Hi Tomato,
NEW YORK (AP) - Sometimes you win. Sometimes you lose. And this time, speculator George Soros, regarded by some as almost invincible in gauging financial trends, lost big.
Soros Fund Management, founded by the well-known currency trader, suffered its heaviest one-day loss - $2 billion - when markets plummeted on Monday, a spokesman said Friday.
Half the losses were suffered by the Quantum Fund, the flagship of a group of seven investment funds under the banner of the Quantum Group of Funds. The Quantum Fund had nearly $10 billion in assets under management before the market drop.
''The recent volatility in the world's financial markets is reflected in the volatility of the Quantum Group's performance,'' said Soros Fund spokesman Shawn Pattison.
The hedge funds were apparently battered not only by the frantic selloff in stock markets worldwide, but also by the decline in the value of the dollar, which was hurt by Wall Street's plunge.
Despite the losses, Soros, who in recent years has turned his attention to philanthropy, apparently has no plans to pull back on his efforts to promote democracy in Russia and other countries. He recently promised as much as $500 million more in philanthropic aid for Russia, which would make him a bigger donor there than the U.S. government.
''Recent volatility in the financial markets will not affect Mr. Soros' planned charitable contributions in Russia or elsewhere,'' said Michael Vachon, spokesman for Soros' Open Society Institute in New York.
The market downturn also will not affect media mogul Ted Turner's promise to donate $1 billion to U.N. charities over the next decade, said a spokeswoman in Atlanta. Turner made the pledge based on the increased value of his Time Warner Inc. stock, which is down less than 2 percent this week.
Soros' personal fortune, estimated at some $5 billion, likely took a hit as well since some of his assets are tied up with the funds. His compensation, as is typical with hedge funds, depends on the funds' annual performance.
The Soros funds, despite Monday's drop averaging 8.57 percent, are up 17.7 percent, on average, for the year, Pattison said.
Another well-known trading firm, Niederhoffer Investments Inc., also was shaken - and apparently wiped out - by the stock market rout. Niederhoffer had taken options on the Chicago Mercantile Exchange's S&P 500 futures index and was unable to meet its obligations at the close of trading Monday, the Weston, Conn., company said earlier this week.
The Quantum Group of Funds, with nearly $19 billion in assets under management, are high-risk hedge funds. The investment funds bet on stocks, bonds, currencies and commodities worldwide with borrowed money.
The Quantum funds, based in Curacao in the Netherlands Antilles, are not open to U.S. residents since they are not registered with the Securities and Exchange Commission, the federal regulatory agency. Soros Fund Management LLC, based in New York, is their principal investment adviser.
In an interview with The Wall Street Journal, Stanley Druckenmiller, the funds' chief investment strategist, said the firm had recovered little, if any, of Monday's losses in the following days, when markets recovered somewhat.
''To me, these are the kinds of fluctuations that we have to deal with, for a fund our size, in highly volatile markets,'' he told the Journal in Friday's editions.
In addition to the Quantum Fund, others suffering losses were the $3.5 billion Quota Fund, which slipped 10 percent, and the $3 billion Quantum Emerging Growth Fund, off 7.1 percent. Despite the declines, both are up more than 30 percent this year, Pattison said.
The Soros funds also were pummeled in the 1987 stock market crash. The Quantum Fund, then about $2 billion in size, plunged 30 percent.
But it was Soros' $1 billion gain in 1992 that brought him international attention, when he correctly bet against the British pound.
Last summer he was attacked by Malaysian Prime Minister Mahathir Mohamed as the cause of Southeast Asia's currency turmoil, which began with the devaluation of the Thai currency, the baht. Mahathir has contended Soros and others wanted to enrich themselves and keep developing nations weak.
Soros, in response, has called Mahathir ''a menace to his country'' who was covering up his own failures in managing the Malaysian economy.
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LONDON, Nov 1 (Reuters) - International financier George Soros said on Saturday he believed the recent turbulence on the world's financial markets was over and called for international cooperation to head off further storms.
In an interview with BBC radio, Soros disclosed that he had lost about one billion dollars during the market mayhem, giving back the profits he famously made when he successfully bet in September 1992 that Britain would be forced out of the European Exchange Rate Mechanism (ERM).
Hungarian-born Soros also waded into the debate raging in Britain over whether to join the European Union's planned single currency, the Euro, saying it would have no choice but to sign up.
''In the long run Britain must be part of it. It would really suffer from being out of it,'' Soros said.
He said the single currency, due to be launched in 1999, would not prevent upheavals outside the bloc but it would give member countries a greater degree of stability within it.
''At least it would avoid storms in the currency market inside Europe,'' Soros said.
He noted that the ERM, the forerunner of the Euro, had already shielded European currencies -- though not its stock markets -- to great effect this week.
''But there are problems about Britain joining (the Euro) because the British economy does dance to a different tune from the continental currencies.''
Soros said the recent turmoil, which started with attacks on Southeast Asian currencies but quickly engulfed markets from Russia to Brazil, showed the need for central banks and regulators to band together to rein in speculators.
''I think we should really consider what needs to be done...you now have a global economy which is characterised by tremendous financial transfers and you don't have any international authorities dealing with supervision or being lenders of last resort,'' he said.
Britain, for example, could do nothing by itself to shelter from the storm. ''That is outside the control of the British government. The British government can cooperate with other governments in making the system more secure. That has to be done on the international level, '' he said.
Asked whether he was saying the world should be protected from people like himself, Soros said, ''If you take me as the personification of the market, then I would agree with you.
''The markets need to be kept under some better control. You also need a market, so let's say outlawing me would do more damage than it would do good. But to change some of the rules by which we play -- that's perfectly legitimate, and I am pushing that this should be considered.''
Soros said he did not like to make market predictions because he might be wrong. ''But I would think that this particular storm, near term, has passed.''
Reminded that he was best remembered in Britain for making one billion dollars when Britain was kicked out of the ERM, Soros was asked whether he had lost that much this week.
''Oh, I think I've happened to lose more than that probably -- or about the same this week. So people can feel that there is divine justice after all,'' he said.
GOLDIGER. |
