LONDON: All eyes are on the multi-billionaire giants of global capitalism as equity markets across the world exhibit advanced psychosis.

Just one trade from Warren Buffett, the legendary oracle of Omaha; George Soros, the hedge fund speculator; or Prince Alwaleed bin Talal bin Abdul Aziz al Saud, the Saudi prince reckoned to be the richest man outside America, is, in the words of the Old Testament prophets, “a sign”.

To understand the market is to follow the prophets, but their power is such that many of their movements are shrouded in secrecy. In the United States, share transaction announcements are delayed for up to six months because they spark mania bordering on anarchy.

But with currency speculation, impact is instantaneous. When on 28 June, Soros said the US dollar could fall 30 per cent by the end of the year, the dollar immediately collapsed to near parity with the euro. Soros’s spokesman refused to say whether the fund operating in his name, Quantum, bet prior on a downward movement, but it’s possible. Mind you, in subsequent weeks the dollar has clawed back losses. For Soros’s sake, let’s hope he “covered his shorts”.

The “giants” wield massive power — but last week one of them blinked. Martin Ebner, one of Switzerland’s wealthiest investors, was forced to sell four quoted investment funds and liquidate parts of his sizeable stakes in several of Switzerland’s best- known blue chips after losing more than US dollars 3.3 billion in the equity melt down.

Ebner cut his exposure to banking giant Credit Suisse and troubled engineering giant, ABB, whose shares dived on the news. Credit Suisse was forced to invest in Ebner’s business in what analysts reckon is a move to protect its own price.

But while Ebner and most ordinary investors suffer, one investment giant is going from strength to strength, feasting on company carcasses, stripping out underpriced assets from distressed companies desperate to sell and creating unstoppable momentum by taking aggressive forward positions on equities.

This year of turmoil is set to yield Buffet one of the best returns in his 37-year career, which has seen him amass a personal fortune of US dollars 50bn, according to US analysts.

Buffett, who turns 72 later this month, is the world’s second-richest man after Bill Gates. But it’s a good bet he will soon overtake the Microsoft founder, whose paper fortune dwindles in the tech stock carnage.

It is market freefall that has provided the window for Berkshire Hathaway (Buffett’s holding company) to thrive. In the last few months BH, where a single share trades at US dollars 78,000, has gone on an astonishing buying spree, snaffling everything from insurance companies, strategic energy pipelines, high-profile clothing firms and in a spectacular u-turn, hi-tech companies. BH has spent billions in the process but the returns will be awesome.

Keith Trauner, senior analyst with Fairholme Capital Management, said: “The world is moving in his direction. The next couple of years should be a bonanza [for him]. Banks have pulled lending. Companies have over-leveraged. They need help. Berkshire Hathaway has a formidable balance sheet. This will be his best ever year.” In recent months, Buffett has raided the Fruit of the Loom clothing company, bought out of bankruptcy for a knockdown US dollars 835 million, two strategic US energy pipelines — one last week from a stricken Enron subsidiary that required a quick sale — three Lloyd’s of London insurance syndicates for more than US dollars 550m, furniture shops, US estate agents, bakeries and, most surprisingly of all, a hi-tech company.

The Sage of Omaha was the man who famously missed out on the dotcom boom. He was written off as an old timer. He only invested in companies and sectors that he understood. Companies such as Coca-Cola, Gillette and American Express, three blue chips where he is the largest shareholder, and General Re, the fifth largest insurance company, which he owns outright.

But Buffett was playing at being a technophobe. He was waiting for the right vehicle to enable him to consolidate the sector. And on 13 July he pounced with US dollars 100m into Level 3 Communications. The figure is relatively small, but it is part of a US dollars 500m fund to buy competitors mopping up extra long-distance phone capacity.

Buffett has the reputation as a sober investor who holds stock for the long term. But this is untrue. He’s gambled. On 4 June, it emerged he bet $60m that the US stock market would fall earlier this year. He won handsomely.

And there’s that theory that he never sells. Wrong. Buffett has in recent years dumped 12 blue-chip stocks including McDonald’s, Citigroup, Gap, Nike and Walt Disney. His timing was masterly. In most cases, he got out before the storm hit.

But it is with insurance that Buffett is set to clean up. BH is the leading insurer against terrorism. Although he took a US dollars 2bn hit in the aftermath of 11 September, terrorism premiums have hardened by 1,000 per cent following the attacks in America — helped by recent Buffett comments that America is in serious danger of experiencing nuclear war. Even spiralling asbestos liabilities, which are hitting insurers, are working to Buffett’s advantage. Last May Buffett said he can buy asbestos-stricken insurers who have settled their liabilities at bargain prices.

While Buffett cleared out of Citigroup, Saudi Arabia’s Prince Alwaleed has invested heavily in it in recent months, becoming the largest single investor in what is the world’s biggest financial group culminating in a $500m bet last month. Citigroup stock has been on a slide but market insiders say if it doesn’t recover the whole financial system will fail.

The prince bet on the long term, having originally sunk significant cash in Citibank 10 years ago, which has sustained other losses in his portfolio.

He is reputed to be based in a Bedouin tent complex surrounded by satellite dishes and illuminated by arc lights in the desert close to Riyadh. From there the widely repeated rumour is that he acts as an investment front for the senior members of the Saudi royal family.

They may be disappointed at some of Prince Alwaleed’s decisions. For instance, the Saudi Royal, 45, is reported to have invested US dollars 2bn in AOL Time Warner; Priceline, the quirky travel agency; and German media group Kirch, all of which have suffered in recent months.

Recently the prince is reported to have said: “We’re getting hurt but I’m a long-term investor.” Some of his ships have come in. The prince was part of a consortium that bought Canary Wharf, the east London office complex, from a banking syndicate. Canary subsequently floated and the prince sold at a 500 per cent mark-up, netting US dollars 125m last year.

London property agents say that he is part of a consortium that is scouring the British capital’s Mayfair and Knightsbridge areas for real estate.

For Soros, things haven’t gone his way. His Quantum fund, which has US dollars 7bn under management, is down 3 per cent in the last quarter, The Observer newspaper in London has been informed.

But Soros’s private equity and real estate businesses, which are worth US dollars 4.5bn, are showing exceptional growth.

Delancey Estates, the property firm he majority owns in the UK, is currently selling assets worth nearly US dollars 471m, which will give him a handsome return. Delancey will go back into the market towards the end of this year when prices are expected to fall.

Soros’s private equity businesses are currently teaming up with Independent News & Media’s Sir Anthony O’Reilly to buy up Australian media assets. Soros and O’Reilly last year bought Eircom, the former Irish state-run phone company, for US dollars 3bn.

Soros is also the largest shareholder in Chinese Hinain Airlines, which recently declared its intention to buy into US airlines. The Chinese Government also said it will allow foreign investors to own up to 49 per cent of its airline, which has seen Soros’s stake increase in value.

Soros has taken hits in the IT sector and in Russian telecoms. He is trying to be less aggressive. But the man who wants to reform the global financial system to prevent people like himself profiting from currency speculation is still at it, albeit not as successfully as before. —Dawn/Guardian News Service.