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Sun 12 Apr 2009 04:00 AM

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Slumdog Billionaire

Forbes' Billionaire List is the world's most exclusive measure of wealth but the global economic crisis has wreaked havoc on even the world's richest assets.

Slumdog Billionaire
Warren Buffett has lost $25bn this year as profits of his company Berkshire Hathaway fell 50%.
Slumdog Billionaire
HRH Prince Alwaleed bin Talal Alsaud.
Slumdog Billionaire
Anil Ambani.
Slumdog Billionaire
Bill Gates.

Forbes' Billionaire List is the world's most exclusive measure of wealth but the global economic crisis has wreaked havoc on even the world's richest assets.

It is one of the world's most exclusive and elite clubs. Gaining membership or even entry is reserved for only the super rich. Yet despite the exclusivity of the Forbes Billionaire List, this year's listing has become better known as the ‘Great Billionaire Depression' and the biggest reality check for the super rich.

The list, a compilation of the world's billionaires, is a reminder to all that the global crisis has not only wreaked havoc on the ordinary banker and his family but also the bank accounts of the disgustingly wealthy, as stock markets across the world have plummeted, assets have devalued and many firms have gone bankrupt.

According to the US magazine, there are just 793 billionaires in the world, down from 1,125 the previous year. Out of the 373 that dropped off the list, eighteen have died while 355 have lost the crucial bank balance which has literally bought them a place in previous years.

But even those lucky enough to make the list this year haven't been spared from the slump. According to Forbes estimates, collectively the world's wealthiest have lost $2 trillion compared to twelve months ago. Today their average net worth has fallen 23 percent to $3bn. The last time the average was that low was in 2003.

Steve Forbes, editor in chief of the magazine, said "no tears will be shed" by those not wealthy enough to make the exclusive list this year, but said the global impact of their combined losses was significant.

"Billionaires don't have to worry about their next meal, but if their wealth is declining and you're not creating numerous billionaires, it means the rest of the world is not doing very well."

Luisa Kroll, senior editor at the magazine and the person responsible for putting the list together, added that only a few of the super wealthy "had been spared" from the global crisis which has wrecked havoc across the world.

So who was lucky enough to gain entry this year? Securing the top spot as the world's richest man is last year's number two, Microsoft chairman, Bill Gates, with an estimated fortune of $40bn, down from $18bn the previous year. In second place is last year's number one, Warren Buffett valued at $37bn.

According to the US magazine's calculations, Buffett, one the world's most successful investors, has lost $25bn this year as profits in his own company, Berkshire Hathaway, declined 50 percent. Buffett saw his biggest losses in his investments in the financial and insurance sectors which have been hardest hit during the recession.

Mexican Carlos Slim Helu is crowned third richest with an estimated fortune of $35bn, down $25bn from the previous year, followed by Larry Ellison, co-founder and CEO of software firm Oracle. Fifth is Ingvar Kamprad, CEO of Swedish giant, IKEA.

Unsurprisingly, 656 billionaires worldwide lost money this year. Facebook founder, Mark Zuckerberg and the UK's Carphone Warehouse chief executive, Charles Dunstone, both failed to make the list at all this year.

And while Indian industrialist, Anil Ambani has been saved the shame of being knocked off the list entirely, he is now being hailed the biggest loser of 2009. The chairman of the Reliance group of companies and last year's biggest gainer, is thought to have lost around $32bn - or 76 percent of his fortune - as shares in Reliance Communications, Reliance Power and Reliance Capital all declined as the global recession hit the Indian stock market.

"I am not surprised [he has lost so much]", Sanjeev Prasad, co-head of institutional equities at Kotak Institutional Equities, who covers Reliance's equities tells Arabian Insight. "All of the stock prices in India in 2007 had gone up four or five times without any real change in fundamentals. Reliance stocks would be down to less than fifteen to twenty percent of their valuations."

Ambani can rest assured he is not alone, following India's tumbling stock market and the rupee's eighteen percent decline against the dollar, 29 Indian billionaires have lost their place on the list. Prasad says he doesn't expect India's stock market players to be gaining entry to the list any time soon. "Until the time [comes when] people get confident about the financials of the company, and what's happening to the cash which is shown on the balance sheet, I think its going to be a long haul for them."

But India's loss has been China's biggest gain, which with 28 billionaires, is now Asia's top spot for billionaires.

According to Forbes the net worth of billionaires from China has tripled in the last year from $26.6bn to $84.4bn, largely by those working in the construction and manufacturing industries.

With an estimated fortune of $8bn, Yang Huiyan is China's third wealthiest and the richest woman in Asia, despite seeing her fortune lose more than two thirds of its value on the local stock exchange.Unlike most other Chinese billionaires the 26-year-old's fortune is not self-made. In fact Huiyan was little known until her father transferred 70 percent of his shares in his company, Country Garden Holdings into her name just before the firm went public in Hong Kong in 2007.

"Country Garden has not performed well over the last year. The stock price has dropped from its peak price of HKD$14 ($1.81) to now HKD$1.90 ($0.25)," says Christina Ngai, an analyst at Sun Hung Kai in Hong Kong. "[The] current market value of the stock is about HKD$30bn, which is about $3.9bn, so it's not surprising [she's still wealthy]," she added.

Huiyan was groomed by her father, who started the business in 1997, to take over from an early age - according to reports she was already attending important board meetings as a teenager. She now sits on the property development firm's board.

Another to make it to the list is Abu Dhabi's HH Sheikh Mansour bin Zayed Al Nahyan. The son of the late Sheikh Zayed bin Sultan Al Nahyan, the former president of the UAE, was little known outside of the Middle East until he bought a 90 percent stake in the Premier League football team, Manchester City from ex-Thai prime minister, Thaksin Shinawatra.

At the same time Sheikh Mansour closed the deal, the British football team picked up Brazilian superstar Robinho from Real Madrid for a record transfer fee of $59m, proof the Arab businessman meant business.

The following month Sheikh Mansour made headlines again for a different reason when it was announced he had clubbed together with Qatar's sovereign wealth fund and offered a private rescue package of $9.6bn to Barclays after learning of reports that the British bank was refusing to take part in the government's bailout package.

With an estimated personal fortune of $4.9bn, Sheikh Mansour is now the Gulf's newest billionaire, according to the list. He is also the world's second youngest billionaire after Google founders Sergey Brin and Larry Page, both of whom have an estimated fortune of $12bn.

Although Sheikh Mansour, who also chairs the Abu Dhabi International Petroleum Investment Company, is probably not the richest royal, he is the first one to invest his own money under his own name.

Other significant billionaire newcomers include the controversial inclusion of Mexican drug lord Joaquin "El Chapo" Guzman. El Chapo, who heads up the biggest drug cartel into the US, has an estimated fortune of $1bn, and is number 701 on the list. Mexican and Colombian drug traffickers are estimated to have made between $18bn and $39bn in the last year says Forbes, and El Chapo is thought to have made a large chunk of his fortune from these sales as the assumed controller of the Sinaloa cartel.

El Chapo escaped prison in 2001 and is thought to be at large in either Mexico or Central America. Mexican officers blame much of the recent violence in the north of the country on him and there has been a public outcry since his name appeared on the list. President Felipe Calderon accused the magazine of "praising criminals" while the country's attorney general said Forbes is "comparing the deplorable activity of a criminal wanted in Mexico and abroad with that of an honest businessman."

No Forbes list would be complete without Saudi Arabia's HRH Prince Alwaleed bin Talal Alsaud who has appeared on the Billionaire List for the last ten years. Listed at number 22, the chairman of Kingdom Holding Company is still the wealthiest Arab and Muslim, with an estimated fortune of $13.3bn, despite significant losses in many of his core investments.

Kingdom Holding has been Citigroup's largest individual investor since the early 1990s after the bank's then-chief executive sold $590m of convertible preferred stock to the prince. According to Bloomberg data, Citigroup has declined 77 percent in New York trading so far this year. Kingdom Holding released a statement shortly after the Forbes list saying its diversified portfolio would stand it in good stead during the economic downturn.

"The prince's investments are not focused in one field and instead cover all aspects of life," said the statement. "His [Prince Alwaleed] successful strategy in long-term investment has also paid off handsomely."

Other listed Arabs include Abdullah Al-Ghurair, the president of the UAE's largest independent bank, Mashreq with an estimated fortune of $23.8bn.

But not everyone has lost money. American hedge fund manager, John Paulson is bucking the trend. The 53-year-old made $3bn by betting that the US mortgage market would collapse. Investments so far this year include the $1.3bn he paid for South African mining firm, AngloGold Ashanti.

The list is not all doom and gloom.

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