Grieg Investor

TIRIL JAKOBSEN CEO, GRIEG INVESTOR

When summarising the year that has passed and looking towards the one to come, a picture of several games of tug-of-war pulling in different directions emerges. Infection versus vaccine, economic fundamentals versus speculative trends, increased interest rates versus increased stock prices, transitory versus persistent inflation, and central banks as tailwinds or headwinds.

A year unlike most others

Last year, we named 2020 “The Different-Year.” If only we had known. When 2021 began with the storming of the US Congress, incited by the outgoing president, we could hardly believe the scenes that unfolded. Later in the year, Angela Merkel stepped down after 16 years as one of Europe’s most powerful politicians, while Jonas Gahr Støre won the election and took over as Norway’s Prime Minister after Erna Solberg. ABBA released a new album, which was completely overshadowed by the pandemic that flared up again, with all the challenges it brought the world that thought the worst was over. 2021 has in every way been an eventful year.

Despite many uncertainties last year, the stock market proved highly robust in 2021. It has been a formidable stock market year where both global equities and Norwegian equities were up well over 20% in Norwegian kroner. However, if we dig a little deeper into the figures, we see that the stock market in 2021 differs significantly from that of 2020. What has done well and what has done poorly has been turned upside down.

WINNERS AND LOSERS The energy sector emerged victorious in the past year, with a return of just over 40% in Norwegian kroner. This is perhaps not so strange, given the galloping energy prices. In addition, bank and financial shares have risen due to higher interest rates. There has also been a power struggle between value and growth shares throughout the year. It almost ended in a draw, but value stocks took a narrow victory for the first time since 2016. IT stocks have continued to do well, but it was

MOVING CAPITAL CAN CHANGE THE WORLD

not enough to land the victory for the growth stocks. It is also observed that in periods when interest rates increase on long-term bonds, value stocks tend to do well.

At the bottom, we find cyclical consumption. This sector has been a winner from 2017 to 2020, with companies such as Amazon, Alibaba, and Tesla. The USA became the best region, while Europe fell behind when, among other things, the German market developed relatively weakly. However, the biggest disappointment on a regional basis in 2021 was emerging markets, where Brazilian and Chinese stock markets fell sharply. China was hit from several angles: a weaker economy and real estate sector, investors’ concern for increased regulations, and not least, the ban on private education companies making money on large parts of their businesses, in essence wiping out several players at the stroke of a pen. At the beginning of 2022, China is thus an unloved market, where several fund managers choose not to invest as the regulatory uncertainty is still very high.

2021 was also a weak year for fixed income investments with a negative return for both global and Norwegian bonds. With largely stable credit margins, increased government interest rates were decisive in pushing the return on safe bonds in the red. On the other hand, it was a strong year overall for more risky bonds. As in the stock market, the big disappointment was emerging markets, where dollar bonds fell, driven by Chinese bonds in the real estate sector.

And precisely because 2021 was a year that few could have imagined, it is all the more gratifying to be able to report that our customers had a year with an excellent return. Together, our customers had a return of just under NOK 10 billion in 2021.

WE WILL BE NORWAY’S LEADING ADVISOR IN SUSTAINABLE INVESTMENTS The world faces significant sustainability challenges, which create both risk and opportunities for investors. Our job is to help our customers navigate this troubled landscape. But our work with sustainability is not just about what footprint you leave behind as an investor. It is about understanding how to best position yourself for return. It is possible to combine a positive contribution to sustainability and at the same time generate a good return – and this is where we provide the best advice.

The ambition to be Norway’s leading advisor in sustainable investments has been rooted in our overall business strategy for many years. This requires continuous investments and a clear focus in our organisation and is integrated into all four of our core deliveries: investment strategy, manager selection, transactions, and reporting. TECHNOLOGY, PEOPLE, AND CULTURE There is no doubt that in the years to come, we will experience both “different-years” and years unlike other years, or that we must agree with folk singer Øystein Sunde that it was an extra steep year. I am also convinced that we at Grieg Investor have chosen the right strategy for success, no matter what year we enter. Our ambition is to be the best in our class and to be able to give our clients wise, sustainable, and profitable advice. Our dedication over several years to combining technology with skilled employees and a clearly defined internal culture is what will make us succeed. This is not about reaching a goal that will ever be achieved. It is something that must be done every single day, every single year, and by every single one of us. And luckily, it is something we enjoy doing.