Chart of the Day: Norway’s Sovereign Fund Takes a Hit From Plunge in Chinese Tech Stocks

Alibaba Group Holding Ltd. and Tencent Holdings Ltd. were among the worst-performing stocks invested in by Norway’s sovereign wealth fund last year, the fund manager said in its 2021 annual report released on Thursday.

The market value of Alibaba shares held by the world’s largest sovereign wealth fund fell 46.6% year-on-year to $3.5 billion at the end of 2021, while the fund’s ownership of the company rose 0.02 percentage points, according to Norges Bank Investment Management. The market value of its Tencent holdings fell 13.4% to $5 billion at the end of last year, while its stake in the company rose 0.06 percentage points.

By contrast, the fund’s total equity investment booked an annual return of 20.8% in 2021.

The disappointing performance of investment into Alibaba and Tencent came as China intensified an antimonopoly campaign in the internet sector that saw industry giants, including Alibaba, Tencent, Meituan and Baidu Inc., fined big for antitrust violations. Many saw their stocks slump last year.

Still, Alibaba and Tencent were the Norwegian fund’s largest equity investments in the Chinese market last year, followed by Meituan and state-owned China Construction Bank Corp.

Overall, China accounted for 3.8% of the fund’s global equity investments at the end of last year, down from 5.3% a year earlier, the annual report showed. The U.S. accounted for 44.7%, up from 42% a year earlier. Europe accounted for 31.1%, up from 30.9%.

At the end of last year, 72% of the fund’s investment portfolio was equities, 25.4% was fixed income, and the remainder consisted of unlisted real estate and renewable energy infrastructure. Together, the fund reported an annual return of 14.51% last year, up from 10.86% in 2020, when the world was hit particularly hard by the Covid-19 pandemic.

Author: Tang Ziyi, Caixin Global