Norway’s fund on the look-out in Malaysia

Maeland (left) and Norway Ambassador to Malaysia Hans Ola Urstad at the press conference in Kuala Lumpur. (Pic by Hafzi Mohamed)

The Norwegian Government Pension Fund, which owns stakes in 130 Malaysian companies via investments of more than RM6 billion, will increase its participation in Malaysia’s growing business sector.

Norwegian Minister of Trade and Industry Affairs Monica Maeland said the current investments and future investments will signal the Scandinavian country’s confidence in the Malaysian economy and its corporate companies’ performances.

“The pension fund is here to stay. They have great belief in Malaysian companies as its growth directions are very achievable and clear,” she told The Malaysian Reserve in an exclusive interview during her recent working visit here.

In regard to the capital outflow experienced from investors reacting to the US Federal Reserve decision to taper its bond purchases through its quantitative easing programme, Maeland said that will not likely have an impact on the Norwegian Pension Fund investment strategy here.

Malaysia, like other regional economies witnessed heavy capital outflow when investors reacted negatively to the initial news of the tapering late last year that saw big losses in equity markets. Markets, however, have rebounded but still reacted negatively to news on further tapering.

“I do not think the Norwegian Pension Fund will follow suit as it has demonstrated its confidence on several occasions here in Malaysia. “For the past five years, the investment had been growing steadily with the past three years seeing a steep curve,” she said.

The Norwegian Government Pension Fund, widely known as the Oil Fund, is a fund into which the surplus wealth produced by Norwegian petroleum income is deposited.

As of the valuation in June 2011, it was the largest pension fund in the world, although it is not actually a pension fund as it derives its financial backing from oil profits and not pension contributions.

As of third-quarter 2013, the value of the fund was US$828.66 billion (RM2.74 trillion), holding 1% of the global equity markets.

Among the Malaysian companies that the Norwegian pension fund has a stake includes giant conglomerate Sime Darby Bhd.

For three years between 2010 and 2013, the fund had divested its stakes in 18 Malaysian companies in the palm oil business.

The exercise involved many big names such as Berjaya Corp Bhd, Boustead Holdings Bhd, Genting Plantations Bhd, Kuala Lumpur Kepong Bhd, IJM Plantations Bhd, PPB Group Bhd, Tradewinds Plantations Bhd and Sarawak Oil Palms Bhd.