NORWEGIAN ambassador to Malaysia Gunn Jorid Roset reaffirms that her government’s decision to cut its exposure to US$1.9 billion (RM7.94 billion) worth of Malaysian bonds is not an issue of lost confidence.
Speaking to the New Straits Times, she said the move was due to the new direction taken by Norway’s sovereign wealth fund, Government Pension Fund Global (GPFG).
“It has nothing to do with the new government’s performance. It was a technical decision made by a very capable investment team to earn a higher dividend for its investments.
“The team has made a detailed study of overall trend and long-term strategy where the funds should be invested in order to generate higher income and lower risks.”
Roset said the decision was not made by Norway’s prime minister or finance minister and should not be seen in context of bilateral relations between the two countries.
“The decision is not a political indicator, not a bilateral trade indicator or any indicator about us losing confidence in the country.”
Roset said the world’s largest sovereign wealth fund aimed to increase its investment in equities to up to 70 per cent of its portfolio.
“Given that the investment in equities is still very significant, the wealth fund is also planning to increase its presence in Asia.
“If the local equity market performs well on top of being well governed and transparent, and meeting all the criteria set out, there is a great potential for the fund to increase equity investments in the country,” she said.
On May 16, Bank Negara Malaysia governor Datuk Nor Shamsiah Mohd Yunus had said Malaysia would not face significant impact due to GPFG’s decision to drop emerging market bonds from the benchmark index it tracked.
“Bond yields did increase due to the outflow, but recently, it had declined again to the level that we saw at the beginning of the year. This is the feature of the bond market, it has inflows and outflows.
“Most importantly, we are here to ensure any flows and any movement on the ringgit is orderly and must not disrupt financial market or economic activities,” she said.
On April 5, Norges Bank, which manages GPFG, said it would streamline its US$300 billion fixed-income portfolio by cutting emerging market bonds from the benchmark index it tracked.
Government and corporate bonds totalling US$17 billion at the end of last year would be affected.
The bonds are issuances by Chile (US$362 million), the Czech Republic (US$50 million), Hungary (US$63 million), Israel (US$117 million), Malaysia (US$1.9 billion), Mexico (US$5.7 billion), Poland (US$1.05 billion), Russia (US$1.2 billion), South Korea (US$6.3 billion) and Thailand (US$241 million).