Norway sovereign wealth fund CEO warns of rocky times

By Gwladys Fouche

OSLO (Reuters) - Norway's $1.2 trillion sovereign wealth fund, the world's largest, expects difficult market conditions in the time to come, affected by geopolitical events and inflation, its chief executive said on Tuesday.

Inflation, already on the rise before the conflict in Ukraine, has continued to increase, while interest rates are still very low and share prices remain high, said Nicolai Tangen.

"The geopolitical consequences of the war are difficult to predict, but we probably face the greatest changes for 30 years," he said told a parliamentary hearing.

"There is little doubt that growing frictions between superpowers and a reversal of globalisation will affect the markets," he said.

The Norwegian fund, which invests all its assets in foreign stocks, bonds, real estate and renewable energy projects, has "nowhere to hide" and must manage the risk that comes with exposure to global markets, he added.

"All this taken together means that we have a rocky ride ahead," Tangen said.

Market value of Norway's wealth fund https://graphics.reuters.com/NORWAY-SWF/lgpdwajadvo/chart.png

The fund took its first ever direct stake in a renewable energy project in April last year, a Dutch wind farm, together with, but has not done further investments of that kind since.

Tangen said it would take some time, even though the fund has a mandate from parliament to invest up to 2% of its total value in that asset class.

"In this area competition is fierce and good prospects (are) hard to find," he said.

Founded in 1996, the fund invests revenue from Norway's oil and gas sector and holds stakes in 9,300 companies globally, owning 1.3% of all listed stocks.

Assets now correspond to $230,000 for every Norwegian man, woman and child, and the purpose of the fund is to share petroleum proceeds with future generations.

($1 = 9.4587 Norwegian crowns)

(Reporting by Gwladys Fouche, editing by Terje Solsvik and Louise Heavens)