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Following Greek Bond Humiliation, Europe's Biggest Equity Investor Is Slashing Its European Exposure

Tyler Durden's picture




 

Remember this from September 2010? "Norway, which has amassed the world’s second-biggest sovereign wealth fund, says Greece won’t default on its debts. “The point is, do you expect these guys to default?” said Harvinder Sian, senior fixed-income strategist at Royal Bank of Scotland Group Plc, in an interview. “Norway has taken the view that they will not. The Greek holdings are particularly interesting because the consensus in the market is that they will at some point restructure or default.” Norway says its long-term perspective will protect it from losses. “One could say we are investing for infinity."... Uhm, Big Oops. Needless to say, this stupidity was roundly mocked by Zero Hedge at the time. Yet we can only applaud the fact that unlike other European investors (read primarily Italian banks) which are merely sinking ever deeper into the quicksand by dodecatupling down on pyramid scheme assets, the Norwegian SWF finally "plans to sharply reduce its European exposure while raising investments in emerging markets and Asia-Pacific, the finance ministry said on Friday." While we ridiculed their stupidity in 2010, we applaud Norway's prudence in this case, as unlike other insolvent European entities, the crude-rich country is not falling for the latest round of central planning bullshit, and is finally acting as a fiduciary agent. "We're reducing our European exposure because we see that economic development in the global economy is changing and this should also be reflected in our investment strategy," Johnsen said. "Most likely we'll have to sell some assets in Europe." Remember: in game theory he who defects first, defects best. We expect to see many more funds openly declaring they will commence dumping European assets, all of which are buoyed 100% artificially by the ECB, and US taxpayers, shortly.

But where will the SWF reallocate money? Why Asia of course: the only place which actually still "makes" stuff. From Reuters:

Norway's $610 billion sovereign wealth fund, Europe's biggest equity investor, plans to sharply reduce its European exposure while raising investments in emerging markets and Asia-Pacific, the finance ministry said on Friday.

 

Of its entire bond, fixed income and real estate portfolio, European investments will be "gradually" reduced to 41 percent from 54 percent, while Asia-Pacific's share will rise to 19 percent from 11 percent, Finance Minister Sigbjoern Johnsen told a news conference.

 

As a result, the share of emerging markets in the fund's total portfolio will rise to 10 percent from 6 percent and the share of the Americas and Africa will rise to 40 percent from 35 percent.

 

"It is just not possible to say how long this will take ... it should be gradual and taking into account market circumstances," ministry State Secretary Hilde Singsaas said.

 

The fund, which now holds over $120,000 per man, woman and child in Norway, is forecast to grow to 5.86 trillion crowns or $1.03 trillion by the start of 2020 as it collect the country's lucrative oil and gas revenues.

 

In fixed income, developed Asia-Pacific's share will be lifted to 11 percent from 5 percent while its share of the equity portfolio will rise to 15 percent from 11 percent, the finance ministry said.

And now we know that for every BTP the ECB is buying during the upcoming market rout, Norway, for one, is selling.

 

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Fri, 03/30/2012 - 09:27 | 2303217 battle axe
battle axe's picture

Norway is getting the fuck out of Dodge, quickly...Smart move, they see the wrtting on the wall.

Fri, 03/30/2012 - 09:30 | 2303245 GetZeeGold
GetZeeGold's picture

 

 

Sooooooo.....don't double down?

 

Fri, 03/30/2012 - 09:31 | 2303247 LongSoupLine
LongSoupLine's picture

 

 

I'm buying some f'ing salmon in support of Norway tonight!

Fri, 03/30/2012 - 09:34 | 2303255 Fanatic
Fanatic's picture

Make sure you get some Aquavit with it. ;-)

Fri, 03/30/2012 - 10:14 | 2303365 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

How about a little Lutefisch?

Fri, 03/30/2012 - 18:38 | 2305153 DorseyCecil68669
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my friend's aunt makes $72/hr on the internet. She has been without work for six months but last month her payment was $19183 just working on the internet for a few hours. Here's the site to read more .....  http://lazycash9.com

Fri, 03/30/2012 - 09:35 | 2303256 withnmeans
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As the U.S. disconnects from the rest of the world and sucks its thumbs, Europe is now being vacuumed into the black hole of bad finance. Complacency is not the answer, are we living on some sort of mystical mushrooms, pixie dust, you can call it what you will.

Just look at Spain, and not a bit of news on our TV's here in the U.S.

http://www.typicallyspanish.com/news/publish/article_34206.shtml

Fri, 03/30/2012 - 10:17 | 2303371 Vampyroteuthis ...
Vampyroteuthis infernalis's picture

Broken glass, must be bullish!

Fri, 03/30/2012 - 12:13 | 2303724 Nobody For President
Nobody For President's picture

Complacency is not the answer, are we living on some sort of mystical mushrooms, pixie dust, you can call it what you will.

 

I call 'distilled spirits'...

Fri, 03/30/2012 - 13:31 | 2304041 MarcusLCrassus
MarcusLCrassus's picture

Fark year lutefish!

Fri, 03/30/2012 - 09:26 | 2303220 knukles
knukles's picture

Who'dathunk there'd be consequences.
But then again the EU can always label Norway foreigners and that'll make 'me shiver in the dark.

Just think of the embarassment of not being allowed to participate in the 20112 EuroTrashSong contest....
Worse than chemtrails, earth groans and smelly farts

Fri, 03/30/2012 - 09:29 | 2303241 Fanatic
Fanatic's picture

Even though Norway is in Europe, they are not members of the EU, luckily for them.

Fri, 03/30/2012 - 09:45 | 2303290 knukles
knukles's picture

Fucking foreigners

Fri, 03/30/2012 - 09:28 | 2303238 jannewmx
jannewmx's picture

Norway pulling an "Italian Captain"?

Fri, 03/30/2012 - 09:29 | 2303239 SheepDog-One
SheepDog-One's picture

Youre going to have to sell your European 'assets'? Yea well good luck finding an actual real buyer for it.

Fri, 03/30/2012 - 09:39 | 2303265 Vince Clortho
Vince Clortho's picture

Sounds like another job for the american debt slaves taxpayers.

-Chairman of Club Fed

Fri, 03/30/2012 - 10:00 | 2303328 dannyboy
dannyboy's picture

Who needs real buyers when you have the ECB mopping everything up?

Fri, 03/30/2012 - 09:39 | 2303246 Schmuck Raker
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One could say we are investing for infinity."

Did anyone at the BoE hear that?

Fri, 03/30/2012 - 09:41 | 2303274 HoofHearted
HoofHearted's picture

On a long enough timeline...but for some of the Eurozone that timeline only needs to be a few years, er months, ok weeks.

Fri, 03/30/2012 - 09:44 | 2303282 V in PA
V in PA's picture

Physical. The only way to invest for infinity.

Fri, 03/30/2012 - 09:44 | 2303285 GeezerGeek
GeezerGeek's picture

In the long run (infinity) we are all dead.

Fri, 03/30/2012 - 09:33 | 2303253 jcaz
jcaz's picture

Amazed it's taken this long......

Fri, 03/30/2012 - 09:36 | 2303259 Jason T
Jason T's picture

But China is one giant fraud and no one wants to touch Chinese stocks.  I just bought some XIN yesterday .. 

Fri, 03/30/2012 - 10:04 | 2303333 toadold
toadold's picture

Surely they won't invest in Chinese real estate. They'll buy something safe like Bank of Japan bonds.....Or some stock in an Indoniesian unicorn fart factory...Philippine coccanut oil extracting factory for sexual lubricants....a monkey ranch that supplies the monkey brain market...vending machines that sell sumo wrestlers used butt thongs

Fri, 03/30/2012 - 09:37 | 2303263 mendigo
mendigo's picture

"we are investing for infinity" - reeks of two martini international conference in posh hotel.

Fri, 03/30/2012 - 09:41 | 2303273 Vince Clortho
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Desparate action of a country not receiving its rightful share of CB Instant Money.

Fri, 03/30/2012 - 09:52 | 2303307 The Reich
The Reich's picture

So how much money did the Norwegian Pension Funds drop within these two years???

Fri, 03/30/2012 - 09:55 | 2303317 nah
nah's picture

brics are so super badass

Fri, 03/30/2012 - 09:58 | 2303322 FranSix
FranSix's picture

Um, are they, like, um sort of buying bullion?  

Ok, so emerging markets are Canadian tar sands.  Right?

Fri, 03/30/2012 - 10:04 | 2303335 swissaustrian
swissaustrian's picture

No(r)way's sovereign wealth fund is managed by their central bank and advised by Goldman.... nuff said.

They also have several "ethical" investment restrictions which make it virtually impossible to have impressive returns.

Fri, 03/30/2012 - 10:36 | 2303427 Lux Fiat
Lux Fiat's picture

Yes, I was wondering if Norway was just the latest muppet.  And because one good call deserves another, have to wonder if the advisor re going developing world/Asia is the same one who advised re Greek bonds.  If demand for "stuff" drops off in developed world, the impact on the "stuff" makers will likely be nasty, unless you believe in decoupling.

Fri, 03/30/2012 - 10:05 | 2303336 Bubble
Bubble's picture

The stoopid money just waded into stocks with huge exposure in Chinese real estate.

Fri, 03/30/2012 - 10:19 | 2303338 LMAO
LMAO's picture

While reducing European investments to 41% (still too fucking much IMO) is a step in the right direction, one can seriously wonder why they are telegraphing this move. This is a significant dumpage and reshuffle. Are they telling the world they are going to sell on the cheap and buy at premium?

And yes, why increasing Americas and African exposure........What about diversifying into PM's?

Keep up those paper trades guys and keep believing in the promise of compensation! In the end you are going to ruin the SFW and the peeps money is going to end up in the pockets of your financial cronies anyway. To vaporise is the term, if I'm not mistaken.

Fri, 03/30/2012 - 10:06 | 2303339 Kaiser Sousa
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"The move to diversify reserves away from U.S. dollars and the euro accelerated last year, largely on weaker fiscal fundamentals and subdued economic conditions in developed markets,” Wai Ho Leong, a senior regional economist at Barclays Capital in Singapore, said in an e-mail. “At the same time, it marked a move into gold, and bonds of stable emerging-market economies, particularly those with better longer-term prospects and currency appreciation potential.”

http://mobile.bloomberg.com/news/2012-03-30/bok-s-dollar-holdings-fell-t...

Fri, 03/30/2012 - 19:26 | 2305243 StychoKiller
StychoKiller's picture

I'm not doing anything until Bang Dae Ho shows up with some babes...

Fri, 03/30/2012 - 10:09 | 2303351 Don Diego
Don Diego's picture

come on guys, those Norwegians are not stupid. They put some money in PIIGS debt because, in the grand scheme of things, the pensions of a few smelly fishermen are well worth saving some bankers' bad investments. The Norwegians, like the petro-monarchies, are expected to sink a few tens of billion to save the system. It is a cold dark world out there and if you don't play the game your country will get a bullseye. There is no way the banksters are going to let 5 million Norwegians dispose of $610 billion, the world does not work that way. That money will be malinvested and the Norwegian pensioners will get a much more modest pension than expected. The Norwegian pension fund is like a 16-year old mini-skirted blonde walking in a Detroit ghetto at night, she will get raped 100% sure.

Fri, 03/30/2012 - 10:18 | 2303363 Zero Govt
Zero Govt's picture

".. the Norwegian Fund finally plans to sharply reduce its European exposure.."

'Bombs Away'

Lookin good this Euro Project, all together now, "Fraternity, Liberty and, er, let's get the fuck out of this madhouse...

Fri, 03/30/2012 - 10:32 | 2303411 GMadScientist
GMadScientist's picture

Sarkozy scrambles Mirages and sends them to Norway...

Fri, 03/30/2012 - 10:33 | 2303418 theorist
theorist's picture

European assets looking like they are going to be under stress for a long time to come. With the European banks having to reduce tehir balance sheets (they can't raise capital) to the tune of USD 1.8tn of assets over 10 years = USD 180bn per year, and Norway reducing its European asset pool by USD 79bn, looks like Europe is going into a huge asset price deflation. Given that European banks are major international lenders, particularly in Asia, the bank balance sheet reduction plus the reduction of Norwegian European investments will result in a Global contraction. Who is going to buy all of these European assets - the Chinese?, the Indians?, the distressed hedge funds (not enough money)? These guys also have their own internal problems. With the withdrawal of European capital from Asia, Norway's input will look like small cheese. Further it doesn't help - as Seekingalpha reports, the Greeks are saying they may need another bailout. This will cause a further loss of faith among investors in Italy and Spain; they will have the Greek model to indicate to them that perhaps Italian and Spanish bonds and the potential resturcturing process, should anything go wrong is too risky to hold this paper.

Fri, 03/30/2012 - 15:05 | 2304440 Carl Spackler
Carl Spackler's picture

This looks to be akin to yelling fire in a movie theater.

Of course, this is not a full movie theater we are talking about.

Fri, 03/30/2012 - 19:27 | 2305248 StychoKiller
StychoKiller's picture

Are you in favor of a Chinese fire drill, then? :>D

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