Share prices boost Norwegian state oil fund

Aug 14, 2009, 10:20 GMT

Oslo - Rising share prices helped lift second-quarter returns to a record level for the fund that invests income from Norway's petroleum and gas riches for future pensions, the Norwegian central bank said Friday.

Second-quarter return equalled 12.7 per cent or 270 billion kroner (44 billion dollars) - measured in international currency, it said.

The fund, officially named the Norwegian Government Pension Fund - Global, was worth some 2.38 trillion kroner (393 billion dollars) at the end of the quarter, up 309 billion kroner since the first quarter.

'The positive development in the second quarter has continued into the third quarter,' said Yngve Slyngstad, chief executive for Norges Bank Investment Management that manages the fund.

'Economic developments showed clear signs of stabilising in the second quarter and the uncertainty around the financial sector decreased,' he added.

At the end of the quarter, the fund was estimated to own some 1.7 per cent of European equity markets.

At the end of 2008, the fund was estimated to own shares in some 7,700 companies worldwide.

The fund, managed by the central bank, was created to pay for Norway's future health and pension expenditure through investments outside the Norwegian economy.

The capital is invested in bonds, shares, money market instruments and derivatives.

During the quarter, 40 billion kroner was transferred to the fund. That was in line with the first quarter but the lowest inflow since the fourth quarter of 2004, the bank said.