Saturday, December 25, 2021
Inflation threatens the stock market
Norwegian oil fund fears negative returns
Because of rising inflation, the fat years on the stock market are over, predicts the head of the powerful Norwegian sovereign wealth fund. Instead of dream returns from past decades, the major shareholders even fear negative deals. People are also dissatisfied with the development of VW.
The head of the Norwegian oil fund, Nicolai Tangen, expects a long period of weakness in the international financial markets. “We are preparing for a decade with lower returns. Perhaps it will even be negative,” said Tangen of the “Frankfurter Allgemeine Sonntagszeitung”.
With a current market value of around 1.2 trillion euros, the oil fund is the largest sovereign wealth fund in the world. Around 70 percent of this is invested in shares, which also makes the Norwegians the largest single shareholder in the world. Over the past 25 years, the fund has achieved an average return of 6 percent on its investments. “It will not go on like this, I am convinced. The future will be less attractive to us than the past,” Tangen said of the newspaper. The greatest threat to the stock and bond markets is inflation. “I think this will have far more serious consequences than is currently assumed.”
Criticism of VW bodies
The oil fund has stakes in more than 9,000 companies around the world, including in Germany in the car company Volkswagen. There, the fund recently voted against the discharge of the board of directors and the supervisory board. Tangen said: “We have clearly well-founded doubts about the actions of these bodies.” The management of VW knows what this is about in detail; in public, however, he does not want to discuss the criticism in detail.
At the beginning of December, the VW supervisory board had reached a compromise: The chairman of the board, Herbert Diess, remains at the top of the group despite his violent dispute with the employees, but has to give up power and henceforth concentrate on strategic issues. The compromise inflates the board and its efficiency is impaired, which has already led to public criticism from IG Metall, for example.