Norwegian Sovereign Wealth Fund Cuts Israeli Stocks but Increases Investment Value Amid Market Rally

Last year, the Norwegian Sovereign Wealth Fund removed dozens of Israeli companies from its portfolio, citing ethical concerns related to involvement in the occupation of Palestinian territories, the Gaza conflict, and alleged war crimes. This decision followed significant public pressure and political involvement. The fund manages approximately $2.3 trillion in global investments. Since then, it has suspended its ethics committee activities due to fears of backlash from the United States and potential legal challenges over divesting from major tech companies linked to Israel.

The fund's semi-annual report for the first half of 2026, released recently, reveals that despite a sharp reduction in the number of Israeli companies held, from 65 at the end of 2024 to 29 by mid-2026, the total value of its investments in the Israeli market actually increased. As of December 31, 2024, the fund held Israeli stocks worth 22.2 billion Norwegian kroner ($1.95 billion), while by June 30, 2026, the value rose to 23.9 billion kroner ($2.4 billion).

This indicates that the divestments made on ethical and international law grounds were relatively minor compared to the fund's large remaining holdings in Israeli companies such as Teva, ICL, Tower Semiconductor, and Nova. The Israeli stock market outperformed other markets over the past year, boosting the value of the fund's Israeli assets. Companies removed from the portfolio include most major banks (except Discount Bank) due to their financial services to settlements and East Jerusalem, Beit Shemesh Engines (linked to fighter jet engine maintenance), infrastructure firms like Bezeq, and previously Delek.

The report also shows the fund achieved a 9.4% return, mainly driven by sharp gains in Asian markets. It holds 0.05% of SpaceX shares, 1.3% of Nvidia, and 1.2% of Apple. Overall, the fund invests in stocks and bonds of about 7,000 companies worldwide, owning 1.5% of all publicly traded shares globally. Fund CEO Nicolai Tangen attributed the strong results to good returns in equity markets, especially Asian tech stocks.