Thursday 14 April 2011

Norway is second largest stock investor in Spain

SPAIN (El Economista) The Norway Goverment Pension Fund, which invests the country's oil income and is the second largest pension fund in the world, with €500,000 millions under its management, has become one of very few institutional investors that could be looking to buy up shares in the troubled cajas, when these come into the market. The fact has been admitted by Norges Bank Investment, the managing entity, in an iunterview with El País. Experience in the Spanish stock market is not a problem: at the close of 2010, the fund was the second largest investor, with a global figure of $9,921 million (€7,460 million), according to Ipreo.>
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While this figure is well below the $19,904 invested in Spanish stock by Blackrock, at the headof the list, bear in mind that these latter numbers include Blackrock's assets managed directly but also those of ETF Ishares, which it bought from Barclays two years ago.

Increasing positions in banking

The Norwegian sovereign fund is gaining positions on the Spanish stock market. At the end of 2009, according to Ipreo, it was in third place, and it is now one step above. Indeed, its Spanish investments already accounts for 4.6% of its capital and Spain becomes the sixth country in order of its investments.

The financial sector has been much in the view of the Norwegians over the last year, which explains why they have signed up with a Spanish specialist to continue increasing their positions in this industry, be it through banks that are already in the market or to take advantage of opportunities that come up with the country's troubled cajas de ahorro.

At the moent, Norges Bank Investement Management owns 7.74% of Spanish banks on the open market, against the 7.31% it had at the end of last year. The two entities in which it has the largest investment are Santander and Sabadell, with 1.71 and 1.69% respectively.

Other companies

Aside from increasing investment in the banking industry, the fund also took advantage of the Spanish market's corrections last year to acquire new stock in a variety of companies.

For example, among the new positions the fund took include titles at Vocento, Vidrala, Quabit Inmobiliaria, Elecnor, Natra, Tavex, Iberpapel, Azkoyen, Telvent, Dinamia, Ezentis and Unipapel.

Nevertheless, there are two companies that got very close scrutiny and investment: Gamesa and Miquel y Costas. The funds participation in Gamesa, the energy company, is above 3%, against its previous 1.62%. Miquel y Costas makes tobacco rolling paper, of which the fund now owns very close to 5%, against the 0.63% it had at the end of 2009.

New business

Among the fund's planned investment this year is the real estate market, a sector that has also caught the eye of Calpers, the California state workers pension fund, the world's third largest, which announced recently that it would set aside $2 billion for the purpose.

Norges Bank Investment Management plans to invest $2,740 million in this sector. Norway's Ministry of Finance has defined this type of asset as "the largest and most mature market that is not on a stock exchange." The Norwegian fund has already taken 25% of a property on London's Regent Street as its first investment.

But the real estate business is not the only risk planned for the fund. Just last weekend, the country's Minister of Finance, Sigbjoern Jonhsen, expresssed his desire that the fund should invest more in emerging markets, instead of the Europen, which takes up over 50% of its investments, as protection against the volatile money market. The minister pointed to Asia and Latin America.

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