Support post Brexit from Norway

by Adrienne Lawler
March 4, 2019

Oliver Wright, Policy Editor | Callum Jones, Trade Correspondent

February 28 2019, 12:01 am, The Times

The world’s largest sovereign wealth fund is taking a 30-year bet that Britain will emerge from Brexit stronger outside the European Union.

In an unexpected move, Norway’s £740 billion wealth fund said yesterday that it would increase its exposure to British companies, property and bonds regardless of the outcome of Brexit negotiations.

This comes despite a 12 per cent fall in the value of its £62 billion of UK investments this year. Britain is the third largest market for the fund’s investment capital, which was built up from Norway’s oil and gas revenues.

In a bullish statement Yngve Slyngstad, the chief executive, said: “We will continue to be significant investors in Britain. We foresee that over time our investments in the UK will increase.”

Asked about Brexit uncertainty, Mr Slyngstad suggested that in the longer term the UK was still particularly attractive. “With our time horizon, which is 30 years-plus, current political discussions do not change our view of the situation,” he said.

The Norwegian fund is one of the biggest foreign investors in Britain. Officially called the Government Pension Fund Global, it is a co-owner of Regent Street in London, a top five investor in companies including HSBC and BP, and holds about £6 billion of UK government debt.

The move was welcomed by Brexiteers, who said that Britain would become even more attractive when freed from the constraints of EU membership. “It is a recognition that the freer the market in Britain is the more attractive the country will be to outside investment,” Jacob Rees-Mogg said.

However, Chris Leslie, the former Labour shadow chancellor who defected to the Independent Group last week, said that it was a response to the decline in UK asset prices since the Brexit vote.

“The truth is that British assets are in the global bargain basement,” he said. “Investment funds like these are not putting money into creating jobs or improving productivity, they are just buying up assets at a relatively cheap price in the hope that in the long term it will make them money.”

Middle Eastern funds have also increased their exposure to Britain. Qatar has invested almost £3 billion with plans to invest £2 billion more.

Some believe a no-deal Brexit could make the UK an even more attractive investment opportunity. David Zahn, senior vice-president at Franklin Templeton Fixed Income Group, said: “A hard Brexit would likely prompt a decline in sterling but we think a lot of people would step in to buy it attracted by the even lower levels.”

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