Norway's $1.7 Trillion Wealth Fund Raises Alarm Over Global Debt Risk

The CEO of Norway's $1.7 trillion wealth fund warns that countries are not doing enough to reduce their debts, posing risks to the stability of global financial markets. While the fund posted a significant profit, concerns about sovereign debt and reliance on tech stocks underscore ongoing uncertainties.

The CEO of Norway's $1.7 trillion wealth fund has raised concerns about global sovereign debt, warning that insufficient action by countries to reduce their debts could destabilize financial markets. This warning comes despite the fund posting a profit of 1.48 trillion crowns ($138 billion) in the first half of the year, bolstered by strong global stock markets.

Fund CEO Nicolai Tangen emphasized that the current levels of sovereign debt are unprecedented and continue to rise, with little global willingness to address the issue. He noted that the situation affects most major economies, making financial markets more fragile.

Although Tangen does not foresee an immediate crisis, he compared the potential for sudden financial turmoil to Britain's 2022 market plunge following an unsustainable fiscal budget. He highlighted the limitations of the fund in mitigating this risk but stressed the importance of alerting the Norwegian state to the potential dangers.

The fund's performance remains particularly tied to the tech sector, with significant returns driven by leading technology stocks and increased AI solutions demand. However, Tangen pointed out the interdependence and risk among these tech giants.

(With inputs from agencies.)