Report: Norway's sovereign wealth fund is selling off UK small and mid-cap stocks on a large scale

Norges Bank Investment Management (NBIM), one of the world’s largest sovereign wealth funds, has recently started to sharply reduce its holdings of small and mid-cap stocks listed on the London Stock Exchange. This forms a striking contrast with UK Chancellor Rachel Reeves’ rhetoric on ushering in a “new golden era” for the City of London.

On January 19th, according to Sky News citing sources, this sell-off involves “dozens” of companies. Several asset management firms have received notifications in recent weeks of reductions in NBIM-managed portfolios. The sovereign wealth fund’s scale is about $2 trillion.

This round of reductions comes as the FTSE 100 Index keeps hitting new historic highs. Despite ongoing geopolitical uncertainties, London’s blue-chip stocks remain strong. It is worth noting that NBIM publicly stated last December that it had not reduced its overall allocation to the UK market.

Currently, this round of selling is mainly focused on small and mid-cap companies, with NBIM’s core holdings in large London-listed enterprises unaffected.

A stark contrast with government statements

The timing of this sell-off is rather delicate. On Monday local time, UK Chancellor Reeves just announced reform measures aimed at lowering the costs and barriers of London listings. She said:

"Two years ago, people said the City of London’s best days were behind it. They were wrong. Today, we are taking an important step and I look forward to continuing to work closely with everyone here to keep our capital markets world-leading."

Reeves also declared:

“As the FTSE 100 index keeps reaching new highs and global businesses choose London again, we’re seeing the first signs of a new golden era for the City of London.”

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