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IN DEPTH Pages 14-15
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Thursday, March 3, 2011
ASIA
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Libyan leader Col. Moammar Gadhafi delivered a three-hour speech Wednesday in which he warned that thousands of Libyans will die if foreign forces intervene in the conflict. ‘We will fight until the last man and woman,’ he said.
Libyan rebels fight to hold oil city Forces loyal to Libyan leader Col. Moammar Gadhafi pushed an offensive into the east Wednesday, but were reBy Charles Levinson in Brega, Libya, Margaret Coker in Tripoli and Julian E. Barnes in Washington sisted by antiregime forces, as Col. Gadhafi warned against a foreign military intervention, saying, “we will fight until the last man and woman.”
U.S. Defense Secretary Robert Gates, testifying before Congress, criticized “loose talk” about a military intervention in Libya. He also said the U.S. military would have to launch pre-emptive strikes to destroy Libya’s air defenses, should President Barack Obama order the imposition of a no-fly zone over the North African country, “Let’s just call a spade a spade,” Mr. Gates said. “A nofly zone begins with an attack on Libya.” Col. Gadhafi lashed out, in
a speech shown on state television against Europe and the U.S. for their pressure on him to step down, warning that thousands of Libyans will die if U.S. and North Atlantic Treaty Organization forces intervene in the conflict. “We will not accept an intervention like that of the Italians that lasted decades,” Col. Gadhafi said, referring to Italy’s colonial rule early in the 20th century. Pro-Gadhafi forces moved into the oil refinery city of Brega early Wednesday morn-
ing and took over much of the western half of the city, according to residents. Fighter jets launched airstrikes against rebel forces in Brega and in the area of the rebelheld city of Ajdabiya, home to a massive rebel-controlled arms depot. Rebel forces from Benghazi, about 200 kilometers from Brega, and Ajdabiya about 70 kilometers away. With reinforcements, the rebel forces pushed the proGadhafi fighters back toward the edge of the city, according
Jobs appears at iPad 2 unveiling BY IAN SHERR Apple Inc. Chief Executive Steve Jobs surprised a crowd of fans by taking the stage Wednesday to unveil the next version of his company’s iPad tablet. Mr. Jobs’s surprise appearance was greeted by a standing ovation by the crowd in San Francisco. The executive, who took a medical leave earlier this year, joked with the audience, saying he “didn’t want to miss today.” Mr. Jobs, a cancer survivor and transplant recipient, appeared energetic though thin as he took the stage at the invitation-only event. The Cupertino, Calif., consumer electronics maker unveiled a second-generation iPad. Mr. Jobs said the iPad 2, which has a dual-core micro-
Associated Press
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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)
OPINION: Russia's arms buildup aims at China, not Japan Page 13
The odd couple behind Nintendo’s 3-D game player
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Steve Jobs on Wednesday. processor and two video cameras, is thinner and lighter than its predecessor. The new version will start
at $499, which is the same price as the original model. It will be available in black and white colors and offered by both AT&T Inc. and Verizon Wireless. Mr. Jobs said it will begin shipping on March 11 in the U.S. and in more than two dozen other countries on March 25. Apple’s new iPad is hitting the market at a time when a slew of other manufacturers have announced plans to launch similar products this year. As competition intensifies in the growing tablet space, analysts and companies are also concerned about a looming price war. In January, Apple said Mr. Jobs is taking a medical leave of absence and that Chief Operating Officer Tim Cook would take over day-to-day operations. Mr. Jobs has bat-
tled pancreatic cancer and had a liver transplant in 2009. By the end of 2010 there were already 30 different tablets for sale, according to research company PRTM. The company now counts 102 tablets from 64 different makers that are either available now or in development. The category “is completely overbuilt,” said Brian Gladden, Dell Inc.’s chief financial officer, in a recent interview. Apple hasn’t historically competed on price in the personal-computer business, instead choosing to charge a premium for its design and proprietary operating system. Some of the most highprofile tablet contenders so far haven’t chosen to undercut the iPad’s price. Motorola Please turn to page 18
S&P/ASX 200 4803.21 g 0.48%
to rebel fighters and witnesses. Witnesses said the proGadhafi forces holed up in the city’s university campus had been surrounded by rebels, and were driven out late Wednesday afternoon. After rebels surged onto the campus to celebrate, a warplane swooped down and Please turn to page 18 Concerns over Libya push oil above $100 ................................... 8 Egypt faces critical decision on its future ................................ 8
Yahoo held talks on Japan holding BY AMIR EFRATI Yahoo Inc. has been in talks to potentially unload its 30% stake in its popular Japanese namesake, the country’s most-visited Web portal and dominant Internet player, among many other options, according to a person familiar with the matter. The discussions have involved Softbank Corp., a Japanese telecommunications and Web conglomerate that currently holds a 41.9% stake in Yahoo Japan, the person said, although a deal is not imminent. At Wednesday’s closing prices. Yahoo’s stake in Yahoo Japan is valued at about 560 billion yen, or $6.84 billion. Softbank said on Wednesday that it isn’t in talks with Yahoo to acquire the U.S. company’s shareholdings in their Japanese joint venture. “We have no intention to acquire the [Yahoo Japan] shares,” Softbank said in a statement. A spokeswoman for Yahoo, Please turn to page 18
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Thursday, March 3, 2011
PAGE TWO
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Business & Finance n U.S. oil futures held above $100 a barrel as fighting raged in Libya and the IEA said the conflict there had shut down more oil production than originally forecast. The IEA said between 850,000 and one million barrels a day of output had gone offline, but that European refiners, the main users of Libyan oil, have ample supplies. 8 n U.S. stocks struggled as crude oil rose amid a potential flareup in Libyan tensions. Gold rose as well, but Asian stocks fell, led by a 2.4% drop in Japan’s Nikkei. 27
Technology: In China, Groupon battles with local rivals. 19
n South Korean consumer prices surged in February, prompting the government to convene another price-stability meeting and raising pressure on the Bank of Korea to increase its policy interest rate. 4 n Australia posted solid fourthquarter growth, but gains are expected to slow in the current quarter as the country grapples with the effects of flooding. 6
n The Fed’s Bernanke reiterated his message that the U.S. central bank will act as necessary to respond to inflation and weighed in on other hot-button issues. 7 n Standard Chartered posted a record annual net profit and forecast continued double-digit income growth for 2011. 20 n Tata Steel raised its stake in Riversdale Mining to 27.1% amid Rio Tinto’s takeover offer for the Africa-focused coal company. 20 n Bombardier received an order from NetJets for as many as 120 business jets, in a deal that could be valued at over $6.7 billion. 21 n A unit of AVIC signed an agreement to buy U.S.-based personal aircraft maker Cirrus. 21
Business & Finance: U.S. credit-card firms shrug at China. 19
Reuters
n New Zealand’s prime minister offered a glum outlook for the economy, forecasting an $11.1 billion blow to GDP from earthquakes in Christchurch. 6
Suspected Islamic militants shot and killed Pakistan’s minister for minority affairs, who had campaigned for overhauling the country’s controversial blasphemy law. Shahbaz Bhatti was traveling in Islamabad when three men fired on his car. Above, Prime Minister Yousuf Raza Gilani, right, consoles relatives of Mr. Bhatti outside a hospital in the capital. Page 5 n Hong Kong Exchanges & Clearing’s net rose 7% in 2010, boosted by rising turnover and a record year for IPOs. Unlike its rivals, the exchange operator isn’t in talks about potential tie-ups. 24 n Children’s clothing maker Dadida aims to raise up to $500 million from a Hong Kong IPO. 26 n Sina said it will boost investment in its microblog product this year, as China’s biggest Internet portal reported a loss for the fourth-quarter. 22 n Petronas’s profit rose 74% in the fiscal-third-quarter from a year earlier, helped by higher oil prices and one-time gains. 23
n Coda expects to start selling its first all-electric car in the U.S. in the second half, as the California start-up uses Chinese technology to make market inroads. 21 n Lachlan Murdoch named a successor for himself just a week after he took over as interim CEO of Australian broadcaster Ten. 22
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World-Wide n A gunman killed two U.S. servicemen and wounded at least two others on a U.S. military bus outside Frankfurt’s main airport. 3 n A top U.S. official said the U.S. sees no need to deploy nuclear
weapons to South Korea, despite increasing pressure from some ruling-party politicians in Seoul. 4 n NATO’s top commander in Afghanistan apologized for the accidental killing of nine Afghan boys and ordered helicopter crews to be briefed again on his directive for preventing civilian deaths. n Bangladesh’s government ordered Nobel laureate Muhammad Yunus out of his post as head of his microfinance bank, capping a string of problems that faced the outspoken government critic.
Markets: Australian mall owner Centro revamps for survival. 24
n Taiwan said it plans to open an additional 42 sectors to Chinese investors. 4
ONLINE TODAY Most read in Asia
1. China Tightens Leash on Foreign Journalists 2. Libya Rebels March West as Fronts Firm 3. China Mobilizes Against Activists 4. China Economist: Yuan Is Undervalued 5. Hong Kong Offers Cash Handouts
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It’s ‘critical that Hong Kong is seen as having a clean, tough market with a strong regulator.’ Martin Wheatley, departing Securities and Futures Commission CEO
Most emailed in Asia 1. Why the Dollar’s Reign Is Near an End 2. Japan’s Bernanke Hits Out at Critics in West 3. Sweating Out a Fever 4. Hong Kong Official Says Yuan Peg Is ‘Not an Option’ 5. China Tightens Leash on ...
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Heard on the Street: Japan’s gridlock puts economy in a bind. 32 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: 66-2 652 0871; India: 91-11 6462 0215. Or email:
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WORLD NEWS
FRANKFURT—A gunman killed two U.S. servicemen and wounded at least two others on a U.S. military bus outside Frankfurt’s main airport in Germany on Wednesday. By David Crawford, Julian E. Barnes and Laura Stevens German authorities have arrested the suspected gunman, a Frankfurt police spokesman said, adding that investigators are still working to confirm the suspect’s identity. The shooting occurred shortly before 3:30 p.m. local time when the gunman opened fire out-
side Terminal 2 at the airport. German Chancellor Angela Merkel, speaking in Berlin, promised a thorough investigation. “I want to convey my deep dismay and ensure the families and relatives of these American soldiers that we’re doing everything possible to clarify what happened in this awful incident,” Ms. Merkel said. A senior military official said that according to initial reports the suspected shooter is from Kosovo. But the official said it was unknown whether the shooter was ethnic Serb or an Albanian. The Associated Press has reported the shooter is an ethnic Albanian.
Kosovo Interior Minister Bajram Rexhepi reportedly told the AP that German police say the suspect is Arif Uka, a Kosovo citizen from the northern town of Mitrovica. The motive of the shooter isn’t yet known, the senior military official said. But the U.S. military has long had concerns about anti-American, anti-NATO groups in Kosovo, where NATO has a peacekeeping mission, the senior official said. The anti-American militants in Kosovo, the senior official said, are small in number. “We don’t think they are particularly well organized, but they are present,” the official said.
Associated Press
Gunman kills two U.S. servicemen in Frankfurt
A gunman shot dead two U.S. servicemen on this U.S. military bus in Frankfurt.
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WORLD NEWS: ASIA
No U.S. nuclear plan for Seoul BY EVAN RAMSTAD
BY FANNY LIU AND PAUL MOZUR
Associated Press
SEOUL—The U.S. sees no need to deploy nuclear weapons to South Korea, a senior U.S. official said Wednesday, despite increasing pressure from some ruling-party politicians here. “We have no plan and we have no intention to deploy U.S. tactical or other nuclear weapons in South Korea. Moreover, we don’t believe that there is a military need to do so,” Robert Einhorn, the State Department’s special adviser for nonproliferation and arms control, told reporters during a visit. “The United States and South Korea can have a robust, effective deterrent without the deployment of U.S. nuclear weapons in South Korea.” The pressure comes from politicians worried by North Korea’s attacks on the South last year and its continuing nuclear-weapons program, but Mr. Einhorn said U.S. military forces have multiple ways of quickly countering a North Korean nuclear attack on the South. The U.S., which has been South Korea’s main defense ally for more than 60 years, withdrew its nuclear weapons from South Korea in 1991, a move that satisfied neither side in the inter-Korean conflict. North Korea frequently accuses the U.S. and South Korea of continuing to keep U.S. nuclear weapons in the South. South Korean officials have long debated whether to ask the U.S. redeploy its nuclear weapons here or start developing its own. That debate reheated last year following two North Korean attacks, in March on a naval ship and in November on an island. The then-defense minister said at a parliamentary hearing the week before the second attack that South Korea
Robert Einhorn, the U.S. State Department’s special adviser for nonproliferation, answers questions in Seoul Wednesday. should consider asking for U.S. nuclear redeployment, but the government hasn’t acted on the matter since. In the past week, one of the country’s most powerful politicians urged President Lee Myung-bak to make the request, and editorials in several newspapers followed suit. “We have no options to frustrate the North’s nuclear ambitions,” said the politician, Chung Mong-joon, a former chairman of the ruling Grand National Party and potential presidential candidate in 2012. “That explains why some people here say that South Korea needs to be armed with nuclear weapons.”
Putting U.S. nuclear weapons back in South Korea would also likely be a jolt to North Korea’s main ally, China, which has thwarted United Nations Security Council discussions of both North Korea’s attacks on South Korea and the North’s self-disclosed uraniumenrichment activities. Mr. Einhorn told reporters the U.S. would continue to seek a Security Council statement on the North’s uranium work. He flew to Seoul to continue negotiations between the U.S. and South Korea on a new agreement on civil nuclear cooperation. The current pact, set in 1972 and changed
slightly in 1974, will expire in 2014. Since that agreement, South Korea’s nuclear-energy industry has grown huge; its 21 nuclear reactors supply about 40% of the country’s electricity. The country’s major utilities and construction firms also sell nuclear-plant technology abroad. North Korea, meanwhile, has used nuclear technology principally to develop weapons. It tested nuclear explosives in 2006 and 2009. Mr. Einhorn said the new agreement between the U.S. and South Korea on nuclear cooperation “has to recognize the differences that have developed in the last 30, 40 years.”
Inflation surges in South Korea BY KANGA KONG AND IN-SOO NAM SEOUL—South Korea’s February consumer prices topped forecasts to rise at their fastest clip in more than two years, prompting the government to convene another pricestability meeting and raising pressure on the Bank of Korea to increase its policy interest rate next week. With the government’s pledges to maintain price stability failing to curb inflation expectations and the growing belief that global oil and raw material prices will continue to remain high, some economists are raising their inflation forecasts for this year and calling on the central bank to raise its policy rate. The BOK’s monetary policy board, which held rates steady in February following a 0.25 percentage point rate increase in January, next meets March 10. “Now I see more chances for the consumer price index to rise by more than 5% in the early part of the second quarter if global oil prices stay above $100 a barrel for a prolonged time,” HI Investment & Securities economist Park Sanghyun said. The central bank’s inflation target range for this year is 2% to 4%. In February, the consumer price index was up 4.5% from the yearearlier month, accelerating from a
Taiwan opens more sectors to China
Back on the rise South Korea's consumer price index, change from a year earlier 5% 4 3 2 1 2008
'09
'10
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Sources: Statistics Korea via Thomson Reuters; Bloomberg News (photo)
4.1% rise in January and marking the fastest pace since the same rate was recorded in November 2008. Inflation was driven by rising global raw material prices externally and more expensive service charges internally. Month-to-month, the CPI rose 0.8% following a 0.9% increase in January. Economists polled by Dow Jones Newswires had forecast the CPI to rise 4.3% year-to-year and 0.5% month-to-month. The core CPI, which excludes volatile energy and food prices, rose 3.1% year-to-year, the biggest rise since the same reading in August 2009 and larger than a 2.6% rise in January. It was up 0.7% month-to-
A shopper at Hanaro Mart in Seoul month in February following a rise of 0.6% in the previous month. The data are the latest sign of escalating prices pressures in Asia, where fast economic growth and rising prices of food and energy have stoked inflation and prompted most central banks in the region to raise interest rates. Even the region’s holdout, the Philippines, may be moving closer to lifting rates from a record-low level. Bangko Sentral ng Pilipinas Gov. Amando Tetangco said Wednesday the scope for keeping interest rates at current levels “has narrowed,” responding to comments by the International Monetary Fund, which said the surge in food and fuel prices
“probably reinforces the case for normalizing the monetary policy stance sooner rather than later.” Recent data show the South Korean economy—Asia’s fourth largest—remains resilient despite growing external uncertainties, adding urgency to the authorities’ need to take action to curb surging prices. “Korea’s economy is not missing a beat. Output is expanding at a robust pace and a pick-up in new export orders in February points to another month of solid gains,” said HSBC economist Song Yi Kim. “The only headache is inflation … Amid healthy demand growth, firms will increasingly pass these on, necessitating continued tightening by the central bank.” Government data Tuesday showed Korea’s exports rose 17.9% from a year earlier to $38.96 billion in February, while imports were up 16.3% on year at $36.11 billion, resulting in a handsome surplus of $2.85 billion. The data showed export momentum remains solid, which means the BOK will be able to tighten policy next week with little fear of damping economic growth, said Mr. Park at HI Investment. Minister of Strategy and Finance Yoon Jeung-hyun convened a meeting with nine other minister-level officials to discuss what the government can do to stabilize prices. --Cris Larano in Manila contributed to this article.
TAIPEI—Taiwan’s government will open an additional 42 sectors to Chinese investors, including the strategically important panel and chip industries, as cross-strait economic ties continue to deepen, the island’s Ministry of Economic Affairs said Wednesday. Tension between the countries has eased after pro-China Ma Yingjeou became Taiwan’s president in May 2008, and Taiwan has opened around 200 sectors to Chinese investors since June 2009. The 42 newly added sectors include manufacturing, service and public infrastructure, the ministry said, adding the new rules start Monday. The ministry said Chinese companies will be allowed to acquire stakes of as much as 10% in the island’s existing semiconductor and panel makers. If Chinese and Taiwanese companies want to set up a new joint venture, Chinese ownership will be limited to less than 50%. Although the relaxation is a cause for concern for some who fear the country will be “bought up” by China, it will ultimately be a boon to Taiwan’s economy, said National Taiwan University’s vice president, Tang Ming-je. “What is more important than the investment flows we will likely see is the cooperation that will come from the investments,” he said. Taiwan’s chip and panel manufacturing sector is far more advanced than China’s, and the island’s government has been cautious about allowing Chinese investments in what it considers a strategic industry. However, the island’s panel makers badly need fresh funding as falling global panel prices have hurt their earnings, and analysts say deep-pocketed Chinese investors are the logical choice. China can also close the technology gap in the industry, they say. “Taiwan’s panel makers will benefit from having Chinese shareholders, because we will be given immediate and long-term access to the huge market in China,” Minister of Economic Affairs Shih Yen-shiang said at a news conference. Under the new rules, Chinese companies will also be allowed to acquire as much as 20% of Taiwan’s machinery-equipment makers and fertilizer makers and up to 50% of any port operators, while there is no limit on investing in battery makers, the ministry said. However, Taiwan’s revised investment rules raised concerns about a possible migration of major Taiwanese industries to China. “By nature of the size of the country, many of China’s companies have a much larger scale than Taiwan’s, and they can use that to compete against or buy up Taiwan companies. I don’t see this as good for the long-term economy, I see this bringing more unemployment,” said Lo Chih-ming, chairman of Taiwan Thinktank. As of the end of February, Chinese investments in Taiwan were $139 million, according to the ministry.
Thursday, March 3, 2011
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WORLD NEWS: ASIA
Pakistan official shot Islamists suspected in death of minister who blasted blasphemy laws BY ZAHID HUSSAIN AND TOM WRIGHT
Arlene Chang/The Wall Street Journal
Alex White Mazzarella standing besides his beehive installation.
Mumbai’s Dharavi area serves as canvas for artists Sanaullah Compound, in Mumbai’s Dharavi area—often described as one of Asia’s largest slums—is always abuzz with activity. Not only is it a major recycling hubs, it is also home to thriving small-scale industries for embroidered garments, leather, pottery and plastic. Recently it tried on a different hat—that of art district. At the end of January, urban planners Alex White Mazzarella and Casey Nolan, who are American, and Dutch photographer Arne De Knegt invited visitors to walk through Dharavi’s alleys to look at video projections, murals, paintings and photographs. Many installations were created from waste sourced from the area itself. The initiative was part of “Artefacting Mumbai,” organized by Acorn, a nonprofit that focuses on improving livelihoods for hawkers and small traders. Although it was a one-day event, much of the art is still there. “We wanted to gift back to the area some of our art because we drew so much from it during the course of our work here,” said Mr. Mazzarella. The trio played with the concept of being outsiders. White and black silhouettes represented the outsider and the insider respectively, while paintings of barrels served as a metaphor for Dharavi, a place the outside world looks at from afar. Initially, the group faced resistance in the area, Mr. Mazzarella said, with many asking them for money to allow them to paint there. But this rapidly changed. “Once we painted one person’s unit for free, we were inundated with requests from others to come and paint on their walls and doors too,” he said. This included many neighborhood institutions, from the teaseller to the barber to the baker. In total, they painted about 10 murals and set up three art installations. One of the installations is a hut made of 160 barrels stacked in the shape of a beehive, with a wooden mesh roof and a bench inside for visitors to sit on. The beehive installation also had a sound element: everyday sounds of people chatting, trains pulling in and out of stations and the snarl
of traffic. “The beehive to us signified the buzz of the area, the business, the constant work happening,” said Mr. Mazzarella. —Arlene Chang
Who Is India’s Common Man? The phrase “common man” has wide political currency in India, with parties across the political spectrum using it, and it will likely be uttered many times in the coming weeks as India discusses the federal budget that was unveiled Monday. But who exactly is the common man—or, in Hindi, the aam aadmi? Is he the moustachioed old man with a wisp of white hair, as depicted in the drawings of Times of India cartoonist R.K. Laxman? Or is he the hapless farmer in last year’s Bollywood movie “Peepli Live,” who finds himself considering suicide as an escape from debt? Or is he one of the villagers who arrive daily at Delhi’s interstate bus terminal seeking employment in the big city? To ruling Congress party youth leader Rahul Gandhi, the “aam aadmi in India is that person who does not have a connection to the system. Whether he is poor or rich, Hindu, Muslim, Sikh or Christian, educated or uneducated, if he is not connected to the system, he is an aam aadmi.” “We call him the common man but in fact he is unique,” he said during his party’s anniversary conference in December. On the left, Basudeb Acharia, a senior member of the Communist Party of India (Marxist), defines the common man as “those who are below the poverty line. In India, common men are peasants, agricultural laborers and middle class who all constitute over 85% of the country’s population.” For the opposition Bharatiya Janata Party, the “common man is anybody who has a stake in the system but doesn’t have an effective say,” said spokesman Prakash Javadekar, adding that this is “mainly those in the unorganized sector.” —Krishna Pokharel Keep up on India minute by minute with The Wall Street Journal’s India Real Time at http://blogs.wsj.com/indiarealtime
ISLAMABAD—Suspected Islamic militants shot and killed Pakistan’s minister for minorities affairs, who had campaigned for reforming the country’s controversial blasphemy law. Shahbaz Bhatti, one of the few Christians in a senior government position, was traveling in Islamabad to attend a cabinet meeting when three gunmen opened fire on his car. Eyewitness and police said the gunmen dragged Mr. Bhatti out of his car and shot him several times before escaping in a white Suzuki vehicle. Mr. Bhatti was shot about eight times and died on the spot. His driver was seriously injured. No group claimed responsibility. But the attackers left leaflets saying they had acted in the name of the Punjabi Taliban and al Qaeda. “This is the horrible fate of this cursed person,” read the leaflet. It also blamed the government for putting an “infidel Christian” in an important position. The killing of Mr. Bhatti, a Catholic in his 40s, further deepens the political instability in a country where secular-minded politicians are increasingly at odds with a rising strain of Islamism in the middle classes. It also complicates the role of the U.S. in Pakistan. Washington has strengthened ties with the govern-
ment of President Asif Ali Zardari, including with a massive new civilian aid package. But the government, viewed as too pro-U.S. and secular by many Pakistanis, is increasingly unpopular. The U.S. ambassador to Pakistan, Cameron Munter, in a statement condemned the killing of Mr. Bhatti, whom he called a “Pakistani patriot and a voice for understanding.” In January, Salmaan Taseer, governor of Punjab province and a key ally of Mr. Zardari, was killed by his police bodyguard. Mr. Taseer, a Muslim, also had spoken out against the blasphemy law, which human-rights groups and others say has been used to target minority groups like Christians and Ahmadi Muslims. The police guard said he shot Mr. Taseer in a posh Islamabad shopping center because of his stance on the blasphemy issue. The guard is facing trial but has been feted as a hero by some religious groups and sectors of the middle classes like lawyers’ associations. Mr. Bhatti had angered Islamic extremists by urging changes in the law that sanctions the death penalty to anyone found guilty of blasphemy against the prophet Muhammed. Mr. Bhatti was head of a parliamentary committee examining misuse of the law. In many cases, people have used it to settle local scores unrelated to religion, human-rights groups say. In recent media interviews, Mr. Bhatti
had vowed to continue his campaign, despite receiving repeated death threats from the Islamists. Wajid Durrani, Islamabad’s police chief, said Mr. Bhatti was provided protection in view of the threat to his life but was traveling without his security detail at the time of the attack. The loss of one of the most prominent leaders of Pakistan’s small Christian community comes amid increased persecution from Islamists. Last year, a court sentenced a Pakistani Christian farm worker to death for blasphemy. The Vatican and rights groups have slammed the verdict and called for her release. Christians are the largest religious minority in the country, where about 5% of the 180 million population are non-Muslims. “We have lost our most courageous spokesman,” said Akram Massig Gil, a Christian member of parliament. Authorities have yet to carry out a death sentence for blasphemy since the law was tightened under the Islamist dictator Gen. Zia-ul-Haq in the 1980s. But human-rights groups say the law has encouraged violence against minorities. Scores of people, most of them Christians, are in detention facing trial under the law. Sherry Rehman, a former minister of information and opponent of the law, is in hiding. —Rehmat Mehsud contributed to this article.
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Thursday, March 3, 2011
WORLD NEWS
Aftershocks to hit New Zealand GDP Prime minister warns quakes may flatten growth, says rate cuts are likely; insurance losses seen far above forecasts WELLINGTON—New Zealand’s prime minister offered a glum outlook for the economy, forecasting a 15 billion New Zealand dollar (US$11.1 billion) blow to gross domestic product from earthquakes that have destroyed large areas of the nation’s second-largest city. In response to the looming economic shock from the Christchurch quake, John Key said in an interview Wednesday that rate cuts by the central bank “would probably be our expectation.” “I don’t think there is any question that it is helpful if there are lower interest rates to reflect what we are going through at the moment,” he said Wednesday. The remarks will add to pressure on the Reserve Bank of New Zealand, which the market expects will cut rates by as much as half a percentage point as early as next week. The prospect of lower interest rates helped send the New Zealand dollar to its lowest level of the year. Mr. Key said the sequence of quakes that began in September could flatten growth. “If you go from June 2010 to June 2011, it is eminently possible New Zealand will have flat growth as a result of these two earthquakes,” he said. Also Wednesday, Zurich-based reinsurer Swiss Re said it estimates that the total loss from the recent New Zealand quake will amount to between $6 billion to $12 billion. Should the top end of this estimate emerge as the final figure, this would already amount to a third of
Craig Bain for The Wall Street Journal
BY REBECCA HOWARD
New Zealand Prime Minister John Key discusses the earthquakes’ effects on the economy in Wellington Wednesday. the roughly $36 billion insured loss from catastrophes in all of 2010, it said. Based on preliminary estimates, Swiss Re expects its own claims for the earthquake in New Zealand, where insurance is common and easily available, to be around $800 million before tax. The loss is much higher than analysts expected. The company cautioned that the preliminary estimate may change as new information becomes available.
The death toll from last week’s 6.3-magnitude earthquake stands at 159, but international and local rescue teams continue to search for around 80 people, with many of the dead expected to be foreign nationals. A third of the city’s residents are still without water and 13% without power, but the reopening of some businesses has begun to restore a measure of normality in outlying suburbs and surrounding towns.
Richard Grace, the head of currency strategy at the Commonwealth Bank of Australia said Mr. Key’s forecast that the economy could be weakened for an extended period was alarming. “New Zealand could face four quarters of recession,” said Mr. Grace. “That’s the new info here.” CBA expects the central bank to announce a 0.5-percentage-point cut to 2.5% in its official cash rate during a monetary policy statement
scheduled for March 10. The Reserve Bank has only once moved between meetings, when it made a 0.5-percentage-point cut shortly after Sept. 11, 2001. The aftermath and economic recovery from the quakes could still trigger a downgrade of New Zealand by ratings agencies, which have voiced concern over the country’s foreign debt. “It will almost certainly see us running a slightly higher deficit than we would have expected,” said Mr. Key. Moody’s Investors Service said last week that it would “await a fuller assessment of the long-term effects on government finances.” Moody’s rates New Zealand with a top grading and a stable outlook. “We have seen early indications from ratings agencies that they have held our rating and that is good,” said Mr. Key. “The slightly worrying thing was that we took seriously their concerns that they would potentially downgrade New Zealand unless we addressed our net external liability position.” The quakes are a further reminder of New Zealand’s vulnerability due to its location in a geologically active zone know as the Pacific “ring of fire.” —Anita Greil in Zurich contributed to this article.
WSJ.com ONLINE TODAY: Watch an interview with New Zealand Prime Minister John Key at WSJ.com/ video.
Australia’s first-quarter growth is expected to slow BY JAMES GLYNN AND ENDA CURRAN SYDNEY—The Australian economy grew solidly in the fourth quarter of 2010, bucking the headwinds of rising interest rates, a still-fragile global backdrop and devastating floods that inundated the coal-rich
state of Queensland in December and January. However, Treasurer Wayne Swan warned that in the first quarter of 2011 the brakes would slam on growth, as the full force of natural disasters that struck at the economy are felt. Queensland, which accounts for 20% of national output, experi-
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enced its worst flooding on record in January, and was later battered by a Category 5 cyclone, prompting a massive rebuilding effort. Mr. Swan said the hit to exports as a result of the disasters will reduce tax revenues and cut around a percentage point from first-quarter growth and half a percentage point from growth over the 2010-2011 fiscal year. A hit to growth on that scale could result in a first-quarter contraction, a rare event in an economy that hasn’t experienced a recession in 20 years. The cautious outlook highlights the challenge the government faces in meeting a multibillion-dollar compensation bill to rebuild stormravaged homes and infrastructure while at the same time returning a budget surplus by the fiscal year beginning July 1, 2012. Debt and the deficit are tense topics in Australian politics and Prime Minister Julia Gillard has staked her minority Labor government’s reputation on meeting the surplus target, even as the reconstruction bill is expected to climb. In its most recent outlook, the Treasury department forecast Australia would grow at 3.5% over the year and return an underlying deficit of 41.5 billion Australian dollars (US$42.06 billion). In February the International Monetary Fund said the weather disaster could cut as much as one percentage point from first-quarter growth. “From what I have seen so far,
Australia's GDP Change from previous quarter, seaonally adjusted 1.2% 1.0 0.8 0.6 0.4 0.2 0
2009
’10
Source: Australian Bureau of Statistics
we will have lower taxation revenues,” Mr. Swan said. “There will be a heavy toll on the budget due to spending on reconstruction and lower activity.” Illustrating the impact from adverse weather, Mr. Swan said heavy rains alone during December shaved 0.4 percentage point off fourthquarter growth. Figures released Wednesday showed the economy grew 0.7% in during the quarter. Ms. Gillard is planning budget cuts and is attempting to push through a A$1.8 billion flood levy. It has won lower-house approval but could run into stumbling blocks in the upper house. Still, the interruption to growth is expected to be brief as the mining investment boom intensifies, with
mining companies planning to invest an estimated A$100 billion in new projects in 2011-12, close to double that of the previous year. Economists said the mining boom is balanced by a cautious trend in consumer spending. With households still focusing on savings and debt reduction, the Reserve Bank of Australia has scope to keep interest rates steady for now. The central bank expects economic growth to rebound by the end of 2011, to be running well above historic averages, putting inflation at the top of its 2%-3% inflation target band. Australia’s economy grew 0.7% in the fourth quarter from the third quarter and 2.7% from the year-earlier period, the Australian Bureau of Statistics said Wednesday. Economists on average had expected growth of 0.8% on quarter and 2.8% on year. The main contributors to growth in the quarter were a sharp rise in plant and machinery equipment and a rise in store inventories. A fall in construction detracted from growth, while Mr. Swan estimated the havoc across Queensland sliced four percentage points from growth in the quarter. The data dispel “this ridiculous notion that the economy ground to a halt in the second half of last year,” said Adam Carr, an economist at ICAP. —Geoffrey Rogow contributed to this article.
Thursday, March 3, 2011
THE WALL STREET JOURNAL.
7
**
WORLD NEWS: U.S.
BY MICHAEL R. CRITTENDEN AND IAN TALLEY WASHINGTON—Federal Reserve Chairman Ben Bernanke on Wednesday reiterated his message that the U.S. central bank will act as necessary to respond to inflation while he faced a wide array of questions on Capitol Hill. Mr. Bernanke, appearing before lawmakers for the second straight day to discuss the state of the economy, weighed in on a number of hot-button issues: the dollar’s role as the dominant world currency, the U.S. deficit and the ability of global regulators to stave off future financial crises. He also repeated comments made Tuesday before a Senate panel that the Fed is closely watching rising commodity prices and is deter-
mined to ensure prices don’t get out of control. “We’re looking very carefully at inflation expectations and making sure that people remain confident that inflation will stay low and we will address that,” Mr. Bernanke said. A number of lawmakers expressed specific concern that a rise in gasoline prices is already hurting consumers at the pump and grocery store, but Mr. Bernanke played down the idea that inflation is already starting to rise. While there may be some changes in the relative prices for goods, he said, there is no immediate real inflationary impact. Still, he said the Fed is aware of the concerns. “We have learned a lesson, as central bankers have learned a lesson from the ’70s: We will not allow
inflation to get above low and stable levels,” Mr. Bernanke said, later adding that “oil prices alone, nothing else moving, will probably not be enough to make us respond.” Discussing the economy, Mr. Bernanke said the still-nascent economic recovery is gaining traction despite high levels of unemployment and a struggling housing market. He said the Fed is still convinced that the economy needs monetary-policy support to ensure a continued recovery, but did let lawmakers know the central bank will alter its stance when the time is right. “If we leave policy too accommodative for too long, that would lead to inflation, and so that’s why…all of these things will have to be unwound at the appropriate time,” Mr. Bernanke said. Lawmakers also asked Mr. Ber-
nanke to weigh in on issues well beyond monetary policy, including bank capital standards and lending, as well as the trade imbalance between the U.S. and China. On the latter issue, Mr. Bernanke acknowledged that Beijing’s practice of managing its currency plays a role in the trade gap, though he said the high savings rate in China and the low savings rate in the U.S. also play a significant role. Mr. Bernanke also said Congress should draft a plan to lower the ratio of debt to the U.S. gross domestic product as a way to tackle the mounting deficit problems facing the nation. “One rule of thumb is cutting enough [from the federal budget] that the ratio of the debt-to-GDP stops rising, because currently it’s rising relatively quickly,” he said.
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Bernanke tries to ease inflation fears
Mr. Bernanke on Capitol Hill.
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THE WALL STREET JOURNAL.
Thursday, March 3, 2011
WORLD NEWS: MIDDLE EAST
Egypt faces critical decision on its future [ Capital ] BY DAVID WESSEL The battle for Libya is stealing the headlines, and for good reason. But economic prospects for the Middle East turn on the direction Egypt takes. A decade from now, will Egypt look more like Poland, an Eastern European post-communism success, or more like Pakistan, an economically dysfunctional breeding ground for terrorists? The Middle East sorely needs a success story. As Latin America prospers and growth in subSaharan Africa picks up, the Middle East and North Africa stand out as economic disappointments, especially for their huge cohorts of unemployed youth. Poland, after missteps and wrong turns, emerged from the darkness of World War II, the Cold War and the collapse of the Soviet empire as a model. Its per capita income, on a purchasing power basis, has more than tripled since 1990. It was the only European Union economy to grow amid the global recession of 2009. It was one of only a few in Eastern Europe to avoid a foreign borrowing binge.
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Egypt isn’t Poland, of course. “Much of Eastern Europe lacked any basic mechanisms to deal with contract rights and private ownership,” says Kenneth Froot, a Harvard Business School economist who studied that region’s transition. In contrast, he says, “Egypt is not starting at ground level, but a ways above that.” And Egypt, with 85 million people packed along the Nile, has seen its population nearly double since the recently ousted president, Hosni Mubarak, took power 30 years ago; Poland’s population hasn’t grown. On the other hand, the politics of Poland were more favorable to modern capitalism. In Poland, the U.S. was on the right side of history. In Egypt, it was not. In Poland, communism was bankrupt and free-market capitalism seemed to many of the country’s 38 million people to be their only shot at prosperity. In Egypt, free markets stink of crony capitalism in which the army and Mr. Mubarak’s buddies got the goodies. Yet, as Poland was 20 years ago, Egypt is at a once-ingeneration moment. It’s easy to sketch the scenario in which Egypt blows it. The army could maintain control behind a façade of democracy and protect elites who benefited from the growth produced by significant economic reforms that Mr. Mubarak blessed.
Possible paths for Egypt
$20,000
Gross domestic product per capita, PPP basis
15,000 POLAND 10,000 EGYPT
5,000 PAKISTAN
1986
'90
2000
'10
0
Notes: Purchasing power parity basis adjusts for differences in wages and prices among countries; figures for 2009 and 2010 are estimates; figures for 2011 are forecasts Source: International Monetary Fund, World Economic Outlook Database, Oct. 2010
Four things have to go right for Egypt to seize the moment. First, the young protesters of Tahrir Square have to keep the pressure on the military. A lot depends on which way they go. If they’ve been soured by privatization that engorged the cronies, will they demand the security and subsidies of the state over the risks, competition and dynamism that comes with a vibrant private sector? In short, do they want government jobs? Or a shot at being hired—and maybe fired—by an entrepreneurial company? Second, Egypt needs to trade. No developing-market country has propelled itself to prosperity in recent times without exporting. Trade means jobs and brings
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relentless pressure on economies to up their games, essential for improving living standards. Yet the countries of the Middle East, the ones without oil, are export wimps. Exports of goods amount to 15% of their total output today, not much more than 20 years ago despite the explosion of global trade. Developing economies overall have boosted exports to 25% of output from less than 15% in 1990, the International Monetary Fund says. Thailand alone (population 66 million) exports more than Afghanistan, Egypt, Jordan, Lebanon, Mauritania, Morocco, Pakistan, Syria and Tunisia (combined population 345 million) altogether. The countries of the Middle East barely trade among each other, let
Worries over Libya return oil to $100 BY DAN STRUMPF
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along with the economic powerhouses of Asia. Third, Egypt must respond to its demographic and ecological challenges, such as the torrent of youth seeking work and the threat of climate change. “If they could do one single thing, it would be to slow population growth,” says development economist Jeffrey Sachs of Columbia University. Fourth, Egypt needs help. “While the heavy lifting must be done by revamped domestic institutions,” says Mohamed ElErian, the Egyptian-born chief executive of bond-manager Pimco, “Egypt’s friends and allies can help.” While “IMF” is a dirty word in Egypt, the country will need nearterm help to stabilize its economy. Perhaps Saudi Arabia, forced to choose between watching Egypt succeed and watching it descend into chaos, will pitch in. If it is to trade more, Europe—and China—must open markets wider to Egyptian exports. And the U.S. needs to rethink the $1.5 billion in aid it sends to Egypt every year, more than 80% of which goes to arms in a country that longs for infrastructure and education. “Egypt,” the Moroccan poet Tahar Ben Jelloun, once said, “has suffered more ordeals than the other countries to get where it is.” True, but the same might be said about Poland.
NEW YORK—Oil futures held above $100 a barrel as fighting raged in Libya and the International Energy Agency said the conflict there had shuttered more oil production than originally forecast. Light, sweet crude for April delivery gained $2.10, or 2.1%, to $101.73 a barrel on the New York Mercantile Exchange in midday trading. Brent crude on the ICE futures exchange added 51 cents, or 0.4%, to $115.93 a barrel. Forces loyal to Libyan leader Moammar Gadhafi pushed into oilrich areas in the eastern part of the country Wednesday amid reports that the oil refinery city of Brega had fallen to pro-Gadhafi forces overnight and air strikes pounded the rebel-held city of Ajdabiya. As the fighting intensified in the North African country, the IEA said between 850,000 and one million barrels a day of Libyan crude had gone offline because of the upheaval. Last week, the energy watchdog estimated 500,000 to 750,000 barrels a day of crude production had been disrupted. But the IEA said that European refiners—the main recipients of Libyan oil—have “ample crude” in supply until “at least the end of March.” Other countries in the Organization of Petroleum Exporting Countries, including Saudi Arabia and Kuwait, have said they are able to step up production to make up for any shortfall in oil supplies. “This market is so nervous and
trading with such fear that the next headline could move it right back up,” said Andy Lebow, an oil analyst at MF Global in New York. The violence sweeping Libya has sent oil prices sharply higher in recent weeks. Traders also worry that the popular uprisings that have swept the Arab world will disrupt supplies in other oil producers. “With the recent escalation of protests in Oman, which has generally been a rather benign state, worries about contagion are gripping the market increasingly,” said analysts with Barclays Capital. Oil prices pared their gains slightly following the Department of Energy’s report on U.S. energy levels. Oil and fuel stockpiles declined across the board last week, the DOE said, but crude supplies at Cushing, Okla., the delivery point for the Nymex oil futures contract, rose to a record high. Crude supplies fell by 400,000 barrels last week, surprising analysts who expected an increase of one million barrels, according to a survey by Dow Jones Newswires. Crude supplies at Cushing, however, jumped 1.1 million barrels to 38.6 million barrels. Brimming oil tanks at Cushing have kept Nymex crude trading at a sharp discount to Brent in recent months. Gasoline stockpiles fell by 3.6 million barrels, while supplies of distillates, including heating oil and diesel, fell 800,000 barrels. Analysts expected gasoline stocks to rise by 100,000 barrels and distillate stocks to fall by one million barrels.
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Mad for truffles 10 WINE FROM ... AUSTRIA 10
THURSDAY, MARCH 3, 2011
LIFE & STYLE
asia.WSJ.com
Hiding wealth behind wear and tear Why conspicuous consumption and excess—not to mention ski trips—are fueling ‘luxury shame’ Last Christmas, an investment banker we know did an uncharacteristic thing. While the rest of us shared our Christmas plans, he merely said he was going “East.” When pressed, his children finally admitted they were all going to a private island near Bali, but were ashamed to admit it. And just last week, another European banker friend mentioned the family was going to the “mountains”; it turns out he meant Aspen. Wealth shame has been on the rise as the recession lingers like a cloud across Europe. Previously known as “stealth wealth,” it has caused luxury shoppers to hide their highend purchases in brown paper bags or ask for expensive items to be brought discreetly to their homes to be tried on (and bought). According to the American Affluence Research Center, vacations, new cars and dining out are the three biggest categories where the affluent have reduced their spending due to “luxury shame.” The home is no exception. If showing off expensive art and furniture was the fashionable thing to do when the going was good, the opposite now holds true. A bit of wear and tear (some peeling paint, wrinkled old linens and a distressed antique or two) is not only a good thing to have on display at home, it’s positively trendy. Instead of buying new furniture, many people are simply having tattered items refurbished. Hand & Lock, a firm that restores and hand-embroiders some of the finest cloths in the U.K., say they are busier than ever on the soft-furnishings side. “I think we value more what we have,” says marketing manager Ciara Banks. “We would rather fix and mend what we own, and therefore treasure it, than to throw things out,” she says. If galloping consumerism was what we did in the ’90s, conscientious, responsible and altruistic purchasing is what we do now. The best example of this is Merci, the cult store that opened in Paris in 2009. The 1,500-square-meter former wallpaper factory is one of the finest examples of wealthshame décor, with its rough bits of peeling plaster, cement floors and exposed beams housing a café selling used books, a florist, and fashion, home, cycling, children, fragrance and haberdashery sections. What’s more, owners Marie-France and Bernard Cohen, the founders of the successful children’s label Bonpoint, are giving all of the store’s profits, after operating costs, to children’s charities in Madagascar and India. This antiluxury look (which, of course, never comes cheap) is also the principle behind the privately owned Rough Luxe hotel, restaurant and club chain, with outlets across Europe. The first hotel, at London’s King Cross, was designed by London-based architect Rabih Hage. The walls of the nine-room hotel were stripped back to reveal the original wallpaper and plaster, and some guests even share bathrooms. The owners define Rough Luxe on their website as “a new way of looking at luxury as a moment in time and not only part of an object of consumption.” In the Barcelona apartment of Swiss architect Gus Wüstemann, meanwhile, the rough is positively celebrated—whole expanses of exposed brick and peeling plaster are lit up. “To me the greatest luxury was to leave things unfinished,” said Mr. Wüste-
Clockwise from top, Bruno Helbling Zurich; Scrapwoodwallpaper.com; Rough Luxe
BY HELEN KIRWAN-TAYLOR
Clockwise from top, ‘Crusch Alba’ loft by Gus Wüstemann; Piet Hein Eek’s ‘Scrapwood’ wallpaper; a small en-suite room in Rough Luxe’s London hotel. mann, who also designed the space. Furniture is minimal and casual. In fact, it is the opposite of the tortured, modern styling of the past two decades, with its orchids and white candles placed just so. Paintings are unframed and propped, while reading lights rest on bare floors. Though rigorously thought through and executed, wealth shame is about purposely downsizing design so as to appear almost random. Getting the wealth-shame aesthetic doesn’t necessarily mean you stop spending: it just looks that way so as not to make others feels bad. Florist Victoria Brotherson of Scarlet and Violet sends beautiful displays of hand-picked flowers in rusted jugs
and pots. “When I first started, the ‘in’ thing was huge displays of flowers in tall vases. It was all very bling,” she says. “Now people like it to look like they haven’t spent a small fortune. They want it to look less done, less formal.” Interior designers now routinely comb antique stores for purchases that look industrial and about to fall over. Sites such as Modern 50 in the U.S., devoted to “non-linear,” decorative and reclaimed 20th-century goods, sell old oil barrels and much soughtafter old display cabinets to add a rough feel to any existing luxe. For those whose walls are unfortunately pristine, there’s the new “Scrapwood” wall-
paper by Dutch designer Piet Hein Eek, the master of reclaimed wealth-shame furniture and among the first to create the look. The pattern is made to look like pieces of wood picked up from a lumber yard, but it costs £169 ($276) for a nine-meter roll. But this move toward recycled-reducedreused interiors is more than just a craving for peeling wallpaper. It’s a step away from excess. “I think people feel guilty about the clutter,” says former banker George Bevis, who recently launched SpeedSell (speedsell.co.uk), a business that does nothing but cart away excessive, self-indulgent purchases. “That’s now almost as bad as being conspicuous.”
10
THE WALL STREET JOURNAL.
Thursday, March 3, 2011
LIFE STYLE
An Austrian reawakening [ Wine ]
Mark Whitfield for The Wall Street Journal
BY WILL LYONS
The remains of a plate of gnocchi with black truffles at Locanda Locatelli.
What is it with truffles? These black and white fungi are like no other ingredient [ Food ] BY BRUCE PALLING I had a glimpse of the seductive power of the truffle in season when we went as a family to Le Cinq, the grand restaurant at the Hotel George V in Paris, six years ago. Philippe Legendre, formerly of the city’s legendary Taillevent, was in the kitchen and served my 10-year-old son his first taste of white-truffle-infused mashed potato. Invariably curious about each other’s dishes, we casually raised our spoons in the direction of his plate. Before we could move, his crocked arm surrounded the dish while he hurriedly finished any remaining dollops. He had never acted with such proprietorial zeal either before or since. On reflection, I can’t really blame him. Physically, truffles are a type of fungus that has a symbiotic relationship with the roots of certain trees, but there is no ingredient I know that is as difficult to describe except to say it provides unsurpassable pleasure. For me, it is the most exquisite and delicate hint of sweaty decay, unmatched by any other foodstuff. The season for white truffles in Northern Italy is similar to that of the grouse—from October to mid-December—and just as unpredictable when it comes to the size of the harvest and individual quality. Last year wasn’t an especially minimal crop, but with rising world-wide demand, prices showed no sign of weakening. Last November, I attended the annual charity truffle auction arranged by Bruno Giorgi, the leading white-truffle broker in London. Because of the charity element, prices rapidly became stratospheric, with Macau tycoon Stanley Ho paying $417,200 for two truffles with a combined weight of 1.3 kilograms. Outside of charity auctions, the price for
smaller ones is far lower, but still hovers around €4,000 ($5,524) per kilogram. White truffles have the aromatic edge on their relatively cheaper black cousins, and they don’t tend to be cooked so much as shaved onto sympathetic food surfaces, such as mashed potatoes, scrambled eggs or butter-laden pasta, like tagliolini. If one were comparing the two experiences in wine terms, the white truffle would be the equivalent of the nose of a Grand Cru Burgundy, while the black would be the initial taste in the mouth. Many chefs, however, prefer the less-rarefied black truffle, which is much more amenable to the cooking process than its white cousin. One of nature’s more generous gestures is to ensure that the black truffle season picks up strength just as the white season wanes, so black truffles are at their apogee from January until early March. To those skeptical of the quality of the black truffle, all I can say is that they can never have tried Michel Rostang’s toasted Périgord sandwich. Opinion is violently divided as to whether the black truffle from France’s Périgord is superior to its genetically similar black Italian rival from Umbria. In Britain, the culinary battle can be experienced at The Square (pro-Périgord) and Locanda Locatelli, which naturally favors the Umbrian variety. Philip Howard, two-star chef at The Square (www.squarerestaurant.com), concedes the white Alba truffles are in a league of their own, but “the Périgord black truffle is far superior to the Italian equivalent. It is fundamentally delicious when harnessed in the right way. There is more you can do with a black truffle. We just grate it into melted butter, season it and add a spoon of water, and it just creates the most amazing emulsion.” The Square’s most memorable offering is simple linguine infused with this emulsion and then covered in fresh shavings, giving it a
heady intensity. Giorgio Locatelli, head chef at Locanda Locatelli (www.locandalocatelli.com), ultimately prefers Alba truffles but does an extraordinary black-truffle dish of gnocchi and a sformato (shaped mold) of pasta with truffles both inside and grated on top. “There is some sort of earthy affinity between black truffles and potatoes. Also, my grandfather taught me that you never slice black truffles but always grate them to bring out their flavor,” he says. Mr. Locatelli gets all his supplies from an estate called San Pietro a Pettini (www.sanpietroapettine.com) in Umbria. Carlo Caporicci, the owner, is downbeat about the future, because of climate change and pollution. “The spores are very delicate and can lose intensity because of these factors,” he says. However, Mr. Caporicci agrees with some others that production this year is now very good after a slow start because of severe frosts. Interestingly, England has begun to harvest truffles again after several decades’ absence. One particular forest of 10 hectares, planted in the past 20 years, has an annual output of around 250 kilos of “Burgundy” truffles, a slightly less-intense version of the Périgord variety. The farmer uses the pseudonym “truffle hunter” (www.truffle-uk.co.uk), as he doesn’t want to reveal the location of his patch, somewhere in the Wiltshire/Somerset borders. He only charges between £150 and £180 a kilo ($245 to $300), and can’t meet demand, especially now, later in the season, when the flavors are more intense. “Ours is the only viable British find in the past 60 years or so, but we never know from one year to the next if they will be around the following year, ” he says. This rarity and the unpredictable nature of the crop only enhances the truffle’s mystique, entrancing diners prepared to pay that little bit extra for an ethereal encounter with nature.
Austrian wine is a little abstruse. This isn’t to say the quality is deficient. Far from it. It’s just I suspect that for those of you who don’t curl up in front of the fireplace with “The World Atlas of Wine,” it’s a wine-producing country one approaches in trepidation. Found at the back of the wine list or at the far corner of the wine merchants, sandwiched between Germany and Eastern Europe, the country’s vintners are relatively unknown, which seems a little unfair as it’s hard to think of a comparable wine region that has shown such a dramatic reinvention in recent years. Part of the problem is that Austria has a large and thirsty domestic market that consumes a vast swathe of the country’s production. Figures from the trade group Austrian Wine show that 70% of all production is consumed locally, while 30% is exported. Last year, exports reached a value of €122 million ($168 million). Then, of course, there is the diethylene glycol scandal of 1985, when a handful of producers were caught adding the chemical, which is related to antifreeze, to make their wine sweeter. But the episode occurred a long time ago now and the present generation of Austrian winemakers have moved beyond the scandal and are producing wines of exceptional character. The country’s most famous exponent is the grape variety Grüner Veltliner, which in areas such as Kamptal, Kremstal and Wachau produces a green-tinged white wine that is lean, tart and dry, with aromas that can range from white pepper to perfume to herbaceous spiciness. Above all, it is a wine that refreshes much in the style of, say, a Riesling from Alsace. Along the Danube River, Riesling is cultivated on rocky soil that gives it a mineral character, with notes of white peach, apricot and lemon, and, with bottle age, petrol-like scents. Other white grape varieties range from Pinot Blanc, Sauvignon Blanc and Neuburger, which again, with time, can develop an
attractive nuttiness. But Austria is also carving out a niche for its red wines, based around Blaufränkisch and grape varieties such as Blauer Zweigelt. Blaufränkisch is an interesting varietal; premedieval, it was widely planted throughout the time of the Hapsburg monarchy and is still one of Austria’s most prevalent grapes. Today, it thrives in the vineyards that stretch east on the north bank of the Danube as the river flows out of Vienna toward Slovakia, an area known as Carnuntum. At its best, Blaufränkisch takes on a spicy, cherry-like aroma, with freshness and purity. When drunk young, it can taste a little hard. But with bottle age, it can take on a farm-yard, yeasty character. Blauer Zweigelt is Austria’s most widespread grape variety, with deep, sour-cherry, earthy and berry aromas. These wines work best when they haven’t been exposed to too much oak, providing a welcome antidote to the large quantities of heavier wines on the market. Like most wines, Austria’s reflect their sense of place and are best understood when tasted alongside the local food. A chilled glass of Grüner Veltliner marries wonderfully with schnitzel, while the earthy, cherry character of Blaufränkisch is a perfect foil for veal or stewed meats. For the more adventurous, I would recommend trying a bottle of one of the white-grape varieties with lighter seafood-based dishes. Weingut Bründlmayer, Weingut PichlerKrutzler, F.X. Pichler, Uwe Schiefer, Emmerich Knoll and Muhr-van der Niepoort are among the wineries that impressed. Willi Bründlmayer’s wines are worth seeking out, with fresh, elegant, clean wines that don’t overwhelm. One wine that won’t fail to impress when lined up against its more expensive counterparts is sweet wine from the Kracher winery. The wines are grown in the east of the country in the Burgenland region, close to Lake Neusiedl at Illmitz. They shot to fame in 1994 when the late Alois Kracher’s Welschriesling TBA beat France’s celebrated Château d’Yquem in a blind tasting. Since then, the wines have enjoyed something of a following and it’s not hard to see why they are simply some of the best sweet wines out there.
Drinking Now Riesling Steinmassel Weingut Bründlmayer, Langenlois, Austria Vintage: 2006 Alcohol: 3% Price: About $31 It’s hard not to be impressed by Willi Bründlmayer’s range of Grüner Veltliners and Rieslings. He now has 75 hectares on the terraces above Langenlois, mainly planted with his white varieties, which have a purity and elegance that make them ideal companions with the sort of food served at Michelin-rated restaurants. The Riesling Steinmassel is produced from vines that sit on a bedrock of granite. The minerality comes through spectacularly on the palate, after a nose that is slightly perfumed with notes of citrus, peach and elderflower.
Thursday, March 3, 2011
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THE WALL STREET JOURNAL.
OPINION: REVIEW OUTLOOK
Housing Market Masochism
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he U.S. housing market is still wheezing: The Case Shiller homeprice index has fallen for five consecutive months and 22.5% of all residential properties with a mortgage are in negative equity, according to CoreLogic’s latest data. Bank foreclosures are expected to accelerate, and prices in many markets still haven’t touched bottom. The Obama Administration’s solution? Prolong the pain. The latest attempt at housing market masochism was reported in a page one story in this newspaper last week. Details are sketchy, but the idea seems to be to force the nation’s biggest mortgage servicers to cough up $20 billion for principal write downs on “underwater” mortgages, in which borrowers owe more than their homes are worth. The money would be extorted as part of a settlement for the mortgage foreclosure kerfuffle of last year. Bank of America, Wells Fargo and J.P. Morgan Chase would likely be among the hardest hit. This smells like a re-run of the failed Home Affordable Modification Program, or Hamp. Launched in 2009, Hamp was supposed to keep homeowners in their homes. Instead, the program swamped mortgage servicers as debtors rushed for the goodies, gummed up the foreclosure
process and left some borrowers worse orders to start the bureau up anyway. off. Special Inspector General for the A $20 billion raid on mortgage serTroubled Asset Relief Program, Neil vicers fits with her ideological agenda Barofsky, said in Januthat banks are the vilary that Hamp falls lains of the credit crisis “dramatically short of while distributing cash any meaningful stan- The latest bad idea to homeowners who dard of success.” to raid banks and delay will presumably be Even if Hamp had grateful on Election Day been well-run, there’s a home-price recovery. 2012. A big bank payout little evidence that forcmay also let the state ing principal write attorneys general downs is the way to fix the housing mar- who’ve fanned the foreclosure story ket. Some borrowers took on more debt claim a political victory. than they could afford or have lost their But all of this would also do an end jobs, and so the relief would be short- run around the established regulatory lived. The Obama Administration and process for investigating bank behavior. even the Democratic Congress resisted The Office of the Comptroller of the Curwrite downs as part of Hamp because rency, the Office of Thrift Supervision they are very expensive and reward reck- and the Federal Reserve wrapped up an less borrowers at the expense of those investigation of foreclosure procedures in who are paying their bills. December. Regulators are now figuring So who’s pushing this inside the Ad- out which banks need to fix which proministration? Our sources point to Eliz- cesses, sorting out which customers abeth Warren, the Harvard professor should be compensated, and determining and driving force behind the new Con- the proper penalties—in the order of milsumer Financial Protection Bureau. Af- lions, not billions. ter it became clear she couldn’t win conWe wonder what Mr. Geithner thinks firmation to run the new bureau, of this new bank raid. Amid the forecloPresident Obama gave her an unprece- sure uproar last October, he sounded far dented position reporting to him and more reasonable. He warned on PBS’s Treasury Secretary Tim Geithner with “Charlie Rose” against causing “injustice
to people who can afford to stay in their home” but added that “we also want to make sure that we’re not going to make the problem worse.” Mr. Geithner has to know that taking $20 billion out of the banks will not make them more eager to lend. The larger context here is that Americans are figuring out that the multiple government programs to prop up the housing market have only postponed the day of recovery. They have given homeowners the false hope that they can stay in homes they can’t afford, delayed foreclosures that are probably inevitable, and prevented prices from finding a bottom. Better news for the housing market is coming from Congress, where House Republicans are moving to dump Hamp. Mr. Geithner played the recession scare card on Tuesday by telling a House committee that closing Hamp would “cause a huge amount of damage” to the economy. But Mr. Geithner has had two years to make a difference with Hamp, and he’s done more harm than good. We’d suggest Mr. Geithner save his political energy for debating Ms. Warren and others at the White House who want to bleed the banks one more time while further postponing a housing rebound.
Gadhafi Makes the U.N. Grade
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he U.N. Human Rights Council suspended Libya’s membership on Monday, but this is the same outfit that had very different things to say about Moammar Gadhafi’s moral progress only weeks ago. In January, the Council released its quadrennial report on human rights in Libya as part of its “universal periodic review.” The UPR—advertised as one of the improvements of the Council when it replaced the U.N.’s old Human Rights Commission in 2006—is supposed to provide “objective and reliable information” on human rights in U.N. member states. So how did Libya fare? The report notes that “a number of delegations
commended [Libya] for the preparation and presentation of its national report, noting the broad consultation process with stake holders in the preparation phase. Several delegations also noted with appreciation the country’s commitment to upholding human rights on the ground.” You’ll be pleased to learn that the Gadhafi government offers a generous assessment of its own rights record. Cuba commended Gadhafi for “the progress it made in . . . primary education,” and North Korea lauded Libya’s “achievements in the protection of human rights.” These were not surprise judgments. But what to make of Australia, which
“welcomed [Libya’s] progress in human ports of the torture of prisoners” along rights”; or Canada, which praised “the with other rights violations. Similarly recent legislation that granted women tepid statements of concern were offered married to foreigners the right to pass by the Australians, Canadians and Poles. on their Libyan nationToo bad they couldn’t ality to their children;” muster the nerve of or Poland, which high- The Human Rights Switzerland, which lighted Libya’s tartly noted that Libyan Council opines. “achievements in re“courts continued to cent years, including its pronounce death senefforts to combat corruption and traf- tences and inflict corporal punishment, ficking.” including whipping and amputation.” The U.S., which joined the Council as The Council will meet next month to a sign of the Obama Administration’s consider the UPR, which is embarrassing good global citizenship, “supported enough given its timing and obsequious [Libya’s] increased engagement with the content. But the real embarrassment is international community.” At least the that a human rights body with members U.S. also “expressed concern about re- like Libya and Cuba is taken seriously.
Hanoi and the Doctor
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he arrest of Nguyen Dan Que in claimed to have found tens of thousands Vietnam over the weekend has of “anti-government” files on his combeen overshadowed by events in puter. He was released on bail, but his leLibya, but it deserves close attention. Dr. gal fate is uncertain. Que, a 69-year-old physician and occaDr. Que is no stranger to democracy sional contributor to activism, or the inside these pages, was of a jail. He has been rounded up for calling Vietnam’s leaders join imprisoned for 20 out on his countrymen to of the past 33 years for the ranks of trembling follow the example of his consistent calls for Tunisians, Egyptians authoritarians. political reform. He also and Libyans in taking to has eloquently exthe streets to air their plained how Vietnam’s grievances. The fact that Hanoi seems so freedom, or lack thereof, has a bearing worried at the mere suggestion that peo- on America’s strategic interests in Asia ple might protest is telling. and especially vis-à-vis China’s rise. In Dr. Que’s immediate offense appears his most recent column for us last year, to have been a call for Vietnamese youth he noted that “only a free and demoto use mobile phones and the Internet to cratic Vietnam can be a reliable partner organize mass protests. For this he was for peace in [the South China Sea].” arrested on Saturday. Authorities then Conditions in Vietnam may be ripen-
ing for Middle East-style protests. Though growth has been strong at roughly 7% for the past several years, inflation is rising and the Vietnamese dong almost alone among Asian currencies is plummeting in value. Yesterday Hanoi was forced to raise electricity rates by 15%. Corruption is a chronic complaint. Hanoi, like Beijing, also maintains a comprehensive repression apparatus that includes Internet controls and a years-long crackdown that has rounded up many prominent democracy advocates. Dr. Que’s story shows that the Vietnamese Communist Party cannot quell every voice for freedom. Not everyone believes the “Asian values” trope that Asians prefer authoritarian rule. Self-confident regimes are not afraid of opposition from elderly endocrinologists like Dr. Que. The Party clearly fears that one day
the people of Vietnam will heed Dr. Que’s call to demand the kind of government they deserve. We hope Hanoi is right.
Pepper . . . and Salt
THE WALL STREET JOURNAL
“This isn’t going to work out, I’m looking for someone with more apps.”
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THE WALL STREET JOURNAL.
Thursday, March 3, 2011
OPINION
Where Huawei Went Wrong in America [ Business Asia ] BY ADAM W. GOLDBERG AND JOSHUA P. GALPER A controversy over Chinese investment in the U.S. is again in the news. This time the subject is Huawei, a telecommunications equipment manufacturer whose attempt to buy a small American company was scuttled by Washington on national security grounds. The episode marks Huawei’s second failed attempt to buy an American company. Executives surely are starting to wonder how they could improve their chances if they make a third try. Other Chinese companies also should be paying close attention. It boils down to a question of strategy. Firms simply have to do a much better job of understanding America’s political climate, its investment-review system, and how to navigate both successfully. This is not an unusual problem for Western companies—look at the U.S. technology companies’ struggles to cope during the 1990s when they ran up against politicians and regulators—but China does face some unique challenges. China’s biggest problem is perception. Every week, U.S. politicians and business leaders decry Chinese infringement of U.S. intellectual property; computer hack-
ing; competition over new technologies; the trade imbalance caused by an undervalued currency; and other negative issues. This drumbeat predisposes policy makers to view Chinese investments, and particularly acquisitions of high technology, with suspicion. One sign is the steep escalation in 45-day reviews undertaken by the Committee on Foreign Investment in the United States (CFIUS), a government panel that reviews foreign investments for national security risks. According to Deal Magazine, no Chinese transactions were reviewed in 2006, three were in 2007, and six were in 2008. While the economic slowdown starting in 2009 surely contributed to a decline in overall transactions reviewed, it is not hard to speculate that the rise will continue as the economy recovers. Huawei’s failed attempt to buy 3Leaf, a California-based cloudcomputing company, is among the most striking examples of what this will mean in practice. CFIUS’s review came after the deal had closed, in response to the Pentagon raising a red flag. After CFIUS began its review, Congressmen piled on to oppose the deal. Huawei found itself playing defense in a hostile political environment. The Huawei matter reveals the problem for any company under CFIUS review—politics is inher-
ently part of the process. And the suspicious lens through which Chinese investment in America is viewed extends well beyond CFIUS into other political, business and legal venues—all of which can be as damaging as CFIUS review to a company’s prospects. As Chinese businesses seek to invest billions of dollars in the U.S., the in-
And how other Chinese companies can avoid similar investment controversies in the future. creased investment is triggering more and more alarm bells beyond the federal government—among local officials, businesses and communities. Chinese companies must understand that legal box-ticking is only part of their challenge. Improving the political climate arguably is even more important. Western businesses long ago realized this, and expend considerable resources to educate policy makers about business concerns and to inform the public debate on business issues. It’s called lobbying and public affairs, and Chinese companies could benefit from doing these themselves. First, they should proactively
develop relationships with U.S. policy makers at the federal and state levels to define themselves before their opponents define them. They must educate policy makers about their companies and the benefits of their potential investments in the United States. According to the Washingtonbased Sunlight Foundation, Chinese companies spent a mere $425,000 on federal lobbyists in 2010. The U.S. Chamber of Commerce alone spent over $81 million. Huawei’s open letter inviting Washington to “investigate” the company’s ties to the Chinese military is a start, but it’s too little too late to save the 3Leaf deal. Second, Chinese companies need to be more proactive in their approach to the regulatory process, partly to avoid snafus and partly to assure Americans that they are serious about complying with U.S. laws. Opponents will definitely exploit any available regulatory tools to block investments, so Chinese companies should consider that there can be advantages to being the first on the government’s doorstep to discuss a deal. In this respect, Huawei’s most serious 3Leaf mistake may have been to not seek a CFIUS review earlier in the process. Finally, Chinese companies must engage media and the American public more aggressively. One
rarely sees Chinese companies or their surrogates in the U.S. media. While problems like language differences might pose logistical challenges, Chinese executives can’t afford not to find some way to engage the public on television, in print or on the conference speaking circuit. Companies almost never win a political battle without doing so. As part of this, companies must be prepared to be transparent and give accurate information to the media and U.S. officials. Otherwise, corporate credibility will be undermined before the review process ever begins. No amount of public education about the companies, their intentions, or their transactions will help in situations in which U.S. national security concerns are legitimately at risk, nor should it. However, the environment for Chinese companies in America is only going to worsen as the 2012 presidential election nears and politicians look for targets to criticize. These companies must rise to their own defense when national security is not at issue, or face two more years of failed transactions.
Messrs. Goldberg and Galper are partners at Orrick, Herrington & Sutcliffe LLP, specializing in crisis management and public strategies.
BY MARK HELPRIN Last week, pirates attacked and executed four Americans in the Indian Ocean. We Americans and the Europeans have endured literally thousands of attacks by the Somali pirates without taking the initiative against their vulnerable boats and bases even once. Such paralysis is but a symptom of a sickness that started some time ago. The 1968 film, “2001: A Space Odyssey,” suggested that in another 30 years commercial flights to the moon, extraterrestrial mining, and interplanetary voyages would be routine. It didn’t work out that way. In his 1962 speech at Rice University, perhaps the high-water mark of both the American Century and recorded presidential eloquence, President Kennedy framed the challenge not only of going to the moon but of sustaining American exceptionalism and this country’s leading position in the world. He
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was assassinated a little more than a year later, and in subsequent decades American confidence went south. Not only have we lost our enthusiasm for the exploration of space, we have retreated on the seas. Up to 30 ships, the largest ever constructed, each capable of carrying 18,000 containers, will soon come off the ways in South Korea. Not only will we neither build, own, nor man them, they won’t even call at our ports, which are not large enough to receive them. We are no longer exactly the gem of the ocean. Next in line for gratuitous abdication is our naval position. Separated by the oceans from sources of raw materials in the Middle East, Africa, Australia and South America, and from markets and manufacture in Europe, East Asia and India, we are in effect an island nation. Because 95% and 90% respectively of U.S. and world foreign trade moves by sea, maritime interdiction is the quickest route to both the strangulation of any given nation and chaos in the international system. First Britain and then the U.S. have been the guarantors of the open oceans. The nature of this task demands a large blue-water fleet that simply cannot be abridged. With the loss of a large number of important bases world-wide, if and when the U.S. projects military power it must do so most of the time from its own territory or the sea. Immune to political crosscurrents, economically able to cover multiple areas, hypoallergenic to restive populations, and safe from insurgencies, the fleets
Associated Press
The Decline of U.S. Naval Power
are instruments of undeniable utility in support of allies and response to aggression. Forty percent of the world’s population lives within range of modern naval gunfire, and more than two-thirds within easy reach of carrier aircraft. Nothing is better or safer than naval power and presence to preserve the often fragile reticence among nations, to protect American interests and those of our allies, and to prevent the wars attendant to imbalances of power and unrestrained adventurism. And yet the fleet has been made to wither even in time of war. We have the smallest navy in almost a century, declining in the past 50 years to 286 from 1,000 principal combatants. Apologists may cite typical postwar diminutions, but the ongoing 17% reduction from 1998 to the present applies to a navy that unlike its wartime predecessors was not previously built up. These are reductions upon reductions. Nor can there be comfort in the fact that
modern ships are more capable, for so are the ships of potential opponents. And even if the capacity of a whole navy could be packed into a small number of super ships, they could be in only a limited number of places at a time, and the loss of just a few of them would be catastrophic. The overall effect of recent erosions is illustrated by the fact that 60 ships were commonly underway in America’s seaward approaches in 1998, but today—despite opportunities for the infiltration of terrorists, the potential of weapons of mass destruction, and the ability of rogue nations to sea-launch intermediate and short-range ballistic missiles—there are only 20. As China’s navy rises and ours declines, not that far in the future the trajectories will cross. Rather than face this, we seduce ourselves with redefinitions such as the vogue concept that we can block with relative ease the straits through which the strategic mate-
rials upon which China depends must transit. But in one blink this would move us from the canonical British/American control of the sea to the insurgent model of lesser navies such as Germany’s in World Wars I and II and the Soviet Union’s in the Cold War. If we cast ourselves as insurgents, China will be driven even faster to construct a navy that can dominate the oceans, a complete reversal of fortune. The United Sates Navy need not follow the Royal Navy into near oblivion. We have five times the population and six times the GDP of the U.K., and unlike Britain we were not exhausted by the great wars and their debt, and we neither depended upon an empire for our sway nor did we lose one. Despite its necessity, deficit reduction is not the only or even the most important thing. Abdicating our more than half-century stabilizing role on the oceans, neglecting the military balance, and relinquishing a position we are fully capable of holding will bring tectonic realignments among nations—and ultimately more expense, bloodletting, and heartbreak than the most furious deficit hawk is capable of imagining. A technological nation with a GDP of $14 trillion can afford to build a fleet worthy of its past and sufficient to its future. Pity it if it does not.
Mr. Helprin, a senior fellow at the Claremont Institute, is the author of, among other works, “Winter’s Tale” (Harcourt), “A Soldier of the Great War” (Harcourt) and, most recently, “Digital Barbarism” (HarperCollins).
Thursday, March 3, 2011
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THE WALL STREET JOURNAL.
OPINION
Russia Fears China, Not Japan BY MICHAEL AUSLIN Tokyo Three news items in recent weeks seem to herald a return of Russia to the Asia-Pacific region. The first was the visit of Russia’s defense minister to one of the four Kurile Islands for a “military inspection trip,” following on Russian President Dmitry Medvedev’s stop there last year. Second, Russia’s navy will spend more than $150 million to add dozens of submarines and surface ships over the next decade while shifting its focus to the Pacific Ocean. Third, Russia will deploy advanced S-400 surface-to-air missiles and antiship cruise missiles to protect the Kurile Islands. All these stories relate to the seven-decade dispute between Russia and Japan over control of the Kurile Islands, and therefore seem to indicate a worsening of the relationship. With a seemingly inexhaustible supply of petro-dollars filling Russian military coffers, Moscow is poised for the first time in two decades to make its presence felt in the northern Pacific Ocean. Yet it may well be that President Medvedev and Prime Minister Vladimir Putin are actually laying the groundwork for focusing on Russia’s real long-term adversary: China. For that reason, Tokyo and Moscow need to guard against a new crisis in their relations and should instead consider jointly how to deal with the Chinese security challenge they both face. While Russia and Japan have faced off over Siberian and Kurile territory since the mid-19th century, Sino-Russian conflict is much older, dating back to the late 1600s. The two share thousands of miles of border, over which they have skirmished as recently as 1969. While Japan is no stranger to competing for regional hege-
mony, it is Russia and China that believe themselves to be the real leaders of Eurasia. Moscow’s desire to begin reasserting its influence in areas closer to Russia’s core strategic interests has led to it dramatically increasing the number of air force flights near Japanese territory, for example. This leads to two questions: first, do the moves related above indicate a clear policy shift by Moscow toward focusing on the Asia-Pacific? Second, if so, why now and what is the ultimate goal of Messrs. Medvedev and Putin? The answer to the first question may be simply that Moscow has recognized that its future prosperity rests with the nations of the Asia-Pacific, as have other leading nations around the globe. Russia’s role in the global trading system centered on Northeast Asia is largely as a supplier of raw materials and energy supplies. Yet there is a political element to expanding Russia’s strength in its Far East, as well, in part to make its voice louder in regional councils, and in part to maintain leverage in negotiating export agreements with Beijing, Tokyo and others. Moscow refuses to be seen as supine as Mongolia or as isolated as Australia in dealing with China, and its attempts to bolster its military power are a direct way of making that point. More significantly, Messrs. Putin and Medvedev seem to be positioning Russia for the long term, and their ultimate goal may well be to deal with Chinese growth in the region. Both states know that Russia’s sparsely populated Siberian Far East will become increasingly attractive to a militarily powerful China in search of vast amounts of raw materials and resources. From timber to oil and gas, and even clean water, Siberia offers much that China will need in order
1,000 miles R U S S I A
1,000 km P a c i fi c O ce a n
MON GOLIA
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SOUTHERN KURILE ISLANDS Controlled by Russia, claimed by Japan, which calls them the Northern Territory
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to maintain not merely its economic growth, but some of the basic necessities of life in an industrialized nation. To give but one example, China’s net imports of petroleum will more than quadruple by 2035, according to some estimates, to 14 million barrels per day; meanwhile, 65% of Russia’s prospective petroleum reserves are located just north of China, in Siberia, along with 85% of the country’s natural gas reserves. Yet there are only about 25 million Russians in all of Siberia, an area of more than 9.6 million square kilometers stretching from the Urals to the Kamchatka Peninsula, giving a population density of less than three persons per square kilometer. Further east, the Far Eastern Federal District has a population of just seven million persons, or one person per square kilometer, while 100 million Chinese live in the provinces just across the border. Officially, only 50,000 Chinese are resident in the Russian Far East, but Chinese merchants already control much of the trade there. From a geopolitical perspective, it is all but certain that Chinese influence in Siberia will grow as Russia’s population shrinks, and
future Chinese governments may well come to have a proprietary interest in the region. This is the stimulus for the new Russian buildup, focused on increasing naval assets, asserting its claims over small territories, and deepening its defensive capabilities. Japan, which in no way threatens Russian interests, is an easy foil to use in this not-so-subtle game of shadow boxing between Russia and China. Recognizing this increasing Chinese interest, however, would give Moscow and Tokyo a chance to discuss the future geopolitical environment in the Asia-Pacific. Japan, too, is placing its hopes on Russian oil and natural gas sources while at the same time eyeing China’s growing interest in Arctic shipping routes through the Sea of Japan. For China’s trade with Europe, a northern route could avoid the politically fraught South China Sea. Yet as China’s shipping grows in the north, whether from Russia or in the future from Europe, Japan will probably worry that the PLA Navy is likely to follow. This parallels Russia’s concern to protect its Pacific trade routes from a greater Chinese naval presence.
More broadly, Japan will look with great concern on any Chinese increase in influence or direct control in the Russian Far East. Such a change in the status quo could come by plan or by accident, such as an attack on Chinese citizens in the region. That type of expansion would present Tokyo with significant challenges in protecting its northern areas as well as its southwestern islands, which have now become Japan’s strategic focus in the new National Defense Program Guidelines released in December. Opening a dialogue with Russia on the future of its Pacific maritime regions could lead to expanded economic relations, thereby lessening Russian concern over Chinese domination of its Siberian trade and ensuring that Japan has an interest in maintaining the status quo in the region. Here, the United States can play a role, not only by expanding its security deliberations with Tokyo, but also potentially by beginning broad discussions with Moscow over stability in the Russian Far East. At this stage, there is no reason why Beijing could not join such a nascent dialogue. Some, including the Chinese themselves, may assume that Beijing would never do anything so destabilizing as expanding into Siberia. Yet faced with a growing country needing to have access to critical raw materials that lie in a largely depopulated region, Russia is already acting. Both the U.S. and Japan should similarly think through the potential for disruption and instability in Northeast Asia lest they be caught unprepared, as so many nations have in the past.
Mr. Auslin is director of Japan studies at the American Enterprise Institute and a columnist for WSJ.com.
Branding Your Revolution BY MATTHEW KAMINSKI Every revolution worth the name needs a name. Once upon a century, geography sufficed—American, French, Russian, Iranian. Modern marketing seems to demand something catchier. Blame Vaclav Havel for this todo item on the lists of his revolutionary proteges across the Arab world, and in Iran and China. The Czech with a gift for words led a turnover whose handle captured the historical moment: the “velvety” smooth collapse of the Soviet empire in 1989. Sure, Filipinos fondly recall “People Power ’86” and the Portuguese in 1974 overthrew an authoritarian regime with the carnation (the first broadly recognized use of a flower to brand a revolution). But post-1989 all are measured against the evocative powers of the Velvet Revolution. This winter of Arab discontent has been original in many ways, yet not with nomenclature. The first uprising in Tunisia sometimes goes by “jasmine.” Unfortunately, it’s also the national flower of several other countries. The
Pakistanis, and in recent weeks the Chinese, have laid their own claims to the Jasmine Revolution. Some people call Egypt’s still nameless overthrow of Hosni Mubarak the Twitter or Facebook kind—as was Iran’s 2009 wave of demonstrations, also mobilized over the Web. In the end, Iran’s opposition movement settled on green, a brilliant choice. Using the official color of Islam cleverly undermines the theocrats’ claim to heavenly legitimacy for their tyranny. The color craze started in Georgia. The opposition carried roses to protest fraudulent elections in 2003. The bright red replaced a duller Bolshevik red as the revolutionary hue. Two years later in Kyrgyzstan, various antiregime groups flirted with yellow, pink and green. Edil Baisalov, who headed one of them, emails me that he “tried to peddle Silk Revolution as in Velvet :).” But they settled on Tulip Revolution. “Tulips are thought to have originated in Kyrgyzstan before they found their way to Netherlands via Turkey,” he says, assuring me that no PR firm helped with the
choice. Kyrgyzstan had a repeat uprising last year, but refers to it only by its date: April 7. Confusion isn’t uncommon. Six years ago in Ukraine, “before it was the Orange Revolution,” NPR’s Steve Inskeep recently informed his audience, “it was called the Chestnut Revolution—didn’t sound so inspiring.”
How the Journal christened an uprising, for a little while. Our public broadcaster lands a low blow. The first ever use of that term in any language came in a Journal editorial from February 2004 titled, “A Chestnut Revolution.” As we wrote, Ukraine “offers the best chance to build on the Georgian success in popular democracy.” I’d lived through several springs of Kiev’s notable chestnut trees in bloom and the phrase sounded apt. A month later, Deputy Secretary of State Richard Armitage was asked at a press conference in Kiev about a “plan . . . to start
spreading revolutionary ideas. Is all this a part of the Chestnut Revolution?” Mr. Armitage replied: “I have never heard of the Chestnut Revolution. Since I am so frequently and often criticized in The Wall Street Journal, I don’t normally read that any more, either.” This chestnut wasn’t the dud that NPR would have you think. Throughout 2004, before thousands took to the streets in November and December to protest a stolen election, the phrase inspired a democratic youth organization, a website and a song. Activists in Kazakhstan hatched a plan to plant chestnut trees in their country, seeds for their own uprising, stillborn to this day. Ahead of autumn’s presidential poll, Moscow papers and the proKremlin Ukrainian regime obsessed over the chestnut conspiracy. Viktor Yushchenko, the opposition leader, “threatens Ukraine with ‘Chestnut Revolution,’” wrote the Rossiyskaya Gazeta in October. “Yushchenko’s ‘Chestnut Revolution’ is as realistic as for Kiev’s chestnut trees to blossom in November.”
The uprising did blossom—alas, under a different name. “If there is to be a revolution, it won’t be the Chestnut, but Orange,” declared the Ukrainian Pravda paper in early November. Orange was the color of Yushchenko’s party, its happy brightness a sharp contrast to bleak Ukrainian reality. A natural. Still, for a while orange and chestnut were used interchangeably, not least by addled journalists. The Fort-Worth Star-Telegraph managed to conflate them, saying that Ukraine’s uprising was “named for the chestnut trees that line the boulevards of Kiev, the Ukrainian capital, and produce a profusion of orange in the autumn.” Not quite. As dubiously, the Calgary Herald wrote: “The oval chestnut leaf is almost as much a symbol . . . for them as the maple leaf is for Canadians.” The Chestnut Revolution leaves behind one important legacy: Revolutionaries make their own history, and they decide what it ought to be called.
Mr. Kaminski is a member of the Journal’s editorial board.
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IN DEPTH
Reuters
Nintendo President Satoru Iwata displaying the 3DS Game Player. He worked with game creator Shigeru Miyamoto to develop it.
Odd-couple Nintendo chiefs place big bet on its new 3DS Device culminates dream of company’s president and game creator, pursued through flops and abandoned projects BY DAISUKE WAKABAYASHI AND JURO OSAWA Kyoto, Japan
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Co.’s place atop the world of videogames, and perhaps the course of the industry itself, is riding on a geek bromance. On Saturday, Nintendo launched its first all-new machine in nearly five years, a hand-held player with a three-dimensional display that doesn’t need the clunky glasses required for most 3-D viewing. The landscape of the $50 billion videogame industry and the prospects for one of Japan’s few remaining world-beating companies may rest on the fate of the new gadget, called the 3DS. It’s the latest production from an odd couple that has run Nintendo together for the past nine years: Satoru Iwata, the company’s brainy technologist president, and Shigeru Miyamoto, its carefree and sometimes eccentric top game creator. They have developed and sold many successful games in recent years, such as Brain Age and New Super Mario Bros. Wii, and two hit game players, the hand-held DS and the home console Wii. The new device culminates a generation-long dream of the two men to bring a 3-D machine to market, pursued through a series of embarrassing flops and abandoned projects. They waited years for liquid-crystal-display quality to improve and screen prices to come down so they could finally offer 3-D without glasses. They repeatedly sent engineers back to add features. Mr. Iwata reINTENDO
jected more than a dozen 3DS prototypes. Says Mr. Iwata: “Our bar was set extra high, because we had tried 3-D so many times in the past and it wasn’t successful.” High enough? That is the question as Nintendo brings out a product it needs to replenish its lucrative formula of new-device sales followed by sales of games to play on the devices. Nintendo remains the leader of the videogame world, thanks largely to the success of its DS and the Wii game players. Each device by now has a large “installed base” of customers who continue to buy new games for it. But the first of the devices came out in 2004 and the other in 2006. Sales of both peaked two years ago, and sales of games for them are on the decline as well. The company needs the kind of boost that its new three-dimensional game player could provide, restarting the cycle of player sales followed by sales of high-margin games. One hurdle could be the price. At $250 in the U.S., after the planned late-March launch of the 3DS in America, it will cost 60% more than the initial price of the last new portable game machine from the company. A challenge that is harder to assess, but possibly more serious, comes from a technological change washing over the videogame industry. Smartphones, packing powerful processors and sharp displays, now can play sophisticated videogames, for less money than dedicated game devices. It was Nintendo that was providing much
Game on The Nintendo 3DS arrives as sales of existing handheld players are falling. 30 million units Nintendo DS models
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10 Sony PlayStation Portable 0 FY 2005
’07
’09
Note: Fiscal year ends March 31. Source: the companies
of the technological change over the past three decades, under its former longtime president, Hiroshi Yamauchi, scion of Nintendo’s founding family. Running a company that began in 1889 as a maker of playing cards, he brought out something called the Family Computer home console in 1983, released later in the U.S. as the Nintendo Entertainment System. He has been a mentor to both of Nintendo’s current leaders, Mr. Iwata and Mr. Miyamoto. Mr. Iwata is a technology whiz who programmed his first game on a calculator when he was a teenager. Now 51 years old, the Nintendo president is an executive who appears in public in a dark business suit and carefully measures his words.
Mr. Miyamoto, 58, displays more of a sense of fun, such as when he emerged on a trade-show stage wielding a sword and shield like Link, the main character in his Legend of Zelda games. He has made a career of translating his own experiences to games. His purchase of a dog gave birth to the pet-rearing game Nintendogs, while his health kick spawned the Wii Fit exercise game. (Nintendo keeps Mr. Miyamoto’s latest hobbies a secret.) When Mr. Yamauchi made Mr. Iwata president in 2002, the choice struck some as curious. Mr. Iwata had joined only two years earlier and was then just 42, very young for such a high post in Japan. But while younger still—as the baby-faced president of a game-software developer called HAL Laboratory—Mr. Iwata had lifted that company out of bankruptcy. Mr. Miyamoto, hired out of art school in 1977, at first designed posters and packaging for Nintendo. Though having no programming background, he was part of a team developing an arcade game based on the Popeye cartoons. When a licensing deal for the game fell through, Mr. Miyamoto changed it to be about a chubby construction worker named Mario who was trying to save a princess from a giant ape-like creature. Donkey Kong was a huge success, and Mario, who later became a plumber, emerged as a protagonist in many games. Mr. Iwata recalls watching Mr. Miyamoto work with “eyes as big as saucers” trying to “steal” as much knowledge as possible. Mr. Miyamoto, in turn, says Mr. Iwata impressed him with an understanding of phys-
Thursday, March 3, 2011
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IN DEPTH
Bloomberg News
The pursuit of a 3-D system has been something of a personal mission for Mr. Iwata and Mr. Miyamoto, right, since the mid-1980s.
ics that helped him make games more realistic. Their relationship hasn’t changed much since the early days, Mr. Miyamoto says. Mr. Iwata is a manager known for focusing on details and seeing issues through to the end. Mr. Miyamoto is free to be eccentric and espouse disruptive ideas that might lead to breakthroughs. “Iwata-san may be the brain of Nintendo, but Miyamoto-san is the soul,” one employee says. Though Mr. Iwata is Mr. Miyamoto’s boss, it is a relationship of equals, according to people who have worked with them. Says one former employee, “There are times when you can see that Iwata-san wants to make a decision on the spot, but he waits to run it by Miyamoto-san.” The pursuit of a 3-D game system has been something of a personal mission for the two ever since their first joint project involved 3-D in the mid-1980s. Mr. Iwata was then an outsider developing a rally-car racing game for Nintendo’s first attempt at a 3-D game player. Mr. Iwata made the game technically advanced. Mr. Miyamoto made it more fun, by adding racers and making Mario the main character. Their game was for Nintendo’s Family Computer 3-D System, which required users to buy a special disc player and a pair of 3-D goggles in addition to the standard console. The system never caught on. Eight years later, Nintendo took another stab at 3-D, the Virtual Boy system. Users peered into a goggle-like device to play games displayed in different shades of red against a black backdrop. This one didn’t sell, either. It was gone after about a year. But Nintendo boss Mr. Yamauchi, now 83, was an advocate of 3-D, and after he brought Mr. Iwata to the company in 2000, Nintendo continued to pursue the technology. Creating a 3-D game machine with no special glasses posed challenges. It would have to deliver separate images to the right eye and the left eye. That would require a more powerful processor, as well as brighter backlighting, tough to do without draining the battery quickly. Nintendo tested games on a player called the GameBoy Advance SP that didn’t require special glasses, but decided against moving forward because the display’s resolution wasn’t good enough. Little by little, more refined displays and other key technologies
became available. “We decided that it was worth giving it a shot,” Mr. Iwata says. In early 2009, a team of Nintendo engineers tested one of the Mario games on a glassesfree 3-D display, and Mr. Iwata liked the quality. He and Mr. Miyamoto then badgered engineers to add features, among them one of the first 3-D digital cameras. The result is the 3DS, a clamshell device about the size of a passport when closed, and about 8/10 inch thick. It opens to reveal two screens, one above the other. On top is a 3-D display, on the bottom a touch-screen. It went on sale Saturday in Japan for
25,000 yen, or about $300, and soon will be available in Europe and America, at different prices. The device marks the most ambitious attempt to date to popularize 3-D technology. A push from Hollywood and electronics makers has produced mixed results. While some 3-D movies, such as Twentieth Century Fox’s “Avatar,” have been blockbusters, sales of 3-D home electronics have been hampered by a lack of content. Among the challenges for Nintendo are those coming from ever-smarter smartphones. An iPhone version of the Warner Bros. game LEGO Harry Potter: Year 1-4
Eye-popping | Nintendo’s 3DS goes 3-D without glasses How it works A barrier placed in front of the display with precisely placed openings allows each eye to see alternating sets of pixels, which combine to simulate a 3–D image.
Pixels
Barrier
Cameras Inward-facing one lets users insert themselves into games; two other 3-D cameras face outward
3-D screen Motion and gyro sensors React to users’ movements, making the device the controller for some games
3-D depth slider Lets users change intensity of 3-D images or play games in 2-D
costs $4.99 on Apple Inc.’s iTunes, while a version of the game from Nintendo’s DS player sells for about $27. Some companies have even launched smartphones and television sets with a glasses-free 3-D display, though the 3DS will be the first global, mass-market product offering 3-D to the naked eye. “The 3DS will answer the big question of whether consumers still want dedicated machines when smartphones are rapidly expanding as a gaming platform,” says Yusuke Tsunoda, an analyst at Tokai Tokyo Research Center. “Its success or failure will set the direction for the industry.” Nintendo also has caused a stir by warning that children six and under shouldn’t play 3-D games because doing so could have a negative effect on their eyesight development. “We are not saying that [the 3DS] is a dangerous device,” says Mr. Iwata. “We are being proactive about informing our customer.” So far, the health warning’s effect seems limited in Japan. More than 90% of the 400,000 3DS units in Nintendo’s first shipments to retailers were sold in the first weekend, according to research from Japanese videogame magazine publisher Enterbrain. Nintendo expects to sell four million units by the end of March. That would outstrip the first month’s sales of the Wii in 2006. If Nintendo’s latest flashy offering is a success, it will be due, in part, to how the two very different personalities managed to mesh creatively. As if to illustrate that, Mr. Iwata recently gave a trade-show demonstration of a feature of the 3DS called “amalgamation,” made possible because it has camera lenses that face both inward and outward. Wearing a serious expression, Mr. Iwata looked into the inward-facing lens, then captured Mr. Miyamoto’s smiling face with the other. When he snapped the photo, the result was a blend of the two faces, Mr. Iwata’s and Mr. Miyamoto’s. “Here it is,” he said, “Iwamoto-san.”
WSJ.com Touch screen A 2-D screen that works with the use of a stylus Source: the company
Notification light Tells users when another 3DS is nearby
ONLINE TODAY: Take a look back at Nintendo’s changing game consoles and watch videos about Nintendo’s 3-D gaming technology at WSJ.com/Technology
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Thursday, March 3, 2011
Sports Pr
BLUEPRINT FOR SUCCESS Tips from a sports playbook to keep your business on top Winning strategies include setting clear goals and constant reinventing By Catherine Bolgar
S
UCCESS is wonderful, but sustained success is even better. Whether in sport or business, staying at the top is a rare feat. Sir Alex Ferguson’s 24-year stint at the helm of the Manchester United football club is a show of survival uncommon in an industry known for high turnover and whose winning percentage is but a dream for lesser mortals. How does he do it? Here are eight tips from Sir Alex’s playbook that can be applied in business.
professor of strategic development at the University of Liverpool Management School and a member of the university’s Football Industry Group. “It was a good goal, because it could be defined and everyone knew if he had done it or had failed to do it,” Dr. Cannon says. It’s important to have a focused, straightforward goal and not a lot of smaller subgoals, he adds. “Organizations often get confused by having lots of objectives.”
3. Reinvent…
1. Know yourself “It’s the same for any tribal environment: you want to create something that stands the test of time,” says Clive Gilson, professor of Human Resources Management at the University of Waikato in Hamilton, New Zealand, and director of Inspiros Worldwide Ltd., a consultancy that inspires organizations to sustained peak performance. Dr. Gilson is also co-author of the book “Peak Performance: Inspirational Business Lessons From the World’s Top Sports Organizations.” “What any organization has to ask is, ‘what do we stand for?’ Manchester United and Sir Alex can answer that question.” Sir Alex “has enormous presence and strength of character,” Dr. Gilson says. “He is clear about what he believes in, clear about what he stands for and clear about how he translates it onto the pitch.” The team, meanwhile, delivers attacking football, which reliably fills Old Trafford with faithful fans, he says.
“One of the most successful strategies of any organization is the willingness to reinvent itself,” says Dr. Cannon. “The team that knocked Liverpool off its perch isn’t the team that will compete with Chelsea.” Sir Alex has reinvented the team several times, always around key individuals. Eric Cantona was crucial to success in the early ’90s, and became a role model for a group of younger players who were just arriving from the academy—the so-called Golden Generation of David Beckham, Ryan Giggs, Paul Scholes and others. “Cantona left just as those players were ready to take over. They created the next team,” says Bill Gerrard, professor of sport management and finance at Leeds University Business School. Next, Sir Alex replaced David Beckham with Cristiano Ronaldo; now he is remaking the team around Wayne Rooney.
4. …yet maintain continuity
2. Set clear goals When Sir Alex arrived at Manchester United, he said he wanted to knock Liverpool off its perch, says Tom Cannon,
“Any organization or any individual who is successful over a period of time has that balance of continuity and change,” Dr. Gerrard says. “If you’re successful, others will emulate to outmaneuver you. You have to keep what made you successful but always innovate to keep ahead.” That isn’t to say you want lots of churn
in your personnel, warns Dr. Gilson of Waikato University. Football players are at their physical peaks between the ages of 21 and 28, so by definition football teams constantly need new blood.
5. Rally the troops. “You can have the greatest strategy and know where you want to go with it, but if you don’t take the people with you, you aren’t going to get there,” says Dr. Gerrard of Leeds University. “Sir Alex has an amazing ability to inspire people.”
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IN FOOTBALL Illustrations by Robin Heighway-Bury
“One of the most successful strategies of any organization is the willingness to reinvent itself.”
Sir Alex has famously cultivated a mindset of being the underdog, even though Manchester United is one of the richest teams in football and holds the record for the most FA Cup wins and the most Barclays Premier League titles. “It’s very hard when a club wins a champions league or the equivalent in business, because there’s a tendency to think that’s good enough,” says Dr. Cannon of Liverpool University. “Not with Sir Alex. It doesn’t matter how good you are, you can always be better. And he communicates that.” Sir Alex’s halftime talk to his team at the 1999 European Cup Final included this: “At the end of this game, the European Cup will be only six feet away from you and you’ll not even be able to touch it if we lose. And for many of you that will be the closest you will ever get. Don’t you dare come back in here without giving your all.”
6. Have resources Research shows a high correlation between spending on player wages and results on the field, says Stefan Szymanski, professor of economics at the Cass Business School of City University in London and co-author of the book, “Soccernomics.” So team owners are looking for managers “who can outperform a given sum of money,” he says. “Over many years, Sir Alex has done fairly consistently better than the money might have predicted. But he couldn’t have done half of what he’s done without the money. It’s a chickenand-egg problem for any manager”—you need money to win and you need to win to be trusted with the money. For the 2008-2009 season, Chelsea led with £167 million ($271 million) for player wages, followed by Manchester United with £124 million. Liverpool spent £107 million, and Arsenal £103 million, he says. Then spending dropped to £82 million, at Manchester City. The lowest spender that season was Stokes City, at £30 million. “Mostly, if you spend a lot of money on players and you pay market prices, you will have success,” Dr. Szymanski says. That said, before arriving at Manchester United, Sir Alex turned around Aberdeen, which had a small budget. He took them to the top of the Scottish League, which had been dominated by Celtic and Rangers, and even won the European Cup Winner’s Cup against Real Madrid.
7. Deliver Sir Alex’s admirers note his unswerving confidence of how to get the right result. Indeed, “when you’ve got a line of sight to performance, as long as you believe in yourself, people will take off their shoes and socks and walk to Rome,” says Dr. Gilson of Waikato University. While too many supremely confident people suffer from delusions of competence, Sir Alex actually delivers. He may be famous for quirks like the “hair dryer”—screaming into the face of a player who has disappointed him. But the “hair dryer” doesn’t make him great; he gets away with it because of what he is—a peak performer who delivers. “People focus on the three or four things they notice and miss the dozens of little things that really make a person successful,” Dr. Szymanski says. Confidence has to be founded on a record of success, Dr. Gilson adds. “You have to know what you’re doing, to have been there and done that. Believing, on its own, isn’t enough to make something happen.”
8. Be lucky Winning the lottery, being struck by lightning—some things are rare, but they do happen. “Very few football managers get the chance to see if they can have a consistent level of performance before getting fired,” says Dr. Szymanski. “You need little bit of luck to get you going. “Who is to say Alex Ferguson has not been serially lucky,” he adds. “Most companies have that too—somebody has to get lucky, and millions won’t be.” Sir Alex himself admitted, in an interview in the New Statesman in March 2009, “The thing about Cup football is you need to be the best, but you also need a lot of luck, and I think it’s asking too much for all the games to go your way.”
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Thursday, March 3, 2011
FROM PAGE ONE
Yahoo held talks about Japan stake
Reuters
Antigovernment rebels in Libya undergo weapon training Wednesday in a military base in Benghazi.
Rebels fight Gadhafi forces Continued from first page dropped a bomb that landed about 50 meters away from the celebration, according to witnesses. No one was wounded or killed in the blast. “Gadhafi is dropping bombs on his own people. He’s an animal,” said Nasser al-Subhy, a doctor at Brega’s main city hospital. Doctors said four dead and 13 wounded had reached the hospital as of about 4 p.m. on Wednesday, but they expected significantly more casualties once ambulances could reach the front lines. The latest clashes by pro-Gadhafi forces and rebels over control of rebel-held cities deepened the prospect of an extended war. The ragtag army of antiregime forces in eastern Libya on Tuesday began moving west toward Tripoli, which was firmly under the control of Col. Gadhafi, and on Wednesday two U.S. warships entered the Mediterranean Sea. European nations and Egypt launched emergency airlifts along Libya’s borders, as tens of thousands of hungry, anxious foreign workers poured into Tunisia, the Associated Press reported. More than 140,000 refugees have fled into Tunisia and Egypt and thousands more were arriving by the day. Mr. Gates’s comments to Congress Wednesday echoed remarks on Tuesday by Marine Gen. James Mattis, the commander of U.S. forces in the Middle East. “My military opinion is, sir, it would be challenging,” Gen. Mattis said at a Senate hearing. “You would have to remove the air-defense capability in order to establish the nofly zone so it—no illusions here—it would be a military operation. It wouldn’t simply be telling people not to fly airplanes.” Some analysts have suggested Libyan air defenses may not be particularly robust. But Adm. Michael Mullen, the chairman of the Joint Chiefs of Staff, said if the U.S. were to try to establish a no-fly zone the military would have to assume Libyan defenses pose a serious threat. “You have to assume they are very capable until proven otherwise,” Adm. Mullen said. A no-fly zone wouldn’t necessarily prevent the Libyan military from attacking the rebels or protesters, but would be intended to prevent the country’s air force from attacking rebel positions or protesters. Adm. Mullen noted that the U.S. has so far been unable to confirm reports that Libyan aircraft have
fired on protesters or the rebel army. Mr. Gates noted that the United Nations Security Council resolution on Libya hasn’t authorized the use of force. Such authorization would presumably be necessary if the U.S. were to attack Libya’s air defenses. The U.S. on Tuesday ordered the two warships and 1,200 Marines to the waters off Libya, but a top Obama administration official stopped short of saying the forces would intervene in the clashes that have consumed the country following anti-Gadhafi protests in recent weeks. At a Pentagon briefing Tuesday, Mr. Gates said he had ordered to the Mediterranean the USS Ponce and the USS Kearsarge, an amphibiousassault ship that typically carries infantrymen and troop-transport helicopters. The two ships currently have 800 Marines, in addition to 400 U.S.-based Marines who will be airlifted to meet the ships. He said the ships would be ready to perform evacuations and humanitarian relief. Libya’s opposition is increasingly seeking U.S. military support to push out Col. Gadhafi. Libyan dissidents have held meetings with the State Department in Washington this week in which they called for greater logistical support from U.S. and NATO forces, and possibly targeted strikes on Col. Gadhafi’s air force, tanks and troops. “We’re worried this conflict could drag on,” said Ali Rishi, among the dissidents who met with the State Department this week. “We don’t want Gadhafi to feel he can survive.” A senior State Department official said the U.S. met with opposition figures this week but wouldn’t discuss details. The U.S. has said it wouldn’t rule out any steps to ensure Col. Gadhafi exits power, as the White House and international community continue to exert pressure. The U.N. General Assembly on Tuesday suspended Libya from the U.N. Human Rights Council over the violent crackdown on protesters. On Wednesday, prosecutors at the International Criminal Court said they would open a formal investigation into possible crimes against humanity in Libya. Secretary of State Hillary Clinton on Tuesday told Congress that Libya risks falling into “civil war” unless the international community offers a more coordinated response to the bloodshed there. “In the years ahead, Libya could become a peaceful democracy, or it could face pro-
tracted civil war, or it could descend into chaos,” she said. Some U.S. officials don’t believe conflict will be protracted. They say Col. Gadhafi’s fate is less likely to be settled by a clash on the battlefield than it is by the loyalty of the elite units defending Tripoli. If commanders from those units begin defecting, some U.S. officials believe members of the Libyan dictator’s inner circle will move against him. One senior U.S. official said as the rebellion spreads, an assassination attempt on Col. Gadhafi “seems more plausible.” The official added: “The best outcome for those Libyan leaders who are defecting will be [to put] two bullets into the heads of Gadhafi and his son.” For now, the elite brigades remain “the most enthusiastically loyal” to the dictator, and neither officials in Washington nor witnesses in Libya have seen defections from the elite units, a military official in Washington said. Inside Libya, battle lines have hardened. Col. Gadhafi’s main support resides in the western part of the country, and he retained a strong grip on Tripoli, Sabha and Sirte, his hometown. Forces loyal to Col. Gadhafi have attempted to block the advance of rebel forces based in the eastern stronghold of Benghazi, and the offensive Wednesday indicated the government will push to retake rebel-held cities in the east. There are, in essence, two Libyan rebellions. A rebel army has risen up in the east, led by a provisional government in Benghazi. Independent uprisings have occurred in western towns—including Misrata, Libya’s third-largest city, which lies 210 kilometers east of Tripoli, and Al-Zawiya, 50 kilometers to the capital’s west. In Al-Zawiya, rebels controlled the center of the city Tuesday, while pro-government forces held the outskirts. Witnesses said pro-government forces have moved their checkpoints closer to central AlZawiya, increasing their control over several neighborhoods. Libya’s deputy foreign minister, Khalid Kaid, denied reports that the government had attacked Al-Zawiya’s central square. He said talks between the government and major tribal leaders would start Wednesday in Tripoli and that the government wasn’t planning any major military offensives while the talks were under way. It wasn’t clear who was taking part in talks.
Continued from first page based in Sunnyvale, Calif., declined to comment. Earlier on Wednesday, Reuters News reported that Yahoo is in talks to pull out of Yahoo Japan. Shares of Yahoo Japan surged on the news. It closed up 3.7% at 32,300 yen after rising as much as 11% during the trading day. Softbank fell 3.6% to 3,255 yen. If it happens, a deal would mark a major shuffle of Yahoo’s Asia assets as it strives to make up ground lost to search giant Google Inc. It would draw increased attention to the U.S. company’s roughly 40% stake in Chinese e-commerce giant Alibaba Group Holding Ltd. Some Yahoo shareholders have pressed the company to spin off its Asian assets to “unlock” the value of those investments made many years ago by co-founder Jerry Yang. Analysts say a public offering for Alibaba’s Taobao.com retail site or its Alipay.com electronic-payment service could result in a value to Yahoo that is worth more than what Yahoo trades for today. Yahoo’s market value is about $21 billion. There is no indication either of those Chinese entities are considering such a move. Alibaba and Yahoo have previously held talks about a potential sale of part of Yahoo’s stake, people familiar with the matter have said. Yahoo Japan rules the country’s Web landscape. With more than one billion page views a day, Yahoo Japan is the country’s biggest search engine, online auction site and news aggregator. Unlike the U.S. and Europe where Web services are more segmented, many of Japan’s most popular Web service fall under the umbrella of Yahoo Japan. The Japanese portal had five times the number of monthly page views as Japan’s second mostvisited site, Google.co.jp, according to research firm Nielsen Group. Even though most of its traffic comes from domestic Web users, Yahoo Japan is the world’s 12th most-visited Web site, one spot behind Microsoft Corp.’s MSN site, according to Alexa, a Webinformation company owned by Amazon.com Inc.
It’s not immediately clear what Softbank would gain if it acquired Yahoo’s stake in Yahoo Japan. Softbank is already the biggest shareholder in Yahoo Japan and it consolidates the company’s earnings into its group results. Yahoo executives have spoken openly about their negotiations surrounding the Yahoo Japan stake, estimated to be worth more than $7 billion, according to Marianne Wolk of Susquehanna Financial Group. Two weeks ago, Yahoo’s chief financial officer, Tim Morse, said at a conference that Yahoo was “now working with our partners, Yahoo Japan’s management team, and Softbank to collaborate and find that best unlocks the value of this asset.”
With more than one billion page views a day, Yahoo Japan is the country’s biggest search engine, online auction site and news aggregator. He said the company is trying to figure out whether to keep the stake or do a “transaction” that “would be in the interest of our shareholders.” However, he added that “I don’t see that an outright sale of this asset serves very well our investor’s needs.” That’s because “we really don’t have a good way to offset taxes at all for a sale so we’re looking at tax efficient options” with the other parties, he said. A person familiar with the matter says one of the many options currently being considered by Yahoo is a sale of the stake, but there is no done deal. Meanwhile the company has increased profitability associated with its core Internet advertising business but it has struggled to increase revenue over the past couple of years under Chief Executive Carol Bartz. —Juro Osawa and Daisuke Wakabayashi contributed to this article.
Steve Jobs appears at iPad 2 unveiling Continued from first page Mobility Inc.’s new Xoom tablet, based on Google Inc.’s Android operating system, costs $799 without a cellular service plan compared with $729 for an equivalent iPad. Dell currently sells five-inch and seven-inch tablets and has plans for other models as well, but plans to focus more on business users if tablet prices drop substantially. “We’re not going to chase volume in that environment,” Mr. Gladden said. Mr. Jobs rattled off a list of statistics about the growth of the iPad. The device, which debuted last year on April 3, generated $9.5 billion in revenue in 2010, he said. More than 2,500 publishers have joined the iBook store that was created for the
iPad and the Cupertino, Calif.-based electronics giant has paid $2 billion to developers of programs sold at its App Store. On Tuesday, analysts were also musing about the impact Mr. Jobs’ presence or absence at the event might have. If Mr. Jobs were to be there, he would likely appear thin or frail, which wouldn’t “deliver any increased confidence for his health,” said Gleacher & Co. analyst Brian Marshall.
WSJ.com ONLINE TODAY: Read more about Apple’s event at WSJ.com/Tech.
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Westfield Group icon Frank Lowy handing the reins to his sons
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Japan’s squabbling puts its economy in a bind
BUSINESS& FINANCE. MARKETS 25
HEARD ON THE STREET 32
THE WALL STREET JOURNAL.
Bloomberg News
Thursday, March 3, 2011
Road to credit Key events involving China UnionPay since China's entry into the World Trade Organization December 2001: China joins the WTO. March 2002: China UnionPay is founded by the People's Bank of China.
January 2005: China UnionPay cards are accepted outside China for the first time, in Singapore, Thailand and South Korea. December 2006: The WTO deadline for China to open its yuanpayments market to foreign competition passes. September 2010: The Office of the U.S. Trade Representative signals its intention to challenge China at the WTO over access to its electronic-payment market. February 2011: USTR formally launches WTO case against China. Source: WSJ reporting
U.S. card firms are mum on China case BY DINNY MCMAHON BEIJING—The U.S. government is pressing China to end a state monopoly over its booming paymentcard business and open it to foreign competition. One group that appears less enthusiastic about confronting that monopoly: some of the very U.S. credit-card companies that Washington’s lawsuit aims to help. The U.S. Trade Representative’s Feb. 11 decision to ask the World Trade Organization for a disputesettlement panel in its electronicpayment case against China is the culmination of a decadelong effort to crack open the local market for companies like MasterCard Inc., Visa Inc. and American Express Co. The U.S. lawsuit targets China UnionPay Co., a nine-year-old company controlled by China’s central bank that has managed to dominate the business of processing local-currency credit-card and debit-card payments in China, despite promises that China would open it up as part of its entry into the WTO. UnionPay also has been expanding internationally into markets the foreign companies dominate. But the U.S. Trade Representative’s effort has drawn almost no public backing from the U.S. card companies. Industry executives and lawyers say the companies are wary that overt support will upset UnionPay, which is their partner and sometime regulator in China. Companies fear that public criticism of the Chinese government or the companies it owns could make them vulnerable to rivals that cooperate more with the government and jeopardize their futures in a market that could have 1.1 billion credit cards by 2025, according to some industry projections. “It’s well known that China punishes whistleblowers,” says Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics, a Washington think
Charging Credit cards in circulation in China
200 million 150 100 50 0 2006
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Source: People's Bank of China
tank. UnionPay didn’t respond to repeated requests for comment. To win U.S. backing for its WTO accession in 2001, China agreed to open its electronic payments market completely to foreign companies by the end of 2006. Instead, the Trade Representative says, Beijing has bolstered state control of the industry. UnionPay, which the government formed in 2002, is closely tied to the People’s Bank of China from which it drew some of its top executives. MasterCard has been expanding its efforts to woo support in China even as Washington’s case proceeds. In September, less than 48 hours before the U.S. Trade Representative first launched the WTO case against China over UnionPay’s monopoly, MasterCard issued a two-paragraph statement announcing a memorandum of understanding with UnionPay to “explore business cooperation.” MasterCard says the agreement was unrelated to the U.S. Trade Representative effort. In January, MasterCard became the first foreign company to obtain arena naming rights by disclosing a deal to put its name on the former Beijing Olympics basketball stadium. Please turn to page 21
asia.WSJ.com
Groupon targets China Deals website enters challenging and highly fragmented market BY LORETTA CHAO
BEIJING—Groupon Inc.’s new Chinese deals website is the latest test of whether foreign Internet companies can make it in China. While the company has the backing of China’s largest Web player and the advantage of acting early, it is entering a market with a number of challenges. China has more Internet users than any other nation, but the market is tightly regulated by the government. And as fragmented as the online local deals business can be in the U.S., competitors say it’s even more so in China where everything from household income to tastes in food vary widely from city to city. Groupon, which sells daily coupons for discounts on meals, spa visits and other local products, launched Gaopeng.com in partnership with Tencent Holdings Ltd.
and private equity firm Yunfeng Capital on Monday. The new site’s name appears to be taken from a Chinese phrase meaning “cherished friend sitting around the table.” The Chinese website of Chicagobased Groupon will be up against hundreds of Chinese group-buying and local-deals websites—plus related services provided by Taobao, the online marketplace of Alibaba Group. Google Inc., eBay.com Inc. and Yahoo Inc. have all launched operations in China and have struggled because of strong competition from local companies, which have proven to be adept at localizing foreign business models to suit the preferences of Chinese users. The addition “of big foreign players like Groupon to the market will definitely intensify competition in the market, but there is still no promise that Groupon will achieve
great success,” said Zhang Yi, a consultant at Guangzhou-based market research firm IIMEDIA Group. “There have already been so many cases of foreign companies failing in this market.” Group-buying and local deals websites generally sell batches of vouchers from merchants for deals if a minimum number of buyers sign up, and earn a commission on each voucher sold. GaoPeng said Groupon’s commission rates vary by country and declined to give the rate for China.The websites are a relatively new concept, and newer still in China. But their popularity has soared in part because Chinese online shoppers have long been organizing their own group bargain hunts, analysts say. As early as 2005, Internet users would seek other users on online forums to buy products in bulk, for a discount, Please turn to page 23
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THE WALL STREET JOURNAL.
Thursday, March 3, 2011
BUSINESS FINANCE
Standard Chartered profit at record India edges out Hong Kong as biggest source of pretax earnings; unlike others, return-on-equity target steady BY MARGOT PATRICK AND FIONA LAW LONDON—Standard Chartered PLC posted a record net profit for 2010, driven by increased wholesale income and a sharp reduction in loan-impairment charges, and it forecast continued double-digit income growth for 2011. The U.K.-based, Asia-focused lender said India became the biggest contributor to the bank’s pretax profit last year, with $1.2 billion, outstripping Hong Kong’s $1.1 billion pretax profit. Middle East pretax profit more than doubled, to $841 million from $366 million, amid a sharp fall in bad loans. Overall, net profit rose 29% in 2010 to $4.23 billion from $3.28 billion a year earlier, while total operating income was $16.1 billion, up 5.8% from $15.2 billion in 2009. Loan-impairment charges dropped 56% to $883 million from $2 billion, with wholesale income increasing in key regions, including India and Hong Kong. Chief Executive Peter Sands called regulation the bank’s “biggest external challenge” and estimated a new U.K. levy on large banks’ balance sheets will cost it about $180 million after tax this year. The government introduced the charge in
Standard Chartered Net profit, in billions of dollars $5 4 3 2 1 0 2006
Standard Chartered Bank's headquarters in Hong Kong
'07
'08
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'10
Source: the company
January, with an aim of raising £2.5 billion ($4.06 billion) a year from the largest domestic and foreign banks operating in the country. Mr. Sands said the bank has started 2011 with good momentum and volume growth in both wholesale and consumer banking. He said earnings and return on equity this year will reflect that momentum, but that dilution from last year’s $5.2 billion rights issue and the U.K. levy will have an impact. The bank said it expects doubledigit income growth this year de-
spite a cautious forecast for the world economy and the increased regulatory costs. Regardless, Mr. Sands said the return-on-equity target remains “in the mid-teens.” The figure for 2010 was 14.1%. Some banks, including Credit Suisse Group and HSBC Holdings PLC, have recently cut their returnon-equity forecasts, mainly to reflect higher regulatory charges. Banks across the world are having to hold more capital against their assets, while at the same time fac-
ing higher funding costs in the wake of the financial crisis. Ian Gordon, an analyst at Exane BNP Paribas, said the results were “like a breath of fresh air” after disappointing figures and forecasts from most of Standard Chartered’s U.K. peers. He said he expects the bank’s main markets of Hong Kong, India, Singapore and Korea to be the primary drivers of growth in pretax profit this year and next. Standard Chartered’s shares were up 4.5% in late London trading, outpacing a flat London market.
The bank said one of its goals in India is to expand its distribution beyond its 94 branches. It noted that income in Hong Kong climbed 13% in the second half of the year over the first half, culminating with a record fourth quarter. Finance Director Richard Meddings said the bank hasn’t set a target for its Tier 1 capital ratio—a measure of a bank’s capital relative to its assets—but that it aims to “stay above the fray” as regulatory charges rise. Standard Chartered estimates coming Basel III rules will cut about one percentage point from the current ratio of 11.8%. “We want to make sure that we have capital to meet that while having sufficient capital to continue to grow with our customers,” Mr. Meddings said. Standard Chartered’s costs increased 13% in the year, a rise that included $150 million in direct regulatory and compliance costs. Staff costs also rose as part of the bank’s investment program, with about 7,000 employees added during 2010 as part of its expansion in consumer banking and infrastructure. Mr. Meddings said cost growth should fall back into line with income growth this year, and that net new staff added this year should fall to below 1,000.
Tata Steel increases its stake in Riversdale Mining BY ROBB M. STEWART MELBOURNE—Tata Steel Ltd. of India raised its stake in Riversdale Mining Ltd., giving the largest shareholder in the Africa-focused coal company an even stronger say in Rio Tinto’s proposed 3.9 billion Australian dollar (US$3.95 billion) takeover offer. In a letter to Riversdale, released to the Australian securities exchange Wednesday, Tata said it had raised its stake in the coal company by 2.9 percentage points to 27.1%. The creeping investment sug-
gests a slow take-up for Rio Tinto’s offer. The Anglo-Australian mining company has twice extended the deadline for its bid, last week moving it to March 18. Tata and the next-largest investor, Brazilian steelmaker Cia. Siderurgica Nacional, now own a combined 47% of Riversdale voting shares. CSN raised its stake in the Australian company to 19.9% in February from 16.29%. People familiar with the offer said it is likely that Tata and CSN are ensuring they play a key role in the takeover talks and might even
be pushing for an improvement on the A$16 a share offered by Rio Tinto. Riversdale shares fell 3.4% Wednesday to A$14.97 in Sydney. On Tuesday, Rio Tinto said its interest in Riversdale and acceptances for its offer had risen to 16.9% from 15.9% in mid-February. Rio Tinto has said its bid is subject to it securing more than 50% of Riversdale’s shares. Riversdale has said its directors have all recommended Rio Tinto’s offer “in the absence of a superior proposal.” Riversdale director and Tata executive N.K. Misra had given
his approval for the tie-up only as a nominee director of Riversdale, and not as head of mergers and acquisitions at Tata. Tata last week said it hadn’t made a decision regarding its stake in Riversdale, and a spokesman Wednesday declined to comment other than to say the steel company considers the holding to be strategic. A spokesman for Riversdale declined to comment, and spokesmen for Rio Tinto in Melbourne didn’t return phone calls. The interest shown in Riversdale, which has a coal mine in South Af-
rica and is developing two coal projects in neighboring Mozambique, highlights global appetite for the fuel. Tata has a 35% stake in Riversdale’s Benga project, ensuring coal supplies for its steel operations, and Wuhan Iron & Steel Co. last year agreed to buy a 40% interest in its Zambeze project for a similar percentage of coking coal produced. Tata and CSN are forbidden by Australian listing rules from raising their stakes further for six months without launching a formal offer. —David Fickling in Sydney contributed to this article.
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. Airbus............................21 Air China.......................21 Alibaba Group..........18,19 All Nippon Airways......27 Aluminum Corp. of China ..................... 27 American Express.........19 American International27 Aozora Bank ................. 27 Appaloosa Management ............. 24 Apple...............................1 ASX ............................... 24 Austar United Communications........27 Bank of America......24,32
Berkshire Hathaway.....21 BJ’s Wholesale Club.....27 Blackstone Group.........24 Boeing......................21,27 Bombardier...................21 Boshiwa International Holding.......................26 BYD ............................... 27 CapitaLand....................25 Cathay Pacific Airways 27 CDB Leasing Co............21 Centerbridge Partners..24 Centro Properties.........24 Centro Retail Trust ...... 24 China Airlines...............27 China Aviation Industry ..................... 21 China Aviation Industry General Aircraft Co...21 China Development......21 China Eastern Airlines.21 China National Offshore Oil...............................21 China Southern Airlines ...................... 21 China UnionPay ............ 19 China Vanke..................25 Cia. Siderurgica Nacional.....................20 Cirrus Industries...........21 Citigroup ....................... 32 CK Life Sciences
International..............23 Clix Marketing..............22 Coca-Cola ...................... 22 Coda Holdings...............21 Commercial Aircraft.....21 Commonwealth Bank of Australia......................6 Costco Wholesale.........27 Credit Suisse Group.....20 Dadida...........................26 Daimler..........................27 Davidson Kempner Capital Management LLC ............................. 24 Dell..................................1 Deutsche Bank ............. 26 Deutsche Börse............24 eBay .............................. 19 Facebook ....................... 22 General Electric............21 General Motors.............21 Goldman Sachs Group..32 Google..............1,18,19,22 Grameen Bank................7 Groupon.........................19 Hafei Motor..................21 Hainan Airlines.............21 Hewlett-Packard...........27 Hong Kong Exchanges & Clearing......................24 HSBC Holdings ........ 20,27 Hyundai Motor ............. 27
Imagi International Holdings.....................23 Intuit.............................22 J.P. Morgan Chase ............... 22,24,32 Kia Motors....................27 Korea Development Bank...........................27 Las Vegas Sands..........27 Liberty Global...............27 London Stock Exchange Group ......................... 24 Malaysia Marine & Heavy Engineering Holdings Bhd.............23 ManyMany Creations...23 MasterCard...................19 McDonald’s....................27 Mecox Lane...................22 MetLife ......................... 27 Mitsubishi UFJ Financial Group ......................... 27 Morgan Stanley............32 Motorola Mobility Inc....1 Newcrest Mining..........27 News Corp ............... 22,27 Nintendo .................. 14,27 Nissan Motor................21 Norwegian Embassy.......7 NYSE Euronext.............24 Petroliam Nasional.......23
Petronas Chemicals......23 Platinum Australia.......27 Qantas Airways............27 Rio Tinto.......................20 Riversdale Mining ........ 20 Royal Bank of Scotland Group ......................... 24 SAIC Motor...................21 Sands China..................27 Sanrio............................23 Sequoia Capital ............ 22 Seven Media Group......22 Shanda Interactive Entertainment...........22 Shandong Gold Mining.27 Sina...............................22 Singapore Airlines........27 Singapore Exchange.....24 Snowball Factory..........22 Softbank ......................... 1 Standard Chartered......20 Staples..........................27 Taconic Capital Advisors LP...............................24 Tata Steel.....................20 Tencent Holdings..........19 Ten Network Holdings . 22 Tesla Motors.................21 Thai Airways International..............27 3M.................................27 Tianjin Lishen Battery
Joint-Stock ................ 21 Toon Express Group.....23 Toyota Motor................27 Twitter..........................22 UBS ............................... 26 Visa...............................19 Walt Disney..................23 Wells Fargo...................32 Westfield Group...........25 Wuhan Iron & Steel.....20 Yahoo.....................1,19,27 Yahoo Japan...............1,27 Yunfeng Capital............19
People This index lists the names of businesspeople and government regulators who receive significant mention in Today’s Journal. Abdul, Abul Mal ............. 7 Akter, Shefali..................7 Allen, Peter...................25 Bain, Adam...................22 Blackley, Grant ............. 22 Buffett, Warren............21 Carr, Adam......................6 Chan, Catherine............23 Chang, Richard..............21
Chao, Charles................22 Cook, Timothy...............18 Costolo, Dick.................22 Dimon, James...............32 Eichen, Mitchell............27 Englander, Steven ........ 26 Froot, Kenneth................8 Gladden, Brian................1 Gonski, David................25 Gordon, Bruce...............22 Gordon, Ian...................20 Grace, Richard.................6 Gutman, Michael..........25 Hallerman, David..........22 Ho, Eddie.......................23 Hufbauer, Gary ............. 19 Iwata, Satoru................14 Jersey, Ira.....................26 Jobs, Steve.....................1 Kwai Bun.......................23 Langille, Stewart..........22 Lebow, Andy...................7 Leckie, David.................22 Leow, Jason..................25 Leung, Francis...............23 Li, Charles.....................24 Li Ka-shing....................23 Lowy, David Hillel ........ 25 Lowy, Frank...................25 Lowy, Peter...................25 Lowy, Steven................25 Lundestad, Geir..............7
Manimbo, Joe...............26 Meddings, Richard........20 Meng Xiangkai..............21 Misra, N.K.....................20 Miyamoto, Shigeru.......14 Morse, Tim R................18 Murdoch, Lachlan.........22 Murtaugh, Philip...........21 Noski, Charles...............32 Ouyang, Yun..................23 Packer, James...............22 Paulson, Henry ............. 21 Rich, Stephen ............... 25 Rinehart, Gina .............. 22 Rubin, Miles..................21 Sands, Peter.................20 Saunders, John.............25 Schwartz, Brian............25 Scott, Andrew...............24 Shamsul Azhar Abbas..23 Solomon, Jay................18 Strauss, Jonathan........22 Szetela, David...............22 Warburton, James........22 Williams, Evan..............22 Wolk, Marianne............18 Wouters, Brent.............21 Yamauchi, Hiroshi.........14 Yang, Jerry....................18 Young, Michael.............32 Yung, Larry ................... 23 Yunus, Muhammad.........7 Zhang Yi........................19
Thursday, March 3, 2011
21
THE WALL STREET JOURNAL.
BUSINESS FINANCE
China’s AVIC to buy U.S. plane maker BY NORIHIKO SHIROUZU
Zuma Press
U.S. Commerce Secretary Gary Locke, wearing glasses center, visited Coda Automotive’s Tianjin, China, facility in May.
Electric car set to roll California-China venture plans U.S. debut in the second half BY JASON DEAN BEIJING—Coda Holdings expects to start selling its first all-electric car in the U.S. in the second half, as the California start-up uses Chinese manufacturing and battery technology to make inroads in the challenging U.S. electric-vehicle market. Chief Executive Philip Murtaugh, who joined Coda in January, said the company’s Coda Automotive Inc. unit expects to sell 10,000 to 14,000 Coda sedans in the 12 months after the model is introduced in California. Coda also has begun talks with its main vehicle-manufacturing partner, China’s Hafei Motor Co., about selling cars using Coda’s technology in China, the world’s largest car market, Mr. Murtaugh told reporters here Wednesday. Coda, with its headquarters in Santa Monica but the bulk of its operations in China, was founded three years ago by Miles Rubin to develop electric-vehicle technology. The company’s board of advisers includes former U.S. Treasury Secretary Henry Paulson. Coda has raised about $200 million in financing, including $76 million raised in January. It has a joint venture making battery systems with Tianjin Lishen Battery Joint-Stock Co., which is
part-owned by state-run China National Offshore Oil Corp. In addition to the technical challenges of commercializing a complicated new technology, Coda faces competition from much larger rivals, including General Motors Co. and Nissan Motor Co. Another electric-vehicle start-up, Tesla Motors Inc., is targeting the niche, luxury market. But Coda’s sedan is aimed at the middle of the market, with a suggested retail price of $44,900, although the company said the consumer’s cost could be reduced by taking advantage of about $12,500 in federal and state subsidies. Mr. Murtaugh spent more than 30 years at GM, ran its China business and helped run the international operations of its Chinese joint-venture partner, SAIC Motor Corp. He acknowledged Coda’s competitive challenges but said Coda believes its technology will give its battery a longer range than that of its competitors and will be less affected by outside temperature changes, which can sharply reduce the length of a charge. Coda has had to delay the introduction of the sedan several times. Mr. Murtaugh said that among the first things he did after joining the
company was to establish a solid schedule with the company’s engineers. He said he’s “very confident” that sales can start before year-end. Coda expects to start pilot production of the sedan in the second quarter, and begin regular production in the third. Coda hopes successful sales of the sedan will prove the value of the propulsion system, which combines the battery and battery-management technology, it has developed with Tianjin Lishen. Coda aims to sell the propulsion system to other car makers and, eventually, for other kinds of energy-storage products. Coda’s initial sales will be in California, mainly for rental-car companies and other fleet uses, which decreases the need for a showroom and distribution system. The company plans eventually to expand to other states and countries. It aims to sell 50,000 cars a year world-wide by 2015 or 2016, Mr. Murtaugh said. He said he is pushing Coda to take an interest in the Chinese market. “Before I got here, there wasn’t a whole lot of attention paid to China within Coda, in terms of domestic sales,” he said. “The first question I asked was, ‘Why aren’t we selling this in China.’ So we’re working on it.”
U.S. card firms are mum on China case Continued from page 19 Rival Visa—onetime ally of UnionPay that has more recently butted heads with the company—has been unable since last year to do any new deals in China in the one sliver of the business in which foreigners can access Chinese consumers: cards issued by Chinese banks that can be used overseas as well as in China. People familiar with the situation say they believe it is punishment for Visa’s spat with UnionPay. Foreign card-company executives have made vague calls for more openness in China. “China’s payments market would benefit from having a number of players, but it is obviously not the role of the private sector to decide this,” Richard Chang, Visa’s top China executive, wrote in an email. Credit and debit cards in China
are issued in conjunction with banks. But UnionPay is the only company banks can partner with to issue cards denominated in Chinese yuan, and it has a near monopoly on processing card transactions in China. Foreign firms’ cards carry both their brands and UnionPay’s, and the foreign companies get a cut of the fees only when those cards are used outside China. Such overseas transactions represent a fraction of the industry’s total revenue in China, industry executives say. Visa was for years the most aggressive foreign card company in China. It provided extensive training and technical support for UnionPay in the Chinese company’s early years and poured millions of marketing dollars into the country. But executives eventually grew frustrated that China wasn’t making
good on its market-opening pledge, say people familiar with the situation. Meanwhile, UnionPay stepped up its activity overseas, building its own international network to rival those of Visa and the others. UnionPay’s cards are now accepted in more than 100 countries around the world. Early last year, Visa jolted the industry when it threatened banks outside China that use its VisaNet network with hefty fines if they used other networks to process payments made with Visa/UnionPay cobranded cards. Visa said it was merely enforcing a longstanding policy requiring banks to use VisaNet whenever Visa cards are used outside their country of issue. —Bob Davis in Washington and Kersten Zhang in Beijing contributed to this article.
SHANGHAI—China Aviation Industry Corp. the company behind China’s stealth fighter and its first planned commercial jetliners, agreed to buy Minnesota-based private-aircraft maker Cirrus Industries Inc., a small deal that nonetheless illustrates the expanding ambition of China’s aerospace industry. AVIC unit China Aviation Industry General Aircraft Co. plans to acquire Cirrus’s line of small propeller aircraft for an anticipated takeoff in China’s general-aviation market, which includes small planes owned by individuals and small businesses. Even though the use of such aircraft is limited in China and its airports lack facilities to handle small, privately owned planes, the country is considered one of the world’s most promising markets for growth. China’s Civil Aviation Administration late last year proposed to relax flying restrictions for low-altitude airspace in five to 10 years to to open up flight lanes for small planes. The deal, which the two companies said they expect to close around midyear, would give the Chinese company access to Cirrus’s technology, which includes a planned small private jet. The deal eventually also could give the AVIC unit a way into the U.S. general-aviation market, the world’s largest. “We are very optimistic to begin our partnership with Cirrus and add Cirrus’s strong brand as the cornerstone in our aviation product portfolio,” CAIGA President Meng Xiangkai said in a prepared statement.
The deal points to the growing ambition of China’s aerospace industry. In China’s state-owned Commercial Aircraft Corp. in November said it won its first 100 orders for a large jetliner that would compete with Boeing Co.’s B737 and European Aeronautic Defence & Space Co.’s Airbus A320 single-aisle commercial jetliners. The orders were placed by China’s big three stateowned carriers—Air China Ltd., China Eastern Airlines Corp., China Southern Airlines Co.—and by Hainan Airlines Co. and the leasing arms of state-owned China Development Bank and General Electric Co. That Chinese jet, the Comac C919, followed the company’s development of a smaller, regional jetliner called the ARJ21. The C919’s maiden flight is already two years behind schedule, however, and its first deliveries aren’t expected until 2016. For Cirrus, the acquisition by the cash-rich Chinese aerospace group gives the U.S. company “new resources that will allow us to expedite our aircraft-development programs and accelerate our global expansion,” Brent Wouters, Cirrus’s president and chief executive, said in a prepared statement. Cirrus is attempting to develop a tiny jet, the Vision, and is planning other ambitious projects on the boards. He said the company plans to keep production in the U.S. for the near term, adding manufacturing capacity in China only as that market grows. The deal is subject to approval by both the U.S. and Chinese government agencies.
Bombardier lands NetJets order Bombardier Inc. said it has received an order from NetJets Inc. for as many as 120 business jets, in a deal that could be valued at more than US$6.7 billion. Montreal-based Bombardier said the deal is the largest business-jet order in the company’s history. The firm order, valued at $2.8 billion at list prices, is for 50 Global business jets and includes options for an additional 70 Global aircraft, which if exercised, values the entire order at more than $6.7 billion. The
order comprises 30 Global 5000 Vision and Global Express XRS Vision aircraft, with deliveries set to begin in the last quarter of 2012, as well as 20 firm orders for Global 7000 and Global 8000 jets to be delivered starting in 2017. NetJets, the world’s largest fractional-jet operator, has a fleet of more than 800 planes. The deal disclosed Wednesday is the first time that the Berkshire Hathaway Inc. unit has ordered jets from Bombardier.
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THE WALL STREET JOURNAL.
Thursday, March 3, 2011
CORPORATE NEWS
Twitter targets small advertisers Start-up is working to woo small, midsize businesses to buy ads on its messaging service Twitter Inc. is a hot property among investors, who are pumping up the company’s valuation. But whether the start-up can live up to its multibillion-dollar appraisal depends on the likes of David Szetela, who holds the purse strings of numerous small and midsize advertisers. Mr. Szetela, owner of online-ad agency Clix Marketing in Louisville, Ky., has had his clients pay for ads on Google Inc.’s Web-search engine and on social-networking site Facebook Inc. But in January, a Twitter representative approached him to try advertising on the service, which lets users broadcast short messages called tweets. So Mr. Szetela bought ads on Twitter for five companies, including a health-supplement retailer. He also used Twitter ads to promote a book by venture capitalist Guy Kawasaki called “Enchantment,” targeting users who expressed interest in the book’s topic, persuasion tactics, by tweeting about it or searching for related information using Twitter’s search feature. The upshot: While Mr. Szetela spent more money advertising the book on Google and Facebook than on Twitter over the past few weeks, he said the Twitter ads—which cost more than $4,000 in total—led to more preorders of the book. The orders were in the “high hundreds,” he said, adding that Twitter’s “ability to target so efficiently and interject advertisements into a social conversation is unique.” Whether Twitter can woo more advertisers like those in Mr. Szetela’s roster is crucial. Small and midsize advertisers are the ones that propelled Google’s search-ad growth during the last decade and they are also boosting Facebook’s growth. While Twitter has had some success in selling ads costing as high as $120,000 for a 24-hour period to brand names such as Coca-Cola Co., small businesses spend roughly the same amount as big brands in the $26 billion U.S. online-ad market, according to David Hallerman, an analyst at research firm eMarketer. “Twitter has built an audience, but in order to achieve the scale and revenue that Google and Facebook
Reuters
BY AMIR EFRATI
Twitter CEO Dick Costolo has been charged with turning the company’s popularity into a full-fledged business. are seeing it needs to show that marketing dollars spent on the site can perform well for mom and pops, not just big companies,” said Jonathan Strauss, chief executive of Snowball Factory Inc., which tracks marketing campaigns on Facebook and Twitter. Twitter’s effort to woo small advertisers, begun in December, comes amid investment froth around the start-up. In low-level talks with potential buyers, representatives of Twitter have said it is worth several billion dollars more than the $4 billion valuation set during a financing round in December, people familiar with the matter have said. More recently, J.P. Morgan Chase & Co. has been interested in buying a stake in Twitter, people familiar with the matter said. The attempt to harness small advertisers is also the latest move by Twitter to tap its base of more than 200 million registered users. The company last fall elevated then-operating chief Dick Costolo to CEO, replacing co-founder Evan Williams. Mr. Costolo, a former Google executive, had been charged with turning Twitter’s popularity into a full-fledged business and had started hiring ad sales directors and
Crowd count U.S. adult Twitter users 15 million 10 5 0 2008
2009
2010
2011*
Note: Internet users ages 18+ who access their Twitter account via any device at least once per month. * Estimate Source: eMarketer
staff—including Adam Bain, who previously ran revenue efforts for websites owned by News Corp., to be president of global revenue at Twitter. Overall, Twitter, which was created in 2006 and began working with advertisers less than a year ago, is expected to generate $150 million in ad revenue this year, up from $45 million in 2010, according to eMarketer. The growth is expected to come in part from a self-service system later this year that will let more small businesses buy ads on Twitter, much like Google’s AdWords program. Twitter expects prices for
some ads to rise as advertisers look to target the same users. In January, Mr. Bain began a campaign to enlist more smaller advertisers by letting the direct sales team, which now numbers around 35 people, contact businesses that had previously expressed interest in advertising in Twitter. Mr. Bain said Twitter ads “can deliver value for any business, large or small, by giving them new ways to amplify their existing Twitter presence and accelerate awareness and conversations about their products.” Twitter has more than 125 big brands and more than 100 smalland midsize advertisers on the site, a person familiar with the matter said. Several small advertisers said in interviews that their early experience with Twitter was promising and they expected to allocate part of their future ad budgets to the site. Because many Twitter users access the site from mobile devices, the company eventually will let advertisers target users based on their location, at first based on their country or city, a spokesman said. The company, which has about 350 employees, has begun hiring ad sales staff in Japan and London. Twitter charges advertisers for each time a user selects an ad. Twitter’s ad formats include Promoted Tweets—advertisements that look like regular tweets—as well as Promoted Trends, currently utilized by big-name advertisers, which allows a big brand to show an ad on a list of hot topics on Twitter’s home page. It also offers Promoted Accounts, where a marketer pays to have Twitter recommend that users “follow” the tweets of a particular account. Not every early tester is convinced Twitter’s ad program will be as effective as Google’s AdWords. Stewart Langille, vice president of marketing at Mint.com, a unit of Intuit Inc. that helps people track their finances, said ads on Twitter in recent months helped the site find new potential customers but didn’t cause many of them to sign up for a Mint.com account. He added that “it’s very early” and the system could improve. A Twitter spokesman said ads are “a work in progress.”
Sina posts loss on write-down; Shanda’s net falls BY OWEN FLETCHER AND JOAN E. SOLSMAN Sina Corp. said Wednesday it will boost investment in its microblog product this year, risking short-term margin pressure to fuel long-term growth as it reported a net loss for the fourth quarter because of write-downs. China’s biggest Internet portal also said it will pay $66 million for a stake in Chinese fashion e-commerce company Mecox Lane Ltd. as the company explores further ways to participate in China’s booming ecommerce industry. It will buy the shares from Maxpro Holdings Ltd. and Ever Keen Holdings Ltd., both units of Sequoia Capital. The announcements highlight Sina’s efforts to fuel growth by expanding into new areas, as the por-
tal operator faces tough competition for advertising revenue in a mature industry. Higher bandwidth costs and Sina’s investments in product development and marketing for its microblog product, Sina Weibo, “will inevitably have a negative impact on our overall profitability,” Chief Executive Charles Chao said on a conference call. “However, we believe that our investment and effort in building a more dominant social media platform...will generate much higher returns over the longer term.” Sina posted a fourth-quarter loss of $100 million, or $1.51 a share, compared with a profit of $372.1 million, or $6.03 cents a share, a year earlier. Excluding such items as write-downs and effects from business and investment disposals, earnings per share rose to 46 cents
from 31 cents, the company said. Sina took a $128.6 million writedown on an equity investment in China Real Estate Information Corp., a provider of real-estate information and consulting services. Fourth-quarter revenue increased 12% to $110 million from $98.2 million a year earlier. Advertising revenue increased 30% to $82.5 million, less than the increase of 50% in the previous quarter. Nonadvertising revenue fell 21% to $27.5 million. Gross margin rose to 57.8% from 55.8% Mr. Chao said Sina Weibo, China’s Twitter-like website, will drive the company’s growth strategy this year but that it will favor expanding the service over generating revenue from it. Sina will renovate its online portal and integrate current business lines more closely
with Sina Weibo, which had more than 100 million users at the end of February, he said. Separately, Shanda Interactive Entertainment Ltd. said Wednesday its fourth-quarter net profit fell 65% from a year earlier as revenue at its online games unit declined. The Shanghai-based gaming and media company’s profit declined to 128 million yuan ($19.5 million) from 369.3 million yuan. Overall revenue rose 2% to 1.54 billion yuan, but revenue at the company’s Shanda Games unit fell 14% to 1.15 billion yuan. The gaming industry’s growth in China has slowed as it has matured. In response, Shanda, which like Sina is listed on the Nasdaq Stock Market, has sought to diversify by boosting revenue from businesses such as online literature and videos.
Australia’s Ten names new chief in shake-up BY GAVIN LOWER MELBOURNE—Lachlan Murdoch named a successor for himself just a week after he took over as interim chief executive of Ten Network Holdings Ltd., owner of Australia’s third-largest broadcast network. Ten Network said Wednesday it was appointing James Warburton, a senior executive from rival company Seven Media Group, as chief executive officer, while separately announcing that major shareholder and Australian casino magnate James Packer had resigned as a director of Ten Network. The company didn’t give a reason for Mr. Packer’s departure from the board, four months after he took part in share purchases that sparked a shake-up in the broadcaster’s ownership, with Mr. Murdoch and Australian mining magnate Gina Rinehart also taking stakes. A representative for Mr. Packer didn’t return calls for comment. Mr. Murdoch, the eldest son of News Corp. CEO Rupert Murdoch, said in a written statement he was “delighted” to welcome Mr. Warburton to Ten Network. “I know James well and I also know that he will lead this business with great success,” he said. A person familiar with the matter said Mr. Warburton had wanted to become a CEO but didn’t expect that to occur at Seven Media Group. Ten Network said Mr. Warburton is expected to join the company’s board and that he would start as CEO on July 14. Seven Media Group CEO David Leckie wished Mr. Warburton well on his new role at Ten Network. “We’re sorry to lose him,” Mr. Leckie said in a written statement. A spokesman for Mr. Murdoch declined to comment. The latest changes come after the contract of former Ten Network CEO Grant Blackley was terminated Feb. 23. He had been in the job only since mid-December. Ten Network’s board said at the time that it expected first-half earnings in the six months ended in February to be about 103 million Australian dollars, or US$104.4 million, before interest, tax, depreciation and amortization, down from A$117 million last year, and it would conduct a strategic review of the company’s operations. Efforts to reach Mr. Blackley for comment were unsuccessful. Mr. Murdoch and Mr. Packer, a son of the late Kerry Packer, are both heirs of Australia’s dominant media executives of recent decades, while Ms. Rinehart is the daughter of late mining magnate Lang Hancock. Lachlan Murdoch stepped down as News Corp.’s deputy chief operating officer in 2005, remaining at the company only as a nonexecutive director and a voting stakeholder. Subsequently, he founded Illyria Pty. Ltd., a private investment firm based in Australia. Messrs. Murdoch and Packer together own 17.88% of Ten Network, while longstanding shareholder Bruce Gordon has 14.02% and Ms. Rinehart has 10.01%. News Corp. owns The Wall Street Journal.
Thursday, March 3, 2011
23
THE WALL STREET JOURNAL.
CORPORATE NEWS
An animated goat, banker head out Francis Leung, formerly of Citigroup Asia, has dreams of turning popular Chinese cartoon into a global brand BY POLLY HUI
Creative Power Entertaining
Can Pleasant Goat, star of ‘Pleasant Goat and Big Big Wolf,’ take on Mickey? The “Pleasant Goat” cartoon is broadcast on more than 75 satellite and cable TV networks across China, according to Mr. Leung. He said the first film based on the characters, released in 2009, broke box-office records for locally produced animation films in China with 80 million yuan ($12.2 million) in revenue. “Disney has created Mickey Mouse. There is Hello Kitty in Japan. My plan is to turn Pleasant Goat into the national animation
Petronas profit jumps, but investments loom BY ELFFIE CHEW KUALA LUMPUR—Petroliam Nasional Bhd.’s fiscal-third-quarter profit rose 74% from a year earlier helped by higher oil prices and onetime gains, and Malaysia’s stateowned oil and gas company said crude oil is likely to remain above $100 a barrel over the next couple of months. Petronas, as it is commonly known, said it faces challenges because many of its energy assets in the country average between 19 years and 28 years in age, which will require large investments to replace and refurbish them. Chief Executive Shamsul Azhar Abbas said Wednesday that the next five years “will be all about capex,” adding that the company is targeting capital expenditures of 50 billion to 55 billion Malaysian ringgit, or about $16.5 billion to $18.1 billion, annually over the next five years. For the quarter ended Dec. 31, Petronas said profit rose to 21.21 billion ringgit from 12.19 billion ringgit a year earlier, while revenue rose 12% to 60.04 billion. The company had one-time gains amounting to 9.3 billion ringgit from the listing of two of its units during the third quarter. Petronas Chemicals Group Bhd. made its debut in November raising 12.8 billion ringgit, while Malaysia Marine &
Heavy Engineering Holdings Bhd. raised about $645 million in October. Mr. Shamsul said the company benefited from higher crude-oil prices during the quarter, although the strengthening ringgit against the U.S. dollar has hurt profitability. More recently, crude-oil prices have been on an upswing amid fears of supply disruptions as the political conflict in the Middle East and North Africa continues. Mr. Shamsul said Petronas is on track to meet its full-year pretaxprofit target of 80 billion ringgit, excluding one-time gains. He expects the fourth quarter to be “strong” amid higher oil prices. Nymex crude-oil prices for April delivery straddled the psychologically important $100-a-barrel level in electronic trading Wednesday as forces supporting and opposing Libyan ruler Col. Moammar Gadhafi continued to face off. In the recent quarter, Petronas produced 2.13 million barrels of oil equivalent a day, down from 2.18 million a year earlier. Crude oil and condensates accounted for 875,000 barrels, down 4.6% year-to-year, while natural gas fell slightly to 1.25 million. The lower production of crude oil and condensates stemmed mainly from adverse reservoir performance and natural field depletion, Petronas said.
brand of China. We will also promote the brand outside China,” said Mr. Leung. Mr. Leung said Toon Express signed a deal with a unit of Walt Disney Co. in January to manage Toon Express’ consumer-products licensing business. He said Toon Express now has more than 300 licensing agreements. He also said Toon Express has signed agreements to broadcast the animation program in 17 languages
pany on the Australian dollar that eventually went sour. Mr. Leung said he also plans to broaden Toon Express’ income sources by developing other lines of consumer products under the cartoon brand including books, toys, as well as songs and games that can be downloaded from the Internet and mobile phones. Mr. Leung also said he would consider acquiring other cultural entertainment assets in China by raising funds through Imagi in the future. However, he declined to provide any financial projections on how the Toon Express acquisition would benefit Imagi. Animation-industry experts said the main challenge in exporting characters like “Pleasant Goat” is to make the story appealing to overseas consumers. “Creating a smash hit out of any character takes time and perseverance, and sustaining the success is even harder,” said Masumi Oishi, an analyst at Ichiyoshi Research Institute in Tokyo, who covers Sanrio Co., the company behind Hello Kitty. Kwai Bun, chief executive of ManyMany Creations, a Hong Kong-based creative-production house whose animation designs are used by many mainland Chinese companies, said it may take mainland Chinese animation artists years before they can catch up with the creativity and the techniques of their counterparts in the U.S and Japan. “What appeals to Chinese people may not be that impressive to the overseas market,” said Mr. Kwai. —Juro Osawa in Tokyo contributed to this article.
Groupon targets Chinese market Continued from page 19 from online and offline merchants. Chinese consumers have demonstrated a sizeable appetite for online bargains. Last September, Taobao offered more than 200 Mercedes-Benz Smart cars on its group-buying service, Juhuasuan, or Group Bargain, for 24% off of their listed price, and all the vehicles were sold within three and a half hours. The website also has sold 200 one-and-a-half carat diamond rings within three hours. Few statistics are available related to the growth of group-buying websites, which started appearing in China about a year ago. But Tuan800.com, a company that helps users simultaneously search multiple group-buying websites, estimates transactions in the category reached 1.79 billion yuan ($272 million) in the second half of 2010. It expects the amount to reach 16.5 billion yuan ($2.51 billion) in 2011. In the U.S., Groupon promotes deals on its website and through daily emails, generally keeping about half the value of each deal—a model that earned the company about $760 million in revenue last year. The company declined to say whether it will take the same cut from deals in China, where analysts say Chinese websites, such as Lashou.com, Meituan.com, and Nuomi.com, all based in Beijing, take a smaller cut. Taobao, which commands about
Bloomberg News
HONG KONG—Veteran Hong Kong investment banker Francis Leung has his eyes set on transforming a popular Chinese cartoon brand to the leagues of Mickey Mouse and Hello Kitty in his first foray into China’s animation market. The former Citigroup Asia investment-banking chairman last year was part of a consortium that rescued local animation firm Imagi International Holdings Ltd. from the brink of insolvency by investing in the maker of computer-animated films such as “Teenage Mutant Ninja Turtles.” As chairman of Imagi, Mr. Leung in late February unveiled plans to buy mainland Chinese brand manager Toon Express Group, which owns the character copyrights of “Pleasant Goat and Big Big Wolf,” a successful Chinese animation series that revolves around the travails of a clumsy wolf in his quest to hunt a group of innocent goats. To fund the 814 million Hong Kong dollar (US$104 million) acquisition, Mr. Leung arranged the sale of Imagi shares to investors including Hong Kong billionaire Li Kashing’s CK Life Sciences International (Holdings) Inc., Larry Yung, former chairman of Beijing-backed conglomerate Citic Pacific Ltd., and Hopewell Holdings Ltd. Vice Chairman Eddie Ho. “My original intention was to sell Imagi as a listed cash shell after a financial restructuring,” Mr. Leung said. “But after I took over the company…I began to realize that there is enormous potential in China’s family entertainment market.”
over 52 Asian markets, but he declined to disclose the time frame. The animation is already available in Hong Kong and Taiwan. The Chinese government has said it wants to raise the profile of Chinese culture overseas. Recently, Chinese officials said Beijing will expedite bank loans and facilitate public listings for companies involved in film and television production, live entertainment, as well as gaming and publishing. The acquisition of Toon Express is the latest of a number of highprofile China investments that Mr. Leung has made since leaving Citigroup in 2006, ending his investment-banking career that spanned more than 30 years. The deal-maker is known locally as the “father of red chips” for his work in the 1990s to arrange a slew of Hong Kong listings of Chinese companies. Mr. Leung is well-connected with many of the city’s biggest business people, and has earlier referred to Mr. Li as his longtime supporter. After leaving Citigroup, Mr. Leung led a consortium in 2006 to buy a major stake in Hong Kong telecom company PCCW Ltd. from its chairman Richard Li, son of Li Ka-shing. However, the younger Mr. Li turned down the offer after Mr. Leung disclosed that his father was involved in the planned acquisition. In 2010, he was appointed vice chairman and managing director of Enterprise Holdings Ltd., a family venture set up by Larry Yung to invest in large-scale mainland projects after Mr. Yung resigned from Citic Pacific to take responsibility for unauthorized bets made by the com-
Groupon employees at work in the company’s Chicago headquarters. three quarters of e-commerce transactions in China, also plans to offer local deals on Juhuasuan. The company is taking a different approach—rather than selling coupons for a cut of the deal, Juhuasuan allows merchants to submit deal offers for promotion to Taobao’s 370 million registered users, free of charge. The company earns revenue from premium services for merchants such as keyword advertising. Taobao’s commission-free model helped the website overtake eBay’s Chinese website, causing the company to largely pull out of China in 2006, and enabled Taobao to grow its user base rapidly to 370 million registered users and 400 billion
yuan in transactions last year. Groupon’s Gaopeng will have the aid of Tencent, which popularized instant-messaging in China. Gaopeng will be headed by Yun Ouyang, formerly a vice general manager at Tencent. The companies declined to say how much Tencent invested, or how large its stake in Gaopeng is, but a Tencent spokeswoman Catherine Chan said there would be a lot of “experience sharing” between Groupon’s international experience and Tencent’s knowledge of the local market. —Geoffrey A. Fowler in San Francisco and Juliet Ye in Shanghai contributed to this article.
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THE WALL STREET JOURNAL.
Thursday, March 3, 2011
MARKETS
Centro deal gives it new lease on life More than three years after running afoul of its lenders, Centro Properties Group is on the verge of resolving the debt troubles that put the shopping-center giant on the brink of liquidation. Centro, based in Melbourne, Australia, confirmed late Monday a major restructuring that will turn over control of its Australian operations to several U.S. hedge funds and sell its U.S. centers. The deal enables Centro to shed more than half of its $16 billion debt load. The restructuring means a gamble that several U.S. hedge funds and private-equity investors took in the past year, buying Centro’s corporate debt on the cheap, is paying off.
The revamping also allows Centro to survive as a stand-alone company, if only in Australia, when such an outcome seemed unlikely. A major aspect of Centro’s restructuring is a deal to sell its 588 U.S. shopping centers to Blackstone Group LP for $9.4 billion. In that deal, Blackstone will pay Centro $1.4 billion in cash and take on the U.S. centers’ $8 billion of debt. The deal is expected to close by mid year. Now, in the next step of that restructuring, Centro will convert its corporate debt in Australia into equity. That means that investors who bought that debt in the past year for as little as 50 cents on the dollar in some cases will end up in control of a retail landlord with 112 malls in Australia and New Zealand collectively valued at up to $4 billion.
2010
after former CEO Andrew Scott led a debt-fueled buying spree during the boom years that made Centro one of the world’s largest retail landlords. But that spree also left Centro with $16 billion of debt. Centro first ran aground in late 2007, when it failed to refinance portions of its debts coming due. Its collapse was one of the biggest of the downturn in the commercial real-estate industry. Mr. Scott departed in early 2008, and Centro since has repeatedly convinced its lenders to postpone its due dates while it searches for a solution. The restructuring unveiled this week is designed to be that final answer. Centro’s corporate debt is divided between its Australian and U.S. operations. On the U.S. side, the investors
+6.2% €40.1 bn
BY KATE O’KEEFFE
RESULTS
SHARP UPSWING IN RESULTS
Pierre-André de Chalendar Chairman and Chief Executive Officer
OPERATING INCOME
+41%
Saint-Gobain, resuming its ambitious strategy on all fronts
€1.3 bn
Overall in 2011, Saint-Gobain expects to see more upbeat trading conditions in its key markets. It will pursue the proactive development policy begun in the second half of 2010, with a targeted increase in capital expenditure and financial investments. The Group’s acquisition priorities are clear: emerging countries, high value-added solutions in Habitat markets, and the consolidation of positions in Building Distribution.
DIVIDEND**
For 2011, Saint-Gobain is targeting robust organic growth and double-digit growth in operating income.
RECURRING NET INCOME*
+116% +15% €1.15
per share
Paid entirely in cash * excluding capital gains and losses on disposals, asset write-downs and non-recurring provisions ** amount to be recommended to the AGM
that hold Centro’s $2.7 billion of debt coming due in December—including J.P. Morgan, Bank of America Corp., Royal Bank of Scotland Group PLC, Centerbridge and Davidson Kempner—will receive payment at face value for their holdings as part of the Blackstone deal. In Australia, holders of Centro’s $3.3 billion in debt coming due in December will receive $600 million in cash to pay down their claims. The balance of their claims then will be converted into equity in Centro’s surviving Australian operations. So far, 73% of those lenders have agreed to the restructuring. Receiving the balance of the new Centro’s equity will be junior creditors and shareholders of Centro’s sister company, Centro Retail Trust, which will be merged into the surviving company.
HKEx’s profit rises 7%; it has no tie-up plans
“Saint-Gobain has put the crisis behind it. In 2010, amid a global economy still recovering from the crisis, we delivered a sharp upswing in our results. I firmly believe that the return to growth will be confirmed this year. That’s why Saint-Gobain is resuming its ambitious strategy on all fronts, in both emerging and mature markets.”
SALES
€3.1 bn
That includes some of Australia’s best-known malls, such as the Glen in Melbourne and the Galleria in Perth. Among those who collectively will own more than half of Centro’s equity after the conversion: Centerbridge Partners LP, Davidson Kempner Capital Management LLC, Appaloosa Management, Taconic Capital Advisors LP, Värde Partners and J.P. Morgan Chase & Co., the only originating bank that retained most of its position in the Australian debt. In the U.S., Blackstone hasn’t yet divulged its plans for the Centro shopping centers it is buying. The centers carry roughly $8 billion of debt, which Blackstone will need to assume, pay down, refinance or some combination of the three. Centro found itself mired in debt
UPCOMING EVENTS
April 28: publication of first-quarter sales June 9: AGM at the Palais des Congrès in Paris
Full details of results can be found at www.saint-gobain.com
Photos : Saint-Gobain
BY KRIS HUDSON AND MIKE SPECTOR
HONG KONG—Market operator Hong Kong Exchanges & Clearing Ltd. said net profit rose 7% in 2010, boosted by an increase in average daily turnover value on the stock exchange and a record year for initial public offerings. The company also said it isn’t in talks with other exchange operators, following a flurry of merger announcements around the world. But it acknowledged it faces challenges in an “evolving exchange landscape,” and that mergers among leading exchanges would intensify competition. Hong Kong’s stock exchange, the most popular global venue for new share offerings during the past two years, has beaten rival exchanges in attracting issuers largely thanks to its ties with China. Companies raised US$57.74 billion through Hong Kong IPOs in 2010, according to data provider Dealogic. New York was a distant second with US$34.97 billion, while Shenzhen and Shanghai ranked third and fourth. HK Exchanges Chief Executive Officer Charles Li, speaking at a news conference Wednesday to discuss the results, predicted that Hong Kong’s first yuan-denominated IPO will happen this year. Mr. Li said that despite recent plans by some of the world’s largest exchanges to merge, “our strategy remains unchanged…We’re not in discussions with anybody.” Last month, Deutsche Börse AG and NYSE Euronext announced a merger that would create the world’s largest financial exchange, shortly after the London Stock Exchange Group and Toronto-based TMX Group set a merger of their own. In Asia, Singapore Exchange Ltd. announced in October a US$8.3 billion offer for all the shares of the operator of Australia’s stock exchange, ASX Ltd. All the deals require regulatory and shareholder approval. HK Exchanges said net profit for the 12 months ended Dec. 31 was HK$5.04 billion, up from HK$4.70 billion in 2009. The result was slightly below the average HK$5.09 billion forecast of 17 analysts in a Thomson Reuters poll. Revenue rose 8% to HK$7.57 billion.
Thursday, March 3, 2011
25
THE WALL STREET JOURNAL.
MARKETS
CapitaLand queries Beijing’s moves CEO of developer’s China unit says limits on home purchases won’t reduce prices; risk of creating pent-up demand BY ESTHER FUNG
Reuters
SHANGHAI—The chief executive of property developer CapitaLand Ltd.’s China unit said Tuesday that the country’s latest measures to cool the property sector, including restrictions on home purchases and reduced land supply for private development, will most likely result in pent-up demand rather than lowering prices. Beijing is concerned about overheating in the real-estate market after months of rising home prices prompted widespread resentment over unaffordable housing. In addition to raising interest rates three times since October, China ordered local governments to introduce restrictions such as banning residents from buying third or subsequent homes, after earlier measures such as higher down-payment requirements and mortgage rates had a limited effect. In an interview, CapitaLand China CEO Jason Leow said longerterm measures that make owning multiple units more expensive—such as higher interest rates, a real-estate tax, and possibly a higher stamp duty—would be more effective in managing the market. “We prefer market mechanisms where they address the real issues. By artificially curbing [home purchases] you’re just deferring the problem,” Mr. Leow said. He added that some of the Singapore-listed company’s customers have canceled purchases because of the new ownership limits, but not because the units were too expensive. CapitaLand China generally sells about 3,000 residential units a year, and plans to put 4,000 units up for sale in the country this year. The company’s revenue from sales of residential units totaled 5.4 billion yuan (US$821.9 million) in 2010. Residential property accounts for 33% of CapitaLand’s 10 billion Sin-
Uphill fight | China’s steps to rein in property prices
Laborers at a residential construction site in Hefei, China
2010 April 15 The State Council announces a rise in down payments for second-home buyers to a minimum 50%, from 40%. First-home buyers must pay 30%, from 20%, if the property exceeds 90 square meters. Banks must charge a minimum mortgage rate on second homes of 1.1 times benchmark interest rates (from as low as 0.7 times benchmark rates previously). April 30 Beijing municipal government limits home purchases, allowing a family only one new apartment purchase in addition to what they already own. Sept. 29 Central government ministries unveil rules that all first-home buyers must make a down payment of at least 30% of the gapore dollar (US$7.85 billion) portfolio in China. The firm also has offices, malls and serviced residences in more than 40 Chinese cities.
purchase price. Banks are ordered to stop lending for all purchases of third homes. Oct. 20 People's Bank of China raises its benchmark one-year lending and deposit rate by 0.25 percentage point. October- November Governments of cities such as Tianjin, Dalian, Shanghai, Hangzhou, Nanjing, Wenzhou, Ningbo, Suzhou, Guangzhou, Shenzhen, Xiamen, Fuzhou, Lanzhou, Sanya and Haikou, introduce limits on home purchases. Dec. 25 PBOC raises its benchmark one-year lending and deposit rate by 0.25 percentage point for the second time in 2 months.
2011 Jan. 26 State Council raises downpayment rates for second home “The good thing is that we’re in different sectors, which are affected by policy changes to a different degree,” Mr. Leow said, adding that
purchases to 60% from 50%. Extends limits on home purchases as a nationwide policy, in which resident owners of two or more homes, as well as nonresident owners, are barred from buying additional homes. Jan. 28 Shanghai and Chongqing launch trials of taxes on residential property. Shanghai's annual tax rates are 0.4% and 0.6%, depending on transaction prices. In Chongqing, the rates are 0.5%, 1% and 1.2%, depending on prices. February More local governments announce restrictions on home purchases. On Feb.8, PBOC raises its benchmark one-year lending and deposit rates by 0.25 percentage point for the third time in a little over 3 months. Source: Dow Jones Newswires
the company’s retail and office operations are benefiting from the government’s efforts to boost domestic consumption.
He said the government’s restrictions on the number of units people can buy will limit demand in the short term, “but in the long term we still think demand is very strong.” He added that factors such as urbanization, higher disposable incomes and a limited number of investment options that can serve as a hedge against inflation will continue to make China’s property market attractive. Analysts say property developers in China need to have strong balance sheets, given the government’s efforts to cool the sector and rein in bank lending. However, the impact of such measures on companies that had strong sales last year, such as China Vanke Co., which posted a record 108 billion yuan in sales for 2010, will likely be small. “Bigger players in the market won’t have cash-flow problems,” said Mr. Leow. “We actually monitor their gearing ratios and they are still in very healthy positions. Smaller players may face some problems, but maybe not immediately. “There are lots of individual companies who own pieces of land here and there, and we can see some opportunities moving forward to take over some of these projects.” CapitaLand China has more cash on hand than borrowed funds, Mr. Leow said, adding that despite lower interest rates on U.S. dollar loans, CapitaLand China borrows in yuan because the currency serves as a natural hedge. The unit’s revenue is denominated in yuan. CapitaLand China may also consider issuing yuan-denominated bonds if there is enough demand for such instruments, but not as a way of speculating the currency will rise. “Obviously in Hong Kong, there’s demand for yuan-denominated financial instruments. So that’s something that we’ll look at if there’s demand, but not so much because we like the currency,” he said.
BY ROSS KELLY SYDNEY—Westfield Group said Wednesday that co-founder Frank Lowy will relinquish his executive role at the shopping-mall giant and hand over power to two of his sons. After half a century at the reins, the group’s 80-year-old executive chairman and one of Australia’s richest men will become nonexecutive chairman at the company’s annual shareholder meeting May 25. While the move isn’t entirely surprising given his age—and the Czech-born Mr. Lowy has indicated that he will stay close to the company’s affairs—the end of his executive tenure is a significant turn for one of Australia’s most successful businesses. Westfield’s first mall was opened by John Saunders and Mr. Lowy in 1959 in the western Sydney suburb of Blacktown. The company was floated on the Australian Stock Exchange in 1960 and now owns 119 malls in the U.S., the U.K. and Australia. Mr. Lowy’s sons Peter and Steven Lowy, who are currently joint managing directors and have worked at
the company for more than two decades, have been appointed joint chief executive officers in a move unlikely to surprise the market. A third son, David Lowy, and Australian businessman David Gonski won’t stand for re-election to the board. While Peter Lowy and Steven Lowy will be joint CEOs, significant moves or changes in the company’s direction wouldn’t likely be implemented without the buy-in of the broader senior management team, which will continue to include the chairman, Credit Suisse analyst Stephen Rich said. “I think the key point is that the group has been incredibly well positioned from a progression perspective,” Mr. Rich said. “Steven and Peter have worked through the gamut of businesses across Westfield, and that’s a standout relative to some of the other big Australian companies with regards to succession.” Frank Lowy said in a statement that he will be “an active and involved” chairman, staying close to the business “and contributing to the strategy and all major decisionmaking for the group.”
“I am healthy and committed and I will continue to contribute to the group which has been my life for more than 50 years,” he said. Chief Financial Officer Peter Allen will stand for election to the board and Brian Schwartz will be appointed deputy chairman to succeed David Lowy. Credit Suisse’s Mr. Rich said the departure of David Lowy and David Gonski, who have served for 34 and 25 years, respectively, on the board may bring about an increased perception of independence under the strictest corporate governance interpretations and an introduction of some fresh perspectives—depending on the elected replacement. Westfield has just completed a restructuring in which a 50% share of its Australian malls was spun out into a separately listed company. Capital raised from the move could help it push into new markets in Europe or China. Michael Gutman, who heads up Westfield’s U.K. and European operations, has been given the extra responsibility of developing the business in new international markets, Frank Lowy said Wednesday.
Bloomberg News
Westfield founder Lowy to give up executive role
Frank Lowy, shown in 2009, said he will still be ‘active’ at the company.
26
THE WALL STREET JOURNAL.
Thursday, March 3, 2011
INTERNATIONAL INVESTOR
ADP payroll report pressures Treasurys BY MIN ZENG
tion pressure and hurt consumer spending, slowing growth. In late morning trading, the benchmark 10-year note was down 3/32 to yield 3.4271%. Bond yields move inversely to prices. The monthly jobs report from Automatic Data Processing Inc. showed private-sector employers in the U.S. added 217,000 jobs in February, compared with 189,000 in January and a market consensus of 170,000. Economists in a Dow Jones Newswires survey expect Friday’s nonfarm-payrolls report from the U.S. government, which measures private and government hiring, to show an expansion of 200,000 jobs in February.
Treasury prices declined as a private-sector employment report spurred optimism about U.S. payrolls data due on Friday. Still, some invesU.S. CREDIT tors were cautious MARKETS as antigovernment protests spread to Oman, raising concern that the unrest could reach large oil producers such as Saudi Arabia. Worries about the potential disruption of oil supplies from the region has pushed crude-oil-futures prices sharply higher in recent weeks. Many investors are concerned that higher oil prices could increase global infla-
European rivals outpace dollar BY ANDREW J. JOHNSON
day. Sterling rose to its highest level since January 2010 in the wake of improving U.K. domestic data. Meanwhile, the dollar fell to a record low against the haven Swiss franc. In noon trade, the euro was at $1.3864 from $1.3770 late Tuesday in New York. The dollar fetched 81.60 yen from 81.92 yen. The pound rose to $1.6311 from $1.6256 after strong U.K. economic data. The dollar traded at 0.9220 franc, from the previous record low of 0.9229 franc, and 0.9296 franc late Tuesday.
NEW YORK—The dollar swooned Wednesday as traders pushed the greenback to recent lows against three rival EuroCURRENCY pean currencies MARKETS based on rate-increase expectations from Europe’s central banks, as well as resurfacing Middle East tensions. The euro set a new four-month high as investors positioned themselves aggressively ahead of a European Central Bank meeting Thurs-
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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
NAV
—%RETURN— YTD 12-MO 2-YR
n AHW CAPITAL MANAGEMENT Tel (+49) 1805 - 23 82 82 www.ahw-capital.com AHW Top-Div.Int.
GL
EQ LUX 03/01 EUR
53.08
3.8
7.9
20.4
15.1 14.1 17.2 17.9 16.0 16.7 18.2 9.6 9.7 9.7 9.6 9.6 8.9 8.9 8.9 9.0 9.0 9.1 9.2 10.2 9.2 9.3 9.2 8.2 8.2 8.2 8.7 8.8 9.8 15.9 14.8 15.4 16.9 8.4 8.4 8.5 8.5 8.5
32.2 30.9 32.7 33.5 31.4 32.1 33.8 19.2 19.3 19.3 19.2 19.2 18.3 18.4 18.4 18.4 18.4 18.6 18.7 19.9 27.1 27.2 27.2 25.9 26.0 25.9 26.6 26.6 27.7 46.4 45.0 45.8 47.6 26.9 26.9 27.1 27.1 27.2
n ALLIANCE BERNSTEIN www.alliancebernstein.com/investments Tel. +800 2263 8637 Am Eq Blend A Am Eq Blend B Am Growth A Am Growth AX Am Growth B Am Growth C Am Growth I Am Income A Am Income A2 Am Income A2 Am Income AT Am Income AT Am Income B Am Income B2 Am Income B2 Am Income BT Am Income BT Am Income C Am Income C2 Am Income I Emg Mkts Debt A Emg Mkts Debt A2 Emg Mkts Debt AT Emg Mkts Debt B Emg Mkts Debt B2 Emg Mkts Debt BT Emg Mkts Debt C Emg Mkts Debt C2 Emg Mkts Debt I Emg Mkts Growth A Emg Mkts Growth B Emg Mkts Growth C Emg Mkts Growth I Eur Income A Eur Income A Eur Income A2 Eur Income A2 Eur Income AT
US US US US US US US OT OT OT OT OT OT OT OT OT OT OT OT OT GL GL GL GL GL GL GL GL GL GL GL GL GL OT OT OT OT OT
EQ EQ EQ EQ EQ EQ EQ OT OT OT OT OT OT OT OT OT OT OT OT OT BD BD BD BD BD BD BD BD BD EQ EQ EQ EQ OT OT OT OT 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 LUX LUX LUX LUX LUX LUX LUX LUX
Japan Small/Mid-Cap Equity
BY PRUDENCE HO AND YVONNE LEE
Leading 10 Performers
02/28 USD 02/28 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 HKD 03/01 USD 03/01 HKD 03/01 USD 03/01 USD 03/01 HKD 03/01 USD 03/01 HKD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 EUR 03/01 USD 03/01 EUR 03/01 USD 03/01 EUR
11.77 10.94 35.79 38.89 29.74 32.21 40.04 8.83 165.80 21.28 68.64 8.81 8.83 141.73 18.19 69.03 8.86 8.83 27.13 8.83 16.16 22.43 16.21 16.16 21.36 16.18 16.16 21.93 16.16 38.17 31.98 32.91 42.71 6.88 9.48 14.34 19.75 6.88
3.4 3.3 6.3 6.4 6.1 6.2 6.4 1.2 1.1 1.1 1.2 1.2 1.1 1.1 1.1 1.0 1.0 1.1 1.1 1.3 -0.5 -0.5 -0.5 -0.7 -0.7 -0.7 -0.6 -0.6 -0.4 -3.5 -3.7 -3.6 -3.4 1.9 1.9 2.0 2.0 2.0
NAV GF AT LB DATE CR
Eur Income B Eur Income B Eur Income B2 Eur Income B2 Eur Income BT Eur Income C Eur Income C Eur Income C2 Eur Income C2 Eur Income I Eur Income I Eur Strat Value A Eur Strat Value A Eur Strat Value I Eur Strat Value I Eur Value A Eur Value A Eur Value B Eur Value B Eur Value C Eur Value C Eur Value I Eur Value I EuroZone Strat Val AX EuroZone Strat Val AX EuroZone Strat Val BX EuroZone Strat Val BX EuroZone Strat Val CX EuroZone Strat Val IX EuroZone Strat Val IX Gl Balanced (Euro) A Gl Balanced (Euro) B Gl Balanced (Euro) C Gl Balanced (Euro) I
OT OT OT OT OT OT OT OT OT OT OT EU EU EU EU EU EU EU EU EU EU EU EU EU EU EU EU EU EU EU EU EU EU EU
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FUND NAME
OT OT OT OT OT OT OT OT OT OT OT EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ BA BA BA BA
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
03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01 03/01
NAV
EUR USD EUR USD EUR EUR USD EUR USD EUR USD EUR USD EUR USD EUR USD USD EUR EUR USD USD EUR USD EUR EUR USD EUR USD EUR USD USD USD USD
6.88 9.48 13.23 18.23 6.87 6.88 9.48 14.22 19.59 6.88 9.48 9.34 12.87 9.64 13.28 10.16 14.00 12.73 9.24 9.77 13.46 16.31 11.84 11.53 8.37 7.44 10.25 6.31 12.69 9.21 17.21 16.57 17.01 17.66
—%RETURN— YTD 12-MO 2-YR 1.8 1.8 1.9 1.9 1.8 1.8 1.8 1.9 1.9 2.0 2.0 4.0 4.0 4.1 4.1 4.0 4.0 3.8 3.8 3.9 3.9 4.1 4.1 6.5 6.5 6.3 6.3 6.4 6.6 6.6 NS NS NS NS
7.7 7.7 7.7 7.7 7.7 7.9 7.9 8.1 8.1 9.0 9.0 12.9 12.9 13.7 13.7 13.9 13.9 12.8 12.8 13.5 13.5 14.8 14.8 20.6 20.6 19.4 19.4 20.2 21.7 21.7 NS NS NS NS
NS NS NS NS NS NS NS NS NS NS
FUND MGM'T CO.
NAV GF AT LB DATE CR
NAV
26.1 26.1 26.2 26.2 26.1 26.4 26.4 26.5 26.5 27.5 27.5 26.7 26.7 27.6 27.6 29.0 29.0 27.7 27.7 28.4 28.4 30.0 30.0 28.1 28.1 26.9 26.9 27.5 29.2 29.2 NS NS NS NS
—%RETURN— YTD 12-MO 2-YR
2352.40
1.7
32.3
54.4
99.90
-18.5
-3.4
10.2
n CREDIT PACIFIC ASSET MANAGMENT www.creditpacific.com GL OT WSM 03/01 USD
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
vember, citing data from business consultancy Frost & Sullivan. Activity in Hong Kong’s IPO market is picking up after a slow start to the year—only seven IPOs raising a total of US$258 million had been completed as of Wednesday, according to data provider Dealogic. At least three companies, aiming to raise around US$3.5 billion, have
FUND NAME
NAV GF AT LB DATE CR
Gl Balanced A Gl Balanced B Gl Balanced C Gl Balanced C Gl Balanced I Gl Bond A Gl Bond A2 Gl Bond A2 Gl Bond AT Gl Bond AT Gl Bond B Gl Bond B2 Gl Bond B2 Gl Bond BT Gl Bond BT Gl Bond C Gl Bond C2 Gl Bond I Gl Conservative A Gl Conservative A2 Gl Conservative B Gl Conservative B2 Gl Conservative C Gl Conservative C2 Gl Conservative I Gl Eq Blend A Gl Eq Blend B Gl Eq Blend C Gl Eq Blend I Gl Growth A Gl Growth B Gl Growth C Gl Growth I Gl High Yield A
US US US US US OT OT OT OT OT OT OT OT OT OT OT OT OT US US US US US US US GL GL GL GL GL GL GL GL OT
BA BA BA BA BA OT OT OT OT OT OT OT OT OT OT OT OT OT BA BA BA BA BA BA BA EQ EQ EQ EQ EQ EQ EQ EQ 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 LUX LUX LUX LUX
03/01 USD 03/01 USD 03/01 USD 03/01 EUR 03/01 USD 03/01 USD 03/01 HKD 03/01 USD 03/01 HKD 03/01 USD 03/01 USD 03/01 HKD 03/01 USD 03/01 HKD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD
FUND NAME
NAV GF AT LB DATE CR
Platinm-Gbl Dividend Platinm-Nordic Platinm-Premier Platinm-Turnberry
GL OT OT OT
NAV 17.91 16.84 17.59 12.77 18.73 9.44 133.39 17.12 73.40 9.42 9.44 115.47 14.82 73.63 9.45 9.44 14.78 9.44 15.49 18.06 15.50 16.97 15.52 17.58 15.57 12.73 11.81 12.44 13.56 45.97 37.93 43.88 51.52 4.69
—%RETURN— YTD 12-MO 2-YR 2.2 2.1 2.2 2.2 2.4 0.1 0.1 0.1 0.1 0.1 0.0 -0.1 -0.1 -0.1 -0.1 0.1 0.1 0.2 1.2 1.2 1.1 1.1 1.1 1.2 1.3 3.7 3.5 3.6 3.8 2.4 2.3 2.4 2.6 2.3
10.4 9.3 10.1 10.1 11.2 4.7 4.6 4.6 4.7 4.7 3.7 3.6 3.6 3.6 3.6 4.2 4.2 5.2 7.1 6.7 6.0 5.7 6.6 6.3 7.6 13.7 12.6 13.2 14.6 13.5 12.4 13.0 14.4 15.6
23.8 22.6 23.5 23.5 24.7 11.0 10.9 10.9 10.9 10.9 9.9 9.9 9.9 9.9 9.9 10.5 10.5 11.6 15.3 15.1 14.1 13.9 14.8 14.6 16.1 32.2 30.9 31.6 33.3 29.7 28.4 29.1 30.8 37.6
CYM USA USA USA USA
01/31 10/31 01/31 01/31 05/29
USD USD USD USD USD
102.26 129.92 115.19 113.15 35.02
CYM CYM CYM USA
01/31 01/31 08/29 01/31
USD SEK USD USD
78.75 637.61 28.37 60.53
—%RETURN— YTD 12-MO 2-YR 2.0 -4.7 NS -0.6
26.1 1.6 NS -0.4
33.5 7.9 NS NS
GL GL GL GL GL
OT OT OT OT OT
CYM LUX CYM CYM AUT
02/22 02/22 02/22 02/22 02/22
USD USD USD USD EUR
52.89 2490.00 1257.12 1217.36 7298.00
-3.3 -3.2 -4.1 -5.2 -2.4
56.4 32.0 41.5 49.4 19.0
-22.3 -18.7 -1.7 -10.8 -9.4
11.2 11.4 11.3 0.1 14.4 0.1 0.1
8.1 8.3 8.3 17.5 14.4 17.4 17.7
NS NS 3.5 3.9 4.8 3.2 4.0
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 OT OT OT OT OT
EQ OT OT OT
NAV
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*
OT OT OT OT OT
0.3 NS -0.9 2.0 -18.2
4.4 NS 5.0 19.5 -63.7
LEGAL CURR. BASE
YTD
Parvest BNP Paribas JPYLUX Equity Japan Small Cap C UBS (Lux) EF UBS Equity Fund JPYLUX Small Mid Caps Japan P Management Company S.A. M&G Japan M&G Group EURGBR Smaller Companies A EUR Henderson Henderson USDLUX HorizonJapaneseSmlrComsA2 Management S.A. Schroder ISF Schroder JPYLUX Japanese Sm Comp A Acc Investment Mgmt Luxembourg SA Aberdeen Aberdeen Asset GBPLUX GlobalJapaneseSmCosD2 Managers Limited(Lux) SGAM Fund Amundi JPYLUX Eqs Japan Small Cap A JF Japan OTC JF Asset JPYHKG Management Limited (HK) PineBridge PineBridge USDIRL Japan Small Companies Y Investments Ireland Ltd PineBridge PineBridge USDIRL Japan Smaller Com Plus A Investments Ireland Ltd
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AlexandraConvertibleBondFundI,Ltd.(ClassA) OT OT VGB 01/31 USD
Platinm-All Star Platinm-All Weather Platinm-Dynasty Platinm-Emancipation Platinm-Equity Plus
FUND FUND RATING * NAME
% Return in $US ** 1-YR 2-YR 5-YR
11.53 34.63 37.88 -6.54 6.44 28.04 39.16 -6.24 5.42 26.24 45.57 -3.90 4.45 25.43 36.37 -0.53 5.32 24.82 32.37 -4.13 3.21 23.95 28.37 -2.36 8.63 22.72 30.54 -11.30 13.30 22.06 28.87 -15.34 6.45 21.60 30.76 -2.88 4.24 20.41 27.17 -3.99
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
plans to list in Hong Kong in the next few weeks. Recent weakness in Hong Kong’s benchmark Hang Seng Index likely weighed on the territory’s IPO market. The blue-chip index closed as low as 22601 on Feb. 24 after rising as high as 24988 last year, but has since rebounded around 2% from the year-to-date low.
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n ALEXANDRA INVESTMENT MANAGEMENT Tel: +1 212 301 1800 Fax: +1 212 301 1810
CPS-Master Priv Fund
Funds that invest primarily in equities of small-/mid-cap Japanese companies At least 75% of total assets are invested in equities. Ranked on % total return (dividends reinvested) in Euros for one year ending March 02, 2011
HONG KONG—Dadida, a manufacturer and retailer of children’s clothing in China, aims to raise US$400 million to US$500 million from an initial public offering, people familiar with the situation said Wednesday. Dadida aims to list on the Hong Kong stock exchange as soon as September, one of IPO the people said, OUTLOOK adding that the company will use the proceeds from the offering to open stores and expand production facilities. Deutsche Bank AG is one of the banks handling the deal, the people said. Dadida’s listing plan comes less than six months after another Chinese retailer of children’s products, Boshiwa International Holding Ltd., raised US$369 million ahead of its Hong Kong listing in September. On the first day of trading, shares of Boshiwa soared 41% above the offer price of 4.98 Hong Kong dollars (64 U.S. cents) as rising spending on children’s apparel and products in China buoyed investors’ interest. Boshiwa closed down 2.3% at HK$4.63 on Wednesday. China’s children’s product market will likely almost double to 311 billion yuan ($47.33 billion) in 2013 from 165 billion yuan in 2009, UBS AG said in a research report in No-
INTERNATIONAL INVESTMENT FUNDS FUND NAME
FUND SCORECARD
Chinese maker of kids’ clothes plans offering
9.8 NS 11.6 24.1 -45.6
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
GL GL GL GL GL GL GL
OT OT OT OT OT OT OT
CYM CYM CYM VGB VGB VGB VGB
09/30 09/30 09/30 01/31 11/30 01/31 01/31
EUR 1049.82 GBP 1056.92 USD 1332.74 EUR 224.87 GBP 234.75 JPY 15874.03 USD 801.13
FUND NAME
NAV GF AT LB DATE CR
NAV
—%RETURN— YTD 12-MO 2-YR
Gl High Yield A2 Gl High Yield A2 Gl High Yield AT Gl High Yield AT Gl High Yield B Gl High Yield B2 Gl High Yield B2 Gl High Yield BT Gl High Yield BT Gl High Yield C Gl High Yield C2 Gl High Yield I Gl Thematic Res. A Gl Thematic Res. B Gl Thematic Res. I Gl Value A Gl Value B Gl Value C Gl Value I Greater China A Greater China B Greater China C India Growth A India Growth AX India Growth B India Growth BX India Growth I Int'l Health Care A Int'l Health Care B Int'l Health Care C Int'l Health Care I Int'l Technology A Int'l Technology B Int'l Technology C Int'l Technology I Japan Eq Blend A Japan Eq Blend B Japan Eq Blend C Japan Growth A Japan Growth B Japan Growth C Japan Strat Value A Japan Strat Value B Japan Strat Value C Real Estate Sec. A Real Estate Sec. B Real Estate Sec. I Short Mat Dollar A Short Mat Dollar A2 Short Mat Dollar AT Short Mat Dollar B Short Mat Dollar B2 Short Mat Dollar BT Short Mat Dollar C Short Mat Dollar C2 Short Mat Dollar I US Thematic Portfolio A EUR H US Thematic Portfolio B EUR H US Thematic Portfolio C EUR H US Thematic Portfolio I EUR H US Thematic Research A US Thematic Research B US Thematic Research I
OT OT OT OT OT OT OT OT OT OT OT OT GL GL GL GL GL GL GL AS AS AS EA EA EA EA EA OT OT OT OT OT OT OT OT JP JP JP JP JP JP JP JP JP OT OT OT US US US US US US US US US US US US US US US US
85.39 10.96 4.65 36.23 4.69 135.73 17.42 36.85 4.73 4.69 16.17 4.69 17.63 15.24 19.84 12.16 11.04 11.76 13.06 43.11 37.71 42.34 137.07 120.22 141.92 101.57 125.32 139.17 116.03 132.69 153.47 137.16 117.48 131.86 155.23 6099.88 5822.20 5973.14 5713.54 5454.58 5595.92 6893.00 6587.00 6741.00 17.05 15.40 18.49 7.45 10.35 7.44 7.45 10.25 7.46 7.45 14.49 7.45 19.75 19.62 19.69 19.85 11.01 10.01 11.96
2.3 2.3 2.5 2.5 2.1 2.2 2.2 2.3 2.3 2.2 2.3 2.4 1.5 1.3 1.6 5.0 4.7 4.9 5.2 -2.7 -2.8 -2.8 -10.3 -10.2 -10.4 -10.4 -10.2 1.5 1.4 1.5 1.7 5.6 5.4 5.5 5.7 2.1 2.0 2.1 1.7 1.6 1.6 8.9 8.8 8.8 2.4 2.3 2.6 0.8 0.9 0.8 0.7 0.8 0.8 0.7 0.8 0.9 5.2 5.0 5.1 5.4 5.3 5.0 5.5
For information about listing your funds, please contact: Carson Wong tel: +852 2831-6481; email:
[email protected]
OT OT OT OT OT OT OT OT OT OT OT OT EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ BD BD BD BD BD BD BD BD BD 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 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
03/01 HKD 03/01 USD 03/01 USD 03/01 HKD 03/01 USD 03/01 HKD 03/01 USD 03/01 HKD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 02/28 JPY 02/28 JPY 02/28 JPY 02/28 JPY 02/28 JPY 02/28 JPY 03/01 JPY 03/01 JPY 03/01 JPY 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 USD 03/01 EUR 03/01 EUR 03/01 EUR 03/01 EUR 03/01 USD 03/01 USD 03/01 USD
15.7 15.7 15.9 15.9 14.5 14.6 14.6 14.6 14.6 15.1 15.3 16.2 22.6 21.3 23.5 14.4 13.2 13.8 15.4 13.2 12.1 12.7 11.4 11.8 10.3 10.6 12.3 -0.9 -1.9 -1.3 -0.1 28.4 27.1 27.8 29.4 4.2 3.2 3.7 2.6 1.7 2.2 12.2 11.2 11.7 21.0 19.8 22.0 4.8 5.0 5.0 4.4 4.6 4.5 4.4 4.5 5.4 NS NS NS NS 28.0 26.7 29.0
37.7 37.7 37.7 37.7 36.1 36.3 36.3 36.4 36.4 37.0 37.1 38.4 48.4 46.9 49.6 35.1 33.8 34.6 36.2 36.2 34.9 35.6 NS 50.8 NS 49.3 51.6 16.2 15.1 15.7 17.1 44.8 43.4 44.1 46.0 16.2 15.1 15.7 9.6 8.5 9.1 27.0 25.7 26.3 47.5 45.9 48.6 9.7 9.8 9.8 9.2 9.3 NS 9.2 9.3 10.3 NS NS NS NS 34.9 33.5 36.0
Thursday, March 3, 2011
27
THE WALL STREET JOURNAL.
INTERNATIONAL INVESTOR
U.S., European stocks fret as crude tops $100 BY JONATHAN CHENG
its 30% stake in Yahoo Japan, citing an unnamed source.
U.S. stocks struggled as crude oil neared $102 a barrel amid steppedup fighting in Libya. The Dow Jones Industrial Average was off 11.33 points, or 0.1%, at 12046.70 in midday ABREAST OF trading. The StanTHE MARKET dard & Poor’s 500stock index was fractionally lower at 1305.86 while the Nasdaq Composite gained 0.3% to 2744.49. The market moves came as crude oil rose 2% to $101.66 a barrel for April delivery on the New York Mercantile Exchange. Brent crude oil, traded in London, rose 1.6% to $117.25 a barrel. Gold also gained, topping Tuesday’s settlement record of $1,430.70 in intraday trade. The March futures contract was up $6.80 at $1,437.50. Leading the declines were financial and consumer staple stocks. Boeing led the Dow components with a 1.7% decline, with McDonald’s dropping 1.2%. MetLife fell 4.6% after American International Group said it was accelerating plans to cash out of its stake in the insurer through share sales that could raise more than $9 billion in proceeds, most of which will be used to repay U.S. taxpayers for the AIG bailout ahead of schedule. AIG rose 0.6%. Yahoo climbed 3.5% after The Wall Street Journal reported the Internet company was looking to sell
European stocks Shares fell on the same worries about oil prices and the unrest in the Mideast and North Africa. The Stoxx Europe 600 index fell 0.7% to 282.77. Mideast markets fell sharply. Saudi Arabia’s benchmark TASI index fell 3.9% and Dubai’s DFM stock index declined 3.5%. Swiss Life Holding shed 3.3% in Zurich after reporting operating profit below expectations. Standard Chartered rallied 4.3% in London after the bank reported a 29% increase in annual profit, helped by lower impairment provisions. Carrefour dropped 3.9% in Paris after the group said it will spin off its Dia hard-discount unit and list 25% of its European property unit. “We struggle to see how this move will create significant incremental value,” Royal Bank of Scotland said in a note to clients. Real-estate, media and telecommunications conglomerate Bouygues rose 3% after saying it expects sales to grow this year, even as it reported a 19% drop in annual profit in 2010. In Germany, sportswear specialist Adidas rose 1.1% after it lifted its sales guidance for 2011. Car stocks fell. BMW and Daimler both dropped 2.8%. Volkswagen lost 1.4%.
NAV GF AT LB DATE CR
NAV
—%RETURN— YTD 12-MO 2-YR
n ALLIANZ GLOBAL INVESTORS KAPITALANLAGEGESELLSCHAFT Concentra AE Industria AE InternRent AE
EU EQ DEU 03/01 EUR EU EQ DEU 03/01 EUR EU BD DEU 03/01 EUR
64.60 77.00 39.06
4.5 0.0 -3.4
30.9 9.5 5.6
43.0 24.8 5.4
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 02/18 USD 396377.48
-4.5
35.3
72.7
Japanese government-bond yields dropped as weaker stock markets and rising oil prices prompted a further shift away from riskier assets. But investors are still divided over how rising oil prices will affect the global economic BOND recovery, and that MARKETS is keeping them cautious about the bond market’s near- and mediumterm outlook. The benchmark 10-year bond yield fell 0.035 percentage point to 1.27%. Yields and prices move in opposite directions. Among Asian borrowers, stateowned Korea Development Bank aimed to price a 5½-year benchmark bond later Wednesday. It has lowered its yield guidance to 1.95 to 2.05 percentage points above comparable U.S. Treasurys, according to a term sheet for the proposed deal. Earlier term sheets had given guidance of two to 2.10 percentage points over Treasurys. A benchmark-sized issue is at least $500 million, but according to the term sheet, the bond won’t be larger than $1 billion. The tightening of guidance follows relatively strong investor demand for the lender’s bond. By early evening in Asia, KDB had received around $2 billion in orders, a person familiar with the deal said.
FUND NAME
NAV GF AT LB DATE CR
NAV
GAMStarPharoEmerMktDebt&FXUSDAcc GAMStar-AsEqUSD Ord Ac GAMStar-AsPacEqEUR Acc GAMStar-ContEurEqEUR Ac GAMStar-EurpEqEUR Acc GAMStar-EurpEqUSD Acc GAMStar-JpnEq EUR Acc GAMStar-JpnEq JPY Acc GAMStar-JpnEq USD Acc GAMStar-World Eq EUR Acc
GL BD IRL 02/22 USD OT OT IRL 02/28 USD AS EQ IRL 03/01 EUR EU EQ IRL 02/28 EUR EU EQ IRL 02/28 EUR EU EQ IRL 02/28 USD JP EQ IRL 02/28 EUR JP EQ IRL 02/28 JPY JP EQ IRL 02/28 USD GL EQ IRL 02/28 EUR
10.74 14.06 118.84 12.78 202.26 17.04 102.65 1001.44 12.55 11.96
—%RETURN— YTD 12-MO 2-YR -3.0 -5.1 2.3 1.4 1.5 4.7 5.3 7.0 6.8 4.5
5.3 13.0 13.1 20.2 14.3 16.0 11.3 8.6 10.6 18.8
NS 39.2 23.2 28.0 23.7 29.2 19.4 17.9 21.4 26.3
n HSBC Trinkaus Investment Managers SA E-Mail:
[email protected] Telephone: 352 - 47 18471 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 GAM Asia Equity Hedge US GAM Asia Equity USD 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
GL OT 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 OT 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 VGB VGB
02/28 03/01 03/01 02/21 02/21 02/21 02/21 02/21 02/21 02/21 02/21 02/21 02/28 02/21 02/21 02/21 02/21 02/28 02/28 02/22 02/28 02/28 02/21 02/28 02/28 03/01 03/01 02/28 02/28 02/21 02/21 02/21 02/21 02/21 02/21 02/18 03/01 02/21 02/07 02/21 02/21 02/21 02/28 02/23 11/30
USD USD 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
265.89 693.17 1443.34 107.02 142.29 117.27 150.79 100.10 143.88 151.38 109.35 908.21 315.67 639.50 73.80 676.11 206.38 237.71 220.39 1075.20 292.65 237.00 324.45 132.27 9157.77 1280.16 9810.14 51.06 100.08 90.19 674.78 290.54 149.52 122.60 507.48 3408.32 2812.36 251.84 341.84 1031.32 334.99 649.55 2501.69 8139.31 116.46
-1.7 -4.1 4.2 2.7 2.7 4.5 4.5 3.5 3.5 1.2 1.6 1.6 8.2 1.8 4.2 1.9 1.7 -3.1 -2.4 4.0 6.0 -1.7 4.9 3.8 4.1 8.4 8.7 -0.1 0.0 -2.1 -1.0 3.5 3.5 3.6 3.6 3.4 -3.9 2.4 -0.3 0.1 0.1 3.3 7.6 0.1 2.5
2.3 12.3 14.4 13.3 13.3 23.5 23.5 16.9 16.9 6.6 7.3 7.7 28.8 -1.0 -4.6 -0.4 -1.4 9.0 8.9 34.8 18.3 -7.8 17.9 5.7 6.2 13.3 10.4 0.2 0.3 -19.8 5.8 10.0 10.1 10.3 10.4 28.6 16.2 13.1 5.7 6.8 6.8 17.1 20.2 6.5 10.3
29.7 40.2 28.4 15.3 15.3 24.5 24.5 17.6 17.6 8.0 8.5 8.9 41.7 1.4 1.0 1.8 0.9 11.5 12.0 44.0 30.6 35.2 47.5 13.4 14.1 23.4 19.4 0.5 0.1 -10.0 14.0 6.9 6.9 7.0 6.8 45.9 39.1 29.3 4.6 5.5 5.5 48.4 31.6 3.5 NS
AS OT OT OT
EQ OT OT OT
IRL IRL IRL IRL
02/28 02/25 02/22 02/28
USD USD USD USD
19.95 10.66 11.06 10.39
-1.4 -2.6 1.9 -1.5
13.8 NS 8.9 NS
62.3 NS NS NS
n GAM Star Fund Plc GAMStar China EqUSD (SCHUA) GAMStar Emer Mkt Rates USD Acc GAMStar Global Rates USD Acc GAMStar Keynes Quant Strategy USD Acc
Prosperity Return Fund A Prosperity Return Fund B Prosperity Return Fund C Prosperity Return Fund D Renaissance Hgh Grade Bd A Renaissance Hgh Grade Bd B Renaissance Hgh Grade Bd C Renaissance Hgh Grade Bd D
JP OT OT OT JP JP JP JP
BD OT OT OT BD BD BD BD
LUX LUX LUX LUX LUX LUX LUX LUX
02/28 02/28 02/28 02/28 02/28 02/28 02/28 02/28
JPY JPY USD EUR JPY JPY USD EUR
9969.50 8968.45 98.72 113.33 10244.11 9174.35 100.20 106.64
1.6 4.1 5.5 1.8 2.3 4.7 5.9 1.2
LIST YOUR FUNDS
-0.2 -3.7 5.3 13.5 3.3 -0.5 8.6 7.4
NS NS NS NS 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)
AS EQ LUX 03/01 SGD AS EQ LUX 03/01 USD AS EQ LUX 03/01 SGD AS EQ LUX 03/01 USD AS EQ LUX 03/01 SGD AS EQ LUX 03/01 USD AS EQ LUX 03/01 SGD AS EQ LUX 03/01 USD EA EQ LUX 03/01 SGD EA EQ LUX 03/01 USD AS EQ LUX 02/28 USD OT EQ LUX 03/01 USD AS EQ LUX 03/01 SGD AS EQ LUX 03/01 USD OT OT LUX 03/01 USD AS BD LUX 03/01 USD OT OT LUX 03/01 USD OT OT LUX 03/01 SGD EU EQ LUX 03/01 EUR GL EQ LUX 03/01 SGD GL EQ LUX 03/01 USD OT OT LUX 03/01 SGD OT OT LUX 03/01 USD GL EQ LUX 03/01 SGD GL EQ LUX 03/01 USD OT OT LUX 03/01 USD OT OT LUX 03/01 USD GL EQ LUX 03/01 SGD GL EQ LUX 03/01 USD GL EQ LUX 03/01 EUR GL EQ LUX 03/01 SGD GL EQ LUX 03/01 USD GL EQ LUX 03/01 SGD GL EQ LUX 03/01 USD EE EQ LUX 03/01 USD
BY COLIN NG AND LESLIE SHAFFER
BY KAZUHIRO SHIMAMURA AND NATASHA BRERETON
[ Search by company, category or country at asia.WSJ.com/funds ] FUND NAME
Higher oil prices sink Asian share markets
Japan yields fall on move toward safety
14.91 15.40 14.43 20.11 12.90 49.21 14.40 28.37 14.70 26.15 10.74 17.25 15.54 32.65 11.01 10.77 11.19 13.62 33.63 14.47 61.73 12.37 21.56 14.45 31.87 8.64 15.91 15.21 14.10 22.22 26.95 21.87 14.16 44.24 16.82
-5.5 -4.1 -4.1 -3.4 -2.3 -1.5 -3.9 -3.2 -10.9 -10.2 -5.5 1.2 -4.4 -3.7 -7.5 -0.6 -6.8 -8.1 -3.5 -5.5 -4.8 -15.9 -14.7 -5.7 -5.0 -4.2 0.0 4.4 5.1 -2.2 0.2 1.0 -7.8 -6.4 4.0
In print & online. Contact:
NS 37.9 NS 15.2 -1.5 9.1 7.1 18.5 5.4 16.5 32.3 17.3 12.0 24.0 22.1 NS 11.0 NS 20.1 NS 21.6 NS 9.3 5.6 16.9 21.5 13.8 10.5 22.3 43.4 32.7 46.8 NS 16.3 26.9
NS NS NS 48.4 NS 38.0 NS 43.5 NS 52.4 60.3 39.5 NS 60.0 58.4 NS 56.8 NS 74.8 NS 63.1 NS 26.9 NS 47.9 54.3 NS NS 36.0 65.1 NS 72.8 NS 62.0 100.4
Asian stock markets slid Wednesday, with Japanese shares registering their biggest fall of the year, as concerns grew that rising oil prices will damage the global recovery. An overnight slide on Wall Street also hurt sentiment. Japan’s Nikkei Stock Average fell 2.4% to 10492.38, its biggest percentage loss since ASIAN-PACIFIC Aug. 31 and its STOCKS first loss in four sessions. Hong Kong’s Hang Seng Index dropped 1.5% to 23048.66, also breaking a three-day wining streak, while Australia’s S&P/ASX 200 declined 0.5% to 4803.21, China’s Shanghai Composite slipped 0.2% to 2913.81. South Korea’s Kospi gave up 0.6% to 1928.24, its lowest close since Nov. 30., and Taiwan’s Taiex shed 1.2% to 8619.90. Indian markets were closed for a national holiday. High fuel costs hit regional airlines. Cathay Pacific Airways fell 2.5%, Qantas Airways shed 2.2% in Sydney, All Nippon Airways dropped 3.1% in Tokyo, China Airlines fell 3.1% in Taipei, Singapore Airlines dropped 2.8%, and Thai Airways International fell 2.5% in Bangkok. Precious-metals shares gained as gold hovered near record levels. Gold miner Newcrest Mining gained 1.9% and Platinum Australia
rose 3.2% in Sydney, Shandong Gold Mining rose 3.7% and Zijin Mining Group rose 1.7% in Shanghai. In Tokyo, Aozora Bank slid 5% and Mitsubishi UFJ Financial Group fell 3.2% as financials lost ground on heightened risk-aversion. Most exporters also dropped on worries about possible weakened global demand due to higher energy costs. Toyota Motor lost 2.9% and Nintendo fell 3.9%. In Hong Kong, HSBC Holdings dropped 2.2% and Aluminum Corp. of China shed 1.2% to extend their losses after they reported disappointing 2010 results this week. Sands China tumbled 6.2% after parent Las Vegas Sands said it is being investigated by U.S. authorities over its compliance with antibribery laws in its Macau operations. BYD soared 9.2% after Germany’s Daimler said China has approved its 50-50 joint venture with the company. In Sydney, regional pay-TV company Austar United Communications surged 11% on news that major shareholder Liberty Global and rival Foxtel were in talks and weighing an Austar buyout. Foxtel is 25%owned by News Ltd., a unit of News Corp., which also owns The Wall Street Journal. In Seoul, auto makers bucked the broad market weakness on optimism over their February car sales. Kia Motors added 2.4% and Hyundai Motor rose 0.6%.
INTERNATIONAL INVESTMENT FUNDS
FUND NAME
NAV GF AT LB DATE CR
NAV
—%RETURN— YTD 12-MO 2-YR
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FUND NAME
NAV GF AT LB DATE CR
Eq. MENA EURO A Eq. MENA USD A Eq. US Rel Val A Money Market EURO A Money Market USD A
OT OT LUX OT OT LUX US EQ LUX EU MM LUX US MM LUX
03/01 03/01 02/28 02/28 02/28
EUR USD USD EUR USD
NAV 34.99 48.41 25.33 27.56 15.89
—%RETURN— YTD 12-MO 2-YR -16.2 -16.2 7.2 0.1 0.0
-4.3 -4.3 24.1 0.6 0.3
19.5 19.5 40.7 0.6 0.3
-7.0 -4.8 -5.1 -2.6
-16.3 0.1 NS -2.7
-5.6 6.6 NS 8.6
n MANULIFE ASSET MANAGEMENT TEL:(852)2108 1110 Internet:http://www.manulife.com.hk 47/F Manulife Plaza, Causeway Bay, Hong Kong American Growth American Growth AA 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
US EQ LUX 03/01 USD US EQ LUX 03/01 USD OT OT LUX 03/01 USD OT OT LUX 03/01 USD OT OT LUX 03/01 USD AS EQ LUX 03/01 USD AS EQ LUX 03/01 USD AS EQ LUX 03/01 USD AS EQ LUX 03/01 HKD EU EQ LUX 03/01 USD EU EQ LUX 03/01 USD EU EQ LUX 03/01 USD EU EQ LUX 03/01 USD GL EQ LUX 03/01 USD OT EQ LUX 03/01 USD GL EQ LUX 03/01 USD OT EQ LUX 03/01 USD EA EQ LUX 03/01 USD GL EQ LUX 03/01 USD GL EQ LUX 03/01 USD JP EQ LUX 03/01 USD JP EQ LUX 03/01 USD GL EQ LUX 03/01 USD OT OT LUX 03/01 USD OT OT LUX 03/01 USD EE EQ LUX 03/01 USD AS EQ LUX 03/01 USD OT OT LUX 03/01 USD US BD LUX 03/01 USD US EQ LUX 03/01 USD US BD LUX 03/01 USD OT OT LUX 03/01 USD
18.33 1.05 2.83 0.91 1.54 8.11 2.54 1.76 8.59 5.52 2.36 10.38 0.74 1.17 0.83 1.35 1.05 1.18 3.42 0.79 3.21 0.83 1.40 1.12 1.35 0.87 1.26 0.88 1.19 1.10 1.03 1.20
6.4 6.3 -1.1 -1.1 -2.0 -2.0 -2.0 -0.7 -0.6 2.9 2.9 7.8 7.8 0.2 5.1 4.3 3.9 -10.7 6.2 6.2 6.6 6.8 -3.8 2.1 -2.2 6.3 -2.7 -11.1 1.4 3.1 2.7 1.0
22.5 22.2 22.1 21.7 35.7 21.5 21.2 12.9 13.0 24.1 24.0 24.6 24.3 29.6 26.3 30.9 11.2 13.8 15.7 15.4 15.7 13.5 15.6 12.1 20.5 33.3 27.6 22.7 8.1 26.9 21.5 5.9
32.5 32.2 46.5 46.0 67.2 41.7 41.4 37.4 37.3 67.8 67.6 42.0 41.7 68.2 54.0 41.2 19.6 46.7 27.1 26.8 24.3 23.4 54.9 NS NS 83.0 52.1 72.0 13.9 56.4 58.8 7.9
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 02/23 USD
168.58
-7.4
29.0
75.3
n THE NATIONAL INVESTOR TNI Tower | Zayed 1st Street Khalidia| Web:www.tni.ae TNI Mena Real Estate Fund TNI MENA Special Sits Fund TNI MENA UCITS Fund TNI UAE Blue Chip Fund
OT OT OT OT
EQ BMU OT BMU OT IRL OT ARE
02/24 01/31 02/24 02/24
USD USD USD AED
760.22 1092.55 1010.59 4.62
n WEBSITE: WWW.VALUEPARTNERS.COM.HK, TEL: (852) 2880 9263, FAX: (852) 2564 8487 *formerly known as China ABH Shares Fund Intel-Chin Mainlnd Foc Intel-China Converg* VP Classic - A VP CLassic - B VP High Dividend Stk
AS AS AS AS OT
EQ EQ EQ EQ OT
CYM CYM CYM CYM CYM
02/28 02/15 03/01 03/01 02/14
USD USD USD USD USD
35.73 134.40 220.90 102.36 57.33
-3.4 -2.9 -1.4 -1.5 0.3
24.6 23.7 21.6 21.0 32.3
53.4 50.8 49.8 49.0 51.4
JP
EQ IRL 03/02 JPY
10026.00
8.6
13.8
18.3
JP JP
EQ IRL 03/02 JPY EQ IRL 04/27 JPY
6164.00 5230.34
9.0 -7.3
9.4 -5.4
10.7 -27.3
EQ IRL 03/02 JPY EQ IRL 03/02 JPY
7073.00 8536.00
7.8 10.7
10.4 14.7
15.1 14.3
4593.00 5274.00 5339.00
8.8 6.7 9.4
4.3 4.5 15.2
9.6 10.4 16.3
4317.00 4616.00 6810.00 9163.00 6622.00 7838.00 5204.00 12337.00 7662.00 7625.00 5914.00 2675.00
8.7 8.0 8.9 9.3 8.0 6.5 7.2 10.4 7.0 10.8 8.2 7.9
6.4 7.3 6.4 14.7 12.1 7.2 6.8 10.9 5.7 18.9 9.9 0.8
10.5 11.3 14.8 17.2 13.5 7.3 12.4 16.6 9.8 21.7 15.1 12.6
n YUKI MANAGEMENT & RESEARCH n YMR-N Series YMR-N Growth Fund
n Yuki 77 Series Yuki 77 General Yuki 77 Growth
n Yuki Chugoku Series
[email protected]
Yuki Chugoku Jpn Gen Yuki Chugoku JpnLowP
n Yuki Hokuyo Japan Series
n SENSIBLE ASSET MANAGEMENT LIMITED www.samfund.com.hk Tel: (852) 2868 6848 Fax: (852) 2810 9948 Asia Value Formula Fd-B
OT
OT CYM 03/01 USD
10.32
-2.4
30.8
63.7
n SGAM FUND AMUNDI HONG KONG LIMITED Hotline in Hong Kong (852) 2521 4231 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
US BD LUX 02/28 USD OT OT LUX 02/28 USD AS EQ LUX 03/01 USD AS EQ LUX 03/01 USD OT EQ LUX 02/28 USD GL EQ LUX 02/28 USD OT EQ LUX 02/28 USD EA EQ LUX 03/01 USD OT EQ LUX 02/28 EUR OT EQ LUX 02/28 USD
JP JP
Yuki Hokuyo Jpn Gen Yuki Hokuyo Jpn Inc Yuki Hokuyo Jpn Sm Cap
JP JP JP
EQ IRL 03/02 JPY EQ IRL 03/02 JPY EQ IRL 03/02 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
n Yuki Mizuho Series 40.64 43.89 11.42 23.72 21.55 138.16 38.91 139.57 91.77 126.76
1.1 -0.1 -3.5 -2.1 11.6 4.1 -4.3 -10.9 -0.2 -0.2
8.5 5.0 15.4 6.4 26.0 33.7 36.7 13.4 39.5 39.5
13.0 9.0 44.0 33.8 30.5 44.1 37.3 45.9 59.4 59.4
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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IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL
03/02 03/02 03/02 03/02 03/02 03/02 03/02 03/02 03/02 03/02 03/02 03/02
JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY
28
THE WALL STREET JOURNAL.
Thursday, March 3, 2011
BLUE CHIPS BONDS Dow Jones Asia Titans: Wednesday's best and worst...
Major players benchmarks
Company
Country
Industry
PetroChina
Hong Kong
Integrated Oil Gas
Market value, in billions of US$
Previous close, in local currency
$29.0
10.70
0.19%
STOCK PERFORMANCE Previous session
52-week
Three-year
20.6%
-9.6%
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
Woodside Petroleum
Australia
Exploration Production
33.7
42.63
0.14
-3.3
-25.2
Woolworths
Australia
Food Retailers Wholesalers
33.4
27.12
0.07
-2.3
-6.5
Giants around the world
Nippon T&T
Japan
Fixed Line Telecommunications
65.9
4,070
National Australia Bk
Australia
Banks
55.0
25.55
Japan Tobacco
Japan
Tobacco
$39.1
332,500
In U.S.-dollar terms.
Dow Jones Country Titans INDEX PERFORMANCE Previous session
Italy
Year-to-date
10.0%
Spain
-0.63
Russia
0.43
8.6 7.3
Toys
36.5
23,290
-3.72
-9.0
-56.4
Specialty Chemicals
23.6
4,550
-3.70
-5.2
-20.7
3.2
Tokio Marine Hldgs
Japan
Property Casualty Insurance
25.3
2,622
-3.43
4.5
-33.1
Mitsubishi UFJ Finl
Japan
Banks
77.1
453.00
-3.21
-0.4
-52.1
-0.52
6.2
4.8
5.4
16.8
Japan
-2.20
5.0
3.1
Netherlands
-0.74
4.4
10.0
Germany
-0.43
3.7
19.7
Switzerland
-0.41
3.7
0.3
China 88
-0.07
3.6
-8.1
Australia
-0.47
U.K.
-0.02
0.9
5.5
Hong Kong
-1.30
0.3
12.8
Brazil
0.45
-2.2%
8.5
South Africa
0.25
-3.1
12.7
Sweden
-1.20
-4.1
14.9
Singapore
-1.29
-4.3
12.3
South Korea
-0.36
-5.1
Turkey
0.42
...And the rest of Asia's blue chips POSCO 31.5 South Korea (Steel) Westpac Bking 70.4 Australia (Banks) KDDI 28.8 Japan (Mobile Telecommunications) Bank of China 44.0 Hong Kong (Banks) Samsung Electronics 105.8 South Korea (Semiconductors) Aus NZ Bk 62.0 Australia (Banks) BHP Billiton 156.9 Australia (General Mining) Westfield Grp 22.4 Australia (Retail) Reliance Industries 70.4 India (Exploration Production) Takeda Pharm 39.1 Japan (Pharmaceuticals) China Construction Bank 210.5 Hong Kong (Banks) Commonwlth Bk of Aus 81.9 Australia (Banks) CNOOC 102.3 Hong Kong (Exploration Production) Tokyo Elec Power 41.4 Japan (Electricity) Indl Comm Bk China 67.0 Hong Kong (Banks) China Life Insurance 28.0 Hong Kong (Life Insurance) QBE Insurance Group 19.0 Australia (Reinsurance) China Mobile (HK) 188.2 Hong Kong (Mobile Telecommunications) Kansai Elec Power 23.5 Japan (Electricity) Rio Tinto Ltd. 37.2 Australia (General Mining)
20.8 12.8
Dow Jones Regional Sector Titans Media
0.15
22.5%
9.4
28.2
9.3
11.5
Insurance
-0.83
Banks
0.09
Ind Gds Svcs
0.01
6.2
24.1
-0.30
5.7
31.7
Chemicals Global 50
-0.24
Asian 50
-1.30
Tiger 50*
-1.15
Arab 50
-2.12
7.4
4.6
5.8
10.4
1.8
9.9
-0.3%
16.9
-10.3
Market value, in billions (U.S)
Company/Country (Industry)
-0.2
11.3%
-0.9
*Asia excluding Japan
Latest, in local currency
STOCK PERFORMANCE Latest 52-week Three-year
-0.11%
-14.1%
-13.3%
-0.30
-13.2
-0.5
532,000
-0.37
10.4
-16.9
4.10
-0.49
6.4
28.0
918,000
-0.54
19.2
63.9
23.86
-0.67
0.1
8.5
46.05
-0.69
12.1
16.3
9.57
-0.73
-0.0
-30.0
43.05
-0.81
-0.8
-29.2
4,050
-0.86
0.4
-30.9
459,500 23.20
6.82
-0.87
13.8
16.2
52.57
-0.89
-4.3
24.8
17.84
-0.89
46.2
32.9
2,110
-0.94
-14.4
-21.7
6.01
-0.99
4.5
10.6
29.30
-1.18
-16.8
-6.8
17.75
-1.28
-15.9
-21.4
73.75
-1.34
-3.6
-38.5
2,131
-1.39
-0.2
-16.8
84.12
-1.39
16.8
-38.6
Company/Country (Industry)
Taiwan Smcndtr Mfg 61.6 Taiwan (Semiconductors) Mitsui 32.9 Japan (Industrial Suppliers) NTT DoCoMo 78.7 Japan (Mobile Telecommunications) Shinhan Financial Grp 19.5 South Korea (Banks) Nissan Motor 43.2 Japan (Automobiles) Canon 58.8 Japan (Electronic Office Equipment) Nippon Steel 22.6 Japan (Steel) Panasonic 27.5 Japan (Consumer Electronics) Seven I Hldgs 24.7 Japan (Broadline Retailers) Hon Hai Precision Ind 36.6 Taiwan (Electrical Components Equipment) East Japan Railway 27.6 Japan (Travel Tourism) Mitsubishi 45.3 Japan (Industrial Suppliers) Sony 35.9 Japan (Consumer Electronics) JFE Hldgs 16.3 Japan (Steel) Mizuho Financial Grp 39.6 Japan (Banks) Sun Hung Kai Prop 41.2 Hong Kong (Real Estate Holding Development) Cheung Kong 36.6 Hong Kong (Real Estate Holding Development) Honda Motor 78.7 Japan (Automobiles) Sumitomo Mitsui Finl 52.9 Japan (Banks) Toyota Motor 144.3 Japan (Automobiles)
70.40
-1.40%
17.5%
1,485
-1.46
4.4
154,000
-1.53
10.3
-1.3
46,350
-1.59
8.7
-10.0
843.00
-1.63
19.6
-12.6
3,895
-1.64
3.3
-19.2
293.00
-1.68
-13.1
-47.7
1,087
-1.72
-14.1
-51.4
2,288
-1.72
15.3
-13.0
112.00
-1.75
-5.7
-33.3
14.3% -36.3
5,710
-1.89
-7.5
-99.3
2,250
-2.13
0.1
-31.2
2,945
-2.16
-4.8
-41.0
2,512
-2.29
-25.8
-47.0
168.00
-2.33
-5.6
-100.0
125.10
-2.34
13.8
-10.0
123.00
-2.38
26.8
3.4
3,520
-2.49
14.1
8.0
3,095
-2.83
7.8
-99.6
3,745
-2.85
13.0
-34.9
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: 14/1 Eur. High Volatility: 14/1 Europe Crossover: 14/1 Asia ex-Japan IG: 14/1 Japan: 14/1
Mid-spread, in pct. pts. Mid-price
SPREAD RANGE, in pct. pts. since most recent roll Maximum Minimum Average
Coupon
0.99
100.06%
0.01%
1.20
0.94
1.03
1.35
98.48
0.01
1.84
1.29
1.52
3.87
104.48
0.05
5.37
3.81
4.46
1.08
99.64
0.01
1.25
0.93
1.08
1.02
99.90
0.01
1.16
0.90
1.02
Spreads Spreads on fiveyear swaps for corporate debt; based on Markit iTraxx indexes.
In percentage points
Index roll
2.00 1.50
Australia t
Showing the biggest improvement...
And the most deterioration
CHANGE, in basis points
CHANGE, in basis points
Yesterday Yesterday Five-day 28-day Petroliam Nasional BHD Petronas
73
–3
–3
–8
Bk of China
132
–3
–1
–2
Expt Import Bk Korea
117
–2
–1
–1
Rep Philippines
138
–2
–4
...
Korea Dev
117
–2
–1
...
POSCO
95
–2
–1
1
Kdom Thailand
115
–2
–2
0
Hutchison Whampoa
75
–2
–2
–2
Yesterday Yesterday Five-day 28-day Indl Bk Korea
122
1
1
...
Daiwa Secs
138
...
–1
19
ORIX
156
...
–5
–29
55
...
1
2
Mitsubishi Estate
Source: Markit Group
1.00
t
All statistics published in The Wall Street Journal Asia from markets outside the Asian-Pacific region reflect preliminary data.
STOCK PERFORMANCE Latest 52-week Three-year
Sources: Dow Jones Indexes; WSJ Market Data Group
Note: Data as of March 1
— NOTICE TO READERS —
Latest, in local currency
Market value, in billions (U.S)
Source: Dow Jones Indexes
Tracking credit markets dealmakers
-37.4
Japan
-0.05
-0.04%
2.9
-4.45%
Japan
Canada
Oil Gas
-11.4
Shin-Etsu Chml
France
-11.4
-99.1
Nintendo
31.5
1.6
4.4 -0.2
3.6%
52-week
0.55%
unch. -0.08%
0.50
Asia ex-Japan IG
0 Sept. Oct. Nov. Dec. Jan. Feb. 2010 2011 Source: Markit Group
Behind Asia's deals: Bank revenue rankings, Asia (ex Japan) 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
Market share
Equity capital markets
$69
5.2%
99%
Guosen Securities Co Ltd
WSJ.com Follow the markets throughout the day, with updated stock quotes, news and commentary at WSJ.com. Also, receive emails that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com/Email.
PERCENTAGE OF TOTAL REVENUE Debt Mergers & capital markets acquisitions
1%
Loans
1%
... ...
Deutsche Bank
61
4.6
49
48
3
UBS
51
3.9
41
36
16
Ping An Securities Co Ltd
50
3.8
98
...
2
...
7%
Morgan Stanley
43
3.2
86
6
8
...
Goldman Sachs
35
2.7
64
28
8
...
Huatai Securities Co Ltd
31
2.3
99
...
...
...
China Everbright Investment Trust Corp
28
2.1
80
20
...
...
Sinolink Securities Stock Co Ltd
27
2.0
100
...
...
... Source: Dealogic
Thursday, March 3, 2011
29
THE WALL STREET JOURNAL.
GLOBAL MARKETS LINEUP Commodities
Currencies
Prices of futures contracts with the most open interest
EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; NYBOT: New York Board of Trade; MDEX: Bursa Malaysia Derivatives Berhad; LIFFE: London International Financial Futures Exchange; LME: London Mercantile Exchange; NYMEX: New York Mercantile Exchange; ICE: IntercontinentalExchange Contract ONE-DAY CHANGE Commodity Exchange Last price Net Percentage high
Corn (cents/bu.) Soybeans (cents/bu.) Wheat (cents/bu.) Live cattle (cents/lb.) Cocoa ($/ton) Coffee (cents/lb.) Sugar (cents/lb.) Cotton (cents/lb.) Crude palm oil (ringgit/ton) Cocoa (pounds/ton) Robusta coffee ($/ton) Copper (cents/lb.) Gold ($/troy oz.) Silver (cents/troy oz.) Aluminum ($/ton) Tin ($/ton) Copper ($/ton) Lead ($/ton) Zinc ($/ton) Nickel ($/ton)
-0.75 19.25 17.25 -1.500 14 -0.80 1.11 5.99 44 -17 -20
448.40 1436.00 3480.00 2,584.50 31,900.00 9,825.00 2,524.00 2,472.00 28,455
-2.55 4.80 37.90 -27.50 -475.00 -94.00 -35.00 -46.00 -395
100.24 3.0387 3.0059 3.894 115.69 959.75
0.61 0.0152 0.0225 -0.056 0.27 15.50
CBOT CME ICE-US ICE-US ICE-US ICE-US MDEX LIFFE LIFFE COMEX COMEX COMEX LME LME LME LME LME LME
Crude oil ($/bbl.) Heating oil ($/gal.) RBOB gasoline ($/gal.) Natural gas ($/mmBtu) Brent crude ($/bbl.) Gas oil ($/ton)
734.75 1394.50 827.50 111.400 3,634 268.50 30.37 199.59 3,590.00 2,308 2,364
CBOT CBOT
NYMEX NYMEX NYMEX NYMEX ICE-EU ICE-EU
744.25 1,467.50 925.50 116.600 3,712 278.40 33.11 208.93 3,930 2,389 2,417
-0.10% 1.40% 2.13 -1.33 0.39 -0.30 3.79 3.09 1.24 -0.73 -0.84
Contract low
366.50 909.25 521.75 89.975 2,650 133.75 11.84 68.05 2,095 1,818 1,493
465.75 280.00 1,438.20 1,005.00 3,487.50 18.50 2,612.00 1,857.00 32,590.00 15,925.00 10,123.00 6,120.00 2,676.00 1,580.00 2,584.00 1,617.00 29,050 18,005
-0.57 0.34 1.10 -1.05 -1.47 -0.95 -1.37 -1.83 -1.37
136.90 3.0767 3.0354 10.050 133.58 977.00
0.61 0.50 0.75 -1.42 0.23 1.64
67.95 1.7225 1.9900 3.876 68.02 634.25
Source: Thomson Reuters; WSJ Market Data Group
WSJ.com
PREVIOUS SESSION
Region/Country Index
Close
16
ASIA-PACIFIC DJ Asia-Pacific
15
Australia
SPX/ASX 200
China
14
In euros
5.5954 2.3033 1.3500 1.3508 1.3528 1.3563 661.45 2659.06 1.3880 16.7863 3.8448 26.997 1.3880 5.96
0.1787 0.4342 0.7408 0.7403 0.7392 0.7373 0.001512 0.0003761 0.7205 0.0596 0.2601 0.0370 0.7205 0.167758
4.0313 0.2481 1.6595 0.6026 0.9726 1.0282 0.9732 1.0275 0.9746 1.0260 0.9772 1.0234 476.55 0.002098 1915.75 0.0005220 1 1 12.0939 0.0827 2.7700 0.3610 19.450 0.0514 1 1 4.29 0.232848
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
1.3645 0.7329 9.1226 0.1096 10.8118 0.0925 62.2102 0.0161 12232 0.0000818 113.32 0.008825 113.30 0.008826 113.24 0.008831 113.13 0.008840 4.2140 0.2373 1.8668 0.5357 118.910 0.0084 60.364 0.0166 1.7616 0.5676 1561.29 0.0006405 41.154 0.02430 42.396 0.02359
0.9830 1.0173 6.5725 0.1521 7.7895 0.1284 44.8200 0.0223 8813 0.0001135 81.64 0.012249 81.63 0.012251 81.58 0.012257 81.50 0.012269 3.0360 0.3294 1.3450 0.7435 85.670 0.0117 43.490 0.0230 1.2692 0.7879 1124.85 0.0008890 29.650 0.03373 30.545 0.03274
Net change
Percentage change -1.13%
PERFORMANCE Yr.-to-date 52-wk.
-1.62
-0.4%
14.8%
-23.19
-0.48
1.2
1.4
13
CBN 600
27640.00
-79.20
-0.29
3.5
-0.6
19
Denmark
OMX Copenhagen
Hong Kong
Hang Seng
23048.66
-347.76
17
India
Sensex
18446.50
18
Indonesia
Jakarta Composite
3486.197
-26.420
Japan
Nikkei Stock Average
10492.38
-261.65
942.87
-20.83
1499.28
-2.96
...
Topix
...
Malaysia
18
Kuala Lumpur Composite
New Zealand
NZSX-50
3381.993
-2.399
KSE 100
11699.16
90.73
12
Philippines
Manila Composite
3773.71
-10.52
-5.9
35.8
13
Germany
DAX
-0.58
3.9
23.4
-2.43
2.6
2.3
12
Italy
FTSE MIB
-2.16
4.9
4.1
13
Netherlands
AEX
-1.3
16.6
...
Russia Spain Switzerland
SMI
Turkey
ISE National 100
-0.75
-0.20 -0.07 0.78% -0.28 -1.31
-6.89
-0.69
16
EUROPE
-0.57 -1.23
2.2
5.7
9
-2.7
24.2
10
-10.2
23.0
...
364.86
-3.09
RTSI
1991.29
28.63
IBEX 35
10643.8
-118.1
6592.07
-27.29
-0.41
2.4
-3.2
58664.24
-45.09
-0.08
-11.1
13.5
5914.89
-20.87
-0.35
354.37
0.80
8.8
12
U.K.
FTSE 100
18
AMERICAS
DJ Americas
-3.9
13.0
12
Brazil
Bovespa
66889.13
646.50
-4.4
34.4
11
Argentina
Merval
3451.59
24.73
16
Mexico
IPC
36806.76
38.67
283.15
-1.48
-0.52
2.7
12.1
-11.24
-0.42
3.6
5.8
Price-toDividend earnings yield* ratio* Dows Jones Index
Last
Shenzhen -c 447.03 U.S. TSM 13675.93 Global Select Div -d 222.71 Asia/Pacific Select Div -d 297.75 Hong Kong Select Div -d 216.00 U.S. Select Dividend -d 364.18 Islamic Market 2298.84 Islamic Market 100 2321.83 Islamic China/HK Titans 30 1668.79 Sustainability Korea 1442.14 Brookfield Infrastructure 2358.81 DJ-UBS Commodity -p 166.98
Net change
-1.79 32.75 -1.36 -1.59 -1.64 1.09 -0.89 -3.17 -14.94 -0.28 -3.47 0.84
*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.
PERFORMANCE YearThree-yr., to-date 52-wk. annualized
Daily
-0.40% 0.24 -0.61 -0.53 -0.75 0.30 -0.04 -0.14 -0.89 -0.02 -0.15 0.51
2.5% 8.0% 4.1 18.7 2.8 14.9 0.1 12.1 -1.9 14.5 1.6 13.8 3.2 17.3 3.5 11.6 ... 13.1 -3.2 23.2 4.1 17.4 2.8 24.3
-2.8% 0.7 -5.0 -7.8 4.1 -4.0 0.7 -1.1 -4.3 1.5 0.4 -8.2
Source: DowJones Indexes
U.S.-dollar and euro foreign-exchange rates in global trading
1.605 1.011 0.150 1.364 0.126 0.0219 0.0001 0.012 0.731 0.0009 0.324 0.023 0.775 1.066 0.033 0.032
0.630 0.093 0.850 0.079 0.0137 0.0001 0.008 0.455 0.0005 0.202 0.014 0.483 0.664 0.021 0.020
C$ 0.973 0.989 1.588 0.148 1.350 0.125 0.0217 0.0001 0.012 0.723 0.0009 0.320 0.022 0.766 1.055 0.033 0.032
YUAN 6.572 6.686 10.729 6.758 9.123 0.844 0.1466 0.0007 0.081 4.887 0.0058 2.165 0.151 5.178 7.127 0.222 0.215
EURO 0.720 0.733 1.176 0.741 0.110 0.092 0.0161 0.0001 0.009 0.536 0.0006 0.237 0.017 0.568 0.781 0.024 0.024
HK$ 7.789 7.924 12.715 8.009 1.185 10.812 0.1738 0.0009 0.095 5.791 0.0069 2.566 0.179 6.137 8.446 0.263 0.255
RUPEE 44.820 45.593 73.162 46.083 6.819 62.210 5.754 0.0051 0.549 33.324 0.0398 14.763 1.031 35.314 48.599 1.512 1.467
RUPIAH 8812.13 8964.13 14384.47 9060.38 1340.76 12231.23 1131.28 196.61 107.94 6551.82 7.83 2902.54 202.62 6943.06 9555.03 297.20 288.50
YEN 81.640 83.048 133.265 83.940 12.421 113.316 10.481 1.8215 0.0093 60.699 0.0726 26.891 1.877 64.324 88.523 2.753 2.673
NZ$ 1.345 1.368 2.195 1.383 0.205 1.867 0.173 0.0300 0.0002 0.016 0.0012 0.443 0.031 1.060 1.458 0.045 0.044
WON 1124.85 1144.25 1836.14 1156.54 171.14 1561.29 144.41 25.10 0.13 13.78 836.32 370.50 25.86 886.26 1219.68 37.94 36.83
0.05%
10.2
2.3
2.9
9.9
12.5
36.4
8.0
-0.2
-0.84 1.46 -1.10
0.23
0.3
6.9
4.0
18.1
0.98
-3.5
-1.2
0.72
-2.0
49.2
-4.5
14.0
0.11
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
2.29% 13 1.67 20 5.25 14 6.17 11 3.73 7 3.96 15 1.54 20 1.89 15 2.30 14 1.34 18 3.20 22
11.52
18.8
2679.75
-1.9% -4.4 -5.1 -1.9 -1.0 -6.4 -2.3 -3.4 -2.7 -9.5 -3.8 -8.9
-42.18
-5.1
Stoxx Europe 600
PERFORMANCE YearThree-yr., to-date 52-wk. annualized
7181.12 22238.75
-6.0
Stoxx Europe 50
£ 0.613 0.623
25.7 7.6
987.59
A$ 0.983
1.6
5.0
SET
US$
5.0
-0.67
6.0
Thailand
16.9% 13.0 10.4 14.8 16.3 14.4 15.0 9.9 12.7 -0.6 8.3 -0.7
6.1
-2.93
-3.2
10
3.2% 5.0 4.6 -0.5 -3.5 6.2 -3.8 1.8 -0.8 3.5 -0.4 4.5
-0.70
434.02
-0.81
-107.66
Daily
-20.92
-0.92
8619.90
-0.18% -0.17 -0.24 -1.10 -0.64 -0.18 -0.03 -1.30 -0.11 -0.29 -0.95 -0.19
-0.64%
2962.35
-69.19
Weighted
Dow Jones Indexes
Net change -1.85
-32.83
Taiwan
*P/E ratios use trailing 12-months, as-reported earnings European and Americas index data are as of 12:00 p.m. ET.
Euro Stoxx 50
Percentage change
PERFORMANCE Yr.-to-date 52-wk. 4.9% 8.3%
Close 288.00
7419.75
15
1.017 1.632 1.028 0.1521 1.388 0.128 0.0223 0.0001 0.012 0.744 0.0009 0.329 0.023 0.788 1.084 0.034 0.033
1.5736
4034.32
-11.06
U.S. Australia Britain Canada China Euro Hong Kong India Indonesia Japan New Zealand South Korea Malaysia Philippines Singapore Switzerland Taiwan Thailand
0.6355
CAC-40
-40.09
Cross rates
1.1337
OMX Helsinki
3027.51
-4.79 -3.77 -0.45 -15.58 -22.58 -5.15 -1.29 -1.96 -0.70 -79.20 -40.49 -0.70
0.8821
France
1928.24
Last
SDR -f
0.3770 2.6522 5.8951 0.1696 3.6230 0.2760 0.7083 1.4119 0.2783 3.5939 1500.50 0.0006665 3.7506 0.2666 6.8574 0.1458 3.6730 0.2723
Finland
Kospi
Global TSM 2692.63 Global DOW 2191.43 Global Titans 50 185.26 Asia/Pacific TSM 1402.90 Asia/Pacific ex-Japan TSM 3484.35 Europe TSM 2917.83 Emerging Markets TSM 4614.75 Asian Titans 50 148.31 BRIC 50 649.22 27640.00 CBN China 600 -c China Offshore 50 4228.11 Shanghai -c 371.93
MIDDLE EAST/AFRICA Bahrain dinar 0.5233 1.9108 Egypt pound-a 8.1823 0.1222 Israel shekel 5.0287 0.1989 Jordan dinar 0.9831 1.0172 Kuwait dinar 0.3862 2.5893 Lebanon pound 2082.69 0.0004802 Saudi Arabia riyal 5.2058 0.1921 South Africa rand 9.5181 0.1051 United Arab dirham 5.0981 0.1962
12
Straits Times
16 15 14 16 16 15 12 14 12 12 13 13
1.3880 1.3875 1.3863 1.3837 0.0572 0.1861 0.005126 0.1799 0.3491 0.03525 0.1582 1.0843 1.0846 1.0852 1.0860 0.6194 1.6323 1.6319 1.6307 1.6280
14
South Korea
2.09% 1.90 2.18 2.30 2.56 2.64 2.12 2.60 2.56 2.56 2.29 2.29
0.7205 0.7207 0.7213 0.7227 17.495 5.3725 195.10 5.5576 2.8647 28.367 6.3213 0.9223 0.9220 0.9215 0.9208 1.6145 0.6126 0.6128 0.6132 0.6143
8.5
Singapore
Net change
1 0.9996 0.9988 0.9969 0.0412 0.1341 0.003693 0.1296 0.2515 0.02540 0.1140 0.7812 0.7814 0.7818 0.7824 0.4462 1.1760 1.1757 1.1748 1.1729
10.4
...
Price-toDividend earnings yield* ratio* Dows Jones Index
In U.S. dollars
0.1
11
14
Per U.S. dollar
-10.1
-1.49 Closed
Pakistan
9
In euros
PREVIOUS SESSION
Region/Country Index Euro Zone Euro Stoxx
141.91
...
Per euro EUROPE Euro zone euro 1 1-mo. forward 1.0004 3-mos. forward 1.0012 6-mos. forward 1.0031 Czech Rep. koruna-b 24.283 Denmark krone 7.4570 Hungary forint 270.79 Norway krone 7.7139 Poland zloty 3.9762 Russia ruble-d 39.373 Sweden krona 8.7740 Switzerland franc 1.2801 1-mo. forward 1.2797 3-mos. forward 1.2790 6-mos. forward 1.2781 Turkey lira 2.2409 U.K. pound 0.8503 1-mo. forward 0.8505 3-mos. forward 0.8512 6-mos. forward 0.8526
Price-to-
earnings ratio* 14
4803.21
...
In U.S. dollars
Per euro
Stock indexes from around the world, grouped by region. Shown in local-currency terms.
Price-to-
earnings ratio*
Per U.S. dollar
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
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 $1 million and more, as quoted by Thomson Reuters.
Follow the markets throughout the day with updated stock quotes, news and commentary at WSJ.com Also, receive email alerts that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com/Email
Major stock market indexes
London close on March 2
RINGGIT PH. PESO 3.036 43.490 3.088 44.240 4.956 70.991 3.122 44.715 0.462 6.617 4.214 60.364 0.390 5.583 0.0677 0.9703 0.0003 0.0049 0.037 0.533 2.257 32.335 0.0027 0.0387 14.325 0.070 2.392 34.266 3.292 47.156 0.102 1.467 0.099 1.424
S$ S FRANC 1.269 0.922 1.291 0.938 2.072 1.505 1.305 0.948 0.193 0.140 1.762 1.280 0.163 0.118 0.0283 0.0206 0.0001 0.0001 0.016 0.011 0.944 0.686 0.0011 0.0008 0.418 0.304 0.029 0.021 0.727 1.376 0.043 0.031 0.042 0.030
TW$ 29.650 30.161 48.399 30.485 4.511 41.154 3.806 0.6615 0.0034 0.363 22.045 0.0264 9.766 0.682 23.361 32.150
BAHT 30.545 31.072 49.860 31.406 4.647 42.396 3.921 0.6815 0.0035 0.374 22.710 0.0272 10.061 0.702 24.066 33.120 1.030
0.971
Source: Thomson Reuters via WSJ Market Data Group
MSCI indexes Developed and emerging-market regional and country indexes from MSCI Barra as of March. 02, 2011 Price-toDividend earnings yield ratio Morgan Stanley Index
LOCAL-CURRENCY PERFORMANCE
Last
Daily
YTD
52-wk.
2.30% 16
ALL COUNTRY (AC) WORLD* 342.61
0.65%
3.6%
18.3%
2.30
16
World (Developed Markets) 1,340.89
0.80
4.8
18.3
1.60
26
World Small Cap
245.91
0.83
4.0
29.7
2.40
16
Kokusai (World ex-Japan)
1,324.12
1.03
4.6
18.5
2.90
15
EAFE
1,748.25
0.04
5.4
16.8
2.20
14
Emerging Markets (EM)
1,112.15
-0.39
-3.4
18.8
2.70
15
AC ASIA PACIFIC EX-JAPAN 468.05
-1.05
-2.3
18.8
2.40
14
AC Far East ex-Japan
511.76
-1.25
-2.5
21.0
1.80
16
Japan
601.41
1.34
7.1
7.6
2.30
14
China
66.01
1.44
-0.7
9.0
1.00
22
China A (China Domestic)
3,203.55
0.50
3.7
1.8
2.50
22
Hong Kong
12,184.88
1.31
-0.2
23.3
1.10
19
India
725.34
3.49 -10.6
7.9
1.30
11
Korea
557.27
0.00
-5.1
23.7
2.50
17
Malaysia
18.3
3.10
14
Singapore
3.30
15
2.80 4.10
551.45
0.71
-1.6
1,683.80
2.06
-4.1
9.4
Taiwan
311.63
1.65
-2.4
16.6
14
Thailand
405.50
0.95
-1.4
37.3
17
Australia
985.72
-0.16
2.0
2.6
4.80
17
New Zealand
87.62
0.94
4.5
4.3
1.70
18
US BROAD MARKET
1,479.03
1.65
3.9
20.2
3.10
15
EUROPE
98.53
-0.65
3.3
15.4
*Twenty-three developed and 26 emerging markets
Source: MSCI Barra
30
THE WALL STREET JOURNAL.
Thursday, March 3, 2011
SCANNING THE GLOBE Dow Jones Industrial Average
Nasdaq Composite Index
P/E: 15
s 47.45, or 0.39%
LAST: 12105.47 YEAR TO DATE: OVER 52 WEEKS
s 23.34, or 0.85%
LAST: 2760.75 YEAR TO DATE: OVER 52 WEEKS
s 527.96, or 4.6% s 1,708.71, or 16.4%
S&P 500 Index
P/E: 13*
P/E: 18 s 6.57, or 0.50%
LAST: 1312.90 YEAR TO DATE: OVER 52 WEEKS
s 107.88, or 4.1% s 480.07, or 21.0%
s 55.26, or 4.4% s 194.11, or 17.3%
High 12500
2800
1350
12000
2700
1300
11500
2600
1250
11000
2500
1200
10500
2400
1150
Close Low
t
50–day moving average
10000 3 Dec.
10
17 23
31
7
14
21
Jan.
28
4 Feb.
11
2300
18 25
3 Dec.
10
17 23
31
7
14
21
Jan.
28
4 Feb.
11
1100
18 25
3 Dec.
10
17 23
31
7
14
Symbol
Latest
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
11.5 8.8 3.7 56.1 3.3 3.3 4.0 27.0 4.0 3.6 2.5 7.9 23.3 6.8 6.0 26.7 1.5 12.2 3.6 3.2 3.3 5.5 18.4 18.1 4.3 1.3 1.2 1.8 8.5
$28.28 16.23 42.83 13.84 68.86 100.34 102.99 18.47 64.32 43.17 52.99 84.47 20.29 43.31 36.43 21.49 160.27 45.29 60.49 31.32 73.73 32.33 26.22 19.00 62.47 91.20 59.01 81.60 36.18
0.20 ... –0.32 –0.08 –1.26 0.48 0.09 –0.09 –0.59 0.18 –0.23 –0.33 0.04 0.40 –0.33 0.10 0.30 –0.31 –0.21 –0.23 –1.16 –0.13 0.05 –0.14 –0.27 0.74 –0.21 –0.48 0.16
0.71% ... –0.74 –0.61 –1.80 0.48 0.09 –0.48 –0.91 0.42 –0.42 –0.39 0.20 0.93 –0.90 0.47 0.19 –0.68 –0.35 –0.73 –1.55 –0.40 0.21 –0.73 –0.43 0.82 –0.35 –0.58 0.44
WalMart
WMT
4.6
51.83
–0.24
–0.46
Stock
CHANGE Points Percentage
4 Feb.
11
18 25
Sources: WSJ Market Data Group; Birinyi Associates
U.S. stocks: most active...
Volume, in millions
28
Jan.
*Price-to-earnings ratio for the Nasdaq 100 Note: Price-to-earnings ratios are for trailing 12 months
DJIA component stocks
21
Stock
Volume, Symbol in millions
Citigroup SPDR S&P 500 Weatherford BankAm PwrShrs QQQ AlcatelLucent ADS iShrRu2000 iShrMSCIEmrgMkt FordMotor CiscoSys Intel HudsnCtyBcp SPDR FnclSelSct SprintNextel GenElec
C SPY WFT BAC QQQQ ALU IWM EEM F CSCO INTC HCBK XLF S GE
ADRs of Asian companies* Latest
CHANGE Points Percentage
202.3 91.8 71.3 56.1 31.5 30.6 30.4 29.9 28.8 27.0 26.7 24.9 23.6 23.5 23.3
$4.58 130.73 20.80 13.84 57.00 4.99 80.39 45.69 14.77 18.47 21.49 9.95 16.37 4.22 20.29
... –0.20 –2.72 –0.08 0.16 0.27 –0.23 0.37 0.11 –0.09 0.10 –0.95 –0.12 0.01 0.04
0.11% –0.15 –11.56 –0.61 0.28 5.61 –0.29 0.82 0.77 –0.48 0.47 –8.73 –0.73 0.36 0.20
EDGW 880.6 LEI 8,140.1 MELA 2,669.7 CAP 296.0 PERF 6.3
$3.20 2.63 3.02 23.83 10.47
0.88 0.54 0.47 3.53 1.42
37.94% 25.72 18.43 17.39 15.69
$22.34 8.52 21.02 19.56 33.08
–6.51 –1.51 –3.62 –3.31 –4.37
–22.56% –15.03 –14.69 –14.47 –11.67
52-WEEK High Low
$13.85 15.55 96.23 131.63 17.60 3.94 12.55 6.66 54.70 4.75 37.65 53.16 5.68 58.22 77.92 19.24 7.27 27.48 22.81 17.32 16.81 21.59 7.69 44.56 93.90 3.51 111.92 48.70 8.94 19.23
Biggest gainers... EdgwtrTch LucasEnergy MELA Sci CAI Intl PerfumaniaHldg
...Biggest losers GettyRlty McrmkSchmkRes WT Offshr HiTechPhrml AtlTelNtwk
GTY MSSR WTI HITK ATNI
1,784.8 206.9 2,989.4 1,017.8 275.8
$9.30 7.05 58.38 51.25 10.91 2.50 8.38 3.33 44.36 1.91 15.25 31.35 4.48 33.21 53.28 14.58 4.45 14.35 17.48 10.43 11.30 13.75 4.75 28.33 67.56 1.82 70.15 26.16 5.90 14.47
Volume, Symbol in OOOs
Stock
TaiwanSemi SuntechPwr BHPBilton ADS Baidu ADS ChinaUnicomHK UtdMicro ADS AU Optrncs AdSemEg ADS ChinaMobile ChinaTch ADS TataMtrs ADS CtripInt ADS MitsuUFJ ADS ICICI Bk ADS Infosys SK Tele ADS Slcnwr ADS FocusMediaHldg KT Crp ADS KoreaElecPwr Wipro ADS LG DisplayADS NmuraHldg HondaMtr ADS ToyotaMtr ADS Mhngr ADS ChinaPete ADS Netease.com TeleNZ ADS NTT DOCOMO
TSM STP BHP BIDU CHU UMC AUO ASX CHL CNTF TTM CTRP MTU IBN INFY SKM SPIL FMCN KT KEP WIT LPL NMR HMC TM MTE SNP NTES NZT DCM
CHANGE Latest Points Percentage
6,435.6 $12.13 –0.05 2,504.8 9.63 –0.15 2,228.8 94.15 0.88 1,950.1 118.96 1.13 1,528.3 16.66 –0.22 1,424.0 2.85 0.01 1,422.3 9.04 0.05 1,180.7 5.79 –0.02 1,056.0 47.38 0.07 987.6 4.59 0.29 837.8 25.36 –0.24 684.8 38.48 0.48 675.1 5.52 –0.08 621.6 44.67 0.30 530.1 67.13 0.57 524.7 17.48 –0.16 514.9 6.79 0.02 431.3 26.47 0.27 411.1 19.63 –0.14 340.6 12.20 0.04 323.4 13.01 –0.10 320.0 15.93 0.13 280.0 6.14 –0.11 249.0 43.07 –0.43 244.1 91.21 –1.63 234.8 1.82 –0.02 217.0 100.19 –2.23 213.7 45.99 0.23 190.4 7.92 –0.02 58.2 18.92 –0.14
–0.41% –1.53 0.94 0.96 –1.30 0.35 0.56 –0.34 0.15 6.74 –0.94 1.26 –1.43 0.68 0.86 –0.91 0.30 1.03 –0.71 0.33 –0.76 0.82 –1.76 –0.99 –1.76 –1.09 –2.18 0.50 –0.26 –0.73
*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.
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 11 a.m. ET Country/ Maturity, in years
4.945% 5.495 1.948 3.664 2.283 4.274 1.799 3.301 1.513 3.244 1.598 3.584 1.555 3.205 0.712 2.941 2.951 4.797 0.240 1.273 1.325 3.388 5.701 7.510 3.142 5.331 0.623 1.857 1.393 3.724 0.669 3.435
SPREAD OVER TREASURYS, in basis points Latest Previous Month ago Year ago
427.6 206.0 127.9 22.9 161.4 83.9 113.0 -13.4 84.4 -19.1 92.9 14.9 88.6 -23.0 4.3 -49.4 228.2 136.2 -42.9 -216.2 65.6 -4.7 503.2 407.5 247.3 189.6 -4.6 -157.8 72.4 28.9 ... ...
426.9 206.8 117.4 16.9 163.1 82.1 113.1 -13.3 78.7 -23.3 94.1 10.9 84.4 -27.7 3.1 -48.3 228.2 135.3 -45.1 -217.2 63.1 -7.0 503.0 406.4 246.9 189.6 -5.9 -159.1 72.0 26.3 ... ...
431.5 214.5 129.0 30.4 189.5 98.5 112.9 -8.3 91.9 -12.0 100.9 22.4 82.2 -15.4 0.9 -44.1 207.1 144.6 -36.0 -211.1 74.5 0.7 385.8 373.4 266.4 214.5 10.3 -144.2 72.0 33.1 ... ...
379.6 184.0 47.4 -5.4 29.9 2.9 55.3 -22.4 88.6 -19.2 14.8 -18.6 5.9 -49.7 -12.6 -83.1 58.3 35.4 -63.4 -230.9 10.9 -20.8 116.2 70.3 42.0 26.1 -46.1 -168.6 20.3 41.9 ... ...
Previous
4.965% 5.525 1.870 3.626 2.327 4.278 1.827 3.324 1.483 3.224 1.637 3.566 1.540 3.180 0.727 2.974 2.978 4.810 0.245 1.285 1.327 3.387 5.726 7.521 3.165 5.353 0.637 1.866 1.416 3.720 0.696 3.457
YIELD Month ago
4.870% 5.474 1.845 3.633 2.450 4.314 1.684 3.246 1.474 3.209 1.564 3.553 1.377 3.175 0.564 2.888 2.626 4.775 0.195 1.218 1.300 3.336 4.413 7.063 3.219 5.474 0.658 1.887 1.275 3.660 0.555 3.329
TOTAL RETURN Year ago
4.595% 5.453 1.273 3.559 1.098 3.642 1.352 3.389 1.685 3.421 0.947 3.427 0.858 3.116 0.673 2.782 1.382 3.967 0.165 1.304 0.908 3.405 1.961 4.316 1.219 3.874 0.338 1.927 1.002 4.032 0.799 3.613
Source: Thomson Reuters
5% 4
One year ago
s
4.750% Australia 2 4.500 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 5.000 Netherlands 2 3.500 10 5.450 Portugal 2 4.800 10 2.300 Spain 2 5.500 10 4.000 Switzerland 2 2.000 10 4.500 U.K. 2 3.750 10 0.625 U.S. 2 3.625 10
Yield
3 2 s
Coupon
Tuesday 1 0
1
3
6
month(s)
1
2 3 5 710
years maturity
30
Ryan Index
Yield to maturity
Modified duration
Month to-date
Quarter to-date
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
4.489% 3.416 2.819 2.125 2.444 1.142 0.672 0.244 0.163 0.173 0.142
16.17 8.31 6.32 4.72 6.73 2.90 1.98 0.94 0.50 0.44 0.25
0.07 % 0.01 0.07 0.07 0.06 0.10 0.05 ... 0.01 ... ...
–1.85 % –0.37 0.04 0.17 –0.33 –0.08 0.06 0.12 0.07 0.06 0.04
–1.85 % –0.37 0.04 0.17 –0.33 –0.08 0.06 0.12 0.07 0.06 0.04
6.95 % 5.23 5.91 4.34 4.53 2.59 1.25 0.72 0.32 0.36 0.25
One-month bill
0.142
0.08
...
0.02
0.02
0.16
a-Performance of a cash investment
Year to-date 12-month
Source: Ryan ALM
Key money rates Latest
52 wks ago
Prime rates
Latest Euro Libor One month
Offer Eurodollars One month
Bid
0.81938%
0.38000%
Three month
1.04750
0.60000
1.475
Six month
1.32625
0.50
One year
1.70125
1.00
Hibor One month
0.15857
0.08000%
0.23071
0.13000
U.S. discount
0.75%
0.75%
0.29071
0.23000
Fed-funds target
0.25
0.25
0.63071
0.50000
Call money
2.00
2.00
U.S.
3.25%
3.25%
Canada
3.00
2.25
Japan
1.475
Britain
0.50
ECB
1.00
Switzerland
0.55
0.53
Australia
4.75
4.00
Three month
Hong Kong
5.25
5.25
Six month One year
Libor One month
52 wks ago
Asian dollars One month
0.2720%
0.3500%
0.2500%
Three month
0.5500
0.4500
0.91063
Six month
0.7500
0.6000
1.19625
One year
1.0500
0.8500
Latest
52 wks ago
0.26000%
0.22813%
Three month
0.30950
0.25194
Three month
0.3150
0.2566
Six month
0.46150
0.38319
Six month
0.4735
0.3860
U.K. (BBA)
0.502
0.510
One year
0.78625
0.83438
One year
0.8015
0.8390
Euro zone
0.50
0.29
0.24%
Overnight repurchase rates U.S. 0.20%
0.16%
Sources: WSJ Market Data Group; Reuters
Thursday, March 3, 2011
31
THE WALL STREET JOURNAL.
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 Wednesday. 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
Hang Seng
Japan
Hong Kong
t
10492.38 2.43% or 261.62
The benchmark registered its biggest percentage loss in seven months due to concern over how rising oil prices will affect the global economy.
Volume in millions
Close
165.77
168
Hitachi
64.77
Mtshbsh Fin Grp
62.24
Toshiba M'bishi Heavy
Stock
Mizuho Financial
Kospi
Singapore
South Korea
t
Like their counterparts elsewhere in Asia, Singapore stocks fell because of concern about higher oil prices. Commodity producers slipped back after rising Tuesday.
t
1928.24 0.57% or 11.06
Hope that auto makers registered strong sales in February boosted their shares, helping to offset the damage from fear of higher oil prices.
4500
3000
12500
25000
3750
2500
10000
20000
3000
2000
7500
15000
2250
1500
10000 M A M J J A S O N D J F 2010 2011
1500 M A M J J A S O N D J F 2010 2011
Volume in millions
Close
Icbc
248.65
6.01
–0.06
–0.99
Golden Agri
–1.40
CCB
245.58
6.82
–0.06
–0.87
–3.21
ChinaPetroChem 230.00
7.74
–0.32
–3.97
–12
–2.24
Bank Of China
198.03
4.10
–0.02
–0.49
–10
–2.75
PetroChina
83.19
10.70
0.02
0.19
Change Net
3027.51 1.31% or 40.09
30000
M A M J J A S O N D J F 2010 2011
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HSBC and Aluminum Corp. of China extended their losses after reporting disappointing 2010 results this week. Property stocks were weaker, too.
Straits-Times
15000
5000
WSJ.com
t
23048.66 1.49% or 347.74
%
Stock
–4
–2.33
492
–7
453
–15
52.49
524
27.24
353
Change Net
%
Volume in millions
Close
91.27
0.69
–0.02
Genting Spore
69.31
1.93
Olam Inter
34.05
2.71
Noble Grp
33.54
Sing Telecom
15.97
Stock
Change Net
1000 M A M J J A S O N D J F 2010 2011 Stock
%
Volume in millions
Change Net
Close
%
–2.84
Chasys
7.16
–0.03
–1.53
Mirae
6.94
–0.10
–3.56
Woori Finance
5.51
13,450.00 -200.00
–1.47
2.19
…
…
Hynix Semi
4.64
27,550.00 -800.00
–2.82
2.91
–0.09
–3.00
Ilshin Stone
4.40
1,300.00 -225.00 404.00
-17.00
1,155.00
115.00
–14.75 –4.04
11.06
Asian stocks in the news Newcrest Mining Australia
Kia Motors A$38.41 Korea
s 1.9% or A$0.72
U.S. gold futures closed at a record high on Tuesday, aiding gold miners.
In Australian dollars
60
58,800 won
s 2.4% or 1,400 won
-0.8% 1.9%
TW$345.50
s 5.3% or TW$17.50
A report Softbank may buy Yahoo's stake in Yahoo Japan caused the surge. Softbank denied this.
Media reports that the chip maker expects margins to rise boosted the stock.
In won
In won
In yen
In Taiwan dollars
75000
400000
60000
750
320000
48000
600
36
45000
240000
36000
450
24
30000
160000
24000
300
15000 M A M J J A S O N D J F 2010 2011
17.3% 16.6%
Nintendo Japan
¥32,300 Taiwan
s 3.7% or ¥1,150
60000
27 1.44 0.3
0.3% -1.4%
Japan
230,500 won
s 3.1% or 7,000 won
South Korean insurers rose on expectations the nation's central bank will raise rates next week.
¥23,290
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Automobiles & Parts Kia Motors
-1.4% 2.4%
1.1% 27.3% 3.9% 162.5%
Sumitomo Chml t 3.7% or ¥900
80000 M A M J J A S O N D J F 2010 2011
10 5763.35 0.9
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Basic Resources Newcrest Mining
Korea
MediaTek
48
J A S O N D J F 2011
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
Yahoo Japan
Korean auto makers rose on optimism about their February sales.
12 M A M J 2010
Samsung Fire & Mar Ins
Japan
17 13381.76 1.3
Insurance Samsung Fire & Mar Ins
-1.3% 3.1%
0.6% 2.0%
6.3% 16.1%
¥430
Japan
¥1,334
J A S O N D J F 2011
Technology Yahoo Japan
-0.8% 3.7%
1.0% 4.4%
13.8% -0.2%
Japan
10 33.03 7.5
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Asahi Glass
t 4.2% or ¥59
150 M A M J 2010
20 1587.30 1.0
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Nippon Elec Glass
t 3.8% or ¥17
12000 M A M J J A S O N D J F 2010 2011
PERCENTAGE CHANGE Daily 1 wk. 52 wks
-0.8% 5.3%
Technology MediaTek
1.0% 3.4%
13.8% -34.1%
Sands China Ltd. ¥1,113 Hong Kong
t 4.3% or ¥50
HK$17.86
t 6.2% or HK$1.18
Japanese exporters fell on worries rising oil prices will hurt demand.
Fear oil prices will rise further hurt makers of oil-based products.
Like Asahi Glass, the firm fell on worry over higher costs for raw materials.
Concern over rising prices for raw materials hurt glassmakers.
U.S. authorities are investigating the firm's parent over compliance with antibribery laws in Macau.
In yen
In yen
In yen
In yen
In Hong Kong dollars
50000
750
1400
24
30000
450
1350
1050
18
20000
300
900
700
12
150 M A M J 2010
37 635.30 2.4
8.7% -11.3%
J A S O N D J F 2011
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
-1.6% ... -3.7% -4.2%
30
1800
10000
Personal & Hshld Gds Nintendo
1750
600
M A M J J A S O N D J F 2010 2011 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
2250
40000
450 M A M J J A S O N D J F 2010 2011
36 12.10 2.1
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Chemicals Sumitomo Chml
-1.9% -0.6% -3.8% -4.4%
32.4% 8.6%
350 M A M J J A S O N D J F 2010 2011
9 142.70 0.9
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Indus Gds & Svcs Nippon Elec Glass
-1.3% 1.1% -4.2% -0.7%
20.5% 13.9%
10 109.50 2.3
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
6 M A M J 2010
-1.5% -4.3%
0.1% 1.0%
8.6% 21.0%
35 0.51 None
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Constructn & Matl Asahi Glass
J A S O N D J F 2011
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Travel & Leisure Sands China Ltd.
-1.2% -6.2%
-0.1% -2.1%
15.8% 70.7%
THE WALL STREET JOURNAL.
Thursday, March 3, 2011
HEARD ON THE STREET FINA NCIA L A NA LYSIS & COMMENTARY
Email:
[email protected]
WSJ.com/Heard
Japan’s gridlock puts economy in a bind ing party itself and an opposition that is hoping to capitalize on Prime Minister Naoto Kan’s unpopularity. The infighting is just a symptom of a bigger problem in Japan: Its sclerotic political class is unable to make the difficult decisions—to cut benefits,
The ruling party needs to revamp campaign promises from 2009 that are increasingly pie-in-the-sky. fix the state pension system or raise taxes—that will be critical to Japan’s long-term viability. Even in the short term, the ruling
Democratic Party of Japan needs to revamp campaign promises from 2009 that are increasingly pie-inthe-sky. The opposition’s key effort now is to label the proposals as pure porkbarrel spending. They call the election pledges the wasteful “four K,” the phonetic translation of the Japanese for cash for car tolls, crops and kids twice (free tuition and childcare allowances). But the other guys’ main proposal is hardly innovative: Cash for construction. Japan doesn’t need an additional $18 billion in roads and ports. They say they want to “drive the Kan administration into a corner” and retake power. Politics is already doing that to the entire nation. —James Simms
Kan in a corner
Reuters
It’s too bad there is no economic value in political squabbling. If there were, Japan’s economy would be far better situated. The opposite is true. The latest impasse in the nation’s parliament means imperative changes are being delayed. Included in the budget package are proposals to cut corporate income taxes and renew tax breaks on real-estate deals. The $1.13 trillion budget passed Tuesday and will take effect within 30 days. But the legislation to enable Tokyo to issue deficit bonds to cover more than 40% of its spending, and to cut business taxes by five percentage points, among other things, is being held up. What’s the delay? In a nutshell, an internecine battle within the rul-
Naoto Kan, Japan's prime minister
Legal risk? It’s time for banks to spell it out clearly
When it
Gauging risk Estimated possible losses at banks beyond charges already taken as litigation reserves* J.P. Morgan Chase
$4.5 billion 4.0
Citigroup Goldman Sachs Bank of America Wells Fargo
3.4 1.5 1.2
*As of Dec. 31, 2010 Source: the companies
Jamie Dimon, CEO and chairman of J.P. Morgan Chase
have been tight-lipped about potential litigation costs. Companies say putting a number on what has been set aside will give plaintiffs’ attor-
Reuters
Banks are giving more clues about the size of the legal hits they may face from the housing meltdown and other battles. But the big picture remains murky. J.P. Morgan Chase disclosed Monday that it estimates as much as $4.5 billion in possible litigation expense beyond what it has set aside in reserves. Goldman Sachs Group said Tuesday it estimates possible extra charges of $3.4 billion. But those numbers are tough to put into context, since banks don’t disclose what they have put aside in total litigation reserves. The reserves are actual charges against earnings. As Bank of America finance chief Charles Noski told analysts recently, “We’re not going to share that.” Perhaps it is time they did. Banks, like other companies, always
neys a target for damages to claim. It is easy to see the risk for a small company facing few lawsuits. It’s different for big banks facing a
multitude of legal actions. In those cases, aggregated sums set aside as reserves aren’t likely to be meaningful to litigation opponents. Yet that data would give investors a way to gauge just how conservative a bank is or to compare one bank’s stance with another’s. Was J.P. Morgan Chief Executive Officer Jamie Dimon justified to claim, as he did in January, that the bank has “maybe uniquely” increased litigation reserves? The significance of this has intensified due to legal fights over mortgage bonds and investigations by officials into mortgage practices. Admittedly, after urging from the Securities and Exchange Commission, banks have released more information by giving the estimates of possible litigation losses beyond what has been set aside. The actual reserve increases are only made if a
company believes a charge is probable and estimable. In addition to estimates from J.P. Morgan and Goldman, Wells Fargo disclosed an estimated, possible loss beyond what has been set aside of $1.2 billion; Citigroup, $4 billion; and Bank of America, $1.5 billion. Morgan Stanley only detailed estimates for individual cases. These disclosures are meant to address the dilemma of trying to be more transparent while operating in an adversarial legal system, notes Michael Young, a partner at Wilkie Farr & Gallagher. But there still isn’t enough clarity. Without knowing total litigation reserves and having some idea of what goes into them, investors can’t assess potential risks to earnings and equity. A brighter light needs to shine on this dark corner of bank balance sheets. —David Reilly
was initially developed and immediately became functional,
further development and adaptation was contemplated alongside its international rollout. Whereas a mobile phone application may
takes hours
to search for any new platform to be customized so it can learn and compensate for the information you need, and then operate on other platforms too. As far as starting a global marketing trend, the new platform has potential for wide adoption now that the business has evolved to post development. The immediate intention is to commence the rollout of the product offering, initially in the United States and South Africa to be followed in the medium term by a staged international rollout. But Mobile users who download the consumerfriendly application remain wary about hidden costs and ask is
it really free?
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