The Norwegian Pension Fund – the largest reserve fund on the planet – warned of the formation of a new “bubble” in the global financial market. Bloomberg reports this with reference to the statement of the head of the fund, Nicolai Tangen.
In his opinion, the situation with a sharply increased demand for socially responsible investments in companies that meet ESG (environmental, social and governance) standards resembles the circumstances that preceded the emergence of the dot-com bubble that arose in the second half of the 1990s – early 2000s. Then there was a sharp increase in interest in investing in shares of Internet companies that appeared everywhere, which ended in a market collapse and the ruin of many investors.
At the same time, Tangen recalled that after the “dot-com bubble” burst and the quotes of technology companies collapsed, the sector continued to develop. Crisis companies are now worth more than they were at their peak 20 years ago. For example, Microsoft shares at the end of 1999 traded at about $ 60 per share. On Friday, February 26, 2021, they cost over $ 232.
According to the head of the Norwegian Pension Fund, as in the case of technology companies, the market for socially responsible investments in the short term may face a collapse. However, in the long term, they have significant potential.
In January, it became known that the Norwegian Pension Fund began to abandon environmentally damaging investments in oil and gas three years ago. The mission of the organization is to increase investment in renewable energy sources. Their share in the $ 1.3 trillion fund is expected to reach about 1 percent.