– Money has become very cheap. There is a new situation. We pondering still what this means in the long term.
Olaug Svarva leader Folketrygdfondet and manages nearly 200 billion government money at a time of historically low interest rates.
– In the short term, this means rising prices because money moves into stocks. But when capital is so cheap, the risk that agents RAs are poorer and thus also the profitability of investments deteriorate. For securities our means low interest rates inevitably low returns going forward, says Svarva.
She is like an echo of its financial brother Yngve Slyngstad in Oil Fund.
If he is the king Wall Street as head of the world’s largest fund, she queen of Exchange in Oslo. Svarva manages around 5 percent of share values on stock exchange.
Two monetary bins
Each of the two state leader monetary bins. Svarva have much less money than Slyngstad, but she is closer to the Norwegian daily life. She sits in the middle of the largest Norwegian companies with thousands of jobs.
– Deliver you in the shadow of the Oil Fund?
– Yes, we do. But we have our mission and it is up to us to deliver in accordance with this.
– Can you imagine several billion to manage the rich Norwegian state?
– Not with current design of our mission Ministry of Finance. We are already big in Norway and the largest financial investor. It had been challenging to handle collection of stocks and securities if we were to become even bigger.
Restructuring in oil
At the very oil heavy Oslo Stock Exchange is the transition to lower oil pressure that characterizes days. Svarva have faith in their own stock.
– The ability to adapt is great in the listed companies. They come early in the process cost. They are good at creating new products, find new markets and developing new technology. Just look at the new technology to get more oil out of the fields. Restructuring is often painful, but important for the continued growth potential and profitable jobs. The balance between business and society is strong in Norway. It makes us good at restructuring, says Svarva.
– Must Exchange now pay for the very good times we have behind us?
– The stock market is like a weather forecast, it is ahead. The fall in oil activity settled into courses already two years ago. Oil slump came on top of this. It was over investments and high costs in the oil industry. This industry will be great to come too, but must be profitable, she said.
With the exception of five years in banking has Svarva worked in Folketrygdfondet since 1991. Therefore she has with both ups and downs. This year it is 25 years since the fund began investing in shares.
– The oil is an important growth potential for many years, but not as strong as in recent years. Other companies will emerge. Ten years ago was farming almost nothing. Now it has a market capitalization of over 100 billion, she said.
Staten many chairs
The state sits on many chairs around the table in business. 45 percent of Folketrygdfondet share money is invested in five large companies with large direct state ownership: Statoil, Telenor, DNB, Hydro and Yara.
On general meetings in election committees and in policy documents can Svarva meet people and views from other parts of the diverse state.
– This is a reality we only have to deal with. We will invest in the Exchange, and the large Norwegian companies are partially privatized state companies. We can not get around them. But we have a completely independent Ministry of Finance and acting independently of state ownership directly in companies, she said.
Lending to state
Svarva meets state also by 16 billion of government money in the fund is borrowed back to the state in the form of purchased government bonds. It becomes an accounting roundel with state money.
She denies that this makes the fund to a paper tiger.
– Government Bonds is money we must have in reserve for To exploit opportunities in the market. We can quickly sell down in government securities. In 2009 we sold a lot and bought cheap stocks and bonds, she said.
Ensures capital
Folketrygdfondet had invested 89 billion in Norwegian shares at year end. Svarva believes Fund makes a difference in Norwegian industry.
– We are big and we are long term. There are no outside and should have annual payments from us. We can utilize our characteristics and go the opposite way of the others in markets, for example by buying shares when it is good payment to take risks. All this is more we can exploit for the benefit of both businesses and private returns, she says.
She believes in Folketrygdfondet virtue of its size has an important role as watchdog in the stock market. Svarva will have a market that follows the rules for financial practices and usage.
– The Norwegian stock market has become much more orderly and functioning over the last ten years. Exchange depends on trust. Awareness this is much stronger now than before, she said.
A lot can go wrong
During his 25 years close to the Norwegian stock market has Svarva learned at least two important things
- it comes to having an awareness of risk
- the quality of management in Norwegian listed companies varies
That money management is risky given all brand when it slammed financial crisis for six to seven years ago.
– It is important to have systems to measure risk and to manage the risk of teaching. Finally, it is necessary contingency plans when risk becomes reality out in the markets, as it was during the financial crisis. Without this, the long-term return bad, she says.
In addition, she has learned that there are differences of boards and managers.
– The management means very much and the quality varies widely between companies. The ability to build a good corporate culture often separates good managers from bad, says Svarva.
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