At the end of January 2024, Norway's Global Pension Group (GPFG), the world's largest sovereign wealth, announced its amazing investment performance for 2023.
Even if the asset size has exceeded 16 trillion NOK (1078 trillion yuan), but elephants are still able to dance. In 2023, it returned 16% and made a floating profit of NOK 2,222 billion (1.222 billion).5 trillion yuan), a record high. From a more intuitive point of view, it is equivalent to giving 553 to the whole of Norway40,000 people, each earning 270,000 yuan.
In addition to emotion, I can't help but ask: why does GPFG make so much money? This global capital giant, where does the capital come from? And what Chinese assets did you buy?
Invest in what earns 15 trillion?
As the name suggests, Global Pension Norway (GPFG) only invests outside Norway. Due to the huge volume, covering 65 countries and regions on six continents at the same time, the energy in the world's largest market cannot be underestimated.
According to the current asset allocation strategy of GPFG: 709% Investment**, 271% invest in fixed income assets such as bonds, 19% invested in real estate, 01% invest in renewable energy infrastructure. Well, the amount of money used for ** investment, is about 11NOK 34 trillion (NOK 764 trillion RMB).
What is the concept of this number? According to official data, the ** is a shareholder of nearly 9,000 listed companies in the world, and in total owns nearly 15%** - On the other hand, Norway has more than 5 million people, which is less than many prefecture-level cities in China.
In 2023, GPFG** will return 21% on its investments, but the overall return will be pulled back to 16% due to the low returns of the other three asset classes: fixed income assets return 6%; 4% return on investment in renewable energy infrastructure, which is very low and has a "politically correct" function; Real estate assets (unlisted) had a poor return of -12%.
In fact, in 2023, the global real estate industry is in a low tide cycle, which is the result of multiple factors such as the global wave of interest rate hikes under the influence of the Federal Reserve, the real estate **soaring during the epidemic**, and the rising cost of the real estate industry due to global inflation.
However, this kind of investment style of heavy chips on ** has made GPFG suffer losses - the ** has lost 1. in 202264 trillion NOK, also a record high.
However, the big turnaround in 2023 not only made up for the losses in 2022, but also set a new record for profitability. Nicolai Tangen, chief executive of Norges Bank Investment Management (NBIM), which manages the GPFG, explained it bluntly: "Technology stocks have performed particularly well. ”
For example, at the end of 2022, GPFG held 113%, which is the second largest in its asset plate, when the market capitalization was 1998NOK 7.8 billion (NOK 1,365.)RMB 8.9 billion). By the end of 2023, the percentage of Microsoft** holdings will rise to 126%, and the market capitalization also soared to 3583NOK 8.8 billion (NOK 2,449.)0.9 billion yuan), surpassing Apple and becoming the first place in GPFG's holdings.
And Nvidia. At the end of 2022, it held 108% of **, with a market value of 3810 billion NOK (2603.6 billion yuan), although it is also a heavy stock, but it only ranks 22nd in the ** plate. By the end of 2023, the open interest increased slightly, reaching 117% – but the market capitalization has soared to 1458NOK 5.5 billion (NOK 996RMB 7.2 billion), becoming the fifth largest GPFG market capitalization**.
The logic behind it couldn't be clearer. Starting in early 2023, ChatGPT has led a wave of AI-driven value of technology stocks, with technology stocks such as Microsoft and Nvidia being the biggest beneficiaries. And GPFG not only has long held the "chips", but also firmly increased its position.
Looking at the overall heavy stocks, GPFG's preference for technology stocks is more obvious. At the end of 2022 and the end of 2023, the top three positions are Microsoft, Apple, and Google, but the ranking has changed slightly. The entire chip industry chain is naturally also the focus - from lithography machines to wafer processing, from ASML, NVIDIA, to Samsung, TSMC, are the key targets of investment.
How much money do these tech stocks make for GPFG in 2023? Its overall return was NOK 895 billion (6,093.).0.8 billion yuan), which was the second largest class of consumer stocks to create 361 billion NOK (2457.00 billion6.6 billion yuan) more than double the return.
Of course, the top six most profitable stocks are all tech stocks
Microsoft made NOK 129 billion, Apple NOK 114 billion, Nvidia NOK 98 billion, Facebook (META) NOK 78 billion, Amazon NOK 74 billion, Google (Alphabet) NOK 72 billion. The seventh place is also a pan-technology stock, Tesla, 36 billion NOK.
Warren Buffett's Berkshire Hathaway is also a heavy stock. At the end of 2022, GPFG held 063%, ranking 12th in terms of holdings, and the market capitalization at that time was 518NOK 3.4 billion (NOK 3516.4 billion RMB). By the end of 2023, the increase in holdings has increased to 085%, market capitalization 691NOK 0.9 billion (NOK 468..)RMB 8.4 billion).
However, Berkshire Hathaway's holdings fell to 14th place in the overall GPFG** plate as tech stocks rose better.
The decision-makers of GPFG may be Buffett's "fans" and fans of value investing.
Massive funds come from?
Many of the world's top sovereign wealth** comes from the oil states of the Middle East. In fact, Norway's Global Pension Group (GPFG) is also funded by oil.
When most people think of Norway, the hashtags come to mind are the high welfare of Northern Europe, the steep fjord scenery, or the sea food like salmon. But in addition to this, Norway has a "hardcore" identity - the largest oil producer in Western Europe.
In 2022, Norway produced 89 million tonnes of oil, while the whole of Europe, excluding the CIS countries, produced only 148 million tonnes for the year. With a population of just over 5 million, Norway is bound to have a surplus of oil, making it the world's ninth-largest oil exporter, after Kuwait in the Middle East.
In the 2023 Fortune 500 list, only one Norwegian company is on the list, and that is Equinor, the Norwegian national oil company, whose annual revenue was 1,508 in the previous year0.6 billion U.S. dollars (1.)07 trillion yuan), accounting for 5794 of Norway's GDP in the same year$2.2 billion (4.2 billion)11 trillion yuan).
It can be said that oil is a real pillar industry in Norway and an important guarantee to support its high welfare.
How can the wealth obtained from natural resources be used by the people? This is a question that Norway has been exploring since the discovery of one of the world's largest offshore oil fields, Ekofisk, on the Norwegian continental shelf in the North Sea in 1969.
By the 1970s, the take-off of industrialization after World War II had led to a significant increase in global oil consumption. In 1971, production began in Ekofisk, Norway. In 1972, Statoil was founded. In 1973, during the Fourth Middle East War, OPEC member countries imposed an oil embargo on countries that supported Israel. The first oil crisis broke out, and global oil ** skyrocketed.
In 1974, the Norwegian Ministry of Finance submitted a report to Parliament, "The Role of Petroleum Activities in Norwegian Society", which began a formal discussion on how the country's oil wealth should be used. As oil wealth continued to accumulate, by 1983 a report was led by Hermod Skorland, the former governor of Norges Bank, recommending that growing oil revenues be built in search of a return on investment.
In 1990, Iraq invaded Kuwait and the third oil crisis. In the same year, the Norwegian parliament officially passed the Government Pension Fund Act, authorizing the establishment of a government petroleum fund, to which oil revenues (including oil taxes, exploitation license fees and dividends from national oil companies) are regularly transferred.
At the beginning of its establishment, the purpose of this company was multiple: to hedge against the lack of income when oil prices were in place, to make up for the deficit in Norway's domestic economic contraction cycle, and to cope with the ...... of Norway's domestic aging trend
In the longer term, this is also preparing for the decline or depletion of oil resources in the future: investing in alternative minerals. This is similar to the sovereign wealth** strategy of many Middle Eastern oil states.
In 1996, Oil officially received its first funding from the Norwegian Ministry of Finance. In 1998, Norges Bank Investment Management (NBIM) was established to manage the firm. At the beginning, it was also relatively cautious, with only 40% of its assets invested in the international ** market.
In 2006, Norwegian Petroleum changed its name to its current name: Global Pension Norway (GPFG). After the 2008 financial crisis, the ruins also became gold pannings. In June 2009, the Norwegian Ministry of Finance increased its share of investment to 60 per cent. And with that, a record return for the year: 256%。
Beginning in the 2010s, GPFG began investing in real estate, starting with 113 buildings on Regent Street in London. Subsequently, it invested in real estate in New York, Washington, Boston, Tokyo and other places, all of which are core locations and core properties.
In 2014, the Norges Bank governor proposed to further increase the proportion of investment to 70%. In 2021, it began to invest in unlisted renewable energy infrastructure – which, together with **, fixed income and real estate, constitutes the four major sectors of GPFG's asset allocation today.
So, as the world's largest sovereign wealth**, how much has it earned over the years?
According to data released by Norges Bank Investment Management (NBIM), as of June 30, 2023, GPFG inflows totaled NOK 4,392 billion (2.).99 trillion RMB). Since 1998, this ** has earned NOK 7,871 billion (5.).36 trillion RMB), with an annualized rate of return of 599%。If you count the data for the whole of 2023, this number is bound to be even more impressive.
Due to the legal and regulatory model based on the central bank's foreign exchange reserves, the scope of GPFG investments was limited to Norway from the outset. As one of the largest emerging markets, China's assets are naturally among its top pools.
The style of value investing is still very typical. From the perspective of head holdings, technology stocks are the main line, superimposed on the head of consumption, finance, and pharmaceutical stocks. However, there are some changes that deserve attention. Compared with 2022, the position at the end of 2023 shows its investment decision-making thinking:
increased its holdings in Pinduoduo, and also increased its positions in Alibaba and Meituan, but ** JD.com. China Construction Bank and China Merchants Bank continued to be the company, but the shareholding in ICBC did not increase or decrease.
Having made money on Tesla, GPFG continues to increase its holdings in BYD in 2023. But it sold Kweichow Moutai. However, the world's largest sovereign wealth** is still the largest company in A** value holding 016% of shareholders.