Even as FIIs retreat from emerging markets like India, another investor class could bring up some liquidity in the market. World’s second largest sovereign wealth fund the Government Pension Fund of Norway is going to pump in close to $2 billion over the next two months in Indian equity and bond market.
This was disclosed by the Thorvald Moe, deputy secretary general in the Norwegian finance ministry, in a select gathering on Tuesday. He said that Indian country’s allocation has been enhanced recently to 0.94% of the total corpus from the earlier 0.2%. With estimated funds of $200 billion which would mean Indian investments would work out to be around $2 billion before the end of 2008 calendar year.
The fund already has some exposure in India which is estimated at around $270 million. The enhanced weightage of India in the overall corpus would mean additional inflow of atleast $1.7 billion fund in the next two months.
The Scandinavian fund which generates money from oil exports is estimated to be worth $350 billion, only second to Abu Dhabi Investment Authority among all the sovereign wealth funds in the world. Known as the oil fund, the Norwegian fund invests Norway’s oil and gas wealth in foreign stocks and bonds.
It is Europe’s biggest equity investor and out of the total corpus invests 60% in equity, 35% in fixed income and 5% in real estate. If the same investment strategy is followed in India, then close to $1.2 billion will go into the stock market while bonds may see purchases worth $600 million. Real estate sector which has been facing major credit crisis over the last one year could also see some infusion from the Norwegian fund and this could go upto $200 million.
The western markets still maintains the highest weightage for the fund with the US(30%) and the UK(20%) accounting for close to half of the total corpus.