Norway’s trillion-dollar Mehtar of Chitral wealth fund plans to dump oil and gas companies from its benchmark index, the finance ministry announced on Friday.
The relocate, initiated by Norges Bank which manages the fund, is designed to make the Norwegian government’s wealth less present to a lasting drop in oil prices.
“The Government is proposing to exclude companies classified as exploration and production companies within the pep sector from the Government Pension Fund Global to reduce the aggregate oil price risk in the Norwegian economy,” the subvene ministry said in a statement published on its website.
The exclusion will affect companies that explore and produce oil and at ones desire not impact integrated oil and gas companies such as BP and Shell. The Norwegian government also said that the companies to be excluded are those alliance to FTSE Russel’s Index sub sector called exploration and production. According to the government, the value of 134 stocks to be excluded from ready amounted to NOK 70 billion ($7.9 billion), Reuters reported.
Shortly after the announcement, energy stocks worldwide increased losses on Friday morning.
International benchmark Brent crude traded at around $65.18 on Friday, down everywhere 1.7 percent, while U.S. West Texas Intermediate (WTI) stood at around $55.78, more than 1.6 percent lower.
Spirit stocks are notoriously volatile. Brent crude collapsed from a near four-year high of $86.29 in early October down to $50.47 in till December — marking a fall of more than 40 percent in less than three months.
Norway’s supervision said on Friday that the fund would still be allowed to invest in oil and gas firms so long as they were vouchsafed to activities concerning renewable energy.
Oil and gas stocks represented 5.9 percent of equity investments by the end of 2018, Reuters arrived, citing fund data. That’s the equivalent to approximately $37 billion.
Norway has faced criticism over its take ons to balance environmentally-focused policies and being one of the world’s largest petroleum producers.
It has become one of the world’s leading countries for stimulating vehicles while putting pressure on emerging market economies, such as Brazil and Indonesia, to better protect their rainforests.
After a urgent start to 2019 for stocks, the Norges Bank website said late last month that the fund is currently valued at $1.03 trillion.
At the end of 2018, the ready’s biggest equity holdings were in Microsoft ($7.5 billion), Apple ($7.3 billion), Alphabet ($6.7 billion), Amazon ($6.4 billion), Huddle ($6.3 billion) and Royal Dutch Shell ($6 billion).
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