Norwegian fund’s investment in Dhaka

From left to right: The Danish Ambassador to Bangladesh, H. E. Ms. Hanne Fugl Eskjær and the Norwegian Ambassador to Bangladesh, H. E. Ms. Merete Lundemo with the local women and children. Photo: Royal Norwegian Embassy

Norway’s sovereign wealth fund invested $112 million in Bangladesh’s stockmarket in 2016 — a six-fold rise compared to the previous year.

The Norwegian Government Pension Fund Global, the world’s biggest wealth fund, made the investment in 15 companies that are listed on the Dhaka Stock Exchange, the premier bourse.

The wealth fund first made investment in Bangladesh in 2015 with a modest amount of $19 million, according to the Norwegian embassy in Dhaka. The huge growth in investment in Bangladesh by the Fund is very positive, it said.

“I see this as a confirmation that the Bangladeshi economy is maturing and companies are regarded as promising investments,” said Norwegian Ambassador Sidsel Bleken.

She said the investment by the fund is made on a strictly commercial basis and is not an expression of political preferences or decisions.

The fund has clear expectations of companies in areas such as corporate governance, shareholder rights, social issues and the environment. The guidelines for investments are made by the Norwegian parliament but the day-to-day management is not influenced by politicians.

The ambassador pointed out that global investors such as the pension funds are looking for a stable and predictable business environment.

The Bangladesh government needs to continue to create a level-playing field where companies are treated on an equal basis, Bleken said.

The total market value of investments done by the fund is close to $900 billion.

The fund was established in 1990 and is built up by revenues from oil and gas activities on the Norwegian continental shelf. The fund is managed by an entity under the National Bank of Norway.

The fund said it is saving for the future generations of Norway. One day the oil will run out, but the return on the fund will continue to benefit the Norwegian population.

The fund owns stocks in 9,000 companies in 77 countries. In total, it holds 1.3 percent of all public listed shares worldwide. To avoid pressure on the domestic economy all investments by the fund are made outside the country. The fund gained $53 billion last year.

Apart from the Norwegian fund, several global investment banks such as Morgan Stanley, JPMorgan and Goldman Sachs as well as asset management firms such as BlackRock have presence in the capital market of Bangladesh.

However, foreign investment, also known as portfolio investment, accounts for only 1 percent of the premier bourse’s total market capitalisation, which stood at Tk 372,662 crore at the close of trade yesterday.

Net foreign investment was Tk 1,340 crore in 2016, up from Tk 185 crore in the previous year.