The Wall Street Journal Asia, Friday-Sunday, April 8 - 10, 2011

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ECB raises interest rates; first since ’08

New earthquake rattles a nervous Japan

BY BRIAN BLACKSTONE

A Japanese rescue team listened for news early Friday after northeastern Japan was rocked by a temblor that caused widespread power outages. Nuclear-power plants in the region were running on emergency power, and reported no major damage. Page 4

DUBAI—Thailand’s ousted Prime Minister Thaksin Shinawatra emerged from months of silence in his self-imposed exile Thursday to say he intends to play a key role in running from afar his country’s economic policies if Thailand’s main opposition party wins coming elections. His immediate goals include slashing corporate-tax rates and pushing for an amnesty for everybody charged with politically linked offenses in the tumultuous fourplus years since a military coup in Bangkok swept him from power. “This conflict has been going on for five years and many people have suffered mentally and physically,” Mr. Thaksin told The Wall Street Journal in an interview in a

villa in Dubai. “We should start all over again to help the country prosper.” The 61-year-old former telecommunications mogul, who fled the country in 2008 before being convicted of corruption in a case he says was politically motivated, remains a polarizing figure in Thailand. His political opponents in power in Southeast Asia’s second-biggest economy, contend he will stop at nothing to reassert control over a country he once dominated after winning landslide popular elections in 2001 and 2005. Mr. Thaksin has kept a low profile since the violent collapse of antigovernment protests in Bangkok last spring. Tens of thousands of people flocked to the Thai capital from around the country to protest what they said is a rigged political system that

Agence France-Presse/Getty Images

Thaksin seeks role after Thai vote BY JAMES HOOKWAY

Thaksin Shinawatra places power in the hands of Thailand’s conservative, royalist establishment at the expense of a large number of the country’s voters. Dressed in their distinctive red shirts, many of the demonstrators were enthusiastic

S&P/ASX 200 4908.13 g 0.10%

Friday - Sunday, April 8 - 10, 2011

ASIA

(India facsimile Vol. 2 No. 215)

Associated Press

SK. MENPEN R.I. NO: 01/SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998

Australia: A$6.00(Incl GST), Brunei: B$7.00, China: RMB25.00, Hong Kong: HK$18.00, India: Rs25.00, Indonesia: Rp18,000(Incl PPN), Japan: Yen500(Incl JCT), Korea: Won2,500,

MICA (P) NO. 164/10/2010

Malaysia: RM6.00, Pakistan: Rs140.00, Philippines: Peso80.00, Singapore: S$4.00(Incl GST), Sri Lanka: Slrs180(Incl VAT), Taiwan: NT$60.00, Thailand: Baht50.00, Vietnam: US$2.50

KKDN PP 9315/10/2011 (026992)

VO L . X X X V N O. 1 5 4

Nikkei 225 9590.93 À 0.07% Shanghai Comp. 3007.91 À 1.36% Hang Seng 24281.80 g 0.01%

backers of Mr. Thaksin, and he urged them on from overseas after a Thai court confiscated $1.4 billion of his assets, ruling they were corruptly earned—a charge Mr. Thaksin denies. A total of 91 people were killed in clashes between security forces and protesters. The running street battles culminated in a series of arson attacks on shopping malls and the country’s stock exchange on May 19. Mr. Thaksin and several other Red Shirt leaders later denied charges of terrorism amid widespread reports that he helped to incite the unrest. Now, Mr. Thaksin says he is reinvigorated by the wave of uprisings sweeping the Middle East and North Africa, and buoyed by the prospect of new elections that could be Please turn to page 14

FRANKFURT—The European Central Bank raised interest rates for the first time in nearly three years Thursday, but sought to reassure investors that it won’t embark on a rapid-fire series of increases that could disrupt fragile economies in parts of the euro bloc. Despite those assurances, many analysts expect more increases to follow in increments of about once every quarter into 2012, amid steadily rising inflation. That would leave the ECB well ahead of its counterparts at the Federal Reserve, Bank of England and Bank of Japan, which could push the euro higher against other major currencies, weighing on European exporters. It is a tricky balance for the ECB’s longtime president, Jean-Claude Trichet, who appears to be betting that a strict anti-inflation message will more than offset further damage to the bloc’s rate-sen-

Separate ways Key interest rates 6%

European Central Bank

5 4

Bank of England

3

U.S. Fed

2 1 0

'05 '06 '07 '08 '09 '10

Source: WSJ Market Data Group

sitive periphery, where a debt crisis this week claimed a third victim, Portugal. “We did not decide today that it was the first of a series,” Mr. Trichet said at a news conference after the ECB’s monthly meeting, in which members voted unanimously to raise the ECB’s Please turn to page 14

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Trade in any HP Superdome for 50% off the list purchase price of a Sun M8000/M9000 server. Offer expires 5/31/11. More details at oracle.com/goto/CashForClunkers Copyright © 2011, Oracle and/or its affiliates. All rights reserved.

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THE WALL STREET JOURNAL.

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Friday - Sunday, April 8 - 10, 2011

PAGE TWO

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What’s News—

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Inside

Business & Finance n The Bank of Japan announced steps to get funds to the country’s earthquake-ravaged areas, but remained opposed to buying bonds directly from the government to assist reconstruction. 5 n Hong Kong IPO activity is picking up after a slow start to the year. More than a dozen are in the pipeline for the second quarter. 15

World News: Activist is on hunger strike to protest corruption. 6

n Citigroup is battling with allegations an employee in Indonesia embezzled millions of dollars from customers. A lawmaker called for penalties against the bank. 15 n Rio Tinto, closing in on a majority stake in Riversdale, took three seats on its takeover target’s board ahead of a detailed review of its assets. 16 n Japanese retailer Seven & i projected fiscal-year earnings will drop 22%, and FamilyMart, as much as 45%, in the aftermath of the earthquake. 17 n U.S. chain stores reported stronger-than-expected March sales, despite the Easter holiday falling late this year. The 25 retailers tracked logged a 1.7% gain. 17

Tobacco: Australian draft laws ban logos on packaging. 3

n Australian jobs growth surged in March, pushing the Aussie dollar to a fresh postfloat high of US$1.0481 and suggesting a rate increase could be closer than thought. 8 n Goldman Sachs is taking full ownership of its Australian venture, by buying the 55% stake it doesn’t already own. 16 n Portugal will need as much as $129 billion under a bailout package from the EU and the IMF. 12 n H-P sued a former sales executive, alleging that he stole trade secrets from the company before joining rival Oracle. 17

Reuters

n China’s push for more public housing is likely to draw resistance from builders. 8

French forces during a helicopter-borne mission Thursday rescued Japan’s ambassador to Ivory Coast and seven of his colleagues after the envoy's home was taken over by armed mercenaries in the embattled West African nation. Above, forces loyal to Ivory Coast presidential claimant Alassane Ouattara ride on a pickup truck in Abidjan. n Dell plans to invest $1 billion this year to build data centers and move deeper into the business of offering so-called cloud-computing services. 19

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World-Wide n Japan is looking into extending the evacuation zone around the quake-damaged Fukushima Daiichi power plant, amid radiation concerns. 4

n Libyan rebels said a NATO airstrike misfired and hit opposition forces. 13

courthouse in support of another dissident who was being tried.

n Health experts renewed their warnings about the spread of a new form of superbug that gives bacteria the power to resist virtually all known antibiotics. 7

n A heavily armed former student went on a shooting rampage at an elementary school in Rio de Janiero, killing at least 11 people and wounding 18 before killing himself with the gun, police said.

n Vietnam detained two prominent pro-democracy activists, Pham Hong Son and Le Quoc Quan, who appeared outside a

n Uganda has bought at least eight fighter jets and other military hardware valued at $744 million from Russia.

Sports: LeBron James is in a deal for stake in Liverpool club. 18

ONLINE TODAY Most read in Asia

1. Buffett’s Policies Went Unheeded 2. The Sleepless Elite 3. Japan to Head Off Hydrogen Blast 4. Japan Hopes School Will Help Kids Heal

Wealth

The Juggle

blogs.wsj.com/in-charge

A new study of the world’s millionaires shows India leads the world in planned spending on yachts and private jets.

Google seems to have prompted a brief spike in the sales for some mom-and-pop ice-cream shops. Blogger Sarah E. Needleman asks, ‘Can Google influence consumer behavior?’

Most emailed in Asia 1. Few India Graduates Are Fit to Hire 2. The Sleepless Elite 3. Do You Get an ‘A’ in Personality? 4. Tour de Pakistan Is a Tough Ride

In Charge

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Having babies changes parents’ perceptions of opportunities to advance. blogs.wsj.com/juggle

Heard on the Street: It’s no time for Europe to get complacent. 28 THE WALL STREET JOURNAL ASIA Dow Jones Publishing Company (Asia) 25/F, Central Plaza, 18 Harbour Road, Hong Kong Tel 852-2573 7121 Fax 852-2834 5291 www.wsj-asia.com SUBSCRIPTIONS and Address Changes, please telephone our local customer service hotline, Hong Kong/Taiwan: 852-2831 2555; Beijing: 86-10 6581 4090; Shanghai: 86-21 5836 8228; Indonesia: 62-21 527 7592; Japan: 81-3 6269-2760; Korea: 82-2 756 1695; Malaysia: 60-3 2026 4061; Philippines: 63-2 848 5873; Singapore: 65-6415 4000; Thailand: 66-2 690 4222 to 7; India: 91-11 6462 0215. Or email: [email protected] ADVERTISING SALES worldwide through Dow Jones International. Hong Kong: 852-2831 2504; Singapore: 65-6415 4300; Tokyo: 81-3 6269-2701; Frankfurt: 49 69 29725390; London: 44 207 842 9600; Paris: 33 1 40 17 17 01; New York: 1-212 659 2176. Or email: [email protected] Trademarks appearing herein are used under license from Dow Jones & Company. USPS 337-350ISSN 0377-9920

Friday - Sunday, April 8 - 10, 2011

THE WALL STREET JOURNAL.

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WORLD NEWS

Australia plans tobacco crackdown SYDNEY—Australia on Thursday unveiled draft laws banning logos and branding from tobacco packaging, the first government in the world to take such a stance, likely setting lawmakers up for a pitched battle with cigarette makers. Under the proposed laws, logos, branding, colors and promotional text will be restricted on packets. Product names will appear in standard colors and positions in a regular font and size on packets colored a dark olive/brown, which government research has found holds the lowest appeal to smokers. Health warnings with graphic images of the harmful effects of smoking will have to make up 75% of the front of the packaging and 90% of the back. “I expect Big Tobacco to fight these steps tooth and nail. They know that if Australia is the first, we will not be the last,” said Health Minister Nicola Roxon. “This plain packaging legislation is a world first and sends a clear message that the glamour is gone. Cigarette packs will now only show the death and disease that can come from smoking,” she said. British American Tobacco PLC—the world’s second-biggest tobacco group by revenue, after China National Tobacco Corp., and the biggest cigarette seller in Australia— said it intends to fight the measures, saying the laws would rob it of intellectual property rights val-

Associated Press

BY ENDA CURRAN

Proposed cigarette packaging would be stripped of logos and would be dominated by large and graphic health warnings. ued at billions of dollars and that they would breach international trademark laws. “It’s going to end up in the courts,” BAT spokesman Scott McIntyre said. BAT also says plain packaging would open the cigarette market to counterfeit producers, something the government says will be offset by new features designed to thwart counterfeiting. BAT this year reported higher full-year profit on the back of growing demand from emerging countries, even while volumes decline as the global economy stutters. The company’s Australian brands include some of the country’s most popular: Winfield, Dunhill and Benson &

Hedges. Rivals in Australia include Philip Morris International Inc. and Imperial Tobacco Group PLC’s local unit. A spokesman for Philip Morris said the company will oppose the government’s move “in every way possible.” “Plain packaging not only constitutes an expropriation of our valuable trademarks, but would be a pure and simple confiscation of the core of our business,” the company said in a statement. Imperial Tobacco said it, too, will “robustly” fight the claims and said sales of counterfeit tobacco will soar if the new rules are implemented. “Organized crime will con-

tinue to strengthen its footprint in Australia because importing and selling counterfeits of plain packaged legitimate Australian brands will be easier than in any other market in the world,” the company said. Retailers are also set to oppose the measure. The Australian Retailers Association said costs would increase as store fittings are altered and the laws could spark “retail rage” at checkouts as increased transaction times anger consumers. “Plain packaging is likely to significantly increase the time taken to complete a transaction, including the sale of tobacco product,” Russell Zimmerman, the ARA’s executive director, said in a statement.

SGX defends bid for ASX to panel BY SAM HOLMES AND ENDA CURRAN SINGAPORE—Singapore Exchange Ltd. said Thursday it had provided information to Australia’s foreign investment regulator on its proposed merger with ASX Ltd., the operator of the Australian stock exchange, but that it hadn’t changed the terms of its offer. The submission to Australia’s Foreign Investment Review Board comes amid expectations that the fate of the proposed 8.4 billion Australian dollar (US$8.77 billion) merger could be known within a few days. Australian Treasurer Wayne Swan said Thursday that he would carefully consider the response and “will make a public statement as soon as possible.” SGX’s plan to merge with its Australian counterpart was dealt a blow Tuesday when Mr. Swan said the board had “serious concerns” about the proposed transaction, saying it wouldn’t be in Australia’s national interest. “In response to the [Foreign Investment Review Board’s] invitation to provide further comments, and following discussions with the FIRB, SGX has today provided further written responses to the FIRB in connection to the ASX-SGX merger proposal,” SGX said. “SGX has not amended the terms of the proposed merger.” While SGX didn’t disclose the details of its comments to the board, it said both the Singapore and Austra-

lian exchanges maintain the belief “that the merger proposal would result in significant benefits for Australia and Singapore, market users and the shareholders of SGX and ASX.” Investment in Australia from overseas is reviewed by the Treasury department’s FIRB, but the final decision lies with the treasurer. The swift regulatory response on the ASX-SGX bid came within the statutory 30-day consultation period, raising concerns over political interference. Because the transaction also requires parliamentary approval, stiff opposition from some key lawmakers means the ruling Labor government, which has a slim majority, would face an uphill battle if it sanctioned the deal. SGX Chief Executive Magnus Bocker said Tuesday his group won’t make any decision on the offer until the treasurer has made his final call. SGX’s October bid to acquire all of ASX would create the world’s fifth-largest listed exchange operator. It is among the boldest steps toward exchange consolidation in Asia, which lags behind Europe and the U.S. in terms of regional tie-ups. Separately Thursday, Singapore state-investment firm Temasek Holdings, which indirectly holds a 23.5% stake in SGX through specialpurpose entity SEL Holdings, said it played no part in SGX’s decision to bid for ASX, as the stake contains no voting rights.

Chronomat 01

WW W. B R WWW. RE E I T L I N G. G . C OM OM

If passed, the new laws would take effect Jan. 1, with all packaging expected to comply with the regulations within six months. According to government figures, 15,000 Australians die annually from smoking, while tobacco-related illness costs society 31.5 billion Australian dollars (US$32.9 billion) annually. Shadow health minister and Liberal Party lawmaker Peter Dutton said his party has yet to formulate a stance on the policy but wants to see the government’s research on why plain packaging is deemed an effective method to reduce smoking habits. His remarks hint the government may need to compromise on the new rules if they are to pass through Parliament. Australia’s plan is in line with moves by other governments around the world. In the U.K., the Conservative-led government plans to ban tobacco products from being openly displayed in shops, while the U.S. Justice Department in February said tobacco companies should say in product warnings that they deceived the public about the dangers of smoking and manipulated their products to increase addiction. Health experts in China have also warned of tobacco-related illnesses. China is the world’s biggest consumer of tobacco. The World Health Organization, which backs the plain-packaging measures, estimates five million people die annually from diseases linked to tobacco, a figure expected to climb to nine million by 2030.

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THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

DISASTER IN JAPAN

New earthquake rattles northeast Power outages reported at nuclear-power plants but no serious damage seen after temblor hits devastated coast BY PHRED DVORAK TOKYO—Northeastern Japan was rocked Thursday night by its biggest earthquake since March 11, causing widespread power outages through the north, shaking buildings in Tokyo and putting the country on alert for the safety of its nuclearpower plants. But early reports showed little damage from the magnitude 7.1 quake, which hit at 11:32 p.m. off the coast of Miyagi prefecture—close to the epicenter of last month’s magnitude-9 quake. A tsunami evacuation warning was lifted about an hour after the quake, without any major waves being reported. The country’s nuclear regulator said that none of the plants in the affected areas were reporting operating problems—including the troubled Fukushima Daiichi nuclear

complex—though several were affected by widespread power outages in northern Japan. The operators of two nuclear-power plants in the northern prefecture of Aomori said they were running on emergency diesel power after the quake knocked out external power. The quake cut off two of three power sources at the Onagawa nuclear plant in Miyagi, but the plant operator was feeding power from a third source that hadn’t been affected. Thursday’s quake raised fears in a country still staggering from the effects of the March 11 temblor and tsunami, which destroyed coastal areas and precipitated a nuclear crisis when reactors started overheating at the Fukushima Daiichi plant. In the wee hours of Friday, Fukushima Daiichi managers pulled several workers from the coast further inland, and sent others to check the

status of its reactors. Plant operator Tokyo Electric Power Co. said that it was still pumping water into reactors 1, 2 and 3, where it has been struggling to keep fuel cores cool. Tepco also said it was continuing to pump nitrogen into the containment vessel surrounding the cores of reactor No. 1, an operation it had started to prevent a buildup of explosive hydrogen inside the reactor. Tepco also said that the level of radioactive water in Fukushima Daiichi’s trenches hadn’t changed. The company said there were 383 employees at the plant at the time. The earthquake rattled buildings in Kitakami, an inland city in the northern prefecture of Iwate. After shaking violently for about a minute, electricity was knocked out throughout this city of 100,000. The damage in the downtown in

RUSSIA Earthquake’s epicenter CHINA N. KOREA S. KOREA 500 miles

Tokyo

JA PA N Pacific O ce a n

500 km

Kitakami area was relatively minor. A rooftop water tank tipped over and created a cascade of water onto the sidewalk. Pieces of cement fell from a sidewalk overhang onto the

street below. Guests at a local hotel packed up their belongings in suitcases and stampeded down the emergency stairs. People from the surrounding buildings spilled out into the streets, trying to survey the damage in complete darkness. “I learned from last time,” said Tetsuo Kimura, a 44-year-old salesman clutching his rolling suitcase outside a business hotel in Kitakami. “That felt bigger than the earthquake from last month.” Power companies reported much of the electricity was out in the prefectures of Aomori, Iwate and Akita and in some areas of Miyagi and Yamagata—all in northern and northeastern Japan. But there have still been few reports of injuries or damage from the quake. —Daisuke Wakabayashi, William Sposato and Kosaku Narioka contributed to this article.

Japan considers enlarging evacuation area BY TOKO SEKIGUCHI AND MITSURU OBE TOKYO—Japan’s government said Thursday it is considering extending the evacuation zone around its hobbled Fukushima Daiichi nuclear complex, as the government requantifies the risks of radioactivity that continues to issue from the plant four weeks after Japan’s devastating earthquake and tsunami. Later on Thursday, Japan suffered its strongest tremors since the March 11 quake, highlighting the ongoing uncertainty over the situation at the complex—both over its shortterm stability and the long-term impact of low but persistent levels of radiation to the health of those living nearby. The government’s top spokesman, Chief Cabinet Secretary Yukio Edano, said Thursday the current 20-kilometer (12-mile) evacuation zone around the Fukushima Daiichi nuclear-power plant may need to be enlarged because the original parameters were established in relation to short-term exposure. “Current evacuation orders apply to areas where people are in danger of having received 50 millisieverts [of cumulative exposure]. We are now looking into what to do with other areas where, with prolonged exposure, people may receive that amount,” Mr. Edano said. A 50-millisievert amount represents the exposure limit for a nuclear-plant worker for a full year. The government hasn’t yet outlined any safety limits in terms of time and measure, and said it hasn’t set a timetable for such a decision. The discussion is likely to renew international scrutiny of the government’s 20-kilometer zone, which is smaller than 80-kilometer zone recommended by U.S. officials. Several municipal officials in the area have reacted angrily to the government’s handling of the situation. The mayor of one town just outside the 30-kilometer radius said the government should have thought ahead earlier in the crisis. “We are hearing that it may take months for the plant to settle down—and only now are they talking about expanding the zone?” said Michio Furukawa, mayor of Kawa-

Watching the zone Radiation readings, in microsieverts per hour, taken at four locations around the Fukushima Daiichi nuclear complex on Thursday at 8 a.m.

JA PA N Area of detail

Note: Background radiation a person would typically be exposed to: 0.035 microsieverts per hour

Tokyo

*Kawauchi reading taken at 5 p.m. Wednesday Souces: Fukushima prefecture

MIYAGI YAMAGATA Pacific Ocean

Iitate

Tamura

FUKUSHIMA

6.1

Minamisoma

0.4

0.7

DAIICHI

Kawauchi

0.4*

Japan evacuation zone

TOCHIGI

mata, a town northwest of the plant that has seen elevated radiation levels and is one of seven municipalities from which sales of local produce have been banned. “When this will all end?” Last week, the government reported that just a handful of people have remained inside the 20-kilometer exclusion zone. It said thousands remain in the band 20 to 30 kilometers from the plant, where the government has urged residents to remain indoors as much as possible. It said others travel into the band daily to check on people and prop-

U.S. evacuation zone

erty. Senior nuclear regulator Hidehiko Nishiyama apologized for the possible further dislocation to those living in the area. He identified a series of hydrogen explosions at the plant days after the earthquake as the primary cause of the widespread radiation. “The explosions sent radioactive materials flying to areas far outside the nuclear complex,” Mr. Nishiyama, of Japan’s Nuclear and Industrial Safety Agency, said at a news conference. “Radioactive materials, once spread, cannot be put

back. The best we can do is to stabilize the damaged reactors and prevent further emissions of radiation.” In the early hours Friday, following Japan’s 7.1 magnitude quake, NISA said the Fukushima Daiichi plant hadn’t reported immediate problems but that it was sending workers to check on the status of its reactors. In an effort to head off further hydrogen explosions, the plant operator, Tokyo Electric Power Co., early Thursday began streaming nitrogen gas into reactor No. 1, one of the less damaged of the three crippled units. Tepco said these operations continued Friday morning. Reactor No. 1’s pressure and containment vessels are seen to have come out relatively unscathed by the overheating of the reactor core following the failure of the cooling system on March 11. However, as the fuel cooled down and more steam condensed into water, fears grew that the pressure inside the containment vessel would fall sharply, allowing air to come in and create a dangerous mix of hydrogen and oxygen. Nitrogen injection is designed to forestall the entry of oxygen. “The injection of gas is proceeding smoothly,” a Tepco company official said at a briefing. The process began around 1 a.m. local time Thursday and will continue for about six days, he said, adding that the measure was having the desired effect of slightly raising the pressure within the container vessel. Tepco also said that its president, Masataka Shimizu, had returned to work after being hospitalized for more than a week as his company was blamed for power outages and radioactive contamination that swept eastern Japan. Mr. Shimizu will assume the role leading a joint task force with the government to support evacuees, allowing Chairman Tsunehisa Katsumata to continue his role of overseeing the company’s effort to bring the plant under control, according to Tepco spokesman Naoyuki Matsumoto. The other two heavily damaged units—reactors Nos. 2 and 3—stayed in a relatively stable condition

Thursday, as workers continued to pump cold water to cool the reactor cores. The situation isn’t sustainable, however. Irradiated water that overflows from the massive water injection has forced operators to reduce the water they pump in, in turn causing the reactors to heat, said Tadashi Narabayashi, a professor at Hokkaido University and an expert in reactor engineering. “Unless a cooling system is restored, in which water is recirculated within the system, the reactors cannot be stabilized on a sustained basis,” he said. Meanwhile, Mr. Edano denied a claim by a U.S. lawmaker that part of the No. 2 reactor core at the plant had melted through its pressure vessel. “I am not sure what the reasoning behind the lawmaker’s statement was,” he said. “The unfortunate situation [at reactor No. 2], which continues unchanged, is that the fuel rods are partially exposed, and we are doing all that we can to reduce the risks created by this situation and to address the problem.” On Wednesday, Rep. Ed Markey, a Massachusetts Democrat and a critic of nuclear power, said the U.S. Nuclear Regulatory Commission had informed him “the core of unit two has gotten so hot that part of it has probably melted through the reactor pressure vessel.” Later Wednesday, an NRC official disputed Mr. Markey’s remarks, saying that while there was significant fuel damage in all three reactors, “we don’t believe at this point in time that the core has left the vessel.” The recovery efforts have received some support from the British government, which said it was easing its travel restrictions to Tokyo based on its scientific analysis of the current situation. “Although the situation at Fukushima will remain of concern for some time, the risks are gradually declining as the reactors cool and as facilities to stabilise them are established,” the government’s Foreign and Commonwealth Office said on its website.
Nissan navigates quake damage, supply gaps................................................ 15

Friday - Sunday, April 8 - 10, 2011

THE WALL STREET JOURNAL.

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DISASTER IN JAPAN

BOJ moves to get funds to rebuild BY MEGUMI FUJIKAWA AND TATSUO ITO TOKYO—The Bank of Japan announced steps Thursday to get funds to the country’s earthquakeravaged areas, but remained opposed to buying bonds directly from the government to assist reconstruction. Separately, analysts said the central bank appeared to purchase ¥100 billion ($1.17 billion) in corporate bonds of troubled Tokyo Electric Power Co. at an auction Wednesday. The BOJ wouldn’t confirm the purchase, but analysts cited a spike in the auction’s average yield—to 1.277% from 0.138% in February—as an indication the bank bought Tepco bonds, which have plunged in value since the crisis at its Fukushima Daiichi nuclear power plant. The central bank voted unanimously to keep its overnight interest-rate target at 0.0%-0.1%, as expected. But it cut its economic assessment, given expectations that the impact of the March 11 earthquake and tsunami and subsequent nuclear crisis will be widespread. “Japan’s economy is under strong downward pressure, mainly on the production side,” the bank said in the statement. “The earthquake has sharply dampened production in some areas by damaging production facilities, disrupting the supply chain and restricting electric

power supply; exports and domestic private demand have been affected accordingly.” Ending a two-day meeting, the BOJ said it will offer ¥1 trillion in one-year loans at 0.1% to financial firms with branches in affected areas, to facilitate a smooth flow of cash to the quake-hit northeast. The central bank will also consider broadening the range of financial assets it accepts as collateral in a bid to secure “sufficient financing capacity of financial institutions in disaster areas.” Gov. Masaaki Shirakawa said he hopes to start the special lending facility next month. Details of the two measures will be decided by the next monetary policy board meeting, on April 28, when the BOJ will also release its semiannual outlook on the economy and prices. Days after the quake, the BOJ doubled its asset-purchase program to ¥10 trillion to bolster sentiment in the world’s third-largest economy. It has also been aggressively providing liquidity into the money market to meet any surge in funding demand. Analysts said Wednesday’s apparent purchase of ¥100 billion in Tepco corporate bonds—the maximum amount of debt in a single company that the central bank allows itself to buy under its own program—was still small compared with an outstanding balance of

Reactor reaction Annual cost of insuring ¥100 million of Tepco debt for five years ¥4 million 3 2 1 0 March

April

Source: Markit

around ¥5 trillion in Tepco corporate debt, most of which is held by Japanese institutional investors. Before the quake, Tepco bonds were considered a virtual derivative of Japanese government bonds, being as the company had a solid revenue stream as the utility for the entire Tokyo area. The central bank chief on Thursday reiterated the BOJ’s opposition to underwriting Japanese government bonds, in the face of suggestions that the bank could buy reconstruction bonds straight from the government. “I believe it is extremely important to maintain trust in the cur-

rency, both internationally and domestically,” especially given the huge impact of the earthquake and Japan’s severe fiscal condition, Mr. Shirakawa told a news conference. He said direct bond purchases could push up long-term interest rates, which in turn would increase the cost of bond issuance. Debt underwriting is generally a taboo among central banks on concerns that it would appear to give governments a blank check for uncontrolled spending. Still, the idea has surfaced intermittently as Japan has lurched from crisis to crisis over the past 20 years. It is banned by law under normal circumstances but possible if approved by Parliament. Some members of the ruling Democratic Party of Japan have floated the idea of the central bank underwriting government bonds as debate heats up over how to pay for reconstruction. Many analysts expect additional monetary easing eventually as the economic impact of the disasters and government rescue plans becomes clearer in the months ahead. The special lending facility is “just a very small amount,” said Christian Carrillo, senior rates strategist at Société Générale. “It’s not something that’s really expanding purchases of JGBs so the government could directly spend more money in the economy, and it’s not clear that it can be used very

quickly.” While it appears the government’s first supplementary budget of the new fiscal year may not require additional JGB issuance, this could change later in the year. “The BOJ may want to keep its powder dry until there is more need for additional JGB issuance, particularly amid the talk of possibly trying to make them underwrite JGBs,” Mr. Carrillo said. Although the central bank lowered its economic outlook in the wake of the disasters that have left more than 27,000 dead or missing, it maintained a positive outlook for the longer term. It said the economy is likely to return to “a moderate recovery path” as exports and domestic demand are expected to pick up on the back of improvement in overseas economies and post-quake reconstruction. “I’m convinced that the nation’s economy will return to a sustainable recovery and achieve high growth after overcoming problems,” such as supply limitations and loss of capital stocks, Mr. Shirakawa said. He said he expects supply chains to be restored by June or July, though he added he isn’t sure when supply shortages caused by unstable electricity supply and damages at production sites will improve. —George Nishiyama, Takashi Nakamichi and Andrew Monahan contributed to this article.

BY REBECCA SMITH AND TENNILLE TRACY WASHINGTON—A nuclear-power plant located some 64 kilometers from Baltimore would come dangerously close to meltdown if it lost all electricity for two days, according to a U.S. government-run disaster simulation model disclosed Wednesday during a congressional hearing. Researchers with the Nuclear Regulatory Commission last year simulated a two-day blackout at the Peach Bottom plant in Lancaster, Pa., determining the plant would be on the verge of a meltdown two days after losing all power. In a lesssevere scenario, in which the plant has access to backup battery power for four hours, the operator was able to prevent core damage. The hearing showcased the extent to which the disaster at Japan’s Fukushima Daiichi nuclear complex has reanimated Washington’s longrunning political sparring over nuclear power. Peach Bottom has General Electric Co.-designed boiling water reactors with an older style of containment structure—designs similar to those at Fukushima Daiichi, which began leaking radiation after it lost cooling systems in the earthquake and tsunami on March 11. The NRC’s findings, described in a November 2010 report, were disclosed Wednesday by Democratic members of the House Energy and Commerce Committee, and by representatives of the Union of Concerned Scientists, a nonprofit group critical of nuclear power safety standards. California Democratic Rep. Henry Waxman said the NRC report “raises questions about whether our reactors may be as vulnerable as those in Fukushima.”

Some Republican lawmakers countered at the hearing that Democrats were exaggerating the significance of the NRC’s findings. “Most people I talk to in Nebraska are fearful this [accident] is going to be used to shut down nuclear power across the United States,” said Rep. Lee Terry, a Nebraska Republican. In another sign of partisan tensions, the top Republican on a Senate panel with jurisdiction over the NRC released a letter accusing commission Chairman Gregory Jaczko of failing to consult fellow commissioners before declaring the agency was operating in a state of emergency. Sen. James Inhofe (R., Okla.), citing communications between his aides and an NRC staffer, said in a letter to Mr. Jaczko that the NRC has been in emergency operations since Japan’s earthquake. Mr. Inhofe wrote that NRC staffers “indicated that you invoked these powers when the NRC operations entered ‘monitoring mode’ at 9:46 a.m. on March 11 in reaction to the Tohoku Earthquake.” Mr. Inhofe asked Mr. Jaczko to explain his “rationale for continuing to exercise emergency authority” given his public statements of confidence in U.S. plants’ safety. The senator said he was concerned those actions “may have reduced the contributions of your experienced colleagues in monitoring the event and in decision-making.” A spokesman for Mr. Jaczko, who was named NRC chairman in 2009 by President Barack Obama, didn’t immediately respond to a request for comment. Martin Virgilio, a senior NRC official, cautioned that the Peach Bottom simulation results portrayed “very unrealistic events.” Peach Bottom is jointly owned by

Associated Press

Simulated meltdown reignites U.S. battle

Pennsylvania’s Peach Bottom plant, which has similar reactor architecture to Japan’s Fukushima Daiichi plants, in 2007. Illinois-based Exelon Corp. and New Jersey-based Public Service Enterprise Group Inc. Exelon spokesman Craig Nesbit said the scenario is intended to present a sort of doomsday analysis so that the industry can address any deficiencies. He said it failed to capture all the protective measures that are available to that particular plant. For example, the Peach Bottom plant has a dedicated transmission line, buried for added security, that could bring electricity to the plant from the Conowingo hydroelectric dam on the Susquehanna River.

Peach Bottom’s diesel generators are behind submarine doors, Mr. Nesbit said, as is the plant’s vital electrical switch gear. Tsunami waves destroyed diesel generators and fuel tanks at Fukushima Daiichi and badly damaged switch gear. Both failures contributed to severe overheating of at least three reactor cores and at least four spent fuel pools at the complex. In the U.S., all reactors must have backup diesel generators with enough fuel to last at least seven days. They also must have large rooms filled with batteries that are capable

of keeping essential instrumentation and controls operative for four to eight hours. Some plants have additional batteries, diesel generators or gas-fired turbines. U.S. nuclear industry executives say they are preparing for added regulatory scrutiny of issues such as station blackout risks, as the NRC conducts a safety review spurred by the Fukushima catastrophe. “Let’s not fool ourselves,” Exelon Chief Executive John Rowe said recently. “We’re going to spend a lot of money in new regulatory reviews” and likely in making upgrades to existing plants.

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WORLD NEWS

Activist’s fast targets India’s graft Hazare’s hunger strike bolsters demonstrators calling for a new anticorruption agency with sweeping powers NEW DELHI—A respected war veteran turned social activist has taken up residence on a street around the corner from India’s Parliament and is now on the third day of a Mahatma Gandhi-style hunger strike to protest government corruption. He has become a major attraction, winning support from other social activists, students and followers of two popular new-age gurus. On Thursday, Kisan Baburao Hazare, better known as Anna Hazare, reclined on a dais surrounded by admirers, TV crews and volunteers for the India Against Corruption campaign who carried out a brisk sale of anticorruption pamphlets and comic books nearby. A volunteer said Mr. Hazare, who is 72 years old, was taking in no food at all but was drinking just enough water to “wet his throat.” “Anna Hazare had a check-up an hour ago and he is ship-shape,” another man called out over a megaphone, urging those in the crowd who were fasting out of solidarity to take glucose or oral rehydration salts if they felt dizzy. India has a long tradition of using hunger fasts to make a political point, but not all fasts generate this level of public support. The elderly former soldier commands respect for being the only person from his Army unit to survive an air strike in a 1965 border war with Pakistan and for his decades of social activism, which have included successfully campaigning for a right-to-information act in his home state of Maharashtra, for which he also undertook a hunger strike. This time, Mr. Hazare, dressed in white and wearing a white cap, is fasting to persuade the government to enlist people from outside government to help draft a bill to set up an anticorruption ombudsman’s office. Plans to set up such an institution have been dragging on for four decades. But after a series of widely publicized corruption scandals in recent months, the creation of this office has swung into public focus. Two scandals, in particular—the mismanagement of the organization of the October Commonwealth Games and a 2008 telecom spectrum licensing process that a federal investigative agency alleges was rigged—have stoked public ire. An official audit last year said the flawed telecom licensing may have cost the government as much as $40 billion in lost revenues. People demonstrating at the site said they agree with Mr. Hazare that ombudsman legislation drafted with public participation stands a better

Associated Press

BY TRIPTI LAHIRI

Indian social activist Anna Hazare gestured during his hunger strike against corruption in New Delhi Thursday. chance of making sure the office is set up with enough independence to investigate and prosecute officials of any level. “Corruption has grown so much that it’s hard for the common man to live,” Mr. Hazare said on an Indian news channel this week. “That’s why we want the Lokpal [Ombudsman] bill, which can reduce corruption, to be independent and not under government control.” Prime Minister Manmohan Singh said in a statement on Monday that he had met with Mr. Hazare last month and that ministers had met with activists on the public draft. The discussion “proved fruitless as the activists were insisting on the Government accepting their draft in full,” the statement said. The activists’ draft of the bill, which has been posted online by the recently formed anticorruption campaign, would create a body with sweeping powers, including to issue search warrants, to examine anyone it chooses under oath and to punish those it finds guilty. It would be able to investigate any organization or office in the country, as well as examine complaints brought against

its own members. In a sign that Mr. Hazare’s strike is making some progress, Mr. Singh’s telecom minister, Kapil Sibal, met on Thursday with two anticorruption activists from his camp. “The negotiations are on with the activists, but nothing has been decided so far,” said Harish Khare, a spokesman in the prime minister’s office. “The government needs one more day to take a final call.” Mr. Hazare wasnt granting oneon-one interviews on Thursday, but he periodically spoke to the crowd from a dais draped with a white sheet against a backdrop of an image of a pink-cheeked goddess representing India and waving a flag. The gathering of a few thousand people took place by a several-hundred-year-old astronomical observatory in New Delhi that is the designated spot for political sit-ins and draws protests from all corners of the country. A few other groups carried on with their demonstrations alongside Mr. Hazare’s fast: one called for prohibition of alcohol while another protested violence against Indian Shias in Bahrain. But the corruption protest, with

its slogans, flags and the occasional visiting Bollywood filmmaker, stole the limelight this week and is dominating local news coverage. Other Indian cities also saw anticorruption demonstrations take place, as well as an outpouring of support on online forums. The group says its campaign to register supporters via mobile phone had received 600,000 calls by Thursday. The same day, the group’s Facebook page climbed from 82,000 “likes” to 100,000 “likes” in the space of a couple of hours. The protest appeared to have successfully drawn on the philosophical strands of Indian public life, where appeals grounded in a higher morality, usually demonstrated through sacrifice, asceticism, and spirituality, have been important in galvanizing people. Many of those at the gathering—as at a January anticorruption rally—were adherents of two popular gurus who have backed the India Against Corruption campaign. Several in the crowd said that Baba Ramdev, a yoga guru who teaches courses in person around the world as well as through his television

programs and videos, had brought the anticorruption movement to their attention. “The people have been awakened,” said J.P. Sharma, a 75-year-old retired school principal who was at the sit-in on Thursday, and who says he is influenced by the yoga master. Elsewhere, posters of a smiling Sri Sri Ravi Shankar, the leader of the Art of Living Foundation, which promotes “stress-elimination” through a special set of breathing exercises, proclaimed the group’s support for the cause. Shatakshi Chowdhry, 34, who has been with the Art of Living for over a decade, credited the movement’s self-actualizing philosophy—it emphasizes putting out the right energy in the world—for encouraging her to join the anticorruption protest. “My guru inspired me. Earlier I used to say, ‘What can I do?’” said Ms. Chowdhry, who works in public relations for a real-estate firm. “I realized I do have the power to make a change. Now I will support any movement that is for honesty, integrity and social justice.” —Vibhuti Agarwal and Nikita Garria contributed to this article.

India firm to stop selling execution drug to prisons BY NATHAN KOPPEL An Indian drug company that supplied a key execution drug to U.S. prisons has decided to halt future sales following objections from death-penalty opponents. Kayem Pharmaceutical Pvt. Ltd. supplied Nebraska prison officials with a large supply of thiopental so-

dium, an anesthetic typically used to render a condemned inmate unconscious before other lethal drugs, including a paralytic agent, are administered. Lethal injection is the sole or primary execution method in the 34 U.S. states that carry out the death penalty. The company also supplied the

drug to South Dakota, Navneet Verma, the managing director of the Mumbai-based company, told The Wall Street Journal. “We appreciate the global concerns about the death penalty and particularly the concerns of the human-rights community,” Mr. Verma said. “I decided voluntarily not to sell a single vial of thiopental for

use in lethal injections.” The decision could make it even more difficult for U.S. prisons to find the drug, which has been in short supply for about a year, delaying executions and forcing some states to alter their executions procedures. Prison officials in South Dakota and Nebraska weren’t available for

comment. Hospira Inc., the only U.S. manufacturer of thiopental, decided earlier this year to stop making the drug due to concerns from deathpenalty opponents. Some states, including Texas, have switched from using thiopental to pentobarbital, a sedative often used to euthanize animals.

Friday - Sunday, April 8 - 10, 2011

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WORLD NEWS

BY STEN STOVALL LONDON—Health experts renewed their warnings Thursday that a new form of superbug that gives bacteria the power to resist virtually all known antibiotics is spreading quickly, posing a global health disaster. Called New Delhi metallobetalactamase, or NDM-1 for short, the enzyme destroys carbapenems, an important group of antibiotics used for difficult infections in hospitals, and has been found in a wide variety of bacterial types. British researchers in August reported that infections involving NDM-1 had been found in patients in Bangladesh, India, Pakistan and Britain. New research published Thursday in the U.K. medical publication The Lancet shows NDM-1 is widespread in sewage and drinking water outside the hospital environment in Delhi, India, circulating in bacteria that inhabit drains and tap water due to sewage contamination. The World Health Organization issued a plea for collective action to fight emerging new superbugs like the NDM-1, warning that the threat is spreading fast. The danger is acute because the pipeline of new antibiotics is essentially empty, posing huge dangers to health care and efforts against infectious diseases. Some experts warn health-care provision is in danger of reverting back to a pre-antibiotic era in which hip replacements, care of preterm babies and advanced cancer treatment are no longer possible. “So much of modern medicine—from gut surgery to cancer treatment, to transplants—depends on our ability to treat infection. If resistance destroys that ability then the whole edifice of modern medicine crumbles,” David Livermore, director of antibiotic resistance monitoring at the U.K.’s Health Protection Agency said. Over the past three decades only two new classes of antibacterial medicines have been discovered, compared with 11 in the previous 50 years. “We have to recognize that even if we can increase these numbers, the task will never be complete because our most recently approved and most effective drugs will gradually decline in efficacy and we will need to develop new antibiotics to replace them,” AstraZeneca PLC Chief Executive David Brennan said in a prepared address Thursday for the WHO World Health Day, marking the founding of the Geneva-based body. That is because antibiotics lose their effectiveness over time, as bacteria naturally evolve and mutate, becoming resistant. And resistance is a global problem. In the U.S., hospital-acquired, drug-resistant bacterial infections kill 63,000 patients each year and cost $34 billion. In the EU, multidrug-resistant bacteria cause about 400,000 infections a year and at least 25,000 deaths, and generate costs of €1.5 billion ($2.1 billion), industry figures show. One underlying problem is a lack of financial incentives to spur pharmaceutical companies to invest in researching and developing new an-

tibiotics. “Discovery needs to be underpinned by new financial mechanisms that allow companies to receive a return on their investment in new drugs, while limiting their use to situations of greatest need,” Mr. Brennan said in his prepared remarks. Experts say it isn’t viable that drug companies who spend millions developing a new antibiotic medi-

cine are then told by regulators to hold it in reserve for the next emergency. Instead, a fresh approach and new business model for antibiotics R&D is needed. Options include new models for compound sharing in discovery research, the revisiting of previously discarded compounds with modern methods, and the involvement of public funding in antibiotic R&D.

Reuters

Scientists say superbug poses global threat A scientist in London examines a plate coated with antibiotic-resistant NDM-1.

NOTHING IS AS STRONG AS TEAM SPIRIT

R E TA I L B A N K I N G - C O R P O R AT E & I N V E S T M E N T B A N K I N G SPECIALISED FINANCIAL SERVICES & INSURANCE P R I VAT E B A N K I N G , G L O B A L I N V E S T M E N T M A N A G E M E N T & S E RV I C E S Societe Generale is a credit institution and investment services provider (entitled to perform banking activities and/or to provide investment services other than the operation of Multilateral Trading Facilities) authorised and regulated by the French Autorité de Contrôle Prudentiel (Prudential Control Authority) and Autorité des Marchés Financiers (Financial Markets Authority). Societe Generale is subject to limited regulation by the UK Financial Services Authority («FSA») for the conduct of its business in the United Kingdom. Details of the extent of its regulation by the FSA are available from us on request. Societe Generale benefits from the EC passport authorising the provision of certain banking and investment services within the EEA. This material has been prepared solely for information purposes and does not constitute an offer from Societe Generale to buy or sell any securities or financial instruments, or to participate in any trading strategies. Not all products and services offered by Societe Generale are available in all jurisdictions. Please contact your local office for any further information. © 2011 Societe Generale Group and its affiliates. © GettyImages -

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WORLD NEWS

China builders balk at cheap housing BY ESTHER FUNG

v

Home front Year-over-year change in China’s urban property price index, 2010 15% 12 9 6 3 0

J F M A M J J A S O N D

Source: National Bureau of Statistics European Pressphoto Agency

SHANGHAI—China’s pledge to hugely increase public housing is likely to face problems from property developers and local governments, real-estate executives and analysts say, testing the central government’s ability to offer more affordable housing to its people. As real-estate prices continue to surge and resentment among lowincome household rises, the central government last month detailed its plans to increase this year’s target for new public-housing construction 10 million units from last year’s 5.8 million. In December, average urban property prices rose 6.4% compared with the year earlier, and government officials have since stopped releasing nationwide figures. The price tag: about 1.3 trillion Chinese yuan, or about $200 billion. The housing ministry says the central and local governments will provide 500 billion yuan to the effort, with the remaining 800 billion yuan coming from companies and institutions. That has led to griping from property developers. The authorities already have taken a series of steps that rein in home-price appreciation, from interest-rate increases to administrative measures such as limits on home purchases. Focusing on lower-income housing could further pressure profit margins. “It’s wrong to push the responsibility of building and financing the public housing project to the private

Prospective tenants visit a public housing project Wednesday in the city of Qingdao, in the eastern province of Shandong. market players,” said Ren Zhiqiang, president of Beijing-based residential developer Huayuan Group. “Low-rental housing is the responsibility of the government.” Local governments, which rely on land sales for much of their revenue, will also feel the strain and may be loath to do anything to reduce that flow. China’s efforts could ripple around global markets. China counts on strong growth to keep its popu-

lation mollified, but rising housing prices could upset that relationship. That could push China to take further steps, such as more interestrate increases or curbs on investing, which could impact the world’s fastest-growing major economy and the engine of much of its growth. Premier Wen Jiabao got involved in February, calling on property firms to be socially responsible by making housing more affordable. “Morality should flow in the blood

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of property developers,” Mr. Wen wrote on an online forum. Property is a major engine of China’s growth. But the sector is under pressure. Government limits on home purchases have caused sales volume to drop since February. Some bigger developers, like China Vanke Co., say they’re ready to invest but want to at least break even. “Vanke is willing to build public housing—just earning one yuan will do,” Vanke President Yu Liang

Australian dollar rallies to new high on jobs data BY JAMES GLYNN

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said last month. But he added if the project loses money, “we can’t face our shareholders, and if it is profitable, then we won’t have ‘morality in our blood.’ So if the government gives us land and money, we can help, and earning one yuan will do.” That compares with private residential margins of 30% to 40%, according to CIMB-GK Securities analyst Johnson Hu. “Perhaps some property developers can get better terms from the government, like cheaper land, tax incentives. But the profit margins aren’t attractive at all,” Mr. Hu said. Developers may have little choice but to participate, as the government has said 70% of residential land supply should be allocated for these projects.

SYDNEY—Australian employment growth surged in March, sweeping aside lingering fears of a sharp slowdown in the economy in the first quarter and suggesting an interest-rate increase may be closer than previously thought. The Australian dollar surged to a fresh postfloat high of US$1.0481 Thursday, climbing a half U.S. cent immediately after the release of the data. Employment rose 37,800 compared with an expected increase of 24,000 by economists. Unemployment fell to a lowerthan-expected seasonally adjusted 4.9% in March from 5.0% in February, while economists expected unemployment to remain at 5.0%. The jobless rate is now at its lowest rate since December 2008. The number of people in full-time work rose 32,100, while the number of people in part-time work rose 5,700, the bureau said. The fall in unemployment comes despite a string of devastating natural disasters in the first quarter, which are expected to slow the economy sharply. The strong result also defies the soaring Australian dollar, which is taking a hefty toll on nonmining exporters. “This is a real return to the heady days of 2010 when employment growth was really rocketing along,” said Brian Redican, an economist at Macquarie. Mr. Redican added that much of the growth was Queensland-based, showing the state is rebounding from flooding, which affected much

of the region as a deluge swamped the central business district of Brisbane. “The Reserve Bank of Australia won’t be panicking, it will just give them more reassurance that the economy is hanging together in a very good shape and the current policy stance is completely justified,” he added. The RBA left interest rates on hold on Tuesday, citing an absence of immediate inflation risks and pointing to the high Australian dollar as a headwind for the economy.

The central bank left rates on hold this week, citing an absence of immediate inflation risks and pointing to the high dollar as a headwind for the economy. The cash rate has been left at 4.75% since November, with many economists expecting it to remain sidelined until the second half of the year. The high Australian dollar could well remain a restraint on growth. “There’s just no ceiling in sight for the Australian dollar with further gains likely,” said RBS FX strategist Greg Gibbs. “There’s no obvious near-term resistance level, so the risk is it does continue to grind higher.” Late Thursday in London, the Australian dollar was changing hands at US$1.0472.

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OPINION: REVIEW
OUTLOOK

Medicare for a New Century

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iberals in the U.S. seem delighted clip, far faster than the economy. Spendthat Paul Ryan and the GOP have ing is due to double over the next dedecided to charge the fixed bayo- cade, feeding on more and more of the nets of Medicare reform, denouncing the federal fisc and national wealth. (See the new House budget as a crime against se- nearby chart.) niors, humanity, and so on. Republicans The 45 million Medicare beneficiaries are taking a huge political risk, but they enjoy the security of “free” health care are now setting the reform agenda, and and its no-questions-asked payments. their honesty may even oblige a national Still, the entitlement is stuck in a Great debate about the future of an entitle- Society time warp. It offers no protecment state that can’t survive in its cur- tion against catastrophic expenses, the rent form. most basic function of insurance. CoverMr. Ryan’s core insight is that Medi- age doesn’t keep up with medical progcare needs to be modernized if it is to ress; prescription drugs weren’t added survive. The federal inuntil 2003. Seniors are surance program for docked a $1,000 dethe elderly has barely Paul Ryan’s plan would ductible for a single changed since 1965, hospital stay, though modernize a program several health-care revnine of 10 buy medigap olutions and trillions of stuck in 1965. coverage to backfill misspent tax dollars these and other holes. ago. The GOP Where else do people plan—known as premium sup- buy insurance for their insurance? port—would rationalize Medicare’s burUnder the Ryan premium support den on taxpayers, while introducing mar- model, seniors would instead choose ket competition to control costs. from a menu of guaranteed private ini i i surance options of the kind younger, priAs Democrats build their re-election vate-sector workers have come to expect. bids around Mediscare demagoguery, These plans would be subsidized by a they’re pretending that the choice is be- “defined contribution,” roughly equal to tween “privatization” and a free lunch. what the government now spends per Mr. Ryan has done a service in exposing person. This subsidy, about $15,000, this illusion. Nothing will sooner finish would grow over time with consumer off “Medicare as we know it” than to con- prices, but seniors who wanted more extinue its present march into insolvency. pensive plans would pay the difference His is the first credible plan endorsed by out of pocket. either party for preserving the safety net. Premium support would create a marToday traditional Medicare is the ket reward for the services that consumlargest buyer of health care in America. ers value. Because seniors would be It is also the worst buyer. The govern- chipping in at the margin, only above the ment sets prices for thousands of ser- fixed-dollar subsidy, most would favor vices, then pays nearly any doctor or lower premiums. Insurers would compete hospital that a patient visits. The same to supply them, and providers in turn arbitrary fee schedule applies to the best would have a reason to innovate in hospital and the worst hospital, regard- health-care delivery and improve what less of the quality or value of the care has been their negative productivity delivered, and the bills are sent to tax- rate. payers. Premium support would not cure all This deliberate suppression of the of America’s health ailments, and missprice mechanism has helped to turbo- ing in action in the House budget is a charge U.S. health costs. Providers who comparable reform for the rest of the find ways to deliver better medicine at a market. But Medicare is so big that if it lower cost aren’t rewarded, as they doesn’t change, nothing else can. Simply would be in any other industry. Medicare unwinding Medicare’s price controls spending is growing at a 7.2% annual would be an historic achievement.

The Entitlement Express Annual and projected Medicare expenditures, 1980-2019 $900 billion 800 700 600 500 400 300 200 100 0 '80 '90 '00 '02 '04 '06 '08 '10 '12 '14 '16 '18 Source: Medicare Trustees Report, 2010

That said, Granny will not be turned loose unsupervised into the market wilds. The subsidies will flow through Medicare, only to regulated insurers and government-approved plans. It does not go as far as Mr. Ryan’s previous “roadmap,” which offered direct cash vouchers for individuals who preferred to buy insurance themselves. The subsidies are means-tested, so the poor would receive more support, as will sicker and chronically ill patients. They wouldn’t kick in until 2022, more than enough time for people to adapt and exempting everyone older than 55 if they wished. Mr. Ryan moderated his ambitions not merely because the fiscal crisis is so urgent, but because reforms of this order are so unusual. Seniors and other voters may be unnerved, especially when AARP and politicians beat the Mediscare drums. As they inspect the details, however, seniors may be surprised to learn that premium support is not an untested idea. It is even routine in parts of Medicare itself. Traditional Medicare would look a lot like Medicare Advantage, which gives almost one of four seniors today private alternatives. Premium support forms the architecture of the Medicare drug benefit too, and as a result it has cost 30% less than almost anyone predicted. The same concept governs the Federal Employee Health Benefits Program, which insures everyone from postal workers to Members of Congress. The same is true for several large university

systems and Calpers, the benefits program for public workers in California. None are known as incubators for the pitiless ideology that Democrats impute to Mr. Ryan. Despite this experience, one common criticism is that the subsidies wouldn’t keep pace with the rising health costs that Medicare now promotes. But medicine has always proven adept at reorganizing itself when the incentives change, and costs would fall over time if more patients were demanding their money’s worth. Health care’s lack of accountability to consumers helps explain why Medicare’s unfunded liabilities over the next 75 years are about $31 trillion. That number is beyond human comprehension and among the reasons that creating one more new entitlement in ObamaCare was so reckless. Keeping Medicare’s generational promise—that children assent to be taxed to pay for their grandparents’ health care so that their grandkids can one day pay for theirs—would mean under current trends that every income tax rate, in every bracket, would need to more than double. The brutal arithmetic is that total federal health spending is about 10% of GDP today and on pace to hit 15% in 20 years. The liberal response is more central planning and eventually the political rationing of care, even as taxes continue to climb. The alternative that Mr. Ryan has offered, including an ObamaCare repeal and a conversion of Medicaid into block grants to states, would bring that share down to 6% as premium support began to limit Medicare’s open-ended spending. i

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The reality that Mr. Ryan has recognized is that Medicare can’t be fixed with nips and tucks. Premium support is easily as important an advance as the shift from defined-benefit pensions to 401(k)s, and the transition could be as smooth. Major changes to the social compact must be grounded in some rough public consensus, and Republicans now have an obligation to persuade the country that their reform is the only one with a chance of saving Medicare for future generations.

Delhi’s Mixed Message on FDI

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nvestors in India who try to build roads or factories have found their feet tied by the arbitrary application of regulations in the past year, which helps explain why foreign direct investment into the country has shrunk. So it’s worth reporting that in the past seven days New Delhi has managed to unshackle one foot. Too bad the other one remains chained. Let’s start with the good news. Last Friday, the Indian government put into effect a new policy on FDI, which liberalizes the legal framework for investment. Take two restrictions it does away with. First, a foreign firm no longer has to ask for bureaucratic approval to invest in a sector where it has an existing joint venture with a domestic firm, a rule that protected the domestic firm from competition. Second, a foreign investor who bought stake in a company with a convertible instrument now doesn’t have to

fix in advance the price or formula at Delhi gives with one hand, it takes with which, say, a preferred share could be the other. On Wednesday, the governconverted into common stock. For the ment further delayed approval of one of last year in fact, regulators forced firms the largest FDIs into India: the $9.6 bilto declare the absolute price of conver- lion deal between London-listed sion, defeating the Vedanta and Britishability to alter the conowned Cairn India. version price as an in- India offers investors Vedanta has been waitcentive for the future ing for eight months to performance of the predictability with acquire Cairn’s oil company. fields, but has been one hand, but takes The new policy held up because an Indoesn’t go as far as to it away with another. dian state-owned enremove certain caps terprise’s interests are that restrict foreigners on the line. Vedanta to, for instance, 74% ownership in tele- and Cairn have been negotiating with com. But it does decree 100% FDI in the government as it tried to change some agricultural areas and, equally im- the rules of the game. portant, plugs loopholes and discrepanIndia’s cabinet was expected to settle cies that earlier confused even lawyers. the deal on Wednesday, but it has This will go some way in making the passed the buck to another ministerial process of investing in India predict- panel. So at the very least, New Delhi able. has disrupted Vedanta and Cairn’s timeBut the sense of predictability New line. But it could derail the whole deal:

India’s oil minister now says the cabinet is unanimous about helping the state-owned firm get its due, which will surely change Vedanta’s valuation of Cairn’s assets. With this, India has signalled that an investor in a sector like oil—where “national interests” are at stake—will be meddled with. No surprise that the country found it hard last week to attract bids from global companies for oil exploration. Which goes to show that, unless New Delhi deregulates as it did last week with its FDI policy, India’s growth prospects will be the victim. India’s politicians tout grand growth targets these days, but they should know that the few sustained growth spells this country has enjoyed since liberalization have come on the back of private investment. If they can’t encourage investors through simple, predictable rules, they won’t get any growth in return.

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OPINION

BY SADANAND DHUME It was inevitable that a highprofile sporting face-off between India and Pakistan would revive talk of “cricket diplomacy.” And sure enough, last week’s World Cup semifinal clash between the two yielded its share of photos of Indian Prime Minister Manmohan Singh seated woodenly beside his Pakistani counterpart, Yusuf Raza Gilani. In theory, cricket diplomacy is meant to create sufficient bonhomie to spur peace talks that have

Forget cricket summits. Focus on individual artists and sportsmen who will undermine Islamists in Pakistan. sputtered since the November 2008 Mumbai terrorist attacks but restarted, tentatively, in February. In practice, however, the prime ministerial (or presidential) match-watching ritual—also tried in 1987 and 2005—signifies little. Negotiations follow the logic of international realpolitik and domestic pressures on the two sides, regardless of what their teams do on the cricket pitch. But despite that shortcoming, the return of cricket diplomacy raises an intriguing question: How can India use its considerable soft power—its dominance of South Asian sport, movies, music, television and publishing—to address the rise of Isla-

mist fundamentalism in Pakistan? Pakistan’s problem is dire. According to the Pew Global Attitudes Project, four out of five Pakistanis approve of stoning to death for adultery. The outpouring of support for the fundamentalist murderer of Punjab Governor Salmaan Taseer in January, and a spate of attacks on Sufi Muslim shrines across the country, underscore that the problem cannot be solved by Predator drones and well-intentioned development programs alone. Culture, including popular culture, must form part of the mix. For a hint of the role India can play, look beyond the recent World Cup-driven cricket mania to the sudden rise to prominence of a young Pakistani starlet named Veena Malik. Until recently Ms. Malik was famous mainly for her romance with a Pakistani cricketer accused of match-fixing. But she has now become a spokeswoman for moderation, catapulted into her bully pulpit by an appearance on India’s version of “Big Brother,” called “Big Boss 4.” In a muchwatched video clip on the Internet, Ms. Malik dresses down a mullah for daring to criticize her somewhat risqué appearance last fall on the show. In Pakistan, where questioning any aspect of orthodox Islam—including a blasphemy law routinely used to persecute Christians, Hindus and heterodox Muslims—can invite violent attack or even assassination, Ms. Malik stands out for her refusal to be cowed by clerical authority. It’s not every day that you get to see a bare-headed young woman

say baldly to a mullah: “There are many things in your community that need to be rectified, so please correct them.” And while Ms. Malik’s showdown with her clerical tormentor took place on Pakistani TV, parts of which remains oases of free speech, if not for “Big Boss,” or India’s ratings-driven TV industry more broadly, Ms. Malik would scarcely have merited an interview to begin with. Ms. Malik’s nearly overnight transformation from obscure Blister to household name in much of the Subcontinent illustrates a larger point. Thanks to its sheer size and rapidly growing economy, in cultural terms India is to Pakistan what the United States is to Canada or Australia to New Zealand: the big stage to which local talent aspires. It’s only natural that over time more actors from Rawalpindi and crooners from Lahore will aim for careers in Bollywood or Indian TV, that cricketers from the backstreets of Karachi or the badlands of Pakistan’s northwest frontier will dream of making their fortune in the Indian Premier League, that ambitious young Pakistani writers will quickly figure out that knowing the right people in New Delhi matters nearly as much as knowing the right people in London or New York. The first signs of this are already visible. The singer Rahat Fateh Ali Khan works regularly in Bollywood, and the rock bank Junoon boasts a considerable Indian following. Nonfiction writer Fatima Bhutto and fiction writer Daniyal Mueenuddin flog their

Associated Press

India’s Better Shot at Soft Diplomacy

Veena Malik books in Mumbai and Delhi. At the Jaipur Literature Festival this year, Pakistani novelist H. M. Naqvi won the inaugural $50,000 DSC Literature Prize sponsored by an Indian construction firm. Like other democracies, India does not expect visiting artists to become crude propagandists for its government or people. But at the same time, as a multireligious and increasingly wealthy country India automatically gives Pakistanis a luxury they lack at home: a giant soapbox from which to challenge the weight of intolerance within their own society. As Pakistan’s own cultural space shrinks under the Islamist onslaught, the importance of India as a lifeline for the country’s beleaguered liberals will only grow. This is not to suggest that the

choices India faces are always easy. Take cricket itself. Though India and Pakistan played in the World Cup, the two sides have not faced each other in a bilateral series since 2007. Wary of public opinion since the Mumbai attacks, the Indian Premier League, a hugely profitable private cricket tournament that begins its fourth season later this month, has not found room for a single Pakistani player. Traditionally, Indians doves see closer cultural contact as a virtue in itself. Hawks point out the folly of pretending that it’s business as usual with a state sponsor of terrorism. If India is to use its cultural heft intelligently, it must transcend both camps. This means limiting contact with official Pakistani entities such as the national cricket team until the government shows it’s serious about shutting down terrorism emanating from its soil. But it also means welcoming individual Pakistani cricketers to play once more in the IPL. Nobody expects Pakistan’s problems with fundamentalism, rooted as they are in cultural and historical processes set in motion decades ago, to abate any time soon. But by opening its doors to Pakistani actors, singers, sportsmen and writers, India can enrich its own culture while denting the Islamist onslaught. Let a hundred Veena Maliks bloom.

Mr. Dhume is a resident fellow at the American Enterprise Institute in Washington, and a columnist for WSJ.com. Follow him on Twitter @dhume01.

Obama’s Government Shutdown Gambit BY KARL ROVE In the White House Press Room on Tuesday, President Barack Obama did what comes naturally—scold others, in this case the Congress. Mr. Obama complained that a budget agreement “could have gotten done three months ago.” What he didn’t say was that the budget should have “gotten done” six months ago, before the current fiscal year started last Oct. 1. Our government’s failure to have a budget in place halfway through the fiscal year is the president’s responsibility. He and his party dominated Congress by wide margins when the budget

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was supposed to be put in place. Also on Tuesday, at the other end of Pennsylvania Avenue, House Budget Chairman Paul Ryan did what the president has not. Demonstrating leadership and more than a little courage, Mr. Ryan laid out a thoughtful, ambitious blueprint for the next decade. The Path to Prosperity would return discretionary spending to its 2008 levels and hold it flat for five years; reduce the federal government’s work force by 10%; slash corporate welfare; reform the tax code; and reduce the corporate and top personal rate to 25%. It would repeal ObamaCare, change Medicare so the government helps all seniors pay for an insurance policy they choose, and send states money for each person covered by Medicaid, plus the flexibility to spend that money as they see fit. The Obama-Ryan budget battle foreshadows what Americans are likely to hear in the 2012 campaign: an unengaged, reactive chief executive versus a bold, reform-minded GOP. In the short term, it’s obvious what Mr. Obama hopes to gain. Having watched his standing as “a strong and decisive leader” drop to 52% in last month’s Gallup poll from 60% last year, the president is looking to profit po-

litically from a shutdown of the federal government. When the government was twice shut down in 1995 and 1996, Congressional Republicans survived the controversy and kept their majorities in the 1996 election. At the same time, the shutdowns boosted Bill Clinton’s image. Only 37% viewed him as

The president sees political profit in demagoguing GOP spending proposals. “a strong leader” in a June 1995 ABC News poll. In a January 1996 CBS News poll after the shutdowns, 53% said Mr. Clinton had “strong qualities of leadership.” The president will instruct his party to demagogue the House Republican budget, labeling it as an assault on the poor and a windfall for the rich that will rip America’s social safety net to shreds. Never mind that these charges are false and irresponsible. Mr. Ryan would have the government spend $40 trillion over the next 10 years, $6.2 trillion less than Mr. Obama’s budget plan of $46

trillion. This is an overall reduction in what the government plans to spend, not a cut from what it is spending today. Under Mr. Ryan’s proposal, for example, health-care spending would still rise for both Medicaid, which serves the poor, and Medicare, which serves seniors. The $275 billion spent on Medicaid this year would grow to $305 billion in 2021 while the $563 billion spent on Medicare this year would grow to $953 billion in 2021. Nor would anyone 55 years or older be affected by any Medicare reforms. Mr. Ryan and his colleagues want to act now to keep entitlement programs solvent. They want to keep Americans from experiencing the pain of the crisis that will come when the public debt has doubled by 2012 (from the level when Mr. Obama came into office) and nearly tripled by 2021, as it would under the president’s plan. Already mandatory spending, the part of the budget that’s automatic and not subject to approval each year by Congress, eats up all available revenue this year. Medicare goes broke in 2029, and Social Security is bankrupt in 2037. The White House doesn’t care—it perceives a political path to victory in 2012. What makes this strategy doubly reckless and

cynical is that the administration knows a debt crisis is coming and that its spending plans cannot continue. But the Obama administration’s adults—Chief of Staff Bill Daley, Office of Management and Budget Director Jack Lew, and National Economic Council Director Gene Sperling—are clearly not in charge. The politicos—Senior Adviser David Plouffe (who managed Mr. Obama’s 2008 campaign) and Communications Director Daniel Pfeiffer (who had the same title in the 2008 campaign) have their hands on the wheel. The White House is in full re-election mode. The House GOP budget will not become law this year, but it will smoke the president out on spending and provide a framework for Republicans to discuss the nation’s fiscal challenges. The contrast between the GOP’s boldness and the president’s cowardice is striking. The question is whether the president and his party will pay a political price for their abdication of leadership. We’re about to find out.

Mr. Rove, the former senior adviser and deputy chief of staff to President George W. Bush, is the author of “Courage and Consequence” (Threshold Editions, 2010).

Friday - Sunday, April 8 - 10, 2011

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OPINION

The Fed Should Consider a ‘Bad Bank’ BY ALLAN H. MELTZER Federal Reserve Chairman Ben Bernanke sees little risk of inflation because he doesn’t look in the right places. Inflation is a general increase in prices, but increases always occur at different rates. Right now, labor costs are not rising but other costs, such as the prices of raw materials, have been and are continuing to increase. Businesses will pass some of these costs to their customers. Those who doubt that the United States is headed for inflation remind us that increases in the consumer price index (CPI), and the “core” CPI that omits food and energy prices, remain modest. But the CPI and the core CPI are currently misleading because 40% of the CPI and 25% of the core CPI represent housing prices and are heavily dependent on statistical estimates of what homeowners would pay to rent their homes. Most of us never see these prices and do not pay them the same way we pay for food, gasoline and health insurance. Furthermore, the Fed treats gasoline and oil price increases as a transitory blip. That’s almost certainly correct about the effect of Arab unrest or the Japanese tsunami. But much of the rise in

oil prices came before these events and was in response to the strengthening world economy. Prices will likely continue to rise as the world economy grows. Meanwhile, world grain prices have been driven up by the foolish U.S. ethanol program. When ethanol raises corn prices, prices for substitutes like wheat and rice

There is a long lag, up to two years, from the beginning of antiinflation policy to success. Much of the time lag reflects market beliefs that the Fed will not persist once unemployment rises. By the time the Fed finally decides inflation is coming, it will be here. One of the Fed’s recent errors was increasing the money supply by buying more than $1 trillion of mortgage-backed securities as part of its “quantitative easing” policy. Its hefty balance sheet now threatens to finance further inflationary increases in the money supply. How can it be unwound in an orderly way? One idea is for the Fed to create its own version of a “bad bank.” The Fed should promptly put the $180 billion of its longterm government debt and more than $1 trillion of its mortgagebacked securities into a separate entity. The long-term government debt and mortgage-backed securities would be the new bank’s assets. (The $1 trillion in Fed-created “excess” bank reserves as a result of quantitative easing would become the liabilities of the bad bank.) The Fed would make a commitment not to sell any of the bad bank’s mortgage-backed secu-

Taking excess assets off the table can avert inflationary monetary policy. rise also. There is no sign that Congress will repeal the ethanol program. When countries run huge budget deficits with rapid money growth and a depreciating exchange rate, inflation follows. There is no reason to believe we will escape the consequences. The biggest risk is that the Fed will wait too long and be too hesitant to begin tightening. Fed policy discussions always concentrate on near-term data and events over which the Fed has little control. They give much less attention to longer-term events that a central bank can influence.

rities and Treasurys until they mature. Almost half of the Fed’s currently held assets, more than $1 trillion, have 10 or more years until maturity, so all of them would be off the table as far as financing inflation during the gradual economic recovery. As the mortgages mature and are paid off, the bad bank’s assets decline. The reduction in the bad bank’s assets means that its liabilities, the excess reserves, would also decline—though that would be years away. Letting the market know precisely when the mortgage-backed securities would be sold makes the adjustment to the future elimination of excess reserves manageable. The Fed’s current operating balance sheet would be back to a more manageable range of about $1 trillion. This proposal removes some of the risk of inflation by removing some of the bank reserves that threaten to fuel it.

keyboard to guitar, even blowing a bit of his harmonica with astonishing energy for a man who turns 70 next month. He introduces his crack five-piece band, and plays another 30 minutes of crowdrousing encores: “Like A Rolling Stone,” “All Along the Watchtower,” and “Forever Young.” And then the icon is gone. Reporters slink off to file headlines like: “Dylan bows to China censors,” while fans buzz about seldom-heard material like “Beyond Here Lies Nothin’,” “Love Sick,” and “Gonna Change My Way Of Thinking,” from “Slow Train Coming.” Released in 1979 around the time of Mr. Dylan’s conversion to Christianity, the lyrics carry just a hint of the old rebelliousness, for any in Beijing who are listening carefully: “I’m gonna change my way of thinking, make myself a different set of rules. Gonna put my best foot forward, stop bein’ influenced by fools.”

Mr. Gluckman is a Beijing-based writer. Michele Scrimenti contributed to this article.

Mrs. and Mr. Zagat are the cofounders and publishers of Zagat Restaurant Surveys.

Mr. Meltzer is a professor of political economy at the Tepper School, Carnegie Mellon University, a visiting scholar at the American Enterprise Institute, and the author of “A History of the Federal Reserve” (University of Chicago Press, 2003 and 2009).

Ron Gluckman

Beijing The times, he sang long ago, are a-changing. Yet when the world’s greatest protest singer steps on stage in the world’s biggest no-protest zone, the astonishing thing is that even after half a century, little has changed. The media assail the performer for not raising more of a ruckus, fans cheer songs few really understand, and purists complain about the sound system and ticket prices. It’s almost 50 years to the day since he played his first big show in the Big Apple—as a teenage folkie opening for John Lee Hooker—and Bob Dylan is making his debut on perhaps the last remaining big stage, China. Wearing a spiffy Panama hat, the dapper Mr. Dylan runs through a tight two-hour set that features his always-bewildering mix of lesserknown tracks sprinkled with landmarks like “All Along the Watchtower,” “A Hard Rain’s A-Gonna Fall” and “Like a Rolling Stone.” Long before his April 6 gig in Beijing, the international media was speculating whether he would buck the censors. The government has unleashed a tsunami of censorship that has seen the Internet disrupted and dissidents rounded up. On Sunday, Ai Weiwei, China’s most famous artist and a belligerent critic of Beijing, was arrested. So will the man who crafted such classics as “Blowing in the Wind” and “A Hard Rain’s a-Gonna Fall” dare criticize China’s abysmal human rights record? After all, exactly a year ago, Mr. Dylan’s China debut was abruptly cancelled. The word on the street was that the authorities rejected some

anti-establishment songs on the set-list. However, fans who paid stiff ticket prices that topped out at more than $200 are uninterested in the manufactured controversy. They seem uniformly pleased with what Dylan veterans call a consistently entertaining performance by a star known for erratic shows. “I really like folk music, and early rock,” says Tian Zizhang, 21, a university student shopping for resale tickets outside the Worker’s Gymnasium with two of her young friends. They snap up three passes for $85 each. “It’s a rare chance,” she explains. The crowd is a mixture of young Chinese and middle-aged expats old enough to remember the heyday of America’s most iconic singer of the 1960s and 1970s. Dylan discs, while widely available in China, have never been officially released, and many questioned his appeal to a market focused more on club mixes and a range of midstream acts from Air Supply to Madonna. Yet Mr. Dylan does have a cult following among local musicians. “He’s been a huge influence on creative talents in China,” says Michael Pettis, an emerging markets expert who teaches finance in Beijing and runs a music label and the punk club D-22 on the side. Zhou Yunpeng, one of China’s biggest folk singers, first heard Mr. Dylan in the early 1990s, while still at college. “I couldn’t understand English, so I didn’t know what the lyrics meant, but I was immediately attracted to his music,” he recalls. “This is most definitely a big deal,” he says of Mr. Dylan’s shows (also in Shanghai April 8 and Hong Kong April 12-13). “It’s second only to the

Bob Dylan plays Beijing. Olympics in importance.” Outside the stadium, one of China’s most influential rockers from the 1990s, Zhang Chu, is walking by wearing a floppy hat. “I’ve been listening to Bob Dylan since about 1988,” he volunteers. “His influence is his words. It’s great to finally see him. “Chinese music is becoming more and more about spirit, so more like Dylan music,” he adds. “The most important thing tonight was to realize that he still has that essence of the artist. You have to keep true to yourself as an artist.” But for most Chinese, Bob Dylan remains a mystery, so it’s unlikely that any pointed remark about the Chinese government would resonate. Near the stadium entrance, a vendor slowly grilling sticks of chicken, squid and lamb can only remember the performer has a B in his name. A guard at the gate knows it is “Baobo Dilun.” “But he’s not really a big star,” he confides. “He’s not famous at all.” In great voice, Mr. Dylan plays a spirited 90-minute set without pause or comment, switching from

BY NINA AND TIM ZAGAT People often ask us about opening a restaurant. Our usual answer: “Don’t do it!” There’s a 60% probability that you will fail within three years or less. It’s not enough that one be a great host or good cook. That motivates many people to open their own place, but there are plenty of other skills required to be successful and the actual work is physically demanding. But it’s hard to deter people. So let’s see if you’ve got what it takes. First, you must have a knack for real estate so you can secure a good location at a reasonable rent. Next, you’ll need an eye for interior design, since diners must enjoy spending time in your space. Of course, you have to be adequately capitalized. Then, you’ve got to be a savvy buyer. Purchasing perishable produce in bulk ain’t a walk down the aisle of a supermarket. Buy too much and you’ll be literally throwing your money in the garbage a few days later. Buy too little and you’ll run out. And you must have a nose for sniffing out the good stuff. Are you a good leader? You’d better be, boss, because you’ll be hiring, training and managing an entire crew of cooks, cleaners, wait staff and others. And how are your people skills? To hire hospitable staff you’d better be able to recognize important qualities like affability and reliability in job applicants. You’ll also be playing the friendly host, welcoming patrons into your restaurant without appearing either unctuous or arrogant. How’s your memory? You’ll need to remember your patrons’ names. And in these media-driven times, you’ve got to be on top of the public relations and advertising games. By the way, you have to understand how to use social media, too. Good reports on Twitter, Facebook and YouTube will be increasingly important to your success. On top of everything else, you have to be a technician to understand the new reservation and table-management systems. So many people start restaurants (or dream of starting a restaurant) because they think that all it takes is to be a good cook. Yes, you have to possess serious chops in the kitchen. But serving hundreds of people à la carte is totally different than cooking a meal for a few friends. It’s also nowhere near as much fun. But that’s not all. Opening a restaurant is no hobby. It will require unusually long hours. You will find yourself rising pre-dawn and cleaning up after the last guest has left at 11 p.m. or later. Most restaurants operate six days a week (or even seven) and certain holidays are big dining-out days, including Valentine’s Day, New Year’s Eve and Easter Sunday. There are no sick or personal days, either. You’d better be in great shape as well, because staying on your toes all day is challenging. That’s why we try to dissuade our friends from opening their own restaurants. That’s also why we admire successful restaurateurs so much.

Dylan’s Beijing Bob BY RON GLUCKMAN

Don’t Open That Restaurant!

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Friday - Sunday, April 8 - 10, 2011

WORLD NEWS

Portuguese bailout terms discussed Portugal will need as much as €90 billion ($129 billion), including €10 billion in June, under a bailout package from the European Union and the International Monetary Fund, people familiar with the situation said Thursday. Terms of the rescue package will be discussed in more detail at an EU finance ministers’ meeting in Hungary beginning Friday. A formal request for aid will be submitted Thursday, a Portuguese government spokesman said. It will take two to three weeks to work out an austerity program to accompany a bailout with the help of the European Commission, the European Central Bank, and the IMF, German Finance Minister Wolfgang Schäuble said Thursday. The funds are expected to be used to cover Portugal’s short-term debt obligations and cash shortfalls at public-service companies, and to repay loans made to nationalized bank Banco Português de Negócios. Funds would also be set aside to cover local banks’ potential capital shortfalls, according to one person familiar with the situation. “A bailout package can be put together very quickly as there has already been preparatory work in anticipation of Portugal’s request,” said one minister from a euro-zone country. Departing Prime Minister José Sócrates said late Wednesday in a televised address that the Portuguese government has been forced to request a bailout owing to “unsustainable financing conditions,” setting up a crucial test of the euro zone’s efforts to contain its sovereign-debt crisis and protect the euro. Portugal will become the third nation in the 17-member currency bloc, after Greece and Ireland, to turn to its peers for help, after concerns over the country’s funding capabilities and its heavy debt burden triggered a series of downgrades in

Reuters

BY PATRICIA KOWSMANN AND COSTAS PARIS

Portuguese leader José Sócrates on Wednesday before his televised address.

Tough times Spain and Portugal have higher jobless rates and deeper deficits than other EU nations. Deficit/surplus as a percentage of GDP Unemployment rates Spain

20%

5%

15 Portugal EU

10

Deficit

EU

5

5 0 2000

Surplus

0

Portugal Spain

10

’05

15 2000

’10

Source: Eurostat

’05

’10* *EU figure not available

its credit ratings. Portuguese policy makers say there is a growing consensus that a bailout would need to be structured and disbursed in several phases,

coming before and after the country’s June 5 elections. The current government and the incoming administration would share the responsibility of negotiating the deal.

Mr. Sócrates, who is acting as caretaker prime minister until the elections are held, will require political clearance from Portugal’s three main parties, including the Social Democrats, whose leader is the front-runner in the coming elections. Government spokesman Pedro Silva Pereira said Thursday that though the current government has the authority to negotiate conditions for an aid package, “it clearly can’t commit to long-term goals.” The leader of the Social Democrats, Pedro Passos Coelho, has supported the government’s request, indicating that a political consensus exists to request a bailout package. Mr. Passos Coelho is already working on a government plan that includes the support from the EU and IMF, said a person familiar with the matter. The Democratic and Social Center Party, or CDS, has yet to make an official announcement on Portugal’s request of external financial support, but is widely expected to form a coalition government with the Social Democrats. These two parties will need to see the plan before it is sent to the European Union for a formal request, and discussions among the parties are being mediated by President Aníbal Cavaco Silva, the person familiar with the matter said. Mr. Sócrates, from the ruling Socialist Party, had fiercely resisted pressure to seek external financial assistance, but the request became inevitable as Portugal’s financing terms deteriorated following his resignation last month after his proposed budget cuts were defeated in Parliament. Pressure intensified after senior executives from leading financial institutions met with Finance Minister Fernando Teixeira dos Santos and Bank of Portugal Gov. Carlos Costa on Wednesday. Local banks, among the main buyers of government debt in recent months, made clear at the meeting that they were unwilling to add to

their purchases of sovereign bonds, according to people familiar with the situation. That gave the government little hope that it could keep Portugal’s finances in check until the election in June, when the country faces €4.9 billion in debt repayments. It already has thin cash reserves to cover €4.2 billion in debt due this month. There is more than enough money in Europe’s bailout funds to handle Portugal’s likely financing needs over the next few years, which will run into the tens of billions of euros. The latest polls indicate Mr. Passos Coelho from the Social Democrats would win the premiership if elections were held today, with 39% of the votes, followed by Mr. Sócrates—who has said he will run again—with 33%. The CDS would have 7% of the votes. “Sócrates has not specified how immediate the financing need is,” said the euro-zone minister. “If there is a need for funds before the election, we must be creative in our thinking which means we can maybe split the bailout, with some money going to Lisbon before the election and the remainder after the election.” The minister said he doesn’t believe there is flexibility for a bridge loan unless Portugal sets separate negotiations with one or more of its euro-zone partners. The minister also predicted that the terms of Portugal’s bailout will be similar to those of the Greek and Irish bailouts. Greece was the first country to be bailed out by the EU and the IMF last year, with a package valued at €110 billion. Ireland was granted aid totaling €67.5 billion. “I think the trend is to align all bailout packages in terms of duration and maybe interest rates,” the minister said. “I think this will be the case for Portugal as well.” Mr. Sócrates said in his televised address late Wednesday that he will do everything possible to set the best terms for the country’s bailout.

Shutdown looms as negotiations heat up WASHINGTON—President Barack Obama and congressional leaders huddled again Thursday to try and break a budget impasse to keep the U.S. government running past Friday even as top negotiators expressed pessimism about reaching a deal. Mr. Obama, House Speaker John Boehner (R., Ohio) and Senate Majority Leader Harry Reid (D., Nev.) met at the White House for the second time in 16 hours Thursday afternoon, attempting to avert a shutdown that a White House official said “would have very real effects” on the U.S.’s economy. Even as that meeting was occurring, however, the political stakes were being upped on Capitol Hill. House Republicans were closing in on passage of a one-week stop-gap funding measure that would cut $12 billion in federal spending, but which includes nonspending provisions Democrats have assailed. The current interim funding measure expires at midnight on Friday. The White House and Senate Democrats have said they will not

accept another temporary funding measure, and the White House issued a veto threat describing the House Republican bill as a “distraction” from the broader negotiations. Mr. Reid, speaking on the Senate floor earlier Thursday, said he was less optimistic about finalizing a budget deal than when he emerged Wednesday evening with Mr. Boehner from an emergency meeting at the White House with Mr. Obama. “If this government shuts down, and it looks like it’s headed in that direction, it’s going to be based on my friends in the House of Representatives...focusing on ideological matters,” Mr. Reid said. The sticking point, Mr. Reid says, revolves around Republican-led provisions over abortion and other nonspending measures introduced into the budget proposal. The Senate’s top Republican, Sen. Mitch McConnell of Kentucky, said the policy riders attached to the one-week patch are hardly controversial, having received support previously from Democratic senators. Mr. Boehner, in a statement released by his office before the meeting with Mr. Obama, said Democrats

haven’t identified any substantive objections to the one-week measure. “As I have said before, Republicans’ goal is to cut spending to help create a better environment for job creation—not to shut down the government,” Mr. Boehner said.

An analyst in the Washington offices of MF Global Holdings Ltd. put the likelihood of a government shutdown below 50%. MF Global research analyst Chris Krueger, in a report Thursday, said all the parties involved have a vested interest in

Agence France-Presse/Getty Images

BY JARED A. FAVOLE AND MICHAEL R. CRITTENDEN

Senate Majority Leader Harry Reid, left, and House Speaker John Boehner talk to reporters after meeting with President Barack Obama Wednesday night.

keeping the government open. “These are positive indicators for a deal,” he said. The Obama administration has said a shutdown would have wideranging consequences, from slowing tax refunds, temporarily halting pay to soldiers and possibly freezing some housing loans. This comes at a time when the economy is still recovering from the recession. Housing and Urban Development Secretary Shaun Donovan told Senate lawmakers he is concerned a government shutdown could force lenders to stop making loans backed by the Federal Housing Administration, a government agency that insures home mortgages. “This is the worst time that we could introduce that uncertainty into this fragile housing market,” Mr. Donovan told a Senate subcommittee. Mr. Obama emerged from a meeting with Messrs. Reid and Boehner late Wednesday saying he remained confident a deal could be averted. The meeting, he said, helped “narrow the issues and clarify the issues that are still outstanding.” —Alan Zibel contributed to this article.

Friday - Sunday, April 8 - 10, 2011

THE WALL STREET JOURNAL.

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WORLD NEWS

Bahrain grows more divided BY BILL SPINDLE

BY ERIK STIER

Getty Images

MANAMA, Bahrain—Nearly a month after the arrival of troops from Saudi Arabia, Bahrain has become more deeply divided along sectarian lines and is thus a growing threat to become a flashpoint in the broader confrontation between the U.S. and its Arab allies and Iran in the Persian Gulf. Although Bahrain is a tiny island with a population of fewer than one million people, its large Shia Muslim population and its location between Sunni Muslim-dominated Saudi Arabia and Shia Muslim-led Iran has made unrest there a focal point of regional security concerns for both the U.S. and the Arab monarchies of the Persian Gulf, especially Saudi Arabia. After meeting with King Abdullah of Saudi Arabia on Wednesday, U.S. Secretary of Defense Robert Gates said publicly that the U.S. has “evidence” of Iranian meddling in Bahrain. He declined to reveal what proof the U.S. had of Iranian interference. Bahrain’s government, led by a ruling Al Khalifa family long allied with the Sunni rulers of Saudi Arabia, has complained vociferously about Iran’s vocal support for the island’s Shia population and provocative coverage on Iranian-backed television stations that reach Bahrain. Like Mr. Gates and the Saudis, the Bahraini government also has intimated knowledge of more direct efforts by Iran and its ally Hezbollah, the Lebanese militant group, to incite unrest in Bahrain. The Bahrain government also has offered no evidence of specific plots or operational links between Iranian groups or Hezbollah and Bahrianis involved in the protests. U.S. officials have said they don’t believe Iran or other outside groups were behind large-scale demonstrations in Bahrain over the past two months. But they remain concerned that heightened sectarian tensions could provide openings for Iran and Hezbollah to expand their influence

U.S. Defense Secretary Robert Gates, left, met with Saudi Arabia’s King Abdullah, right, as Ambassador to the U.S. Adel Al-Jubair translated at the king’s Riyadh Palace on Wednesday. in Bahrain and elsewhere in the region. Yet tensions show little sign of abating as Bahrain’s government has expanded a forceful crackdown, arresting hundreds of opposition leaders, activists and protesters under an emergency decree. Most, though not all, are Shiites. Between 300 and 400 people have been detained, many in nighttime raids on their homes, according to human-rights activists. Meanwhile, government-owned companies have announced they have fired hundreds of employees who missed work during the protests or were identified as participating in protests the government considered illegal or inappropriate. Teachers, doctors and other professionals the government accuses of participating in protests—some of them at their workplaces—also

have lost their jobs, and more than a dozen have been jailed. Al Wefaq, the leading mainstream Shiite political party, said a total of 1,000 workers have lost their jobs at the national oil company, the national telecom company and other government firms. The companies have announced smaller numbers, totaling several hundred workers. They have said the workers violated contracts and left work during strikes that were called illegally by union leaders. The government also shut down the country’s sole independent newspaper this week after it published what the government described as “false” photos of demonstrators being beaten. The paper was allowed to begin publishing the next day after its prominent editor, Mansoor al Jamri, resigned. He said editors published the photos with-

out realizing they were from demonstrations that weren’t in Bahrain. The opposition groups, which carried on talks with the government but declined full-scale negotiations before troops from across the causeway that links the island to Saudi Arabia arrived, say they now are willing to negotiate with mediation. But the government, which feels pressure from the minority Sunni Muslim population to deal harshly with protest leaders, has announced that political reform discussions take place in the partially elected Parliament. That’s likely to mean the Shiite opposition groups won’t participate. Opposition politicians resigned during the protests. This week, the remaining, largely Sunni parliamentarians, accepted most of those resignations.

Libya rebels say NATO misfire hit them A Wall Street Journal Roundup

Libyan rebel fighters claimed North Atlantic Treaty Organization airstrikes blasted their forces Thursday, in another apparent mistake that escalated anger about coordination with the military alliance in efforts to cripple Libyan forces. At least two rebels were killed and more than a dozen injured, a doctor said. The attack, near the front lines outside the eastern oil port of Brega, would be the second accidental NATO strike against rebel forces in less than a week, and brought cries of outrage from fighters struggling against Col. Moammar Gadhafi’s larger and more experienced military. “Down, down with NATO,” shouted one fighter as dozens of rebel vehicles raced eastward from the front toward the rebel-held city of Ajbadiya. In Brussels, a NATO official said that the alliance will look into the latest rebel claims but that he had no immediate information. NATO last week took control over the international airstrikes that began March 19 as a U.S.-led mis-

Arab plan would seek Saleh’s exit

sion. International diplomatic activity continued on Thursday, with the U.K., the U.S. and allies from the Middle East planning for the first meeting next week of a contact group set up to guide the international intervention in Libya, Britain’s Foreign Office said. The group is set to meet in Qatar next Wednesday, and will include both NATO member nations and some international organizations. The foreign office didn’t confirm who has been invited, but British officials said the U.S. would be represented, and that the Arab League is also expected to be at the talks. The group was established to act as the guide to the NATO-led military operation and humanitarian assistance mission in Libya. Countries involved in the Libyan intervention have continued to hold discussions this week about providing incentives for members of the Gadhafi regime to defect, finding a possible exit for Col. Gadhafi himself and his family, and securing a truce, but there have been few signs any initiatives were advancing. Some members of the British military want the U.K. government

to persuade Arab states to fund the training of rebels, according to a person familiar with the matter. Arab states could pay private security firms to train them, this person said. However, that isn’t a position currently held by the British government, which would have to do the lobbying. “We have not decided to arm or train the opposition forces,” a Downing Street spokesman said.

The attack would be the second accidental NATO strike on rebel forces in less than a week. Still, the U.K. has throughout this conflict kept options on the table. NATO has come under criticism from the rebels since assuming control of the military mission in Libya, with opposition commanders complaining the airstrikes were coming too slowly and lacking the precision to give the rebels a clear edge. On Thursday, a rebel commander, Ayman Abdul-Karim, said he saw airstrikes hit tanks and a rebel con-

voy, which included a passenger bus carrying fighters toward Brega. He and other rebels described dozens killed or wounded, but a precise toll wasn’t immediately known. Hakim al-Abeidi, a doctor at Ajbadiya Hospital, said that at least two people were killed and 16 injured, some with serious burns. Other rebel leaders said that other casualties were left in the field in the chaos of fleeing the area. On Saturday, a NATO airstrike killed 13 rebel fighters in eastern Libya. A spokesman for the rebels described it as an “unfortunate accident” in the shifting battles and pledged support for the international air campaign to weaken Col. Gadhafi’s military power. NATO officials say that the pro-Gadhafi troops have blended into civilian areas in efforts to frustrate the alliances bombing runs. Mr. Adbul-Karim, the rebel commander, said the tops of rebel vehicles were marked with yellow under advice by NATO to identify the opposition forces. The attack occurred about 30 kilometers from Brega, where rebel forces have struggled to break through government lines.

SAN’A, Yemen—A group of Arab Gulf states is proposing to end Yemen’s political deadlock with a plan that could remove the president from office with immunity from prosecution for himself and his family, a concession that has angered members of the youth movement pressing for his resignation. The six-member Gulf Cooperation Council, which said earlier this week it would get involved in mediating the standoff between President Ali Abdullah Saleh and Yemeni opposition, has suggested transferring executive power to Mr. Saleh’s deputy, Vice President Abdrabuh Mansur Hadi, people familiar with the proposal said Thursday. “This is a serious initiative dealing with the entirety of the problem in Yemen,” said Mohammad Abou Lahoum, a senior member of Mr. Saleh’s General People’s Congress party. He said the proposal calls for establishing a governing council of the country’s tribes and political factions, and for elections to take place within three months. He said it complements parallel efforts to resolve the standoff over the handover of power brokered by the U.S. and the European Union. But some of those demonstrating against the president are unsatisfied with the latest plan to end tensions. “This doesn’t take into account the demands of the youth who started this movement,” said Adel al-Surabi, a leader of San’a’s youth coalition. He said his movement couldn’t accept the idea of immunity from prosecution for Mr. Saleh and his family members. “People have suffered and died for almost 33 years under Saleh. No one has the right to take that away, to prevent the people from seeking justice.” Members of both the government and the opposition have been invited to Riyadh to discuss the GCC’s proposed resolution to the standoff, though no dates for the meeting have been set. Mr. Saleh has agreed to attend the Riyadh meetings but hasn’t said publicly whether he accepts the GCC’s handover plan. Indeed, Mr. Saleh has met opposition demands for his resignation with a combination of concessions and violent crackdowns, all the while appearing resolute to remain in power. He has rejected as many as seven proposals brought by the opposition to ease him from power. More than 100 antiregime demonstrators have been killed since protests began in January. Earlier this week, police opened fire on demonstrators in the southern city of Taiz, killing at least 11 people. Following a series of high-ranking military defections and the resignations of members of his government, Mr. Saleh has been struggling to maintain control of the country. In the provinces of Marib, al-Jowf and Abyan, opposition members have cast off central authority and taken over government buildings. Prolonged instability and the limited reach of Mr. Saleh’s government has prompted the U.S., the European Union and the Arab Gulf states to warm to the idea of replacing the Yemeni president, a longstanding counterterrorism ally whose continued presence now appears to be damaging security interests.

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Friday - Sunday, April 8 - 10, 2011

FROM PAGE ONE

Ousted Thai leader vows to play key role Thaksin: Center of the storm

Agence France-Presse/Getty Images

2001: Telecommunications mogul Thaksin Shinawatra is elected prime minister after his Thais Love Thais Party wins national elections and launches a series of populist policies to cement his support base. 2005: Mr. Thaksin wins a second term as prime minister – the first time a Thai leader has been re-elected.

April-May: Months of protests culminate in a series of violent confrontations between security forces and demonstrators. An estimated 91 people are killed—the vast majority of them protesters— and about 2,000 are injured before the rallies collapse on May 19.

2006: Thailand's armed forces topple Mr. Thaksin in a bloodless coup while he is in New York attending the United Nations annual assembly; army chiefs accuse him of corruption and undermining the country’s monarchy. 2007: The army restores democracy; Mr. Thaksin's allies win control of Parliament.

companies are taxed 25% of their profits, and Singapore, where the rate is capped at 17%. Finance Minister Korn Chatikavanij last month indicated the government is looking at cutting corporate-tax rates if the move doesn’t affect long-term revenue collection too greatly. Mr. Thaksin also said he is keen to bolster the country’s domestic economy to stimulate more imports. That, he said, would be a good way of curbing the steady rise of the country’s baht currency against the dollar—a trend that threatens the competitiveness of some exportdriven industries in Thailand.

December: Mr. Thaksin's allies are forced from office after a court convicts the ruling party of vote-buying. Parliament elects Oxford educated Abhisit Vejjajiva as prime minister after the army brokers a series of defections from Mr. Thaksin's ranks. February 2010: Thailand's Supreme Court rules that $1.4 billion of Mr. Thaksin's fortune was corruptly obtained. The money is confiscated. March: Tens of thousands of Mr. Thaksin's supporters begin gathering in Bangkok to demand new elections

“He is highly unpredictable, but in the past few months he has disappeared from view,” says Pavin Chachavalpongun, a fellow at the Institute of Southeast Asian Studies in Singapore. “For him to come out now shows he is very much interested in having a say in what happens in Thai politics—and he is a determinant factor in what happens.” Red Shirt leaders see Mr. Thaksin as a galvanizing force. Speaking in Bangkok earlier this week, one of the movement’s main leaders, Nattawut Saikeua, said Mr. Thaksin had transformed the political consciousness of many Thai people with pop-

Getty Images

August 2008: Mr. Thaksin flees to Britain with his family instead of appearing in court to face corruption allegations. He is later convicted. Associated Press

Continued from first page held as soon as the end of June. His renewed engagement in Thai politics is an indication that the opposition party is preparing to vigorously enter the campaign. It also appears to provide some evidence that Mr. Thaksin plays a hand in directing what happens in the country, just as the country’s political and military establishment accuse him of doing. The current prime minister, Abhisit Vejjajiva, says he plans to dissolve Parliament in early May, potentially launching Thailand into a fraught couple of months of campaigning. Opinion polls show Mr. Abhisit’s Democrat Party neck-andneck with the For Thais Party backed by Mr. Thaksin and his supporters. Many political analysts predict neither party will win an outright majority, and will have to rely on Thailand’s many smaller political parties to form a coalition government. If the For Thais Party wins, it could potentially push through an amnesty law enabling Mr. Thaksin to return to Thailand. Its precampaign pitch to voters is that it is the party that will bring the former premier home. Even if he doesn’t return, Mr. Thaksin’s latest comments indicate he plans to exert a sizable influence from overseas. “Thailand’s democracy is at a crossroads,” he said. “What’s happening in the Middle East and North Africa tells you that the whole world, the majority of people, are changing because of the influence of what they see outside of their own country and the impact of the Internet and social networks.” A steady stream of visitors come to his villa here among the golf courses lining the outskirts of Dubai, which is among several countries where he maintains residences. He also regularly phones in to Red Shirt rallies in Thailand to offer protesters encouragement. Among the measures he has in mind if his supporters win is cutting the country’s corporate tax, which, at 30%, is higher than rates in neighbors such as Malaysia, where

May 25, 2010: Thailand's Criminal Court approves an arrest warrant for Mr. Thaksin on charges of terrorism. He calls the charge politically motivated. January 2011: Mr. Thaksin’s lawyers submit a petition with the International Criminal Court to investigate the killings during the Bangkok protests. March: Prime Minister Abhisit says Thailand could hold new elections by the middle of the year. Source: WSJ Research

ulist policies that targeted the economic chasm between the country’s wealthiest and poorest people. Yet many people in Thailand worry Mr. Thaksin’s return to a higher political profile could hinder any reconciliation between Red Shirt activists and the country’s traditional bureaucratic and military elites. While pushing pro-poor policies during his premiership, Mr. Thaksin sometimes bypassed the country’s democratic checks and balances,critics say. At one stage he was accused of masking the extent of his wealth while in office, but was acquitted after telling Thailand’s Constitutional

Court he had made a mistake. Some influential Thais, including senior army officers, also say they feared his political successes threatened the authority of Thailand’s revered royal family. Government spokesman Panitan Wattanayagorn said Thursday that while Mr. Thaksin is talking about democracy, Prime Minister Abhisit’s administration was taking concrete steps to make sure an election happens. The country’s Parliament, he said, has just passed new laws enabling an election to proceed. Mr. Panitan said Mr. Abhisit has ruled out the possibility of an amnesty for politically linked crimes. He said the government isn’t able to institute an amnesty program for cases that have already been forwarded to the country’s courts—including the terrorism charges against Mr. Thaksin and a conviction for corruption in 2008. New elections might not be enough to resolve Thailand’s political divides, Mr. Thaksin warned, and he also voiced his concern that polls might not go ahead. He said his main concern is that the armed forces and powerful bureaucrats—whom he calls an “invisible hand”—would attempt to derail the vote or dissuade smaller parties from enabling the For Thais Party to form a coalition government. He pointed to how in 2008 the country’s courts forced one pro-Thaksin premier to resign and forced the fall of another pro-Thaksin government by ruling it violated election laws. Mr. Thaksin said Thailand’s economy risks falling behind some of its competitors if the country fails to recalibrate its political system and scale back what he says is a creeping culture of censorship in some parts of the Thai media. “We can’t simply assemble things for others anymore, we need a lot more creativity,” Mr. Thaksin said. “But if freedom of speech is not there, and there is no freedom for people in getting access to knowledge and capital, how can you be creative? That’s what I really worry about.”

ECB lifts rates, says more raises not imminent Continued from first page main policy rate to 1.25% from 1%. The Bank of England voted to hold rates at a record low Thursday despite high inflation, in order to safeguard a shaky recovery. The Bank of Japan held rates steady and pumped an additional $11.7 billion in loans into an economy suffering in the aftermath of earthquake and nuclear crisis. The Federal Reserve, which didn’t meet Thursday, is still engaging in asset purchases to spur growth and isn’t expected to raise rates from near zero for many months. Mr. Trichet suggested the ECB remains concerned about the prospect of higher energy and food prices seeping through the economy via wage and retail-price increases. The risk of higher inflation remains even after Thursday’s decision, the ECB said, adding that it will “monitor very closely” price developments. In ECB-speak, “monitor very closely” is only one step below “strong vigilance”—the term the ECB used last month in signaling a rate rise.

“The official line is that it’s not the first of a series, but I think they have kept the door firmly open to further interest-rate increases as early as June,” said Royal Bank of Scotland economist Nick Matthews. Inflation across the euro zone was 2.6% in March, well above the ECB’s target of just under 2%. Many economists expect it to approach 3% this summer, as past energy and commodity-price gains kick in. Mr. Matthews expects a June rate increase to be followed by two more in the second half of the year, leaving the ECB’s policy rate at 2% by year’s end. That would have a damaging effect on the euro bloc’s periphery of Spain, Portugal, Ireland and Greece, many analysts warn. Those economies carry crushing private-sector debt loads whose financing is closely tied to short-term interest rates, a lethal cocktail for countries struggling with burst property and debt bubbles. “If it’s a change to more normal monetary policy, then this will have certainly an impact on growth, on credit and on nonperforming loans,”

said Fernando Fernandez, professor at IE Business School in Madrid. In Spain, more than 90% of mortgages are tied to short-term interest rates. If the ECB delivers 0.75 percentage point in rate increases this year, as many ECB watchers expect, it would add almost €1,000, or around $1,430, per year to the average Spaniard’s mortgage payment, Mr. Fernandez estimates. Carsten Brzeski, an economist at ING Bank in Brussels, says that based on the structure of lending and interest rates, Spain, Italy, Greece, Ireland and Portugal will be most affected by higher ECB rates. The least affected include Germany, France, the Netherlands and Finland—all countries that are growing solidly and could better weather higher borrowing costs. Mr. Trichet played down the effect Thursday’s rate increase will have on Europe’s wide economic divide. “It is in the interest of all members of the single market, with a single currency, that we maintain maximum credibility for the anchor-

ing of inflation expectations,” he said, insisting that interest rates “across the entire maturity spectrum remain low.” Mr. Trichet received a stark reminder of the periphery’s fragility less than 24 hours before the ECB decision, when Portugal said it would seek a bailout from its European peers, joining Greece and Ireland, which accepted bailouts last year. The ECB encouraged Lisbon to seek aid, Mr. Trichet said. The dilemma for the ECB is that those three countries, though confronting enormous risks, combine for just 6% of euro-zone GDP, about one-fifth as much as Germany alone. Highlighting the north-south divide, Germany on Thursday reported a robust 1.6% rise in factory output in February from January. Germany’s major think tanks upgraded their GDP growth forecasts this year to 2.8% from 2%. Of the major, developed-country central banks, the Bank of England will likely be next to follow the ECB. At 4.4%, U.K. inflation is more than double its 2% target, and some

analysts expect a rate increase as soon as May, when the bank issues its next inflation report. In contrast, the Federal Reserve is expected to hold rates near zero until late 2011 at the earliest, to safeguard an uneven recovery with high unemployment. One source of divide, at least between the ECB and Fed, is how much of a difference still exists between current levels of output and where production would have been without the recession. Economists call this the “output gap.” The wider the gap, the more aggressive central banks can be in spurring growth without worrying about inflation. Economists at Goldman Sachs estimate that the 2008-2009 recession opened up an output gap in the U.S. equal to about 6% of GDP, nearly twice the gap in the euro zone. “In the Anglo Saxon countries, the assumption is that there’s a huge output gap…so you should do everything to get back to (the precrisis) path,” said Daniel Gros, director of the Center for European Policy Studies, a Brussels think tank.

As of 12 p.m. ET

Euro 1.4291 g 0.41%

Yen/US$ ¥85.20 g 0.28%

Yen/A$ ¥89.22 À 0.03%

Oil 109.24 À 0.38%

Gold 1458.10 À 0.03%

Seven & i predicts painful drop in earnings after Japan’s quake

10-year Treasury unch. yield 3.545%

Seoul’s banking deal is too ambitious

BUSINESS& FINANCE. BUSINESS & FINANCE 17

Friday - Sunday, April 8 - 10, 2011

3-month Libor 0.28950

HEARD ON THE STREET 28

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asia.WSJ.com

Pressure grows on Citi in Indonesia Calls for penalties following allegations of employee fraud, questions about debt-collection practices BY ISABELLA STEGER AND I MADE SENTANA

Reuters

A senior Indonesian lawmaker called for penalties against Citigroup Inc. as the bank grapples with allegations that a local employee embezzled millions of dollars from customers, as well as questions about its debt-collection practices. Speaking to reporters in Jakarta on Thursday, Emir Moeis, chairman of the parliamentary committee overseeing the financial sector in Southeast Asia’s most populous country, said the central bank should impose “stern actions” on Citigroup, “ranging from freezing its credit-card business to revoking its entire license in the country depending on the degree of violations it has committed.” Bank Indonesia has already ordered Citibank, the largest foreign bank by assets in the country, not to accept new clients for its Citigold wealth-management unit after a

sia, said in a statement prepared for testimony before parliament that the halt on accepting new customers is “temporary” and that it has “no impact on the service we offer our existing Citigold customers.” A Citigroup spokesman said the bank had “identified some suspicious transactions conducted by a Relationship Manager at our Landmark Branch and immediately informed local regulators and the Police.” It said it had “contacted those who may have been impacted by the fraud, and will work with them to “address any losses in their accounts.” The allegations made against Citi come at a time when Indonesia, with its rapidly growing middle class, is increasing in importance to foreign banks. The Citigold business in which the fraud took place targets Asia’s emerging affluent, generally defined as those with between $10,000 and $100,000 in assets. In Indonesia, Citi’s Citigold clients have $50,000

Indonesia’s rapidly growing middle class is gaining importance for foreign banks. staff member, Inong Malinda Dee, was detained by police on March 23 on charges of stealing at least 17 billion rupiah ($2 million) from clients after obtaining signed blank checks from them. Citi detected the problem in February, and an investiga-

tion shows that the fraud dates to December. Police also seized expensive cars in Ms. Dee’s possession. Efforts to reach Ms. Dee were unsuccessful. Ditta Amahorseya, head of Citi’s country corporate affairs in Indone-

or more in investible assets. Citigroup’s consumer unit in Asia generated $2.1 billion in net profit in 2010, up 52% from a year earlier, and was the largest regional contributor to consumer banking globally, according to the company. In a parliamentary hearing on Wednesday, Bank Indonesia Gov. Darmin Nasution said he wouldn’t rule out more “severe sanctions” if more wrongdoings were discovered. Indonesian police are simultaneously conducting an investigation into the death of a Citibank client, who died last week after meeting with debt collectors contracted by Citi at a Citibank branch in Jakarta. The man, Irzen Octa, was the secretary-general of the National Unity Party, a small party in Indonesian politics. The circumstances of his death are unclear. The investigation resulted in Bank Indonesia ordering Citigroup not to accept new credit-card cusPlease turn to page 22

Hong Kong IPO pipeline looks rich this quarter

Nissan’s scramble to recover

BY PRUDENCE HO

YOKOHAMA, Japan—On the evening of Thursday, March 10, a cargo of 600 Leaf electric cars and other Nissan Motor Co. vehicles bound for the U.S. sailed out of the Port of Yokohama, allowing Nissan logistics chief John Martin to breathe a sigh of relief. The Japanese auto maker had been under fire for slow deliveries of the highly anticipated Leaf after taking more than 20,000 orders in the U.S. “I was especially relieved that this last shipment of Leafs had not been delayed,” Mr. Martin said. The next day, the supply-chain guru had one major chore to finish before heading out for the weekend: a presentation on the 22nd floor of Nissan’s global headquarters building. At 2:46 p.m. local time, just as he began his remarks, a massive earthquake shook the building. “It was terrifying,” said Mr. Martin, a 47-year-old corporate vice president from the U.K. who joined Nissan 20 years ago. “You suddenly realize that ‘fight or flight’ doesn’t apply when you are 22 stories up.” It turned out to be one of the most powerful earthquakes ever to strike Japan—a 9.0 magnitude seismic event that reverberated hundreds of kilometers away. For Nissan, it resulted in damage to six facilities, including an assembly plant in Tochigi prefecture north of Tokyo and an engine plant in Iwaki in hard-hit northeastern Fukushima prefecture. A 7.1 magnitude aftershock hit the same region Thursday,

European Pressphoto Agency

HONG KONG—After a slow start to the year, more than a dozen companies are lining up initial public offerings in Hong Kong in the second quarter, seeking to raise more than US$16 billion. With funds flowing back into Asia after a flight in January and February, a spate of deals that include IPO FOCUS global brand names, miners and pharmaceutical firms are slated to list. An IPO by China’s Inner Mongolia Yitai Coal Co. could total US$1.5 billion, while Swiss trader Glencore International AG’s dual listing in Hong Kong and London could raise US$10 billion, of which around US$3 billion is expected in Hong Kong. For the first time in 10 weeks, Asian and global emerging-market funds, excluding Japan, chalked up net inflows, according to a Nomura research report dated April 1. Chinarelated fund inflows totaled US$210 million for the week to March 30, an 18-week high, and Hong Kong fund net inflows were US$52 million, the first positive figure in 11 weeks. That should help reverse Hong Kong’s recent drop in IPO activity, bankers said. In the first quarter, 11 companies raised US$2.26 billion from IPOs in Hong Kong, down 51% from the US$4.6 billion raised by 14 companies a year earlier. “We see more than US$100 billion worth of IPOs in the Asian pipe-

line, with most of that targeting Hong Kong in the next 12 months,” said Mark Warburton, head of equity capital markets, Asia, at Macquarie Capital Advisors, the corporate advisory arm of Macquarie Group Ltd. “It’s possible not all of these deals will get done, but IPOs by companies based outside the region will be a key theme as Asia, especially Hong Kong, will remain an IPO hotspot.” The biggest overseas company to list in the second quarter should be Swiss commodities trader Glencore, which is attempting to woo cornerstone investors. In addition to Yitai Coal, among those planning IPOs of US$1 billion or more in the second quarter are Shanghai Fosun Pharmaceutical Group Co., with a US$1 billion offering, Shanghai Pharmaceuticals, which is looking to raise up to US$1.8 billion, and Sany Heavy Industry Co., with an offering that could total US$3 billion. Tycoon Li Ka-shing will be raising up to US$1.8 billion from listing the Beijing-focused real-estate investment trust he controls, Hui Xian REIT, in Hong Kong this month. Bankers said timing will be key. “The IPO market is closely correlated with market sentiment and fund flows, so the window for companies to launch their IPOs can be as narrow as two to three months, which often leads to a concentration of IPOs flocking the market at a similar time,” said David Suen at J.P. Please turn to page 21

BY CHESTER DAWSON

The quake devastated a Nissan dealership in Ishinomaki, above in late March. with no early reports of major new damage. It took days before the full scope of the destruction was known. But the severity was clear even before the shaking stopped. Mr. Martin and others on the top floor peered through windows and saw scattered fires in the cityscape below. Most appeared to be near the port, where Nissan employs about 100 employees and had stored parts and vehicles coming into and out of Japan. Mr. Martin tried to phone contacts at the company’s dockside facility, but cellphone and fixed-line service was out. “The most important tool an executive has is the cellphone, but none worked,” he said. One story down, Nissan Chief Operating Officer Toshiyuki Shiga

was in a meeting with officials from the Japan Automobile Manufacturers Association, where he serves as chairman. As a wheeled cart with a closed-circuit television connection to JAMA’s office in Tokyo rolled back and forth, Mr. Shiga looked to a senior vice president who had just overseen an annual disaster-preparedness drill three weeks before, Hitoshi Kawaguchi. “We better set up a disaster task force now or this could get ugly,” Mr. Shiga later recalled saying to his deputy in charge of external affairs, Mr. Kawaguchi. Minutes later, a strong aftershock rocked the building anew and workers scrambled to take cover under their desks as books toppled from shelves and laptops skittered Please turn to next page

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BUSINESS
FINANCE

Rio adds 3 to Riversdale board Nearing a majority stake, miner installs key executives among takeover target’s directors MELBOURNE—Closing in on a majority stake in Riversdale Mining Ltd., Rio Tinto took three seats on its takeover target’s board ahead of a detailed review of its assets. Rio Tinto has secured at least 49.53% of the Sydney-based coal miner, after late Wednesday surpassing the 47% threshold it sought. That triggered a 14-day extension of the offer deadline, to April 20. Thursday, Riversdale said three Rio nominees have now joined as board directors, and Executive Chairman Michael O’Keeffe and a nonexecutive director will step down. Rapid industrialization in Asia, especially China and India, has prompted miners to bid aggressively for undeveloped deposits of commodities that are essential to manufacturing steel, such as coking coal. Riversdale’s assets include billions of metric tons of coking coal in Mozambique that could be shipped eastward once infrastructure, including rail links and a port, is built. Riversdale’s board, which has backed the proposed deal from the start in December, has recommended that shareholders accept the offer, which values the company at about US$4 billion. Riversdale’s shares ended the day at 16.51 Aus-

Bloomberg News

BY ROBB M. STEWART

Rio Tinto’s head of energy, Douglas Ritchie, is joining the Riversdale board. tralian dollars (US$17.24), one Australian cent above Rio’s offer price. Riversdale said Chairman O’Keeffe and Andrew Love will resign from its board when Rio’s stake passes the 50% mark or the offer closes. Douglas Ritchie, chief executive of Rio’s energy business, joined Riversdale’s board, effective immediately, along with David Peever, managing director of Rio Tinto Australia, and Matthew Coulter, Rio’s chief development officer of coal. The appointments bring the number of directors to nine, including Narendra Misra, head of mergers and acquisitions at Indian steel producer Tata Steel Ltd. Tata has

an agreement for 40% of the coal produced by Riversdale’s Benga mine, which is scheduled to begin production this year. Tata last month raised its stake in Riversdale by 2.9 percentage points to 27.1% after rival steel maker Cia. Siderurgica Nacional of Brazil increased its holding to 19.9%. CSN officers have said the company is open to possibilities for its stake, but for now intends to keep the investment in Riversdale as a hedge to cover part of its own coking-coal needs. Representatives for CSN weren’t reachable when telephoned outside of business hours. A spokesman for Tata wasn’t immedi-

ately available for comment. Rio in January said it would evaluate the performance and prospects for Riversdale’s operations and projects when the takeover is complete. It is expected to sell the company’s Zululand coal mine in South Africa. It also plans to close Riversdale’s head office eventually and seek the resignation of directors, while retaining key management and staff. Rio has said it expected to lower corporate costs, though it didn’t provide an estimate. Key to the acquisition are two coking-coal mines being developed in Mozambique’s Tete province, an area that has attracted the interest of steel and mining companies including Vale SA of Brazil. Riversdale has estimated at least US$400 million will be needed for its share of costs for the second and third stages of developing the Benga project, and at least US$2.9 billion for the Zambeze project. Benga has resources of four billion metric tons and Zambeze, which is at an earlier stage of development, has nine billion tons. Rio has the financial might to push the projects onward and said it would use its experience in the rail, port and barging sectors to provide infrastructure.

At Nissan, executives drew on preparation to recover Continued from previous page across desks. At 3 p.m. local time, Nissan set up a crisis-management committee composed of all operating officers in the headquarters building. Since the elevators had shut down as a standard precautionary measure, Mr. Shiga and other key executives walked down 13 flights of stairs to a make-shift “war room” set up in a media briefing area on the eighth floor. There, folding tables were set up representing key business functions such as human resources, damage assessment, factory operations, production engineering, procurement and public relations. Mr. Shiga and other executives sat at a table along one wall where they could take in scenes of the damage from two large-screen tele-

vision sets and make spot decisions regarding issues raised by those manning laptops at the various desks. Except for the live TV footage of damage, it was similar to a mock disaster drill that had taken place just weeks earlier on Feb. 22, an annual rite since a 2007 quake that disabled some key suppliers’ production. “We saw the tsunami devastation play out right before our eyes,” said Mr. Shiga. “When I saw cars being tossed like toys, it was a very humbling moment. There are no words to convey the shock,” he said. As the scope of the disaster became clearer, Nissan officials ran through functional management reviews to determine the impact and response. On the procurement desk, supply-chain experts began to look

for possible choke points that could affect production. “We knew in about an hour where we had our major supply issues,” Mr. Martin said. The damage was significant. Nissan would be forced to halt production for weeks. The biggest problem was with the smallest suppliers at the bottom of the supply network. Ultimately, officials found that Nissan was exposed to about 60 of the 300 hardest-hit auto-related parts makers. Yokohama Port’s Honmoku Wharf is Nissan’s global logistical nerve center, where key parts are assembled and then shipped inland or out to vehicle factories around the world. Since highways were closed after the quake, Mr. Martin made his way through backstreets en

route to the port. Although the buildings were between 25 and 30 years old, they withstood the magnitude 5.0 shaking in Yokohama. There was some damage to floor boards and from liquefaction of the reclaimed land on which the facility was built. But the port would reopen just 48 hours later. Nissan was still having trouble getting a full picture of the damage at Iwaki, but by 6 p.m. local time company headquarters got word the fires at Tochigi were extinguished. “The workers contained a lot of damage that would otherwise have been inevitable,” said Mr. Shiga. “We practice disaster training every year at the factories, and it worked like clockwork during the real thing,” he added.

Goldman to buy out Aussie unit BY CYNTHIA KOONS SYDNEY—Goldman Sachs Group Inc. said Thursday it plans to buy the 55% of its Australian venture that it doesn’t already own amid an investment boom in the country being driven by deals activity across the mining industry. “Australia and New Zealand represent an important part of our growth strategy,” said Lloyd Blankfein, chairman and chief executive of Goldman Sachs, in a statement. “This investment underscores our desire to continue to strengthen our Australasian client franchise.” A representative for Goldman Sachs in Sydney declined to comment on the terms of the deal. For the year ended Dec. 31, Goldman Sachs & Partners Australia reported after-tax profit of 94.9 million Australian dollars (US$99.1 million), down 65% from the A$272.3 million earned in the year prior. The unit had A$813.2 million of net assets, up from A$780.7 billion a year earlier. The stake in Goldman Sachs & Partners in Australia and New Zealand is held by current and former Goldman management and employee shareholders and the acquisition requires a minimum 75% acceptance by shareholders and requires regulatory approvals. New York-based Goldman has operated its Australian joint venture since 2003. International investment banks such as Goldman are boosting their presence in Australia amid a substantial pick-up in mergers-and-acquisitions activity in the first quarter, driven largely by the continued strength in the commodities sector and the strength of the Australian dollar, according to Dealogic data. Goldman Sachs is one of many international banks looking for a larger piece of the action in Australia. Japan’s biggest brokerage house Nomura Holdings Inc. plans to build an equity capital markets, or ECM, desk in Australia as it seeks to capitalize on growth in the resource-rich Pacific nation and HSBC Holdings PLC recently hired a new head of its local leveraged finance business as part of a wider plan to expand its position in deals here.

INDEX TO BUSINESSES AND PEOPLE Businesses This index of businesses mentioned in today’s issue of The Wall Street Journal is intended to include all significant reference to companies. First reference to the companies appears in bold face type in all articles except those on page one and the editorial pages. Acer...............................19 Actividades de Construccion y Servicios....................18 Amazon.com.................19 AMI Insurance..............23 Apollo Management.....22 Apple.............................19 AstraZeneca....................7 ASX ................................. 3 Banco BPI ..................... 20 Banco Espirito Santo...20

Bank of America .......... 21 BC Partners .................. 23 Blockbuster...................19 British American Tobacco........................3 BW Offshore.................23 Cairn Energy............18,20 Cheung Kong (Holdings)..................21 Chevron.........................28 China Vanke....................8 Cia. Siderurgica Nacional.....................16 Citic Pacific...................21 Citigroup .................. 15,21 Cnooc.............................21 Costco ........................... 20 Costco Wholesale.........17 Daewoo Securities .. 22,28 Dell................................19 Diageo ......................... W4 Dish Network................19 Elpida Memory ............. 21 Erdenes-Tavan Tolgoi...21 Exelon ............................. 5 Facebook ......................... 6 FamilyMart ................... 17 Fenway Sports Group .. 18 Fitness First.................23

Gap...........................17,20 General Electric..............5 Glencore International.15 Goldman Sachs........16,22 Google...........................19 GS Holding....................28 Hang Lung Properties..21 Henderson Land Development ............. 21 Hewlett-Packard...........17 Hochtief...................18,20 Honda Motor ................ 21 Hospira............................6 HSBC Holdings ............. 16 Huayuan Group...............8 Hui Xian REIT...............15 Hutchison Port Holdings Trust .......................... 23 Imperial Tobacco Australia......................3 Inner Mongolia Yitai Coal Co...............................15 International Business Machines ................... 19 Japan Automobile Manufacturers Association................15 J.C. Penney...................17 JGC................................18

J.P. Morgan Chase........21 Kayem Pharmaceutical Pvt. Ltd........................6 KDB Financial..........22,28 Kellogg Brown & Root . 18 Kohl’s........................17,20 Korea National Oil........28 Larsen & Toubro...........19 Lawson..........................17 Leighton Holdings...18,20 Limited Brands........17,20 Living Foundation...........6 LRMR Branding & Marketing..................18 Macy’s...........................17 Mazda Motor................21 Netflix...........................19 News Corp .................... 19 Nissan Motor................15 Nokia.............................17 Nomura Holdings..........16 Nordstrom.....................17 Oaktree Capital Management ............. 22 Oracle............................17 Philip Morris International................3 Pioneer..........................21 Prada.............................21

Public Service Enterprise Group ........................... 5 Rio Tinto.......................16 Riversdale Mining ........ 16 Saks...............................17 Samsonite.....................21 Samsung Electronics.......17,21,22 Samsung Securities.....28 Sany Heavy Industry....15 Seven & i Holdings.......17 Shanghai Fosun Pharmaceutical..........15 Shanghai Pharmaceuticals........15 Singapore Exchange.......3 SK Innovation...............28 Snamprogetti Netherlands...............18 S-Oil..............................28 STX OSV Holdings........23 Sun Hung Kai Properties..................21 Target............................17 Tata Steel................16,19 Technip..........................18 Telstra...........................21 Temasek Holdings..........3

Time Warner.................18 Tokyo Electric Power.4,21 Toyota Motor................21 United Co. Rusal...........23 Vedanta Resources..18,20 Woori Finance Holdings................22,28 Woori Investment & Securities Co........22,28

People This index lists the names of businesspeople and government regulators who receive significant mention in Today’s Journal. Agarwal, Vibhuti ............ 6 Arimura, Hideo.............21 Balmforth, John ........... 23 Beacher, Annette..........23 Bell, Paul.......................19 Blankfein, Lloyd............16 Bocker, Magnus..............3 Brennan, David...............7 Brzeski, Carsten...........14 Carrillo, Christian ......... 21

Carter, Maverick...........18 Cheung, Alvin ............... 21 Chow, Nicolas...............19 Coulter, Matthew.........16 Dee, Inong Malinda......15 Fukunaga, Hiroyuki.......21 Galvin, Tom...................20 Gandhi, Mahatma...........6 Garria, Nikita..................6 Graham, Angus.............28 Groschke, Alexander .... 18 Hasegawa, Naomi.........21 Hazare, Anna..................6 Henry, John...................18 Hess, Steven.................23 Hu, Johnson....................8 Jones, Adrian................17 Kahn, Barbara...............17 Karsh, Bruce ................. 22 Kawaguchi, Hitoshi ...... 15 Khare, Harish..................6 Kim, Brian.....................20 Lahiri, Tripti....................6 Lee, Se Young...............22 Lee Shau-kee................21 Leven, Ron....................20 Li Ka-shing....................15

Love, Andrew................16 Mahaney, Mark.............19 Marks, Howard.............22 Martin, John.................15 McIntyre, Scott .............. 3 Misra, Narendra............16 Murata, Noritoshi.........17 Newman, James...........20 O’Keeffe, Michael.........16 Peever, David................16 Ramdev, Baba.................6 Ren Zhiqiang...................8 Ritchie, Douglas ........... 16 Rowe, John.....................5 Seo Won-seok .............. 17 Shankar, Sri Sri Ravi......6 Sharma, J.P.....................6 Sproule, Simon.............16 Stone, Raymond...........23 Trichet, Jean-Claude..1,20 Turner, Michael.............23 Verma, Navneet..............6 Wachter, Paul...............18 Werner, Tom.................18 Woo, Art.......................23 Yang, Michael ............... 19 Yu Liang..........................8 Zimmerman, Russell......3

Friday - Sunday, April 8 - 10, 2011

THE WALL STREET JOURNAL.

17

BUSINESS
FINANCE

Samsung stumbles amid slow recovery BY JUNG-AH LEE

qnb - Imaginechina

Shoppers lined up at a 7-Eleven in Sendai, Japan, two days after the quake. The chain’s owner said 60 stores remain shut.

Seven & i predicts pain Japanese retailer forecasts 22% drop in earnings as result of quake BY HIROYUKI KACHI TOKYO—Top Japanese retailer Seven & i Holdings Co. said it expects its earnings to drop 22% this fiscal year as the country’s natural disasters and nuclear crisis crimp consumer spending and boost company costs. The company, which runs 7Eleven convenience stores in Japan and the U.S., Seibu and Sogo department stores and big-box Ito-Yokado stores, forecast that its net profit will fall to ¥87.5 billion ($1.02 billion) for the year through February. “We expect the quake will strip ¥38.1 billion from our operating profit,” President Noritoshi Murata said Thursday as the company reported that earnings doubled for the fiscal year recently ended. Seven & i, Japan’s biggest retailer by sales, expects to record a special loss of ¥26 billion to reflect costs for earthquake-damaged stores for the current fiscal year. Separately, convenience-store chain FamilyMart Co. forecast that its profit will fall 33%-45% this fiscal year, also citing the March 11 earthquake, after reporting strong earnings for its latest year. Seven & i forecast revenue would fall 10% to ¥4.6 trillion this fiscal

year. Seven & i said that in addition to the effects of the earthquake, sales will be damped by an accounting change in which the company’s U.S. convenience-store segment no longer will include sales from its franchise stores in its top line. Some 600 of the company’s roughly 13,200 domestic 7-Eleven stores closed after the earthquake, with 60 remaining shut. The company said 100 of its 170 York-Benimaru grocery stores, mainly in northern Japan, closed temporarily. But Mr. Murata said Seven & i’s convenience stores, supermarkets and department stores now are registering gains in sales from a year earlier. “I don’t expect the quake will cause a big impact on the economy,” he said, adding that the earthquake came as the economy was on track for recovery. He called the company’s estimates cautious. Rolling power outages implemented by Tokyo Electric Power Co. in the Tokyo area are hurting retail operations around the capital. And traffic disruptions caused by the power outages have kept some consumers from shopping. The government-mandated power cuts are aimed at preventing a widespread outage. The earthquake and tsunami knocked out two Tepco nuclear fa-

cilities, leaving the utility, which serves all of the Tokyo area, with a 25% shortfall in capacity. For the fiscal year ended in February, Seven & i’s earnings more than doubled, helped by prior-year asset write-downs. Net profit jumped to ¥111.96 billion from ¥44.88 billion. Revenue edged up to ¥5.12 trillion from ¥5.111 trillion. For the fiscal fourth quarter, net profit of ¥21.74 billion reversed a year-earlier loss of ¥24.47 billion, when Seven & i booked a big special loss for asset write-downs and store closures. Meanwhile, FamilyMart said the effects of the earthquake will depress net profit to between ¥10 billion and ¥12 billion for the current fiscal year. The company is Japan’s third-largest convenience-store operator by sales, behind Seven & i’s Seven-Eleven Japan Co. unit and Lawson Inc. FamilyMart’s profit climbed 19% to ¥18.02 billion from ¥15.1 billion for the year ended in February. Revenue increased 15% to ¥319.89 billion, largely because of the acquisition of smaller rival am/ pm Japan Co. Seven & i and FamilyMart report earnings based on Japanese accounting standards.

U.S. retailers post solid sales gains BY KAREN TALLEY U.S. retailers delivered solid March sales numbers, despite the challenges posed by a later Easter, poor weather and higher gasoline prices. The majority of retail chains reported decent gains for the month at stores open a year or more, including Costco Wholesale Corp., Macy’s Inc. and Limited Brands Inc. Others, including Target Corp., J.C. Penney Co. and Kohl’s Corp. posted declines in same-store sales from a year earlier, but the drops were less than analysts projected. Upper-end shoppers continued to show particular strength, with Saks Inc. and Nordstrom Inc. delivering

strong results. “I was worried about the fragile progress we have seen so far on the part of retailers, which is really a reflection of consumers,” said Barbara Kahn, director of the Jay Baker Retailing Center at the University of Pennsylvania’s Wharton School. “But March, even though a complicated month, does suggest more progress on the road to recovery.” The month saw tax returns coming in, which gave consumers some extra discretionary income. The government also reported strong growth in employment. Higher-end consumers especially were feeling good as the stock market continued marking gains. The 25 retailers tracked by

Thomson Reuters reported a 1.7% rise in same-store sales for last month. A 0.7% decline was expected. The solid showing overcame a later Easter shopping period; the holiday lands on April 24 this year, its latest date since 1943. Gap Inc. lowered guidance because of events in Japan, where it operates over 150 stores. The retailer said last month’s earthquakes and tsunami will cut earnings per share for the current quarter by about four cents. Gap was among the few retailers to serve up a disappointment in March same-store sales, showing a 10% drop when a 7% decline was expected. Gap also owns the Banana Republic and Old Navy chains.

SEOUL—Samsung Electronics Co., the world’s biggest maker of memory chips and liquid-crystaldisplay television sets, gave a weak first-quarter earnings estimate Thursday, reflecting how the slow global economic recovery, exacerbated by the earthquake in Japan last month, is weighing on demand for consumer electronics. Samsung’s earnings guidance is closely watched by the market as a gauge of overall demand for various technology products given its diversified businesses. In addition to key technology components such as memory chips and flat screens, the company is the world’s second-largest maker of mobile phones behind Nokia Corp. and also makes home appliances. Samsung said it estimates firstquarter operating profit of between 2.7 trillion won and 3.1 trillion won ($2.49 billion and $2.85 billion). Based on the midpoint of that range, that would be largely in line with the market expectations for profit of 2.84 trillion won. The company estimates sales of between 36 trillion won and 38 trillion won. Analysts expected firstquarter sales of 37.68 trillion won. Samsung didn’t provide a netprofit forecast or a breakdown of its estimates by business sector. In the year-earlier first quarter, Samsung posted an operating profit of 4.41 trillion won on sales of 34.64 trillion won. After logging a record secondquarter operating profit of 5.01 trillion won last year, Samsung’s earnings have been falling as its LCD division, which makes screens for phones, computers and television

sets, as well as the division that makes TVs and consumer goods, saw a sharp squeeze in margins toward the end of last year because of softening demand, particularly in Europe and the U.S. But analysts expect better earnings in the coming quarters. “Due to a price rally in DRAM and NAND chips, the operating profit from its chip division will improve to two trillion won in the second quarter, while its LCD division is also expected to turn around to a 230-billion-won profit,” after posting a loss of about 142 billion won in the first quarter, said Seo Wonseok, an analyst at NH Investment & Securities. DRAM chips are most widely used in personal computers and NAND flash-memory chips are used to store data in music players and digital cameras. Memory-chip prices have risen steadily since the March 11 earthquake on concerns about shortages, while some liquid-crystal-display prices have stabilized in a sign that Samsung will likely see profit margins expanding from its component business in the second quarter. Analysts also said the earthquake that hit Japan last month may initially benefit Korean chipmakers after some disruptions at Japanese counterparts’ chip-production facilities. But if Japanese companies can’t produce for more than two months, component supply globally could be disrupted, hurting all manufacturers. Samsung shares initially rose 1.3% despite the tepid outlook as investors focused on the improving outlook. But they closed 1.5% lower at 909,000 won amid heavy selling by foreign investors.

Associated Press

Samsung’s products include the Galaxy mobile phone, shown in an ad in Seoul.

H-P sues former sales executive, alleging he stole trade secrets BY BEN WORTHEN Hewlett-Packard Co. sued a former sales executive Wednesday, alleging that he stole trade secrets from the company before joining rival Oracle Corp. H-P alleged that Adrian Jones, a senior vice president in its Asian operations, on Feb. 11 used a USB storage device to copy H-P’s strategic and financial plans, sales figures and employee data, among other information, according to a complaint filed in California Superior Court in Santa Clara County. Mr. Jones resigned five days

later and didn’t return the copied files, the complaint says. A month later he told H-P that he had accepted a similar position at Oracle. Mr. Jones couldn’t be reached. An Oracle spokeswoman declined to comment. A spokeswoman for H-P said it takes the protection of its trade secrets and confidential information seriously. The action seeks to prevent Mr. Jones from using the theft of confidential H-P documents to place the company “in an unfair competitive disadvantage,” she said. The case was earlier reported by Reuters.

18

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

CORPORATE NEWS

Hochtief issues warning German builder expects profit to be hit by Australian unit’s woes BY HILDE MESSER FRANKFURT—Hochtief AG issued a profit warning Thursday after its Australian unit Leighton Holdings Ltd. said it would review its outlook amid concerns that it may disclose write-downs and a capital increase. Shares in Hochtief were off 8% in Frankfurt on Thursday afternoon in reaction to the news. The German builder’s stock had gained 15% in value in the past three months. The drop in Hochtief’s share price presents an opportunity for Actividades de Construcción y Servicios SA to increase its stake in the German construction company, which for months has resisted the Spanish builder’s unsolicited, hostile bid to compile a majority holding. Previous profit warnings from Leighton in November and February had been played down by Hochtief, but Thursday the German company said it expected “significant adverse effects” on its own 2011 forecast. “There is no indication that Hochtief’s forecasts for the business years 2012 and 2013 are affected,” Hochtief said. The announcement came after Leighton requested the Australian stock exchange halt trading in its shares, possibly into next week, pending an update on its targets. That followed a report this week

in Melbourne’s The Age newspaper that said Australia’s largest desalination project in Victoria state, valued at 5.7 billion Australian dollars ($6 billion), was as much as a year behind schedule and could cost its builders hundreds of millions of dollars in profits. Analysts believe the project at Wonthaggi, Australia, being built by Leighton unit Thiess, would be a key factor in an expected profit downgrade for Leighton, according to the report.

Leighton Holdings asked the Australian stock exchange to halt trading in its shares, possibly into next week, pending a review of the company’s outlook. LBBW analyst Alexander Groschke said a material profit warning is expected, with Leighton “facing heavy contractual fines.” Leighton declined to comment Thursday. The company plans to review its outlook, published Feb. 24, prior to a resumption in trading. Hochtief previously said it expected a pretax profit of about €1 billion ($1.43 billion) and net profit of about €600 million this year. For

2012, the construction company targets a pretax profit of about €1 billion and net profit of about €500 million; for 2013, it expects a pretax profit from operating activities of more than €1 billion and net profit of about €450 million. The problems at Leighton come at an awkward time for Hochtief. ACS, which aims to build a stake of more than 50% in Hochtief, raised its holding in the Essen-based company to about 41% at the end of March. Hochtief’s management had rejected ACS’s takeover offer, made at the minimum price, but the renewed problems at its Australian unit are likely to help ACS to acquire more shares in Hochtief. ACS is expected to use the lower share price to “remain a buyer of Hochtief shares in the market,” brokerage equinet said in a research note. Leighton’s problems caused analysts to downgrade it, citing the possibility of write-downs and a capital increase. Royal Bank of Scotland on Thursday put a “sell” recommendation on the stock after identifying a number of risks—including the Brisbane Airport Link project, the Wonthaggi desalination plant, bad weather and its venture in the United Arab Emirates—as issues that could trim profit in fiscal 2011 to less than A$100 million.

Cairn extends deal deadline BY ALEXIS FLYNN LONDON—Cairn Energy PLC has extended by more than a month the deadline for selling a stake in its Indian unit to Vedanta Resources PLC, a day after an Indian regulatory panel said it needed to take a closer look at the deal. Edinburgh-based Cairn also said some elements of the deal—namely put and call options exercisable by Cairn and Vedanta, and pre-emption right exercisable by Vedanta—were removed from the terms of the sale agreement after objections from the Securities and Exchange Board of India, the country’s market regulator. Vedanta in August proposed to acquire up to 60% of oil-exploration company Cairn India Ltd. for about $9.6 billion in cash. Vedanta aims to buy a stake of 40% to 51% in Cairn India from Cairn Energy. Separately, a Vedanta unit, Sesa Goa Ltd., plans to make an open offer of 355 rupees

($8.05) a share to Cairn India shareholders to buy up to 20% in the company. “Cairn and Vedanta have extended the long stop date in the sale agreement, by which all conditions must be completed or waived, to May 20, 2011, in order to accommodate the completion of the open offer of up to 20% of the shares of Cairn India,” Cairn said. Cairn India holds stakes in 10 oil and gas blocks in India, including the huge RJ-ON-90/1 oil block at Barmer in the western state of Rajasthan. The block’s output of 125,000 barrels a day accounts for about 17% of India’s total crude production. Anticipation had mounted in recent days following news reports that the deal would be approved before a mandated April 15 deadline for the sale agreement to be completed elapsed. However, an Indian government committee Wednesday referred the

deal to a group of ministers for further study, giving no indication of when a decision could be expected. Still, analysts said that it was likely the deal would go through. “While the delays are frustrating we would still expect the transaction to be approved,” said Oriel Securities’ Richard Rose. This view was echoed by Evolution Securities’ Richard Griffith, who pointed out that delays to the deal were unlikely to have a material impact on Cairn’s business. Malcolm Graham-Wood of VSA Capital said: “It’s not a game changing thing for Cairn, but it’s a pain as much as anything else. This is just taking up an amount of time. Of course, if they don’t get it through by the expiry [of the deadline] they will have to get shareholder permission again, something which they could generally do without.” —Prasanta Sahu, Rakesh Sharma and Bijou George in New Delhi contributed to this article.

JGC to settle Nigeria bribery charges BY DREW FITZGERALD JGC Corp. of Japan agreed to pay $218.8 million to resolve charges stemming from kickbacks allegedly paid to Nigerian government officials, the U.S. Justice Department said Wednesday. According to the department, the so-called TSKJ joint venture among JGC, Kellogg Brown & Root Inc., Technip SA and Snamprogetti Netherlands BV arranged to bribe Nigerian government officials in the awarding of more than $6 billion in contracts for liquefied-natural-gas

facilities on Nigeria’s Bonny Island. A representative from JGC wasn’t immediately available for comment. The other companies involved have already pleaded guilty or settled separate charges. The U.S. Foreign Corrupt Practices Act outlaws bribes paid by corporations to government officials in other countries. “With today’s resolution, each of the four companies in the TSKJ joint venture, the former chairman of the U.S. joint-venture partner, and several other individuals have

now been held accountable for a massive conspiracy to bribe Nigerian government officials to obtain lucrative construction contracts,” said Mythili Raman, the Justice Department’s principal deputy assistant attorney general. Under the agreement, the Justice Department agreed to defer prosecution of JGC for two years if the Japanese contractor retains an independent compliance consultant to prevent further lapses. If the company meets certain conditions, the department will drop the criminal charge.

Reuters

The NBA star is teaming up with Fenway Sports, which also owns the Red Sox.

LeBron James gets piece of Liverpool BY MATTHEW FUTTERMAN U.S. basketball star LeBron James is joining forces with renowned hedge-fund manager John Henry and veteran Hollywood producer Tom Werner in a deal that brings together one of the biggest stars in sports and two of the world’s most renowned teams. The deal between Mr. James and Fenway Sports Group will give Mr. James a minority interest in the soccer club Liverpool, which FSG owns. FSG, which also owns the Boston Red Sox, is teaming up with Mr. James’s sports-marketing firm, LRMR Branding & Marketing to become the exclusive world-wide representative for Mr. James. The deal marks the first time that a professional athlete at the top of his game has taken an ownership interest in a team with the size and reach of Liverpool, which is one of the most popular and powerful sports teams in the world. It also adds yet another dimension for Boston-based FSG, which became a global operation last October when it bought Liverpool for $488 million. The company was founded as New England Sports Ventures nine years ago after Messrs. Henry and Werner bought the Red Sox and 80% of regional sports channel New England Sports Network. In 2007 Fenway became 50% owner of the Nascar auto-racing team Roush Fenway Racing. Its subsidiary, Fenway Sports Management, has since become a leading sports-marketing firm, selling $60 million in sponsorships annually for properties FSG owns or represents. By teaming up with Mr. James, Fenway will be representing the commercial interests of an individual sports star for the first time. “We’re not interested in talent or athlete representation but we think he is one of the most remarkable athletes of his time,” Mr. Werner said Tuesday. “We believe we can open doors for LeBron and LeBron can open doors for us.”

Executives involved with the deal declined to comment on the financial terms, but a person familiar with the details said FSG would receive a small commission on any deals it landed for Mr. James. Mr. James said he was “humbled” by the deal and looked forward to donning a red Liverpool jersey and visiting Anfield, the team’s legendary stadium. “The first time I stepped on an NBA court I became a businessman,” said Mr. James, who is 26 years old. “This is a great opportunity for me.” Maverick Carter, CEO of LRMR and a high-school teammate of Mr. James, said teaming up with Fenway was essential for them to gain access to international business opportunities that go beyond the typical athlete endorsement deals. In addition to his $15.8 million salary from the Miami Heat, Mr. James earns an estimated $30 million annually from endorsements with such blue-chip companies as McDonald’s, Nike, and Coca-Cola. His image took a major hit last summer when he was criticized by the media and National Basketball Association Commissioner David Stern for teaming up with ESPN to create “The Decision,” an hour-long special during which he announced his choice to leave the Cleveland Cavaliers for the Miami Heat. His new team has stumbled at times this season, leaving many to wonder if Mr. James will ever fulfill his promise and begin winning championships in the style of global stars like Kobe Bryant and Michael Jordan. According to executives involved with the transaction, it was conceived by Paul Wachter, a director of Time Warner Inc. who advised Messrs. Henry and Werner on their acquisition of the Red Sox. Mr. Wachter has also grown close with Mr. Carter, who expressed his desire to build Mr. James’s portfolio internationally and find opportunities for the Miami Heat star to gain equity in companies globally.

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

19

CORPORATE NEWS

YouTube targets TV viewers Google plans to reorganize site around ‘channels,’ spend $100 million on original content Google Inc. is working on a major overhaul of YouTube as it tries to position itself for the rise of televisions that let people watch online video in their living rooms, people familiar with the matter said.

YouTube is looking to compete with broadcast and cable television, some of these people said, a goal that requires it to entice users to stay on the website longer, and to convince advertisers that it will reach desirable consumers. The site is planning a series of changes to its home page to highlight sets of “channels” around topics such as arts and sports. About 20 of those channels will feature several hours a week of professionally produced original programming, some of these people said. It is planning to spend as much as $100 million to commission lowcost content designed exclusively for the Web, people familiar with the matter said. The pending changes are a big bet by the world’s most-popular video site to push in a new direction. Between the Wild West of user-generated content and the pricier precincts of full-blown TV shows, Google is hoping to carve out a niche of original Web videos that it hopes will cultivate loyal viewers. A YouTube spokesman declined to comment on the new initiatives. “YouTube saw incredible growth in 2010 and we’re excited about the future,” the spokesman said. YouTube’s move comes as streaming video services are growing stronger, upending the way people watch TV shows. Netflix Inc. is building up a cache of TV content and movies, recently securing rights to stream the hit series “Mad Men.” Amazon.com Inc. and Hulu LLC are making a similar grab. Hulu’s investors include Wall Street Journal owner News Corp. The moves are pressuring cable

Youtube.com

By Jessica E. Vascellaro, Amir Efrati and Ethan Smith

Videos such as Justin Bieber’s ‘Baby’ can be viewed online on YouTube.

Upstream

Unique U.S. visitors to YouTube, monthly 125 million 100 75 50 25 0 2007

2008

2009

2010

Source: comScore

and satellite companies, which are developing and acquiring new services to compete. On Wednesday, satellite operator Dish Network Corp. said it won a bankruptcy auction for Blockbuster Inc., which has a streaming movie business. The efforts represent a new phase for YouTube, which years ago gained dominance with a site designed to drive traffic to individual videos and to help those clips go viral. It had little contact with content

owners and focused on maximizing traffic to whatever was popular, whether it was silly or serious, revenue-generating or not. After Google bought the site for $1.6 billion in 2006 and eventually faced pressure to turn it into a profit center, YouTube went on the hunt for feature content, like TV and movies, expecting such content would make it easier to sell ads. But that effort has been slow going as Google has so far remained

unwilling to pay licensing fees on the same scale as Netflix and others. From the beginning, YouTube featured professional entertainment content, but it was often posted without the owners’ consent. The site eventually implemented a filtering system in response to complaints from content owners. Now, it is pursuing a middle way, investing in programming rather than spending to license it. It aims to create ad-supported channels that users spend more time with. YouTube executives say they want people to “watch YouTube” the same way they “watch TV.” YouTube’s changes are expected to be phased in over time, starting before the year-end, people familiar with the matter said. YouTube is in the process of designing the channels and in recent weeks held meetings with Hollywood agencies such as Creative Artists Agency, William Morris Endeavor and International Creative Management to discuss the possibility of their clients creating YouTube channels, people familiar with the matter said. Several news publications previously reported on its talks with talent agencies. The talks are more likely to yield deals with production companies or directors than with individual movie stars, said the people familiar with the matter. In addition to increasing the average time a YouTube user spends on the site, which stands at about 15 minutes a day, the moves are aimed at attracting new ad dollars, including a chunk from the $70 billion U.S. television-ad market, said people familiar with the matter. YouTube last year generated $544 million in net revenue, after payouts to content creators with which it shares ad revenue, according to estimates from Citigroup analyst Mark Mahaney. The site is expected to generate more than $800 million in net revenue this year, according to Citigroup estimates. YouTube executives have said the site is close to being profitable.

Sotheby’s auction falls flat BY JASON CHOW A highly anticipated sale of prized imperial Chinese porcelain at a Sotheby’s auction Thursday night in Hong Kong failed to live up to its hype, as many top lots went unsold. The sale of the Meiyintang Collection—amassed over half a century by a European collector and considered by some to be the most important Chinese porcelain collection in the world—was expected to be the highlight of Sotheby’s spring sales auction week in Hong Kong. Presale estimates set the collection at 710 million to 1.07 billion Hong Kong dollars (US$91 million to US$137 million). Though the auction room was filled to capacity, the collection fetched just over HK$399 million when the last hammer fell. “There was guarded bidding on some of the top lots,” said Nicolas Chow, Sotheby’s international head of ChineseCeramics and Works of Art Department, in a statement. “As we have seen all week long, the market sets its own prices.” Sotheby’s noted prices were stronger earlier in the week. The result was surprising given that Chinese ceramics in recent months have become the most sought-after items at Hong Kong auctions, often selling for prices far above high estimates. In October, a Hong Kong-based collector paid HK$251 million for a Qing Dynasty vase—five times its high estimate. But on Thursday, buyers failed to lift their paddles. The most expensive piece on offer was the Falangcai (foreign color) vase—a Qing Dynasty porcelain piece decorated with golden pheasants that dates back to the 18th century. After a round of stalled bidding, the final hammer price on the vase was HK$170 million. Failing to hit the HK$180 million reserve price, the vase went unsold at the auction. But hours later, Sotheby’s issued a statement saying that the vase was sold privately for HK$200 million.

Dell to invest $1 billion in ‘cloud’ data centers

Panel balks at plant in India

BY OWEN FLETCHER

NEW DELHI—A panel set up by the federal environmental ministry objected to the proposed site of Larsen & Toubro Ltd.’s $2.2 billion power plant in eastern India, expressing concerns over the project’s likely impact on water supply and the environment. The site selection “does not appear to be proper,” the Environment Appraisal Committee said Thursday in its report on the project, in eastern India’s Orissa state. Larsen & Toubro declined to comment. The company in 2008 proposed constructing the 1,680-megawatt coal-fired power plant near the site of Dhamra Port, which Larsen & Toubro is building in a joint venture with Tata Steel Ltd. The plant is part of the Mumbaibased engineering and construction company’s plan to enter the powergeneration business. India faces a shortage in the supply of electricity as demand rises with industrial ex-

Dell Inc. said it will invest $1 billion world-wide this year to build data centers and move deeper into the business of offering so-called cloud-computing services. The personal-computer maker is jumping into a market where a number of technology companies, including Amazon.com Inc. and International Business Machines Corp., are selling remote storage and access to computing capacity. The spending comes as Dell aims to fuel growth by expanding its businesses outside of computer hardware. Dell’s PC business faces growing competition from rivals such as Acer Inc. of Taiwan and from tablet devices such as Apple Inc.’s iPad. The projects disclosed Thursday will include the construction and staffing of 22 new “solutions centers,” including 12 to be completed this year, where customers can be

trained and work with the company on products, said Paul Bell, president of Dell’s public and large enterprise business units. Research-and-development spending will focus on products such as a package of hardware and setup services meant to launch the virtualization of a customer’s systems, Mr. Bell said at a conference in Beijing. Virtualization refers to a process that converts individual servers into multiple virtual servers, allowing them to share their workloads more efficiently. U.S.-based Dell also said it plans to introduce a 10-inch tablet device in China in the second quarter of the fiscal year ending in January. Michael Yang, Dell’s president for the Greater China region, called the device “Streak 10.” Mr. Yang also said Dell is looking for acquisitions in China to support its offerings in areas such as storage and cloud computing.

BY PRASENJIT BHATTACHARYA

pansion. A delay in building power plants, especially large ones such as the one Larsen & Toubro plans to build, could affect India’s ability to keep its factories running round the clock.

The committee expresses concerns over the $2.2 billion Larsen & Toubro power plant’s likely impact on water supply and the environment. The Ministry of Environment and Forests in recent months has delayed or refused permission to several industrial and mining projects, especially in mineral-rich, densely forested eastern India, citing damage that large factories or mines can cause to the local population and environment.

Concerns regarding environmental damage and difficulties in land acquisition in eastern India have delayed ArcelorMittal’s $20 billion project to build two steel factories, derailed Vedanta Resources PLC’s proposal to mine the bauxite-rich Niyamgiri hills and restricted Coal India Ltd.’s plans to expand its mines. The panel on Thursday said the Larsen & Toubro site is in a region that is prone to cyclones. It also said the project, proposed to be spread over 1,249 acres and covering nine villages, is close to mangroves and just 15 kilometers from a wildlife sanctuary. The panel said Larsen & Toubro should consider using sea water for the project, rather than using water from a nearby river, saying that fresh water is a scarce resource in the area. The committee said Larsen should return to the panel with “adequate justification” on why it wants to build the plant at the proposed site.

20

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

INTERNATIONAL INVESTOR

FUND SCORECARD

Quake rattles U.S. stocks

Sector Equity Technology

Retailers gain on March sales reports; Portuguese banks jump

Fund that invest in equities of companies in the hardware and software sectors. At least 75% of total assets are invested in equities. Ranked on % total return (dividends reinvested) in U.S. dollars for one year ending April 07, 2011

BY BRENDAN CONWAY AND KRISTINA PETERSON

Leading 10 Performers

stable. I think maybe the markets have become trained to expect the unexpected.” U.S. consumers showed unexpected resilience in March, opening their pocketbooks for retailers despite a later Easter, poor weather and higher gasoline prices. Warehouse club Costco climbed 4.4% after posting a 13% rise in same-store sales, beating estimates for a 7.4% gain. Limited Brands, operator of Victoria’s Secret, gained 2.2% after same-store sales jumped 14%, well ahead of the 1.5% increase forecast from analysts. Kohl’s added 1.3% after March sales at its stores open at least one year fell 6.5%, slightly better than analysts’ expectations that samestore sales would fall 7.9% However, Gap reported weak same-store sales for March and said its fiscal first-quarter earnings will miss Street estimates. The casualapparel retailer said the recent natural disasters in Japan will hurt its profit in the period, sending shares down 0.7%.

NEW YORK—U.S. stocks were generally lower after another major earthquake hit Japan’s northeastern coast, but pulled back from the morning’s sharp plunge after a tsunami warning was lifted. After dropping nearly 100 points immediately following reports of the 7. 1 - m a g n i t u d e ABREAST OF earthquake, the THE MARKET Dow Jones Industrial Average was off 25.73, or 0.2%, at 12401.02 in early afternoon trade. The Standard & Poor’s 500-stock index eased 0.1% to 1333.83, but the Nasdaq Composite crept up 0.1% to 2802.93. “People remain concerned that Mother Nature and geopolitical events stay foremost in the headlines,” said Tom Galvin, managing director and lead portfolio manager at Columbia Management. However, he said, “in the face of that, the market remains resilient and fairly

European stocks Shares gave up early gains to finish lower after Japan was shaken by another earthquake, though shares in Lisbon found support after Portugal sought financial aid. The Stoxx Europe 600 index fell 0.2% to 280.90, its first loss in five sessions. Bank stocks in Portugal gained after the debt-laden country said it will request international financial aid. Banco Espirito Santo surged 8.9% and Banco BPI rallied 5.1%. The Portuguese PSI General index rose 1% to 2840.92. Hochtief slumped 7.9% in Frankfurt on a profit warning for 2011. The company’s Australian unit, Leighton Holdings, said it would review its guidance amid concerns it may announce write-downs and a capital increase. Mining stocks fell in London, led by a 2.6% drop for Vedanta Resources after further delays to its deal to acquire the Indian assets of Cairn Energy. Cairn shares fell 2.3%.

FUND FUND RATING * NAME

4 5 3 4 3 3 4 5 4 2

day. The dollar slipped to 0.9174 Swiss francs from 0.9189 francs. The euro, meanwhile, was weaker against the dollar as comments from European Central Bank President Jean-Claude Trichet slightly disappointed investors hoping for more hawkish signals about future rate increases. In afternoon trading, the euro was at $1.4295 from $1.4331 late Wednesday. It traded as high as $1.4326 and dipped as low as $1.4243 during Mr. Trichet’s news conference. The dollar was at ¥85.05 from ¥85.43, while the euro was at ¥121.55 from ¥122.48. The U.K. pound bought $1.6303 from $1.6333. The ECB raised its benchmark interest rate to 1.25% from a historical

NEW YORK—The safe-haven Japanese yen and Swiss franc gained swiftly against the U.S. dollar on Thursday after a powerful earthquake and tsunami CURRENCY alert shook northMARKETS eastern Japan and unnerved markets. “We thought things were sort of returning to normal,” but the fresh aftershocks and subsequent scramble for safe-haven assets prove just how uncertain the world is at the moment, said Brian Kim, currency strategist at UBS. The dollar quickly dipped to ¥84.87 following the news, having been as high as ¥85.51 earlier in the

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FUND NAME

Data as shown is for information purposes only. No offer is being made by Morningstar, Ltd. or this publication. Funds shown aren’t registered with the U.S. Securities and Exchange Commission and aren’t available for sale to United States citizens and/or residents except as noted. Prices are in local currencies. All performance figures are calculated using the most recent prices available.

FUND NAME

NAV GF AT LB DATE CR

n AHW CAPITAL MANAGEMENT Tel (+49) 1805 - 23 82 82 www.ahw-capital.com AHW Top-Div.Int.

GL EQ LUX 04/06 EUR

NAV

52.19

—%RETURN— YTD 12-MO 2-YR

2.1

-5.7

13.7

n ALLIANZ GLOBAL INVESTORS KAPITALANLAGEGESELLSCHAFT Concentra AE Industria AE InternRent AE

EU EQ DEU 04/07 EUR EU EQ DEU 04/07 EUR EU BD DEU 04/07 EUR

64.14 75.56 37.93

3.8 -1.0 -6.2

17.6 2.8 2.3

34.3 20.6 6.8

n CHARTERED ASSET MANAGEMENT PTE LTD - TEL NO: 65-6835-8866 Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: [email protected] CAM-GTF Limited

OT

OT MUS 03/31 USD 388419.91

-6.4

19.0

77.7

GAM Asia Equity Hedge US GL EQ VGB 04/04 USD GAM Asia Equity USD OT OT VGB 04/06 USD

280.22 735.51

3.6 1.7

1.4 10.6

GAM Asia-Pacific Eq USD GAM Com Glb Bal EUR Op GAM Com Glb Bal USD Op GAM Comp Glb Eq EUR Op GAM Comp Glb Eq USD Op GAM Comp Glb Gr EUR Op GAM Comp Glb Gr USD Op GAM CompAbsRT EUR Op GAM CompAbsRT SGD Op GAM CompAbsRT USD Op GAM Cptal Apprec Eq Inc GAM Diversity EUR Op GAM Diversity USD 2.5XL GAM Diversity USD Op GAM Dvrsty II USD Op GAM Euro Eq Hdg EUR Op GAM Euro Eq Hdg USD Op GAM GAMCO Eq GAM Gbl Divers USD Inc. GAM Grtr China Eq Hdg Op GAM Intrst Trend Inc GAM Japan Eq Hdg USD Op GAM Japan Eq Hdg YEN Open GAM Japan Eq USD GAM Japan Eq YEN GAM Money Mkt EuroOp GAM Money Mkt USD GAM Multi-Arb EUR Op GAM Multi-Emer Mkts USD GAM Multi-Eur EUR Op GAM Multi-Eur II EUR Op GAM Multi-Eur II USD Op GAM Multi-Eur USD Op GAM Selection Hdg GAM Sing/Malaysia Eq GAM Sterling Spe Bd Inc GAM Trading EUR Inc GAM Trading USD Inc GAM Trdg II IncUSD Op GAM USDSpecBondInc GAM Worldwide GAMut Investments GAMut Investments - T class

n GAM Star Fund Plc

n GAM FUND MANAGEMENT LIMITED George's Court, 54-62 Townsend Street, Dublin 2, Ireland Tel +353 1 609 3927 Fax +353 1 611 7941, Internet: www.gam.com 31.4 31.9

NAV GF AT LB DATE CR

GAMStar China EqUSD (SCHUA) GAMStar DiversMktNeutCredit USD Acc GAMStar Emer Mkt Rates USD Acc GAMStar GEO USD Acc GAMStar Global Conv.Bd USD Acc GAMStar Global Eq Inflat Focus USD Acc

AS US US GL GL US US OT OT OT US OT OT OT OT EU EU US GL GL OT AS AS JP JP EU US OT OT OT OT OT OT US EA OT OT OT OT OT GL OT GL

EQ BA BA EQ EQ BA BA OT OT OT EQ OT OT OT OT EQ EQ EQ EQ EQ OT EQ EQ EQ EQ MM MM OT OT OT OT OT OT EQ EQ OT OT OT OT OT EQ OT OT

VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB

04/05 03/31 03/31 03/31 03/31 03/31 03/31 04/04 04/04 04/04 04/01 03/31 03/31 03/31 03/31 04/05 04/06 04/05 04/04 04/04 03/31 04/04 04/04 04/06 04/06 04/06 04/06 03/28 03/31 03/31 03/31 03/31 03/31 04/01 04/06 04/04 03/31 03/31 03/31 04/04 04/06 03/31 11/30

NAV

YTD

TWDTWN

1.96

MYRMYS

8.14 27.90 38.95 15.45

USDLUX

4.14 27.07 38.12

2.51

TWDTWN

5.45 26.79 43.91

8.77

TWDTWN

-1.56

23.91 41.94

4.69

EURIRL

9.58 23.54 38.85

7.12

USDLUX

5.57

21.87 38.00

6.43

USDLUX

5.39 21.60 36.47

7.71

USDLUX

5.74 20.83 34.69

3.57

TWDTWN

2.26 20.21 36.90

1.94

Capital Capital Investment High-Tech Trust Co., Ltd AmMalaysia AmInvestment Equity Services Berhad Parvest BNP Paribas EquityWorldTechInnovatorsC Allianz Glbl Allianz Global Inv Taiwan Tech Investors Taiwan Ltd Invesco Invesco Taiwan Taiwan Technology Limited Janus Global Janus Capital Technology A EUR Funds Plc Franklin Franklin Templeton Technology A Acc $ Investment Funds MFS Meridian MFS Meridian Funds Technology I1 USD AB SICAV AllianceBernstein InternationalTechnologyIUSD (Luxembourg) S.A. Hua Nan Hua Nan Investment Vision Tech Trust Co., Ltd

% Return in $US ** 1-YR 2-YR 5-YR

32.14 45.01

9.38

Source: Morningstar, Ltd 1 Oliver’s Yard, 55-71 City Road London EC1Y 1HQ United Kingdom www.morningstar.co.uk; Email: [email protected] Phone: +44 (0)203 107 0038; Fax: +44 (0)203 107 0001

Short-term bonds climb BY MIN ZENG

low of 1% on Thursday, as expected. But markets focused on the subsequent news conference, during which Mr. Trichet said the rate increase wasn’t conceived of as the “first of a series” of increases. That weighed on the euro, in which people had been building up long positions in the hope that the ECB would signal more rate rises later this year. “The ECB basically delivered as was generally expected … but it was probably the case that people saw the risk rewards skewed that they were more likely to be more hawkish than less hawkish,” which led to some profit-taking, said Ron Leven, currency strategist at Morgan Stanley.

INTERNATIONAL INVESTMENT FUNDS

LEGAL CURR. BASE

NOTE: Changes in currency rates will affect performance and rankings. KEY: ** 2YR and 5YR performance is annualized NA-not available due to incomplete data; NS-fund not in existence for entire period

Yen, swiss franc push higher BY ERIN MCCARTHY

FUND MGM'T CO.

NEW YORK—Short-dated Treasurys rose Thursday as many investors bought safe assets after another powerful earthquake hit northern Japan. The buying was moderate as state broadcaster NHK reported that authorities in Japan U.S. CREDIT said that the nuMARKETS clear power plants in the area, including the stricken Fukushima Daiichi nuclear plant, were already shut down and that no emergency was being issued. A tsunami warning was initially issued for the coastal areas but was soon lifted. “There is a lot of uncertainty on the Japan situation,” said James

Newman, head of U.S. government and agency trading in New York at Keefe, Bruyette & Woods Inc. “People tend to prefer short-dated notes to park cash.” In noon trading, the two-year note rose 3/32 to 99 29/32 to yield 0.7978%. Long-dated Treasurys underperformed ahead of new debt supply in the coming week. The benchmark 10-year note was flat at 100 21/32 to yield 3.5451%. The 30-year bond fell 11/32 to 102 10/32 to yield 4.6063%. Bond prices and yields move in opposite directions. The Treasury Department said Thursday it would sell $66 billion in new government debt next week, which matched the expectations of many market participants.

[ Search by company, category or country at asia.WSJ.com/funds ]

—%RETURN— YTD 12-MO 2-YR

USD EUR USD EUR USD EUR USD EUR SGD USD USD EUR USD USD USD EUR USD USD USD USD USD USD JPY USD JPY EUR USD EUR USD EUR EUR USD USD USD USD GBP EUR USD USD USD USD USD USD

1354.75 103.76 140.41 112.17 148.05 95.72 141.09 148.64 107.78 895.44 320.66 635.40 72.38 671.64 204.93 237.80 219.75 1103.71 283.35 241.73 336.39 125.26 8680.76 1112.10 8637.17 51.02 100.08 87.67 676.47 288.17 148.30 121.55 503.16 3398.36 2935.91 258.04 339.29 1019.32 331.10 669.19 2523.10 7996.70 116.46

-2.2 1.3 1.3 2.6 2.6 1.4 1.4 -0.6 0.1 0.2 9.9 1.1 2.2 1.2 0.9 -3.1 -2.3 6.8 2.7 0.2 8.8 -1.7 -1.3 -5.8 -4.3 -0.1 0.1 -4.8 -0.7 2.7 2.7 2.7 2.7 2.8 0.3 5.0 -1.0 -1.1 -1.1 6.4 7.9 -1.6 2.5

-2.1 7.2 7.2 12.3 12.3 8.7 8.7 2.0 3.2 3.6 22.1 -2.5 -8.3 -1.9 -2.9 5.0 4.9 27.5 7.2 -12.2 12.4 -8.4 -7.9 -11.8 -14.6 0.1 0.2 -22.1 2.5 6.8 6.8 7.1 7.1 21.3 12.2 11.7 5.1 5.5 5.5 13.3 11.2 3.6 10.3

19.3 16.0 16.0 25.8 25.8 18.3 18.3 7.6 8.2 8.5 37.6 1.1 0.3 1.5 0.5 11.3 11.7 45.8 25.6 30.4 54.9 6.6 7.4 7.8 3.8 0.4 0.1 -11.4 13.7 6.5 6.5 6.6 6.7 43.3 38.1 35.5 4.5 4.8 4.8 52.9 25.0 3.4 NS

AS EQ IRL 04/05 USD OT OT IRL 04/01 USD OT OT IRL 04/04 USD OT OT IRL 04/05 USD OT OT IRL 04/04 USD GL EQ IRL 04/05 USD

20.36 10.14 10.72 10.52 10.56 153.74

0.6 0.3 -2.0 5.2 4.3 9.2

5.4 NS NS NS NS NS

50.4 NS NS NS NS NS

FUND NAME

NAV GF AT LB DATE CR

GAMStar Global Rates USD Acc GAMStar Keynes Quant Strategy USD Acc GAMStarPharoEmerMktDebt&FXUSDAcc GAMStar Technology USD Acc GAMStar Trading USD Acc GAMStar-AsEqUSD Ord Ac GAMStar-AsPacEqEUR Acc GAMStar-ContEurEqEUR Ac GAMStar-EurpEqEUR Acc GAMStar-EurpEqUSD Acc GAMStar-JpnEq EUR Acc

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FUND NAME

OT OT GL OT OT OT AS EU EU EU JP

OT OT BD EQ OT OT EQ EQ EQ EQ EQ

IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL

03/31 04/05 04/05 04/05 04/04 04/06 04/06 04/06 04/06 04/06 04/06

USD USD USD USD USD USD EUR EUR EUR USD EUR

NAV 11.03 10.31 11.04 9.94 9.86 15.09 106.94 12.74 201.07 17.59 87.42

—%RETURN— YTD 12-MO 2-YR 1.5 -2.3 -1.5 NS NS 1.1 -8.0 1.0 0.9 7.2 -10.3

3.7 NS 1.9 NS NS 10.3 -8.6 8.8 2.6 9.2 -15.5

NS NS NS NS NS 32.0 11.5 24.0 21.2 24.2 4.7

NAV GF AT LB DATE CR

AlexandraConvertibleBondFundI,Ltd.(ClassA) OT OT VGB 02/28 USD

NAV

—%RETURN— YTD 12-MO 2-YR

2364.66

2.2

29.4

52.1

105.56

-13.9

-2.5

12.8

n CREDIT PACIFIC ASSET MANAGMENT www.creditpacific.com GL OT WSM 04/06 USD

JP EQ IRL 04/06 JPY JP EQ IRL 04/06 USD

NAV

—%RETURN— YTD 12-MO 2-YR

896.40 11.06

-4.2 -5.9

-14.8 -12.4

3.2 6.7

10215.29 9678.54 103.35 114.51

4.1 12.3 10.4 2.8

0.2 -1.1 8.8 12.4

NS NS NS NS

n HSBC Trinkaus Investment Managers SA E-Mail: [email protected] Telephone: 352 - 47 18471 Prosperity Return Fund A Prosperity Return Fund B Prosperity Return Fund C Prosperity Return Fund D

JP BD LUX 04/04 JPY OT OT LUX 04/04 JPY OT OT LUX 04/04 USD OT OT LUX 04/04 EUR

OT OT OT OT OT GL

OT OT OT OT OT EQ

CYM USA USA USA USA CYM

03/31 10/31 03/31 03/31 05/29 03/31

USD USD USD USD USD USD

NS 129.92 NS NS 35.02 NS

FUND NAME

NAV GF AT LB DATE CR

Platinm-Nordic Platinm-Premier Platinm-Turnberry

OT OT CYM 03/31 SEK OT OT CYM 12/31 USD OT OT USA 02/28 USD

NAV NS NS 60.14

—%RETURN— YTD 12-MO 2-YR -4.7 NS -1.2

-0.7 NS -3.0

9.0 NS NS

n SUPERFUND ASSET MANAGEMENT GMBH For info about open funds, contact [email protected] and www.superfund.com *Closed for New Investments Superfund Cayman* Superfund GCT USD* Superfund Green Gold A (SPC) Superfund Green Gold B (SPC) Superfund Q-AG*

GL GL GL GL GL

OT OT OT OT OT

CYM LUX CYM CYM AUT

04/05 04/05 04/05 04/05 04/05

USD USD USD USD EUR

57.26 2645.00 1345.99 1327.95 7569.00

4.7 2.8 2.6 3.4 1.2

30.6 15.6 33.7 34.2 8.2

-15.5 -14.0 6.7 -1.3 -6.6

3.1 3.1 3.1 1.6 1.6 1.6 1.6

17.8 17.8 18.1 16.5 16.6 16.4 16.7

5.3 5.7 5.4 4.8 5.1 4.4 4.9

n WINTON CAPITAL MANAGEMENT LTD Tel: +44 (0)20 7610 5350 Fax: +44 (0)20 7610 5301

n PLATINUM CAPITAL MANAGEMENT Tel: +44 207 024 9840, www.platinumfunds.net Platinm-All Star Platinm-All Weather Platinm-Dynasty Platinm-Emancipation Platinm-Equity Plus Platinm-Gbl Dividend

GAMStar-JpnEq JPY Acc GAMStar-JpnEq USD Acc

NAV GF AT LB DATE CR

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n ALEXANDRA INVESTMENT MANAGEMENT Tel: +1 212 301 1800 Fax: +1 212 301 1810

CPS-Master Priv Fund

FUND NAME

1.6 NS -0.7 7.2 -18.2 0.9

4.6 NS 3.0 23.1 -63.7 17.9

10.4 NS 10.7 30.5 -45.6 36.8

Winton Evolution EUR Cls H Winton Evolution GBP Cls G Winton Evolution USD Cls F Winton Futures EUR Cls C Winton Futures GBP Cls D Winton Futures JPY Cls E Winton Futures USD Cls B

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GL GL GL GL GL GL GL

OT OT OT OT OT OT OT

CYM CYM CYM VGB VGB VGB VGB

02/28 02/28 02/28 02/28 02/28 02/28 02/28

EUR NS GBP NS USD NS EUR 228.31 GBP 247.50 JPY 16111.36 USD 813.20

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

21

INTERNATIONAL INVESTOR

JGB 10-year yield tops 1.3% BY ANDREW MONAHAN

Christian Carrillo, senior rates strategist at Société Générale. “It’s not something that’s really expanding purchases of [Japanese government bonds] so the government could directly spend more money in the economy, and it’s not clear that it can be used very quickly.” As expected, BOJ said it remained opposed to buying bonds directly from the government to assist reconstruction. The five-year yield touched 0.54%, its highest since March 11, before ending at 0.535%, up 0.015 percentage point on the day. The benchmark 10-year yield also rose 0.015 percentage point, to 1.305%, where it was on Tuesday and on March 10.

TOKYO—Japanese governmentbond yields rose Thursday, pushing the benchmark five-year yield to its highest in nearly a month, as the Bank of Japan failed to announce measures that would support the market following its BOND policy meeting. MARKETS In a widely expected move, the central bank introduced a special lending facility for banks in areas affected by the earthquake and tsunami that struck on March 11. But analysts said this new program would likely bring no significant benefits to the JGB market. The special lending facility is “just a very small amount,” said

While it appears that the government’s first supplementary budget may not require additional JGB issuance, this could change later in the year, analysts said. Any additional debt issuance could put further pressure on bonds and drive up yields. “The BOJ may want to keep its powder dry until there is more need for additional JGB issuance, particularly amid the talk of possibly trying to make them underwrite JGBs,” Mr. Carrillo said The first extra budget that Prime Minister Naoto Kan’s government is drafting may avoid extra issuance through the exceptional measure of drawing down the Pension Reserve, though this could lead to deadlock on a second extra budget, said

Naomi Hasegawa, a senior fixed-income strategist at Mitsubishi UFJ Morgan Stanley. “In assuming that increased JGB issuance can be avoided, the government and ruling coalition seem to be counting their chickens before they are hatched,” she said. Among Asian borrowers, Australian telecommunications company Telstra Corp. is in the market with a benchmark-sized offering of 10year senior bonds, according to a person familiar with the deal. A benchmark-sized bond generally is $500 million or more. Bank of America Merrill Lynch, Citigroup and J.P. Morgan Chase & Co. are in charge of the sale. —Katy Burne in New York contributed to this article.

Samsung hits Seoul; exporters lift Tokyo BY V. PHANI KUMAR AND SHRI NAVARATNAM

However, investors remain cautious about how soon full manufacturing functions will resume in all sectors following the quake and rolling blackouts. “We know production will come back eventually, but the question is how soon—three months, six months or longer,” said Hideo Arimura, senior fund manager at Mizuho Asset Management. “Nobody has any idea right now.” Pioneer slid 5% after Barclays Capital downgraded the firm to “equal-weight” from “overweight,” saying the likelihood of a slow recovery in auto production will hurt the company’s car-electronics unit. The Bank of Japan kept interest rates unchanged at 0.1%, as expected, and said it will establish a special lending facility for financial firms in areas hit by the quake. “It was hoped that the BOJ would take some steps to help drive the economy—not merely to sustain it—following the quake and ensuing disaster,” said Investrust CEO Hiroyuki Fukunaga. The amount of the central bank’s special lending facil-

South Korean stocks edged lower Thursday on weak earnings guidance from Samsung Electronics, while Japanese shares rose slightly as exporters drew support from the yen’s recent ASIAN-PACIFIC weakness. STOCKS Other regional markets also stayed in tight ranges amid light trading. The Nikkei Stock Average gained 0.1% to 9590.93, Australia’s S&P/ASX 200 slipped 0.1% to 4908.13 and China’s Shanghai Composite added 0.2% to 3007.91. Bombay’s Sensex declined 0.1% to 19591.18, and Hong Kong’s Hang Seng Index fell less than 0.1% to 24281.80, ending a five-day winning streak. In Tokyo, a weaker yen helped exporters including Honda Motor, up 1.1%, and Mazda Motor, which gained 1.7%. Toyota Motor climbed 0.9%, helped by news of partial production restarts.

ity for postquake reconstruction—one trillion yen ($11.7 billion)—may not be considered large enough, he added. Elpida Memory gained 2.7% after saying it has developed a smaller, more energy-efficient chip for smartphones and tablet computers that it plans to start mass producing in June. Tokyo Electric Power ended up 0.9% in choppy trading as workers injected nitrogen into the containment vessel of reactor No. 1 at the firm’s stricken Fukushima Daiichi plant to prevent a hydrogen explosion. In Seoul, Samsung Electronics dropped 1.5% after the company said its first-quarter operating profit probably fell 34% from a year earlier to 2.9 trillion Korean won ($2.67 billion), raising worries about the demand outlook for consumer electronics. In Hong Kong, property firms declined on concerns that banks in Hong Kong could raise mortgage rates later this year. “The U.S. is widely expected to

[ Search by company, category or country at asia.WSJ.com/funds ] FUND NAME Renaissance Hgh Grade Bd A Renaissance Hgh Grade Bd B Renaissance Hgh Grade Bd C Renaissance Hgh Grade Bd D

NAV GF AT LB DATE CR JP JP JP JP

BD BD BD BD

LUX LUX LUX LUX

04/04 04/04 04/04 04/04

JPY JPY USD EUR

NAV 10438.94 9847.08 104.22 107.40

—%RETURN— YTD 12-MO 2-YR 4.3 12.3 10.2 1.9

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3.3 2.0 12.0 6.0

AS AS AS AS AS AS AS AS EA EA AS OT AS AS OT AS OT OT EU GL GL OT OT GL GL OT OT GL GL GL GL GL GL GL EE

EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ OT BD OT OT EQ EQ EQ OT OT EQ EQ OT OT EQ EQ EQ EQ EQ EQ EQ EQ

LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX

04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06 04/06

SGD USD SGD USD SGD USD SGD USD SGD USD USD USD SGD USD USD USD USD SGD EUR SGD USD SGD USD SGD USD USD USD SGD USD EUR SGD USD SGD USD USD

15.84 16.50 15.40 21.65 13.81 53.11 15.26 30.31 15.88 28.49 11.96 16.58 16.10 34.13 11.31 11.09 12.07 14.56 35.32 15.56 66.97 13.56 23.84 15.42 34.30 9.51 16.70 15.24 14.25 22.01 27.34 22.38 15.00 47.29 17.62

0.4 2.7 2.3 4.0 4.6 6.3 1.8 3.4 -3.8 -2.2 5.3 -2.8 -0.9 0.7 -5.0 2.4 0.5 -1.8 1.3 1.6 3.2 -7.8 -5.7 0.6 2.2 5.4 5.1 4.6 6.3 -3.2 1.7 3.3 -2.3 0.0 8.9

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NAV GF AT LB DATE CR

NAV

—%RETURN— YTD 12-MO 2-YR

FUND NAME

NAV GF AT LB DATE CR

NAV

—%RETURN— YTD 12-MO 2-YR

Asia Value Formula Fd-B

NS NS NS 37.7 NS 28.2 NS 33.9 NS 46.3 44.6 25.7 NS 49.6 45.9 NS 49.5 NS 61.2 NS 52.8 NS 27.0 NS 38.8 45.1 NS NS 28.8 57.5 NS 62.4 NS 52.0 76.6

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1Q

Full year

$40

20

0

2005 ’06 ’07 ’08 ’09 ’10 ’11

Source: Dealogic

Hong Kong rich in IPOs slated for 2nd quarter Continued from page 15 Morgan Chase & Co. Not all IPOs can get done. “When it comes to Chinese companies, this is a market where investors prefer to buy companies in industries like construction, consumption or pharmaceuticals, industries that can benefit from China’s national policy,” said Alex Au, managing director of Richland Capital Management Ltd., a panAsian hedge fund. “For overseas companies, this is a market where bigger IPOs that have good post-liquidity will do well.” Of the foreign companies seeking to tap the Hong Kong market, miners are expected to be especially prolific. “Most mining companies looking to list either sell to China or at least have the price of their raw material heavily influenced by demand from China, so targeting a listing close to China makes sense,” said Mr. Warburton of Macquarie, which is one of the bookrunners on the US$5 billion IPO planned this year by Mongolian coal company Erdenes-Tavan Tolgoi Co. Also waiting in the wings are Italian fashion house Prada SpA, which has said it is looking into a Hong Kong IPO, and luggage maker Samsonite, with a US$1 billion IPO plan.

FUND NAME

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n WEBSITE: WWW.VALUEPARTNERS.COM.HK, TEL: (852) 2880 9263, FAX: (852) 2564 8487 *formerly known as China ABH Shares Fund

n SENSIBLE ASSET MANAGEMENT LIMITED www.samfund.com.hk Tel: (852) 2868 6848 Fax: (852) 2810 9948

NS 32.7 NS 14.5 1.2 12.2 8.2 19.8 1.6 12.7 33.5 2.8 8.8 20.7 12.5 8.7 13.8 NS 9.7 NS 17.0 NS 5.9 2.3 13.4 22.6 14.3 2.3 13.5 22.9 18.6 31.4 NS 13.8 20.5

Value, in billions of U.S. dollars

INTERNATIONAL INVESTMENT FUNDS

NS NS NS NS

n J.P. MORGAN ASSET MANAGEMENT For additional fund prices, please visit www.jpmorganam.com.sg Tel: +65 6882 1328 JF ASEAN Eq (SGD)A(acc) JF ASEAN Eq (USD)A(acc) JF Asia Pac ex-Jap Eq(SGD)A(acc) JF Asia Pac ex-Jp (USD)A(acc) JF China (SGD)A(acc) JF China (USD)A(dist) JF Greater China (SGD)A(acc) JF Greater China (USD)A(dist) JF India (SGD)A(acc) JF India (USD)A(acc) JF Korea Equity (USD) A (acc) JF Pacific Tech (USD) A (acc) JF Singapore (SGD)A(acc) JF Singapore (USD)A(dist) JPM Africa (USD) A (acc) JPM Asia Pac Bond (USD)A(acc) JPM Brazil Alpha+ (USD)A(acc) JPM Brazil Alpha+(SGD)A(acc) JPM East Eur (EUR)A(dist)(JF) JPM Emerg EMEA (SGD)A(acc) JPM Emerg EMEA (USD)A(dist) JPM Emerg Mid East Eq(SGD)A(acc) JPM Emerg Mid East(USD)A(dist) JPM Emerg Mkt Eq (SGD)A(acc) JPM Emerg Mkt Eq (USD)A(dist) JPM Emerg Mkt Infra(USD)A(acc) JPM Emerg Mkt LC Debt(USD)A(mth) JPM Glb Dyn (SGD)A(acc) JPM Glb Dyn (USD)A(dist)(JF) JPM Glb Nat Res (EUR)A(dist) JPM Glb Nat Res (SGD)A(acc) JPM Glb Nat Res (USD)A(acc) JPM Latin Amer Eq(SGD)A(acc) JPM Latin Amer Eq(USD)A(dist)JF JPM Russia (USD) A (dist)

FUND NAME

raise interest rates in the latter part of this year, and Hong Kong will have to follow suit because of the currency peg,” said Alvin Cheung, associate director of Prudential Brokerage Ltd. Cheung Kong (Holdings) fell 2.2%, Hang Lung Properties dropped 1.5%, and Sun Hung Kai Properties fell 1%. Henderson Land Development bucked the trend, rising 0.3%, spurred by a slew of share purchases by its chairman, Lee Shaukee. The tycoon made three separate purchases totaling 3.403 million shares in the developer in late March, according to disclosure documents filed to the stock exchange. Citic Pacific rose 3.4% following a Dow Jones report Wednesday that said it is seeking to raise more than US$1 billion by selling U.S. dollardenominated perpetual bonds and 10-year senior unsecured notes this week. Oil and gas producer Cnooc gained 1.5%, supported by strong crude prices.

Hong Kong’s IPOs

OT

OT CYM 04/06 USD

n MANULIFE ASSET MANAGEMENT TEL:(852)2108 1110 n SGAM FUND Internet:http://www.manulife.com.hk 47/F Manulife Plaza, Causeway Bay, Hong Kong AMUNDI HONG KONG LIMITED American Growth US EQ LUX 04/07 USD 18.58 7.8 15.4 27.8 Hotline in Hong Kong (852) 2521 4231 American Growth AA US EQ LUX 04/07 USD 1.07 7.5 14.8 27.0 Asian Equity Asian Equity AA Asian Sm Cap Equity AA China Value A China Value AA Dragon Growth Dragon Growth AA Emg Eastrn Europe A Emg Eastrn Europe AA European Growth European Growth AA Global Contrarain AA Global Property AA Global Resources AA Healthcare AA India Equity AA International Growth International Growth AA Japanese Growth Japanese Growth AA Latin America Equity AA Manulife GF Strategic Income Fund AA MGF Asia Value Dividend Equity Fund Russia Equity AA Taiwan Equity AA Turkey Equity AA U.S. Bond AA U.S. Sm Cap Equity AA U.S. Special Opportunities U.S. Tsy Inf-ProtSec AA

OT OT OT AS AS AS AS EU EU EU EU GL OT GL OT EA GL GL JP JP GL OT OT EE AS OT US US US OT

OT OT OT EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ OT OT EQ EQ OT BD EQ BD OT

LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX

04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07

USD USD USD USD USD USD HKD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD USD

3.08 0.99 1.67 8.77 2.75 1.86 9.06 6.10 2.61 10.44 0.75 1.23 0.82 1.38 1.09 1.27 3.42 0.79 2.76 0.71 1.47 1.14 1.44 0.92 1.30 1.06 1.19 1.12 1.02 1.21

7.6 7.3 5.4 6.1 5.7 4.9 4.8 13.8 14.2 8.5 8.8 4.7 3.8 7.8 7.4 -3.5 6.2 6.0 -8.6 -8.8 1.7 3.2 4.6 13.1 0.0 6.5 1.7 4.3 1.2 2.5

21.9 22.8 32.0 21.6 23.3 10.5 12.7 21.0 20.6 15.8 15.5 27.3 16.1 23.9 7.9 9.9 8.5 8.0 -6.0 -7.7 11.5 10.6 22.0 24.0 22.6 24.4 8.0 15.1 15.6 7.6

38.8 37.0 62.9 38.7 37.6 31.9 31.5 59.3 55.2 34.1 30.0 53.2 38.9 35.0 21.6 40.5 22.3 20.6 10.1 9.8 44.0 NS NS 63.0 37.9 69.9 13.7 42.3 52.6 6.7

n PT CIPTADANA ASSET MANAGEMENT Tel: +62 21 25574 883 Fax: +62 21 25574 893 Website: www.ciptadana.com Indonesian Grth Fund

GL EQ BMU 04/06 USD

185.89

2.1

31.2

73.8

Bonds US OppsCoreplus A Bonds World A Eq. AsiaPac Dual Strategies A Eq. China A Eq. Global Energy A Eq. Global Resources A Eq. Gold Mines A Eq. India A Eq. Luxury & Lifestyle EURO A Eq. Luxury & Lifestyle USD A Eq. MENA EURO A Eq. MENA USD A Eq. US Rel Val A Money Market EURO A Money Market USD A

US OT AS AS OT GL OT EA OT OT OT OT US EU US

BD OT EQ EQ EQ EQ EQ EQ EQ EQ OT OT EQ MM MM

LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX

04/05 04/05 04/06 04/06 04/05 04/05 04/05 04/06 04/05 04/05 04/06 04/06 04/05 04/05 04/05

USD USD USD USD USD USD USD USD EUR USD EUR USD USD EUR USD

Intel-Chin Mainlnd Foc Intel-China Converg* VP Classic - A VP CLassic - B VP High Dividend Stk

11.10

5.0

31.2

50.4

40.69 43.49 12.19 25.25 21.95 142.89 40.76 150.80 89.16 126.66 38.95 55.65 25.47 27.58 15.89

1.2 -1.0 3.0 4.2 13.6 7.7 0.3 -3.7 -0.3 -0.3 -3.7 -3.7 7.8 0.2 0.1

8.8 5.6 13.2 7.1 20.6 27.4 31.1 9.3 26.2 26.2 0.1 0.1 16.5 0.6 0.4

12.0 7.5 36.0 25.3 25.6 38.1 36.5 40.2 44.6 44.6 19.0 19.0 30.8 0.6 0.3

AS AS AS AS OT

EQ CYM EQ CYM EQ CYM EQ CYM OT CYM

03/31 03/31 04/06 04/06 03/28

USD USD USD USD USD

37.45 139.05 234.83 108.76 57.93

1.3 0.5 4.8 4.6 1.3

22.7 19.5 20.3 19.7 21.8

48.5 46.4 47.6 46.9 49.3

JP EQ IRL 04/07 JPY

9035.00

-4.1

-9.7

6.2

JP EQ IRL 04/07 JPY JP EQ IRL 04/27 JPY

5520.00 5230.34

-4.5 -7.3

-14.6 -5.4

-1.8 -27.3

6321.00 7547.00

-5.8 -4.2

-14.0 -12.2

2.2 1.6

4142.00 4790.00 4607.00

-4.1 -5.0 -7.4

-17.3 -17.2 -12.3

-0.6 0.4 5.3

3895.00 4125.00 6153.00 8222.00 5935.00 7140.00 4687.00 10718.00 6899.00 6568.00 5278.00 2336.00

-4.1 -5.5 -3.7 -4.0 -5.2 -4.9 -5.5 -6.3 -5.7 -6.3 -5.5 -7.0

-16.4 -15.7 -15.6 -11.9 -10.2 -13.6 -15.9 -16.6 -15.9 -10.5 -13.9 -17.4

-0.6 -0.3 2.0 3.1 1.5 -0.8 0.2 1.7 -1.5 9.5 2.3 2.2

n YUKI MANAGEMENT & RESEARCH n YMR-N Series YMR-N Growth Fund

n Yuki 77 Series Yuki 77 General Yuki 77 Growth

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775.45 1066.09 1009.30 4.91

n Yuki Mizuho Series -6.4 -7.1 -8.2 -2.8

-18.1 -3.9 NS -10.8

-5.2 5.6 NS 2.0

Yuki Mizuho Gen Jpn III Yuki Mizuho Jpn Dyn Gro Yuki Mizuho Jpn Exc 100 Yuki Mizuho Jpn Gen Yuki Mizuho Jpn Gro Yuki Mizuho Jpn Inc Yuki Mizuho Jpn Lg Cap Yuki Mizuho Jpn LowP Yuki Mizuho Jpn PGth Yuki Mizuho Jpn SmCp Yuki Mizuho Jpn Val Sel Yuki Mizuho Jpn YoungCo

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JP EQ IRL 04/07 JPY JP EQ IRL 04/07 JPY JP EQ IRL 04/07 JPY

JP JP JP JP JP JP JP JP JP JP AS AS

EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ

IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL

04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07 04/07

JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY

22

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

MARKETS

A champion for Korea State mulls merging Daewoo, Woori brokerages; global competition BY SE YOUNG LEE

BY GREGORY ZUCKERMAN

Bloomberg News

SEOUL—South Korea’s Financial Services Commission is considering a merger of Daewoo Securities Co. and Woori Investment & Securities Co. as part of its efforts to strengthen the local investmentbanking industry. An FSC official Thursday confirmed remarks by commission Chairman Kim Seok-dong that were published by Bloomberg News. Mr. Kim said the financial regulator will encourage industry consolidation and ease regulatory restrictions so that brokerages can become large enough to compete globally. The deliberations come as Seoul pursues its goal of becoming a regional financial hub by overhauling regulations governing the local capital markets. Government officials believe that consolidation in the brokerage industry would further their aim of creating firms that can compete on the global stage. Daewoo Securities is an affiliate of state-owned KDB Financial Group, while Woori Investment is an affiliate of Woori Finance Holdings Co., which is 57% owned by the government. They are two of the largest brokerages in South Korea. “A powerful investment bank is a must; without it there is no future for South Korea,” Mr. Kim said in February, adding that there needs to be an equivalent of a global heavyweight like Samsung Electronics

Private market falls short for Goldman

Kim Seok-dong, chairman of Korea’s financial regulator, wants consolidation. Co. in the domestic financial sector that can properly support Korean companies’ financing needs abroad. The commission said in February it would consider selling Woori Investment separately from Woori Finance, which it is trying to divest. The market has speculated that the government may pursue a merger of Woori Investment and Daewoo Securities, given the brokerages’ ties to government-controlled financial holding companies. Officials at KDB and Woori Finance said they haven’t held any formal discussions with the government about a merger of Daewoo Securities and Woori Investment. KDB controls around 39% of Daewoo, val-

ued at around 1.72 trillion won ($1.6 billion), while Woori holds a 35% stake in Woori Investment currently valued at 960.05 billion won. Woori Finance Chief Executive Lee Pal-seung has said he opposes selling the Woori Investment stake. He is seeking to increase Woori Finance’s stake in the brokerage to boost nonbanking operations. A loss of its shares in Woori Investment could be a major blow for Woori Finance; the brokerage is the holding company’s key nonbanking affiliate. Mr. Lee hasn’t taken a firm stance on the issue of a potential merger of Woori and Daewoo, however. He has said Woori Finance would consider such a possibility.

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When Goldman Sachs Group Inc. hatches a new idea it usually is a winner. Not always, it turns out. In 2007, Goldman set up a new, private marketplace open only to institutions and ultrarich investors. There, they would be able to own and trade shares, which wouldn’t be registered with the Securities and Exchange Commission. The attraction for listing companies: avoiding many of the disclosure and regulatory requirements of public stock markets, as well as the pressures that come with dealing with public investors. Goldman spent millions of dollars to develop the private exchange, and senior Goldman bankers spent over a year on the project. They gave it an awkward name—the “GS Tradable Unregistered Equity OTC Market” or GSTrUE—but it seemed like an instant success. Oaktree Capital Management LLC raised about $1 billion in May 2007, selling a 15% stake in itself on the Goldman market. Two months later, Apollo Management LP, the big New York private-equity firm, sold shares, raising $895 million. Many bankers expected the new market to steal some of the hottest offerings from the New York Stock Exchange and Nasdaq. Private-equity firms, hedge funds and others that guarded their privacy seemed likely to sell shares there. At the time, Oaktree partners Howard Marks and Bruce Karsh predicted in a memo to clients that “a number of premier companies in other industries” would join their firm on the Goldman platform. Rival banks and exchanges soon launched competing private markets. Then a curious thing happened—hardly any investors showed up. Fewer than seven Apollo trades took place last year, according to someone close to the firm. Shareholders called Apollo executives to

complain about the difficulty of getting in and out of Apollo’s shares. This month, Apollo left the Goldman exchange to begin trading on the New York Stock Exchange. As for Oaktree, it has been averaging four or five trades a month since its launch, according to people close to the private-equity firm. Some months have seen no trading at all. (People close to Goldman, which counts multiple buyers of a block of Oaktree shares as multiple trades, say there have been between one dozen and two dozen Oaktree trades a month since the launch). The lack of trading has resulted in what many believe to be a distorted market. For instance, Oaktree shares trade around $40 each, well below the price of $70 that bankers say Oaktree shares could fetch on a major public market. “The platform has achieved its objectives,” said a Goldman spokeswoman. “It enables issuers to raise capital while remaining private and gives” investors who qualify to buy these private-placement securities—known as 144a securities—more liquidity than they otherwise would have had with a private placement, she added. Soon after the launch, financial markets went into turmoil, reminding investors of the value of liquidity—the ability to easily trade in and out of shares. Without active trading, investors shied away. Goldman has largely stopped working on GSTRuE, merging it into the Portal Alliance, a fledgling network developed by Nasdaq, Goldman and Wall Street firms to act as a single market. That effort hasn’t attracted any new listings, either. The Goldman private market has withered even as private Silicon Valley companies such as Facebook Inc., Twitter Inc. and LinkedIn Corp. have seen growing volume on exchanges trading private-company stock, such as SharesPost and SecondMarket.

Citi’s Indonesia woes grow Continued from page 15 tomers. A spokesman for the Jakarta police, Baharudin Jafar, said four suspects have been named and three detained as part of the investigation, which the police are treating as a “criminal one.” The police are investigating the relationship between Citibank and the debt collectors, he said. On Wednesday, Citi’s country manager for Indonesia, Shariq Mukhtar, told parliament that the bank was “deeply saddened and shocked by the unexpected passing” of Mr. Octa, and that Citi was “working very hard to understand” what happened when Mr. Octa visited the bank branch on March 29. Mr. Mukhtar said Citi didn't believe “anyone physically harmed Mr. Octa” in their offices. In discussing the bank’s debt-collection practices, he said Citi has “strong controls and robust processes to ensure we satisfy all local, legal and regulatory requirements regarding debt collection.” Mr. Moeis, the parliamentarian, said he had ordered Bank Indonesia to ban debt-collecting outsourcing.

“Debt collection must be part of the banks.” This isn’t the first time Citigroup’s internal controls have been called into question with regard to customer accounts in Asia. In 2010, Citigroup identified a $67 million investment fraud at one of its Indian branches. The customer involved in that case filed an official complaint against Citigroup, which prompted a police investigation that was later withdrawn. Citigroup said at the time the claims in the case against senior executives were “completely without basis and we intend to contest them vigorously.” The case remains open. In Hong Kong in 2009, Citi found in a probe that a financial adviser had duped seven investors in what was effectively a Ponzi scheme, with losses estimated at about $1.7 million. At the time, a bank spokesman described the episode as an “isolated incident.” Police are seeking the financial adviser, who has left the country. —Alison Tudor and Yayu Yuniar contributed to this article.

Friday - Sunday, April 8 - 10, 2011

THE WALL STREET JOURNAL.

23

MARKETS

New Zealand to aid AMI In a surprise, Fed’s Government will help cover insurer’s claims from February quake BY REBECCA HOWARD

BY JON HILSENRATH AND MARK GONGLOFF

Zuma Press

The New Zealand government is providing AMI Insurance with a support package to ensure all claims can be met in the wake of a February earthquake in the country’s second-largest city, the second to hit the region in less than six months, Finance Minister Bill English said Thursday. Mr. English said at a news conference that the government could end up paying out as much as one billion New Zealand dollars (US$780 million)—the initial package is half that, to be drawn on if AMI’s own reserves are exhausted—but it wouldn’t knock New Zealand off its track toward a budget surplus. “We want to deliver a credible track back to surplus…. It’s another item that is significant. It is a bit more of a headwind, but we must focus on getting that track back to surplus and it is not going to knock us off that track,” Mr. English said. Mr. English said recently the country’s core operating deficit excluding investment gains and losses could reach 8% of gross domestic product in the fiscal year ending in June, but that if the government makes “careful decisions about public spending” it could return to surplus in the year to June 2016. RBC Economist Michael Turner, however, warned Thursday this may prove “too optimistic” as reconstruction costs mount and tax revenues remain soft in line with weaker consumption. “Whilst this fiscal position in and of itself is not enough to warrant concern over ratings action, this must be viewed in conjunction with New Zealand’s external position and reliance on foreign capital,” he said, adding that New Zealand’s “net foreign liabilities are uncomfortably high.” TD Securities Economist Annette Beacher said the news was a negative for the New Zealand dollar and for the bond market but agreed it shouldn’t be seen as a trigger for an actual downgrade by ratings firms because it is part of the “one-off” costs related to the Christchurch earthquakes.

A building damaged during the earthquake in Christchurch in February. Moody’s Investors Service said Thursday it will be closely watching New Zealand’s budget, due May 19, for measures to offset the damage done to public finances by two earthquakes. The larger the ultimate cost of the earthquakes, including any money going to AMI policy holders, the harder it will be to return to a balanced budget position,” Moody’s sovereign analyst Steven Hess said. Fitch Ratings said Thursday the support package is unlikely to be material from a ratings perspective but it will keep it under review. “Even if the support package does happen to cost the government NZ$1 billion, this amounts to roughly 0.5% of GDP. Fitch would view this amount as quite manageable,” said Art Woo, director in Fitch’s Asian-Pacific sovereigns team. Fitch has had a negative outlook on the country’s double-A-plus foreign-currency rating since July 2009. Moody’s has a stable outlook on the rating, while S&P in November cut its outlook on the foreigncurrency rating to negative from stable, warning of a possible downgrade to its long-term double-A-plus rating due to the country’s widening external imbalances. The New Zealand dollar fell slightly after the news of the rescue package and was trading at 77.75

U.S. cents early afternoon in New York compared with 77.96 cents early in New Zealand. Christchurch-based AMI is New Zealand’s second-largest residential insurer, with 485,000 policy holders and 1.2 million policies across the country. That includes more than 85,000 in Christchurch, where the Feb. 22 earthquake left more than 160 people dead and caused extensive damage to infrastructure and buildings. Government officials have said that about a quarter of the buildings in the central city will likely have to be demolished, while thousands of homes may need to be rebuilt. The government’s costs from the earthquakes could be as much as NZ$10 billion, and the New Zealand Treasury has estimated GDP growth will be around 1.5 percentage points lower in the 2011 calendar year solely as a result of the February earthquake. AMI Chief Executive John Balmforth said in a statement that “although the flow of claims has slowed significantly in recent days, the final tally and cost is not known.” The February quake tested the company’s reinsurance levels, he said, but it has more than NZ$350 million of reserves. “Time will tell whether these will be sufficient,” he said.

Fitness First plans Singapore listing BY SAM HOLMES AND P.R. VENKAT SINGAPORE—U.K.-headquartered gym operator Fitness First is likely to apply for listing approval with the Singapore Exchange this month ahead of a 600 million Singapore dollar to 700 million Singapore dollar (US$476.2 million to US$555.5 million) initial public offering, three people familiar with the situation said Thursday. The people said Fitness First is on course to launch the IPO and list in the third quarter, and that a deal team from the group was in Singapore this month to discuss the proposed transaction. Fitness First is owned by London-based buyout firm BC Partners, which bought the business for €1.2 billion (US$1.72 billion) in 2005, and would be the latest foreign company to list in Singapore after Hutchison Port Holdings Trust raised US$5.4 billion last month in the city-state’s largest IPO.

key policy rate falls

Under Singapore listing rules, a company usually seeks an eligibility to list from the Singapore Exchange ahead of its IPO process, which involves premarketing, roadshows and the filing of an IPO prospectus to the regulators before listing. Other offshore companies seeking to tap Singapore’s equities market include Norway’s BW Offshore Ltd., which has flagged plans to list this year. Bankers involved in various transactions say other European, Vietnamese and Indonesian companies involved in real estate, commodities and consumer businesses are looking to raise capital in Singapore. However, Singapore, which has been aggressively looking to compete with Hong Kong as a global listings hub, has a long way to go. Hong Kong has been the world’s hottest IPO market for two consecutive years, raising a total of US$53.2 billion last year in a wave of listings that included foreign companies

such as Russia’s United Co. Rusal PLC, which raised US$2.55 billion from a dual IPO in Hong Kong and Paris. In comparison, Singapore raised US$6 billion—its largest foreign IPO last year was the US$224 million offer by Norway’s STX OSV Holdings Ltd. Last year, people familiar with the situation said BC Partners was looking to sell Fitness First through a listing on an Asian exchange. Listing on an Asian exchange would make sense given the bulk of the gym chain’s business is in Asia, where it runs 140 clubs and has seen double-digit growth, the person said in June last year. The company has appointed CLSA, Credit Suisse and J.P. Morgan as advisers on the deal, the people said. According to Fitness First’s website, it is the largest privately owned health club group in the world, with more than 548 clubs and 1.4 million members in 22 countries.

A sharp and unintentional decline in the Federal Reserve’s key interest rate in recent days is raising eyebrows in financial markets and shining a light on the challenges the central bank could face steering future monetary policy. The federal-funds rate, an overnight bank lending rate that affects borrowing costs throughout the economy, has fallen to 0.09% from 0.13% in the past week and from 0.2% in late December. While the numbers are small, such movement is unusual. The Fed’s target for this rate is between zero and 0.25%, but the rate has generally held close to the high end of that range since the central bank set it in December 2008. This is the Fed’s key policy rate and the Fed usually finds it easier to control its moves. When it wants to fend off inflation, it raises this rate to tighten policy. But a confluence of events, including the cash it has pumped into the financial system, threatens to make this task more complicated. “The folks at the Fed tell us they have the tools to exit, but are they going to work properly?” said Raymond Stone, of Stone & McCarthy Research Associates, an economic and market-forecasting firm. “I don’t believe anybody really knows.” The funds rate has been falling since November, when the Fed began its program to buy $600 billion in Treasury debt, known as quantitative easing, or “QE2.” Fed officials—especially at the markets desk of the Federal Reserve Bank of New York—are watching closely. They have expressed confidence in the past that they can manage the rate as needed. It isn’t clear the Fed would want to do anything about the downward drift in the funds rate now. Fed Chairman Ben Bernanke made clear earlier

Rate retreat Effective federal-funds rate 0.25% 0.20 0.15 0.10 0.05 0

2010

this week that he wasn’t ready to tighten policy. The fed-funds rate has suffered other precipitous declines in recent years, typically for a day or two at the end of quarters, but it usually snaps back. This time it has stayed low, echoing other short-term lending markets, where a host of factors have combined to drive rates lower in recent days. The U.S. Treasury has drawn down $200 billion in deposits it had been holding with the Fed, adding to the money in the banking system. Moreover, a new fee on bank liabilities imposed by the Federal Deposit Insurance Corp. has given banks less incentive to borrow in the fed-funds market, putting further downward pressure on the rate. The Fed is counting on a relatively new tool to manage the fedfunds rate when the time comes to tighten—its ability to pay interest to banks on the reserves that they keep on deposit with the central bank. That rate is now 0.25%. When the Fed wants to tighten policy, the thinking goes, it can raise this rate, giving banks more incentive to keep money tied up with the Fed and less incentive to put it to work in the fed-funds market.

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24

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

BLUE CHIPS
BONDS Dow Jones Asia Titans: Thursday's best and worst...

Major players
benchmarks At right, a look at the Asia Titans, the biggest and best known companies in Asia. Below, some of the Dow Jones Titans indexes of biggest and most liquid stocks in individual countries and regions

Giants around the world

In U.S.-dollar terms.

Company

Country

Industry

Kansai Elec Power

Japan

Electricity

Market value, in billions of US$

$19.1

Previous close, in local currency

STOCK PERFORMANCE Previous session

1,803

52-week

5.25%

Three-year

-14.8%

-32.1%

-24.3

-61.6

3.3

-6.5

Mitsubishi UFJ Finl

Japan

Banks

63.3

381.00

NTT DoCoMo

Japan

Mobile Telecomms

72.9

148,600

Japan Tobacco

Japan

Tobacco

35.6

315,500

1.77

-5.3

-40.7

Mizuho Financial Grp

Japan

Banks

33.2

131.00

1.55

-29.9

-100.0

Nintendo

Japan

Toys

$31.6

21,020

-33.6

-62.8

Cheung Kong

Hong Kong

Real Estate Hldg Dev

Samsung Electronics

South Korea

Semiconductors

Mitsubishi

Japan

Industrial Suppliers

43.9

2,276

-1.17

-7.8

-32.9

Nippon Steel

Japan

Steel

18.7

253.00

-1.17

-31.1

-50.6

2.42 1.78

Dow Jones Country Titans INDEX PERFORMANCE Previous session

Spain Russia

Year-to-date

52-week

12.5%

0.49%

1.8%

11.2

-0.78

28.1

9.8

Italy

0.67

China 88

0.38

France

0.55

6.9

2.0

Hong Kong

-0.29

6.7

13.0

Canada

-0.16

5.4

14.0

Netherlands

0.22

5.4

5.6

Brazil

0.87

5.1

10.5

Germany

0.24

4.2

13.5

Australia

unch.

4.1

-1.9

South Korea

-0.38

3.6

21.8

1.19

3.6

17.2

Turkey

-1.3

8.6

-3.8

U.K.

0.23

3.0

4.8

Switzerland

0.93

2.6

-2.1

South Africa

-0.40

0.8

12.1

Sweden

-0.09

0.6

13.6

Singapore

0.05

Japan

0.38

unch.

CNOOC 119.0 Hong Kong (Exploration Production) East Japan Railway 21.2 Japan (Travel Tourism) Seven I Hldgs 21.5 Japan (Broadline Retailers) Nissan Motor 35.4 Japan (Automobiles) Honda Motor 61.9 Japan (Automobiles) Toyota Motor 121.8 Japan (Automobiles) Tokyo Elec Power 6.4 Japan (Electricity) Aus NZ Bk 65.7 Australia (Banks) Tokio Marine Hldgs 21.3 Japan (Property Casualty Insurance) Panasonic 27.7 Japan (Consumer Electronics) Commonwlth Bk of Aus 84.6 Australia (Banks) Canon 52.7 Japan (Electronic Office Equipment) Takeda Pharm 36.1 Japan (Pharmaceuticals) China Life Insurance 29.1 Hong Kong (Life Insurance) QBE Insurance Group 21.0 Australia (Reinsurance) Nippon T&T 58.4 Japan (Fixed Line Telecommunications) Sumitomo Mitsui Finl 41.0 Japan (Banks) JFE Hldgs 14.1 Japan (Steel) Reliance Industries 77.9 India (Exploration Production) Sony 30.4 Japan (Consumer Electronics)

Dow Jones Regional Sector Titans 15.1%

0.02%

Insurance

0.40

Media

-0.35

9.3

20.0

Chemicals

-0.14

9.1

32.0

1.06

8.9

-0.5

-0.29

8.2

18.6

Banks Ind Gds Svcs Tiger 50* Global 50

0.10 0.34

Arab 50

0.57

6.6

6.5

-0.09

Asian 50

21.3%

10.8

17.4

5.9

7.8

-3.1%

-0.7

-7.0

Market value, in billions (U.S)

Company/Country (Industry)

-16.4

Oil Gas

128.60 909,000

-2.21

-3.2

*Asia excluding Japan

Latest, in local currency

STOCK PERFORMANCE Latest 52-week Three-year

20.70

1.47%

48.7%

4,570

1.33

-32.3

-99.5

Company/Country (Industry)

66.1%

2,072

1.17

-12.0

-26.3

720.00

1.12

-12.7

-15.9

2,927

1.11

-12.0

-1.4

3,295

0.92

-12.4

-34.0

340.00

0.89

-86.1

-87.6

24.10

0.71

-5.5

9.5

2,300

0.70

-18.1

-46.5

1,019

0.69

-29.3

-53.7

52.55

0.48

-8.6

19.3

3,635

0.41

-18.0

-27.0

3,890

0.39

-6.3

-30.0

30.40

0.33

-20.4

-0.7

19.03

0.32

-10.4

-23.7

3,760

0.27

-4.8

-99.2

2,500

0.24

-23.3

-99.7

2,267

0.22

-39.8

-50.0

47.65

0.21

-7.3

-21.6

2,595

0.15

-25.6

-40.6

39.8

KDDI 26.3 Japan (Mobile Telecommunications) Hon Hai Precision Ind 36.6 Taiwan (Electrical Components Equipment) Woodside Petroleum 38.3 Australia (Exploration Production) Rio Tinto Ltd. 39.3 Australia (General Mining) Westpac Bking 76.6 Australia (Banks) China Mobile (HK) 190.6 Hong Kong (Mobile Telecommunications) Taiwan Smcndtr Mfg 65.1 Taiwan (Semiconductors) National Australia Bk 59.1 Australia (Banks) Woolworths 34.3 Australia (Food Retailers Wholesalers) BHP Billiton 167.9 Australia (General Mining) POSCO 34.7 South Korea (Steel) PetroChina 33.0 Hong Kong (Integrated Oil Gas) Bank of China 47.8 Hong Kong (Banks) Indl Comm Bk China 73.7 Hong Kong (Banks) China Construction Bank 230.8 Hong Kong (Banks) Shin-Etsu Chml 20.3 Japan (Specialty Chemicals) Shinhan Financial Grp 21.7 South Korea (Banks) Westfield Grp 22.4 Australia (Retail) Sun Hung Kai Prop 42.0 Hong Kong (Real Estate Holding Development) Mitsui 31.1 Japan (Industrial Suppliers)

STOCK PERFORMANCE Latest 52-week Three-year

507,000

...

5.1%

109.50

...

-15.1

-26.6% -32.8

46.95

-0.11%

-1.4

-16.5

86.00

-0.12

6.4

-37.2

24.43

-0.12

-13.0

1.2

73.85

-0.14

-3.3

-42.5

72.80

-0.14

14.6

12.0

25.95

-0.31

-7.3

-12.4

26.98

-0.33

-5.3

-12.2

47.68

-0.56

7.0

17.6

490,000

-0.61

-12.5

-4.9

12.14

-0.65

29.1

12.8

4.44

-0.67

6.7

29.0

6.60

-0.75

7.1

14.0

7.46

-0.80

13.6

18.1

4,065

-0.85

-27.5

-30.9

49,750

-0.90

8.2

-7.0

9.26

-0.96

-0.6

-34.8

127.30

-1.01

6.3

-3.1

1,464

-1.01

-9.9

-36.5

Credit derivatives

Credit-default swaps: Asian companies

Spreads on credit derivatives are one way the market rates creditworthiness. Regions that are treading in rough waters can see spreads swing toward the maximum—and vice versa. Indexes below are for five-year swaps.

At its most basic, the pricing of credit-default swaps measures how much a buyer has to pay to purchase-and how much a seller demands to sell-protection from default on an issuer's debt. The snapshot below gives a sense which way the market was moving yesterday.

Markit iTraxx Indexes Index: series/version

Europe: 15/1 Eur. High Volatility: 15/1 Europe Crossover: 15/1 Asia ex-Japan IG: 15/1 Japan: 15/1

Mid-spread, in pct. pts. Mid-price

Coupon

SPREAD RANGE, in pct. pts. since most recent roll Maximum Minimum Average

And the most deterioration

CHANGE, in basis points

CHANGE, in basis points

100.24%

0.01%

1.04

0.95

1.01

1.33

98.46

0.01

1.42

1.33

1.39

Odakyu Elec Rwy Co Ltd

41

–3

...

8

MARUI GROUP Co Ltd

158

19

16

43

3.59

105.97

0.05

3.93

3.59

3.80

East Japan Rwy Co

47

–3

...

20

CHUBU Elec Pwr Co Inc

79

5

5

42

1.03

99.85

0.01

1.16

1.03

1.10

Tokyo Elec Pwr Co Inc

368

–16

2

334

49

1.39

98.07

0.01

1.43

1.38

1.40

Bk of Tokyo Mitsubishi UFJ Ltd

101

–3

–4

25

Mizuho Corporate Bk

145

–4

–3

48

POSCO

88

–3

–6

–5

Nankai Elec Rwy Co Ltd

114

–3

1

18

Nikon Corp

56

–2

–1

10

Hankyu Hanshin Hldgs Inc

93

–3

1

20

101

–3

–3

–28

In percentage points

Spreads Spreads on fiveyear swaps for corporate debt; based on Markit iTraxx indexes.

Showing the biggest improvement...

0.95

Index roll

2.00 1.50

Australia t

1.00

t

All statistics published in The Wall Street Journal Asia from markets outside the Asian-Pacific region reflect preliminary data.

5.7

5.8

Sources: Dow Jones Indexes; WSJ Market Data Group

Note: Data as of April 6

— NOTICE TO READERS —

Latest, in local currency

Market value, in billions (U.S)

Source: Dow Jones Indexes

Tracking credit markets
dealmakers

23.8

-1.52

...And the rest of Asia's blue chips

10.0

-7.4%

38.3 108.3

-2.87%

Japan

Yesterday Yesterday Five-day 28-day

CHINA Dev Bk Corp

Yesterday Yesterday Five-day 28-day

NEC Corp

134

8

8

Bridgestone Corp

54

3

3

15

TOKYO GAS CO LTD

62

3

3

33

Teijin Ltd

55

2

3

11

Kansai Elec Pwr Co Inc

83

3

11

45

Hongkong Ld Co Ltd

82

2

...

...

Samsung Electrs Co Ltd

66

2

–3

...

NTT Docomo Inc

41

1

1

12

Source: Markit Group

0.50 0

Oct. Nov. Dec. Jan. Feb. Mar. 2010 2011 Source: Markit Group

Behind Asia's deals: Bank revenue rankings, Global Behind every IPO, bond offering, merger deal or syndicated loan is one or more investment banks. Here are investment banks ranked by year-to-date revenues from recent deals. Revenue, in millions

JPMorgan

$1,762

Market share

Equity capital markets

PERCENTAGE OF TOTAL REVENUE Debt Mergers & capital markets acquisitions

8.6%

20%

29%

24%

Loans

28%

Bank of America Merrill Lynch

1,619

7.9

23

28

18

31

Goldman Sachs

1,246

6.1

30

25

35

10

WSJ.com

Morgan Stanley

1,160

5.7

29

24

37

10

Deutsche Bank

1,153

5.7

24

38

24

13

Follow the markets throughout the day, with updated stock quotes, news and commentary at WSJ.com. Also, receive emails that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com/Email.

Credit Suisse

1,100

5.4

22

32

28

18

Barclays Capital

969

4.8

23

37

20

21

Citi

913

4.5

25

39

21

15

UBS

703

3.5

29

29

34

9 Source: Dealogic

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

25

GLOBAL MARKETS LINEUP Commodities

Currencies

Prices of futures contracts with the most open interest

EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; NYBOT: New York Board of Trade; MDEX: Bursa Malaysia Derivatives Berhad; LIFFE: London International Financial Futures Exchange; LME: London Mercantile Exchange; NYMEX: New York Mercantile Exchange; ICE: IntercontinentalExchange Contract ONE-DAY CHANGE Commodity Exchange Last price Net Percentage high CBOT

Corn (cents/bu.) Soybeans (cents/bu.) Wheat (cents/bu.) Live cattle (cents/lb.) Cocoa ($/ton) Coffee (cents/lb.) Sugar (cents/lb.) Cotton (cents/lb.) Crude palm oil (ringgit/ton) Cocoa (pounds/ton) Robusta coffee ($/ton)

CBOT CBOT CME ICE-US ICE-US ICE-US ICE-US MDEX LIFFE LIFFE COMEX

Copper (cents/lb.) Gold ($/troy oz.) Silver (cents/troy oz.) Aluminum ($/ton) Tin ($/ton) Copper ($/ton) Lead ($/ton) Zinc ($/ton) Nickel ($/ton)

COMEX COMEX LME LME LME LME LME LME NYMEX

Crude oil ($/bbl.) Heating oil ($/gal.) RBOB gasoline ($/gal.) Natural gas ($/mmBtu) Brent crude ($/bbl.) Gas oil ($/ton)

NYMEX NYMEX NYMEX ICE-EU ICE-EU

763.00 1367.75 808.50 117.400 3,004 272.80 24.84 212.38 3,328.00 1,911 2,435

0.00 -8.75 -9.75 -0.850 -10 7.65 -0.13 4.32 -48 -10 46

440.25 1458.30 3946.00 2,693.00 32,625.00 9,717.00 2,821.00 2,460.50 27,125

3.25 -0.20 7.30 37.50 700.00 217.00 51.00 45.00 1,135

109.24 3.1908 3.1752 4.078 121.44 1,018.50

0.41 -0.0004 -0.0177 -0.068 -0.49 -3.25

773.25 1,467.50 1,036.00 121.625 3,710 296.65 29.75 219.70 3,872 2,348 2,543

unch.

-0.64% -1.19 -0.72 -0.33 2.89% -0.52 2.08 -1.42 -0.52 1.93

AMERICAS Argentina peso-a Brazil real Canada dollar 1-mo. forward 3-mos. forward 6-mos. forward Chile peso Colombia peso Ecuador US dollar-f Mexico peso-a Peru sol Uruguay peso-e U.S. dollar Venezuela bolivar

Contract low

366.50 909.25 540.00 89.575 2,670 133.75 11.82 68.05 3,163 1,837 1,604

465.75 280.00 1,467.00 775.00 3,978.50 18.50 2,693.00 1,857.00 32,625.00 15,925.00 10,123.00 6,120.00 2,821.00 1,580.00 2,584.00 1,617.00 29,050 18,005

0.74 -0.01 0.19 1.41 2.19 2.28 1.84 1.86 4.37

129.16 3.5800 3.2120 10.050 134.60 1,027.75

0.38 -0.01 -0.55 -1.64 -0.40 -0.32

66.00 1.6000 2.0122 3.805 58.40 637.00

Source: Thomson Reuters; WSJ Market Data Group

WSJ.com

Major stock market indexes Price-to-

14

Region/Country Index

Per U.S. dollar

In U.S. dollars

5.7930 0.1726 2.2786 0.4389 1.3703 0.7298 1.3713 0.7293 1.3732 0.7282 1.3770 0.7262 676.44 0.001478 2611.95 0.0003829 1.4290 0.6998 16.8671 0.0593 4.0163 0.2490 27.152 0.0368 1.4290 0.6998 6.14 0.162939

4.0538 1.5945 0.9589 0.9596 0.9609 0.9636 473.35 1827.75 1 11.8031 2.8105 19.000 1 4.29

0.2467 0.6272 1.0429 1.0421 1.0407 1.0378 0.002113 0.0005471 1 0.0847 0.3558 0.0526 1 0.232848

1.3646 0.7328 9.3493 0.1070 11.1051 0.0900 63.1283 0.0158 12401 0.0000806 121.75 0.008214 121.73 0.008215 121.68 0.008218 121.57 0.008225 4.3286 0.2310 1.8372 0.5443 121.112 0.0083 61.592 0.0162 1.8020 0.5549 1556.31 0.0006425 41.378 0.02417 42.979 0.02327

0.9549 6.5424 7.7710 44.1750 8678 85.20 85.18 85.15 85.07 3.0290 1.2856 84.750 43.100 1.2610 1089.05 28.955 30.075

1.0472 0.1529 0.1287 0.0226 0.0001152 0.011738 0.011740 0.011744 0.011754 0.3301 0.7779 0.0118 0.0232 0.7930 0.0009182 0.03454 0.03325

PREVIOUS SESSION

Net change

Percentage change

PERFORMANCE Yr.-to-date 52-wk.

Price-to-

earnings ratio* 13

7.0%

-2.0%

Region/Country Index Euro Zone Euro Stoxx

139.72

0.45

4908.13

-4.78

CBN 600

28071.78

116.06

Hong Kong

Hang Seng

24281.80

-3.25

-0.01

India

Sensex

19591.18

-21.02

-0.11

...

Indonesia

Jakarta Composite

3730.583

2.785

0.07

0.7

...

Japan

Nikkei Stock Average

9590.93

6.56

0.07

-6.2

-14.1

12

Italy

FTSE MIB

841.10

1.49

0.18

-6.4

-14.7

12

Netherlands

AEX

1561.93

9.04

2.8

17.2

...

Russia

RTSI

...

Australia

SPX/ASX 200

...

China

13 18

...

Topix

...

Malaysia

Kuala Lumpur Composite

...

New Zealand

NZSX-50

3450.356

0.480

8

Pakistan

KSE 100

11848.84

-84.33

14

Philippines

Manila Composite

4219.43

6.91

...

Singapore

Straits Times

3171.65

1.32

11

South Korea

Kospi

2122.14

-4.57

15

Taiwan

Weighted

8901.72

49.74

10

Thailand

SET

1089.21

13.08

14

EUROPE

Stoxx Europe 600

280.90

-0.67

Stoxx Europe 50

2640.91

5.29

1305

*P/E ratios use trailing 12-months, as-reported earnings European and Americas index data are as of 12:00 p.m. ET.

0.32% -0.10% 0.42

0.58

3.4

-0.6

12

2.17% 1.95 2.29 2.46 2.57 2.77 2.10 2.67 2.51 2.51 2.27 2.27

15 14 14 14 16 14 14 13 15 15 17 17

5.1

0.3

19

Denmark

OMX Copenhagen

5.4

11.0

14

Finland

-4.5

10.6

12

France

30.9

13

Germany

Last

U.S. Australia Britain Canada China Euro Hong Kong India Indonesia Japan New Zealand South Korea Malaysia Philippines Singapore Switzerland Taiwan Thailand

1.047 1.631 1.043 0.1529 1.429 0.129 0.0226 0.0001 0.012 0.778 0.0009 0.330 0.023 0.793 1.090 0.035 0.033

1.557 0.996 0.146 1.365 0.123 0.0216 0.0001 0.011 0.743 0.0009 0.315 0.022 0.757 1.041 0.033 0.032

£ 0.613 0.642 0.639 0.094 0.876 0.079 0.0139 0.0001 0.007 0.477 0.0006 0.202 0.014 0.486 0.668 0.021 0.020

1 0.9993 0.9979 0.9952 0.0409 0.1341 0.003777 0.1280 0.2518 0.02480 0.1108 0.7625 0.7626 0.7629 0.7632 0.4631 1.1413 1.1409 1.1398 1.1377

0.6998 0.7002 0.7012 0.7031 17.096 5.2185 185.27 5.4667 2.7786 28.219 6.3131 0.9177 0.9176 0.9172 0.9169 1.5110 0.6131 0.6133 0.6139 0.6151

1.4291 1.4281 1.4261 1.4222 0.0585 0.1916 0.005398 0.1829 0.3599 0.03544 0.1584 1.0897 1.0899 1.0902 1.0907 0.6618 1.6310 1.6304 1.6288 1.6258

SDR -f

0.9002

0.3770 2.6526 5.9655 0.1676 3.4510 0.2898 0.7088 1.4109 0.2771 3.6091 1500.50 0.0006665 3.7502 0.2667 6.6850 0.1496 3.6729 0.2723

1.1108

0.6300

1.5874

2.6

-68.44 -19.86

-0.49

5.9

1.3

DAX

7178.78

-36.33

-0.50

3.8

16.3

22243.99

-82.53

10.3

-2.5

367.39

-2.25

2089.52

-21.38

0.16

0.4

29.6

...

Turkey

ISE National 100

0.04

-0.6

7.0

13

U.K.

FTSE 100

3.5

22.4

18

AMERICAS

DJ Americas

0.20

-1.6

7542.74 4028.30

9

-0.24

0.8 18.7

CAC-40

10

1.22

6.2 2.0

OMX Helsinki

4.3

0.56

-0.39%

-2.95

12.5

-0.21

Percentage change

435.36

4.3

-0.71

PERFORMANCE Yr.-to-date 52-wk. 5.3% 3.8%

PREVIOUS SESSION

Net change -1.12 -6.86

-0.23 -0.67 -0.90

-0.37

3.6

4.7

18.0

30.5

-0.61 -1.01

Spain

IBEX 35

10849.1

4.0

0.04%

10.0

-2.1

Switzerland

SMI

6465.57

22.51

0.35

0.5

-4.8

69490.47

841.23

5.3

19.0

6007.37

-33.76

364.16

0.60

68859.05

-177.86

3471.46

-32.53

37639.22

-222.59

-0.8

10.5

...

Brazil

Bovespa

5.5

38.9

...

Argentina

Merval

1.8

5.5

11

Mexico

IPC

2.1

-0.2

1.23 -0.56 0.17 -0.26

1.8

5.2

6.8

15.1

-0.6

-3.7

-1.5

42.9

-2.4

12.0

-0.93 -0.59

Thomson Reuters is the primary data provider for several statistical tables in The Wall Street Journal, including foreign stock quotations, futures and futures options prices, and foreign exchange tables. Reuters real-time data feeds are used to calculate various Dow Jones Indexes.

Sources: Thomson Reuters; WSJ Market Data Group

PERFORMANCE YearThree-yr., to-date 52-wk. annualized

Daily

0.16% 0.08 0.10 0.32 0.25 0.03 0.25 0.34 -0.52 0.42 0.12 0.31

5.4% 5.9 5.9 -1.9 3.7 9.3 3.9 -3.1 6.3 5.1 9.3 7.2

13.4% 8.6 7.8 7.1 16.4 14.4 15.9 -0.7 12.5 0.3 11.9 0.6

-1.9% -5.5 -5.7 -2.0 2.2 -6.8 1.2 -5.0 0.6 -2.6 0.2 -1.6

Price-toDividend earnings yield* ratio* Dows Jones Index

2.27% 17 1.72 19 4.83 12 5.94 11 3.82 6 3.94 15 1.56 17 1.92 15 2.44 16 1.23 20 3.16 21

Last

Shenzhen -c 444.78 U.S. TSM 14045.67 Global Select Div -d 230.60 Asia/Pacific Select Div -d 307.10 Hong Kong Select Div -d 226.70 U.S. Select Dividend -d 378.70 Islamic Market 2358.86 Islamic Market 100 2358.88 Islamic China/HK Titans 30 1754.62 Sustainability Korea 1642.32 Brookfield Infrastructure 2433.89 DJ-UBS Commodity -p 171.44

Net change

3.35 24.95 -0.22 0.45 -0.99 -0.38 1.71 3.22 3.69 -6.35 -1.70 0.19

PERFORMANCE YearThree-yr., to-date 52-wk. annualized

Daily

0.76% 0.18 -0.09 0.15 -0.43 -0.10 0.07 0.14 0.21 -0.39 -0.07 0.11

2.0% 6.3% 7.0 14.8 6.4 14.0 3.2 10.1 3.0 13.3 5.6 12.6 5.9 15.2 5.1 9.7 5.2 13.2 10.2 29.3 7.4 17.0 5.6 26.9

4.7% 0.6 -4.3 -6.2 5.9 -3.7 0.9 -1.1 -1.0 5.5 1.4 -5.7

Source: DowJones Indexes

U.S.-dollar and euro foreign-exchange rates in global trading A$ 0.955

In U.S. dollars

2964.62

-1.4

0.01

*Fundamentals are based on data in U.S. dollar. Footnotes: c-in local currency. d-dividends reinvested. p-previous day. Note: All data as of 11:30 a.m. ET.

US$

Per U.S. dollar

MSCI indexes Net change

Global TSM 2748.88 4.41 Global DOW 2210.34 1.86 Global Titans 50 187.64 0.18 Asia/Pacific TSM 1383.18 4.43 Asia/Pacific ex-Japan TSM 3747.56 9.17 Europe TSM 3005.20 0.83 Emerging Markets TSM 4988.23 12.35 Asian Titans 50 141.21 0.48 BRIC 50 695.96 -3.62 CBN China 600 -c 28071.78 116.06 China Offshore 50 4642.30 5.43 Shanghai -c 381.65 1.16

Cross rates

In euros

MIDDLE EAST/AFRICA Bahrain dinar 0.5387 1.8562 Egypt pound-a 8.5250 0.1173 Israel shekel 4.9317 0.2028 Jordan dinar 1.0128 0.9873 Kuwait dinar 0.3960 2.5255 Lebanon pound 2144.29 0.0004664 Saudi Arabia riyal 5.3592 0.1866 South Africa rand 9.5532 0.1047 United Arab dirham 5.2488 0.1905

Close 289.11

Euro Stoxx 50

Dow Jones Indexes Price-toDividend earnings yield* ratio* Dows Jones Index

Per euro EUROPE Euro zone euro 1 1-mo. forward 1.0007 3-mos. forward 1.0021 6-mos. forward 1.0048 Czech Rep. koruna-b 24.430 Denmark krone 7.4574 Hungary forint 264.76 Norway krone 7.8122 Poland zloty 3.9708 Russia ruble-d 40.326 Sweden krona 9.0217 Switzerland franc 1.3114 1-mo. forward 1.3112 3-mos. forward 1.3108 6-mos. forward 1.3102 Turkey lira 2.1593 U.K. pound 0.8762 1-mo. forward 0.8765 3-mos. forward 0.8773 6-mos. forward 0.8790

Stock indexes from around the world, grouped by region. Shown in local-currency terms.

Close

ASIA-PACIFIC DJ Asia-Pacific

In euros

Per euro

a-floating rate b-commercial rate c-government rate c-commercial rate d-Russian Central Bank rate f-Special Drawing Rights from the International Monetary Fund ; based on exchange rates for U.S., British and Japanese currencies. Note: Based on trading among banks in amounts of $1 million and more, as quoted by Thomson Reuters.

Follow the markets throughout the day with updated stock quotes, news and commentary at WSJ.com Also, receive email alerts that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com/Email

earnings ratio*

ASIA-PACIFIC Australia dollar China yuan Hong Kong dollar India rupee Indonesia rupiah Japan yen 1-mo. forward 3-mos. forward 6-mos. forward Malaysia ringgit-c New Zealand dollar Pakistan rupee Philippines peso Singapore dollar South Korea won Taiwan dollar Thailand baht

London close on April 7

C$ 0.959 1.004 1.564 0.147 1.370 0.123 0.0217 0.0001 0.011 0.746 0.0009 0.317 0.022 0.760 1.045 0.033 0.032

YUAN 6.542 6.851 10.671 6.823 9.349 0.842 0.1481 0.0008 0.077 5.089 0.0060 2.160 0.152 5.188 7.129 0.226 0.218

EURO 0.700 0.733 1.141 0.730 0.107 0.090 0.0158 0.0001 0.008 0.544 0.0006 0.231 0.016 0.555 0.763 0.024 0.023

HK$ 7.771 8.138 12.675 8.104 1.188 11.105 0.1759 0.0009 0.091 6.045 0.0071 2.566 0.180 6.163 8.468 0.268 0.258

RUPEE 44.175 46.260 72.049 46.068 6.752 63.128 5.685 0.0051 0.519 34.362 0.0406 14.584 1.025 35.032 48.137 1.526 1.469

RUPIAH 8677.54 9087.12 14153.07 9049.48 1326.36 12400.64 1116.66 196.44 101.86 6749.83 7.97 2864.82 201.34 6881.48 9455.75 299.69 288.53

YEN 85.195 89.216 138.953 88.847 13.022 121.748 10.963 1.9286 0.0098 66.269 0.0782 28.126 1.977 67.561 92.835 2.942 2.833

NZ$ 1.286 1.346 2.097 1.341 0.197 1.837 0.165 0.0291 0.0001 0.015 0.0012 0.424 0.030 1.020 1.401 0.044 0.043

WON 1089.05 1140.46 1776.24 1135.73 166.46 1556.31 140.14 24.65 0.13 12.78 847.12 359.54 25.27 863.64 1186.72 37.61 36.21

RINGGIT PH. PESO 3.029 43.100 3.172 45.134 4.940 70.296 3.159 44.947 0.463 6.588 4.329 61.592 0.390 5.546 0.0686 0.9757 0.0003 0.0050 0.036 0.506 2.356 33.525 0.0028 0.0396 14.229 0.070 2.402 34.179 3.301 46.965 0.105 1.489 0.101 1.433

S$ S FRANC 1.261 0.918 1.321 0.961 2.057 1.497 1.315 0.957 0.193 0.140 1.802 1.311 0.162 0.118 0.0285 0.0208 0.0001 0.0001 0.015 0.011 0.981 0.714 0.0012 0.0008 0.416 0.303 0.029 0.021 0.728 1.374 0.044 0.032 0.042 0.031

TW$ 28.955 30.322 47.226 30.196 4.426 41.378 3.726 0.6555 0.0033 0.340 22.523 0.0266 9.559 0.672 22.962 31.552

BAHT 30.075 31.495 49.052 31.364 4.597 42.979 3.870 0.6808 0.0035 0.353 23.394 0.0276 9.929 0.698 23.850 32.772 1.039

0.963

Source: Thomson Reuters via WSJ Market Data Group

Developed and emerging-market regional and country indexes from MSCI Barra as of April. 07, 2011 Price-toDividend earnings yield ratio Morgan Stanley Index

LOCAL-CURRENCY PERFORMANCE

Last

Daily

YTD

52-wk.

2.40% 15

ALL COUNTRY (AC) WORLD* 348.05 -0.43%

5.3%

13.2%

2.40

15

World (Developed Markets) 1,348.86

-0.39

5.4

12.4

1.60

25

World Small Cap

252.94

-0.13

7.0

24.1

2.40

15

Kokusai (World ex-Japan)

1,357.57 -0.60

7.3

14.5

3.10

14

EAFE

1,723.46

-0.62

3.9

8.8

2.20

14

Emerging Markets (EM)

1,203.47

-0.72

4.5

19.1

2.70

15

AC ASIA PACIFIC EX-JAPAN 499.05

-0.93

4.2

18.0

2.30

14

AC Far East ex-Japan

548.57

-0.85

4.5

21.3

2.00

15

Japan

523.55

-0.79

-6.7

-14.5

2.20

14

China

70.64

0.48

6.2

10.6

1.00

22

China A (China Domestic)

3,224.40

0.78

4.4

0.6

2.60

20

Hong Kong

12,546.21

0.83

2.7

20.6

1.00

19

India

778.13

-0.13

-4.1

8.9

1.20

12

Korea

609.15

-0.28

3.8

26.9

2.60

18

Malaysia

18.5

2.90

14

Singapore

3.20

15

Taiwan

2.80

14

4.10

16

4.80

19

New Zealand

1.70

17

US BROAD MARKET

3.30

13

EUROPE

573.95

0.01

2.4

1,748.00

0.78

-0.5

9.6

315.38

2.04

-1.2

11.6

Thailand

442.11

0.00

7.5

34.2

Australia

1,003.55

0.36

3.9

-0.6

87.97

-1.16

5.0

3.6

1,520.07

-0.17

6.8

16.4

97.40

0.23

2.1

6.5

*Twenty-three developed and 26 emerging markets

Source: MSCI Barra

26

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

SCANNING THE GLOBE Dow Jones Industrial Average

Nasdaq Composite Index

P/E: 15

t 68.08, or 0.55%

LAST: 12358.67 YEAR TO DATE: OVER 52 WEEKS

t 13.72, or 0.49%

LAST: 2786.10 YEAR TO DATE: OVER 52 WEEKS

s 781.16, or 6.7% s 1,431.60, or 13.1%

S&P 500 Index

P/E: 13*

P/E: 18 t 6.26, or 0.47%

LAST: 1329.28 YEAR TO DATE: OVER 52 WEEKS

s 133.23, or 5.0% s 349.29, or 14.3%

s 71.64, or 5.7% s 142.84, or 12.0%

High 13000

2925

1375

12500

2800

1300

12000

2675

1225

11500

2550

1150

11000

2425

1075

Close Low

t

50–day moving average

10500 7

14 21

28

4 Feb.

11

18 25

4 Mar.

11

18

25

2300

1 Apr.

7

14 21

28

4 Feb.

11

18 25

4 Mar.

11

18

25

1000

1 Apr.

7

14 21

28

4 Feb.

11

18 25

U.S. stocks: most active...

Symbol

Volume, in millions

AT&T Alcoa AmExpress BankAm Boeing Caterpillar Chevron CiscoSys CocaCola Disney DuPont ExxonMobil GenElec HewlettPk HomeDpt Intel IBM JPMorgChas JohnsJohns KftFoods McDonalds Merck Microsoft Pfizer ProctGamb 3M TravelersCos UnitedTech Verizon

T AA AXP BAC BA CAT CVX CSCO KO DIS DD XOM GE HPQ HD INTC IBM JPM JNJ KFT MCD MRK MSFT PFE PG MMM TRV UTX VZ

15.7 16.5 4.0 67.3 2.8 5.1 3.7 79.2 3.6 5.0 2.3 7.9 26.6 10.1 5.4 29.6 2.1 16.1 5.3 3.3 3.1 6.3 28.4 22.6 4.0 1.8 1.2 1.1 8.1

$30.49 17.99 46.10 13.70 74.49 110.45 108.15 17.90 67.28 42.00 55.56 85.15 20.33 41.32 37.86 20.05 164.07 47.40 59.52 31.70 76.26 33.25 26.21 20.25 61.94 93.35 59.75 85.29 37.69

0.02 –0.14 –0.18 –0.02 0.77 –0.55 –0.51 –0.17 –0.35 –0.27 –0.46 –0.03 –0.22 0.14 0.36 0.10 0.03 –0.24 –0.14 –0.05 –0.46 –0.10 0.06 –0.04 0.18 –0.47 –0.19 –0.37 –0.16

0.07% –0.77 –0.39 –0.14 1.04 –0.50 –0.47 –0.94 –0.52 –0.64 –0.82 –0.04 –1.07 0.34 0.96 0.50 0.02 –0.50 –0.23 –0.17 –0.60 –0.30 0.21 –0.20 0.29 –0.50 –0.32 –0.43 –0.42

WalMart

WMT

6.5

53.20

0.22

0.42

Stock

Latest

CHANGE Points Percentage

11

18

25

1 Apr.

Sources: WSJ Market Data Group; Birinyi Associates

*Price-to-earnings ratio for the Nasdaq 100 Note: Price-to-earnings ratios are for trailing 12 months

DJIA component stocks

4 Mar.

Stock

Volume, Symbol in millions

Citigroup SPDR S&P 500 CiscoSys iShrMSCI Jpn BankAm iShrRu2000 PwrShrs QQQ SPDR FnclSelSct SiriusXM Intel FordMotor Microsoft iShrMSCIEmrgMkt GenElec Pfizer

C SPY CSCO EWJ BAC IWM QQQ XLF SIRI INTC F MSFT EEM GE PFE

ADRs of Asian companies* Latest

CHANGE Points Percentage

394.5 112.1 79.2 78.9 67.3 48.5 46.2 32.9 31.7 29.6 29.1 28.4 27.6 26.6 22.6

$4.62 133.53 17.90 9.84 13.70 85.32 57.43 16.66 1.81 20.05 15.62 26.21 49.97 20.33 20.25

0.03 –0.13 –0.17 –0.03 –0.02 –0.06 0.17 –0.03 –0.03 0.10 –0.11 0.06 –0.07 –0.22 –0.04

0.65% –0.10 –0.94 –0.30 –0.14 –0.07 0.30 –0.18 –1.36 0.50 –0.70 0.21 –0.14 –1.07 –0.20

XNPT 19,966.5 IMGN 3,547.6 DGW 4,240.3 AXN 475.3 CNTY 850.9

$10.36 11.37 3.90 2.72 3.50

3.98 2.07 0.69 0.47 0.50

62.38% 22.26 21.50 20.89 16.67

$1.95 3.55 3.21 11.39 2.10

–0.49 –0.89 –0.78 –1.99 –0.33

–20.08% –20.05 –19.55 –14.85 –13.58

52-WEEK High Low

$13.85 143.48 99.94 5.68 15.55 7.27 12.55 3.94 44.56 93.90 37.65 58.22 53.16 7.67 21.59 4.47 37.04 77.92 54.70 52.69 17.60 31.27 6.66 16.58 4.50 8.94 9.70 9.90 39.80 25.18

Biggest gainers... Xenoport Immunogen DuoyGlblWtr ADS AoxingPharmac CentCsno

...Biggest losers GdTimeRestr QiaoXingComm QuantumFuel RubyTues LizhanEnvl

GTIM 7.9 QXM 953.0 QTWW 854.2 RT 6,982.8 LZEN 89.7

Volume, Symbol in OOOs

Stock

TaiwanSemi Baidu ADS BHPBilton ADS MitsuUFJ ADS SuntechPwr Slcnwr ADS AU Optrncs UtdMicro ADS HondaMtr ADS ToyotaMtr ADS TataMtrs ADS ICICI Bk ADS CtripInt ADS NmuraHldg LG DisplayADS SifyTech ADS SonyCp Infosys ChinaMobile Netease.com ChinaUnicomHK FocusMediaHldg AdSemEg ADS KoreaElecPwr PranaBiotech TeleNZ ADS SilicnMotnTch Rediff ADS Yanzhou ADS Nippon ADS

$9.30 60.22 58.38 4.36 7.05 4.45 8.14 2.49 28.33 67.56 15.25 33.21 31.35 4.75 13.75 1.18 25.85 53.28 44.36 26.16 10.91 14.36 3.33 10.43 1.09 5.90 3.83 1.69 18.29 19.59

TSM BIDU BHP MTU STP SPIL AUO UMC HMC TM TTM IBN CTRP NMR LPL SIFY SNE INFY CHL NTES CHU FMCN ASX KEP PRAN NZT SIMO REDF YZC NTT

CHANGE Latest Points Percentage

5,159.2 $12.73 –0.04 4,075.4 138.30 1.05 2,895.4 98.92 –0.66 1,961.6 4.47 0.07 1,760.7 9.51 –0.11 1,668.4 6.34 –0.13 1,483.4 8.91 –0.03 1,402.9 2.86 0.02 1,284.2 34.45 0.20 1,193.8 77.55 0.20 1,131.2 28.51 –0.07 936.1 49.84 0.42 932.8 45.41 1.28 852.8 4.84 0.02 812.7 17.02 0.11 751.1 4.35 0.14 691.3 30.38 –0.18 567.2 73.21 0.07 543.0 47.52 –0.13 535.9 52.33 0.98 511.7 17.38 –0.04 460.2 30.92 0.39 429.8 5.60 –0.10 392.0 12.37 –0.12 364.0 2.40 –0.05 343.1 7.79 –0.04 298.0 9.27 –0.15 296.0 8.00 0.15 281.1 39.33 1.49 280.8 22.21 0.11

–0.31% 0.77 –0.66 1.59 –1.16 –1.93 –0.34 0.70 0.58 0.26 –0.24 0.85 2.90 0.41 0.62 3.30 –0.59 0.10 –0.26 1.91 –0.23 1.28 –1.75 –0.96 –2.06 –0.57 –1.59 1.92 3.94 0.50

*Most active American depositary receipts tracked by Dow Jones Source: WSJ Market Data Group

U.S. Treasury yield curve

Global government bonds

The curve shows the yield to maturity of current bills, notes and bonds; all data as of 3 p.m. ET.

Coupon

Country/ Maturity, in years

5.005% 5.593 2.198 3.806 2.207 4.228 1.862 3.423 1.804 3.484 1.821 3.728 1.832 3.411 0.708 2.980 2.829 4.742 0.205 1.315 1.806 3.675 9.031 8.776 3.065 5.236 0.768 2.031 1.372 3.745 0.794 3.528

SPREAD OVER TREASURYS, in basis points Latest Previous Month ago Year ago

421.1 206.5 140.4 27.8 141.3 70.0 106.8 -10.5 101.0 -4.4 102.7 20.0 103.8 -11.7 -8.6 -54.8 203.5 121.4 -58.9 -221.3 101.2 14.7 823.7 524.8 227.1 170.8 -2.6 -149.7 57.8 21.7 ... ...

412.4 206.7 135.2 32.3 144.0 73.8 104.7 -14.3 101.5 -0.7 102.1 24.3 102.8 -8.4 -11.8 -58.4 197.4 123.0 -61.6 -221.0 98.6 17.6 816.9 525.1 223.9 172.0 -7.9 -145.5 57.5 24.7 ... ...

424.1 198.0 140.7 21.2 177.4 79.0 114.8 -16.3 107.8 -15.0 110.1 13.0 104.9 -22.8 0.8 -66.9 239.9 137.8 -48.0 -223.8 83.7 -6.1 545.6 411.5 255.5 187.7 3.5 -160.7 68.3 20.5 ... ...

397.6 198.2 14.3 -34.3 1.0 -28.5 72.9 -24.6 51.2 -44.2 -14.8 -41.1 -9.9 -74.3 -22.8 -90.8 50.9 3.8 -88.6 -244.7 -14.9 -49.3 66.3 44.4 11.4 2.4 -44.2 -189.6 -4.7 18.7 ... ...

Previous

YIELD Month ago

Year ago

4.950% 5.582 2.178 3.838 2.266 4.253 1.873 3.372 1.841 3.508 1.847 3.758 1.854 3.431 0.708 2.931 2.800 4.745 0.210 1.305 1.812 3.691 8.995 8.766 3.065 5.235 0.747 2.060 1.401 3.762 0.826 3.515

4.946% 5.496 2.112 3.728 2.479 4.306 1.853 3.353 1.783 3.366 1.806 3.646 1.754 3.288 0.713 2.847 3.104 4.894 0.225 1.278 1.542 3.455 6.161 7.631 3.260 5.393 0.740 1.909 1.388 3.721 0.705 3.516

5.032% 5.845 1.199 3.520 1.066 3.578 1.785 3.617 1.568 3.421 0.908 3.452 0.957 3.120 0.828 2.955 1.565 3.901 0.170 1.416 0.907 3.370 1.719 4.307 1.170 3.887 0.614 1.967 1.009 4.050 1.056 3.863

Source: Thomson Reuters

5% 4 s

6.500% Australia 2 5.750 10 3.800 Austria 2 3.500 10 4.000 Belgium 2 4.250 10 1.750 Canada 2 3.500 10 4.000 Denmark 2 4.000 10 3.750 France 2 2.500 10 1.500 Germany 2 2.500 10 0.580 Hong Kong 2 2.440 10 2.000 Italy 2 3.750 10 0.200 Japan 2 1.300 10 1.750 Netherlands 2 3.250 10 5.450 Portugal 2 3.850 10 2.300 Spain 2 5.500 10 4.000 Switzerland 2 2.000 10 4.500 U.K. 2 3.750 10 0.750 U.S. 2 3.625 10

Yield

One year ago

3 2 s

Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year and 10-year government bonds around the world. Data as of 12 p.m. ET

Wednesday 1 0

1

3

6

month(s)

1

2 3 5 710

years maturity

30

Ryan Index

Yield to maturity

Modified duration

30-year Treasury 10-year Treasury 7 Year Treasury Five-year Treasury Ryan Index 3 Year Treasury Two-year Treasury 1 Year Treasury Six-month Treasury Ryan Cash Index-a Three-month bill

4.585% 3.545 2.980 2.317 2.602 1.337 0.846 0.285 0.142 0.130 0.061

15.96 8.20 6.28 4.69 6.66 2.88 1.96 0.99 0.50 0.45 0.25

One-month bill

0.031

0.08

Month to-date

TOTAL RETURN

Quarter to-date

–1.09 % –0.71 –0.49 –0.39 –0.49 –0.20 –0.10 0.02 0.02 0.02 0.01

–1.09 % –0.71 –0.49 –0.39 –0.49 –0.20 –0.10 0.02 0.02 0.02 0.01

...

a-Performance of a cash investment

...

Year to-date 12-month

–2.94 % –1.09 –0.52 –0.35 –0.89 –0.39 –0.16 0.17 0.10 0.09 0.05

10.20 % 7.21 7.31 5.44 5.94 3.15 1.55 0.82 0.34 0.40 0.25

0.04

0.16

Source: Ryan ALM

Key money rates Latest

52 wks ago

Prime rates

Latest Euro Libor One month

52 wks ago

Offer Eurodollars One month

Bid

0.98250%

0.37000%

0.3500%

0.2500%

Three month

1.22875

0.58063

Three month

0.5500

0.4500

1.475

Six month

1.54000

0.88813

Six month

0.7500

0.6000

0.50

One year

1.99188

1.18688

One year

1.0500

0.8500

1.00

1.00

Switzerland

0.52

0.53

Hibor One month

0.20107

0.08000%

Latest

52 wks ago

Australia

4.75

4.25

Three month

0.26000

0.13000

U.S. discount

0.75%

0.75%

Hong Kong

5.00

5.25

Six month

0.32071

0.24857

Fed-funds target

0.25

0.25

One year

0.64000

0.56000

Call money

2.00

2.00

U.S.

3.25%

3.25%

Canada

3.00

2.25

Japan

1.475

Britain

0.50

ECB

Libor One month

0.23138%

0.25013%

Asian dollars One month

0.2404%

0.26%

Overnight repurchase rates U.S. 0.15%

Three month

0.28950

0.29400

Three month

0.2995

0.2980

Six month

0.45088

0.45250

Six month

0.4595

0.4450

U.K. (BBA)

0.538

0.505

One year

0.77775

0.93356

One year

0.7840

0.9170

Euro zone

0.51

0.29

0.20%

Sources: WSJ Market Data Group; Reuters

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

27

MARKETS LINEUP Asian index movers…

Moving the markets

At right, Japan’s benchmark stock index and the biggest movers among the larger Asian stocks indexes and stocks Thursday. Below each index are its most actively traded stocks. The charts show the percentage change in each index’s or stock’s value, rather than the point change, for purposes of comparison. The index level or stock price is indicated on each axis. All indexes and stocks are shown in local currency terms.

Nikkei Stock Average

CBN 600

Japan

China

s

9590.93 0.07% or 6.56

The benchmark edged higher as exporters such as Honda Motor benefited from more yen weakness. Meanwhile, investors were jittery ahead of earnings announcements.

Volume in millions

Close

Mizuho Financial

223.47

131

Tokyo Elec Power

151.95

Mtshbsh Fin Grp

94.61

Hitachi

45.08

424

Toshiba

40.12

381

Stock

Steelmakers rose on hopes that product prices will increase amid stronger demand, while machinery makers advanced on expectations of strong first-quarter results.

t

2122.14 0.21% or 4.57

Tech shares were weighed by a weak firstquarter earnings estimate from Samsung Electronics. Telecoms fell on concerns authorities may aim to lower service charges.

India t

19591.18 0.11% or 21.02

The market ended lower for a third consecutive session. Software firms weakened ahead of companies’ quarterly results. Property shares rose.

45000

3000

30000

12500

37500

2500

25000

10000

30000

2000

20000

7500

22500

1500

15000

A M J J A S O N D J F M 2010 2011

Follow the markets throughout the day, with updated stock quotes, news and commentary at WSJ.com. Also, receive emails that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com/Email.

s

Sensex

South Korea

15000

5000

WSJ.com

Kospi 28071.78 0.40% or 112.59

Change Net

15000 A M J J A S O N D J F M 2010 2011 Stock

%

Volume in millions

Close

1000 A M J J A S O N D J F M 2010 2011

Change Net

Volume in millions

Close

Mirae

47.22

505.00

–1.00

Chinhung Int

26.65

218.00

Rnl Bio

11.59

%

Stock

0.35

2

1.55

AgricBkofChina

339.08

2.87

340

3

0.89

ChinaMinshengBkg 242.56

5.94

…

…

381

9

2.42

China State Con

234.12

3.92

0.01

0.26

7

1.68

HainanRubberInd 234.08

12.89

–0.32

–2.42

Stx Ofsh Spbd

10.58

–9

–2.31

Metallurgical Cn 220.46

4.28

0.10

2.39

Woongjin Chem

9.99

0.01

Change Net

%

10000 A M J J A S O N D J F M 2010 2011 Stock

Volume in millions

Close

1.56

110.80

Change Net

-0.05

%

–0.20

Reliance Com-A

–0.05

–17.00

–7.23

Dlf-A

1.03

269.50

-1.10

–0.41

2,970.00 –100.00

–3.26

Jaiprak Asso-A

0.95

98.20

-0.35

–0.36

27,250.00 3,550.00

14.98

Bharti Airtel-A

0.68

356.50

3.25

0.92

1,400.00 –60.00

–4.11

Tata Steel-A

0.64

637.55

4.35

0.69

Asian stocks in the news CITIC Pacific Hong Kong

Indorama Ventures PCL HK$24.10 Thailand

s 3.4% or HK$0.80

SJM Hldgs

55.0 baht

s 4.3% or 2.3 baht

Hong Kong

Chubu Elec Power HK$15.92

s 4.7% or HK$0.72

Japan

Anhui Conch Cement ¥1,831 Hong Kong

s 5.8% or ¥101

HK$51.80

s 6.0% or HK$2.95

A report Wednesday said the company was seeking to raise more than US$1 billion this week.

The maker of PET, used in bottling and textiles, will expand its production capacity in Europe.

Shares continued to surge from Wednesday’s record high amid a strong outlook on gaming revenue.

Observers cited corrective buying, but the stock is still down about 15% since the earthquake.

The cement maker extended Wednesday’s gains on an expected surge in 1st-quarter profit.

In Hong Kong dollars

In baht

In Hong Kong dollars

In yen

In Hong Kong dollars

30

60

J

A S O N D

12

3000

40

18

36

9

2250

30

12

24

6

1500

20

12 A M J 2010

10 2.44 1.9

J A S O N D J F M 2011

Price-to-earnings ratio Earnings per share, past four quarters Dividend yield

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Indus Gds & Svcs CITIC Pacific

0.1% 3.4%

-1.9% 11.6%

9.2% 27.4%

Cheung Kong Hong Kong

HK$128.60

t 2.2% or HK$2.90

Property firms led Thursday's decline on concerns that banks could raise mortgage rates this year. 200

Chemicals Indorama Ventures PCL

Japan

0.3% -0.8% 25.5% 4.3% 4.8% 223.5%

-0.2% -2.2%

Price-to-earnings ratio Earnings per share, past four quarters Dividend yield

A M J 2010 23 0.69 2.2

¥381

J A S O N D J F M 2011

Price-to-earnings ratio Earnings per share, past four quarters Dividend yield

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Travel & Leisure SJM Hldgs

0.7% -1.0% 5.9% 4.7% 16.9% 205.6%

Korea

19 98.90 3.3

205,500 won

J A S O N D J F M 2011

Price-to-earnings ratio Earnings per share, past four quarters Dividend yield

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Utilities Chubu Elec Power

1.6% -2.0% -13.1% 5.8% -1.0% -20.4%

Sesa Goa Ltd.

t 2.4% or 5,000 won

10 A M J 2010

India

25 2.06 0.4

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Constructn & Matl Anhui Conch Cement

0.4% 6.0%

0.1% 6.5%

10.1% 88.4%

Agile Prop 315.85 rupee Hong Kong

t 3.1% or 10.00 rupee

HK$12.46

t 4.4% or HK$0.58

Macquarie Securities cut its target price but kept its “outperform” rating on the stock.

Foreign investment weakened, with selling concentrated in blue chip exporters.

Shares reversed course from Wednesday’s big gains amid uncertainty over a Cairn Energy stake.

Investors reacted to the sale of convertible bonds, but analysts said the selloff was overdone.

In yen

In won

In rupee

In Hong Kong dollars

750

300000

750

20

600

240000

600

16

120

450

180000

450

12

80

300

120000

300

8

150 A M J 2010

11 11.43 2.3 1.3% 1.4%

J F M 2011

Hyundai Motor t 2.3% or ¥9

J A S O N D J F M 2011

Price-to-earnings ratio Earnings per share, past four quarters Dividend yield

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Real Estate Cheung Kong

A S O N D

160

J A S O N D J F M 2011

Price-to-earnings ratio Earnings per share, past four quarters Dividend yield

J

PERCENTAGE CHANGE Daily 1 wk. 52 wks

40 A M J 2010

22 2.49 1.2

750

3 A M J 2010

Toshiba

In Hong Kong dollars

50

48

J F M 2011

Price-to-earnings ratio Earnings per share, past four quarters Dividend yield

3750

24

6 A M J 2010

15

7.8% 24.1%

60000 A M J J A S O N D J F M 2010 2011

16 23.60 1.3

Price-to-earnings ratio Earnings per share, past four quarters Dividend yield

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Indus Gds & Svcs Toshiba

0.1% -1.9% -2.3% -6.4%

9.2% -22.4%

150 A M J 2010

10 20051.53 0.7

J A S O N D J F M 2011

Price-to-earnings ratio Earnings per share, past four quarters Dividend yield

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Automobiles & Parts Hyundai Motor

0.7% -4.3% -2.4% 1.2%

10.4% 61.2%

4 A M J 2010

7 46.96 1.0

0.1% -3.1%

1.8% 8.8%

12.1% -35.6%

A S O N D

J F M 2011

Price-to-earnings ratio Earnings per share, past four quarters Dividend yield

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Basic Resources Sesa Goa Ltd.

J

6 2.01 2.3

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Real Estate Agile Prop

-0.2% -4.4%

1.3% 1.6%

7.8% 15.4%

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

HEARD ON THE STREET FINA NCIA L A NA LYSIS & COMMENTARY

Email: [email protected]

WSJ.com/Heard

Korea flails at inflation Seoul banking deal Shareholders value corporate altruism, provided it is confined to touchy-feely advertisements. Being nice quickly loses its appeal when it hurts the bottom line. Korea’s oil refiners are a case in point. They are to cut motor fuel prices by 100 won (9.2 U.S. cents) per liter, or roughly 5% to 6%, for three months beginning this week. The largest refiner, SK Energy, kicked it off on Sunday. Shares in parent SK Innovation promptly dropped 10% the following day. Rivals S-Oil Corp. and GS Caltex, owned jointly by Korea’s GS Holding and U.S. oil major Chevron, followed suit quickly. Oil refiners aren’t inclined to give away profits. CLSA analyst Angus Graham calculates an 11% hit to SK’s 2011 earnings from the price cut. But they are into self-preservation. Korea’s government is rightly concerned about rising prices. Inflation hit 4.7% in March and is accelerating quarter-to-quarter. Reluctant to jack up interest rates—attracting more hot money and hurting exporters with a stronger won—politicians are turning to other methods. Seoul has some leverage over Korea’s refiners. An investigation into alleged collusion on setting fuel prices is due to report in the coming

Fuel dump Daily share price of SK Innovation Thursday's close: 202,000 won, up 2.3% 220,000 won 210,000 200,000 190,000 180,000 170,000

2011

Source: Thomson Reuters

weeks. The government has also said it is considering offering incentives to boost independent fuel retailers and allowing state-owned Korea National Oil Corp. to participate in the wholesale fuel business, raising competition for the listed refiners. Refining stocks have recovered their poise somewhat since Monday. That’s because, absent Seoul’s intervention, the outlook for Asia’s independent refiners is good, given rising demand for fuel, disruption of Japa-

This is no time to get complacent in Europe When Greece applied for a eurozone bailout last May, the markets went into a tailspin for months, and when Ireland hit the buffers in December, the fallout lasted weeks. Yet Portugal’s decision to throw in the towel Wednesday has barely troubled investors: The euro rose, Italian and Spanish bond yields remained close to 12-month lows and bank stocks rose. Not only was Portugal’s bailout long expected, but the market has reached a settled view that Spain has decoupled from Europe’s crisis-stricken periphery. That may be the correct assessment. It certainly seems to be the view of the euro-zone authorities. The European Central Bank pushed ahead nonchalantly with a well-forecast interest-rate increase Thursday, and it has effectively suspended its government bond-buying program, crucial in averting postGreek and Irish bailout contagion. European leaders clearly felt sufficiently relaxed last month about the risks of the crisis spreading to Spain that they shelved difficult decisions over expanding proposals to increase the powers of Europe’s bailout mechanisms. Still, the turnaround in perceptions toward Spain has been swift. Just four months ago, bond yields hit 5.45%—not far from the 6% level at which a bailout starts to look plausible. Today, those yields are 5.06%. That reflects optimism that Spain has taken convincing steps to address its fiscal crisis. Spain is fortunate it started the crisis with a low ratio of government debt to GDP. Even so, the risks that previously worried investors haven’t

Climbing higher 10-year bond yields 10%

Ireland

9 8 7 Portugal

6 5

Spain

4 3

2010

'11

Source: Thomson Reuters Datastream

gone away. Unemployment is stuck at 20%, which is likely to continue to put downward pressure on consumer spending and the housing market. The stock of unsold homes stands at more than one million units, notes research group Gavekal. In addition, doubts persist over Madrid’s ability to rein in borrowing by regional authorities, and the combined funding needs of the public and private sectors, with total debt equivalent to 354% of GDP, will test markets. Will the ECB’s rate increase alter the outlook? Perhaps not. Much depends on what further tightening the market prices in and over what time period. Spain’s recovery prospects depend in particular on banks being able to borrow at low rates. But market sentiment can turn quickly and political risks across Europe are rising. This is no time for complacency. —Simon Nixon

nese refining operations, and a medium-term trend toward older competing refineries in Japan and Europe closing. The wrinkle with such optimism is it assumes Seoul’s pressure on the refiners will prove temporary. Yet it was only in February that refiners cut prices for kerosene. Viewed then as a way of heading off pressure for gasoline and diesel price cuts, it plainly didn’t work. Investors should note other examples of governments resorting to unorthodox measures to curb inflation. Korea’s earlier audit of banks’ foreign-exchange derivatives positions was a thinly veiled attempt at deterring hot money flows without raising rates. Last week, Beijing persuaded Unilever to hold off raising prices of essentials like detergent. And China controls fuel prices tightly. With oil prices set more by outside factors like Libya’s civil war and a weak dollar, Korea will struggle to control them. Indeed, price cuts serve to bolster demand. Yet such rational thinking can go out the window when politicians fear a backlash against prices. Investors in Korea’s refiners, and other consumer-exposed Asian sectors, should bear that in mind. — Liam Denning

is overly ambitious Is there something up with the South Korean financial regulator’s math? Kim Seok-dong, chairman of South Korea’s Financial Services Commission, has been talking up the possibility of merging two of the country’s securities companies, in the hope that adding together two firms with little international experience will create a giant with global potential. Daewoo Securities and Woori Investment & Securities are the country’s No. 2 and 3 investment banks by market capitalization. Together, they would leapfrog Samsung Securities to be the biggest investment bank in South Korea. And the country’s fragmented financial-services industry—there are more than two dozen South Korean brokerages in Seoul—could do with consolidating. But as the global financial crisis demonstrated, with the giants of Wall Street turning to taxpayers for help, mere scale isn’t always the answer. Besides, merging two South Ko-

rean brokers is hardly likely to create a world-beater. Asia’s fourth-biggest economy is still largely dominated by a handful of chaebols, or conglomerates. As a result, South Korea lacks the necessary cross-border merger-andacquisitions volume to support a big international investment bank. In 2010, Woori, Samsung and Daewoo ranked 47, 100 and 214 in Asian-Pacific M&A by deal value, according to Dealogic. Ultimately, the FSC is motivated by a desire to privatize state-owned banks. Daewoo Securities is an affiliate of state-owned KDB Financial Group, while Woori Investment is an affiliate of Woori Finance Holdings, in which the government has a 57% stake. In that respect, a combined megabroker, with bigger domestic clout, could be more attractive to investors. But without wider adjustments to South Korea’s corporate structure, Seoul’s ambitions to enter the banking bulge bracket look futile. —Duncan Mavin

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28

WEEKEND JOURNAL. asia.WSJ.com/lifestyle

Illustration by Matt Collins

Friday - Sunday, April 8 - 10, 2011

The Sleepless Elite

Why some people can run on little sleep and get so much done, while others just wither BY MELINDA BECK

F

or a small group of people—perhaps just 1% to 3% of the population—sleep is a waste of time. Natural “short sleepers,” as they’re officially known, are night owls and early birds simultaneously. They typically turn in well after midnight, then get up just a few hours later and barrel through the day without needing to take naps or load up on caffeine. They are also energetic, outgoing, opti-

mistic and ambitious, according to the few researchers who have studied them. The pattern sometimes starts in childhood and often runs in families. It’s unclear if all short sleepers are high achievers. But they all do have more time in the day to do things, and they keep finding more interesting things to do than sleep. They are often better able to do several things at once. Nobody knows how many natural short sleepers are out there.

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“There aren’t nearly as many as there are people who think they’re short sleepers,” says Daniel J. Buysse, a psychiatrist at the University of Pittsburgh Medical Center and a past president of the American Academy of Sleep Medicine, a professional group. Out of every 100 people who believe they only need five or six hours of sleep a night, only about five people really do, Dr. Buysse says. The rest end up chronically sleep deprived, part of the one-third of U.S.

SHIPS FOR THE HIP Unusual itineraries and top chefs aboard sophisticated cruises W8

adults who get less than the recommended seven hours of sleep per night, according to a report released last month by the U.S. Centers for Disease Control and Prevention. To date, only a handful of small studies have looked at short sleepers—in part because they’re hard to find. They rarely go to sleep clinics and don’t think they have a disorder. A few studies have suggested that some short sleepers may have hypomania, a mild Please turn to next page

CRAZY HORSES The FF hatchback is the coolest Ferrari ever W16

W2

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

WEEKEND JOURNAL

For the sleepless elite, snoozing’s a waste Genetic analyses spotted one gene variation common to them both. The scientists were able to replicate the gene variation in a strain of mice and found that the mice needed less sleep than usual, too. News of their finding spurred other people to write the team, saying they were natural short sleepers and volunteering to be studied. The researchers are recruiting more candidates and hope to find more gene variations they have in common. Potential candidates for the gene study are sent multiple questionnaires and undergo a long structured phone interview. Those who make the initial screening wear monitors to track their sleep patterns at home. Christopher Jones, a University of Utah neurologist and sleep scientist who oversees the recruiting, says there is one question that is more revealing than anything else: When people do have a chance to sleep longer, on weekends or vacation, do they still sleep only five or six hours a night? People who sleep more when they can are not true short sleepers, he says. To date, Dr. Jones says he has identified only about 20 true short sleepers, and he says they share some fascinating characteristics. Not only are their circadian rhythms different from most people, so are their moods (very upbeat) and their metabolism (they’re thinner than average, even though sleep deprivation usually raises the risk of obesity). They also seem to have a high tol-

That All-Nighter Feels Good—Temporarily Sleep deprivation makes most people grumpy. Oddly enough, it can also bring on temporary euphoria, according to a study in the journal Neuroscience last month. Researchers had 14 healthy young adults stay up all night and all the next day and then compared their reactions with 13 subjects who had slept normally. In one test, sleepless subjects asked to rate a series of images uniformly saw them as more pleasant or positive. “We saw this strange lopsided shift,” says lead author Matthew Walker, an associate professor of psychology and neuroscience at the University of California-Berkeley. Brain scans also showed that the subjects who had pulled all-nighters had heightened activity in the mesolimbic pathway, a brain circuit driven by dopamine, a neurotransmitter that typically regulates feelings of pleasure, addiction and cravings. The boost of dopamine after an all-nighter may help explain why sleep deprivation can

alleviate major depression in about 60% of patients, although the effect is only temporary. Could the sleep-deprived brain be somehow compensating for the lack of downtime with a surge of dopamine to keep on going? Scientists don’t yet know. Earlier studies have also shown that sleep deprivation amplifies activity in the amygdala, the primitive emotional center of the brain, and reduces it the prefrontal cortex, where higher, more rational thought occurs. It may be that the brain reverts to a more basic mode of operating when it is sleep deprived, Dr. Walker speculates. Alternatively, he says, “we know that different parts of the brain are more sensitive than others to sleep deprivation. It may be that the prefrontal cortex just goes down first.” Although the feelings of euphoria sound great, Dr. Walker warns that operating more on emotion than reason can be very risky.

What is a good night’s sleep worth to you?
Normal Sleeper Most adults have normal sleep needs, functioning best with 7 to 9 hours of sleep, and about two-thirds of Americans regularly get it. Children fare better with 8 to 12 hours, and elderly people may need only 6 to 7.
Wannabe Short Sleeper One-third of Americans are sleep-deprived, getting less than 7 hours a night, which puts them at higher risk of diabetes, obesity, high blood pressure and other health problems.

Getty Images

Continued from previous page form of mania with racing thoughts and few inhibitions. “These people talk fast. They never stop. They’re always on the up side of life,” says Dr. Buysse. He was one of the authors of a 2001 study that had 12 confirmed short sleepers and 12 control subjects keep diaries and complete numerous questionnaires about their work, sleep and living habits.One survey dubbed “Attitude for Life” that was actually a test for hypomania. The natural short sleepers scored twice as high as the controls. There is currently no way people can teach themselves to be short sleepers. Still, scientists hope that by studying this group, they can better understand how the body regulates sleep and why sleep needs vary so much in humans. “My long-term goal is to someday learn enough so we can manipulate the sleep pathways without damaging our health,” says human geneticist Ying-Hui Fu at the University of California-San Francisco. “Everybody can use more waking hours, even if you just watch movies.” Dr. Fu was part of a research team that discovered a gene variation, hDEC2, in a pair of short sleepers in 2009. They were studying extreme early birds when they when they noticed that two of their subjects, a mother and daughter, got up naturally about 4 a.m. but also went to bed past midnight.


Short Sleeper Short sleepers, about 1% to 3% of the population, function well on less than 6 hours of sleep without being tired during the day. They tend to be unusually energetic and outgoing. Geneticists who spotted a gene variation in short sleepers were able to replicate it in mice—which needed less sleep than usual, too.

A lie-in is wasted on about 1% to 3% of people. erance for physical pain and psychological setbacks. “They encounter obstacles, they just pick themselves up and try again,” Dr. Jones says. Some short sleepers say their sleep patterns go back to childhood and some see the same patterns starting in their own kids, such as giving up naps by age 2. As adults, they gravitate to different fields, but whatever they do, they do full bore, Dr. Jones says. “Typically, at the end of a long, structured phone interview, they will admit that they’ve been texting and surfing the Internet and doing the crossword puzzle at the same time, all on less than six hours of sleep,” says Dr. Jones. “There is some sort of psychological and physiological energy to them that we don’t understand.” Drs. Jones and Fu stress that there is no genetic test for short sleeping. Ultimately, they expect to find that many different genes play a role, which may in turn reveal more about the complex systems that regulate sleep in humans. Benjamin Franklin, Thomas Jefferson and Leonardo da Vinci were too busy to sleep much, according to historical accounts. Winston Churchill and Thomas Edison came close but they were also fond of taking naps, which may disqualify them as true short sleepers.

Nowadays, some short sleepers gravitate to fields like blogging, videogame design and social media, where their sleep habits come in handy. “If I could find a way to do it, I’d never sleep,” says Dave Hatter, a software developer in Fort Wright, Kentucky. He typically sleeps just four to five hours a night, up from two to three hours a few years ago. “It’s crazy, but it works for me,” says Eleanor Hoffman, an overnight administrator at Bellevue Hospital Center in New York who would rather spend afternoons playing mahjong with friends than sleep anymore than four hours. Sometimes she calls her cousin, Linda Cohen, in Pittsburgh about 4 a.m., since she knows she’ll be wide awake as well—just like they were as kids. “I come to life about 11 at night,” says Mrs. Cohen, who owns a chain of toy stores with her husband and gets up early in the morning with ease. “If I went to bed earlier, I’d feel like half my life was missing.” Email [email protected]

WSJ.com ONLINE TODAY: Columnist Melinda Beck explains why for some people sleep is a waste of time and the reasons behind it at WSJ.com/health.

[ ACHES
CLAIMS ] BY LAURA JOHANNES Once a popular circus stunt, a bed of nails is now being touted as a relaxation tool. A growing number of companies selling mats with nail-like plastic spikes say they can relieve stress, neck, back and other pain and even help insomnia. There is little published evidence, but some scientists say early results suggest they are worth further study. The modern-day mats are made with small disks of plastic spikes. Some companies suggest starting with lying down, usually face up with the spikes in contact with the back and neck, for 5 to 10 minutes, then gradually longer. The fewer spikes, the more challenge to the body—and the more benefit, saysTeam Shakti AB of Sweden, which puts 6,000 spikes on its main mat but offers a more comfortable version, its Shakti Light mat, with 8,000 spikes. For the biggest benefit, lie naked on the mat, Shakti says. Shakti says its mat “increases the blood circulation and stimulates the body to re-

lease endorphins which help to bring about a deeply relaxed state.” Rattlebug LLC of Warwick, New York, says its 8,820-spike Hälsa mat will “stimulate your body’s acupressure points, helping it to release natural pain relief hormones.” Acupressure involves a therapist putting pressure on specific points to create a body response—such as relaxation or pain relief. There are more than 100 acupressure points on the human back—and using a mat with many evenly distributed points, “you’d have to hit some of them,” says Steven Given, associate dean of Bastyr University’s School of Acupuncture and Oriental Medicine in Kenmore, Wash. The mat is likely to provide some benefits, he says. Research on nail mats so far is preliminary, scientists say. A Shakti-funded study, published earlier this year in the Journal of Alternative and Complementary Medicine, tested heart rate, body temperature and other physical reactions to the “nail” mat compared with a soft bed in 32 healthy volunteers during three 20-minute sessions. Back temperature was higher on the nail mat than on the soft bed—indicating

increasing circulation, says study co-author Erik Olsson, who worked on the study at a Swedish rehabilitation clinic and is now a researcher at Uppsala University in Sweden. Heart rate slowed and was more variable on the Shakti mat—signs the body’s parasympathetic nervous system, responsible for relaxation, was activated, he adds. Since the participants were all healthy, the study didn’t measure if there were any health benefits. Dr. Olsson says further study would be needed to determine if endorphins are produced. A study of 36 sufferers of chronic neck and back pain, published last week in the online journal Alternative Medicine Studies, found that nail mats used 15 minutes daily for three weeks reduced the patients’ peak levels of pain but failed to reduce their normal pain levels. No effects were found on depression, anxiety and sleep. The study, which used a control group of patients who received no intervention, received no funding from companies selling mats, according to lead author Anette Kjellgren, an associate professor at Karlstad University in Karlstad, Sweden.

F. Martin Ramin for The Wall Street Journal (2)

Relax—8,000 spikes to relieve stress and ease insomnia

Rattlebug’s 8,820-spike Hälsa mat. London neurophysiologist Nerina Ramlakhan says she recommends the Shakti mat to patients suffering from insomnia. “It very quickly helps the body to come into a state of rest,” says Dr. Ramlakhan, who treats patients with sleep problems at a psychiatric clinic and has no connection with Shakti. She recommends relaxing on the mat for 10 to 20 minutes in the afternoon, or even starting off with it in bed at night.

Friday - Sunday, April 8 - 10, 2011

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ART

A dream weaver goes global BY ALEXANDRA A. SENO

S

opheap Pich, Cambodia’s leading contemporary artist, says his woven bamboo-and-rattan installation at this year’s Singapore Biennale “references the cycle of building and destroying,” something he sees every day from his studio on the Mekong River, where the banks on one side are collapsing opposite massive new real estate projects on the other. The 39-year old artist, who lives outside Phnom Penh, says his early works were inspired by Buddhist sculptures and human organs. But “Compound”—a 400 x 250 x 250 cm-group of cylindrical and rectangular shapes made of bamboo strips—marks a shift, he says. “It is about something outside now. Before I was more preoccupied with the human interior,” he says. “Compound,” which took eight months to create, currently takes pride of place in the main foyer of the National Museum of Singapore. Elsewhere, Mr. Pich’s work is gaining international renown. In San Francisco, his work is on display as part of a group show that continues until October at the Asian Art Museum. He will have a solo museum show at the University of Washington in Seattle in the fall. “He has amazing technique and uses these unusual materials,” says Tyler Rollins, a New York dealer

specializing in contemporary Southeast Asian art. “The works speak for themselves with a solemnity that people pick up on. His career is moving in a steady forward-trajectory because his work has a universality. He has a unique way of working yet is familiar with the international vocabulary and dialog but is not copying.” Mr. Rollins’ eponymous gallery in the Chelsea district will feature Mr. Pich’s art later this year. Except for a large piece best suited for a museum, everything sold at the sculptor’s first American show, held by Mr. Rollins in 2009. Next year, the artist will also have a solo exhibit at Hong Kong’s 10 Chancery Lane Gallery. As a boy in 1979, Mr. Pich and his family fled their home in Cambodia, which had just been invaded by Vietnam. They became refugees in a camp in Thailand, until 1984 when they were resettled in America, where they became citizens. Attending the University of Massachusetts at Amherst, he switched from pre-med to painting. In 1999, he graduated from the prestigious Art Institute of Chicago with a fine arts master’s degree. He explains that he left America, where his parents and siblings still live, because he missed Cambodia and “was just tired of doing meaningless things to stay alive in the U.S. The idea of being an artist in that environment made less and less sense.”

10 Chancery Lane Gallery

A Cambodian artist’s distinctive bamboo-and-rattan sculptures are drawing international acclaim

Sopheap Pich, Cambodia’s leading contemporary artist, with one of his woven sculptures. As a struggling artist he had jobs ranging from real-estate agent to counselor to interpreter. He recalls: “I was driving all the time to different parts of Massachusetts. All the time was lost.” In 2002, as he was on the road again trying to make a living, a

friend happened to call, asking: “Are you lost?” Mr. Pich replied: “Yes.” Two days later he went to buy an air ticket to return to Cambodia for the first time. He says it is a total coincidence that he landed in Phnom Penh on Nov. 9, Cambodian independence day.

Mr. Pich is currently working on a five-meter-high sculpture inspired by the Morning Glory plant, a staple food in Cambodia under the Khmer Rouge. Those who lived through that era “remember this very cheap and abundant plant because we owe our survival to Morning Glory,” he says.

Sorting through Sotheby’s sales BY CATHY YAN

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otheby’s completed its 20thcentury and contemporary-art sales in Hong Kong this week with hammer prices that went well above presale estimates. Combined with the 106 lots sold from the collection of Belgian collector Guy Ullens on Sunday, the two-day Asian contemporary art sales totaled HK$610 million. The top lot was a 57 million Hong Kong dollar ($7.3 million) Zhang Xiaogang painting from his iconic Bloodline series—the haunting portraits that made him famous. On Sunday, an early work by Mr. Zhang, “Forever Lasting Love,”sold for HK$79 million, the

highest price for a Chinese contemporary artwork sold at auction. The Monday night sale of contemporary Asian art brought in a total of HK$183 million and was 88% sold. Blue-chip Chinese artists such as Zeng Fanzhi, Liu Ye and Yue Minjun commanded the highest prices. In the 20th-century Chinese art auction, works by abstract French-Chinese painters such as the 90-year-old Zao Wou-ki and Chu Teh-chun sold well over their estimates. Of the three auctions on Monday, the 20th-century Chinese art sales fetched the most, at HK$236 million. It is the highest total sales for a single auction of 20th-century Chinese art for Sotheby’s Hong Kong.

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BlanCpain Boutiques aBu DHaBi · BeiJinG · Cannes · DuBai · eKateRinBuRG · GeneVa · HonG KonG MaCau · MaDRiD · ManaMa · MosCoW · MuMBai · MuniCH · neW YoRK · paRis sHanGHai · sinGapoRe · taipei · toKYo · ZuRiCH

Zhang Xiaogang’s ‘Big Family’ from his famous Bloodline series

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Friday - Sunday, April 8 - 10, 2011

Francois Dischinger for The Wall Street Journal (interior); Gehry Partners, LLP (hat, bracelet, chair); Alamy (Bernini)

WEEKEND JOURNAL

Clockwise from top left, Mr. Gehry’s Hat Trick Chair; the hat Mr. Gehry designed for Lady Gaga; Tiffany bracelet designed by Mr. Gehry; interior of an apartment in New York by Gehry at 8 Spruce St.; Bermini’s Saint Teresa.

‘I can’t stand the aesthetes, the minimal thing’

One of my greatest influences is the Italian artist Gian Lorenzo Bernini. The first time I saw his sculpture of Saint Teresa [in Santa Maria della Vittoria in Rome] was in 1960. You can only see it during Mass and in order to see the little chapel it’s in, you have to get to the front pew and lean forward. I don’t know how to do the crossing myself very well. The young priest was howling with laughter when he saw me in the front row, trying to kneel when everyone else kneels, but doing it wrong. I’ve always been fascinated with folds. All artists through the ages have spent time on the fold. Michelangelo had stacks of drawings of fabric. At 8 Spruce, we’re using Bernini’s folds to inspire the fa-

Architect Frank Gehry in New York by Gehry at 8 Spruce St., his new residential tower in Manhattan. çade. I look for ways to express feeling in a building without using historic decoration. A project that got away was the trellis I tried to build for Norton Simon. It emulated the movement of an Indian dancing figure in his private collection. I wanted it to look like a pile of wood had been lifted in the air by the wind. I got two layers built and was getting ready to do the third when he called me and said, “I’m going to stop this. This is going to be your unfinished symphony.“ I used to sketch—that’s the way I thought out loud. Then they made a book of my sketches and I got self-conscious, so now I don’t do it much. I’ve got to do that more. I love music. I flew to Milan the other night to hear Daniel Barenboim play Schubert and it was so beautiful, even though La Scala’s acoustics aren’t that great. I don’t listen to music when I work, but I do go to a lot of concerts. A conductor I love is “the Dude,” Gustavo Dudamel, because he’s come to our building [the Walt Disney Concert Hall]. I also love Esa-Pekka Salonen and Pierre Boulez. When I first saw Boulez conduct it was the famous “rug concert.” He had the seats re-

The original hat I made for Lady Gaga, commissioned by Francesco Vezzoli, was made out of leather and was floppy so it didn’t work. She never saw it. I was thinking of sending it to her but she probably gets all kind of junk. A well-designed home has to be very comfortable. I can’t stand the aesthetes, the minimal thing. I can’t live that way. My home has to be filled with stuff—mostly paintings, sculpture, my fish lamps, cardboard furniture, lots of books. I couldn’t live in the Farnsworth House. I don’t collect objects, but I do collect art. My favorite artists are Ken Price, Robert Rauschenberg, Ellsworth Kelly, Ed Moses and John Baldessari. I’d always wanted to design tabletop items, but I never had a venue. When I started working with Tiffany, it was to do tabletop but I got brought into the jewelry because whenever I’d go to their offices, they’d let me watch the craftsmen. It was seduction by workmanship. I just made 30 oneof-a-kind bone-china cuff bracelets. My hobby is sailing. I have a Beneteau First 44.7 sailboat that I keep in Marina del Rey. I just day sail. It relaxes me like nothing else. When you’re sailing, things change every second so you’ve got to be on your toes. I love that. Ice hockey was an inspiration for the Hat Trick Chair I designed for Knoll. I own a team called the Fog, and we play in the Over-30 League. I played a bit growing up and I loved playing with my boys.

Harry Harrison

The best advice I’ve received is to be yourself. The best artists do that. People look over their shoulders too much. I tell kids that come to Yale, where I’ve taught every other year since 1978, to find your own way because then you’re the only expert. Some people might not like what you do, but still, you’re the only expert.

Francois Dischinger for The Wall Street Journal

Pritzker Prize-winning architect Frank Gehry has designed some of the world’s most impressive buildings, including the Walt Disney Concert Hall in Los Angeles, the Guggenheim Museum in Bilbao and the Vitra Design Museum in Weil am Rhein, Germany. Now 82 and making only slight concessions to his age—he walks with a cane—Mr. Gehry has just opened New York by Gehry at 8 Spruce St., the largest apartment building in the Western Hemisphere and Mr. Gehry’s first major residential project in New York City. He gave us a peek into the 76-story building, talked about what wakes him up at night, why he doesn’t sketch much anymore and designing for Lady Gaga.

Is Erik Lorincz the best bartender in the world? Diageo, the beverage company, seems to think so—it chose him as the best of 9,000 contestants last year in the Diageo Reserve World Class Bartender contest. Mr. Lorincz, who was born in Slovakia and is now based in London, is the head bartender at the Savoy Hotel’s American Bar. He will be in New Delhi in July to preside as a judge at the 2011 World Class Bartender contest. Here, he tells us about his five favorite cocktails. 1. Dry Martini: “Preferably made with Tanqueray No. 10 gin, this is an all-time favorite of mine that showcases the complex flavors of the botanicals in the gin for a unique martini. It is best finished with a citrus twist to enhance the aroma.” 2. Daiquiri: “A classic combination of rum, sugar and fresh lime juice. It is the perfect treat to savor at any time of the day, wherever you may be.” 3. Rising to the Sky: “One of my favorite creations, this cocktail earned me a place at the finals [last year]. It’s a combination of Tanqueray No. 10 gin, fresh coriander, yuzu juice, fresh pineapple juice, lemon juice and sugar syrup. I serve this with a fragrant botanical steam to create an aromatic experience that enhances the layered flavors of the drink.”

5. Muchacha Caliente: “This Bloody Mary-style drink is…sometimes referred to as a hangover cure or breakfast drink…my favorite is made with Don Julio tequila, which gives the drink more character and is a perfect match with the spices and tomato juice used in a Bloody Mary. My version is made with celery air [blended celery juice mixed with lecite emulsifier] instead of a celery stick.” —Kristiano Ang

moved from Philharmonic Hall and put rugs out. I sat on the rugs and watched him conduct. He keeps his arms within this very small space. I’d never seen somebody express passion so simply. Conductors usually wave and move so much, but this guy had it all inside.

BY JACKIE COOPERMAN

World’s best bartender prefers to mix it up

4. Ramos gin Fizz: “The recipe for this drink was kept secret for many years by the Ramos brothers [who owned a pre-Prohibition bar in New Orleans]. This is the perfect ‘anti-fogmatic’ [a drink taken in the morning before going out into bad weather]…It’s another gin-based drink with lemon and lime juice, double cream, egg white and a dash of orange-flower water. It needs to be shaken hard to get the texture right and is topped off with soda water.”

The artist of architecture [ 20 Odd Questions ]

TOP FIVE

Friday - Sunday, April 8 - 10, 2011

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FOOD
DRINK

Drinks for an Officer and an Oenophile Lettie Teague shares whites—no reds, please!—with Richard Gere and his wife, Carey Lowell [ On Wine ] Although Richard Gere has starred in more than 50 movies over the past several decades and uttered at least a million different lines, when it comes to buying wine he uses the same few phrases over and over and over again. “My wife and I have a problem and we’re hoping you can help,” he began. Then he paused—a very long, dramatic pause, doubtless discomforting many a wine merchant or sommelier—before continuing: “I like a big, oaky Chardonnay and she likes a wine that’s crisp and dry. What do you suggest?” I was having dinner with the silver-haired screen star and his wife, actress Carey Lowell (a former model and Bond girl), at the Barn, one of the two restaurants at the Bedford Post Inn in Bedford, N.Y., which the couple happens to own. Sommeliers and wine merchants usually take a stab at this wine conundrum, Mr. Gere said. “Although, one time,” he added, “I was in a wine shop and I started to ask this young kid and he got a kind of panicked look on his face and said, ‘I’d better get the manager for you. I don’t know how to solve marital problems.’ ” So what kind of wines does the couple usually end up drinking? Recently, “it’s been a lot of Soave,” Mr. Gere and Ms. Lowell said in near-unison. Familiarity in their case seems to have bred contentment—they’ve been together 16 years—if not exactly the same taste in wine. They also share a dislike of red wine. It puts Mr. Gere to sleep and

Matthew Hranek for The Wall Street Journal (2)

BY LETTIE TEAGUE

Carey Lowell and Richard Gere at one of their inn’s restaurants; Domaine de Gioelli Blanc de Blancs, a mutual favorite turns Ms. Lowell’s face scarlet, so they drink only white, and a little rosé. “We like all kinds of white wines—white Burgundies, Viognier, Pinot Blanc,” said Ms. Lowell. “Not Riesling,” interjected Mr. Gere. “Basically we drink a lot of wines from the restaurant list. You could say it’s our cellar.” Perhaps that’s why there are only five Rieslings on the list. The Barn wine list features just over 100 bottles, priced from $32 to $283. Just about everything at the inn—from the rooms to the baseball trophies on the mantelpiece in the restaurant is a reflection of the Lowell-Geres. Everything, that is, except the menu. “We don’t eat meat and we almost eliminated it from the menu, but then reason prevailed,” Mr. Gere said. As we talked, we drank the 2008 La Viarte Pinot Grigio, which is offered as a wine by the glass on the list for $11. Ms. Lowell also

liked the Pinot Grigio from Livio Felluga, a star winemaker from the Friuli region of Italy. “This isn’t great,” Ms. Lowell said suddenly, holding up her glass of La Viarte. “It’s kind of bitter,” I agreed. “You have to have it with food,” Mr. Gere said. (He was right; a high-acid white always tastes better with food.) Then he turned to me. “If you don’t like it, why don’t you choose another wine from the list?” Suddenly I felt like every sommelier and wine merchant who’d ever faced the star of “Pretty Woman” and “An Officer and a Gentleman.” What would be the right choice for a man who liked oak in his glass and a woman who liked none? I looked at the list again and stalled for time. What was the first wine they drank together? I asked. Newton Unfiltered Chardonnay from the Napa Valley, they said. “I

was drinking a lot of it when I met Carey,” said Mr. Gere, “Until I realized Carey didn’t really like it.” I found a wine that I thought would please both parties, the 2009 Domaine de Noblai Chinon Blanc from the Loire Valley of France. Although there was no oak I thought it would have the weight and roundness to please a Chardonnay lover and enough acidity to make Ms. Lowell happy. Mr. Gere and Ms. Lowell agreed that it wasn’t necessary to spend a lot of money to get a good wine. Mr. Gere recalled that he once bought Ms. Lowell a very expensive wine—Gaja Chardonnay for $250 from a local wine store—and she made him return it because it was far too expensive. Or as Mr. Gere told the story: “She slammed on the brakes like something out of a romantic comedy and turned the car around. I had to go back

into the shop and tell them I had another problem—my wife wouldn’t let me buy the wine.” Meanwhile, my wine choice met with mixed success—or rather, partial failure. Ms. Lowell liked it but Mr. Gere did not. “This is fruitier than anything I would ever drink,” he said. “There’s a tropical element I really don’t like.” It seemed like a good time to change the subject again. What about wine in movies? Did he remember drinking any great wines in his movies? Or maybe during a red-carpet premiere? Not often, he said. “Although you can always tell how much confidence they have in the movie by the quality of the wine they serve at the premiere.” Mr. Gere did have one favorite movie-related wine memory. He was shooting a scene from a movie (“don’t ask which one”) in the Midwest and went into a local wine shop. He found a PulignyMontrachet for $22 a bottle (less than half the usual price) that was so good he went back and bought every bottle the store had. “I stretched it out over the whole shoot,” he said. When he asked the guy at the shop why they were selling it so cheaply, the man told him, “Nobody drinks wines like that around here.” The image of Richard Gere walking into a wine shop and sweeping up all the unappreciated bottles of white Burgundy reminded me of the final scene in my favorite Richard Gere movie, “An Officer and a Gentleman.” He strides through the factory looking for Debra Winger, then takes her in his arms. The movie ends on the triumphant sound of Joe Cocker and Jennifer Warnes singing “Love Lifts Us Up Where We Belong.” When you’re a movie star, there’s a soundtrack even when you buy wine.

Green eggs and sea urchins are a St. George’s favorite until al dente. The chef adds a spoonful to the bottom of each cleaned sea-urchin test, or hard outer skeleton, then places the roe sacs on top of the grain. “It adds much more texture,” he says.

[ Dish ]

Look closely at the stubs of the cut-off needles on your sea urchin the next time you’re at Hong Kong’s St. George restaurant in Tsim Sha Tsui. You’ll notice a curious palegreen hue—unusual because most sea-urchin varieties served in restaurants are purple or red. Chef Philippe Orrico says that the sea urchin used in his modern European restaurant comes from Brittany and is green because of the amount of seaweed it eats. “The taste is very concentrated: sweet, bitter, creamy, and a lot more complex [than other sea-urchin types],” says the chef. This particular marine animal is so flavorful, the chef doesn’t use even a pinch of salt in his recipe.

Thomas Lee

BY AMY MA

Salt water: “When you cut open a fresh sea urchin, you’ll discover six to eight sacs of bright orange roe, and some liquid from the sea,” says French-born Mr. Orrico. “It’s important to keep this liquid, which has all the flavors of the salt and minerals from the ocean.” The chef collects the sea-urchin

jus in a bowl and washes the individual sacs inside the water so the flavors do not become diluted. Bulgur wheat: Grains of this cooked, dried and ground wheat (sometimes called cracked wheat) are mixed with cumin seeds and a dash of olive oil and then steamed

Quail eggs: Each sea urchin is topped with three small quail eggs, cracked open raw. “The quail eggs are a perfect combination to sea urchin – you see it in Japanese sushi all the time,” says Mr. Orrico. Once filled with the sea urchin, bulgur wheat and eggs, the sea-urchin tests get eight to 10 minutes in a low-temperature oven (under 100 degrees Celsius) sitting in a bain-marie (a shallow hot-water bath). The water ensures an even heat and a more gentle cooking process. Sea-urchin emulsion: Using the seaurchin jus, the chef makes a stock infused with carrots, onions, leeks and herbs. Then he adds in a few extra sacs of sea urchin roe and blitzes the entire mixture, with

the help of a hand-held immersion blender, until it reaches a foamy consistency. This airy sauce is placed on top of each sea urchin to hide the contents underneath. “I want it to be a surprise when the diner makes the first scoop,” says the chef. Bread and butter: It’s not typical to serve sea urchin with a baguette and slab of butter, but the chef explains that the butter—made in Brittany by Jean-Yves Bordier, whose butter is heralded in some quarters as the best in the world—is seasoned with seaweed from the same area in which the sea urchins are harvested. And the bread? “How else are you going to sop up the runny yolk and creamy sea-urchin sauce at the bottom?” he asks. Price: 268 dollars Hong Kong (US$34) Hullet House, 2A Canton Rd., Tsimshatsui, Hong Kong. Tel: +852-3988-0220

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Friday - Sunday, April 8 - 10, 2011

Thomas Allen

STYLE

What kind of a guy are you, anyway? A stack of gender-minded books asks the tough questions of the modern-day man BY STEVE GARBARINO

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an, it seems, is going through an identity crisis. Or so we’re led to believe by a duffle-load of schizophrenic how-to-be-a-man tomes currently hitting iPads and bookshelves. After breezing through these books, guy readers may experience an identity crisis, prompted by a barrage of armchair shrink babble and conflicting information about who he is, isn’t and should be. Is he a bad-boy, a child-man or both, like Charlie Sheen? Is he a dude or a dandy? Does he prefer bromances to real commitments? Does he shop online? Does a real man do that? Should he buy an axe or a smoking jacket? Is yoga “OK” now? What’s it all about, Alfie? Here, a sampling of new books about the modern man. “Man Down: Proof Beyond a Reasonable Doubt that Women Are Better Cops, Drivers, Gamblers, Spies, World Leaders, Beer Tasters, Hedge Fund Managers, and Just About Everything Else” (Abrams) is a provocative collection of bite-size, pro-woman essays. The author, Dan Abrams, is a sensitive man, a female sympathizer—or so he’d have you believe. A legal analyst for ABC News and host of “Chasing Justice With Dan Abrams, “ he also has a reputation as a ladies man and most eligible bachelor. You be the judge of

whether there’s some brilliant reverse psychology at play here with his feminist argument. (Citing university studies, Mr. Abrams reveals that women are better at “hammering”, and also “appreciate a good joke” more than men.) A wolf in sheep’s clothing? Perhaps. However, Mr. Abrams knows a woman’s soft spot: a man who “understands” her, and better yet, defers to her. Joining Mr. Abrams in the assertion that women are the new breadwinners is culture-chronicling author Kay S. Hymowitz, who employs terms like “alpha girl,” “Darwinian playboy” and “choice mother.” Her book, “Manning Up: How the Rise of

Women Has Turned Men Into Boys” (Basic Books), attempts to answer the question: Where have all the good men gone? To Ms. Hymowitz, they’ve all become “child-men” (see: “Old School,” “The 40-Year-Old Virgin”). Women, she writes, follow a rigid script, dictated by better education and biological clocks, while men have historically been allowed to wing it all the way to their Depends. Well, not anymore. Today’s Peter Pans need to “grow-up,” she asserts, or face the consequences. “A Gentleman Walks Down the Aisle: A Complete Guide to the Perfect Wedding Day” (Thomas Nelson) is the latest installment in the enduring “Gentle-

Manners” series, which began with “How to be a Gentleman.” Writers John Bridges and Bryan Curtis have created a traditional how-to book, eschewing sociological hypothesizing for practical being-a-groom-fordummies instructions on topics like renting tuxes, choosing groomsmen gifts and in-law diplomacy. Taking a less straightforward, and definitely less earnest approach to manhood is Glenn O’Brien and his new volume, “How to Be a Man: A Guide to Style and Behavior for the Modern Gentleman” (Rizzoli). Mr. O’Brien’s impressive and varied resume (editor at Interview, style columnist for GQ, creative director of

advertising for Barneys), makes him the perfect wingman to the 21st-century guy. He divides his instructional guide into simple chapters including “How to Drink” (“If you’re going to swig heavily…don’t send emails, leave phone messages, or go on eBay”); “How to Fight Like a Man” (“consider the cold cock as a way of saving everyone time and blood loss”) and “Man Is a Fur-Bearing Mammal,” in which Mr. O’Brien writes of plucking his first nipple hair (“The horror!”) at age 12. The author’s book jacket features an aloof aesthete wearing a windowpane-patterned suit standing atop a dead grizzly. On one hand he wears a boxing glove, and in the other is a glass of red vino.

Friday - Sunday, April 8 - 10, 2011

W7

THE WALL STREET JOURNAL.

FASHION

When just any old Lycra won’t do In cycling apparel maker Rapha’s London office, obsessive biking is the benchmark for “normal.”

BY TINA GAUDOIN There’s a new term being bandied about in amateur sporting circles: psychotic cyclist. It seems a little unfair. After all, what is so wrong with squeezing oneself into garish, logo-ridden Lycra, shaving one’s legs and spending up to six hours a day with one’s bum glued to the saddle of a $5,000 bike? Did I mention the main proponents were male? You couldn’t exactly call Rapha co-founder Simon Mottram psychotic, but one tour of the cycling apparel maker’s office could easily convince you of an alternative reality where obsessive biking is the benchmark for “normal.” His team is flushed with the excesses of a morning’s four-hour bike ride (Wednesday morning is set aside for biking). Everywhere biking paraphernalia, from prototype shoes to books such as “The Great Road Climbs of the Pyrenees” and posters of cycling heroes, litters the former industrial warehouse in central London. Downstairs in the dispatch room, the 30-odd staff members’ bikes are racked neatly (almost everyone commutes by bike). In Mr. Mottram’s office, his favorite Colnago bike rests against

“I once owned a brightyellow skin suit. It looked good on me maybe one day a year.’ the wall. Its saddle and bar tape are white. Along with white cycling shoes, Mr. Mottram tells me, this is one of the markers of cycling cool. I’ll have to take his word for it, because, whilst I admire his brand, the last time I got on a bike was to show my 5-year-old (now 12) how to ride without stabilizers. It was his obsession with cycling and his inability to find the right kit that led Mr. Mottram to launch Rapha in 2004 with Luke Scheybeler above a haberdashery store in Camden Town. “There was nothing out there for cyclists like me who wanted a brand that was authentic and unique,” says Mr. Mottram, who has a background in marketing and luxury-goods consultancy. He points to a book of iconic black-and-white prints of the great European riders of the past—Bartali and Coppi looking handsome and somewhat predictably well-dressed. It’s a long way from the swathes of acid-Lycraclad riders that increasingly circle the parks and roadways of Britain. ”The kit is really so bad that we haven’t had to work very hard to stand out,” Mr. Mottram says, pointing to a biking magazine with a cover showing a rider in a bright red, overly logo-ed top, tight Lycra shorts and a multicolored helmet. He works on the principle of “debadging”—normally applied to cars by glacial coolsters who (and this is his example) willingly turn up at the Mercedes factory in Stuttgart to take delivery of their new car,

which has been stripped free of the typical badges and markings. But it was actually the color that Mr. Mottram objected to most with existing cycling kit. “I once owned a bright-yellow skin suit,” he says. “It looked good on me maybe one day a year when I was really tanned and really fit; otherwise, it just looked very wrong.” By way of direct contrast, black was and is Mr. Mottram’s choice of primary colorway; it defines the brand, together with other more saturated colors and accents, from their trademark murky pink to blues, grays, reds and off-white. The styles are simple, with set-in shoulders, pareddown forms and the type of finish you might expect from ready-towear. Gilets start at £115 (about $190), merino base layers from £50 and touring shorts from £70. In association with tailor Timothy Everest, the brand created what you might call a cycling sports jacket—the type of thing you could cycle to the City in and not have to change for a meeting—complete with fold-up front hems and action back pleats, and water- and dirt-proof technology. Rapha’s collaboration with racing fan Paul Smith has yielded plenty of noncycling customers, whilst the company sponsors a pro-Continental team here in the U.K. Mottram’s mission is not small—he wants to make cycling the most popular sport in the world and have children put up pictures of cycling greats like Dave Brailsford and Mark Cavendish on their walls instead of Wayne Rooney. He thinks the company motto, “Glory Through Suffering,” adequately sums up the beauty of the sport. “You have this sense of speed and control; it’s almost cultural—but behind the sport are techniques and skills which are at the heart of racing,” he says. “The cycling gods will kill themselves in pursuit of their goal—much more than, say, Beckham.” He’s at pains to point out that his interest is strictly road racing or riding rather than time trials, “which still have that tight, black Lycra thing going on.” Mr. Mottram raves about the flexibility and mobility a bike gives you, recounting tales of epic cycle rides with a group of friends— coast to coast in Italy, up into the mountains in France and across Spain. Another pilgrimage for serious bikers is L’Etape du Tour, the route that corresponds with one of the most difficult phases of the Tour de France. His customers, of course, can afford that sort of trip. Mr. Mottram has made a virtue of the luxury element of his brand, using events, photography and marketing to engender word of mouth, rather than using advertising. In 2010, Rapha says it did £3 million in sales and grew 70% from a year earlier. Mr. Mottram acknowledges that the “geekiness” of cyclists bodes well for the brand. “They like the idea of buying something new for the sport on a weekly basis,” he says. And Rapha provides that, from the Rapha+Paul Smith track gloves (£120) in supersoft Ethiopian hair sheep leather (the padding is modeled on that of army sniper gloves—“for better grip”) to a product range that includes chamois cream (£15) “to

Clockwise from top, Chamois cream; Rapha gilet, touring shorts, and Rapha and Paul Smith track gloves; Rapha cofounder Simon Motram outside his studios; tailored jacket designed in collaboration with Timothy Everest.

Ki Price

[ Style ]

prevent chafing” and containing rosemary to reduce fungal microbes. Rapha’s fledgling women’s line reflects an increase in women’s cycling. Mottram acknowledges his line will be a challenge to market. “I might have to change the line ‘Glory through Suffering,’” he says. “I think any woman who has gone through childbirth might take exception.” The market is growing particularly in the area of triathlon and regular riders. “There are two strands of female riders,” says Mottram, “those who ride and race, and those who just ride a bike and want wearable clothing that is not overtly about biking.” One London store, Bobbin Bikes, opened in 2007 with a quirky approach to cycling; its brightly colored retrostyle bikes could arguably be the way to a woman’s wallet. Mottram’s current obsession is cycling helmets. “They are really uncool, don’t you think?” he says, thrusting a gray, black and red alien-like helmet into my hands. His hero is Hugo Koblet, the first non-Italian to win the Giro d’Italia. Koblet made a name for himself not just for his biking skills but also because he carried a comb, a sponge and a bottle of cologne tucked in to his jersey pocket, taking the time to make himself look good before he crossed the finish line, almost always in first position. “He was a cycling rock star,” says Mottram. And he would almost certainly have worn Rapha.

www.corum.ch

W8

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

TRAVEL

Ships for the hip—a second Golden A

Unusual itineraries, unconventional designs, boutique accommodations and top-flight chefs are making cruise BY HEIDI MITCHELL

I

t’s time to toss your skepticism overboard: Not all cruise ships are the floating buffets of 20 years ago. There are cheese-free luxury liners, big and small, that offer the amenities of high-end resorts (star chefs, world-class spas) and the sleek aesthetic of boutique hotels. These nine sophisticated ships might even be evidence of a second Golden Age of Cruising. FOR WILDLIFE WATCHERS Peru: M/V Aqua There are few ways to access the Amazon in luxury; the sleek wood, glass and steel Aqua is one of them. The ship transports 24 passengers from Iquitos to far reaches of the river and its tributaries, where monkeys, rare pink dolphins and tree-stumpthick anacondas can be spotted without even getting out of bed: Aqua’s 12 suites are wrapped in glass. Innovative Peruvian chef Pedro Miguel Schiaffino serves up nouveau-Andean dishes to guests—when

they’re not seeking out the elusive threetoed sloth. A sister ship, the M/V Aria, launched in January. From $2,250 per person for three nights, all-inclusive; aquaexpeditions.com (All prices US dollars) Botswana: Zambezi Queen It’s a floating, eco-friendly boutique hotel with gauzy white curtains, cowhide throws and marble baths. The 135-foot-long Zambezi Queen takes 28 guests at a time on two- or three-night journeys along southern Africa’s great Chobe River, providing access to dense populations of elephants, hippos, eland, leopards and lions—without invading their habitats. On board, sip Champagne from the top deck’s hot tub or dine al fresco while tucked into a leather Marconi sofa. From around $950 per person, all-inclusive; zambeziqueen.com Galapagos: MV Eclipse Teak-lined decks, picture windows in a third of the staterooms and half the passengers of any other ship this size in the Galápagos

Islands underscore the luxury factor on the MV Eclipse. It carries just 48 passengers (plus 35 crew members) quietly through the archipelago, which is still only accessible by ship. Four naturalists are on board to explain the curious behavior of the Galápagos’s oddball creatures, and inflatable skiffs allow guests to explore the islands that inspired Charles Darwin, a place where giant tortoises and blue-footed boobies thrive without threat of predators. From $6,855 per person for seven nights, including Quito visit, all-inclusive; abercrombiekent.com FOR CULTURE VULTURES Egypt: Oberoi Zahra This Nile cruiser doesn’t quite qualify as extreme adventure (there is a spa, bathrooms are done in mosaic tiles, the dining room glows with back-lit alabaster walls), but on a seven-day voyage from Luxor to Aswan, you still get the Indiana Jones-like thrill of peeking into King Tut’s tomb, touring Karnak Temple and spending a morning at Abu Simbel. En route, you can watch the ancient

landscape of Egypt pass by your stateroom window. An astrologist and multilingual Egyptologist are on staff to explain the difference between Horus the Falcon God and Hathor the Goddess of Music. From around $5,300 per person for seven nights, all-inclusive; oberoihotels.com/oberoi_zahra China: M.S. Yangzi Explorer Floor-to-ceiling windows, private balconies, a staff-to-guest ratio of one-toone—aboard the Yangzi Explorer you could easily forget you were on a cruise ship at all. Traveling upstream or downstream between Chongqing and Yichang for threenight trips, the ship stops at Daoist temples and remote villages, and offers views of the controversial Three Gorges Dam, which displaced more than a million residents and flooded 1,300 archaeological monuments. When you’ve tired of sightseeing, rejuvenate in the 3,000-square-foot spa. It’s the ultimate add-on to a trip through the vast Chinese interior. From $1,234 per person for three nights, all-inclusive; sanctuaryretreats.com

Friday - Sunday, April 8 - 10, 2011

W9

THE WALL STREET JOURNAL.

TRAVEL

ROAD WARRIOR

Never leave home without a good set of headphones Chef and restaurateur Nobu Matsuhisa is a household name. His signature dishes—such as miso cod and yellow-tail sashimi with jalapenos—have become fixtures of contemporary Japanese restaurants around the world.

Clockwise from far left: Halong Violet; Crystal Cruises; Road to Mandalay; Oberoi Zahra; MV Eclipse; Zambezi Queen

Up in the air: Last year, I traveled 10 months out of 12, and the average time spent in each city was four days. I’m sure I have at least one million miles, but my family uses the free tickets, not me.

Left, Halong Violet cruises Vietnam’s dramatic Halong Bay. From top, the Crystal Serenity’s restaurants boast two celebrity chefs; The Zambezi Queen is a floating, eco-friendly boutique hotel; A cruise to the Galapagos islands is perfect for nature lovers; Temple rooftops line the banks of the Ayeryawady River in Burma; The Oberoi Zahra is luxury on the Nile.

Age of cruising

FOR OLD SOULS Burma: Road to Mandalay The embarkation city of Pagan has some 2,500 pagodas scattered along the bank. From there, the Road to Mandalay follows the Ayeryawady River as it snakes through what was a center of Buddhist spirituality nearly 1,000 years ago, on its way to the royal city of Mandalay. High-end hotels are few and far between here, so the 35-cabin riverboat—featuring traditional Burmese carvings, jade-tiled bathrooms and Jim

Best journey from airport to city: It’s good for me most of the time everywhere, actually. The hotels usually send a car or limousine, and check me in during the ride, so I can go straight to my room. Best airplane food: For me, I like Asian food, so Japan Airlines or ANA makes me feel the most comfortable. Cathay Pacific and Singapore Airlines are also good. Most comfortable airline seats: Emirates is great because every seat can be closed off completely. That way no one sees me snoring loudly with my mouth open. They also have a shower room in first class. Preferred carrier: ANA is has the best VIP check-in service. Your bag always comes out first on the conveyor belt. How to stay fit on the road: Don’t drink the alcohol on the plane. I also don’t drink much coffee. Essential travel gadgets: A good pair of head phones to watch the movies. I like the long haul flights better because I get to actually rest, see a few movies, and catch up on sleep.

How to get an upgrade: I don’t wait for the upgrade, I pay full price for the ticket.

Thompson upholstery fabrics—is the most pampered way to see this essential waterway. From the Governer’s Suite, you can watch saffron-robed monks seeking alms near ancient pagodas, without stepping off the ship. From $2,290 per person for three nights, orient-express.com Vietnam: Halong Violet The glamour of 1930s Indochina was the inspiration for the Halong Violet, a six-suite junk that weaves in and out of Halong Bay—according to legend, the rocky islands are remains of a protective family of dragons descending into the sea. Each suite is decorated in a different theme with silk fabrics, hand-painted walls and teak floors. Step off the Violet to see emerald lagoons and secret grottoes hidden within the 3,000 limestone karsts, accessed by bamboo boats straight out of a Hollywood backlot. At night, in the formal dining room, feast on the day’s catch cooked with Vietnamese spices. From $310 per person for two nights, all-inclusive except some alcohol; halongviolet.com

Most memorable souvenirs: I never used to buy souvenirs, but now I have a 6-month-old granddaughter, and I buy her something from every city I go to. In Dubai it was a stuffed camel toy; in Budapest, it was a crystal tiger because she was born in the year of the tiger; and in Capetown, it was a wooden puzzle.

CMCD

The World: Crystal Serenity Few other ships (well, none other, actually) can claim two celebrity chefs overseeing their menus. Nobu Matsuhisa serves up his signature black cod and hamachi carpaccio

in onboard restaurant Silk Road, while Pierro Selvaggio at Prego fills bread bowls with what could easily be the world’s best wild mushroom soup. Most of the 548 cabins have balconies, Red Flower bathroom amenities and Frette robes; all penthouse suites come with butlers. If you like your waiters in tuxedo whites and your sea days learning to play piano or the tango, this cruise line is for you. From $2,990 per person for 10-day cruises, all-inclusive except some alcohol; crystalcruises.com

Loyalty schemes: British Airways and ANA.

How to get an upgrade: I use Tumi, but Samsonite is also light and convenient.

e vacations cool again FOR SOPHISTICATES The World: Silversea Silver Shadow An Italian heritage and an Art Deco look elevate Silversea’s newly refurbished ship to a level of sophistication generally not seen outside of the yachting circle. The staff-toguest ratio is nearly one-to-one, with experts on board to teach dance classes, host cooking demos or orchestrate a fitness and diet regimen for the duration of the trip. Because the ship is a postage stamp compared to the behemoths of most mass cruise lines, it can pull into lesser-used ports, including Valparaiso, Chile and Monte Carlo. The full-size Bulgari products in the bathrooms (with separate showers and baths) even double as souvenirs. From $3,148 for seven days, all-inclusive; silversea.com

Areas of travel: Beijing, where the newest Nobu restaurant opened in March. Melbourne, Budapest, Tokyo, London, Mexico, Dubai, and the list continues.

W10

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

BOOKS

Dancing in the Glory of Monsters By Jason K. Stearns PublicAffairs, 380 pages, $28.99 The Fear: Robert Mugabe and The Martyrdom of Zimbabwe By Peter Godwin Little, Brown, 371 pages, $26.99 BY DOUGLAS ROGERS As North Africa and the Arab states undergo an awakening, it’s worth pondering the outcome of what South Africa’s Thabo Mbeki liked to call the “African Renaissance.” In the late 1980s, and throughout the 1990s, in Eritrea, Ethiopia, Uganda, Rwanda and elsewhere, a new generation of leaders—Western in mindset, free market in outlook—overthrew an old guard of African Big Men. Nelson Mandela came to power in South Africa at the same time, and a popular democratic opposition even arose in Robert Mugabe’s Zimbabwe. U.S. Secretary of State Madeline Albright gushed in 1997: “Africa’s best new leaders have brought a new spirit of hope and accomplishment to your countries—and that spirit is sweeping the continent.” Yet two new books show how badly the anti-authoritarian movements—and grand plans—have played out. The books are wildly different. In “The Fear,” Peter Godwin reports on the victims of the Mugabe regime’s vicious assault on the democratic opponents who defeated him in elections in 2008, while Jason K. Stearns’s “Dancing in the Glory of Monsters” is an authoritative look at the war that began in Congo in 1996 and that eventually involved nine countries and 20 different rebel movements, resulting in the deaths of more than five million people. In sheer brutality, this mostly unremarked upon cataclysm ranks with the two world wars, the Great Leap Forward and the Cambodia genocide. The war in Congo—a hollowed-out state that has known little but slavery, colonialism and dictatorship for four centuries—started not as a civil war but, Mr. Stearns notes, as “a regional war, pitting a new generation of young visionary African leaders against Mobutu Sese Seko, the continent’s dinosaur.” Its catalyst, moreover, was self-defense. It was planned and fought by Congo’s tiny neighbor, Rwanda, a country smaller than Massachusetts, as a direct result of the 1994 Rwandan genocide, in which 800,000 mostly Tutsi Rwandans had been slaughtered in 100 days by the majority Hutu. By 1996, as Mr. Stearns tells it, the Tutsi-led rebel movement that had overthrown the Hutu regime was firmly established in power and had turned its attention on the Rwandan Hutus settled in sprawling refugee camps in the eastern Congo. Genuine refugees lived side by side with genocidaires, all fed and cared for by eager battalions of Western aid groups whose governments had notoriously failed to intervene to stop the killing. Wary that another war or genocide could be plotted in the camps, Rwanda chose pre-emption. They couldn’t maintain international legitimacy by invading a sovereign country, so, on the advice of their Ugandan allies, the Rwandans put together a rag-tag band of antiMobutu rebels to front the operation—among them the washed-up old revolutionary Laurent Kabila, whom Che Guevara had tried (and failed) to train in the art of war. Ethnic Tutsis from eastern Congo made up other parts of what the Rwandans named

the ADFL, or Alliance of Democratic Forces for the Liberation of Zaire (as Congo was then known). After some bonding sessions in Rwanda—“the Rwandans are weird,” one rebel leader tells Mr. Stearns, “they wanted us to become a team”—war began in September 1996. The invasion force included Ugandan artillery units, Eritrean speedboats, Tanzanian military advisers and Congolese rebels. Angola lent a unit of Katangans who wore magic amulets to deflect bullets. Zimbabwe provided money and arms. By May 1997 the rebels had advanced 1,000 miles through the jungles of Congo, all the way to Kinshasa, and had overthrown Mobutu. Laurent Kabila, who had last been in the capital in the 1960s when it was still Leopoldville, and didn’t recognize the place, was the new president. As military operations go, this was as impressive as Desert Storm. But the trouble had just begun. Mr. Stearns, an American, lived for 10 years in Congo—including three years during the war—working for the United Nations and humanrights groups. But don’t let that put you off. This is no dull policy document. He is a cracking writer, with a wry sense of understatement. Remarking of an earnest, Sartre-quoting political-science professor who leads a second rebellion—but ends up penniless in a slum—he notes: “The Congo has always defied the idealists.” Mr. Stearns has spoken to everyone—villagers, child soldiers, Mobutu’s commanders, Kabila’s ministers, Rwandan intelligence officers. In these conversations he found gold, bringing clarity—and humanity—to a place that usually seems inexplicable and barbaric. “Dancing in the Glory of Monsters” is riveting and certain to become essential reading for anyone looking to understand Central Africa. As Mr. Stearns makes clear, there were wars within wars. While many Congolese had an ethnic hatred for the Tutsi (stoked by Mobutu), after 40 years of the tyrant they welcomed the rebels as liberators. Besides, the state had decayed so much under Mobutu that the Congolese could hardly fight back: The air force had sold the last of its planes to arms dealers; soldiers flogged their weapons to their enemies. Meanwhile, Rwandan troops and their ADFL allies dealt with the refugees. Hundreds of thousands of Hutus fled the camps (“like walking corpses”) into the jungles and were hunted down. One aid group has equated the slaughter to a second genocide, but the true numbers are obscure. Mr. Stearns is careful with figures, but he leaves no doubt that at least tens of thousands were systematically killed by the Rwandans, and as many died of disease and starvation while on the run. Inevitably, Kabila turned out to be little better than Mobutu—political parties were immediately suspended and criticism of the government was met with imprisonment or worse. Kabila was paranoid, and having come to power on the back of the Rwandans, he soon turned against them. Thus the Rwandans, who had agents in place in the upper echelons of his military, decided to replace their unruly puppet, and in August 1998 another war broke out. In what must be one of the most outrageous scenes in any war chronicle, Mr. Stearns describes Kabila summoning his information minister—a 36-year-old writer named Didier Mumengi, who had spent most of his life in exiled comfort in Brussels—to the presidential helipad behind the palace

Marcus Bleasdale/VII

The Triumph of Fear

FRIEND OR FOE Child soldiers of the Mai-Mai militia near Kanyabayonga in eastern Congo. ‘Mai’ means ‘water’ and refers to their chief’s magic, which is supposed to turn the enemy’s bullets to water. as mortar shells fall around them. Unconcerned, Kabila assures his ward that Rwanda can never defeat Congo. “Can a toad swallow an elephant? No!” Then he instructs him to go on the radio to rally the people. “We don’t have an army so we will need them. In the meantime I will go look for allies.” He hands Mr. Mumengi a pistol. “Here, you must use this. From today on you will be minister of war!” This second war split the alliance. Angola and Zimbabwe sent troops to prop up Kabila. Rwanda and Uganda sought to replace him. They ended up fighting one another. There was oldfashioned trench warfare on the rolling savannas of Katanga province, where the Belgians once had sprawling cattle ranches: Rwandans and Burundians battling Hutus and Zimbabweans, hundreds of miles from their home countries. The second war was all about control of resources—Congo’s vast reserves of diamonds, copper and cobalt—and Mr. Stearns is brilliant on who pillaged what and how. Ugandan diamond exports grew 10-fold after 1998—even though the country has no diamonds of its own. The Christmas 2000 release of Sony Playstation 2 was a boon to the trade in coltan, a native mineral used in electronic capacitors. Rwandan exports soared to more than $150 million. President Paul Kagame himself described the Rwandan involvement in Congo as “self-sustaining.” It was Kabila’s assassination in January 2001, by one of his bodyguards, and his son Joseph’s rise to power that finally brought about a peace deal in 2003. The son was a pragmatist, and besides, Zimbabwe and Angola wanted out. As for Rwanda and Uganda, they were having trouble justifying a war of selfdefense so far from their borders. Even today, though, small wars still play out in the eastern parts of Congo, and the duration of the conflict is indefinable. “Dancing” isn’t a perfect book. It can be confusing, jumping back and forth among time periods, and the histories of the roots of ethnic grievance in the east are overlong. But Mr. Stearns never settles for easy answers. Near the end of the book, he visits the scene of one of the worst massacres in the second war, committed by Rwandan-backed rebels in the east in 1998. More than 1,000 villagers were slaughtered, their bodies mutilated, their entrails cut out. Mr. Stearns interviews a survivor:

“It was like they killed them. And killed them again,” he is told. But then he asks the villagers about the Mai Mai—the local militia who fought and provoked the Rwandan rebels. The villagers shake their heads: “They were just as bad!” Then he asks a group of a dozen women for their story. Slowly they step forward. They have all been raped, they tell him—by men from their own village. Mr. Stearns explains at the outset that he is writing about perpetrators, but in central Africa, it seems, victims and perpetrators are interchangeable. Zimbabwe was deeply involved in both wars, and this costly intervention had serious repercussions for Robert Mugabe. In 2000, amid food riots and rising unemployment, an attempt to alter the country’s constitution to extend his rule was rejected by voters. Mr. Mugabe lashed out, invading mainly white-owned commercial farms to win back popular support. It was a disaster, wiping out agriculture, the country’s main source of revenue. Faced with a dismal economy, Mr. Mugabe was eventually forced to withdraw his troops from the Congo, but by now the opposition Movement for Democratic Change (MDC) had momentum. Although in 2002 and 2005 Mr. Mugabe rigged ballots to stay in power (with “Renaissance” man Thabo Mbeki’s full support), by 2008, with shops empty and inflation out of control, something had to give. It did. In an extraordinary election in March 2008, Zimbabweans voted Mr. Mugabe out. With the results clear but still unofficial, Peter Godwin flew into Zimbabwe “to dance on Mugabe’s political grave.” It didn’t work out like that. Mr. Mugabe massaged the presidential ballot to force a run-off, and then the terror began. Opposition activists started popping up in Harare hospitals, the victims of beatings and torture in a campaign known as “The Fear.” Mr. Godwin was there to record their stories, and the descriptions are gruesome: shattered bones, bloodied faces, lacerated skin, feet beaten raw. While the killings in Congo appear part of a lawless land, those in Zimbabwe were planned, coordinated, precise. The intention was to punish those who voted against Mr. Mugabe—and to ensure that they voted the right way in the run-off. It worked. Mr. Mugabe remains president. This is the third memoir of his country by Mr. Godwin, a Zimba-

bwe-born, New York-based journalist. He has a Zelig-like knack for being there at the right time. He is on first-name terms with leaders of the Movement for Democratic Change, and gives an intriguing insider’s account of the back-and-forth behind MDC leader Morgan Tsvangirai’s decision to join a unity government with Mr. Mugabe: He agrees to go into it without consulting his deputies, Tendai Biti and Roy Bennett, who were strongly opposed. As a Zimbabwean, I had a sinking feeling reading this: Mr. Mugabe is running rings around these people. The trouble with “The Fear” is that Mr. Godwin seems unsure whether he is writing another memoir or a piece of hardcore reportage that could be the last word on Mr. Mugabe’s violence. He is accompanied in the book by his sister, Georgina, an accomplished broadcaster, but she’s mostly used for punch lines between his serious accounts of Mr. Mugabe’s victims. He carries out dozens of interviews, but unlike Mr. Stearns, he hasn’t got the time—or perhaps the security—to learn more about the men carrying out the atrocities. He speaks to no one from the other side. The point is not that there are “two sides to every story”—I don’t believe there are in this case. But it would be good to know, as Mr. Stearns shows us, what compels these men to take machetes to their neighbors. Are they paid? Do they feel remorse? Shame? “The Fear” is an important book, not least because Mr. Godwin names names—of rapists, torturers and killers—and one hopes that they get what’s coming to them. In cataloging the victims, he shows the extraordinary courage of those standing up to Mr. Mugabe. But in the end the book feels fragmented and rushed, less than the sum of its parts. The biggest fear, meanwhile, is that the worst may still be to come. It is three years since that 2008 election and Robert Mugabe is not only still in power but resurgent. Another election is on the way, and flush with cash from diamonds in the east, he is again unleashing violence on his opponents. If the stories of Central Africa and Zimbabwe are anything to go by, one has to wonder about those contemporary revolutions to the north: Is the current chaos only the beginning? —Mr. Rogers is the author of “The Last Resort: A Memoir of Mischief and Mayhem on a Family Farm in Africa.”

Friday - Sunday, April 8 - 10, 2011

THE WALL STREET JOURNAL.

W11

BOOKS

Beneath Blossom Rain By Kevin Grange Nebraska, 336 pages, $19.95 BY MICHAEL J. YBARRA The Himalayan country of Bhutan is one of the most remote places in the world. And it wants to stay that way. Bhutan’s monarchy, which recently turned the country over to its first elected government, is determined to preserve the land’s traditional Buddhist culture. Instead of measuring social health by the standard economic yardstick, gross domestic product, Bhutan tracks what it calls gross national happiness, which is defined as sustainable development, cultural preservation, environmental well-being and good governance. Until 1999, Bhutan’s national happiness was insulated from television and the Internet, which were banned. And while the kingdom nominally opened itself up to tourism in 1974, even today visitors are only grudgingly permitted. Tourists must pay a $250 daily fee; the price includes the services of a tour guide who never leaves your side. The country is also home to the Snowman Trek, reputed to be the toughest prolonged hike in the world—a 24-day, 216-mile slog crossing many passes higher than 16,000 feet. Only about 900 trekkers try it every year, and half don’t finish. By contrast, neighboring Nepal, where the high-altitude treks can be almost as daunting, annually draws

60,000 trekkers. After being derailed once by altitude sickness, Kevin Grange trekked the Snowman in 2007, a journey he recounts in the entertaining memoir “Beneath Blossom Rain.” “Hiking in Bhutan was a full body workout,” he writes. “I was constantly stepping around rotting tree trunks, ducking under lowhanging branches, leaping over mud patches, plowing through wet fern sections, balancing precariously on slippery stones. . . . The slightest misstep could’ve resulted in a broken ankle.” Trekking isn’t easy—but it’s not terribly hard, either. A bad trail, after all, is still a trail. And on this variety of Bhutan trek, you don’t even carry your own stuff. Mr. Grange’s group sets off with a support staff of seven, with 30 horses to pack their tents, food, folding tables and chairs. The trekkers don’t make their own tea or set up their own tents. “We’d be transporting an entire village across the wild country,” Mr. Grange notes. He writes well of the beauty he encounters: “There’s something wonderfully inspiring about rivers—about the determination with which they set their sights on the sea and weave around the infinite obstacles in their path while never losing their sweet trilling song.” But anyone who calls the Himalayas “the most scenic range in the world” should probably spend more time in California’s Sierra Nevada or the Canadian Rockies or the Chilean Andes. Mr. Grange is also relentlessly good-natured: “Some people say

Aurora Photos

Semi-Roughing It

PEAK CAPACITY The view from the 17,388-foot Rinchen Zoe La Pass on the Snowman Trek in Bhutan. traveling in Bhutan is too expensive, but personally, I thought bed tea alone was worth two hundred dollars a day. You simply can’t put a price tag on the feeling you get when you open your tent door and a panorama of pristine peaks explodes into view and a hot cup of tea is handed to you.” When he complains about rocks under his sleeping pad, or the stench of the toilet tent, one suspects he is straining for a dyspeptic effect. On a deeper level, however, Mr. Grange aspires to craft a book about the sort of experience that skiing legend Dick Dorworth, in his new memoir, “The Perfect Turn,” calls the “inner expedition.” That is, the mental and emotional journey that mirrors and enriches the physical one. “I wanted to reduce and sim-

plify my life to the essentials with the hope of learning an elemental truth or two,” Mr. Grange writes. “There was wisdom to be found by foregoing convenience and embracing difficulty.” Here, unfortunately, Mr. Grange doesn’t have much to work with: He is a 30-something aspiring screenwriter pondering whether (given how little success he has had) he should give up his professional dreams and whether (ditto) he’ll ever find love. Thinking about Hollywood at high altitude is not riveting stuff. On the romance front, he takes an interest in a German woman on another expedition, but their fleeting contacts make for a wan subplot. To Buddhists, the merit one

earns on a pilgrimage is proportional to the difficulty of the journey. By Mr. Grange’s own description he didn’t embrace much difficulty. He spent $8,000 on a packaged trek, the sort of plush wilderness experience that might make for a memorable vacation but not a gripping man vs. nature narrative. For contrast, one might consider a trip to Bhutan in the 1980s by Yvon Chouinard, the mountaineer and founder of Patagonia Inc., as recounted in Rick Ridgeway’s “Below Another Sky.” After making the first ascents of several peaks, Mr. Chouinard and his friends drew a map of the unnamed mountains they had explored—and then burned it. “So the place stays unknown as much as possible,” Mr. Chouinard explained. “Then the next guys who come here can get as much out of this place as we have, because they won’t know any more about it than we did.” That’s the difference between authentic adventure and Mr. Grange’s outing. Still, “Beneath Blossom Rain” can be enjoyable on its own terms, especially when Mr. Grange revels in the sights he is privileged to witness. One such moment comes when he visits a village and watches women threshing wheat. “They lived lives of authentic human connection—with the land, with each other, and with themselves. Last, and most important, they seemed eternally grateful for what they had.” Perhaps he did learn an elemental truth or two. —Mr. Ybarra is the Journal’s extreme-sports correspondent.

Emotion Among the Cubicles It’s Always Personal By Anne Kreamer Random House, 234 pages, $25 BY CLARE MCHUGH If you’re a woman with a career of some years’ standing and you fancy yourself skilled, ambitious and worthy of respect, you probably subscribe to this unwritten workplace rule: Never cry. When I got my first job in publishing in 1984, the boss—a woman who favored the sort of power suits with heavily padded shoulders that Sigourney Weaver donned in “Working Girl”—leaned over my desk and said: “If you want to survive here, don’t cry in my presence. If you have to cry, go to the ladies’ room and do it there.” She intended this, I believe, not as a put-down but as a helpful bit of advice. In those days—even in publishing, where women were well represented—equality between the sexes seemed like a precarious thing, and many women felt that if they were going to keep their rightful place at the table it was essential to stay buttoned-up and restrained, emulating men in dress and manner. And that meant no weeping in public, ever. Anne Kreamer entered the professional ranks just before I did and absorbed the same crying-equalsweakness doctrine. Now, 30 years later in “It’s Always Personal,” she casts a skeptical eye on that doctrine and on the general taboo against emotional expression at the office. She also deftly reports on what neuroscience tells us about the biology of emotions, provides a per-

sonality test to assess one’s emotional style on the job and shows how in today’s workplace—where parity of the sexes is generally regarded as a given, lawsuits against Wal-Mart aside—men and women can learn from each other. Throughout this heartfelt book, Ms. Kreamer comes down on the side of accepting and expressing one’s authentic feelings, though in sensible and constructive ways. “It’s Always Personal” is not a manifesto for workplace encounter groups, but the book does argue that greater emotional openness could lend vitality to American business, and it urges both men and women to “bring their full, true selves to the game.” It’s a stimulating read bolstered by snippets of some of the best recent work on emotional intelligence and the science of happiness. But to return, first, to the core issue of crying: I am relieved, as someone who has on occasion bolted to the restroom with rapidly filling eyes, that Ms. Kreamer finds crying to be not only commonplace but often appropriate, a natural release that can be “transformative.” She writes: “Each of us needs to understand that tears communicate the fact that something in our lives is out of kilter right now: we are overworked, we are sick, we feel taken advantage of, we are angry, we are frustrated. But we are not weak people or failures.” The author speaks with some authority on the crying question, having been once reduced to tears by media mogul and Viacom CEO Sumner Redstone. As an executive at the TV cable network Nickelodeon in 1993, Ms. Kreamer made a deal with

Sony to create Nickelodeon home videos. Mr. Redstone called her while she was celebrating the announcement of this $25 million coup, but instead of offering his congratulations, he railed at her for something she had no control over: the failure of the Sony deal to goose the stock price of Viacom, Nickelodeon’s parent company.

Yelling at her boss—Sumner Redstone—was unthinkable. So after he hung up on her, the tears came. As she listened to her boss’s ravings, Ms. Kreamer says, she knew that she had done nothing wrong—and besides, the $25 million, as nice as it was, amounted to a pittance in Viacom’s overall earnings. But replying with anger “would have been professional suicide.” Instead, after being hung up on, she cried. “In less than two minutes I’d gone from feeling on top of the world to feeling like scum on a pond—and, worse, a specific pathetic subspecies, crying female scum.” It is daring of Ms. Kreamer to inject so much of herself into what seems at most points to be a general study of the way people can and should interact at work, but the Redstone incident and other anecdotes from the author’s career in television and magazine publishing enliven the book. She even tracks down a man whom she herself made cry when she shot him down in front of others, saying that his plans for a Nick-

elodeon theme park were subpar. “In hindsight the cost of my sharp criticism outweighed the benefit,” she admits. “I bet that if I’d taken a less confrontational tone I would have been able to nurture a more successful working relationship with Scott. It was my loss and if I could have a do-over, I would take it.” Ms. Kreamer also uses personal stories from others to illustrate her main point: that because an emotionless office is not possible, it is up to bosses and workers alike to find a way to express their feelings appropriately—which does not mean hiding passion, anger, anxiety or tears. One example involves Lynda Resnick and her husband, Stewart, who together once owned the Franklin Mint collectibles company. In a large meeting, Ms. Resnick recalls, she found herself being yelled at by her husband because she was strongly pushing for a new piece of religious statuary, a position that no one else in the meeting supported. She could have thrown “a reciprocal tantrum,” Ms. Kreamer points out; instead she decided to commission a market-research study that “fleshed out the logic behind her otherwise seemingly emotionally based decision.” Sales of the figure eventually brought $35 million into the company. Passion certainly underlies innovation, and anxiety fuels attention to detail and planning, as Ms. Kreamer notes, but anger may be the toughest emotion to “sell” as a positive. She acknowledges that anger is no excuse for lashing out or abusing others, but neither should it be swallowed (an unhealthy reaction, all the experts agree). And anger does have value as a powerful

message from the psyche, one that should be heeded: “If you are angry, figure out why—are you jealous, resentful, exhausted, or underappreciated?” Then take some deep breaths and consider how to fix the situation—you ignore the real work required of you if you push anger aside or explode under its pressure. In other words, Ms. Kreamer says, effectiveness on the job requires “metacognition, or the ability to step back and think about ourselves thinking and reacting.” What is not needed: pretending to be someone else—or another sex. The tough-talking, hard-nosed female executive who tells other women to man-up and compete with the boys on their own terms is stuck in the 1980s, ignoring the advantages of possessing a typically female brain—a nimble organ that new science has shown to be superior to men’s for interpreting and expressing emotion. Job success, it turns out, has as much to do with social acuity as with bottom-line reasoning. For all the advances in recent years, Ms. Kreamer argues, women may once again be their own worst enemies. “While women have mostly won the war for parity in men’s minds, they have yet to allow themselves to believe it. And by not believing it, they restrain themselves from acting in more naturally emotional, unself-consciously female ways that would let them be happier.” Let the tears flow, ladies—we have nothing to lose but out-dated notions of how to thrive in the workplace. —Ms. McHugh is the editor of All You magazine.

W12

THE WALL STREET JOURNAL.


    




   
 
 
 



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W13

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W14

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

FEATURE

A model maker’s fantastic workshop BY NANCY KEATES San Francisco ast June, Adam Savage and his wife, Julia Ward, fell in love with a four-bedroom, Edwardian house on a quiet street in the eclectic Mission district of San Francisco. But before he could close on it, Mr. Savage had to build it. Build a model, that is. Borrowing blueprints from their real-estate agent, he constructed a replica out of white foam-core in half dollhouse scale, even making little models of himself and Ms. Ward from cut-outs of photographs and mounted like game pieces. “I built it so we could obsess over it,” Mr. Savage said on a recent Saturday, wearing orangeand red-striped socks that played off his signature red hair. For Mr. Savage, model building is a part of a day’s work. Co-host of Discovery Channel’s “MythBusters,”

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he’s the energetic half of a duo who builds elaborate experiments designed to uncover the truth behind popular myths and legends. He’s the guy who made the replica of a car from a YouTube video to see if it could be lifted off the ground with a stream of water. In a recent episode, at President Barack Obama’s request Mr. Savage and his co-host Jamie Hyneman made a life-size version of a Roman trireme ship to see if there was any truth to the ancient legend of Archimedes’ solar death ray (there wasn’t). Comfortable perfection was the goal for Mr. Savage, 43, and Ms. Ward, 46, when it came to finding a house. An open house in the Mission caught their attention, but to make sure they found the right home the couple looked at 20 other houses nearby in the next 10 days. They bought the house for $2.1 million. It came already remodeled,

Paul Dyer for The Wall Street Journal

In the two San Francisco spaces of ‘MythBusters’ co-host Adam Savage, replicas abound

Adam Savage at his ’man cave’ warehouse with limestone floors, custom bookshelves in the library and a kitchen with limestone counters. A few dozen movie replicas he has made for fun are carefully displayed at home. On a bookshelf in

his office sits the Grail Diary from the Indiana Jones movie “The Last Crusade.” It took Mr. Savage years to make, as he copied every page of notes, sketches and maps from the movie version by hand.

DISTINCTIVE PROPERTIES & ESTATES FARMS/RANCHES/ACREAGE

Most of the models Mr. Savage has built over the years are housed at his “man cave,” a warehouse he rents around the corner where he also keeps all his machine tools and equipment. “I like to separate church and state,” he said. On a recent Saturday night, Mr. Savage and Ms. Ward hosted a poker night with old friends, using chips Ms. Savage had just had custom made as an (almost) exact replica of those used in the movie “Rounders.” At one point someone spilled red wine on one of the red velvet-covered Eero Saarinen dining chairs. True to character, Mr. Savage seized the opportunity to test a myth: He rubbed salt into the area. The stain came out. “I don’t know if it was the salt or the dish soap,” says their friend Stephen Smith, a poker regular who owns a furniture store nearby. “But it was a team endeavor and it worked.”

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W15

THE WALL STREET JOURNAL.

FILM

‘Insidious’: Scary eyeful of the unknown Fright movie strikes a note; Fine acting keeps ‘Code,’ a time-bending bomb thriller, ticking [ Review ]

What makes a movie scary isn’t what jumps out of the closet. It’s what might jump out of the closet. The blood, the gore and the noise of so many fright films miss the horrifying point: Movie watchers are far more convinced, instinctively, that what we don’t know will most assuredly hurt us. The Unknown—and its misshapen attendant, Dread—are the chief assets of “Insidious,” a creepfest that stars Rose Byrne (TV’s “Damages”), Patrick Wilson (“Little Children”) and Barbara Hershey (“Black Swan”) and thus has an immediate leg up on its more generic and possibly inbred cousins. It may be snobbish to say so, it may be unfair to struggling actors, but viewers naturally expect a higher grade of product from a better-known cast, particularly in a genre where performers are often unknown, and their characters are inclined to say, “I’ll be right back” before being whisked away by whatever homicidal maniac is lurking around the corner. “Insidious” does very well by its cast, and by its makers, too: James Wan directed the first “Saw” and has been associated with all six of its blood-soaked sequels; producers Oren Peli, Steven Schneider and Jason Blum were behind the colossal “Paranormal Activity.” When your combined franchises have grossed more than $600 million, you don’t have anything to prove, exactly. Nevertheless, “Insidious” establishes that these folks can make a film that operates on an entirely different level, sans gore, or obvious gimmicks. And make flesh crawl. Moments into the movie, it’s clear that what separates this ghost story from standard-issue horror is sound: The creaking, the moaning and even the silences of the large but unremarkable home where Renai and Josh Lambert (Ms. Byrne and Mr. Wilson) move

FilmDistrict (left); Summit Entertainment

BY JOHN ANDERSON

Left, Rose Byrne in ‘Insidious.’ Right, Michelle Monaghan and Jake Gyllenhaal in ‘Source Code.’ with their two young boys, start working on the nerve endings immediately; Robert Cross’s sound design is an entity all its own. Director Wan takes some chances, providing such fleeting glimpses of the ghouls that plague the Lamberts that we’re not sure we see them either. This puts the viewer on tenterhooks, imposing the kind of involuntary immobility that is a side effect only of the more psychologically disturbing fright films. “Insidious” is not flawless—it goes well over the top as it accelerates toward a conclusion. And it should be said that Renai seems a bit cavalier at times about the idea that her house is haunted, although we like that she doesn’t cower from the spirits crawling around her children’s bedrooms: She confronts and pursues and acts the valiant mother. But she and Josh are stymied until his mom (Ms. Hershey) brings in an old friend named Elise (a terrific Lin Shaye), who has some experience with these “parasites” of the afterlife, the type occupying the cupboards and shadows and corners of ceilings. Elise takes a wonderfully personal attitude toward erasing them—a

vendetta of sorts, tempered by a healthy respect for what they can do and what might happen, along with the knowns, unknowns and unknown unknowns of dealing with the seen and unseen. Which is not to say one should be afraid of “Insidious.” Just don’t go in alone.

‘Source Code’

Army Capt. Colter Stevens (Jake Gyllenhaal) awakens on a commuter train heading to Chicago, and doesn’t know where he is. He finds the delightful Christina (Michelle Monaghan) sitting across from him. A passing woman spills coffee on his shoe. The conductor asks for his ticket. Cranky commuters make comments. And then the train blows up. In the entertaining “Source Code” directed by Duncan Jones, from an original and architecturally ambitious screenplay by Ben Ripley, Colter doesn’t know—and neither do we—that he’s part of a highly classified military research project and has been sent into the immediate past to find out who bombed that train. The “source code”—a kind of shorthand for computer shorthand—is given a

breezy but satisfying enough explanation by its inventor (Jeffrey Wright), but what it does, basically, is provide Colter with an eight-minute window, in a parallel reality, to find the bomber and prevent what is expected to be a subsequent terrorist attack on Chicago itself. What Colter can’t do is save anyone on that train, including Christina—or the man whose body he inhabits, each of the several times he goes back into that irrevocable past. Putting across a premise as fantastical as this film’s requires top-flight acting, as well as a kind of poker face, and that’s precisely what the movie delivers. While there’s no shortage of humor in the film, it has to take its conceit seriously enough for us to trail along behind, but not too far behind: What Colter is discovering along the way the viewer is discovering, too, and Mr. Gyllenhaal, whose performances are usually constrained and internalized, gets to freestyle: At some point during his return trips to the train, Colter decides no one there really exists and he can act as crazily as he needs if it means ferreting out the killer. He goes a bit off the rails,

in a manner of speaking. But Mr. Gyllenhaal makes Colter convincing in other, smaller ways as well: How would anyone act, were he or she to awaken, as Colter does, in a totally unfamiliar place, among people who recognize him but whom he doesn’t know? Probably not with screaming hysterics. Probably with wariness and stealth, which is what Mr. Gyllenhaal brings to Colter, as he repeatedly returns to the train. What Jones and Ripley do, wonderfully, is avoid monotony by framing each time trip in a different way, fast-forwarding through the extraneous, and by having the Colter-Christina story inch forward in such a way that the romantic subplot becomes as intriguing as the plot. Mr. Gyllenhaal is superb, Ms. Monaghan is adorable; Vera Farmiga, as Colter’s “handler” back at the base, is her usual expert self. But Mr. Wright proves once again that he’s perhaps the most underrated screen actor in America, making the scheming Dr. Rutledge simultaneously shy, conniving, misanthropic, paranoid and malevolent. The proof may be in the adjectives.

[ Talking Movies ] BY DEAN NAPOLITANO In the documentary “Bachelor Mountain,” San Liangzi is a middle-age, divorced logger living in China’s snowy northeast province of Heilongjiang. Excessive logging and toughening environmental regulations have pushed the local economy to the edge, and many of the inhabitants—especially the women—have long since moved to the city for work. “Any old loser can find a man here,” says one of the female villagers interviewed. “Most women move to the city. They don’t want to live here in the sticks. We’d all leave if we could.” Mr. San works occasional odd

jobs, and he pines for one of the few single women in town. Wang Meizi—attractive but masculine—lives with her parents and runs an inn. Mr. San has carried a torch for her for years, but she has no interest in marriage. “We all know she’s a lesbian,” Mr. San’s friends tell him in an effort to get him to move on, but he brushes them off with a wave of his hand. The film is a slow-paced and fascinating look at the enormous changes in China as it lurches toward modernity. Director Yu Guangyi followed Mr. San—a childhood friend—for two years, getting his subject to reveal intimate details about a kind of rural life that is alien to most viewers. “Bachelor Mountain,” which had its world premiere at the Hong Kong International Film Festival last week, is the third film in a trilogy documenting the area were Mr. Yu grew up, following

“Timber Gang” (also known as “The Last Lumberjacks”) and “Survival Song.” “I just want to document life of people that I know best,” he says. “I sympathize with them a lot. If I hadn’t left the village, maybe I’d be living the same life.” Like many of those in the film, Mr. Yu left his village more than 20 years ago at the age of 26 and now lives in Daqing, the second largest city in Heilongjiang. “I didn’t see a train until I was 13 years old,” he says. Mr. Yu, who has worked as an artist for two decades, came into film by chance. “I never studied film, so I make them with life experience and my heart,” he said. i i i In February, this column profiled filmmakers Ruby Yang and Thomas Lennon and their Academy Award-nominated short documentary “The Warriors of Qiugang.”

HKIFF

‘Any old loser can find a man here’

San Liangzi, in ‘Bachelor Mountain,’ at his home in rural Heilongjiang province. While they didn’t pick up an Oscar, their film about a farmer’s successful legal battle to rid his village in China’s Anhui province of a pesticide plant shed light on the town’s plight and China’s broader environmental problems. The China Daily reported last month that the government was working to clean up Qiugang of chemical residue left

over after the factory was shut down.“We are thrilled about this news,” says Ms. Yang, who was in Hong Kong last week for the screening of the film at the festival. The farmer, Zhang Gongli, has become a local hero. “He’s viewed as patriotic,” she says. “And he acknowledged that the film helped the village.”

W16

THE WALL STREET JOURNAL.

Friday - Sunday, April 8 - 10, 2011

AUTOS

The coolest Ferrari ever—drive carefully Exhilarating performance overcomes bread-van looks. Just don’t let the low-grip handling fool you [ Rumble Seat ]

Imagine the Alps, perfected. Each breath tastes of diamonds. Snowlaced massifs vault into a dark-blue sky and green hills cascade to the valleys below, a panoptic of edelweiss and immortality. Here the cowbells play Beethoven’s “Ode to Joy” and busty women in over-tight dirndls repair the roads. Now imagine all this upside down, flying past your windshield at 32 feet per second squared as you plunge to your picturesque Alpine death in the Ferrari FF. And everything was going so well. While your four-seat, allwheel-drive, 651-horsepower, $300,000 grand touring car paints a target on some snowy roof far below, your mind will be processing quickly. Did I let the cat out? What is Berlusconi’s problem, anyway? And how, exactly, did this happen? Alas, the last thing to go through your mind is the fitted luggage. Slurg! You want my snap verdict on the new FF? Fine. This is absolutely the coolest Ferrari of all time, “cool” insofar as it delivers brain-solvent performance without looking like it gives a damn what you think, cool insofar as its radical Pininfarina styling (a “shooting brake,” or three-door hatch GT) waves a contemptuous finger at conventional wisdom. This is a car that despises prettiness and mocks your bourgeois notions of sleek and rakish, which are stylistic sideshows of aerodynamics, anyway. Yes, I agree, the car looks like a toilet brush on wheels, but how monumentally gutsy it is for Ferrari to even think such a thing, much less commit hundreds of millions of euros to its execution. My God. Ferrari? The most self-satisfied car company on earth dares to put its weight on such a limb? It’s downright epic. I’m not saying I wouldn’t change a thing. The front fender vents and fluting along the side (reminiscent of the Ferrari California) seem pointless and fussy; and the daft, leering view of the car head-on makes it look as if it’s auditioning for “Pokémon.” But the shooting-brake conformation is so utterly right that it takes on the aspect of preordination. Ferrari just had to build it. Oh yes, right, you’re plunging to your death. I’ll get back to you on that. It’s impossible to know what weight Ferrari lent to its competitors’ offerings—execs would scoff, Ferrari has no competitors!—but it should be noted Porsche and Bentley each sell ballistic GTs with four seats, generous boots and all-wheel drive. These are cars that owners might use to drive to their homes in St. Moritz and Aspen. I know I would. The FF is a diabolically clever way to answer these market challenges without actually acknowledging them. No stooping to conquer. Thanks to its bread-van shape, the FF is surprisingly spacious,

Dan Neil for The Wall Street Journal (2)

BY DAN NEIL

with 16 cubic feet behind the upright rear seats (more than a BMW 7-series trunk) and nearly 29 cubic feet with seats down—enough, Ferrari assures us, to stow two sets of scuba gear. Or, may I mildly suggest, groceries. And while you wouldn’t want to retire in them, the FF’s back seats are actually pretty comfortable for a 6-footer like me. In addition to the golf-bag metric (the FF will hold two), Ferrari suggests two strollers can be put in the back, and you can even get Ferrari-red child safety seats. Interesting. There has always been a reek of attachment disorder with Ferraris, i.e., losers with money; but the ideal FF buyer has a spouse—husband or wife—and actually wants to take the family on the road with him/her. I’d note that Ferrari Chairman Luca di Montezemolo, age 64, has an infant son. I wonder: Did he just build himself a car? But you want numbers. Here they are: The FF is an aluminum space-frame car with a direct-injection, 6.3-liter V12 mounted front-midships: dry-sump lubrication (naturally); 12.3:1 compression ratio; variable valve timing, variable intake and exhaust geometry; all leading to a hearty 103 hp/liter of naturally aspirated displacement. The engine character is free spinning, hugely flexible, orchestral, a grand bargain between suppleness and stunning mechanical leverage. Max horsepower is 651 and max torque is 504 pound-feet, 80% of which is on tap from 1,000 to 8,000 rpm. Ferrari puts the 0-to-62-mph acceleration at 3.7 seconds and the top speed at 207 mph, which makes this car, on paper at least, the fastest four-seater in the world

and second-fastest Ferrari GT after the track-bonkers 599 GTO. And I can personally attest to the sheer, lung-flattening, heart-pounding kinesiology of the car. The FF isn’t the sweating bottle on nitrogylcerine that the 458 Italia is, but it’s still mighty fast. To kick down two gears and stamp the gas is to light a very large, exploding cigar. On the other side of the efficiency ledger, the FF has an electric air-conditioning pump; variable fuel pump and engine fan; and optional stop-start system as part of the HELE (High EmotionsLow Emissions) kit. With a Euro rating of 360 grams of carbon/kilometer, the FF will probably get about 11/18 mpg, city/highway, under the U.S. system. So far the car is pretty G.I. for a new Ferrari GT. Big, fast, upholstered by Croesus’ saddle maker, and endowed with horsepower that would count as its own weather system. However, the FF’s other bit of iconoclasm is its allwheel-drive system (FF=Ferrari Four). A novel solution, it comprises a compact (6.7 inches deep) two-speed gearbox running off the front of the engine crank, driving

the front wheels up to speeds of 124 mph (fourth gear). The socalled Power Transfer Unit is actuated by a multiplate clutch pack doing the bidding of the car’s dynamic handling computers. Up to 20% of engine torque can be channeled through the PTU, which like the rear transaxle provides sideto-side torque vectoring to help the car maintain the desired line. On dry pavement the PTU stays in the background and the FF handles like the run-of-the-mill, license-murdering, grand-touring Godzilla it is, which is to say, very much a rear-drive car. With the car’s Manettino system in Sport mode, you can pitch the car into a hairpin, get it to over-rotate and then pin the tail down with the throttle. Here I’d love to lionize my driving talent, but the truth is, with Ferrari’s current generation of dynamics software, Betty White could drift this car. The steering feels little overassisted for my taste but it’s as precise as a helium laser. With the all-season tires a touch of understeer sneaks past the computers, but it’s surely cured by the summer Pirellis.

When the road goes lousy, you dial in a Manettino switch to one of two new settings: Wet and IceSnow. The computers dial back throttle and steering response, slow the gear shifting, turn up the stability intervention, and otherwise do everything possible to keep the car manageable. But here’s where there’s potential for mischief, and joining the Tyrolean Air Force. The FF, says the company, is designed to deliver extreme performance in the most inhospitable low-grip conditions. Thus spake the press release: “Effortlessly copes with low grip conditions…superb high-performance starts from standstill even on the slipperiest, snowiest and iciest of surfaces.…” Got it? Supercar on ice. To prove it, Ferrari thoughtfully helicoptered two FFs to the top of a ski resort, where a track had been plowed into the snow. And sure enough, the FF chewed through the snowy hairpins and esses like some six-figure Subaru, with the computers furiously stuttering the brakes, vectoring the torque, nulling out rotation. You could practically smell the silicon smoldering. What could be wrong with that? Only one thing. The car still weighs more than two tons! And no matter how quick the computers or how clever the AWD is, you still have to remember to increase your braking distances as speeds increase. The FF’s data-constructed low-grip handling is so reassuring, so empowering, so convincing in its illusion of actual grip, one just might drive into the postcard. It’s a bird. It’s a plane. It’s another victim of irrational exuberance. Not a bad way to go, I must say.