New evaluation of emerging equity and bond markets

1. Background

In a letter dated 20 September 2002, the Ministry of Finance requested Norges Bank to evaluate whether the Government Petroleum Fund should expand the country list to include additional countries. The evaluation should cover both emerging equity and bond markets.

Emerging equity markets are analysed in several of Norges Bank’s submissions to the Ministry of Finance1. On the basis of Norges Bank’s recommendations, the country list for equity investments was expanded to include Brazil, Mexico, Greece, Turkey, Taiwan, South Korea and Thailand with effect from 1 January 2000. With the exception of Thailand, the same countries were included in the benchmark index for the equity portfolio from 1 February 2001. Greece was later reclassified from an emerging market to a developed market. In 2002, six emerging equity markets were thus included in the Fund’s investment universe, and five markets in the benchmark index. These five markets accounted for altogether 1.7% of the strategic benchmark index for equities at the beginning of 2002. The universe of emerging equity marketsis defined as the 29 markets that are included in one of the global indices for emerging markets2.