The greatest risk for markets is a fragmented world, says the CEO of Norway Wealth Fund

Of gwladys fouche

Oslo (Reuters) -World Economy seems to fragment -and is the highest risk for markets at present, as it provides higher growth and higher inflation, he told Reuters the CEO of the Sovereign Wealth Fund of $ 1.8 trillion Norway.

The fund, which invests the revenue of the Norwegian state of oil and gas production, is the largest of its type and one of the largest investors in the world, which has an average of 1.5% of all listed shares and at about 9,000 companies worldwide.

It is also invested in bonds, real estate and renewable energy.

Asked what is the greatest risk for financial markets today, Nicolai Tangen, CEO of the Norges Bank Investment Management (NBIM) fund operator, said that it was dispensable and referred to one of the stress test scenarios in the background that a fragmented world economy sees.

“This kind of discouping the world is a very negative scenario,” he said in an interview.

“You are in a situation now you have … a warm war, you have a Cold War, you have a trade war, you have a technological war. There is a lot of friction among the superpowers,” he added.

“And leads to lower economic growth, higher inflationary pressure and more uncertainty.”

Asked if we were in this scenario, Tangen said, “It seems.”

On the background stress test, a “fragmented world” could cause the background to be lost up to a third of its value.

At the same time, he pointed out the paradox that, although the markets have experienced a lot of volatility in recent weeks, they are flat in the year.

“If you asked me, this is what will happen, where do you think they will be the markets? I would not have thought they would be where they are. I mean, they are not changes in the year,” he said.

It was not clear how long the current situation would last, he said and said that companies seem reluctant to give perspectives right now.

“Companies do not give more and more forecasts when they reach numbers,” he said.

Who is resistant?

Companies that can deal with the best in the current environment are those that can resist price pressure, either because they are able to increase prices and not be financially affected, for example, because their competitors must also increase prices or because they have flexible supply chains.

He denied appointing specific sectors, or companies, especially affected by the trade war.

In general, over the last year, the fund has been slightly low in technological actions and actions.

The changes were small in general, he said, because the fund must respect a term established by Parliament.

Return

Tangen was appointed last month for a second and last term of five years as CEO of NBIM. He comes his work in his new period as continuing to optimize all aspects of fund operations.

“It’s to improve 1% everywhere, all the time,” he said.

Tangen has been interested in the background – and the 9,000 companies in which he invests – to use artificial intelligence in his operations.

In the last three weeks, he said, the fund employees had been able to select their online news tracking of the companies against certain risk parameters, which he did not name, thanks to Ai.

“In the past, it took days and days. (Now) It’s ten minutes. It’s amazing,” he said.

(Gwladys Fouche report; Jan Harvey’s edition)