KUALA LUMPUR: The Norwegian Government Pension Fund Global (GPFG) disposed of its stakes in 23 Asian palm oil companies in 2012, including Kuala Lumpur Kepong and Genting Plantations.
The GPFG, which is the world's largest sovereign wealth fund, was reportedly to have also divested its stake in Astra International, First Resources, Golden Agri, Indofood Agri and Wilmar, according to JP Morgan Asia Pacific Equity Research.
In its research note on Monday, it said the GPFG had divested out of these companies, citing concerns about unsustainable palm oil production.
JP Morgan Research said the divestment was also played up by EU environmentalist groups, describing it as a victory against destructive practices on rainforests.
"GPFG sales appear to be a blanket sell-down of the sector without company specific consideration -- take the opportunity to accumulate good quality names," it said. JP Morgan said however, the environmental groups' accusations were not new for the palm oil sector and the stake sales by GPFG appear to be a blanket divestment across the sector without due consideration to company-specific plantation management practices.
“Notably, many companies in the sector have during the course of the past 2 years been increasing their proportion of RSPO certified plantations.
"Furthermore, it was reported that stakes in the companies mentioned have been divested completely in 2012, indicating that they would be no further overhang on stock prices from stake sale by GPFG from hereon," pointed out JP Morgan Research.
A news report by DPA said rising global share prices helped the Norwegian government's pension fund obtain its second-highest full-year result in 2012. The fund's return was 13.4%, equivalent to a rise of 447bil kroner (US$78.8bil). In 2009, the return was a record 26%.
The GPFG's market value rose 504bil kroner to 3.8 trillion kroner at the end of the year, although a stronger Norwegian krone weighed on the result.
The return on its equity investments was 18.1%, and gained in the second half of the year on moves by the European Central Bank calming concerns for the euro.
Europe accounted for 49% of the fund's equity investments at the year-end. North America's share was 31% and Asia 15%. It also invested in Oceania, Latin America, Africa and the Middle East.