The world’s largest sovereign wealth fund, Norway’s, may begin investing in major defense companies as early as 2027 after more than 20 years of prohibition. This decision is driven by threats related to Russia’s war against Ukraine, as well as sharp statements from former U.S. President Trump regarding security guarantees for Europe.
This is reported by Business • Media
Review of the Fund’s Ethical Principles
The Norwegian parliament has decided to review the ethical principles that have prohibited investments in companies producing components for nuclear weapons since 2004. Under the new rules, the fund, which has assets worth over $2.1 trillion, will be able to acquire stakes in 14 leading defense corporations with a total market capitalization of about $1 trillion. Among the companies that may become available for investment are: Lockheed Martin, Boeing, Airbus, BAE Systems, Safran, Thales, BWX Technologies, Northrop Grumman, Fluor, General Dynamics, Huntington Ingalls Industries, Jacobs Solutions, L3Harris Technologies, and L&T.
“This move will allow the fund to acquire stakes in 14 defense companies with a combined market capitalization of about $1 trillion, in which it currently cannot invest according to ethical principles, as they produce components for nuclear weapons.”
Increasing Appeal of the Defense Sector
Shares of defense companies are becoming increasingly attractive amid Russia’s prolonged aggression against Ukraine and rising defense spending in European countries under pressure from the United States. The new security realities make investments in the defense sector potentially more profitable for institutional investors, including sovereign funds like Norway’s.