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.