Norway fund to divest more Israeli stocks

Norway's sovereign wealth fund plans further divestments from Israeli firms as it reviews holdings amid the Gaza and West Bank crisis.

Norway Wealth Fund to Sell More Israeli Stocks After Gaza West Bank Review

Norway's $2 trillion NBIM said it expects to divest from more Israeli companies as part of a broader review of its Israeli holdings tied to the Gaza war and humanitarian crisis. The fund has terminated contracts with external asset managers handling Israeli investments and has already sold parts of its portfolio, including a stake of just over 2 percent in Bet Shemesh Engines Ltd, a company that services Israel's armed forces.

NBIM held stakes in 61 Israeli companies as of June 30 and has recently divested stakes in 11 firms. Chief executive Nicolai Tangen said more divestments are likely. The fund began investing in Bet Shemesh in November 2023 through an external manager; NBIM did not name the manager. Tangen said discussions with Bet Shemesh focused on business in the United States and did not raise the Gaza conflict. He admitted NBIM had rated BSEL as a medium risk on ethics, later upgrading it to high risk in May and that oversight should have been tighter earlier. The fund posted a profit of 698 billion Norwegian crowns for the first half of the year, a 5.7% return, driven by stock market gains, especially in the financial sector.

The move shows how a giant state fund weighs ethics against returns. It reveals the difficulty of applying a consistent ethical screen when investments are linked to defense and war related activity. It also exposes gaps in risk framing since Gaza did not come up in prior discussions with Bet Shemesh.

Timing matters. The fund is trying to align its operations with public expectations while still seeking solid returns. How NBIM communicates its criteria and tightens oversight of external managers will signal how it handles future controversies.

Highlights

As the fund weighs ethics against returns, observers will watch for clearer governance and quicker action in future reviews.