PARIS — Nicolai Tangen, the CEO of Norges Bank Investment Management, the organization overseeing Norway's $2 trillion sovereign wealth fund, issued a stark warning on Tuesday about the state of European capital markets during an interview on the sidelines of the Euronext Annual Conference here. Tangen, speaking to CNBC's Charlotte Reed, urged European leaders to "get our act together" to unify the continent's fragmented financial systems, emphasizing that "the winner takes it all" in global investment flows.
The fund, known as NBIM, manages revenues from Norway's oil and gas industry, established in the 1990s to safeguard the nation's petroleum wealth for future generations. With investments spanning more than 7,200 companies across 60 countries and stakes in about 1.5% of the world's publicly listed stocks, it stands as the largest sovereign wealth fund globally. NBIM's portfolio extends beyond equities to include fixed income, real estate, and renewable energy infrastructure, currently valued at just over $2 trillion.
Tangen highlighted a dramatic shift in the fund's equity holdings over the past decade, a change he described as "an extraordinary shift." According to NBIM data presented at the conference, European stocks' share of the portfolio dropped from 41% to 21%, while U.S. equities rose from 37% to around 55%. Nearly 40% of NBIM's investments are now in U.S. companies, with top holdings including a 1.3% stake in Nvidia, a 1.2% stake in Apple, and a 1.3% stake in Microsoft.
This rebalancing, Tangen explained, stems from Europe's lag in technology and innovation, particularly in artificial intelligence. "It is because of the U.S. companies' dominant position in AI we do not have strong companies in Europe in that field," he told Reed. The fund's strong performance in 2025, posting an annual profit of 2.36 trillion Norwegian kroner — equivalent to $246.9 billion — was largely driven by the tech sector's resilience, underscoring the disparity between U.S. and European markets.
In his morning speech to the Euronext conference attendees, Tangen positioned NBIM as an investor with significant "skin in the game," noting its European headquarters and ownership of 2.3% of all listed European companies. He posed a rhetorical question to the audience: "Are European capital markets in a crisis?" Answering his own query, he said, "Probably, but in that case, let us not waste a good crisis. We know what needs to be done. And it must be done, otherwise we will lose. We will fall. It is time to act."
Tangen outlined a detailed "wish list" for reform, calling for harmonized financial and corporate legislation across the European Union, a rethink of competition policies to foster innovation, and improvements to the underlying infrastructure — or "fixing the plumbing," as he put it — to enable smoother capital flows. "It's urgent to do this," he stressed in the interview. "We cannot have such a fragmented capital market in Europe. We won't get the liquidity, we won't get the depth of the market." Without consolidation and unified rules to ease cross-border trade, Europe risks falling further behind, he warned.
Tangen's remarks echo broader concerns from market watchers and international officials about the need for a capital markets union in Europe. In January, International Monetary Fund Managing Director Kristalina Georgieva urged European leaders to finalize the capital markets union, complete the energy union, simplify labor mobility across the EU, and boost investments in research and innovation. Regional officers have similarly highlighted the urgency of overhauling the system to compete with the liquidity and valuations attracting investors to U.S. markets.
"People go where the liquidity is highest, where valuations are highest, and so it's really, really important to sort this out," Tangen said, pointing to the magnetic pull of American exchanges. He acknowledged some positive signs in Europe, noting, "I think what Europe can do is, of course, be better at applying AI and there are some signs that, in terms of diffusion of technology, Europe is doing pretty well." Yet, he insisted that bolder action is needed to bridge the gap.
Beyond European market woes, Tangen addressed global uncertainties in the interview, expressing surprise at the relative stability of international capital markets amid escalating geopolitical tensions. The ongoing U.S.-Iran war, which began with U.S. and Israeli strikes on Iran on February 28, has driven oil prices higher, raising fears of an energy shock and renewed inflationary pressures worldwide. The MSCI World Index, tracking mid- and large-cap stocks in developed markets, has declined 3.6% since the conflict started, reflecting heightened volatility.
Despite these pressures, Tangen observed that "markets are remarkably stable" given the circumstances. "We are surprised that they are so stable, and that they have not really reacted so much," he said, adding that NBIM's scenario analyses had anticipated more severe impacts from such threats. When asked about the fund's concerns over elevated oil prices' effects on the global economy and equities, Tangen replied, "Of course worried about this. It's an additional risk, and an additional factor that we have to take into consideration when we look at our various scenarios."
He clarified that NBIM does not predict oil prices but recognizes their inflationary ripple effects, which could weigh on market performance. Tangen's comments align with sentiments from other financial leaders; shortly after the war's onset, Goldman Sachs CEO David Solomon told an Australian conference that he was surprised by the "benign" market reaction "given the magnitude" of the developments.
The Euronext Annual Conference, held in Paris, provided a fitting backdrop for these discussions, drawing policymakers, investors, and executives to address Europe's economic challenges. Tangen's speech and subsequent interview underscore the fund's deep ties to the region, even as its portfolio tilts heavily toward U.S. assets. As Europe's largest single investor in local firms, NBIM's perspective carries weight in pushing for systemic changes.
Looking ahead, Tangen's call to action comes at a pivotal moment for the EU, which has long debated a capital markets union to rival the depth of Wall Street. Progress has been slow, hampered by national interests and regulatory differences, but recent geopolitical strains may accelerate efforts. For Norway, outside the EU but closely linked through trade and investment, the stakes are high; a revitalized European market could help balance NBIM's portfolio and support long-term returns.
Analysts suggest that implementing Tangen's recommendations — from legislative harmonization to innovation-friendly policies — could unlock trillions in capital for European growth. Yet, challenges remain, including political fragmentation and the need for cross-border consensus. As Tangen put it, the continent must act decisively to avoid being sidelined in the global race for investment dominance.
In the broader context of 2026's turbulent markets, NBIM's performance continues to reflect its adaptive strategy. The fund's 2025 gains, fueled by tech heavyweights, highlight the rewards of U.S. exposure, but Tangen's advocacy signals a hope for a more competitive Europe. Whether leaders heed the warning remains to be seen, but with $2 trillion at stake, the pressure is on to deliver reforms that could reshape the continent's financial landscape.