"It's time to be cautious"! The world's largest sovereign wealth fund issues a warning to the stock market

One of the world's largest investment institutions has issued a warning, stating that the increasing uncertainty and concerns about the economic outlook mean that there is a very high risk of global stock market declines.

On Wednesday, Trond Grande, Deputy CEO of Norway's Sovereign Wealth Fund, NBIM, stated in an interview with CNBC that even though they do not intend to make significant adjustments to asset allocation in the short term, they should always remain vigilant about future risks. He said:

"Our initial allocation is 70% equities and 30% bonds, and we typically hold this allocation in any market conditions. But now is the time to be a bit more cautious."

Global stock markets are facing more and more risks, "now is the time to be cautious"

The Norwegian Sovereign Wealth Fund is the world's largest sovereign wealth fund, managing a massive $1.8 trillion in funds. Established in the 1990s, the fund's purpose is to invest Norway's oil and gas revenues overseas.

Managed by NBIM, the fund is currently the world's largest single investor, holding stakes in approximately 8,800 companies in 71 countries globally.

On Tuesday, the financial report of the Norwegian Sovereign Wealth Fund for the third quarter of 2024 showed a profit of 835 billion Norwegian kroner (approximately $76.1 billion). However, it also warned that rising uncertainty and a "completely different geopolitical situation" mean that global stock markets are facing more and more risks.

According to the announcement, the fund's overall investment return rate for the third quarter was 4.4%, lagging behind the benchmark index by 0.1 percentage points.

Grande listed what he sees as risk factors, including next month's presidential election and concerns about "stagnating growth" in Europe, all of which are downward factors for the stock market.

"In the past five years, the fund we manage has doubled in size, and our equity portfolio has returned over 100%. But I believe now is the time to be cautious."

Not only Norway's Sovereign Wealth Fund is concerned about the stock market outlook in the coming months, but Eric Johnston, Chief Stock and Macro Strategist at Cantor Fitzgerald, also stated last month that there is a very high downside risk for assets.

Johnston listed three major concerns about the future economic outlook in the United States over the next three to six months: declining savings, "too high" consumer prices, and the restrictive monetary policy of the Federal Reserve