The CEO of Norway's sovereign wealth fund, the world's largest, reiterated on Tuesday that its $2 trillion in value could sustain an unexpected heavy loss and even disappear altogether in the case of a market collapse.
Norway's wealth fund invests the proceeds of the Nordic country's oil and gas production in stocks, bonds, property and renewable projects abroad.
It has doubled in value in less than a decade — reaching $1 trillion in 2017 — and accounts for about a quarter of Norway's public spending, up from 10% roughly a decade ago.
"I want to contribute to our mental emergency preparedness by asking the question: 'can the oil fund disappear?'," Nicolai Tangen said in a speech during a political conference in Arendal, southern Norway.
"The answer to that question is 'yes' and the worst is that in the world we live in now, it is not completely improbable."
He said the last three decades were marked by an "abnormal" situation with low taxes, inflation and interest rates.
"Let me stop here with the word 'abnormal' because it is in the period we are in now that the oil fund has grown," he said.
TODAY AKIN TO 1920S
Later, in an interview with Reuters, Tangen did not mention any recent market development that would cause him specific worry, but pointed to some elements similar to the period before the 1929 Great Depression, such as tariffs.
At the same time, Tangen said the market was continuing to rally despite a lot of bad news.
"It is interesting how the economy is more resilient than what was the case in the old days. And so clearly companies have worked on supply chains, they worked on different backup systems, they seem to have a more flexible supply situation generally," he said.
"If you were going back two years, if you had predicted tariffs, trade barriers, you would not have expected the market and the economy to be as strong as it is. So it is a resilient economy."
