LONDON — Yngve Slyngstad, the CEO of Norway’s enormous sovereign wealth fund, the world’s biggest by assets, said that the peak of globalised trade has likely passed.
Speaking to Bloomberg in an interview this week, Slyngstad — who oversees the roughly £760 billion fund — said that while the rise of China in recent decades gave global trade a big boost, this boost is now wearing off, making “wins” in investment terms harder to come by.
“The question investors are asking themselves is if the easy wins already have been made,” Slyngstad told Bloomberg’s Sveinung Sleire and Mikeal Holter.
“The global supply chains have in a way had a one-time gain primarily through outsourcing of multinationals to China.”
Slyngstad’s comments come soon after the chief strategist at Norges Bank Investment Management, the fund’s official name, said that an “inflection point” has been reached in global trade thanks to the protectionist agendas of populist governments like that of Donald Trump in the USA.
“Is there also a political situation that could make it more challenging?” Slyngstad said.
“Time will tell, but there’s of course a risk on the horizon.”
In July it was reported that Trump is considering launching what would amount to an international trade war by imposing significant tariffs on major exporters of steel and other goods, reports suggested on Friday.
Trump reportedly intends to penalise China for what he sees as the country deliberately flooding the market with cheap goods, thus making American products uncompetitive.
Any imposition of tariffs would however, inevitably impact other major allies of the US including Canada, Germany, Japan, Mexico, and the UK.
Norway’s fund owns more than 1% of all stocks in the global market, as well as a huge portfolio of bonds, currencies and real estate. It is a major investor in London’s commercial property market, owning a large swathe of Regent Street and properties on Oxford Street.
It has recently been suggested that the fund should take more risks by investing more in stocks and less in bonds. This could lead to a significant shift of as much of £70 billion in its portfolio, and lead to major changes in the global equity landscape.