© Photographer: Carina Johansen/Bl Norway’s sovereign wealth fund has said that European capital markets need to be reformed to stay competitive with the US and Asia.
The country’s $1.7 trillion oil fund will send a letter, seen and quoted The Financial Times, to the European Commission’s consultation on capital markets integration this week.
The letter said that Europe should address deeper structural problems holding back the continent and its national markets, including introducing measures such as harmonised tax, insolvency and supervisory rules.
“We share the concern that European markets over time have fallen behind in terms of business dynamism and the provision of new investment opportunities to institutional investors,” the Financial Times quoted the letter as saying.
“Key barriers include national securities laws, corporate laws, and insolvency regimes that vary significantly across member states.”
Norway’s Oil Fund has been diluting its exposure to European equities over the past decade, going from 26% to 15%. US shares also now make up 40% of its assets, compared with 21% a decade ago.
In addition, the number of European companies with shares held by the fund has fallen 25% to 1,546.
The fund said that this is due to European stocks being less competitive compared to its US and Asian rivals.
In comments to the Financial Times, chief of market strategies at Norway’s Oil Fund Malin Norberg noted that there is a sense of urgency among European policymakers.
“We feel it too, and we’re happy about that,” she said.
However, the letter added that European markets need improved competition and innovation, not regulation.
Last year, Norway’s oil fund committed to invest €900 million in a renewable energy infrastructure portfolio controlled by Copenhagen Infrastructure Partners.
It allowed Norges Bank Investment Management to invest in renewable energy projects in the development stage and provided exposure to other parts of the value chain to build knowledge and experience with new markets and technologies.
