The Wall Street Journal Asia No. 130 dated Monday, March 07, 2011

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The spiritual transformation of Chinese billionaire Zhang Xin

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VO L . X X X V N O. 1 3 0

Gadhafi’s offensives flounder, say rebels

(India facsimile Vol. 2 No. 191)

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Monday, March 7, 2011

ASIA

asia.WSJ.com

Japan foreign minister resigns in latest blow to Kan

Military loyal to Libyan Col. Moammar Gadhafi launched counteroffensives against multiple rebel-held cities across Libya, an escalation that appeared to gain the government little ground but increased the likelihood of entrenched warfare in the North African country.

The afternoon government assault, employing tanks, jets, helicopter gunships and heavy artillery, floundered in the key central-coastal city of Misrata, sandwiched between the government’s two major strongholds of Tripoli and Sirte. But government forces did succeed in stopping an advance by rebels on Sirte, Col. GadPlease turn to page 16

The View From Hong Kong

Reuters

Japan Foreign Minister Seiji Maehara resigned Sunday over illegal political donations from a foreign national, dealing a blow to Prime Minister Naoto Kan’s weakened government and threatening to hinder Japan’s efforts to smooth ties with the U.S. and other major diplomatic partners. Page 3

GIC’s chief: Americans too gloomy on economy BY DENNIS K. BERMAN

Asia’s growing wealth is causing a major personnel shuffle in the hedge-fund world. Page 17

Japan Credit-market paradox: The fiscal discipline of some of Japan’s best-run companies has resulted in a higher credit rating than for government bonds. Page 17

China leaders pledge to lift livelihoods BY BOB DAVIS AND JEREMY PAGE

By Margaret Coker and Sam Dagher in Tripoli and Charles Levinson in Benghazi, Libya


U.S. wavers on ‘regime change.’.......................................... 14
Bahrain protesters increase pressure......................................... 16

NEW YORK—The head of Government of Singapore Investment Corp., one of the world’s most active sovereign-wealth funds, said Americans are being too hard on themselves and have failed to recognize the resilience of the U.S. economy. In an interview with The Wall Street Journal, GIC Executive Director Tony Tan Keng Yam said negative sentiment is a “problem when I talk to Americans. They don’t see the potential in their own economy, which is one of the most innovative, open economies in the world. Foreigners seem more optimistic.”

Dr. Tan, trained as a physicist and mathematician, said he expected that the U.S. economy would grow “above trend” at a rate of between 4% and 4.5%. That would outpace the 3.3% forecast for 2011 by economists surveyed by The Wall Street Journal. GIC has invested more than $100 billion of government reserves into a portfolio of stocks, commodities, bonds and private-equity stakes. More than one-third of the fund’s holdings are in the U.S., Dr. Tan said, adding GIC would continue to invest here. The 71-year-old Dr. Tan, historically averse to media interviews, said he wasn’t

OPINION: ‘Too big to fail’ lives on Page 11

worried about U.S. inflation, praising the monetary policy led by Federal Reserve Chairman Ben S. Bernanke as “necessary for America and the world.” “In America, the risk of inflation is very low because of the slack in the economy,” he said. Meanwhile, “if oil spikes above $100, I expect a severe deflationary impact on the U.S. economy and world economy,” he said. And inflation in Asian economies remains a “great concern.” “I see Asia growing but with problems in asset pricing and inflation. The challenge is to engineer a soft landing.”

BEIJING—Looking to head off the kind of anger that is reshaping the Middle East, China’s leaders pledged to boost incomes for its less wealthy citizens and to tame inflation, goals accompanied by the mobilization of police to snuff out online appeals for antigovernment protests. The country’s economic plans for this year and for the five-year period through 2015, unveiled at the National People’s Congress, the annual legislative session that started Saturday, commit to raising income levels at the rate of economic growth, and call on companies to boost worker wages so they match productivity gains. Incomes haven’t kept up with economic growth for at least five years in China. “We need to reconfigure the line of thinking when it comes to growth,” Zhang Ping, head of China’s most powerful economic ministry,

the National Development and Reform Commission, told a news conference Sunday. “In the past five-year plan, it was absolutely necessary to prioritize maintaining growth,” Mr. Zhang said. “Now we want to put more emphasis on ensuring and improving people’s livelihood.” The plans, which were hatched well before the outbreak of the so-called Jasmine Revolution in Tunisia in December, build on previous pledges to try to narrow a widening wealth gap in China, while also keeping economic growth humming. China’s leaders have long seen economic gains as the key to maintaining social stability, and over the last two weeks, several senior officials have cited growth as the main reason why people are not responding to online appeals Please turn to page 4
Beijing’s defense buildup prompts concerns...................... 4
China changes the way it measures credit growth......... 5

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THE WALL STREET JOURNAL.

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Monday, March 7, 2011

PAGE TWO

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What’s News—

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Inside

Business & Finance n Toyota Motor’s credit-rating downgrade on Friday meant its expulsion from an unusual club: Japanese companies that are considered more creditworthy than their own government. The emergence of that group reflects the fiscal discipline of some of Japan’s bestrun companies, and the government’s heavy spending over the past decade. 17

Japan: Female sushi chefs have traditionalists complaining. 8

n China eliminated a key policy tool to control liquidity and inflation: its annual target for new bank lending, overhauling how it looks at lending and changing the way it regulates banks after a year in which a huge volume of credit wasn’t factored into the formal lending data. 5 n The U.S. stock market has rallied in epic fashion over the two years since it hit bottom in March 2009, yet many investors remain skeptical about the market’s strength. 22

n The Asian Aerospace trade fair starts Tuesday in Hong Kong, and will reflect the sensitivities of mainland China as it reshapes the global aviation industry. 18 n Expectations U.S. rates will stay low are likely to keep the dollar in a downdraft this week, as looming rate increases in Europe enhance the euro’s luster. 24 n Perennial China Retail Trust, a unit of property-investment firm Perennial Real Estate, is deferring its $868 million IPO due to volatile market conditions. 25 n U.S. private-equity fund TPG Capital and Japanese lender JTrust are the likely contenders to take over failed consumer lender Takefuji. A decision could come by the end of the month. 20

Business & Finance: Google cranks up the M&A machine. 19

Reuters

n A former Goldman Sachs director, Rajat Gupta, was part of an alleged insider-trading conspiracy with Galleon Group founder Raj Rajaratnam, according to a U.S. prosecutor. 19

Malaysia’s ruling coalition won special elections to fill two legislative seats Sunday. The state legislature balloting may be the last electoral test in peninsular Malaysia before Prime Minister Najib Razak calls for general elections, which is expected to be by early 2012. Above, Roslan Ahmad, a candidate for the National Front coalition, celebrates after winning the Merlimau state seat. n Posco, Lotte and CJ Group plan to compete for a controlling stake in logistics firm Korea Express, in a deal that could be valued at more than $1.8 billion. 20 n Dolce & Gabbana is folding its D&G brand into the main label, in an effort to limit cannibalization between the two lines. 21 n Christian Dior sought to turn the page on John Galliano, presenting his fall-winter collection in a way that carried little of its former designer’s flair. 21 n Research in Motion’s chief marketing officer is leaving the BlackBerry maker. 20

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World-Wide n Japanese Foreign Minister Seiji Maehara resigned over illegal political donations from a foreign national, dealing a blow to Prime Minister Naoto Kan. 3 n Tens of thousands of protesters encircled a sprawling Bahrain government compound in a move timed to coincide with a cabinet meeting as they sought to further escalate pressure on the ruling AlKhalifa family to accept sweeping change. 16 n Egypt named Gen. Mansour elEssawy as interior minister in a

further sign that ousted President Hosni Mubarak’s old guard were being removed from the cabinet. n North Korea, angry that four of its citizens decided to stay in South Korea after drifting there last month, on Friday sent no one to the inter-Korean border to accept the return of 27 others from the same boat. 6 n Bangladesh’s High Court delayed its ruling on the legality of a government order dismissing Nobel laureate Muhammad Yunus as head of the microfinance bank he founded. Attorney General Mahbub-e-Alam says the court is likely to rule Monday.

Heard on the Street: Signs of excess in China’s art market. 30

ONLINE TODAY Most read in Asia

1. China Stresses Stability Amid Further Growth 2. Libya Rebels March West as Fronts Firm 3. U.S. Wavers on ‘Regime Change’ 4. U.S. Visit to Test Australia’s Gillard

Scene Asia

Korea Real Time

asia.wsj.com/video

Dream job: How Poh Ling Yeow managed to land her own cooking show even though she isn’t a trained chef.

Officials unveil Japan’s new bullet train, capable of traveling at speeds of up to 320 kilometers per hour.

Most emailed in Asia 1. In Afghanistan, War on Giant Gerbils Going Well 2. Opinion: Why America Will Stay on Top 3. The Puzzle of Chronic Fatigue Syndrome 4. Why Chinese Mothers Are Superior

Video

blogs.wsj.com/scene

Find analysis and insight into what’s making news on the Korean peninsula at: blogs.wsj.com/korearealtime

Management: Bryan Robson on bringing his game to Thailand. 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: 66-2 690 4222 to 7; India: 91-11 6462 0215. Or email: [email protected] ADVERTISING SALES worldwide through Dow Jones International. Hong Kong: 852-2831 2504; Singapore: 65-6415 4300; Tokyo: 81-3 6269-2701; Frankfurt: 49 69 29725390; London: 44 207 842 9600; Paris: 33 1 40 17 17 01; New York: 1-212 659 2176. Or email: [email protected] Trademarks appearing herein are used under license from Dow Jones & Company. USPS 337-350ISSN 0377-9920

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WORLD NEWS

Kan suffers blow as minister quits TOKYO—Japanese Foreign Minister Seiji Maehara resigned Sunday over illegal political donations from a foreign national, dealing a blow to Prime Minister Naoto Kan’s faltering government and threatening to hinder Japan’s efforts to smooth ties with the U.S. and other key diplomatic partners that have become frayed in recent months. The sudden resignation of Mr. Maehara, one of the most popular politicians in Japan and one seen as the likeliest candidate to succeed Mr. Kan, came as a shock, even in a country where political instability has persisted. The past four prime ministers lasted only about a year or less, and Mr. Maehara himself held the job less than six months. These rapid changes have raised questions as to whether Japan can tackle the big challenges it faces, such as ballooning public debt, the aging and shrinking of its population, and managing relations with its increasingly powerful neighbor, China. Mr. Maehara’s departure will further exacerbate the current political turmoil surrounding Mr. Kan, who faces increasing pressure to resign only nine months into the job. Unable to garner cooperation from opposition parties in a divided parliament, the prime minister is struggling to pass budget-related bills for the fiscal year starting in April. Weakening his grip on power further, some members of his own party have threatened to bolt amid internal conflict. Mr. Maehara’s scandal will give more ammunition to energized opposition parties as they escalate their attacks on Mr. Kan and add to the logjam in parliament over the coming days. Mr. Maehara’s successor hasn’t been named. The Japanese media

Reuters

BY YUKA HAYASHI AND TAKASHI NAKAMICHI

Japan Foreign Minister Seiji Maehara leaving a news conference Sunday at which he announced his resignation. have mentioned few potential successors as of late Sunday due to the sudden nature of the resignation. The 48-year-old politician is known for his pro-American views and his preference for market-oriented economic policies. In a hurriedly arranged news conference late Sunday, Mr. Maehara admitted he had received political contributions totaling 250,000 yen (about $3,000) from a South Korean national over several years. Receiving political contribution from foreigners is illegal in Japan. Mr. Maehara said he wasn’t aware of the contributions from the old family acquaintance, who runs a Korean barbecue restaurant in Kyoto, Mr. Maehara’s hometown. “I have come to believe I can’t allow my political fund issue to cre-

ate problems for Japanese people and obstruct proceedings in parliament,” he said. “It is a fact that I, [the] foreign minister, was accepting illegal donations from a foreign national. This could allow people from Japan and other nations to view us with suspicion, which in turn would hurt Japan’s national interest. I thought I needed to bring this to closure as soon as possible.” Having repeatedly said in the past that short tenures by prime ministers and foreign ministers hurt Japan’s diplomatic relations, Mr. Maehara said he was embarrassed that he was leaving the post within just six months. “It is particularly painful that I have to abandon halfway what I really wanted to do: economic diplomacy and deepening the U.S-Japan alliance,” he said.

Indeed, Mr. Maehara’s resignation is a blow to the U.S.-Japan relations, which have become strained since the Democratic Party of Japan took power in September 2009 over discord about the relocation of a U.S. military base in Okinawa. Mr. Maehara, known as one of the most pro-American lawmakers in the ruling DPJ, has been a leading negotiator for the Okinawa issue since the beginning—first as minister in charge of Okinawan affairs and then as foreign minister. As he emphasized “economic diplomacy,” Mr. Maehara also was among the leading proponents of trade liberalization and free-trade agreements, pushing for the TransPacific Partnership, a rigorous regional trade agreement supported by the U.S. and highly divisive in Ja-

pan due to strong opposition from farm lobbies. On the other hand, some blamed Mr. Maehara for fueling Japan’s confrontation with two of its powerful neighbors, China and Russia, with his often aggressive comments on territorial issues. Opposition parties are seizing the opportunity to attack Mr. Kan’s ruling party as Mr. Maehara—the DPJ’s star lawmaker, known for his outspokenness and his good looks—stumbled on unexpected trouble. “He should take responsibility,” said Hirofumi Nakasone, a former foreign minister from the Liberal Democratic Party, Japan’s largest opposition party, on a political talk show Sunday. Yosuke Takagi, a deputy secretary-general of New Komeito, a smaller opposition party whose cooperation is essential for the DPJ to pass legislation, spoke more bluntly. Mr. Maehara “should quit,” he said. Mr. Maehara’s resignation also may spotlight the treatment of ethnic Koreans and Chinese in Japan. The donor in question is a South Korean national but is a lifelong resident of Japan. Hundreds of thousands of Koreans still live in Japan today, a legacy from World War II, and most have retained their South Korean citizenship, thus being treated as foreigners in a land many of them consider home. The donor’s identity hasn’t been disclosed. In Japan, politicians can be sentenced to a maximum of three years in prison or be required to pay up to 500,000 yen in fines if it is proved they have deliberately breached the foreign-donation law. They also could be banned from running for public office or from voting in elections for a certain period. The regulation was formed out of concern that foreigners could gain unwarranted influence over the nation’s political decisions or elections.

India counts heads at an elusive address BY TRIPTI LAHIRI NEW DELHI—In most parts of India, national-census takers use a pen and paper to make their tallies. In the island territories of Andaman and Nicobar, where surveyors are barred by law from interacting with indigenous tribes, they need boats, video cameras, coconuts and good throwing arms. Counting India’s population of roughly 1.2 billion across 1.2 million square miles—a task that was set to be completed this past Sunday—is one of the world’s most challenging census exercises. Much of India is rural rather than urban. Its landscape includes the Himalayan Mountains and an island with one lighthouse keeper. India also has indigenous tribes living in forests and on islands that are off-limits, even to other Indians, so as to protect their dwindling members from exposure to germs or exploitation for tourism. Then there are security issues: The widespread Maoist insurgency prevents census takers from reaching some violence-soaked areas. And census workers must persuade nomadic shepherds to stay put temporarily. But perhaps the toughest task is counting the Sentinelese, who live on North Sentinel, which is part of

the Andaman & Nicobar archipelago, a chain of more than 500 islands in the Bay of Bengal between India and Thailand with about 356,000 people. Some of these islands once served as a British penal colony—which left the Andamans with the epithet “black water”—and were also briefly occupied by the Japanese during World War II. This indigenous community is often described as “the most isolated tribe” in the world. Indian law intends to keep them that way. “Even an aircraft cannot fly over that area so you can imagine the ban,” said V. Abrahum, director of census operations for Andaman and Nicobar in Port Blair, the administrative center for the archipelago. In 2001, the last time the census took place, the expedition counted 31 people in the first effort and 39 people on their second try. At that time, the census takers tried to communicate with the islanders using the language of another Andaman tribe, but to no avail. This time, due to Supreme Court orders to further limit contact with the indigenous tribes who lived isolated in the archipelago until the British arrival in the late 1700s, Mr. Abrahum said the team kept its distance. A written brief provided by the Andaman census official called it “a tough but fascinating exercise

PAKISTAN Bay of B e n ga l

NEPAL

BHUTAN

INDIA

MYANMAR BANGLADESH

Port Blair North Sentinel Island

Area of detail ANDAMAN AND NICOBAR ISLANDS

500 miles

SRI LANKA

500 km

Passage from India 100 miles 100 km

down the corridor of time.” Mr. Abrahum said the census takers set forth overnight in a speedboat from Port Blair, heading to the island about 60 miles east, but they make sure not to get too close. “Somebody tried to fly nearby and these people shot with the arrows,” said Mr. Abrahum ahead of the first survey operation, which was carried out last month. Once near the island, census tak-

The archipelago's residents are counted by officials in Port Blair

ers rowed closer to the islands on smaller boats bearing gifts—coconuts, fruits and sometimes cloth—but avoided landing on North Sentinel. From a distance, they tossed the coconuts and other offerings into the aquamarine waters toward the white-sand beaches, hoping to coax the Sentinelese out of the thick forest. In the meantime, video cameramen on the boat taped the scene. Mr. Abrahum said Sunday a sec-

ond team repeated the counting excursion early Saturday morning. He said this time it spotted a large group of people who accepted the fruit the surveyors sent across on the tide. Mr. Abrahum said the videos will be kept under tight security until they are sent back to the New Delhi census office because some of the people may be in a “natural state,” he said, and to prevent a resurgence of attempts by some to promote tribal tourism. A December amendment to the area’s 1956 tribal regulations made “unauthorized entry” into reserved areas for taking photographs or making videos of people there punishable with three years imprisonment. Adrienne Oneto, a U.S. census official who deals with outreach, said there wasn’t anything quite like India’s situation in the U.S., where large numbers of people responded to last year’s census by mail-in form. She pointed out the U.S. has its own island and hunter-gatherer populations, including the Inuit of Alaska, who must be reached before embarking on their spring hunting expeditions. But, she added, “There is no part of the population that we are not allowed to come into contact with.”

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Monday, March 7, 2011

THE WALL STREET JOURNAL.

WORLD NEWS: CHINA

Beijing’s defense buildup stirs fears China’s premier called for strengthening the military to build a “powerful people’s army” that can fight under modern conditions, as the country’s return to double-digit growth in defense spending prompted concern from some foreign governments and analysts. By Jeremy Page and Jason Dean in Beijing and Julian E. Barnes in Washington The government will work to “constantly enhance [the military’s] capability to accomplish a range of military tasks, the most paramount of which is winning local wars under information age conditions,” Premier Wen Jiabao said in his annual report Saturday to kick off the annual session of the National People’s Congress, China’s legislature. His comments came a day after China disclosed plans to increase its defense budget by 13% this year, amid trepidation in the region about China’s escalating might after a week of fresh Chinese territorial confrontations with Japan, South Korea, Vietnam and the Philippines. Concerns that China will use its escalating military power to assert its territorial claims in the region have prompted many of its neighbors to shore up defense ties with the U.S. and beef up their own militaries, threatening to push Asia into a new arms race.

Responding to Friday’s defense budget announcement, Japan Foreign Minister Seiji Maehara urged the Chinese government to be more transparent about how it planned to use its newfound military firepower, saying, “Whether it should be regarded as offensive or defensive would require a close look.” (Mr. Maehara resigned Sunday over an unrelated matter.) China expects to spend 601.1 billion yuan ($91.4 billion) on defense in 2011, up from 533.4 billion yuan last year, said Li Zhaoxing, spokesman for the National People’s Congress, ahead of the start of the legislature’s annual session on Saturday. The projected rise is faster than last year’s 7.5% increase—the slowest clip in decades—but is significantly slower than the roughly 19% annual growth in years before 2010. But the number doesn’t include key items such as the program to develop a stealth fighter and an aircraft carrier, according to foreign military experts who estimate that China’s real defense spending is far higher. Mr. Li said the military budget is relatively low as a proportion of China’s GDP and dismissed concerns that it threatened neighboring countries. Bonnie Glaser, a senior fellow at the Center for Strategic and International Studies, said the newly announced spending levels are a return to Beijing’s spending levels of

Rising might

Actual spending* Official defense budget

China’s defense spending

2009 military expenditures as % of GDP Japan

1.0%

$75 billion 50

China

25

2.0%

0

U.S. 2000

’05

*Estimates of actual spending

’10

4.6%

Sources: Sipri (estimates); National Bureau of Statistics of China (budget); World Bank ( % of GDP)

recent years. “The military has, in general, a growing voice,” she said. “We have seen a lot of evidence of [China] exerting greater influence.” Navy Commander Leslie HullRyde, a Pentagon spokeswoman, said China’s spending was helping Beijing build a “modern force capable of conducting a growing range of military operations.” She said the U.S. is continuing to ask China to be “more transparent regarding the capabilities it is acquiring.” On Wednesday, Japan scrambled fighter jets to chase off two Chinese military planes that it said flew within 34 miles of disputed islands in the East China Sea, which are known as Senkaku in Japan and as Diaoyu in China. Japanese government spokesman Yukio Edano said

Japan wouldn’t protest formally as the Chinese planes did not leave international airspace, but voiced concern over China’s growing military power and said Japan would monitor the situation. China’s Foreign Ministry didn’t respond to a request to comment. China-Japan relations plunged to their lowest point in years in September following collisions near the islands between two Japanese coast guard patrol boats and a Chinese fishing vessel. In December, Japan—which in 2010 was surpassed by China as the world’s No. 2 economy —revised its national defense guidelines, which were drawn up during the Cold War, to shift focus away from Russia and toward the emerging threat from China.

Also on Wednesday, the Philippines deployed two warplanes to protect oil explorers who complained that they were being harassed by two Chinese patrol boats in a disputed area of the South China Sea. The Philippine government demanded an explanation Friday for the incident near the Spratly Islands, which are claimed by China, Brunei, Malaysia, Taiwan, Vietnam and the Philippines. A Chinese Embassy spokesman reiterated China’s claim to the Spratly Islands and adjacent waters, but said Beijing is committed to maintaining peace and stability in the area, according to the Associated Press. On Thursday, Vietnam’s Foreign Ministry said in a statement that it had lodged a protest with the Chinese embassy after China’s navy conducted antipiracy drills around the Spratlys a week earlier. Vietnam said the drills were a violation of its sovereignty. South Korea’s Coast Guard said Friday it seized two Chinese fishing boats and their crews on Thursday after they were found fishing illegally in South Korea’s Exclusive Economic Zone, 64 miles southwest of Keokrulbiyeol island in the west sea. China’s Foreign Ministry didn’t respond to a request to comment on that incident, or the protest from Vietnam. —Owen Fletcher contributed to this article.

Continued from first page over the last two weeks for a Chinese “Jasmine Revolution.” But Wen Jiabao, China’s Premier, acknowledged at the start of the congress Saturday that the government needed to urgently address problems such as inflation that threaten social stability and future economic growth. “We must therefore make it our top priority in macroeconomic control to keep overall price levels stable,” Mr. Wen said in his annual work report—roughly equivalent to the U.S. president’s State of the Union address. Sunday, Premier Wen said that China aimed to “basically eradicate poverty” by 2020, the state-run Xinhua news agency reported, and to “greatly” raise its poverty line of 1,196 yuan ($182) per person a year. Chinese authorities have also launched a massive security crackdown since appeals for antigovernment protests began appearing on Twitter and other web sites that are blocked inside China, but still visible to those who use proxies or virtual private networks to get around China’s Internet controls. Sunday, Beijing government spokesman Wang Hui said protest calls were bound to fail in the capital because people want stability. “All clear-minded people will know that these people have chosen the wrong place and have the wrong idea. The things they want to see take place have not and cannot occur in Beijing,” said Mr. Wang, according to the Associated Press. He vowed that Beijing “will have no such incidents.” Chinese authorities are not taking any chances, however. They have detained dozens of political activ-

Xinhua/Zuma Press

China pledges to boost wages, tame inflation

Chinese President and Communist Party chief Hu Jintao, center, visits deputies to the session of the NPC from Tibet in Beijing on Sunday.

Out of step Growth in China's rural and urban incomes compared to its growth in GDP. Change from a year earlier

12%

Rural GDP

10 8

Urban 6 Note: Income data adjusted for inflation Sources: National Development and Reform Commission (incomes); National Bureau of Statistics (GDP)

4 2006

ists, and deployed thousands of uniformed and plainclothes police around sites in Beijing, Shanghai and other cities where online activ-

'07

'08

'09

'10

ists have urged people to stage silent Sunday “strolling” protests. They have also stepped up Internet controls, and re-imposed many

of the restrictions on foreign journalists that were lifted in the run-up to the 2008 Beijing Olympics. The Beijing government said Sunday that all foreign reporters now need prior permission to conduct reporting activities anywhere in the city center. In Shanghai, meanwhile, police detained about a dozen foreign reporters for reporting from the designated protest site without prior permission, according to the Foreign Correspondents’ Club of China. Reflecting the concern, the government Saturday projected spending on internal security items like police, courts, and jails would rise 14% to $95 billion this year, faster even than the growth in China’s defense spending. China’s heavy-handed response highlights leaders’ pre-occupation with maintaining social stability ahead of a once-a-decade leadership change next year, when President and Communist Party chief Hu Jintao and others are due to retire from their party posts. During the past five years, worker income matched growth in productivity and gross domestic product in only three of China’s 27 provinces and autonomous regions, according to the National Development and Reform Commission. For the new five-year plan, 15 provinces have set the labor-income goal-or picked a higher one—as their target. In the past, local officials have been graded and promoted on their ability to boost growth. Mr. Zhang didn’t specify what measures would be taken to enforce the new goals, but the agency’s directions in a report released over the weekend were clear: Local governments “should not seek rapid growth at all

costs or compete for the fastest rate.” Tough enforcement, though, is bound to produce political confrontation. Export industries depend on cheap labor to compete internationally and China’s huge state-owned industries have seen their profits increase sharply over the past decade as they were able to keep labor costs at a rate well below increases in productivity. Moreover, steeper boosts in labor costs could conflict with controlling inflation, which hit 4.9% in January. Mr. Zhang said the Chinese state was capable of handling inflationary pressures, largely driven by food prices, by tapping grain reserves, giving farmers incentives to produce more and, on occasion, selling food from granaries to drive down consumer prices. His remarks came a day after Mr. Wen told the National People’s Congress that the government aims to cap inflation for the full year “around 4%.” The consumer price index rose 3.3% in 2010, higher than the 3% target set last year. Mr. Wen also said that China would even use its “considerable foreign exchange reserves” to rein in inflation—leading a number of economists to wonder what he meant. Using the reserves to purchase grains, for instance, would push up prices, unless it was matched by price controls or subsidies for Chinese consumers.

WSJ.com ONLINE TODAY: Watch video on the NPC, see an interactive graphic on key players, and find news updates at asia.wsj.com/China.

Monday, March 7, 2011

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WORLD NEWS: CHINA

China alters liquidity gauge BY AARON BACK BEIJING—China eliminated a key policy tool in its arsenal to control liquidity and inflation: its annual target for new bank lending, overhauling how it looks at lending and changing the way it regulates banks. After a year in which the banks made a mockery of the formal loan target with a huge volume of new credit that wasn’t factored in, the target was absent from a host of economic goals announced at the start of China’s annual legislative session over the weekend. China’s banking regulator confirmed Sunday that there won’t be a publicly stated target for new lending this year. The People’s Bank of China last month unveiled a formula to measure total new credit in the economy. Liu Mingkang, chairman of the China Banking Regulatory Commission, said Sunday that until that tool is formally rolled out, authorities will use the broad M2 measure of money supply, the benchmark gauge of how much cash, bank deposits and other money is in circulation, as the main gauge of credit growth in

the country. That will make M2 a more important thermometer of China’s economy in the short term. While Beijing has had an M2 target in past years, it has often overshot that level. The official M2 growth target for 2011 is 16%. “The central bank is coming out with a new way of thinking, which is to control the total supply of national financing, not simply controlling bank lending,” said Yang Kaisheng, president of Industrial & Commercial Bank of China Ltd., the nation’s largest bank by market capitalization. The PBOC measure adds yuan loans to trust loans, bank acceptance bills, corporate bonds, funds raised by share sales of nonfinancial companies and insurance payouts among other fundraising avenues. China’s financial system has grown increasingly sophisticated in recent years but the tools Beijing uses to manage monetary policy have changed little in the face of evolving complexity. While bank lending accounted for almost all formal fund-raising in China’s economy 10 years ago, that slipped to a bit

over half last year. Instead, bond and share sales by companies—both major fund-raising avenues in developed economies—are on the rise, and off-balance-sheet lending by the banks themselves has resulted in a significant erosion of the importance of the formal new loan data. Banks formally lent 7.95 trillion yuan ($1.21 trillion) in new loans last year, blowing past the 7.5 trillion yuan target set by the regulators. But in addition, banks created 3.47 trillion yuan in off-balancesheet credit, according to the central bank’s calculations. Such lending includes the use of entrustment loans and bank-acceptance bills, a type of bank guarantee. In 2009, as part of its stimulus package in response to the international financial crisis, China dropped the lending target, which facilitated a massive credit binge by banks. Despite the absence of a target this year, a similar explosion of credit is unlikely, several of the nation’s top bankers said over the weekend. That is because, in lieu of formal quotas, the central bank has moved toward a new system which

punishes banks for lending more than they deem appropriate by requiring them to hold additional funds in reserve. “A higher reserve requirement ratio is not in a bank’s interest, so it will naturally adjust its actions,” Mr. Yang said. Bankers and regulators said the new regime is likely to result in slower lending this year. In an interview last week in the People’s Daily, the Communist Party’s official mouthpiece, Bank of China Ltd. Chairman Xiao Gang said he expects banks to lend about 7 trillion yuan of new loans this year. It remains unclear whether China’s authorities will set a clear target for total new credit, or if it will remain merely an indicative reference point for policy makers. Many market participants have questioned how any hard limit could be enforced, given that different regulatory agencies have purview over different kinds of financing. Tang Shuangning, chairman of state-owned conglomerate China Everbright Group, flagged such concerns on the enforceability of

Diversifying Chinese companies are increasingly turning to sources other than bank loans for finance People’s Bank of China’s estimates of “total national financing”: Yuan loans

2009 2010

Banker notes Trust-company loans Corporate bonds Non-financial equities Foreign-currency loans Insurance payments Other

Note: 2010 figures don’t add up to 100% due to rounding Source: People’s Bank of China

any national financing target. “It’s the right direction for the central bank to adopt the national financing index as part of its monetary policy, but I think it will be not easy to manage liquidity with the index because of the complex financial regulatory system,” he said. —Iris Cai and Dinny McMahon contributed to this article.

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6

Monday, March 7, 2011

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WORLD NEWS: ASIA

North Korea snubs return of citizens BY EVAN RAMSTAD SEOUL—North Korea, angry that four of its citizens decided to stay in South Korea after drifting there last month in an unpowered boat, on Friday sent no one to the inter-Korean border to accept the return of 27 others from the same boat. The action surprised South Korean government officials and experts on North Korean human-rights issues in Seoul, who said they’d never seen the North snub the repatriation of its citizens. Inter-Korean relations, strained by the South’s refusal since 2008 to provide unfettered economic aid to the North, turned far more tense last year when the North attacked the South twice in a disputed maritime border area. Against that backdrop, the decision by four North Ko-

reans to defect to the South has suddenly emerged as another source of friction. North Korea’s state media on Thursday and Friday issued statements demanding the return of all 31 of its citizens and accusing the South of keeping them hostage. In announcing preparations for the transfer, South Korea on Thursday said that four of the 31 people, including the boat’s captain, had asked to stay in the South. The requests emerged a day earlier during individual meetings with the 31, the South said. On Friday morning, South Korean officials took the 27 who wanted to return to the border crossing where such passage normally occurs. In the late evening, they returned to a facility in a Seoul suburb where they have spent most of their time since

arriving Feb. 4. A spokeswoman at the Unification Ministry, which handles affairs with the North, said officials would attempt to talk to North Korea about the matter on Monday. The South received a phone call from the North on Friday that acknowledged the situation but gave no direction. Only twice out of about 30 incidents of people drifting south of the maritime border since 2004 have North Koreans asked to stay in the South, according to Unification Ministry data. Such incidents typically involve a fishing boat with a small crew that has lost power or track of its location. But the current episode has been unusual from the start. The 31 people were in a fishing boat that was too small for that many people. And it arrived at night on Yeonpyeong Is-

land, the island in the Yellow Sea that North Korea attacked with an artillery barrage in November, killing four South Koreans. After the 31 were initially questioned, South Korean authorities said they didn’t appear to be defecting and expressed as a group a desire to return. North Korea, which usually says nothing about such incidents, in this case began publicly urging South Korea to return the 31 people immediately. South Korea typically detains for several weeks North Koreans who arrive under unusual circumstances. It said it would stick to that practice in this case. South Korean authorities use the time to interview North Koreans for intelligence purposes and to offer to let them stay in the South. The North initially said nothing about South Korea’s announcement

on Thursday that four had chosen to stay. But late Thursday night, the North’s state news agency issued a heated statement on the matter. It said South Korea “refused to send them back not because of any ‘investigation’ or ‘confirmation of their will’ but sought an aim to use them as hostages for hatching sinister plots.” On Friday, a spokesman at the Unification Ministry said the four “wished to stay on our side according to their free will and, therefore, are not returning.” Tim Peters, who leads a defector assistance group called Helping Hands Korea, said the North’s apparent refusal to accept the 27 people who wanted to return home was “uncharted territory” for those involved in such work in Seoul. —Jaeyeon Woo contributed to this article.

Philippine price jump may spur rate rise BY CRIS LARANO AND RHEA SANDIQUE-CARLOS MANILA—Inflation in the Philippines climbed at a faster-than-forecast pace in February on higher costs of food, fuel and home repairs, sparking more hawkish rhetoric from the central bank and reinforcing a burgeoning market view on the need to raise policy interest rates as early as this month. The National Statistics Office reported Friday that the consumerprice index, the country’s main inflation barometer, rose in February by 4.3% from February 2010—a faster clip than January’s year-to-year increase of 3.6%, which was revised up from an initial estimate of 3.5%. February’s rate of inflation was the quickest since the 4.3% recorded in May. The central bank projected February inflation to be in a range of 3% to 4.1%, while economists polled by Dow Jones Newswires forecast a median 3.7% rise.

Core inflation, which excludes volatile food and energy prices, was at 3.5% in February and 3.3% in January. “This supports our view that the scope for keeping rates steady has narrowed,” Bangko Sentral Ng Pilipinas Gov. Amando Tetangco said in a statement. He said the latest data will be incorporated in its review of inflation forecasts, but noted that “it is important to remember that the [central bank] looks at expected price movements over a longer policy horizon, and not simply on contemporaneous inflation.” The central bank has kept its policy overnight interest rates at record lows of 4% for borrowing and 6% for lending since July 2009. At that time, it ended a rate-cutting binge that started in December 2008 and slashed two percentage points off the rates to allow the economy and banks to better cope with fallout from the collapse of investment bank Lehman Brothers. Prior to the Lehman collapse, the

Philippines CPI Year-to-year percentage change 4.5% 4.0 3.5 3.0 2.5 2010

’11

Source: National Statistics Office, Philippines

central bank had raised the overnight rates by a total of one percentage point from June to August 2008 to combat an inflation rate that had risen to double digits. Deputy Gov. Diwa Guinigundo said that although February’s inflation rate topped the central bank’s

forecast, the average of 3.9% over January-February is still at the lower end of this year’s target range of 3% to 5%. “While the two-month average remains within the target range, greater vigilance and anticipation are required. We shall ensure that monetary policy is appropriate, especially in the light of the continuing volatility in the Middle East and North Africa as well as in global commodity markets,” Mr. Guinigundo said. Standard Chartered Bank said in a research note to clients that the central bank should start raising rates as inflation pressure mounts. “It would hurt market sentiment if the [central bank] does not respond,” it said. Simon Wong, an economist at Standard Chartered, added that while the bank is keeping its call of a rise of 25 basis points, or one-quarter of a point, this month, “now [we] cannot rule out a 50-basis-point hike as we see rising need for the [central bank] to catch up with inflation ex-

pectations and avoid being seen as ‘behind the curve.’” Action Economics economist David Cohen said the February data will prompt the central bank to raise its rates by a quarter of a point during the next policy meeting on March 24. “Until today, we had thought that it was still a pretty close call between the first hike in March or May,” Mr. Cohen said. “We think [the overnight borrowing rate] will reach 4.75% by year-end,” Mr. Cohen added. February inflation was up 1.1% from January, which in turn was up 0.8% from December. Year-to-year inflation in February 2010 stood at 4.2%. Philippine stocks largely ignored the latest inflation data and prospects of higher interest rates, with market participants focusing instead on dividends declared by companies and a gain on Wall Street overnight. Meanwhile the peso continues to advance, in step with other regional currencies.

Asian guest workers displace Arab migrants in Gulf BY JOEL MILLMAN AND JOE PARKINSON AMMAN—Rasmy Mahmoud Khair supported his family in Jordan for nearly 15 years by working on a farm in Saudi Arabia. In the two decades since the farm job ended, he and two adult sons have tried in vain to reconnect the family to a Saudi paycheck. “They use others now—Filipinos and Pakistani,” Mr. Khair says, explaining that his efforts to return to his old job feeding chickens keep being rebuffed by Saudi authorities, who say Jordanian applicants must be certified as skilled technicians. Instead of the 700 dinars per month—about $1,000 at the time—he made working with poultry, he now earns 200 dinars a month at best picking up odd jobs, Mr. Khair says. In the one area of the Arab world that continues to be a job-making machine—the oil sheikdoms—Arabs aren’t getting as many jobs as they once did. The Gulf Cooperation Council, or GCC, countries—which include Kuwait, Saudi Arabia, Bahrain, Oman, Qatar and the United

Arab Emirates—employ more than 15 million “guest workers,” according to World Bank figures. Arab manpower once comprised the bulk of this imported work force. Now, some 11 million of the GCC’s guest workers hail from countries east of the Persian Gulf, mainly India and Pakistan. Some countries have contingents from China. The remaining four million migrants arrive from places like Jordan, Yemen, Sudan, Syria and Egypt. Demonstrations that have gripped countries across the Middle East have been fueled, in part, by resentment over the lack of opportunity in countries across the region. But even as unemployment grows across the Arab world, jobs are increasingly going to Asian guest workers. The Arab Labor Organization, based in Cairo, reports the number of unemployed people in the Arabicspeaking world—from Morocco to the Gulf nations—exceeds 20 million. It warns that in the absence of real job growth, those numbers could swell to over 100 million unemployed by 2020. Asians first began out-competing

An Eastern bias Major providers of migrant labor to Gulf Cooperation Council countries in 2010* Within the Middle East India

4.9 million

Pakistan

2.0

Egypt

1.6

Yemen

1.0

Philippines

0.9

Bangladesh

0.9

Sri Lanka

0.9

Sudan

0.3

Iran

0.3

Indonesia

0.3

*Includes Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and United Arab Emirates Note: All figures are estimates. Source: World Bank ‘Migration and Remittances Factbook 2011’

Arabs in service and construction jobs. But now Asians outnumber Arab guest workers in all but the most professional sectors, such as medicine and law. Egypt, with 1.6 million workers, is the leading Arab “sender” to the GCC, while Jordan—whose economy is one of the Middle East’s most-dependent on

overseas remittances—ranks sixth among Arab “senders,” with just 184,000 GCC migrants, according to World Bank estimates. In the mind of employers in oilrich nations, Asians present several advantages. Many arrive more skilled, especially as English speakers, a big selling point in economies relying

more on information and service industries. Asians have tended not to bring their families, as many Palestinian, Lebanese and Jordanians have. Asians also have been easier to lay off and send home, in part because Asian governments exert less pressure on behalf of their workers than can fellow Arab governments. Asians have tended to work for less, bringing Asian wage expectations to a region where locals were used to wages that soared in petroleum boom years. At antigovernment protests last month in Amman, a man who gave his name as Ameer demonstrated alongside Islamists in solidarity with Egypt’s rebels. A college graduate, Ameer described hitting the Internet each week, looking for openings to submit a résumé to employers in the U.A.E. “Most don’t even reply,” he said. Another man at the rally, who said he holds a masters degree in environmental engineering, said his efforts to find work in Saudi Arabia also have come to naught. “They pay less than what I make in Jordan,” he explained.

Monday, March 7, 2011

7

THE WALL STREET JOURNAL.

WORLD NEWS

Rand bedevils South Africa [ The Outlook ] BY MARIAM ISA

Michael Phillips for The Wall Street Journal

Family members and community elders, in a ceremony to receive a released Afghan detainee, center, promised to keep the ex-prisoner out of trouble.

U.S. taps detainees to win Afghan trust BY MICHAEL M. PHILLIPS SAYEDABAD, Afghanistan—The U.S. military is trying to turn its detention system in Afghanistan, long a public-relations disaster, into an asset in its campaign to win over the public. In the year since U.S. commanders shuttered the infamous Bagram Airfield prison and opened a new facility nearby, they have released hundreds of low-threat detainees, hoping they would spread word of fair treatment and improved conditions in U.S. hands. “We treat them as well as we can to keep them from taking up arms against us again,” says Maj. Gen. Marjan Shuja, the top Afghan officer in the U.S.-led detention task force. “We’re trying to get their confidence.” U.S. commanders say the contrast is sharp between the old Bagram detention center and the new one, called the Detention Center in Parwan. There had been numerous reports of abuse at Bagram and, the U.S. military acknowledges, young men who had committed no offense were sometimes held there for long periods. In 2002, two Afghan men died at the hands of U.S. forces in Bagram after repeated beatings, military coroners determined. Seven soldiers were charged. A Defense Department spokesman said there was no “systematic torture or abuse” at Bagram and said military authorities punished those who violated policies prohibiting detainee abuse. The military planned the new detention center as a symbolic break from the past. They named it after Parwan, the province it resides in, though the facility is adjacent to Bagram Airfield, site of the old prison. The new facility—which now holds around 1,550 detainees—offers extensive medical care and classes in literacy, agriculture, bread-making and tailoring. Families are allowed to visit; there is a playground for the detainees’ children, albeit one surrounded by razor wire. Relatives who can’t make the trip chat by video conference. More than 2,300 outsiders have visited the facility, including diplomats, journalists and the International Committee of the Red Cross. Tensions still run high inside the new facility, according to military guards and commanders. Guards wear goggles around the 30-man cells; on occasion, detainees throw plastic water bottles filled with urine and feces at the guards. The detainees mockingly call this “baksheesh,” a gift or bribe, according to

guards. Detainees sometimes shout racial epithets at black guards and sexist comments at female ones. “We have hard-core detainees who are sentenced to 15 or 17 years and say they’ll still keep fighting,” says Gen. Shuja. U.S. and Afghan authorities have released some 675 detainees since the beginning of last year. The military says fewer than 2% of those released are recaptured, although that figure is similar to the rate under the old detention system, according to Vice Adm. Robert Harward, commander of the detention task force. Adm. Harward says that suggests the overwhelming majority of released detainees don’t return to the battlefield. Military survey data, however, show some 85% of released detainees can’t find work, a foreboding statistic when insurgent leaders often pay young men to ambush coalition troops or plant roadside bombs. Military boards review the evidence and intelligence in each detainee’s case every six months, as part of an effort to be fair to detainees and to make sure they don’t release men likely to return to the fight. A U.S. officer—not a lawyer—is assigned to act as the detainee’s advocate, summoning witnesses, contacting family and questioning the military’s case. The board can recommend transfer to Afghan authorities, continued incarceration or release. Some Afghan judges and prosecutors operate out of the Parwan facility to process detainees received from U.S. hands. The question isn’t so much whether a detainee is guilty of past misdeeds; rather it is about whether U.S. commanders believe he can be trusted not to rejoin the insurgency. The release program creates the most good will for the U.S, said Adm. Harward. A former detainee “becomes a messenger,” he said. U.S. forces have detained around 7,550 suspected insurgents since the beginning of last year, sending 1,530 of them to Parwan, joining detainees from Bagram. The U.S. has released some 375 to councils of elders, or shuras, and turned 320 over for release by Afghan authorities. In a typical release in January, the military flew three detainees, 16 to 22 years old, back to their home district in Sayedabad, southwest of Kabul. Each man wore a U.S.-issued olive-drab jacket and blue watch cap, and carried a bag emblazoned with the phrase, “Islamic Republic of Afghanistan—Peace and Unity.” —Maria Abi-Habib in Kabul contributed to this article.

JOHANNESBURG—The gusher of foreign capital that has prompted fears of inflation and overheating in many emerging markets has created a different set of problems for South Africa. Africa’s largest economy is struggling with a delicate task: Trying to reconcile a weak economy and a strong currency without scaring off investors. In the past year, foreign capital has powered many frontier economies and their currencies, as investors pumped money into assets that offered higher returns. But South Africa, which hasn’t been hit by the inflation seen in other emerging markets such as China and Brazil, also hasn’t matched their surging growth. Its economy is expected to grow 3.5% in 2011, lagging behind sub-Saharan Africa as a whole, which is forecast to expand 5.5%. South African officials say the country needs to double its pace of growth to shrink a jobless pool of about one-quarter of the workingage population. Foreign direct investment has fallen sharply over the past two years, due in part to a downturn in global commodity prices and uncertainties over government labor and mining policies. Yet South Africa’s currency

appreciated 12% against the dollar last year, and hit a three-year peak of 6.55 to the dollar on Dec. 31. It has weakened since, but clawed back some of the lost gains after the national budget, unveiled in February, didn’t include new measures to curb its appreciation. Since the start of the year it is down about 5% against the dollar. But the currency is still seen as too strong and the economy as too weak. That disconnect troubles politicians and economists. Many South African officials say the rand’s strength is hampering a recovery because it makes mining and manufacturing exports more expensive for foreign buyers. That leaves industry vulnerable to competition from manufacturing powers such as China, South Africa’s main trade partner. Manufacturing is the South African economy’s second-biggest sector after financial services, accounting for about 15% of overall output. “The strong rand is robbing the South African economy of its growth potential,” said Colen Garrow, an economist at Brait SA, South Africa’s largest listed privateequity company. Mr. Garrow says the rand—now at just below seven to the dollar—should be closer to eight to the dollar. That lower level, he adds, could boost annual economic growth to 4%. But pinpointing the optimal level for the rand is difficult amid brisk global capital flows. South Africa

needs these inflows to absorb its current-account deficit, which has to be covered by foreign capital inflows to compensate for the foreign exchange paid for imports. The country isn’t expected to resort to stricter controls on capital inflows, such as imposing taxes on purchases of bonds or equities. In his budget last week, Finance Minister Pravin Gordhan said the exchange rate would be monitored but that there was little South Africa could do to influence global capital flows. In the first two months of this year, there have been net capital outflows—foreigners have sold a net 6.6 billion rand ($950 million) of bonds and a net 2.3 billion rand of South African equities. Those outflows have removed some of the pressure for authorities to intervene to weaken the rand. One step the Treasury did take in October was opening its doors wider for capital to leave the country, hoping that more buying of foreign currency will counterbalance the rand’s strength. South Africa now allows residents to take four million rand (about $580,000) offshore each year, compared with a previous lifetime limit of four million rand. Limits on amounts that mutual funds and private pension funds can take offshore also were increased, raising the limit for unit trusts to 35% of total assets from 30% and for pension funds to 25% from 20%.

CAREER OPPORTUNITIES

Monday, March 7, 2011

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CAREERS

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N A BACK STREET in the Akihabara district, across from the flashing lights of an electronics discount store, next to the vending machine that dispenses spaghetti in a can, and one floor below the massage parlor that promises “total relaxation,” lies a true pioneer in the Japanese culinary world: the country’s first sushi restaurant featuring a cast of beautiful, young female chefs. Despite the neighborhood, the only thing slimy about Nadeshico Sushi is the fish. “I love fish,” proclaims 24-year-old sushi chef Yuki Chizui, placing a slab of marbled fatty tuna on top of a carefully crafted nugget of rice. “I worked at a sushi restaurant for six years and only the men were allowed to make the sushi.” she says. “Even on a busy day, I couldn’t even offer them my help—that’s the kind of world it is.” Like sumo and Kabuki, the traditional art of making sushi has long been monopolized by men. Until now. At Nadeshico (translation: ideal woman) Sushi, which opened its doors late last year, young women line up behind a 17seat counter, meticulously crafting individual pieces of nigiri (or regular) sushi while bantering with the clientele, 90% of which is male. The restaurant’s specialty: sushi rolls shaped like cartoon panda and frog heads, adorned with heart-shaped eggs. For the Japanese men who dominate the sushi-making industry—where the craft is traditionally passed down from generation to generation—the move is blasphemous. “I imagine what they’re doing isn’t proper sushi-making,” sniffs Masanori Nakamura, the 41-yearold owner of Sushi Nakamura in Tokyo, which has been awarded one Michelin star. “They’re just trying to imitate the art of making sushi,” he says. Mr. Nakamura explains that it takes 10 years to properly learn the art, from choosing the freshest fish at the market; learning how to gut and slice it; forming a perfect mound of rice upon which to place it; and learning the rhythm and cadence of crafting sushi while chatting with customers. At Nadeshico Sushi, women learn how to make sushi in two months. Of course, the job in this case doesn’t involve any of the dirty work involving fish, like gutting and slicing. There are two men in the back of the restaurant who bone fish and discard intestines. Masayuki Yoshino, one of the men behind the screen, has been in the sushi business for 30 years. “My ex-colleagues say I’m a real fool for doing this,” he says. “But I thought it would be fun. Sushi is an industry that has a long tradition of discriminating against women.” Though there are a few women sprinkled throughout Japan who are sushi chefs, Nadeshico is the only sushi restaurant whose sushi chefs are exclusively female. Kazuya Nishikiori, the middleaged owner of Nadeshico, says he wanted to create a new model for working women in Japan. But he

Ko Sasaki for The Wall Street Journal

8

Yuki Chizui, a chef at Nadeshico Sushi later explains he’ll hire only women who are between 18 and 25 to work behind the counter. “After all, our slogan is ‘fresh and kawaii,”’ he explains, invoking the ubiquitous word for “cute.” “If someone wanted to work here and was 30, I’d put her in the back.” The No. 1 reason most chefs cite as to why girls can’t make sushi: they’re too hot. “The temperature of a woman’s hands is higher, and when you’re handling fresh fish, this isn’t good,” says Keiji Mori, the owner of Maru, a modern kaiseki (multi-course haute cuisine) restaurant in Tokyo that employs two female chefs in its kitchen. “This is ridiculous!” cries Mr. Nishikiori. “People use this excuse that women have warmer hands, but women are usually colder than men. Hiroyuki Musashi, the 44-yearold owner of the one-Michelin-star restaurant Sushi Musashi in the tony Aoyama neighborhood, started making sushi when he was 18 years old. “The temperature of your hands doesn’t matter at all,” he says. “Sushi is a tough job, to be frank: You work late and long hours.” Mr. Nishikiori, who runs a staffing company and had no experience owning a restaurant, admits that his place isn’t Michelin-star quality. “It’s best to come in with low expectations,” he says. He wants to attract young people and foreigners as customers. Indeed, one review site gave the restaurant just 2½ stars out of 5. A male patron wrote: “The sushi is pretty awful.” But he also said: “I felt like it was the first blush of love when I was talking with the chef at the counter—my heart was pounding.” Kii Otsuki, a 21-year-old college student who works at Nadeshico part time, says: “Sometimes customers get the wrong idea, since it’s all girls. Since this is Akihabara and there are certain associations with this place, I just laugh it off. Many customers are surprised how serious we are.” While Nadeshico isn’t haute cuisine, even the industry’s seasoned male chefs admit that things have to change. “I think it is strange that there aren’t any female sushi chefs,” says Mr. Nakamura, who teaches at a culinary school in Shinjuku commercial center in Tokyo and says the number of female students has swelled fivefold over the past 20 years. Mr. Musashi takes it one step further: “Young females have more determination and ambition than young men in Japan these days.”

The Moment TALES OF INDIA’S ORDINARY THUGS 10

MONDAY, MARCH 7, 2011

LIFE & STYLE

asia.WSJ.com

Field of unlikely dreams in Hanoi Tom Treutler spent $50,000 to create Vietnam’s only-youth baseball team; a 34-game losing streak Hanoi There are no baseball fields here. Just places where Tom Treutler lays down bases and rolls out a bucket of balls. It could be a football field or a tennis court. Wherever it is, Mr. Treutler’s improvised diamond is the one place in Hanoi where Vietnamese 11and 12-year-olds are playing baseball. They have gloves, bats and red pinstripe uniforms with their first names on the back. From a distance, they look a little like the Philadelphia Phillies. But these are the Hanoi Capitals, Vietnam’s only organized youth-baseball team. Since Mr. Treutler, an intellectual-property lawyer from Michigan, founded the Capitals in 2008, building the team has been his project. He has spent more than $50,000 of his savings on gear and travel to tournaments. He runs several practice sessions a week with two assistants. “We haven’t had a weekend for three years,” said his wife, Thuy, who spends practices explaining the game to parents. “It used to drive me crazy. Now I love baseball more than Tom [does].” Baseball has sprouted sporadically in several Southeast Asian countries, always as the result of a single committed person, according to Rick Dell, Major League Baseball’s director of development for Asia. In most cases, it fails to take hold. “Unfortunately, although the growth is initially rapid, it levels off many times as interest remains localized and the vision does not include the big picture of spreading the game,” he said in an email. What Mr. Treutler’s project may have going for it is Hanoi’s bidding to host the 2019 Asian Games. If successful, officials will hope to field competitive squads in every event, including baseball. When Mr. Treutler’s connection to Vietnam began in the early 1990s, baseball had nothing to do with it. Working in Silicon Valley, he loved the sound of the language when he heard it spoken by a colleague. He took courses to learn and volunteered for an immersion program in Ho Chi Minh City. In the next decade, Mr. Treutler married Thuy, returned to the U.S. to study law and, ultimately, relocated to Hanoi in 2007 after a stint in Southern California. It was there that his oldest son, Ben, started playing baseball. Mr. Treutler wasn’t going to let moving 12,000 kilometers get in the way. “My father was a football coach for 30 years, so I grew up with team sports,” Mr. Treutler said. “I didn’t want my son to miss out on that. It was kind of a selfish thing at the beginning.” Word spread among Ben’s classmates that someone was teaching baseball—bong chay in Vietnamese. Many of them had a vague understanding of the game from a Japanese comic book about a baseball-playing cat named Doremon. Here, at the very least, was a chance to make sense of him. Mr. Treutler and his wife lugged suitcases of gear back from California. A coach in Seattle began sending him whatever used gear he could sneak past the Vietnamese ban on importing second-hand goods. The Capitals made their debut against the Japanese School of Hanoi in February 2009, but they failed to get a hit and lost 16-0. The one run they thought they had

Daniella Zalcman (2)

BY JOSHUA ROBINSON

Tom Treutler, right, didn’t want his son Ben, above during a weekend practice in Hanoi, to miss out on team sports when the family moved to Vietnam from Southern California. scored was erased. The runner, who had advanced by stealing bases, had not touched home plate. “It was like a dagger in the heart,” Mr. Treutler said. It was a harsh reminder of how much work there was to do. He registered the team with the Pony and Little leagues, two American youth-baseball organizations, so it could enter tournaments abroad—there were no other Vietnamese teams to play. Baseball in Vietnam, where other sports such as football and badminton dominate, is still seen as an American curiosity. The few adults who have played, like Mr. Treutler’s assistant coach Pham Ngoc Phu, learned it from American humanitarian workers in the years after the war. Unprepared as the Capitals were, Mr. Treutler shelled out $15,000 to take them to a tournament in Jakarta that summer. And when they first laid eyes on a perfectly manicured diamond, they turned to their coach and said, “It looks like ESPN.” The trip turned into a reality check. They lost every game by the mercy rule. “At that point, I thought, ‘Maybe we made a mistake coming here,’ ” Mr. Treutler said. Mr. Treutler reached out to Mr. Dell, who set up clinics and turned them onto MLB’s recommended training regimens. During practice Mr. Treutler, who was never more than a Little League dad before this, treats the programs as gospel. Through 2010, the losing streak swelled

to 34 games. It was wearing on his team. “If we didn’t go through that period of going to tournaments and seeing how other teams do it,” Mr. Treutler said, “we’d still be where we were two years ago.” Their turn came last month, when the Capitals hosted Vietnam’s first-ever youth baseball tournament. More than 400 practices after they first threw a baseball, four victories came in quick succession. “Last week when I worked with the pitchers, catchers, and hitters, I saw 11-

year-old boys as good as any youth players in the world,” Mr. Dell said. “In many ways it has turned into a version of the Bad News Bears.” The buoyant Capitals capped the threeday event in front of a home crowd by overcoming a team from Indonesia on a temporary diamond. Finally, they were the ones lifting a trophy. For the first time, Mr. Treutler felt like baseball could have a home in Vietnam. Even if it did not have a permanent field.

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THE WALL STREET JOURNAL.

Monday, March 7, 2011

LIFE
STYLE

Author tells of India’s ordinary thugs Tabish Khair’s novel ‘The Thing About Thugs,’ set in London, is a Man Asian Literary Prize finalist I could not keep on writing from Gaya, that I could not say what I wanted to say if I stayed there, so I left for Delhi. There I started working as a staff writer for the Times of India. Then I met a Danish girl. One of the first things I asked myself when I first moved to Denmark was: Where were all the people? The streets were so bloody empty. I still get surprised at times. And then they complain about immigrants!

[ The Moment ]

For an author who was brought up in a town in Bihar, India, and who now lives in Denmark, setting a novel in Victorian London may not seem the obvious choice. But that’s exactly what Tabish Khair did in “The Thing About Thugs,” one of five titles shortlisted for the Man Asian Literary Prize. Awarded annually for a novel by an Asian author, the prize will be announced in Hong Kong on March 16. In his narrative, Mr. Khair takes the reader between a grandfather’s library in modern-day Bihar and the back alleys of 19thcentury England. Above all, Mr. Khair’s novel is about thugs, Indian thugs. They are the ones who belonged to the Thuggee cult, whose tales of callous murders and robberies reached the empire’s mother city of London. At least this was the picture of thugs painted in British literature of the time. In his mocking and provocative take on the genre, Mr. Khair’s thug finds himself in the London of opium dens, sewers and fog, from where he writes letters in Persian to his loved one back home. Born and raised in a Muslim household in Gaya, a town in Bihar, Mr. Khair spent several years in New Delhi before moving to Denmark. A poet, novelist and essayist, Mr. Khair said that while his background is important, he opposes attempts to pigeonhole his work. Mr. Khair spoke to The Wall Street Journal about himself, his novel and his favorite moments in literature. I always knew my book would be about thugs, but from the other side, and I knew it would be about deception, truth and narratives. I

Lars Kruse (portrait); Newscom (Gaya, Bihar); iStockphoto (Aarhus)

BY MARGHERITA STANCATI

Tabish Khair wrote about India’s Thuggee cult in the 19th-century. His character’s hometown of Bihar is pictured in modern day at top right. Khair now mostly lives in Aarhus, Denmark, bottom right. had been reading about thugs, like Meadows’s book on thugs (Philip Meadows Taylor’s 1839 “Confessions of a Thug”). We mainly hear the simplified version of who thugs were. It’s not that I don’t believe this group existed but I wanted to show them not as a cult but as Indians with ordinary backgrounds who varied from area to area and from person to person. I also wanted to write about London but I didn’t want it to be another multicultural London novel—I feel there are too many of them. So I had to look at the past, and the early Victorian period coincided with the suppression of Thuggee in India.

I found out I had been short-listed for the Man Asian Literary Prize when a friend from Delhi posted it on my Facebook. And there were at least two or three other messages about it from my contacts before I actually checked and found out. Being an author was the only thing I ever wanted to be, except perhaps a painter but I cannot paint. I started writing poems when I was 7 or 8. Childish stuff. But mainly all I knew is that I wanted to read, I wanted to read as much as possible. I had no clear idea what it was to become a writer. I come from a professional middleclass family where all studied

medicine, engineering and, these days, IT. Of course, it took years before I realized that I had to write “professionally,” not just dabble in it, and then it took years before I could gather up my courage. I decided to leave Bihar at the age of 24 or so. I had a very comfortable middle-class lifestyle in Gaya, I had a nice house and a library I could read in. That’s what I did, I read a lot. Then I wrote a couple of articles on Islamic fundamentalism which upset some Muslim fundamentalists and I received some threats. This was around the time the death fatwa was issued against Salman Rushdie. I realized

I have many favorite moments in literature. Manto’s Toba Tek Singh stuck in no-man’s land; Brontë’s Heathcliff wrenching open the window and soliciting Cathy’s ghost to enter; King Lear running mad in the storm; a lesbian relationship seen as a quilt changing shapes by a young girl in Ismat Chughtai’s “Lihaf”; moments of complex jealousy in Proust; the moment in Henry James’s “Turn of The Screw” where the boy is seen standing out in the garden at night and many others. There is one particular episode in “Heart of Darkness” where Marlow is bringing back Kurtz on a steamboat through the forest and African tribesmen gather on the shore. The Europeans in the boat aren’t really threatened by the tribesmen because they are not within reach of their spears. Marlow blows the whistle to frighten them away but that doesn’t satisfy other Europeans. “And then that imbecile crowd down on the deck started their little fun, and I could see nothing more for smoke,” writes Conrad. It’s a beautiful and provocative scene. What is actually taking place is a massacre. What is being lost in smoke is this massacre. I find the use of language here fascinating. Marlow the narrator and Conrad the author can only say so many things. There is a story beneath the story that remains untold. That is what I try to do as well.

Monday, March 7, 2011

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THE WALL STREET JOURNAL.

OPINION: REVIEW
OUTLOOK

Still Too Big, Still Can’t Fail

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he 2010 Dodd-Frank law was sold as a way to prevent future bank bailouts. But so few people believe it that Sheila Bair, chairman of the Federal Deposit Insurance Corporation, has embarked on a campaign to convince the markets that next time really will be different. On Friday Ms. Bair sent a letter to Standard & Poor’s, the giant credit-ratings agency. S&P, like most of the financial community, suspects that Washington will open the checkbook again when Wall Street stumbles. Therefore the firm has given the largest financial institutions higher credit ratings to reflect this potential government support. Ms. Bair’s note assures S&P that she will put the wood to big banks and their creditors if they end up in the FDIC’s new resolution process for systemic firms. Therefore, she argues, the giant banks should no longer receive higher ratings, because Uncle Sam isn’t coming to their rescue. We guess the financial crisis really is over when a senior federal regulator feels confident urging downgrades of big banks. And on the merits, if Ms. Bair were the only Washingtonian with a say in this matter, investors might start to believe that the freedom to fail really has been restored. But investors are still expressing a different belief. Recent data from the Federal Reserve and Ms. Bair’s FDIC confirm that the biggest banks still enjoy advan-

tages over their smaller rivals, and by low-interest-rate environments like the some measures these advantages have current one. been growing since the July enactment The FDIC has a point. The big banks of Dodd-Frank. also enjoyed particularly cheap funding The FDIC data show how much banks relative to competitors in the 2002-2004 pay to borrow money. One would expect period of very easy money. And whereas that if Dodd-Frank really eliminated the academic research once suggested that possibility of governbanks couldn’t draw ment assistance for the much additional benefit largest banks and their Dodd-Frank has from economies of creditors, then such scale once they had widened the funding creditors would be no grown to a few hundred more or less willing to edge for giant banks. million dollars of aslend to the big banks sets, more recent data than to their smaller suggest that even the competitors. But in the second half of biggest banks can gain efficiencies as 2010, right after the passage of the law, they grow and deploy automated systems banks with more than $100 billion in as- across vast territories. sets clearly enjoyed a lower cost of funds But the big guys have been enjoying than banks in every other category. free money for years since the crisis, and While the FDIC collects data on banks, the benefits of scale for even longer. If the Federal Reserve collects data for Dodd-Frank was really working as adverbank holding companies. Its data only go tised, wouldn’t the loss of special governthrough the third quarter, but they also ment protection create at least a competshow a funding advantage for the biggest itive speed bump? Some claim that players. An analysis by Mike Mayo of mandated capital raises after the crisis Credit Agricole Securities (USA) shows have made them a safer investment, but that for all of 2010, the 10 largest bank those changes were underway long before holding companies, on average, paid 29 last summer’s passage of Dodd-Frank. basis points less on interest-bearing liaWhat’s remarkable about the FDIC bilities than the next 40 bank holding data is that the biggest banks seem to be companies. accelerating through the first months of The FDIC concedes that big banks en- Dodd-Frank. Looking at the FDIC’s data joy funding advantages, but not because on non-deposit, interest-bearing liabilithe government will bail them out. The ties, the big guys’ funding advantage over agency says the product mix at large the other banks in the second half of last firms helps them do especially well in year was even larger than in the first

half—before the great “reform” was enacted. The funding advantage enjoyed by banks with more than $100 billion in assets over those in the $10-$100 billion range rose from 71 basis points in the first quarter to 78 basis points in the third quarter, which began with President Obama signing the bill and proclaiming an end to too-big-to-fail. The advantage increased to 81 in the fourth quarter. In a Wednesday visit to the Journal, Kansas City Fed President Thomas Hoenig said that the banking giants’ “huge” edge over their smaller rivals is due in large part to government support. Yes, there is new authority for Ms. Bair’s FDIC to resolve large institutions, but will it even be used? In a recent speech, Mr. Hoenig noted that “there are important weaknesses with this framework. In particular, the final decision on solvency is not market driven but rests with different regulatory agencies and finally with the Secretary of the Treasury, which will bring political considerations into what should be a financial determination.” Mr. Hoenig reminded us that the biggest institutions are even bigger than they were before the financial crisis, and that he expects more bailouts of financial giants in the next crisis, regardless of “who the Secretary of the Treasury is.” That sounds right to us, which is also what the market is saying. Dodd-Frank is making the big banks bigger and more protected than ever against failure.

Finally, Jobs

W

ith 192,000 new jobs created in February, the U.S. economic engine clearly has shifted into forward recovery. The unemployment rate for the first time in 20 months nudged below 9%, settling at 8.9%. In the private economy, the source of real wealth, hiring expanded by 222,000. Government employment receded. Gains in jobs were particularly

welcome in manufacturing and construction (each up 33,000), transportation (22,000) and business services (47,000). The construction hiring hints that perhaps the worst of the housing depression is over. The pace of job growth from a recession that vaporized some eight million jobs has been the most anemic of all post-World War II recoveries. Keynes-

ians will have a hard time explaining why the jobs recovery started long after the bulk of the stimulus dollars were spent. We still have 13.7 million officially unemployed Americans, with 2.7 million more who stopped looking for jobs. Nearly half (43.9%) of those without jobs have been out of work at least six months. The main reason the unemploy-

ment rate has fallen the last several months is that the number of workingage Americans not in the labor force dropped by two million over the past year. The U.S. economy needs to maintain a pace of 190,000 net new jobs for at least the next 12 months merely to get the jobless rate back to a still awful 8%. At least the jobs recovery is finally headed in the right direction.

Boiler Room Politics

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mid an Environmental Protection The EPA says it cut annual compliance Agency regulatory spree unprece- costs nearly by half, to $2.1 billion from dented in U.S. history, nothing $3.9 billion, while achieving the same encleared the benches last year like the so- vironmental benefits. But the EPA always called boiler rule. Some 62 Senators, 177 rigs its estimates to minimize costs and House Members and 21 embellish benefits—a Governors publicly obhabit exacerbated under jected, business staged Fake restraint from the Obama Administraa collective revolt, and tion. the EPA as it issues the EPA itself was The boiler rule is reforced to retreat and a damaging new rule. ally four interrelated junk the original rule. rule-makings that are No matter how ruinous the largest and costliest a regulation, this almost never happens. of its kind ever issued. In April 2010, the The problem is that the new rule, EPA tried to steamroll the rule through which came out recently and is meant to with a truncated public comment period, reduce air pollutants like mercury from even as it became clear that the agency industrial boilers, is nearly as bad. The had used outdated or unrepresentative EPA’s new faux-moderation is meant to data and made multiple basic mistakes. be political cover for regulations that will One industry study found the initial be a drag on jobs and economic growth demands would steal as much as $20 bilfor years in manufacturing, energy, lion a year from the private economy. chemicals, steel, hospitals, universities, The American Forest & Paper Associahotels and so many others. tion, a trade group, estimated that the

boiler rule alone, not counting other air regulations coming down the pike, would destroy 16,800 jobs as pulp and paper mills closed, not counting loggers and other suppliers. That’s 14% of the industry’s work force. To pacify the bipartisan backlash on Capitol Hill, the EPA withdrew the rule in December, admitting that it “failed to understand fully certain issues associated with the affected sources” and claiming the rewrite would take 15 months. A federal judge then ruled the agency had to meet the Clean Air Act’s statutory deadline and told the EPA to ask Congress for more time if it needed it. House Energy and Commerce Chairman Fred Upton asked EPA chief Lisa Jackson at a hearing last month if she needed a political hand, which she rejected. Her shop also rejected cheaper approaches that would have resulted in the same air-quality improvements. The new standards are a notch more

flexible, and also now exempt smaller units among the 200,000 boilers in the country. Yet it retains the core defects that will require thousands of businesses to make capital-intensive retrofits, money that could be put to more productive uses. Particular targets are boilers that burn oil or coal. The rule limits the dioxins they can emit, but there is no technology in existence that can limit dioxins. Most hurt will be the many smaller businesses or those with tight margins that won’t be able to afford the mandated upgrades or more expensive fuels. This is a political exercise meant to create the illusion of abiding by President Obama’s executive order on stupid regulations, and it certainly isn’t a preview of a softer method as the EPA issues a parcel of new air and carbon rules meant to cripple coal-fired power plants in the coming months. The only way to check this reckless agency is Congressional intervention.

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Monday, March 7, 2011

THE WALL STREET JOURNAL.

OPINION

[ Journal Interview ] with Paul Johnson BY BRIAN M. CARNEY London In his best-selling history of the 20th century, “Modern Times,” British historian Paul Johnson describes “a significant turning-point in American history: the first time the Great Republic, the richest nation on earth, came up against the limits of its financial resources.” Until the 1960s, he writes in a chapter titled “America’s Suicide Attempt,” “public finance was run in all essentials on conventional lines”—that is to say, with budgets more or less in balance outside of exceptional circumstances. “The big change in principle came under Kennedy,” Mr. Johnson writes. “In the autumn of 1962 the Administration committed itself to a new and radical principle of creating budgetary deficits even when there was no economic emergency.” Removing this constraint on government spending allowed Kennedy to introduce “a new concept of ‘big government’: the ‘problem-eliminator.’ Every area of human misery could be classified as a ‘problem’; then the Federal government could be armed to ‘eliminate’ it.”

The eminent historian on Sarah Palin, the tea party, and ‘baddies’ from Napoleon to Gadhafi. Twenty-eight years after “Modern Times” first appeared, Mr. Johnson is perhaps the most eminent living British historian, and big government as problem-eliminator is back with a vengeance—along with trillion-dollar deficits as far as the eye can see. I visited the 82-year-old Mr. Johnson in his West London home last week to ask him whether America has once again set off down the path to self-destruction. Is he worried about America’s future? “Of course I worry about America,” he says. “The whole world depends on America ultimately, particularly Britain. And also, I love America—a marvelous country. But in a sense I don’t worry about America because I think America has such huge strengths—particularly its freedom of thought and expression—that it’s going to survive as a top nation for the foreseeable future. And therefore take care of

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the world.” Pessimists, he points out, have been predicting America’s decline “since the 18th century.” But whenever things are looking bad, America “suddenly produces these wonderful things—like the tea party movement. That’s cheered me up no end. Because it’s done more for women in politics than anything else—all the feminists? Nuts! It’s brought a lot of very clever and quite young women into mainstream politics and got them elected. A very good little movement, that. I like it.” Then he deepens his voice for effect and adds: “And I like that lady—Sarah Palin. She’s great. I like the cut of her jib.” The former governor of Alaska, he says, “is in the good tradition of America, which this awful political correctness business goes against.” Plus: “She’s got courage. That’s very important in politics. You can have all the right ideas and the ability to express them. But if you haven’t got guts, if you haven’t got courage the way Margaret Thatcher had courage—and [Ronald] Reagan, come to think of it. Your last president had courage too—if you haven’t got courage, all the other virtues are no good at all. It’s the central virtue.” i i i Mr. Johnson, decked out in a tweed jacket, green cardigan and velvet house slippers, speaks in full and lengthy paragraphs that manage to be at once well-formed and sprinkled with a healthy dose of free association. He has a full shock of white hair and a quick smile. He has, he allows, gone a bit deaf, but his mind remains sharp and he continues to write prolifically. His main concession to age, he says, is “I don’t write huge books any more. I used to write 1,000 printed pages, but now I write short books. I did one on Napoleon, 50,000 words—enjoyed doing that. He was a baddie. I did one on Churchill, which was a bestseller in New York, I’m glad to say. 50,000 words. He was a goodie.” He’s also written short forthcoming biographies of Socrates (another “goodie”) and Charles Darwin (an “interesting figure”). Mr. Johnson says he doesn’t follow politics closely anymore, but he quickly warms to the subject of the Middle East. The rash of uprisings across the Arab world right now is “a very interesting phenomenon,” he says. “It’s something that we knew all about in Europe in the 19th century. First of all we had the French Revolution and its repercussions in places like Germany and so on. Then, much like this current phenomenon, in 1830 we had a series of revolutions in Europe which worked like a chain reaction. And then in 1848, on a much bigger scale—that was known as the year of revolutions.” In 1848, he explains, “Practically every country in Europe, except England of course . . . had a revolution and overthrew the government, at any rate for a time. So that is something which historically is well-attested and the same thing has happened here in the Middle East.” Here he injects a note of caution: “But I notice it’s much more likely that a so-called dictatorship will be overthrown if it’s not a real dictatorship. The one in Tuni-

Chris Serra

Why America Will Stay on Top

sia wasn’t very much. Mubarak didn’t run a real dictatorship [in Egypt]. Real dictatorships in that part of the world,” such as Libya, are a different story. As for Moammar Gadhafi, “We’ll see if he goes or not. I think he’s a real baddie, so we hope he will.” The Syrian regime, he adds, “not so long ago in Hama . . . killed 33,000 people because they rose up.” Then, “above all,” there is Iran. “If we can get rid of that horrible regime in Iran,” he says, “that will be a major triumph for the world.” Frank judgments like these are a hallmark of Mr. Johnson’s work, delivered with almost child-like glee. Of Mahatma Gandhi, he wrote in “Modern Times”: “About the Gandhi phenomenon there was always a strong aroma of twentieth-century humbug.” Socrates is much more to Mr. Johnson’s liking. Whereas, in Mr. Johnson’s telling, Gandhi led hundreds of thousands to death by stirring up civil unrest in India, all the while maintaining a pretense of nonviolence, Socrates “thought people mattered more than ideas. . . . He loved people, and his ideas came from people, and he thought ideas existed for the benefit of people,” not the other way around. In the popular imagination, Socrates may be the first deep thinker in Western civilization, but in Mr. Johnson’s view he was also an anti-intellectual. Which is what makes him one of the good guys. “One of the categories of people I don’t like much are intellectuals,” Mr. Johnson says. “People say, ‘Oh, you’re an intellectual,’ and I say, ‘No!’ What is an intellectual? An intellectual is somebody who thinks ideas are more important than people.” And indeed, Mr. Johnson’s work and thought are characterized by concern for the human

qualities of people. Cicero, he tells me, was not a man “one would have liked to have been friends with.” But even so the Roman statesman is “often very well worth reading.” His concern with the human dimension of history is reflected as well in his attitude toward humor, the subject of another recent book, “Humorists.” “The older I get,” he tells me, “the more important I think it is to stress jokes.” Which is another reason he loves America. “One of the great contributions that America has made to civilization,” he deadpans, “is the one-liner.” The oneliner, he says, was “invented, or at any rate brought to the forefront, by Benjamin Franklin.” Mark Twain’s were the “greatest of all.” And then there was Ronald Reagan. “Mr. Reagan had thousands of one-liners.” Here a grin

spreads across Mr. Johnson’s face: “That’s what made him a great president.” Jokes, he argues, were a vital communication tool for President Reagan “because he could illustrate points with them.” Mr. Johnson adopts a remarkable vocal impression of America’s 40th president and delivers an example: “You know, he said, ‘I’m not too worried about the deficit. It’s big enough to take care of itself.’” Recovering from his own laughter, he adds: “Of course, that’s an excellent one-liner, but it’s also a perfectly valid economic point.” Then his expression grows serious again and he concludes: “You don’t get that from Obama. He talks in paragraphs.” i i i Mr. Johnson has written about the famous and notorious around the world and across centuries, but he’s not above telling of his personal encounters with history. He is, he says, “one of a dwindling band of people who actually met” Winston Churchill. “In 1946,” he tells me, “he came up to my hometown because he was speaking at the Conservative Party conference up the road. And I managed to get in just as he was about to leave to make his speech. And I was 16. He seemed friendly, so I was inspired to say, ‘Mr. Winston Churchill, sir, to what do you attribute your success in life?’ And he said without any hesitation”—here Mr. Johnson drops his voice and puts on a passable Churchill impression—“‘Conservation of energy. Never stand up when you can sit down. And never sit down when you can lie down,’” he relates with a laugh. “And I’ve never forgotten this,” he says, “because as a matter of fact, it’s perfectly good advice.” Here he adds the kicker: “Interestingly enough, Theodore Roosevelt, who had a lot in common with Winston Churchill in many ways, but was quite a bit older, said of him, ‘Oh, that Winston Churchill, he is not a gentleman. He doesn’t get to his feet when a lady enters the room.’”

Mr. Carney is editorial page editor of The Wall Street Journal Europe and the co-author of “Freedom, Inc.” (Crown Business, 2009).

Notable & Quotable Kay S. Hymowitz writing in the Winter 2011 issue of City Journal: “[C]alm and collected” are not the words that come to mind to describe the feminist response to the governor from Alaska [Sarah Palin]. The young feminist Jessica Grose, writing on the popular website Jezebel just after the Republican convention, was—well, we’ll let her describe it: “When Palin spoke on Wednesday night, my head almost exploded from the incandescent anger boiling in my skull. . . . What I feel for her privately could be described as violent, nay, murderous, rage.” However excessive their frothing, feminists had good reason to be in panic mode. Palin may have lost her bid to become vice president; she may have failed to appeal to such prominent conservatives as Peggy Noonan, George Will, and Karl

Rove, as well as to lesser right-ofcenter mortals like this writer; but by leading a wave of new conservative women into the fray, she has changed feminism forever. In fact, this new generation of conservative politicas—having caught, skinned, and gutted liberal feminism as if it were one of Palin’s Alaskan salmon—is transforming the very meaning of a women’s movement. For one thing, the Palinites had little interest in women’s issues, conventionally understood. The newcomers weren’t talking about child care, parental leave, equalpay initiatives, or any other issue on the familiar agenda. They were talking about government debt and patronage, about TARP and bailouts and excessive regulation. The Palinites have introduced an unfamiliar thought into American politics: maybe a trillion-dollar deficit is a woman’s issue.

Monday, March 7, 2011

13

THE WALL STREET JOURNAL.

OPINION

BY RUPERT HAMMOND-CHAMBERS News that Beijing is ramping up military spending by 12.7% this year is raising eyebrows in many quarters, and planners in other capitals will be discussing how best to respond for some time to come. As far as Washington is concerned, a large part of that conversation ought to involve America’s relationship with Taiwan. Steadily improving relations between Taipei and Beijing in recent years have eased many headaches for America, but not cured

Beijing’s rapidly increasing military spending means Washington can’t afford to take Taipei for granted. them. The mainland’s military modernization, much of which is aimed at projecting force into China’s neighborhood, is a reminder that Washington still can’t afford to ignore this democratic island. On the surface, Taiwan’s situation looks solid, particularly as rapprochement with China is in its third year. But the cross-Strait relationship is increasingly dominated by China, whose ultimate intentions are not sincere. America remains distant and distracted, and evidently afraid that appearing to lend “too much” support to Taiwan might endanger other attempts at Washington-Beijing cooperation. This was clear in the statement from January’s state meeting between Presidents Barack Obama and Hu Jintao in Washington: The U.S.

lauded the Economic Cooperation Framework Agreement (ECFA) between China and Taiwan. But Mr. Obama made no mention of China’s aggressive defense posture in the Taiwan Strait, nor did he mention any aspect of the growing military imbalance. His secretaries of state and defense likewise made only opaque references to China’s military build-up in the run-up to President Hu’s visit. The normalization and liberalization of cross-Strait trade is an important development, and Taiwan President Ma Ying-jeou deserves considerable praise for the courage he has shown on this issue. Yet it is not acceptable for America to consider ECFA the only dynamic aspect of today’s cross-Strait environment. China’s ever-increasing military investments are having a huge impact on the cross-Strait status quo, and are challenging America’s entire view of Asia-Pacific security. Economic trends across the Strait in no way alter the deep antipathy the people of Taiwan have toward unification with China. The people of Taiwan are proud of what they have accomplished in economic growth and democracy, and do not wish to abdicate those gains to Beijing. Meanwhile, the island has become the most important global technology partner for American companies, producing a large portion of the technology that we use to increase personal and business productivity. Research, design and manufacturing all are done in close transPacific cooperation between Taiwanese and American companies. The recent severing of Chinese rare earth exports to Japan

Associated Press

Time to Straighten Out America’s Taiwan Policy

Taiwanese soldiers drill alongside U.S.-made amphibious vehicles. should focus minds on supplychain security and how reliable we feel our business partners are, particularly when intellectual property is involved. Some Americans have argued that America’s relationship to China is too valuable to jeopardize for Taiwan’s sake. But America also benefits from its ties to Taiwan. Against this comes what is described as a realist view of U.S.Taiwan ties. Charles Glaser, a professor at the George Washington University in Washington, expresses this outlook most clearly when he suggests that if the U.S. were to sever its ties to Taiwan, China would no longer feel compelled to contemplate a crossStrait conflict and the way would be clear for America to pursue closer ties to Beijing. But this assumes that Taiwan is the only potential irritant in relations between China and America and that other policy differences—over trade, U.S. forward military deployment, the status of

North Korea, Tibet, and a host of others—all stem from a relationship poisoned by disagreements over Taiwan. The notion that China would become more pliant to U.S. concerns and demands or that war would be less likely should we step aside and allow China to annex Taiwan does not hold water. Taiwan’s strategic geographic position is an essential link in the first island chain of defense and provides Japan and to a lesser extent Korea important security guarantees. The loss of Taiwan would result in a recalibration of Japan and Korea’s security posture including the possibility of Japan developing nuclear weapons. It would also open the western Pacific to China’s increasingly robust blue-water navy whose global role China still has yet to explain. A more realistic view would be that America’s interests are best protected by encouraging peaceful cross-Strait ties, and that peaceful relations between Beijing and

Taipei are most attainable when both sides come to the table from relatively strong positions. This can allow the people of Taiwan to embrace economic cooperation without the fear that political absorption would be an inevitable result, while also discouraging policy makers on the mainland from growing too assertive. President Ma has attempted to do this, but Taiwan cannot continue to chart this course in the absence of U.S. support. This support has to materially challenge China’s growing military threat, and should therefore include the continued sale of weapons—such as F-16s and submarines—that can update Taiwan’s military arsenal. U.S. support must also include expanding and improving the level of direct government-to-government communication by resuming U.S. cabinet officer visits to Taiwan—suspended by President George W. Bush in 2002. Finally, Taiwan should be part of any American initiative to expand free trade in Asia, whether through the Trans-Pacific Partnership multilateral trade talks or through a bilateral free trade agreement. The lack of ambition in Washington for its bilateral relationship with Taiwan is deeply troubling. China understands all too well the opportunity of this moment, and it is pressing hard in the face of a passive America. For the sake of the people of Taiwan, and to protect American interests in Asia, we can only hope that the Obama administration begins to grasp how emboldened China is becoming with regards to Taiwan.

Mr. Hammond-Chambers is president of the U.S.-Taiwan Business Council.

We Don’t Need U.N. Approval to Save Libyan Lives BY JOHN YOO President Obama last week said “Moammar Gadhafi has lost the legitimacy to lead, and he must leave.” Yet the Obama administration continues to shun the very steps that might hasten the Libyan tyrant’s fall—imposing a no-fly zone over Libya and arming the rebels. Why? Because the United Nations hasn’t give the green light. Desperate to avoid any parallels with Bush foreign policy, the White House has chosen to follow the lead of a dysfunctional international body that protects brutal dictatorships against the advance of human liberty. According to reports in this newspaper, Gadhafi has sent modern tanks to attack peaceful protesters. He has dispatched fighter jets to bomb rebel positions in Brega, the location of an important oil refinery, and Ajdabiya, home to a large arms depot. A nofly zone would eliminate a crucial government advantage over the rebels, who lack an air force or effective antiaircraft systems. Yet in testimony to Congress recently, senior administration officials criticized a Libyan no-fly zone. Secretary of Defense Robert Gates made clear that enforcing the zone would mean the extensive

use of force against Libyan air and ground targets. The United States would have to carry out pre-emptive strikes on Libyan defense sites and antiaircraft systems. Even though a no-fly zone had earlier received the support of Secretary of State Hillary Clinton and British Prime Minister David Cameron, Defense and White House officials raised the specter that such a move would be illegal under international law. Privately, senior administration officials have told the press that the U.S. would not act without approval from the U.N. Security Council, which would likely provoke a veto from Russia or China, two permanent members of the Council. The administration’s apparent refusal to act without U.N. approval harms not only America’s national interests but the interests of democratic movements worldwide. The U.N. Charter guarantees the “territorial integrity” and “political independence” of each nation, from the freest democracy to the most brutal dictatorship. Nations may use force only in selfdefense, or when authorized by the Security Council to protect international peace and security. As authoritarian regimes, China and Russia generally oppose

any intervention into what they consider “internal” affairs, especially the repression of political and economic freedoms. They have become a defense bar for dictators, and the U.N. Charter has become a legal shield for the oppression of their peoples. Nations,

Why is Obama deferring to an international body that protects brutal dictatorships? like the U.S. and its allies, that accept the higher responsibility for maintaining peace and advancing free-market democracy become lawbreakers. States that undermine international stability, promote authoritarianism and abuse human rights hide behind an international status quo maintained by the U.N. Charter. Thankfully, the U.S. has not waited in the past for the Security Council’s permission to protect our national interests. The U.S. acted with the council’s blessing in Korea in 1950 (thanks to a Soviet boycott of the vote), the 1991 Gulf War, Somalia and Haiti, but we would have intervened even

without it. We didn’t seek approval during the Cuban Missile Crisis, the Vietnam War, interventions in Central America, Grenada, Libya (1986), Panama or Kosovo. President Bush did seek U.N. approval in the months before the 2003 invasion of Iraq but the Security Council never explicitly authorized the invasion. Meanwhile, the U.N. and the “international community” stood idly by in the face of the gravest disasters, such as the Rwandan genocide that killed one million civilians. American power, not international law or the U.N., rebuilt Western Europe and Japan, contained communism, maintained the West’s international economic system, and spread democracy and capitalism to nations that had never known them. The Obama administration might be trotting out this sea change in U.S. foreign policy to conceal its passivity and confusion. But deference to the U.N. represents more—it amounts to a triumph of the Democratic Party’s pacifist base. The antiwar left has long viewed the U.N. as a valuable constraint on American power, which it sees as a threat to international peace. These arguments reached a crescendo in the lead-up to the

2003 invasion of Iraq. Leading academics, some of them now in the Obama administration, saw the war as New York University’s Thomas Franck (who has since died) did at the time—as part of “a much broader plan to disable all supranational institutions and the constraints of international law on national sovereignty.” It should come as no surprise that an administration dominated by academic thinking on Iraq is making a fetish of international law in Libya. This pious elevation of international law over American national interests means that more innocent civilians will die and authoritarian regimes will last longer. A better way would spread democracy and capitalism to critical regions like the oil-rich Middle East. Democracies tend not to go to war with each other, and they share a common interest in recognizing individual liberty. By putting aside the U.N.’s antiquated rules, the United States can save lives, improve global welfare, and serve its own national interests.

Mr. Yoo is a law professor at the University of California, Berkeley. He was an official in the Justice Department from 2001-03 and is a visiting scholar at the American Enterprise Institute.

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Associated Press

IN DEPTH

Adm. Mike Mullen with the king of Bahrain last month. Adm. Mullen was straightforward about his intentions to reassure Arab allies that the U.S. would live up to its security commitments.

U.S. wavers on ‘regime change’ to help allies willing to reform Emerging approach from Obama administration aims to slow the pace of upheaval and prevent further violence BY ADAM ENTOUS AND JULIAN E. BARNES Washington

A

on how to respond to uprisings in the Arab world, the Obama administration is settling on a Middle East strategy: help keep longtime allies who are willing to reform in power, even if that means the full democratic demands of their newly emboldened citizens might have to wait. Instead of pushing for immediate regime change—as it did to varying degrees in Egypt and now Libya—the U.S. is urging protesters from Bahrain to Morocco to work with existing rulers toward what some officials and diplomats are now calling “regime alteration.” The approach has emerged amid furious lobbying of the administration by Arab governments, who were alarmed that President Barack Obama had abandoned Egyptian President Hosni Mubarak and worried that, if the U.S. did the same to the beleaguered king of Bahrain, a chain of revolts could sweep them from power, too, and further upend the region’s stability. The strategy also comes in the face of domestic U.S. criticism that the administration sent mixed messages at first in Egypt, tentatively backing Mr. Mubarak before deciding to throw its full support behind the protesters demanding his ouster. Likewise in Bahrain, the U.S. decision to throw a lifeline to the ruling family came after sharp criticism of its handling of protests there. On Friday, the kingdom’s opposition mounted one of its largest rallies, underlining the challenge the administration faces selling a strategy of more gradual change to the population. And on Sunday, tens of thousands of Bahraini opposition demonstrators encircled a sprawling government compound in a gathering timed to coincide with a cabinet meeting as protesters sought to further escalate pressure on the ruling Al-Khalifa family to accept sweeping reFTER WEEKS OF INTERNAL DEBATE

forms. Administration officials say they have been consistent throughout, urging rulers to avoid violence and make democratic reforms that address the demands of the people. Still, a senior administration official acknowledged that the past month has been a learning process for policy makers. “What we have said throughout this is that there is a need for political, economic and social reform, but the particular approach will be country by country,” the official said. A pivotal moment came in late February, in the tense hours after Mr. Obama publicly berated King Hamad bin Isa al-Khalifa for cracking down violently on antigovernment

demonstrators in Bahrain’s capital. Envoys for the king and his Arab allies shuttled from the Pentagon to the State Department and the White House with a carefully coordinated message. If the Obama administration didn’t reverse course and stand squarely behind the monarchy, they warned, Bahrain’s government could fall, costing America a critical ally and potentially moving the country toward Iran’s orbit. Adding to the sense of urgency was a scenario being watched by U.S. intelligence agencies: the possibility that Saudi Arabia might invade its tiny neighbor to silence the Shiite-led protesters, threatening decades-old partnerships and creating

1 2

3

4

5

6

Washington’s approach 1 MOROCCO: The Obama administration has

rallied around King Mohammed, citing economic, social and political reform. 2 ALGERIA: Washington has warned that al

Qaeda’s offshoot in North Africa could try to exploit unrest in the region. 3 LIBYA: The U.S. has escalated pressure on

Col. Moammar Gadhafi to step aside, but it has been reluctant to use military force. Source: WSJ reporting

4 EGYPT: President Barack Obama angered

Israel and Arab allies by backing demonstrators in their call for removal of President Hosni Mubarak. 5 BAHRAIN: After criticizing Bahrain’s

violent crackdown last month, the U.S. has stepped up support for the ruling family. 6 YEMEN: The U.S. is pushing the

government for reforms but does not want regime change for fear Yemen could become a failed state, ripe for an al Qaeda takeover.

vast political and economic upheaval. “We need the full support of the United States,” a top Bahraini diplomat beseeched the Americans, including Joint Chiefs of Staff Chairman Adm. Michael Mullen, Assistant Secretary of State Jeffery Feltman, Deputy National Security Adviser Denis McDonough, and other top policy makers. Arab diplomats believe the push worked. Defense Secretary Robert Gates and Secretary of State Hillary Clinton emerged as leading voices inside the administration urging greater U.S. support for the Bahraini king coupled with a reform agenda that Washington insisted would be have to be credible to street protesters. Instead of backing cries for the king’s removal, Mr. Obama asked protesters to negotiate with the ruling family, which is promising major changes. Israel was also making its voice heard. As Mr. Mubarak’s grip on power slipped away in Egypt, Israeli officials lobbied Washington to move cautiously and reassure Mideast allies that they weren’t being abandoned. Israeli leaders have made clear that they fear extremist forces could try to exploit newfound freedoms and undercut Israel’s security, diplomats said. “Starting with Bahrain, the administration has moved a few notches toward emphasizing stability over majority rule,” said a U.S. official. “Everybody realized that Bahrain was just too important to fail.” An exception to the policy of regime alteration is Libya, a longtime U.S. adversary partially rehabilitated by the Bush administration after Tripoli agreed to give up its nuclear program. Mr. Obama’s initial reaction was muted, but he later criticized Col. Moammar Gadhafi for committing acts of violence against his own people and called for the dictator to step aside. Critics say the response has been too slow and that military action is needed. The emerging approach could help slow the pace of upheaval to avoid further violence, the administration’s top priority, and

Monday, March 7, 2011

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IN DEPTH

Above: Supporters of Libya’s Col. Moammar Gadhafi hold a rally Sunday in Tripoli. Below: Libyan rebel fighters celebrate near an unexploded bomb that was dropped minutes before by a fighter jet at the entrance of the oil rich town of Ras Lanuf on Sunday.

(Top to bottom) Reuters; Agence France-Presse/Getty Images

help preserve important strategic alliances. At the same time, the approach carries risk. Autocratic governments might not deliver on their reform promises, making Washington look like it was doing their bidding at the public’s expense. Officials said the administration’s response in Bahrain, Yemen and elsewhere could change if people take to the streets en masse, rejecting offers made at the negotiating table, or if the U.S.backed governments crack down violently. Indeed, administration officials say the White House is not “unconditionally” behind the monarchy in Bahrain, and has made clear that the U.S. expected to see quick progress on reforms and restraint by security forces. The U.S. is trying a Bahrain-like formula in Morocco, supporting King Mohammed VI, and in Yemen, whose weak central government has been headed by autocratic President Ali Abdullah Saleh for nearly 33 years. The approaches signal Washington’s willingness to vary its strategy depending on its interests and the willingness of autocratic leaders to respond to popular protests. The lobbying push on behalf of Bahrain was led by the Gulf Cooperation Council. In addition to Bahrain, the council includes the Persian Gulf states of Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates. In private meetings late last month with Washington policy makers, cooperation council envoys drove home the message that Bahrain could be a “model” that the Obama administration could follow to advance democratic reforms without fueling unrest that could further destabilize the region. The Arab diplomats found a particularly receptive ear in the Pentagon. As Egypt began to sway, some U.S. military officers had doubts about the administration’s approach. The U.S. military has strong ties with the country. Some worried that the U.S. was moving too quickly to push aside a steadfast ally and that radical change in Cairo could destabilize the region. Those concerns were shared by Israel and several key Arab allies, who were “furious” at the Obama administration for ignoring their appeals to allow Mr. Mubarak a graceful exit, a senior European military official said. But administration officials argued that with hundreds of thousands of protesters on the streets, they had little choice but to turn on Mr. Mubarak sooner rather than later. Indeed, the administration has been criticized by human-rights groups for not standing more squarely with democracy advocates from the start. Though initially skeptical, the Pentagon came around to the White House’s view that if Mr. Mubarak clung to power, there would be little chance for real reform. But the Pentagon’s perspective was far different when trouble began in Bahrain. The protest movement in Bahrain began gathering in intensity on Feb. 14, after police killed a protester and injured 25 more. Over the following days, six more demonstrators were killed and more than 200 injured, as reports circulated that the Bahraini government was moving in military equipment to disperse the protesters. At an emergency meeting in Manama, the capital city, on Feb. 17, leaders of the Gulf Cooperation Council backed Bahrain’s response to the protests and the Bahraini foreign minister warned that the kingdom was at the “brink of sectarian abyss.” The White House watched the developments with alarm, especially reports that Bahraini forces had fired on the crowd from helicopters. A State Department official phoned a top Bahraini diplomat and demanded an accounting of the events, a person familiar with the exchange said. Bahraini officials told their American counterparts that witnesses mistook a long telephoto lens for a rifle and that the helicopters never opened fire. The next day, however, the Bahraini army fired on protesters again. In a call to the king, Mr. Obama condemned the violence used against “peaceful protesters,” and urged the king to direct his security forces to punish those responsible for the bloodshed, according to the White House. Arab diplomats reacted with alarm to the U.S. condemnation. They believed the administration might be returning to the Egyptian playbook, according to officials

and diplomats. Inside the Pentagon, Mr. Gates and his team were quick to point out that Bahrain represented a very different situation than Egypt’s. Bahrain has a restive Shiite majority that has long felt cut off from the opportunities available to the country’s Sunni royal family and social elite. The country is the headquarters of the U.S. Navy’s Fifth Fleet, which patrols the Arabian Sea, Persian Gulf and Red Sea. Some at the Pentagon feared that Shiite-led Iran might try to hijack the protest movement in Bahrain and back installation of an anti-American government. Though skeptical of Bahraini claims that Iran and its Lebanese proxy, Hezbollah, were instigating Shiite protests, U.S. and European officials fear the crisis could benefit Tehran. The Mideast turmoil has driven up oil prices, helping Tehran refill its coffers and withstand international sanctions aimed at curbing its nuclear program. On Feb. 20, as two Bahraini diplomats made their case to top policy makers in Washington, Adm. Mullen, the Joint Chiefs chairman, arrived in Saudi Arabia as part of a weeklong visit to Arab allies. On the top of the agenda of his Arab

counterparts: Bahrain. Adm. Mullen was straightforward about his intentions to reassure the Saudis and other Arab allies that the U.S. would live up to its security commitments, and remained a friend. In Bahrain, the royal family scrambled to show it was complying with American demands. In the following days, King Khalifa stood down his forces and Crown Prince Salman bin Hamad al-Khalifa issued a public call for the start of a “national dialogue” with opposition groups. Privately, Bahraini officials assured their U.S. counterparts that the killing of the protesters was due not to government policy but a breakdown in the chain of command. On Feb. 23, Adm. Mullen arrived in Manama and gave a full-throated endorsement to the national dialogue, a message endorsed by Mr. Gates. As he has at some other critical national security debates within the administration, Mr. Gates found his most important ally in Mrs. Clinton. Still, while Bahrain’s government believed the Pentagon’s support for a national dialogue on reforms was clear, the country’s diplomats worried the White House wasn’t on board. On Thursday, Feb. 24, National Security

Adviser Tom Donilon spoke with the crown prince and, according to a White House statement, voiced “strong support” for efforts to “initiate an open dialogue on political reform with the full spectrum of Bahraini society.” But Bahrain and its allies in the Gulf Cooperation Council wanted the administration to give the initiative higher-level endorsement. Without overt U.S. support from Mr. Obama or Mrs. Clinton, the Arab envoys argued, Bahraini protesters were liable to up their demands. The “Bahrain model,” they said, offered the administration an alternative to their Egypt approach and could be a solution not only to the crisis in Manama, but also a template for dealing with Morocco or even, potentially, Yemen. On Sunday, Feb. 27, the White House threw its support behind King Khalifa. The same day, William Burns, under secretary of state for political affairs, delivered a similar message to Morocco’s King Mohammed VI, another key Arab ally facing unrest, calling the North African country “a model of economic, social, and political reform.” —Keith Johnson and Joe Parkinson contributed to this article.

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Monday, March 7, 2011

MIDDLE EAST

Bahrain protesters increase pressure MANAMA—Tens of thousands of Bahraini opposition protesters encircled a sprawling government compound Sunday in a move timed to coincide with a cabinet meeting as they sought to further escalate pressure on the ruling al-Khalifa family to accept sweeping change. Protesters began assembling before 9 a.m., taking up positions at each of the complex’s four gates and repeating opposition calls for the fall of the government. Behind the compound’s gates, hundreds of riot police stood guard, while police helicopters circled overhead. The protest sought to frustrate the weekly cabinet meeting at which Prime Minister Sheikh Khalifa bin Salman al-Khalifa coordinates policy with the heads of Bahrain’s top ministries. However, Bahrain’s Information Affairs Authority released a statement saying the cabinet meeting “took place in Gudaibiya Palace, as usual.” Opposition groups cite the resignation of the prime minister, who has been in his post for 41 years, as one of their top demands. Opposition leaders said the protest expanded their strategy of escalating pressure on the ruling family by marching on politically sensitive locations across the capital. “We are attacking peacefully all the institutions of state. This is really a regime change without overthrowing the monarchy,” said Ebrahim Sharif, a Sunni Muslim and former banker who heads the National Democratic Action Society, one of the groups tasked with unify-

Agence France-Presse/Getty Images

BY JOE PARKINSON

Bahraini Shiite Muslim men hold up small signs reading “Down with the government” outside Gudaibiya Palace. ing the opposition’s message. The protest Sunday, the first day of the working week here, comes after a weekend of huge demonstrations across the capital. On Friday, more than 100,000 protesters gathered in the Bahraini capital for the largest demonstration in the center of Manama since protests erupted in the Sunni-ruled kingdom almost three weeks ago. Protesters gathered again on Saturday to form a human chain between the Pearl roundabout, the fo-

cal point of antigovernment demonstrations, and the country’s main Sunni mosque, where large groups of pro-government supporters have congregated to voice their support for the monarchy. Shiite-led antigovernment protests and Sunni-dominated pro-government rallies have been careful to avoid sectarian slogans and stress national unity, but tensions between the groups have escalated in recent days as opposition protests have gathered momentum and govern-

ment loyalists have objected to the demonstrations’ mounting impact on the economy. Those tensions were manifested late Thursday in fighting between Sunni and majority Shiite Muslims in the first sectarian violence since protests began. Fighting between a group of Shiites and Bahraini Sunnis of Syrian and Jordanian extraction occurred in Hamad, a town on the outskirts of Manama, before riot police arrived and dispersed them, local residents said. Only half of Bahr-

ain’s population of 1.2 million are native Bahrainis. The Ministry of Interior said in a statement that it took police about two hours to get the situation under control, with the help of local politicians and high-ranking government officials who calmed residents. “We feel the government is trying to separate the Bahrainis, and it’s a dangerous new development, but today’s protest shows we’re united. ...We will keep building pressure until the government falls,” said Jawad Fairooz, a Bahraini opposition lawmaker. Bahrain’s ministry of information says the country’s crown prince, Salman bin Hamad al-Khalifa, has made clear he intends to begin a national dialogue with all sections of society to “move away from polarization and ensure that sectarianism does not take root in Bahrain.” Persistent antigovernment protests and growing sectarian tensions in Bahrain are likely to heighten concerns in neighboring Saudi Arabia, the region’s largest economy, where a restive Shiite minority in the oil-rich Eastern Province took to the streets Thursday to protest against the arrest last Sunday of prominent cleric Tawfiq al-Amir, who had called for more religious freedom in a sermon the previous Friday. Saudi Arabia’s authorities on Thursday night detained 22 people in Qatif, the main Shiite town in the Eastern Province, after they staged a demonstration demanding the release of prisoners they say are being held without trial.

Continued from first page hafi’s home town, from their capital, Benghazi, in the east. The results of the battles, confirmed by residents and witnesses in the towns, underscored the military stalemate faced by both the rebel forces in the east and pro-government forces surrounding them. Col. Gadhafi’s military is larger and better equipped with helicopters, tanks and other armored assets, but it faces the daunting task of having to dislodge rebels in heavily populated urban settings as well as in remote desert locations. Fighters united under the rebel command in Benghazi and working independently in towns like Misrata and Zawiya have managed to rebuff multiple attacks by government troops but still haven’t been able to crack the regime’s stranglehold on the capital or Sirte. In Washington, Republican leaders in Congress recommended a sharp escalation in Washington’s involvement, saying that the U.S. government should consider providing weapons, intelligence and training to the forces intent on overthrowing Col. Gadhafi. Senate Republican Leader Mitch McConnell of Kentucky told CBS’s “Face the Nation” Sunday morning that “arming the insurgents” could be an option, citing as a possible model U.S. efforts against the Soviets during the Cold War. U.S. administration officials have said that President Barack Obama is considering a wide range of options to aid opposition forces but wants any action to be closely coordinated with international allies. The outcome of Sunday’s battles

Reuters

Gadhafi forces push back against rebel fighters

Rebels run for cover during clash with government forces near Bin Jawad. as confirmed by residents and witnesses in the towns conflicted with an intensive government propaganda campaign in which state television and government spokesmen announced soon after daybreak that the armed forces had won back Misrata and the oil-refinery city of Ras Lanuf as well as Benghazai, the country’s second-largest city, and the eastern border town of Tobruq. Residents of Benghazi and Tobruq, which government officials claimed had fallen back under Tripoli’s control early Sunday, said there was no sign of pro-Gadhafi forces in their areas. Residents and journalists in Ras Lanuf contacted Sunday morning said the city remained firmly in rebel control. Earlier Sunday, heavy machinegun fire erupted before dawn in the Libyan capital, including in the

neighborhood of Col. Moammar Gadhafi’s residence, as his supporters poured into the streets after state television broadcast the unconfirmed claims that the government’s armed forces had recaptured key areas around the country. Rebel fighters, riding a wave of momentum after recent victories in the towns of Brega and Ras Lanuf, said their westward push stalled on Saturday night after they appeared to have walked into an ambush in the small coastal city of Bin Jawad, which lies about 30 kilometers west of Ras Lanuf. Townspeople had led them to believe the city was clear of pro-Gadhafi forces, but when the rebel vanguard entered the village, they were surrounded and fired upon from houses all around them, said rebel fighters who escaped.

“The villagers betrayed us,” said Mohammed Salah, 21, a rebel fighter reached by phone on the outskirts of Bin Jawad on Sunday morning. “We had to retreat, the explosions are coming nearer and nearer.” “When we pulled back Gadhafi forces came in and barricaded themselves in the city,” said Mohamed Jahme, another rebel fighter, who retreated from Bin Jawad to Ras Lanuf. “The people of Bin Jawad betrayed us and shot at us. When we arrived in Bin Jawad they had been bought off and they were shooting at us from their houses. The people tried to push us out. We were coming to free them but they sold us out. They didn’t even give us water.” The push back by government forces over the weekend continues a pattern of attack and counterattack on the shifting front line between rebel forces in the east and pro-government forces confronting them. Mr. Gadhafi’s propaganda offensive claiming victory appeared to be an attempt to rally his supporters, particularly in his birthplace and tribal stronghold of Sirte, which is now less than 60 miles away from advancing rebel fighters, who said they hope to attack the city by the end of the day on Sunday. Until Sunday, the government held full control of the capital, home to two million of the country’s approximately six million people, and Sirte, while most of the remaining key coastal cities were under rebel control. The situation reported in the east by residents, rebel officials and journalists based in those places contrasted sharply with the account put

forward by the government amid an unstable and explosive situation inside the capital early in the morning. Around 4:30a.m. gunfire erupted in the vicinity of the leader’s main compound in Tripoli and near to the hotel where government officials are housing foreign journalists invited to cover the political situation here. Sustained gunfire could be heard for more than one hour—consisting of short, controlled bursts of assault rifles followed by responses of fire from a heavier caliber weapon. It was unclear who was the target of the gunfire or who was doing the shooting. By 6 a.m., the time of the dawn prayer, the gunfire had quieted down and transformed into more wild outbursts of small caliber weapons and the honking of multiple car horns. Swiftly, the area around Col. Gadhafi’s residence filled with celebrating people, playing raucous music and shouting from passing vehicles. Residents from three other neighborhoods in Tripoli—along the western coastal districts to eastern downtown neighborhoods—also reported hearing burst of what also appeared to be celebratory gunfire. As tensions eased, government spokesman Musa Ibrahim told foreign journalists that there had been no fighting in Tripoli but that the residents of the city were starting to celebrate news of victories.

WSJ.com ONLINE TODAY: See photos from Tripoli at WSJ.com/World.

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India’s budget makers face a crude reality

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Japan’s credit-rating paradox

Fiscal discipline, versus government debt, means higher ratings for some corporate issues than for sovereign bonds BY CHESTER DAWSON TOKYO —When Toyota Motor Corp. saw its credit rating cut one notch by Standard and Poor’s on Friday, the auto maker dropped out of an unusual and elite club of Japanese companies: those considered more credit worthy than their own government. That credit-market paradox reflects the fiscal discipline of some of Japan’s best-run companies, while their government has become evermore profligate over the past decade. Typically, a company’s credit rating is lower than that for its home country because government bonds are generally more-liquid investments and have less risk of default. As a result, the yields on corporate bonds are often quoted in terms of the premium, or spread, paid above

Rebalanced balance sheet Japanese companies’ rising cash flow, falling debt load ¥600 trillion

¥30 trillion Free cash flow

500

20

Interest-bearing debt

400

10

300 200

0 Free cash flow

100

-10

0 -100 1990

’95

2000

’05

’10

BY ALISON TUDOR HONG KONG— Asia’s growing wealth is causing a major personnel shuffle in the hedge-fund world, as global funds look to establish footholds while star managers strike out on their own. A case in point: 40-year-old Julius Gaudio, the youngest member of hedge fund D.E. Shaw’s six-person executive committee, moved to Hong Kong in the autumn partly to meet more frequently with some of the region’s biggest investors. “Our investor base is becoming more Asian,” he said in an interview. “I’m getting in front of them.” The big New York hedge-fund operator also hired Qin Xiao, former chairman of mainland lender China Merchants Bank Co., to join its China advisory board. But keeping talent can be difficult. D. E. Shaw partner Liang Meng, chief executive of the firm’s Greater China private-equity unit, handed in his resignation in recent weeks to raise capital for his own fund. “He’s taking advantage of a pretty robust environment for fund launches

’95

2000

’05

’10

Source: Nomura Securities

a government bond with a similar maturity. Yet Tokyo’s debt level has grown from zero in the early 1990s to above 200% of total annual eco-

Rising Asian wealth leads to a hedge-fund shuffle [ The View from Hong Kong ]

-20 1990

Recovering Assets under management at hedge funds in Asia, in billions of dollars $150 100 50 0 2007

'08

'09

'10

Note: As of end of year Source: Eurekahedge

right now,” Mr. Gaudio said. More than two years after the global financial crisis hit Asia’s nascent hedge-fund scene, assets under management are climbing once again and hedge fund startups have overtaken the number of closures. Assets under management as of December hit US$129 billion, up from US$117 billion a year earlier but still below their December 2007 peak of US$176 billion, according to industry tracker Eurekahedge. Asian hedge funds saw particularly strong net asset inflows during the fall. In the fourth quarter, a net US$3.4 billion flowed into Asian hedge funds, according to Eurekahedge. Please turn to page 22

nomic output, the highest among major industrialized countries. In that unusual circumstance, “we don’t necessarily consider a sovereign rating to be a ceiling, but

rather a constraint” on a specific company’s rating, said Osamu Kobayashi, a director at S&P in Tokyo overseeing Japanese corporate issuance. It comes as a broad swath of Japanese companies have paid down their once-crushing debt loads of the 1990s to the point where corporate interest-bearing debt is near 20-year lows. S&P and rival Moody’s Investors Service each rate about half a dozen Japan-based companies higher than the Japanese government’s longterm sovereign debt. They cite strong cash flows, high levels of liquid reserves, limited refinancing needs and geographic diversity outside of Japan or monopolistic positions in their home market. Japan’s top-rated companies at both ratings companies are Nippon Telegraph and Telephone Corp.,

sister mobile phone company NTT Docomo Inc., Takeda Pharmaceutical Co. and Canon Inc. S&P rates those four, plus autoparts maker Denso Corp., as AA. It downgraded Toyota last week to AA-minus, which is the rating it assigns Japan’s national debt obligations, such as Japanese government bonds. Moody’s assigns an Aa1 rating to those four companies, along with East Japan Railway Co. and Tokyo Gas Co. That’s one step above its Aa2 rating for Japanese sovereign debt. Moody’s rates Japan’s sovereign debt one notch higher than the equivalent S&P level. While unusual for a leading industrialized nation, Japan is not alone when it comes to countries with credit ratings lower than some of their top-ranked companies. Please turn to page 22

18

Monday, March 7, 2011

THE WALL STREET JOURNAL.

* *

BUSINESS
FINANCE

China takes the aviation stage [ THE WEEK AHEAD]

Currency traders can rest easy: There will be no fighter jets buzzing over Hong Kong when the annual Asian Aerospace trade fair starts on Tuesday . The flying displays and stacks of missiles that pepper air shows in Paris, Dubai and elsewhere will be absent, reflecting the sensitivities of mainland China, which is reshaping the balance of power in the global aerospace industry. China aims to break the duopoly held by Airbus and Boeing Co. in the commercialairliner market with the country’s planned C919 jetliner, while also keeping assembly lines in France, Germany and the U.S. busy with hundreds of aircraft orders. Hong Kong nabbed Asia’s premier air show from Singapore four years ago, dropping the military content and providing a forum for what the city reckons it does best: business. The proximity of the huge China market gives Hong Kong an ace to play. The hundreds of manufacturers and suppliers gathered at Asian Aerospace have an aim in common with the global industry: making safe and more efficient planes—ranging from tiny turboprops to 850-seat jumbo jets—as well as the bells and whistles to pamper a growing legion of business travelers. Overtaking North America as the world’s single largest market for commercial passenger and freight air traffic also gives the Asian aviation industry a different hue, as rivals elsewhere try to eke out profits under the yoke of rising fuel prices. “Asian airlines in particular are concerned about growth,” says Tony Tyler, who will step down at the end of the month as chief executive of Cathay Pacific Airways Ltd., the Hong Kong flag carrier. Mr. Tyler, the keynote speaker at the air show’s companion conference, reflects Asia’s newfound place at the global table, and is in July due to take over as

Ellen Weinstein

BY DOUG CAMERON

head of the International Air Transport Association, the airline industry’s main trade body. When Mr. Tyler refers to

“growth” read “China,” which isn’t prepared to sit back and shell out its currency reserves to Boeing and Airbus, a unit of European

Aeronautic Defence & Space Co. Chinese companies, together with peers in South Korea, Taiwan and Japan, play an increasingly important role in the industry supply chain, making items such as wings, doors and electronics for the established manufacturers. The next stage for China is taking more work in-house and building the country’s own planes, following a familiar route seen in sectors such as high-speed rail, where Western companies are forced to walk a narrow path between accessing the market and policing the transfer of proprietary technology. China Aviation Industry Corp. is already working on a statebacked regional jet, though many industry experts expect it to be too small for the domestic market. A unit of the company also plans to acquire a maker of small turboprops, U.S.-based Cirrus Industries Inc., in anticipation of that market soaring when more military airspace is opened up to private and commercial flying. More closely watched are efforts by the state-backed Commercial Aircraft Corp. of China to start delivering its yetto-be-built C919 plane by 2016. The C919 carries as many as 180 passengers, placing it up against the Airbus A320 and Boeing 737 families. China has lined up a heavyweight list of Western partners, including General Electric Co., United Technologies Corp. and Rockwell Collins Inc., for a project widely seen as a test run for larger and more advanced jets that might attract overseas buyers. “The top priority of our aircraft [industry] is safety,” says Li Jiaxiang, administrator of the Civil Aviation Administration of China and a former head of Air China Ltd., the world’s largest airline by market value. Mr. Li says CAAC will seek to have the C919 approved in partnership with U.S. and European regulators in an effort to win world-wide acceptance, a move that could well see Chinese jets flying over Hong Kong—and perhaps more distant points—by the end of the decade.

HSBC says it prefers London BY MARGOT PATRICK LONDON—HSBC Holdings PLC said it wants to remain headquartered in the U.K. but is increasingly having to justify the decision to shareholders. Responding to a Sunday Telegraph report that HSBC has told its biggest shareholders it is preparing to quit London, HSBC Chairman Douglas Flint and Chief Executive Officer Stuart Gulliver said in a joint statement that the bank has been “very clear” that it prefers to stay in London, and that any talk of an imminent change in its position on the matter “is entirely speculative and presumptuous.” “We are however, in light of possible regulatory changes and additional costs such as the bank levy, being increasingly asked by shareholders and investors about the likely additional costs of being headquartered in the U.K.,” they said. “We are very clear that the City of London’s competitive position deserves protection and HSBC will play a full part in this: we are encouraged by the U.K. government’s recent commitments to do the same.” HSBC moved its headquarters to London from Hong Kong in 1992 when it bought Midland Bank. It reviews the decision every three years and is due to decide this year on any possible change. Messrs. Flint, Gulliver and other executives have said the benefits of London must outweigh negatives that include a new U.K. levy on banks, restrictions on pay and potential breakups of lenders being studied by the government-appointed Independent Commission on Banking. Last week, HSBC said the levy, which increases as banks’ balance sheets grow, would have cost it around $600 million in 2010, making the bank among the largest contributors. The levy is meant to raise £2.5 billion ($4.07 billion) annually. In the bank’s annual report, Mr. Flint said it has no issue with the government’s right to impose such a levy, but doing so adds to the cost of basing a multinational banking group in the U.K.

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. Acom.............................20 Aiful .............................. 20 Air China.......................18 Allianz SE ..................... 24 A&P Financial ............... 20 Apple.............................20 Asiana Airlines.............20 AVIC 1 Commercial Aircraft.......................18 Bank of America...........18 Barclays.........................18 Boeing...........................18

Canon ............................ 17 Cathay Pacific Airways 18 Cerberus Capital Management..............20 China Merchants Bank.17 Christian Dior ............... 21 Cirrus Industries...........18 Citigroup ....................... 20 CJ Group........................20 Coca-Cola.......................20 Credit Suisse Group.....18 Daewoo Engineering & Construction..............20 DBS Bank......................25 Denso ............................ 17 East Japan Railway......17 European Aeronautic Defence & Space.......18 Facebook ....................... 19 Galleon Group...............19 General Electric.......18,20 GLG Partners................22 Goldman Sachs...19,20,25 Google......................19,20 Government of Singapore Investment Corp..........1

Groupon.........................19 Hermes International...21 HSBC Holdings ............. 18 Hutchison Port Holdings.....................25 Hyundai Engineering & Construction..............24 ITA Software................19 J.P. Morgan Chase........22 J-Trust...........................20 Konica Minolta Holdings.....................24 Korea Express...............20 Kumho Asiana Group...20 Lotte Group...................20 LUMA Partners.............19 Mazda Motor................24 Mitsubishi UFJ Financial Group..........................20 Nikon.............................24 Nippon Telegraph and Telephone...................17 Nokia.............................20 Norilsk Nickel ............... 18 NTT Docomo.................17 Perennial Real Estate..25

Posco.............................20 Proctor & Gamble Co....19 Promise.........................20 Research in Motion......20 Rockwell Collins ........... 18 Royal Bank of Scotland Group..........................18 Samsung Electronics....18 Samsung Engineering..24 SOHO China..................31 Soros Fund Management..............22 Standard Chartered......25 Sumitomo Electric Industries...................24 Sumitomo Mitsui Financial Group ......... 20 Takeda Pharmaceutical 17 Takefuji ......................... 20 Tokyo Gas ..................... 17 Tokyo Star Bank...........20 Toyota Motor................17 TPG Capital...................20 Twitter..........................19 UBS ............................... 18 United Co. Rusal...........18 United Technologies.....18

People This index lists the names of businesspeople and government regulators who receive significant mention in Today’s Journal. Bagios, Christos ........... 18 Bernanke, Ben S.............1 Blankfein, Lloyd C. ....... 19 Brunschwig, Serge ....... 21 Busch, Andrew ............. 24 Byrne, Tom....................22 Choi Doo-jin..................20 Crowley, Dennis............19 Deripaska, Oleg ............ 18 Diamond, Robert Jr......18 Dolce, Domenico...........21 Dougan, Brady..............18 Dowd, John...................19 Duong, David ................ 25 Gabbana, Stefano.........21 Galliano, John...............21 Garrow, Colen.................7 Gaudio, Julius...............17 Gold, Jack......................20 Golub, Jonathan ........... 22

Grübel, Oswald.............18 Hester, Stephen............18 Huttenlocher, Carl........22 Karan, Donna................21 Kawaja, Terence ........... 19 Kengeter, Carsten.........18 Klishas, Andrey ............ 18 Kobayashi, Osamu........17 Kumar, Anil...................19 Lawee, David ................ 19 Lefkowitz, William.......22 Li Jiaxiang.....................18 Li Ka-Shing...................25 Matsukawa, Tadashi .... 22 Meng, Liang..................17 Moynihan, Brian T........18 Naftalis, Gary...............19 Obata, Eiichi ................. 20 Page, Larry....................19 Pan Shiyi.......................31 Pardy, Keith..................20 Paulson, John ............... 22 Potanin, Vladimir ......... 18 Qin Xiao........................17 Rajaratnam, Raj............19 Rajaratnam, Rengan.....19 Robson, Bryan...............32 Roche, Michael ............. 25 Rubin, Andy..................19

Schmidt, Eric ................ 19 Shaw, D.E......................17 Shin Ji-yoon..................20 Sinha, Shan...................19 Streeter, Jonathan.......19 Tanimoto, Shinsuke......22 Thatcher, Andrew.........22 Thomas, Patrick............21 Tisci, Riccardo...............21

Toledano, Sidney .......... 21 Tonouchi, Shuji.............25 Treutler, Tom..................9 Trichet, Jean-Claude.....24 Tyler, Tony .................... 18 Wilkinson, Andrew.......24 Yam, Tony Tan Keng.......1 Yano, Masayoshi...........24 Zhang Xin......................31

Corrections
Amplifications Samsung Electronics Co.’s Galaxy S II is a smartphone. A Business & Finance article in some March 4-6 editions incorrectly said it was the successor to the company’s Galaxy Tab tablet computer. Chinese businesses, including state-controlled companies, invested nearly $5 billion in U.S. firms last year. A Corporate News article Wednesday incorrectly said that private-sector Chinese businesses were responsible for the investment.

Monday, March 7, 2011

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THE WALL STREET JOURNAL.

BUSINESS
FINANCE Start-up search | Google acquisitions since its public offering in 2004 YEAR

COMPANIES ACQUIRED

KEY PURCHASE

INVESTMENT TOTAL DISCLOSED

2004

4

2005

15

$131 million

2006

10

YouTube: $1.2

2007

18

2008

3

2009

10

2010

48

$56 million

Keyhole Android $1.5 billion

YouTube

$827 million

Postini $3.4 billion

DoubleClick: $3.2 $92 million

DoubleClick Teracent

AdMob: $750 million

$1.8 billion

AdMob

Sources: Google regulatory filings; CB Insights

Google cranks up M&A Undaunted by valuations, Internet giant to pursue small start-ups Google Inc. doesn’t seem daunted about acquisitions in the wake of its failure last year to land online coupon site Groupon Inc. Indeed, the Internet giant’s deals chief plans to be very active, despite challenges that include soaring valuations for some Web start-ups. Coming off a record 48 acquisitions last year, Google is “going to continue to be aggressive,” said David Lawee, Google’s vice president of corporate development, in an interview. Rather than large targets like Groupon, the main focus for Google continues to be small start-ups that can be a source of new technology, talented engineers and revenue. But courting those start-ups has seldom been harder. The skyrocketing valuations of Internet and mobile device-related start-ups don’t appear to worry Mr. Lawee, who said they were “high, but they reflect the real possibilities.” He added: “these are truly exciting times” for entrepreneurs. Besides the possibility of competing offers from other well-heeled Internet firms, such as Facebook Inc. and Twitter Inc., many entrepreneurs can easily raise money from venture-capital firms to hold off the need to seek a buyer. “The robust environment that we are in has raised the bar in terms of what it will take for leading entrepreneurs to consider” selling to big companies, said Terence Kawaja, chief executive of LUMA Partners LLC, a boutique investment bank focused on digital media. “That, I think, is the sign of a healthy marketplace,” he said. There can be antitrust hurdles to overcome. Google is still awaiting the Justice Department’s approval of a $700 million deal announced last summer to buy ITA Software Inc., which is expected to help Google develop a service for searching for travel fares. There is also a perception that big companies, Google included, can be bureaucratic places that move slowly and are otherwise inhospitable to entrepreneurs. Mr. Lawee says that doesn’t happen at Google, despite having more than 24,000 employees. “If you’re en entrepreneur and you come to Google, your days as an entrepreneur are not over,” he said. “Bringing small entrepreneurial teams into Google who have a strong vision for what they want to do has been highly successful for us.” In 2003, for example, Google bought Applied Semantics, which

Karen T. Borchers/Mercury News

BY AMIR EFRATI

David Lawee, shown in December, says Google has aggressive acquisition plans. had several dozen engineers and helped Google develop a text-advertising network called AdSense, now a multibillion-dollar revenue generator. The company’s 2004 acquisition of Keyhole led to Google Maps. The 2005 purchase of a small firm run by Andy Rubin, called Android Inc., led to the development of what is now a leading operating system for smartphones. “I would love to have 25 more Andy Rubins here who are working on projects with longer time horizons than most people are willing to invest in,” Mr. Lawee said. The core team of the online advertising service DoubleClick—Google’s biggest-ever deal, at $3.2 billion—has remained with the company since the deal closed in 2008. Thanks in large part to the deal, Google will grab 12.6% of the U.S. display-ad market by the end of the year, or $1.3 billion, up from 9.6% last year, research firm eMarketer predicts. More recently, Google paid $25 million for a small team of entrepreneurs at start-up DocVerse, which had built a tool that let people edit Microsoft Office files online. “We’ve been fortunate to have autonomy,” said DocVerse cofounder Shan Sinha, adding he was surprised by the “rate and pace at which the company deployed the product.” Mr. Lawee said the company has a 70% success rate when it comes to acquisitions. A Google spokesman said more than two-thirds of the founders of companies acquired by Google in its 12 ½-year history are still at Google. Not that every important entrepreneur has stayed engaged. The

two co-founders of the online video service YouTube, which Google purchased in 2006 for $1.2 billion, are no longer running that operation, and one has left the company. Several top executives at mobileadvertising firm AdMob left Google shortly after last year’s $750 million acquisition. People familiar with the matter said the business is growing rapidly and could generate $1 billion in revenue within the next year to 18 months. In 2005, Google bought Dodgeball, a service for mobile phones that let people notify their friends that they had “checked in” to a public location such as a restaurant. In 2007 the Dodgeball founders, including Dennis Crowley, left Google, saying publicly that it didn’t support their project. Mr. Crowley went on to found a similar service, Foursquare, which now says it has seven million users. Mr. Crowley declined to comment. Last fall, people familiar with the matter have said Google offered more than $5 billion to buy Groupon but no deal was reached. Google has since begun testing a service that would compete with Groupon’s. Google and Groupon have never confirmed reports of deal talks, and Mr. Lawee declined to comment on the subject. Mr. Lawee, a 45-year-old Montreal native, has led Google’s acquisitions effort since 2008. Before joining Google in 2005, he sold a social network for videogame players to Viacom Inc. and was a venture capitalist. He said Google’s acquisition strategy won’t change with the ascension of co-founder Larry Page to chief executive in April, replacing Eric Schmidt, who will remain as executive chairman.

Prosecutor: Gupta in Galleon scheme BY CHAD BRAY NEW YORK—A federal prosecutor said a former Goldman Sachs Group Inc. director was part of an alleged insider-trading conspiracy with Galleon Group founder Raj Rajaratnam. The statements at a court hearing Friday were the first time federal prosecutors had publicly cited the involvement of the former Goldman director, Rajat Gupta, in the alleged scheme. Earlier this past week, the Securities and Exchange Commission filed a civil administrative action against Mr. Gupta for allegedly sharing inside information with Mr. Rajaratnam when Mr. Gupta was a member of the boards of Goldman and Procter & Gamble Co. Assistant U.S. Attorney Jonathan Streeter said that “the government is going to show on at least two occasions that Mr. Gupta attended Goldman Sachs board meetings” and that “within minutes of the meetings, he called Mr. Raj Rajaratnam.” Following the calls, Mr. Rajaratnam bought or sold his Goldman stock, Mr. Streeter said. The alleged inside information included details before the public announcement of a $5 billion investment by Warren Buffet’s Berkshire Hathaway Inc. at the height of the financial crisis in September 2008 and Goldman’s first reported loss as

a public company in fall 2008. Mr. Rajaratnam allegedly bought “hundreds of thousands of shares” of Goldman Sachs within minutes of receiving the call regarding the Berkshire investment, Mr. Streeter said. John Dowd, Mr. Rajaratnam’s lawyer, has said the SEC’s administrative action was “simply an effort to destroy a favorable witness.” In a letter to the SEC this past week, Mr. Dowd urged the regulator to delay bringing an action against Mr. Gupta because it could affect Mr. Rajaratnam’s ability to have a fair trial, and they had been preparing a trial subpoena “for Mr. Gupta to testify in the criminal case.” It isn’t clear if Mr. Gupta would testifyt. The revelation was part of a hearing over objections to wiretapped phone calls that prosecutors intend to play at Mr. Rajaratnam’s trial on conspiracy and securitiesfraud charges, which begins this coming week. Mr. Rajaratnam has denied wrongdoing. “These allegations first made by the SEC are totally baseless. Mr. Gupta’s 40-year record of ethical conduct, integrity, and commitment to guarding his clients’ confidences is beyond reproach,” said Gary Naftalis, Mr. Gupta’s lawyer. Mr. Gupta, the former head of consulting firm McKinsey & Co., hasn’t been charged with any criminal wrongdoing.

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Monday, March 7, 2011

CORPORATE NEWS

BY KYONG-AE CHOI AND SE YOUNG LEE SEOUL—Three major South Korean companies will compete for a controlling stake in logistics company Korea Express Co., people familiar with the situation said Friday, in a deal that could be valued at more than two trillion won, or about $1.8 billion, and would be a litmus test for Korean mergers and acquisitions this year. Steelmaker Posco said it has submitted a letter of intent to seek a 37.6% stake in the country’s largest logistics company by revenue. Korea Express is being sold by Asiana Airlines Inc. and Korea Development Bank. Posco will face off against two other bidders, Korean conglomerates CJ Group and Lotte Group, the people said, with no other bidders having submitted letters of intent. One of the people said, however, that at least one of the three bidders could form a consortium with other parties to boost its chances of securing the deal. The person said the timetable for the sale could be altered slightly, given that there were only three official bids. Formal bids are likely to be due next month, with the sellers aiming to name a preferred bidder in May, the person said. How well the Korea Express sale fares will provide an early indication of M&A activity, as the stake is the country’s first major asset to be put on the block this year. Analysts expect strong interest for the stake because of Korea Express’s strong fundamentals. Some analysts have estimated that the sale could fetch more than two trillion won—more than double the company’s stock-market value of 947.82 billion won based on a closing price of 110,500 won Friday, up 5.7%. Korea Express’s shares rose were up as much as 12% early Friday, buoyed by hopes of fierce competition for the controlling stake. The sale also marks the latest attempt by troubled South Korean conglomerate Kumho Asiana Group to raise cash in a far-reaching restructuring. Affiliate Asiana Airlines owns 23.95% of Korea Express. KDB, Kumho’s lead creditor, controls another 23.95% in the logistics firm through Daewoo Engineering & Construction Co. CJ, Lotte and Posco “are financially stronger than Kumho Asiana, so Korea Express should benefit from that,” KTB Securities analyst Shin Ji-yoon said. Analysts said Korea Express is an attractive asset for Lotte and Posco as the two already are major clients of the logistics company and that CJ could generate considerable cost savings by combining Korea Express with its existing logistics affiliate. “We believe the addition of the logistics company to our portfolio would strengthen our competitiveness in the steel business by lowering logistics costs,” Posco spokesman Choi Doo-jin said. “If Korea Express advances to overseas markets, along with Posco or its affiliates, chances are high it will grow as a global logistics company.”

RIM loses marketing chief Departure reflects turmoil inside the technology company as it struggles to remake itself BY PHRED DVORAK AND STUART WEINBERG BlackBerry maker Research In Motion Ltd. said its chief marketing officer has decided to leave the company—just weeks ahead of one of its most significant product rollouts in years. RIM said Friday that Keith Pardy is leaving for “personal reasons,” but is continuing to help the company over a six-month transition period. Mr. Pardy wasn’t available to comment. RIM didn’t say whether the company had hired a successor. Mr. Pardy told the company a month ago about his plans to depart, according to a person familiar with the matter. The departure of Mr. Pardy, who was hired from Nokia Corp. in early 2009, deprives the smartphone maker of a marketing chief during the crucial lead-up to the launch of its PlayBook tablet, expected at the end of March or early April. It reflects larger turmoil in RIM, as the company struggles to remake itself from a maker of corporateworkhorse devices known for security and reliability to a producer of hip, media-savvy gadgets that can compete with the likes of Apple Inc.’s iPhones and iPads, say people familiar with RIM’s strategy. The PlayBook will feature a new, faster operating system and revamped look-and-feel. RIM executives say it will be the best look yet at how the company is reinventing its products. But mobile-market watchers say the PlayBook has suffered ever since it was announced last year from confusion over who it’s supposed to appeal to and what market it will satisfy. RIM has con-

Agence France-Presse/Getty Images

Keith Pardy, shown holding two Blackberry Pearl phones in June, is leaving RIM for ‘personal reasons.’ sistently stressed the PlayBook’s usefulness to businesses and its potential popularity among corporate technology officers—even as it shows off the tablet’s ability to play videogames and watch movies in demonstrations. Mr. Pardy had been a marketing executive at Nokia and Coca-Cola Co.; RIM executives had hoped Mr. Pardy would be able to help the company shed its staid corporate image and help it boost popularity in the battle against branding wiz-

ards like Apple. RIM’s BlackBerry phones are still selling strongly overseas. But they’ve been fast losing share to Apple’s iPhones and devices that run on Google Inc.’s Android operating system in the trend-setting North American market. Like Nokia, the Finnish phone giant, RIM was late to recognize the importance of touch-screens, cool interfaces and the need to offer third-party applications. It has also fallen short in getting a marketing

message out that resonates with consumers, analysts said. “RIM’s challenge is product, and another is perception,” said Avi Greengart, an analyst at Current Analysis, a market research firm. Jack Gold, principal at J. Gold Associates, a technology-consulting firm, said RIM has never been a strong marketing company in part because it never had to be. “They’ve been hit by a competitive pressure that they didn’t feel three or four years ago,” he said.

TPG, J-Trust among Takefuji finalists BY ATSUKO FUKASE TOKYO—U.S. private-equity fund TPG Capital and Japanese consumer lender J-Trust are the likely contenders to take over failed consumer lender Takefuji, in a decision to be announced as early as the end of this month, according to sources familiar with the situation. TPG Capital, Cerberus Capital Management, J Trust, Tokyo Star Bank and Korea’s A&P Financial are the five finalists for the final round of bidding, the people said. Eiichi Obata, a lawyer who is Takefuji’s court-appointed administrator and in charge of its sale, said Friday that bidding for the company will take place March 22, a delay from the initial date of March 10 because more time is needed for due diligence from the bidders. Mr. Obata, who declined to name the five bidders, said it would take more time to reach a valuation for Takefuji’s business. “The final bidder will probably be decided between the end of March and early April,” he said. Bidders will submit proposals on how they can generate profit with Takefuji’s operations and staff in the once-lucrative consumer-finance market and how they can raise capital, Mr. Obata said. Takefuji, which once attracted foreign players such as Goldman

Bloomberg News

Posco, CJ, Lotte to bid for Korea Express

The bid process for Takefuji has been delayed. Here, Takefuji offices in Tokyo. Sachs Group Inc. as an acquisition target, has been beset with mounting requests for interest repayments from borrowers, after the Japanese Supreme Court ruled in 2006 that consumer lenders were charging interest at illegally high rates and required them to set aside funds to pay back the overcharged interest. The new rules have caused deep losses at many consumer lenders and prompted foreign players such as General Electric Co. and Citigroup Inc. to exit the sector in Japan. But the consumer-finance sector remains attractive in the longer term due to the nation’s near-zero interest rates. Takefuji filed for bankruptcy

protection in September under the weight of $5.1 billion in debt stemming from tighter lending rules and court-ordered interest repayments. Its image was tarnished in Japan after its founder was arrested for wire-tapping the telephone of a journalist. Takefuji’s outstanding balance of performing loans stood at 75 billion yen ($910.6 million) as of the end of October, and the balance has fallen since then, Mr. Obata said. Since its bankruptcy filing, Takefuji set a deadline of Feb. 28 for its borrowers to file claims or lose their refund rights. Mr. Obata said 776,000 customers have asked for refunds and the

total is expected to reach one million. He didn’t provide the amount of repayments expected, saying it was too early to measure the figure. Takefuji’s outstanding corporate bonds total about 89 billion yen, of which 52.1 billion yen worth is denominated in U.S. dollars and seven billion yen in euros. Both debt holders and customers who are to be repaid interest payments aren’t likely to receive the full amount of their principal. The percentage of the principal both bondholders and customers will receive will be the same, Mr. Obata said. The company is also considering the sale of its Tokyo headquarters building and other real-estate assets, he said. All eyes are now on the remaining big consumer-finance lenders—Acom Co., Promise Co. and Aiful Corp. The three lenders have also faced an increasing number of refund requests. An arm of Mitsubishi UFJ Financial Group Inc. owns over 40% of Acom, Japan’s largest consumerfinance lender by number of loans, while a banking arm of Sumitomo Mitsui Financial Group Inc. owns about 20% of Promise, the secondlargest. Both banks are examining whether the consumer lenders need financial assistance to deal with their refunding claims.

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CORPORATE NEWS

Hermès net jumps, chief calls LVMH ‘undesirable’ holder BY CHRISTINA PASSARIELLO

Getty Images

Dolce & Gabbana poured nearly $100 million into D&G’s development. Above, shoppers walk past a D&G store in London.

D&G to join main label In risky bet, fashion house expands range of Dolce & Gabbana line BY CHRISTINA BINKLEY AND CHRISTINA PASSARIELLO Italian fashion brand Dolce & Gabbana is planning to fold its secondary D&G brand into the main label, according to people familiar with the matter, in an effort to limit cannibalization between the two lines. The D&G label will disappear, but the Dolce & Gabbana line will extend its price range to carry lower-priced clothing in addition to its more expensive, tailored collection, people familiar with the strategy said. D&G’s last runway show will be held in September, and the line will cease in August 2012, the people said. One person close to the company cautioned that a final decision to merge the lines hasn’t yet been made. However, Dolce & Gabbana has begun notifying its retail partners of the change. A Dolce & Gabbana spokeswoman declined to comment. The move is risky. Consumers could confuse the top-tier brand known for it sexy ultra-tailoring with the secondary line known for its youthful buzz, say some in the fashion industry. The brands’ catwalk shows last month during Milan Fashion Week demonstrated the differences: D&G playfully used letters of the alpha-

bet to make colorful patterns; Dolce & Gabbana sent out a sultry ensemble of suits and lace dresses. Both lines are designed and owned by Domenico Dolce and Stefano Gabbana. In addition, D&G is a major contributor to the company. For the financial year that ended in March 2009, the latest figures available, D&G accounted for 45% of the company’s €1.59 billion ($2.22 billion) in wholesale revenue. A person close to the company says D&G is “highly profitable.” Fashion brands have long expanded into lower-priced, secondary brands as a way to attract a wider group of consumers. But they have been careful to distinguish the different labels—in both look and prices. Still, Brunello Cuccinelli, another luxury Italian label, recently did something similar, folding its Gunex and Rivamonte labels into the main line and expanding its main line of clothes and accessories. It has been hard to keep D&G separate from Dolce & Gabbana. Because of their similar names, consumers often confuse the lines, unlike other secondary lines with different names, such as Versace’s Versus and Donna Karan’s DKNY. Messrs. Dolce and Gabbana decided to buy the D&G license back six years ago to improve its posi-

tioning. The designers wanted to make the label, created in 1993, a democratic fashion brand, something that everyone could afford, to better compete with fast-fashion brands such as Zara and H&M. Dolce & Gabbana poured nearly $100 million into D&G’s development. D&G got a new headquarters, separate from Dolce & Gabbana. The company expanded two of its Italian factories to accommodate D&G, even though most of the production was to take place in Asia and Mediterranean countries such as Morocco and Turkey. The designers hired 300 people to work on D&G’s production. Yet the heavy investment sent D&G in the opposite direction. The company raised prices to help pay for the investment. That led to some overlap with Dolce & Gabbana, according to two of the people close to the matter. About six months ago, faced with increasing cannibalization of the two labels, Messrs. Dolce and Gabbana began to consider radically changing D&G’s strategy. Dolce & Gabbana is hoping to convert many of D&G’s stores and wholesale distributors to the main line, according to the two people. The company also plans to retain most of D&G’s employees, but there will be some layoffs, according to one of the people.

PARIS—Luxury fashion house Hermès International, galvanized by a 46% jump in profit and a record operating margin, asserted its independence and rejected the shareholding presence of rival LVMH Möet Hennessy Louis Vuitton SA. LVMH is an “undesired and undesirable shareholder,” Hermès Chief Executive Patrick Thomas said at a meeting on the company’s results. Hermès, the maker of Kelly bags and silk scarves, Friday said its profit came to €422 million ($589.1 million) last year from €289 million the year before, on surging demand for luxury goods. The company logged a 28% operating margin, Hermès’s highest, on a 25% boost in sales to €2.4 billion. Hermès, a family-owned company, was jostled last fall when LVMH swooped in and took a 20% stake, eating up the large majority of Hermès’s publicly traded shares. LVMH boss Bernard Arnault, who has built his empire by capitalizing on family divisions to seize control of companies, said he supports Hermès’s strategy and management. The Hermès family controls 72%

of the capital. However, Hermès doubts Mr. Arnault’s intentions. Mr. Arnault built up the stake using equity swaps without declaring them, a tactic that many say exploited a loophole in market regulations. “The way they entered was unacceptable,” Mr. Thomas said. Mr. Thomas also shot down any cooperation between the two luxury houses. Mr. Arnault said last month that LVMH could develop synergies with Hermès in such areas as store development and advertising. “Synergies don’t interest us,” Mr. Thomas retorted. Mr. Arnault’s arrival has shaken the family behind Hermès, forcing them to demonstrate their commitment to the business. Fifty-two members of the family have agreed to put their shares into a new holding company to keep them out of Mr. Arnault’s hands. In addition, it’s likely that a family member will take over from Mr. Thomas, the first person from outside the family to run Hermès, when he retires in two to three years. Mr. Thomas said his replacement will be chosen from the executive committee, of which three of the seven participants are family members.

Agence France-Presse/Getty Images

Hermès CEO Patrick Thomas, above, ruled out any collaboration with LVMH.

Dior show looks past Galliano, evokes brand history BY CHRISTINA PASSARIELLO PARIS—Fashion house Christian Dior sought to turn the page on John Galliano Friday, presenting his collection of fall-winter clothes in a way that carried little of its former designer’s signature flair. Instead, the French fashion house strove to evoke its rich history, sending old-style knickers, black-cashmere capes and dressing gowns down the runway. It dedicated the show to the “petites mains,” seamstresses and craftsmen, behind the brand. A group of them took the traditional runway bow, before a standing ovation. Before the show, Dior Chief Exec-

utive Sidney Toledano gave a somber speech recalling the house’s history and rejecting the anti-Semitism that cost Mr. Galliano his job. “A new era starts tomorrow,” Dior Chief Operating Officer Serge Brunschwig said after the show. Dior’s challenge now will be to chart its future course—starting with choosing a new designer. Fashion houses such as Yves Saint Laurent, Valentino and Givenchy have stumbled after the departure of their founding designers. Though Mr. Galliano was the fifth designer at Dior’s creative helm since its founding 64 years ago, over the past 15 years his flamboyant persona had become indelibly tied to the label.

Dior is expected to name a new designer within the next few weeks. The front-runner is widely rumored to be Riccardo Tisci, currently the designer of Givenchy. Dior declined to comment on Mr. Galliano’s successor. Both Dior and Givenchy are part of LVMH Moët Hennessy Louis Vuitton SA boss Bernard Arnault’s luxury-goods empire. Dior cut ties with Mr. Galliano Tuesday, after a video surfaced on the Internet appearing to show a seemingly drunk Mr. Galliano making a string of anti-Semitic remarks. Dior had suspended Mr. Galliano four days earlier after the designer was questioned by police about separate anti-Semitic remarks allegedly

made during an argument in a Paris bar. Mr. Galliano, 50, Wednesday apologized in a statement for his behavior but denied making antiSemitic or racist statements. Making anti-Semitic statements is a crime in France, punishable by up to six months in prison. He said in the statement that he would immediately seek help for his “failures.” People close to Dior said the designer has been suffering from alcohol addiction and that it had affected his ability to work. Dior’s new creative director will be responsible for a brand that last year made €826 million ($1.15 billion) in sales, a fraction of what

LVMH’s main Louis Vuitton brand makes, but enough to make it an important part of Mr. Arnault’s empire. The designer will not only be responsible for couture and readyto-wear collections, but will also set the image that trickles down to more affordable items such as Diorbranded lipstick and sunglasses. “They handled it well. Enough. Now it’s about the product,” said one American retail executive, who asked not to be named. Mr. Arnault has handled many designer transitions over the past 20 years, but none has been as sensitive as the Dior succession. —Christina Binkley contributed to this article.

22

Monday, March 7, 2011

THE WALL STREET JOURNAL.

MARKETS

Dow’s surge can’t erase the doubts BY MATT PHILLIPS It has been two years and one epic rally since the market bottomed in March 2009. The Standard & Poor’s 500-stock index, at 1321.15 on Friday, is almost double its closing ABREAST OF low of 676.53 on THE MARKET March 9, 2009. The Dow Jones Industrial Average is at 12169.88, up 86% from its low of 6547.05. The difference between now and then is stark. Back then, money was flooding out of stock mutual funds. Now, it is returning. Companies are expected to report record profits this year, and the economy is generating jobs. The market is calmer, too. The Chicago Board Options Exchange’s Volatility Index, commonly known as the “fear” index, is at just over 19, down from above 49 in March 2009. Yet many investors remain skeptical about the market’s strength. They worry that the economy isn’t strong enough to stand on its own once the Federal Reserve ends its latest round of support in June, and they fear that high oil prices and inflation from other commodities may quash the nascent recovery and weigh on the market. And after such a blockbuster rally, a correction must be around the corner, the reasoning goes. “Things are really renormalizing. But they’re renormalizing because of historical measures by the Fed and others to really re-lubricate the system and keep it going,” said

THEN

Forward P/E ratio

13 times

10 times

February nonfarm payrolls

+192,000 –726,000

The long recovery The Dow Jones Industrial Average has climbed 86% since its low on March 9, 2009. 12000 11000 10000 9000 8000

VIX

19.9

49.7

+$1.50 billion

–$13.66 billion

7000 6000

2009

'10

Sources: WSJ Market Data Group; ICI (flows)

Jonathan Golub, chief U.S. equity strategist at UBS. “There’s this lack of conviction that everything would be fine by itself.” That doubt is reflected in several market measures. Investors are willing to pay only a bit more than 13 times expected earnings for the next 12 months. While that is above the roughly 10 times they were paying in March 2009, it’s below the 10-year average of about 15.5, according to FactSet. When the market is very bullish, investors tend to pay a higher price for earnings, and the price/earnings ratio goes up. Thanks to brutal cost cutting, companies have returned to levels of profitability last seen before the recession. And analysts expect earnings to hit records later this year.

Hedge funds proliferate in Asia as wealth grows Continued from page 17 The number of new funds in Asia last year totaled 155, outstripping the number of closures at 100, Eurekahedge said. Some big-name funds are opening shop in Asia and moving key players out to Hong Kong. GLG Partners opened an office in the region in the autumn and last week named Andrew Thatcher executive director with a mission to develop its Asian business. Mr. Thatcher moved to Hong Kong earlier this year. Other funds to hang out their shingle recently in Hong Kong are Soros Fund Management LLC and Viking Global Investors. John Paulson, who made his name betting against subprime mortgages in 2007, received a license from Hong Kong’s Securities and Futures Commission to deal in securities last month. But even as marquee names in the industry bulk up, some are losing key players who decide they can raise capital for their own funds. Last week, the head of Highbridge Capital Management’s Asia investments, Carl Huttenlocher, told colleagues he was leaving the multibillion-dollar hedge-fund firm owned by J.P. Morgan Chase & Co. to start his own fund, people familiar with the matter said. He oversaw about $2 billion in assets, including the Hong Kong-based Highbridge Asia Opportunities Fund. Western investors pulled out of Asian hedge funds during the fi-

NOW

nancial crisis, leading many to shut down. But fund managers now are banking on the idea that a strong Asian investor base could lend greater stability. By the end of 2009, there were some three million Asian-Pacific high-net-worth individuals, up 26% from 2.4 million, according to a recent report by Capgemini and Merrill Lynch, equaling the number in Europe for the first time. Their wealth jumped 31% to $9.7 trillion, surpassing Europe’s wealthy with $9.5 trillion, and they are gradually shifting their wealth into alternative investments, including hedge funds, the report said Capgemini and Merrill Lynch forecast that 8% of their portfolio will be in alternative investments by 2011, up from 5% in 2009. D. E. Shaw, which was once the giant in the industry, dropped to 20th place among U.S. hedge funds in terms of assets under management, from fifth last year, according to trade publication AR magazine. D.E. Shaw lost 40% of its hedge funds assets in 2010, ending with $14.23 billion, AR said. Assets, including those not in hedge funds, dropped 24% to $19 billion as of Jan. 1. “It feels like it’s turned the corner,” said Mr. Gaudio about the firm’s assets under management. He added that new capital is coming in from different geographies and types of investors. —Mohammed Hadi contributed to this article.

'11

Weekly flows to U.S. stock funds

But the price investors are willing to pay for those earnings betrays the begrudging nature of the rally. As well, the so-called equity risk premium—the extra return investors demand to lure them into stocks and out of the safety of government bonds—remains higher than the historical norm. The risk premium moves lower as investors become more comfortable with owning stocks. The 50year average for the equity risk premium is around 3.5%. Right now, it is at 5.5% by Bank of America Merrill Lynch’s reckoning, an elevated level that suggests investors are still reluctant to move back into stocks. As a result, it seems many have missed out on the biggest stockmarket rally since the Eisenhower administration. And the market con-

as of Feb. 23

tinues to forge ahead without them. Even amid turmoil in the Middle East, oil prices rising above $100 a barrel and mild disappointment in Friday’s jobs data, the Dow rose last week—and it is up in four of the past five weeks. There are signs that doubts are ever-so-slowly being overcome. Inflows to stock mutual funds have turned higher recently. Over the five weeks ending Feb. 23, more than $21 billion has poured into stockmarket mutual funds, far outpacing the less than $7 billion that went into bond funds, according to the Investment Company Institute. That is in direct contrast to the preferences of investors over the last couple of years, when they overwhelmingly preferred bond funds to stock funds. Still, the con-

viction among those who have returned to stocks seems less than steadfast. It’s understandable that some investors seem to have trouble shaking off the traumatic effects of the stock-market collapse they endured. In early 2009, investors were looking at an investment landscape of utter destruction. The Dow closed at a 12-year low of 6547.05; the S&P 500 was at its lowest since 1996. From the October 2007 peak, the decline in S&P 500 stocks destroyed $7.91 trillion in market capitalization by March 9, 2009. Days earlier, the Bureau of Labor Statistics had reported that 651,000 jobs were lost in February 2009. That number was later revised to 726,000. William Lefkowitz, of vFinance Investments, told The Wall Street Journal at the time: “I don’t know if I’ve ever heard as many people being negative on the market as what’s happening right now.” Two years later, Mr. Lefkowitz, a 49-year-old options strategist, still describes investors’ attitude as “very cautious.” He has witnessed the 1987 crash, the dot-com bust, and the rout following the September 2001 terrorist attacks. Investors were able to get over those steep drops much easier than the collapse that ended two years ago, he said, when reached Friday afternoon. “It’s hard for them. They’re not going to forget what happened,” he says. “It might take a whole generation, we’re not really sure.” —Mark Gongloff contributed to this article.

Credit-rating paradox in Japan Continued from page 17 Some 85 corporate and local or regional government ratings exceed the creditworthiness of their home country’s sovereign debt, according to a report released on Feb. 3 by S&P. These nations—21 in all—include Argentina, Ireland, Italy, New Zealand, Portugal and Russia. With Japan’s government borrowing continuing to swell—and political paralysis reducing chances of any near-term fix—Moody’s on Feb. 22 cut its outlook on Japan’s bond rating to “negative” from “stable,” a change in outlook widely interpreted as the first step to a full downgrade of a debt rating. S&P cut Japan’s sovereign rating to AA-minus from AA on Jan. 27. That widely publicized S&P action came just one day after NTT raised 70 billion yen from 10-year bonds, the company’s first new debt issuance in two years. The blue-chip Japanese telecom firm offered a 1.317% yield, or just 0.08 percentage point over the benchmark 10-year JGB. In theory, it might have been able to pay less, now that its credit rating is higher than the Japanese government’s, but credit ratings are just one factor that goes into pricing a bond. So far, NTT’s creditworthiness hasn’t been affected by the Japanese government’s fiscal woes, despite the fact that its largest shareholder is Japan’s Ministry of Finance, with a 36.6% stake. “Although the government faces fiscal difficulties, in our view the impact of that is limited on companies like NTT and NTT Docomo,” said Shinsuke Tanimoto, team leader of corporate finance at Moody’s Japan.

Some bond-market watchers question whether such individual company ratings can really be viewed apart from the sovereign ratings of the country in which they are based. “It makes me somewhat uneasy to see corporates rated higher than sovereigns,” since that flips the conventional wisdom upside down, said Tadashi Matsukawa, the Tokyo-based head of fixed income at asset manager Pinebridge Investments’ unit in Japan. “The ratings agencies don’t seem to have taken a very holistic view.”

Rating firms contend there is no reason why companies can’t be rated more highly than their own governments if their fundamentals are stronger. Critics say that unlike a government, a company can’t raise taxes or print money to pay off debts. And a single company’s business risks arising from such things as fickle consumer demand and product safety can be more acute than any macro-economic risks attached to sovereign ratings. But the major rating companies contend there is no reason why corporations can’t be rated more highly than their own governments if their intrinsic earnings fundamentals are stronger—and that Japan’s toprated firms are no exception. “Would all these highly rated companies default if the government did? Probably not,” said Tom Byrne,

head of sovereign credit ratings in Asia for Moody’s in Singapore. While Tokyo could devalue its currency to pay off debt, Mr. Byrne views that as unlikely. “No advanced power has done that since the early 1900s and for good reason: The hyper inflation it would cause would be very unpopular,” he said. Bond traders say there have been no signs investors are fleeing JGBs due to any perception that more highly rated corporates offer a more secure investment. Even if that were to be the case, it would be impossible to meet demand, because outstanding corporate bonds make up just a fraction of the size of the JGB market. That is especially true for the most highly rated Japanese companies, which rarely issue new debt—one of the reasons the ratings companies hold them in such high esteem. NTT Docomo last issued bonds in March of 2009 and Canon’s most recent issuance dates to 1995. A Takeda Pharmaceutical spokesman said his company has never issued any long-term debt. In a worst-case scenario, the ratings firms say that even the bestrated Japanese companies won’t be completely immune to the fortunes of their own economy. If Japan’s sovereign rating is lowered again due to a poor economic outlook, then that increased risk of default, however far-fetched that might seem, would most likely act as a drag on corporate Japan’s creditworthiness. “If the rating on the Japanese sovereign gets downgraded because of economic weakness, then that may affect all companies” said S&P’s Mr. Kobayashi.

Monday, March 7, 2011

THE WALL STREET JOURNAL.

presented by:

in partnership with:

Is your innovation a natural winner? Sometimes recognition is all that’s needed to elevate an idea onto the world stage. From an entirely new invention to the advancement of a classic, the Asian Innovation Awards and the Credit Suisse Technopreneur Award are committed to finding the next big ideas in Asia. Whether conceptualized in a backyard or a laboratory, we are seeking innovations that break with conventional processes in creative ways to improve quality of life or productivity, as well as those demonstrating the greatest potential for financial success. Entries welcomed from individuals, small businesses, large corporations and academia in Asia Pacific, from any field including health care, technology, medicine, energy, social sciences, government and others.

To enter or to find out more, visit wsj-asia.com/aia Deadline for entries: March 25, 2011

23

24

Monday, March 7, 2011

THE WALL STREET JOURNAL.

INTERNATIONAL INVESTOR

Low yields in U.S. spell pain for dollar

Shanghai hits high for 2011; Korea jumps

BY JAVIER E. DAVID

BY COLIN NG AND V. PHANI KUMAR

eral Reserve ends their QE2 or indicates they will raise rates sooner than currently expected, these forces will remain in play.” Market participants are divided over whether recent inflation pressures are fleeting or are an indication of something more long-term and ominous. But expectations of higher interest rates in Europe have been a boon to the euro, in spite of angst over the euro zone’s unresolved sovereign-debt issues. Investors’ craving for higher yields have outweighed the fact that weaker economies in the 17-nation currency bloc are still struggling with low growth and crushing debt burdens. Last week, a rally took the euro to four-month highs above $1.40, adding nearly three cents during the course of the week. On Thursday, European Central Bank President Jean-Claude Trichet used language that heightened anticipation of a rate increase as soon as next month. “The ECB is always overtly hawkish, but having said that, they really did catch the market by surprise” with their unequivocally aggressive stance on raising interest rates, said Andrew Wilkinson, senior market analyst at Interactive Brokers in Greenwich, Conn. Late Friday, the euro was at $1.3986 from $1.3960 late Thursday. The dollar traded at 82.32 yen from 82.36 yen, while the euro bought 115.13 yen from 114.97 yen.

NEW YORK—The Federal Reserve’s bias for loose monetary policy is likely to keep the dollar trapped in a downdraft this week, just as hawkishness on inflation and looming interest-rate increases in Europe enhance the euro’s luster. Low U.S. interest rates and the possibility of an oil-driven jump in inflation have deprived the dollar of buying linked to inCURRENCY vestors seeking a MARKETS safe place to park their funds. Such buying usually benefits the currency during times of global unrest. Investors’ aversion to risk will likely continue to benefit the Swiss franc and Japanese yen, for now. Investors are searching for currencies that offer both stability and higher yields, which makes the euro a comparatively attractive bet. Meanwhile, the dollar is on the defensive because of the Fed’s controversial bond-purchase program, known as quantitative easing or QE2, which is keeping yields low on dollar-denominated assets. “For the U.S. dollar to reverse its downward slide, an increase in U.S. rate expectations will have to happen without other nations indicating that they will raise rates as well,” wrote Andrew Busch, global currency strategist at BMO Capital Markets, on Friday. “Until the Fed-

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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 03/03 EUR

52.69

3.0

4.7

25.3

15.1 14.1 19.4 20.1 18.2 18.9 20.4 9.2 9.2 9.2 9.3 9.3 8.5 8.5 8.5 8.5 8.5 8.8 8.8 9.8 9.4 9.4 9.4 8.4 8.3 8.3 8.9 8.9 10.0 16.7 15.6 16.3 17.7 7.7 7.7 7.8 7.8 7.9

32.2 30.9 36.4 37.2 35.1 35.8 37.6 19.6 19.6 19.6 19.6 19.6 18.7 18.8 18.8 18.7 18.7 19.0 19.0 20.2 28.1 28.2 28.3 27.0 27.0 26.9 27.6 27.6 28.8 51.4 49.9 50.7 52.6 27.2 27.2 27.3 27.3 27.4

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

02/28 USD 02/28 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 HKD 03/03 USD 03/03 HKD 03/03 USD 03/03 USD 03/03 HKD 03/03 USD 03/03 HKD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 EUR 03/03 USD 03/03 EUR 03/03 USD 03/03 EUR

11.77 10.94 36.66 39.84 30.47 33.00 41.02 8.81 165.40 21.23 68.48 8.79 8.81 141.41 18.15 68.87 8.84 8.81 27.07 8.81 16.21 22.51 16.27 16.21 21.42 16.23 16.21 22.00 16.21 39.06 32.72 33.69 43.71 6.86 9.58 14.30 19.97 6.86

3.4 3.3 8.9 9.0 8.7 8.8 9.0 1.0 0.9 0.9 1.0 1.0 0.8 0.8 0.8 0.7 0.7 0.9 0.9 1.0 -0.2 -0.2 -0.2 -0.4 -0.4 -0.4 -0.3 -0.3 -0.1 -1.3 -1.4 -1.3 -1.1 1.6 1.6 1.7 1.7 1.7

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

03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03 03/03

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

Leading 10 Performers FUND FUND RATING * NAME

6.86 9.58 13.19 18.42 6.85 6.86 9.58 14.18 19.80 6.86 9.58 9.31 13.00 9.61 13.42 10.11 14.12 12.83 9.19 9.72 13.57 16.46 11.79 11.63 8.33 7.40 10.33 6.28 12.80 9.17 17.55 16.90 17.36 18.01

—%RETURN— YTD 12-MO 2-YR 1.5 1.5 1.6 1.6 1.5 1.5 1.5 1.6 1.6 1.7 1.7 3.7 3.7 3.8 3.8 3.5 3.5 3.3 3.3 3.4 3.4 3.7 3.7 6.0 6.0 5.7 5.7 5.9 6.1 6.1 NS NS NS NS

7.0 7.0 7.1 7.1 7.0 7.3 7.3 7.3 7.3 8.3 8.3 9.9 9.9 10.7 10.7 11.1 11.1 9.9 9.9 10.6 10.6 12.0 12.0 17.7 17.7 16.5 16.5 17.2 18.8 18.8 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

26.4 26.4 26.4 26.4 26.4 26.7 26.7 26.7 26.7 27.9 27.9 30.8 30.8 31.8 31.8 33.1 33.1 31.7 31.7 32.3 32.3 34.2 34.2 31.6 31.6 30.1 30.1 31.0 32.7 32.7 NS NS NS NS

—%RETURN— YTD 12-MO 2-YR

2352.40

1.7

32.3

54.4

101.07

-17.5

-4.7

10.8

n CREDIT PACIFIC ASSET MANAGMENT www.creditpacific.com GL OT WSM 03/03 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

raise interest rates soon. ECB President Jean-Claude Trichet had surprised markets by signaling the possibility of an increase at next month’s meeting, and by warning that risks of inflation in the euro zone were to the upside. Mazda Motor added 3.5% and Nikon gained 1.9%. Elsewhere, China’s Shanghai

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

03/03 USD 03/03 USD 03/03 USD 03/03 EUR 03/03 USD 03/03 USD 03/03 HKD 03/03 USD 03/03 HKD 03/03 USD 03/03 USD 03/03 HKD 03/03 USD 03/03 HKD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD

FUND NAME

NAV GF AT LB DATE CR

Platinm-Gbl Dividend Platinm-Nordic Platinm-Premier Platinm-Turnberry

GL OT OT OT

NAV 18.10 17.01 17.77 12.73 18.93 9.40 132.91 17.06 73.16 9.39 9.40 115.07 14.77 73.39 9.42 9.40 14.72 9.40 15.56 18.14 15.56 17.03 15.58 17.65 15.64 12.99 12.05 12.69 13.83 47.03 38.80 44.89 52.71 4.70

—%RETURN— YTD 12-MO 2-YR 3.3 3.2 3.3 3.3 3.5 -0.3 -0.2 -0.2 -0.2 -0.2 -0.4 -0.4 -0.4 -0.4 -0.4 -0.4 -0.3 -0.2 1.7 1.6 1.5 1.4 1.5 1.6 1.7 5.8 5.6 5.7 5.9 4.8 4.6 4.7 4.9 2.5

10.6 9.5 10.2 10.2 11.4 4.4 4.3 4.3 4.3 4.3 3.4 3.3 3.3 3.2 3.2 3.9 3.8 4.9 7.2 6.8 6.0 5.6 6.6 6.3 7.7 14.3 13.3 13.8 15.3 14.6 13.5 14.1 15.5 15.3

26.6 25.3 26.2 26.2 27.4 10.8 10.9 10.9 10.9 10.9 9.8 9.8 9.8 9.8 9.8 10.3 10.3 11.4 16.5 16.2 15.2 15.0 15.9 15.7 17.2 37.4 36.1 36.7 38.5 34.4 33.0 33.8 35.5 38.7

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

03/01 03/01 03/01 03/01 03/01

USD USD USD USD EUR

57.92 2675.00 1359.33 1351.69 7642.00

5.9 4.0 3.7 5.3 2.2

66.4 38.5 51.9 62.9 24.6

-17.9 -15.3 4.5 -3.6 -7.3

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

Nikko AU Nikko Asset JPYJPN Income Open Monthly Management Co., Ltd. Legg Mason Legg Mason Asset JPYJPN AUD Bd Monthly Div Mgmt (Japan) Co., Ltd. Nomura Nomura Asset JPYJPN Australia Bond D Management Co., Ltd. Nomura Nomura Asset JPYJPN Australia Bond B Management Co., Ltd. MitsubishiUFJAustralia Mitsubishi UFJ JPYJPN Income Asset Management Co.,Ltd. SMAM AUD Sumitomo Mitsui JPYJPN Bond Asset Mgmt Co., Ltd. MHAM AU Mizuho Asset JPYJPN Dollar Bond F Monthly Management Co., Ltd. DKA AUD Bond Mizuho Asset JPYJPN Management Co., Ltd. Nomura Nomura Asset JPYJPN Australia Bond Management Co., Ltd. MUFJ Intl Mitsubishi UFJ JPYJPN Org Bd AUD D1M Asset Management Co.,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

Funds that invest in Asia/Pacific government and corporate debt instruments. Assets in securities denominated/hedged in Yen or other Asian currencies. Ranked on % total return (dividends reinvested) in Euros for one year ending March 04, 2011 % Return in $US ** 1-YR 2-YR 5-YR

0.56

18.41 34.24 10.64

0.54

18.21 33.46 11.23

0.49

18.18 33.31 11.08

0.51

18.16 33.49

11.19

0.65 18.06 32.78 11.78 0.82 18.02 33.45 11.65 0.33 17.90 32.89 11.26 0.34

17.89 32.86 11.25

0.43

17.72 32.87 10.87

0.17 17.40 32.15

NS

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

Composite index gained 1.4% to 2942.31 for a 2.2% weekly gain, and Hong Kong’s Hang Seng index advanced 1.2% to 23408.86, rising 1.7% for the week. Australia’s S&P/ASX 200 added 1.2% to 4864.28, gaining 0.6% for the week. Chinese banks were mostly higher on expectations they will report strong full-year 2010 earnings.

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

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

CPS-Master Priv Fund

Asia/Pacific Bond

Asian stock markets had solid gains Friday, cheered by an overnight charge on Wall Street, with shares in Shanghai hitting a 2011 high. In Seoul, South Korea’s Kospi led the charge, rising 1.7% to 2004.68. on the back of continued foreign buying. ConstrucASIAN-PACIFIC tion shares recovSTOCKS ered after heavy losses in the wake of the Libyan turmoil. Hyundai Engineering & Construction rose 2.8% and Samsung Engineering jumped 5.3%. In Tokyo, Japan’s Nikkei Stock Average rose 1.2% to 10693.66, closing the week with a 1.7% gain. “All the positives lined up, with oil prices down, U.S. stocks going up, and the yen weakening,” said Masayoshi Yano, senior market analyst at Meiwa Securities. Sumitomo Electric Industries surged 8.1% on a Nikkei report that the company had developed a new rechargeable molten-salt battery. Konica Minolta Holdings added 4.2% on a separate Nikkei report that it had signed a major officeequipment-supply deal with Germany’s Allianz. Exporters with strong business exposure to Europe climbed after the euro jumped overnight on hopes the European Central Bank would

INTERNATIONAL INVESTMENT FUNDS FUND NAME

FUND SCORECARD

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

85.55 10.98 4.65 36.23 4.70 135.88 17.44 36.85 4.73 4.70 16.19 4.70 17.99 15.55 20.24 12.37 11.23 11.96 13.28 43.76 38.27 42.98 137.09 120.24 141.94 101.59 125.34 142.03 118.41 135.41 156.63 140.93 120.70 135.48 159.51 6099.88 5822.20 5973.14 5713.54 5454.58 5595.92 6773.00 6472.00 6624.00 17.21 15.54 18.66 7.46 10.35 7.45 7.46 10.25 7.46 7.46 14.50 7.46 20.11 19.98 20.05 20.21 11.22 10.20 12.18

2.5 2.5 2.5 2.5 2.3 2.3 2.3 2.3 2.3 2.4 2.4 2.6 3.6 3.4 3.7 6.8 6.5 6.7 6.9 -1.2 -1.4 -1.3 -10.3 -10.2 -10.4 -10.4 -10.1 3.6 3.5 3.5 3.8 8.5 8.3 8.4 8.6 2.1 2.0 2.1 1.7 1.6 1.6 7.0 6.9 7.0 3.4 3.2 3.5 0.9 0.9 0.9 0.8 0.8 0.8 0.8 0.8 1.0 7.1 7.0 7.0 7.3 7.3 7.0 7.4

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

03/03 HKD 03/03 USD 03/03 USD 03/03 HKD 03/03 USD 03/03 HKD 03/03 USD 03/03 HKD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 02/28 JPY 02/28 JPY 02/28 JPY 02/28 JPY 02/28 JPY 02/28 JPY 03/03 JPY 03/03 JPY 03/03 JPY 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 USD 03/03 EUR 03/03 EUR 03/03 EUR 03/03 EUR 03/03 USD 03/03 USD 03/03 USD

15.3 15.3 15.1 15.1 14.2 14.1 14.1 14.1 14.1 14.8 14.7 15.9 23.1 21.9 24.1 14.5 13.4 14.0 15.5 15.0 13.9 14.5 7.2 7.5 6.1 6.4 8.1 0.1 -0.9 -0.4 0.9 31.8 30.5 31.2 32.8 4.2 3.2 3.7 2.6 1.7 2.2 9.5 8.5 9.0 21.7 20.5 22.7 5.0 5.0 5.0 4.5 4.5 4.5 4.5 4.5 5.5 NS NS NS NS 30.3 29.0 31.3

38.8 38.8 38.7 38.7 37.2 37.4 37.4 37.4 37.4 38.1 38.2 39.6 52.7 51.1 53.8 40.8 39.4 40.3 42.0 39.9 38.5 39.3 NS 50.8 NS 49.3 51.6 19.6 18.4 19.1 20.5 49.2 47.7 48.5 50.4 16.2 15.1 15.7 9.6 8.5 9.1 28.4 27.2 27.8 52.5 51.0 53.7 9.8 9.8 9.9 9.3 9.3 NS 9.3 9.3 10.4 NS NS NS NS 41.0 39.7 42.1

Monday, March 7, 2011

25

THE WALL STREET JOURNAL.

INTERNATIONAL INVESTOR

Emerging world faces cost bump

Tokyo yields inch upward as stocks gain

BY CYNTHIA LIN

TOKYO—Japanese governmentbond prices fell Friday due to improved sentiment for the U.S. economy and in reaction to a rise in Tokyo share prices, as investors moved out of the safety of government securities. The yield on the benchmark 10year cash bond rose to 1.31%, up 0.02 percentage point. Bond yields move inversely to prices. Traders said that the appetite for bonds was reduced by expectations of strong U.S. jobs data. The figures, released after the close of Tokyo trading, showed employers added 192,000 jobs to nonfarm payrolls in February, taking the jobless rate down to 8.9%. The optimism, along with a weaker Japanese yen, had helped to buoy Tokyo shares, with the Nikkei average up 1% at 10693.66. But analysts said that the decline in bond prices was likely to be limited as unrest in the Middle East continued to make investors wary. “A wait-and-see mood will likely become dominant once selling runs its course,” said Mitsubishi UFJ Morgan Stanley senior strategist Shuji Tonouchi. Demand for government-backed securities as an investment haven remains intact as investors continue to fret about the impact of rising oil prices on the global economy, analysts said.

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

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 03/04 EUR EU EQ DEU 03/04 EUR EU BD DEU 03/04 EUR

64.56 76.74 38.67

3.5 -0.3 -3.3

26.9 8.2 5.2

45.8 27.9 5.5

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 02/25 USD 383232.77

-7.7

34.1

74.8

FUND NAME

NAV GF AT LB DATE CR

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 03/01 USD OT OT IRL 03/02 USD AS EQ IRL 03/02 EUR EU EQ IRL 03/02 EUR EU EQ IRL 03/02 EUR EU EQ IRL 03/02 USD JP EQ IRL 03/02 EUR JP EQ IRL 03/02 JPY JP EQ IRL 03/02 USD GL EQ IRL 03/02 EUR

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 03/03 03/01 02/21 02/21 02/21 02/21 02/21 02/21 02/28 02/28 02/28 02/28 02/21 02/21 02/21 02/21 03/02 03/02 03/01 02/28 02/28 02/28 02/28 02/28 03/03 03/03 03/02 03/02 02/21 02/21 02/21 02/21 02/21 02/21 02/28 03/03 02/28 02/07 02/21 02/21 02/28 03/02 02/28 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

265.89 696.17 1443.34 107.02 142.29 117.27 150.79 100.10 143.88 150.24 108.63 902.28 315.67 639.50 73.80 676.11 206.38 237.61 220.30 1068.20 292.65 237.00 324.50 132.27 9157.77 1253.47 9623.92 51.06 100.09 90.19 674.78 290.54 149.52 122.60 507.48 3418.93 2798.58 253.25 341.84 1031.32 334.99 649.95 2476.22 8101.25 116.46

-1.7 -3.7 4.2 2.7 2.7 4.5 4.5 3.5 3.5 0.5 0.9 0.9 8.2 1.8 4.2 1.9 1.7 -3.2 -2.4 3.3 6.0 -1.7 4.9 3.8 4.1 6.2 6.7 -0.1 0.1 -2.1 -1.0 3.5 3.5 3.6 3.6 3.7 -4.4 3.0 -0.3 0.1 0.1 3.4 6.5 -0.3 2.5

2.3 11.7 14.4 13.3 13.3 23.5 23.5 16.9 16.9 5.4 6.1 6.5 28.8 -1.1 -4.8 -0.4 -1.5 8.2 8.1 30.9 18.3 -7.8 15.9 5.7 6.2 9.6 7.3 0.2 0.2 -19.8 6.0 10.0 10.0 10.3 10.4 26.7 15.2 13.5 5.7 7.3 7.3 16.3 16.8 6.4 10.3

29.7 43.2 28.4 15.3 15.3 24.5 24.5 17.6 17.6 8.1 8.6 9.0 41.7 1.3 0.9 1.7 0.8 11.5 12.0 46.4 30.6 35.2 53.9 13.4 14.1 25.1 20.9 0.5 0.1 -9.9 14.3 6.7 6.7 6.8 6.9 46.4 40.1 31.6 4.6 5.4 5.4 53.8 33.7 3.6 NS

AS OT OT OT

EQ OT OT OT

IRL IRL IRL IRL

03/02 03/01 03/01 03/02

USD USD USD USD

19.96 10.61 10.99 10.39

-1.3 -3.1 1.2 -1.5

10.6 NS 7.7 NS

64.4 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

NAV 10.77 14.08 116.20 12.69 200.82 16.99 101.34 991.63 12.43 11.79

9969.50 8968.45 98.72 113.33 10244.11 9174.35 100.20 106.64

—%RETURN— YTD 12-MO 2-YR -2.8 -4.9 0.0 0.6 0.8 4.4 4.0 6.0 5.7 3.0

1.6 4.1 5.5 1.8 2.3 4.7 5.9 1.2

LIST YOUR FUNDS

4.9 10.9 10.2 16.0 11.7 13.9 8.4 6.3 8.2 14.9

AS EQ LUX 03/03 SGD AS EQ LUX 03/03 USD AS EQ LUX 03/03 SGD AS EQ LUX 03/03 USD AS EQ LUX 03/03 SGD AS EQ LUX 03/03 USD AS EQ LUX 03/03 SGD AS EQ LUX 03/03 USD EA EQ LUX 03/03 SGD EA EQ LUX 03/03 USD AS EQ LUX 03/03 USD OT EQ LUX 03/03 USD AS EQ LUX 03/03 SGD AS EQ LUX 03/03 USD OT OT LUX 03/03 USD AS BD LUX 03/03 USD OT OT LUX 03/03 USD OT OT LUX 03/03 SGD EU EQ LUX 03/03 EUR GL EQ LUX 03/03 SGD GL EQ LUX 03/03 USD OT OT LUX 03/03 SGD OT OT LUX 03/03 USD GL EQ LUX 03/03 SGD GL EQ LUX 03/03 USD OT OT LUX 03/03 USD OT OT LUX 03/03 USD GL EQ LUX 03/03 SGD GL EQ LUX 03/03 USD GL EQ LUX 03/03 EUR GL EQ LUX 03/03 SGD GL EQ LUX 03/03 USD GL EQ LUX 03/03 SGD GL EQ LUX 03/03 USD EE EQ LUX 03/03 USD

14.81 15.33 14.42 20.15 12.89 49.28 14.40 28.43 14.73 26.26 10.86 17.23 15.38 32.39 10.99 10.77 11.29 13.71 34.04 14.63 62.53 12.31 21.51 14.54 32.14 8.70 16.03 15.20 14.11 22.02 26.84 21.83 14.27 44.69 17.11

-6.1 -4.5 -4.2 -3.2 -2.3 -1.3 -3.9 -3.0 -10.7 -9.8 -4.4 1.1 -5.4 -4.4 -7.6 -0.6 -6.0 -7.5 -2.3 -4.5 -3.6 -16.3 -14.9 -5.2 -4.2 -3.5 0.7 4.3 5.2 -3.1 -0.2 0.8 -7.0 -5.5 5.7

In print & online. Contact:

NS 42.2 23.7 30.1 26.1 32.5 20.3 19.4 22.8 27.5

-0.2 -3.7 5.3 13.5 3.3 -0.5 8.6 7.4

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)

BY SAM HOLMES

MEGUMI FUJIKAWA

bonds at 1.8 percentage points more than the comparable U.S. Treasury yield in its first global bond issue since March 2010. That is at least 0.40 percentage point more than the comparable investment-grade sovereign bonds out on the market. South Africa’ was aware of the recent hesitance toward emerging markets, said Michael Roche of MF Global, “so they gave us favorable pricing and left something on the table for investors.” On Wednesday, Lithuania sold $750 million in 10-year debt, yielding 6.375%—generous for a triple-B bond, Mr. Roche said. As U.S. Treasury yields rise and geopolitical risks in the Middle East turn investors away from emergingmarket assets, “it behooves issuers to err on the side of generous pricing,” Mr. Roche said. The rest of March faces a loaded pipeline of new bond offerings as debut sovereign issuers and a growing variety of corporate borrowers prepare to access international credit markets. Mongolia on Thursday said the nation is planning its first dollarbond issue, aiming to raise $500 million. Poland plans to borrow at least $1 billion in U.S. dollars, while Hungary registered with the U.S. Securities and Exchange Commission to place as much as $5 billion.

March has historically been one of the busiest months for debt sales out of the developing world, but with money moving away from emerging-market assets and funds low on cash, the influx of borrowers looking to raise global debt may need to offer up more attractive yields to lure investors back in. This year, the seasonal wave of new bond offerings comes amid a pullback from BOND emerging-market MARKETS debt, as mounting inflation and unrest in the Middle East prompted investors to pull $1.15 billion out of emerging-market bond funds in February. But with the announcement of fiscal budgets and funding plans, sovereign borrowers seem to be lining up as usual to tap the markets before the end of the first quarter, even if it means at a slightly higher cost. “This is all the more worrisome because borrowers will add to an already-burgeoning level of supply with little in the way of cash positioning or fund flows to help absorb the activity,” said Deutsche Bank strategist David Duong. In the first few days of March, two sovereign issuers have each already sold $750 million in dollar-denominated debt. South Africa offered 30-year

Perennial defers its IPO of China Retail Trust

NS 35.4 NS 13.6 -1.6 8.7 7.1 18.2 1.6 12.2 30.1 15.4 10.7 22.2 21.4 NS 8.6 NS 20.0 NS 20.4 NS 7.7 4.2 14.9 20.0 12.6 8.5 19.7 37.5 27.2 40.4 NS 13.7 26.6

NS NS NS NS NS NS NS NS

NS NS NS 50.8 NS 40.2 NS 46.2 NS 57.2 63.3 42.0 NS 63.2 61.4 NS 61.3 NS 77.6 NS 66.7 NS 29.1 NS 51.0 57.9 NS NS 39.5 68.9 NS 77.7 NS 67.1 104.0

SINGAPORE—Perennial China Retail Trust, a unit of property-investment firm Perennial Real Estate, said it will defer its proposed 1.1 billion Singapore dollar (US$868 million) initial public offering due to volatile market conditions. The deferment comes amid some signs that a much larger listing from Li Ka-Shing’s Hutchison Port Holdings, also due this month, would eat into demand for the offering. The trust said in a statement on Saturday that “in view of the relatively volatile market conditions, the Trustee-Manager and the sponsor have decided that it would be in the best interest of investors to defer the proposed IPO.” This is despite the trust securing commitments from key investors to buy a so-called cornerstone tranche of the offering, amounting to 39.2% of the proposed sale. Hutchison Port Holdings is seeking to raise as much as US$6.4 billion this month in what would be Singapore’s biggest IPO so far. “Although they [Perennial] had a good set of cornerstone investors, they decided to defer because the market condition was very volatile and also the mega-IPO of Hutchison Port had a potential impact,” a person familiar with the transaction said. Perennial last month lodged a preliminary prospectus with the Monetary Authority of Singapore

for the IPO, flagging March 16 as the listing date. A new IPO date wasn’t announced, but the trust said it intends to bring the transaction to market “as soon as practicable.” A person familiar with the transaction said the group could consider revisiting the IPO in the second or third quarter of this year. Singapore’s benchmark Straits Times Index has fallen about 4% since the start of the year—when the first details of the IPO emerged—as investors pulled money out of Asian equity markets on worries about global inflation and worsening geopolitical tensions in the Middle East. Perennial China Retail Trust in its prospectus released Feb. 24 offered a total of 1.1 billion units at an offer price of S$1 per unit. “The bottom line is the market doesn’t want it at this price,” the person said. The deferment comes as a number of issuers, including Huchison Port Holdings, remain poised to launch Singapore offerings in the next few weeks. Pua Seck Guan, the former chief executive of CapitaMall Trust Ltd., is the founder of Perennial Real Estate, which is involved in real-estate and real-estate-related activities, including fund management, asset management and retail management. DBS Bank Ltd., Goldman Sachs Group Inc. and Standard Chartered PLC were advising Perennial on the IPO.

INTERNATIONAL INVESTMENT FUNDS

FUND NAME

NAV GF AT LB DATE CR

NAV

—%RETURN— YTD 12-MO 2-YR

Advertisement

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

03/03 03/03 03/02 03/02 03/02

EUR USD USD EUR USD

NAV 33.68 46.67 24.91 27.56 15.89

—%RETURN— YTD 12-MO 2-YR -19.2 -19.2 5.5 0.1 0.0

-8.3 -8.3 20.7 0.6 0.3

18.8 18.8 43.3 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 03/03 USD US EQ LUX 03/03 USD OT OT LUX 03/03 USD OT OT LUX 03/03 USD OT OT LUX 03/03 USD AS EQ LUX 03/03 USD AS EQ LUX 03/03 USD AS EQ LUX 03/03 USD AS EQ LUX 03/03 HKD EU EQ LUX 03/03 USD EU EQ LUX 03/03 USD EU EQ LUX 03/03 USD EU EQ LUX 03/03 USD GL EQ LUX 03/03 USD OT EQ LUX 03/03 USD GL EQ LUX 03/03 USD OT EQ LUX 03/03 USD EA EQ LUX 03/03 USD GL EQ LUX 03/03 USD GL EQ LUX 03/03 USD JP EQ LUX 03/03 USD JP EQ LUX 03/03 USD GL EQ LUX 03/03 USD OT OT LUX 03/03 USD OT OT LUX 03/03 USD EE EQ LUX 03/03 USD AS EQ LUX 03/03 USD OT OT LUX 03/03 USD US BD LUX 03/03 USD US EQ LUX 03/03 USD US BD LUX 03/03 USD OT OT LUX 03/03 USD

18.04 1.04 2.85 0.92 1.55 8.18 2.56 1.76 8.57 5.57 2.39 10.38 0.74 1.18 0.82 1.35 1.05 1.18 3.40 0.79 3.18 0.82 1.40 1.12 1.36 0.89 1.26 0.86 1.18 1.08 1.02 1.20

4.7 4.6 -0.5 -0.5 -1.3 -1.1 -1.2 -1.0 -0.8 3.9 3.9 7.8 7.8 0.3 3.1 4.4 3.5 -10.7 5.5 5.4 5.5 5.7 -3.9 2.0 -1.7 8.7 -2.8 -13.6 1.3 1.6 0.9 1.3

18.8 18.5 20.9 20.5 34.4 22.1 21.8 12.0 12.1 22.1 21.9 21.2 20.9 28.6 22.5 26.6 6.3 9.5 13.2 12.9 13.2 11.1 12.9 11.7 20.6 33.3 26.5 17.0 7.9 21.8 18.7 6.0

35.7 35.4 49.7 49.2 72.4 44.3 44.0 40.3 40.3 72.3 72.1 47.4 47.0 73.7 56.8 47.2 23.7 50.6 30.1 29.8 26.2 25.3 61.4 NS NS 90.4 54.4 72.3 13.8 59.1 59.3 8.2

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 03/02 USD

168.42

-7.5

30.2

76.6

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 02/28 03/03 03/03 02/28

USD USD USD USD USD

35.73 132.70 222.63 103.16 56.46

-3.4 -4.1 -0.7 -0.8 -1.2

24.6 21.1 21.8 21.2 26.0

53.4 51.6 50.4 49.6 52.1

JP

EQ IRL 03/04 JPY

10211.00

7.3

11.5

20.1

JP JP

EQ IRL 03/04 JPY EQ IRL 04/27 JPY

6267.00 5230.34

7.5 -7.3

6.9 -5.4

12.8 -27.3

EQ IRL 03/04 JPY EQ IRL 03/04 JPY

7184.00 8666.00

6.3 9.4

7.9 12.5

16.9 16.0

4686.00 5334.00 5427.00

7.3 5.1 8.6

2.0 1.7 14.0

11.2 11.8 16.9

4405.00 4694.00 6947.00 9313.00 6742.00 7930.00 5289.00 12520.00 7809.00 7772.00 6005.00 2708.00

7.2 6.5 7.5 7.8 6.6 5.0 5.6 9.0 5.8 10.3 6.6 7.2

4.2 5.1 4.0 11.8 9.9 4.5 4.1 9.0 3.8 18.0 7.3 0.7

12.2 12.9 16.4 18.8 15.1 8.5 14.0 18.5 11.3 22.7 16.9 13.3

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

n Yuki 77 Series Yuki 77 General Yuki 77 Growth

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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 03/03 USD

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 03/02 USD OT OT LUX 03/02 USD AS EQ LUX 03/03 USD AS EQ LUX 03/03 USD OT EQ LUX 03/02 USD GL EQ LUX 03/02 USD OT EQ LUX 03/02 USD EA EQ LUX 03/03 USD OT EQ LUX 03/02 EUR OT EQ LUX 03/02 USD

10.34

-2.2

30.2

JP JP

n Yuki Hokuyo Japan Series 67.4

Yuki Hokuyo Jpn Gen Yuki Hokuyo Jpn Inc Yuki Hokuyo Jpn Sm Cap

JP JP JP

EQ IRL 03/04 JPY EQ IRL 03/04 JPY EQ IRL 03/04 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 40.61 43.93 11.42 23.78 21.38 138.59 39.78 139.82 91.24 126.64

1.1 0.0 -3.5 -1.9 10.7 4.4 -2.2 -10.8 -0.3 -0.3

8.3 5.3 14.2 6.1 22.7 29.1 33.4 9.3 35.8 35.8

12.8 9.0 46.9 36.5 34.7 49.9 42.1 50.3 62.6 62.6

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

03/04 03/04 03/04 03/04 03/04 03/04 03/04 03/04 03/04 03/04 03/04 03/04

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

26

Monday, March 7, 2011

THE WALL STREET JOURNAL.

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

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

Giants around the world

In U.S.-dollar terms.

Company

Country

Industry

Market value, in billions of US$

Previous close, in local currency

Shinhan Financial Grp

South Korea

Banks

$21.3

50,000

Hon Hai Precision Ind

Taiwan

Electrical Components Equipment

38.7

117.50

Tokio Marine Hldgs

Japan

Property Casualty Insurance

26.0

2,718

China Life Insurance

Hong Kong

Life Insurance

28.8

Samsung Electronics

South Korea

Semiconductors

110.0

QBE Insurance Group

Australia

Reinsurance

$18.8

17.63

STOCK PERFORMANCE Previous session

52-week

Three-year

14.9%

4.28%

0.1%

-1.4

-27.3

2.72

10.0

-28.5

30.15

2.55

-12.7

4.0

945,000

2.38

24.2

71.2

-12.3

-14.0

3.52

Dow Jones Country Titans INDEX PERFORMANCE Previous session

JFE Hldgs

Japan

Steel

16.2

2,529

-1.06

-24.4

-42.1

Nippon T&T

Fixed Line Telecommunications

65.8

4,095

-0.85

7.1

Japan

5.8

-99.1

-1.4

6.8

Woodside Petroleum

Australia

Exploration Production

33.7

42.85

-0.76

28.2

Nippon Steel

Japan

Steel

22.4

293.00

52-week

8.9%

Italy

-0.12%

Spain

-0.39

Russia

-0.32

Canada

0.25

6.5

16.7

Japan

0.85

6.5

France

-1.10

5.5

2.3

Netherlands

0.22

5.3

8.7

China 88

1.51

5.2

-4.8

Germany

-0.65

3.5

18.2

Switzerland

-0.86

3.1

-1.5

1.14

2.7

0.2

Australia Hong Kong U.K.

1.56

2.2

15.6

1.8

5.2

0.8

0.15 1.75

-1.1%

25.0

South Africa

-0.17

-2.4

12.9

Singapore

0.70

Turkey

1.21

-3.4

Westfield Grp 22.8 Australia (Retail) Canon 59.0 Japan (Electronic Office Equipment) Cheung Kong 37.2 Hong Kong (Real Estate Holding Development) Indl Comm Bk China 68.8 Hong Kong (Banks) Westpac Bking 71.1 Australia (Banks) Mitsui 33.5 Japan (Industrial Suppliers) Rio Tinto Ltd. 37.7 Australia (General Mining) BHP Billiton 160.5 Australia (General Mining) Taiwan Smcndtr Mfg 63.3 Taiwan (Semiconductors) Nissan Motor 43.2 Japan (Automobiles) CNOOC 102.2 Hong Kong (Exploration Production) China Mobile (HK) 190.4 Hong Kong (Mobile Telecommunications) Bank of China 44.9 Hong Kong (Banks) Toyota Motor 144.7 Japan (Automobiles) China Construction Bank 215.1 Hong Kong (Banks) Sony 36.0 Japan (Consumer Electronics) Mitsubishi 45.8 Japan (Industrial Suppliers) Commonwlth Bk of Aus 81.8 Australia (Banks) NTT DoCoMo 78.9 Japan (Mobile Telecommunications) National Australia Bk 54.8 Australia (Banks)

13.1

-3.5

13.7

-8.8

Media

14.4

Insurance

13.0%

0.10%

10.6

-0.35

22.7% 27.0

10.6

0.31

11.1

Ind Gds Svcs

-0.46

7.4

24.3

Chemicals

-0.09

7.2

32.4

Banks

-0.74

7.1

3.2

5.4

10.1

Global 50

-0.45

Asian 50

1.01

2.7

11.6

Tiger 50*

1.58

2.1

19.9

Arab 50

-0.04

-9.9%

Market value, in billions (U.S)

Company/Country (Industry)

Dow Jones Regional Sector Titans Oil Gas

-0.5

*Asia excluding Japan

Latest, in local currency

STOCK PERFORMANCE Latest 52-week Three-year

9.75

1.88%

2.1%

-27.5%

3,935

1.81

4.5

-14.1

125.10

1.79

30.7

11.2

6.17

1.65

9.4

20.9

23.48

1.60

-12.8

3.3

1,525

1.60

6.5

-31.9

85.52

1.57

14.9

-35.4

47.25

1.50

11.8

22.2

71.80

1.41

21.3

14.1

851.00

1.31

22.6

-5.8

17.82

1.25

46.5

47.0

74.60

1.22

2.4

-34.4

4.18

1.21

12.1

37.1

3,785

1.20

12.1

-31.2

6.97

1.16

20.6

26.7

2,978

1.15

-3.9

-38.0

2,296

1.06

1.7

-27.6

52.65

1.04

-4.2

31.6

155,500

0.97

13.1

1.6

25.52

0.91

-4.2

-7.2

Company/Country (Industry)

Market value, in billions (U.S)

Japan Tobacco 39.8 Japan (Tobacco) Woolworths 33.6 Australia (Food Retailers Wholesalers) Seven I Hldgs 24.5 Japan (Broadline Retailers) KDDI 28.9 Japan (Mobile Telecommunications) PetroChina 29.4 Hong Kong (Integrated Oil Gas) POSCO 32.2 South Korea (Steel) Aus NZ Bk 61.5 Australia (Banks) Sun Hung Kai Prop 41.7 Hong Kong (Real Estate Holding Development) Panasonic 27.6 Japan (Consumer Electronics) Sumitomo Mitsui Finl 52.3 Japan (Banks) East Japan Railway 27.9 Japan (Travel Tourism) Mitsubishi UFJ Finl 76.7 Japan (Banks) Tokyo Elec Power 41.2 Japan (Electricity) Nintendo 36.0 Japan (Toys) Takeda Pharm 39.0 Japan (Pharmaceuticals) Kansai Elec Power 23.3 Japan (Electricity) Mizuho Financial Grp 39.6 Japan (Banks) Reliance Industries 71.0 India (Exploration Production) Shin-Etsu Chml 23.3 Japan (Specialty Chemicals) Honda Motor 78.7 Japan (Automobiles)

Latest, in local currency

STOCK PERFORMANCE Latest 52-week Three-year

341,500

0.89%

6.9%

27.38

0.88

-1.5

-34.1% -5.5

2,286

0.79

17.8

-7.6

537,000

0.75

14.0

-13.4

10.86

0.74

23.8

0.4

465,000

0.65

-14.0

-9.9

23.74

0.59

0.3

10.7

126.80

0.56

16.0

-2.7

1,096

0.55

-12.0

-49.0

3,085

0.49

7.9

-99.6

5,810

0.35

-4.8

-99.3

454.00

0.22

...

-49.7

2,115

0.14

-14.8

-18.7

23,170

0.13

-12.1

-55.0

4,070

0.12

1.1

-27.3

2,132

...

0.0

-15.4

169.00

...

-5.1

-100.0

43.45

-0.07

-1.3

-21.1

4,530

-0.11

-4.7

-16.3

3,545

-0.14

15.1

14.4

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

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

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

Coupon

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

Showing the biggest improvement...

And the most deterioration

CHANGE, in basis points

0.99

100.04%

0.01%

1.20

0.94

1.03

1.35

98.47

0.01

1.84

1.29

1.52

Shin Han

3.84

104.61

0.05

5.37

3.81

4.45

Korea Dep

1.08

99.66

0.01

1.25

0.93

1.08

Expt Import Bk Korea

115

–3

1.01

99.97

0.01

1.16

0.90

1.02

Indl Bk Korea

119

–2

Note: Data as of March 3

Korea Dev

116

–2

–3

1

In percentage points

GS Caltex Oil

116

–2

–5

1

Woori

Index roll

2.00 1.50

Australia t

1.00 t

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

-22.1 -44.2

Sources: Dow Jones Indexes; WSJ Market Data Group

Source: Dow Jones Indexes

Tracking credit markets
dealmakers

-3.3 -13.3

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

10.4

Brazil South Korea

0.09

-0.34

4.1

-0.32

Sweden

-2.22%

0.3%

Year-to-date

CHANGE, in basis points

Yesterday Yesterday Five-day 28-day

Yesterday Yesterday Five-day 28-day

135

–4

–3

–1

Rep Indonesia

148

–1

–6

–5

92

–4

–1

1

ACOM

335

–1

7

–84

–5

1

–4

–2

Petroliam Nasional BHD Petronas

143

–2

–3

...

Malayan Bkg

84

–2

–4

–3

Malaysia

78

–2

–3

–2

POSCO

95

–2

–2

3

73

–1

–3

–6

HYUNDAI

116

–1

–1

4

Kookmin

128

...

–1

3

Daiwa Secs Gp

135

...

–1

13

Mitsubishi Estate

55

...

...

1

ALL NIPPON Awys

155

...

3

1

Canon

29

1

...

–1

MISC

76

2

–5

–3

Source: Markit Group

0.50

Japan

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

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.

Behind Asia’s deals: Bank revenues from equity capital markets Behind every IPO, follow-on or convertible equity offering is one or more investment banks. At right, investment banks historical and yearto-date revenues from global equitycapital-market (ECM) deals

n Equity capital markets n Debt capital markets (both in billions, left axis) 3

ECM as a percentage of total

90%

(right axis) t

2

60

1

30

0 2005

2006

2007

2008

2009

2010

0 2011 Source: Dealogic

Monday, March 7, 2011

27

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 CBOT

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

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

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

COMEX COMEX LME LME LME LME LME LME NYMEX

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

NYMEX NYMEX NYMEX ICE-EU ICE-EU

728.00 1414.00 832.25 114.050 3,657 272.80 29.88 212.70 3,660.00 2,340 2,390

-8.75 2.00 8.75 -0.150 -76 -1.95 -0.71 7.00 60 -56 8

448.55 1428.60 3532.70 2,618.00 31,925.00 9,979.00 2,653.00 2,512.00 28,905

-0.45 12.20 100.00 4.50 305.00 70.00 56.00 12.00 30

104.42 3.0893 3.0464 3.887 115.97 969.00

2.51 0.0400 0.0202 0.028 1.18 6.50

744.25 1,467.50 925.50 116.600 3,775 279.20 33.11 212.70 3,930 2,425 2,417

-1.19% 0.14% 1.06 -0.13 -2.04 -0.71 -2.32 3.40 1.67 -2.34 0.34

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 1,441.00 1,005.00 3,522.00 18.50 2,618.00 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

-0.10 0.86 2.91 0.17 0.96 0.71 2.16 0.48 0.10

136.90 3.0825 3.0500 10.050 133.58 977.00

2.46 1.31 0.67 0.73 1.03 0.68

67.95 1.7225 1.9900 3.809 68.02 634.25

Source: Thomson Reuters; WSJ Market Data Group

WSJ.com

Price-to-

earnings ratio*

Region/Country Index

Per U.S. dollar

5.6364 0.1774 2.3014 0.4345 1.3585 0.7361 1.3594 0.7356 1.3614 0.7345 1.3649 0.7327 662.52 0.001509 2641.90 0.0003785 1.3990 0.7148 16.7812 0.0596 3.8747 0.2581 27.142 0.0368 1.3990 0.7148 6.01 0.166433

4.0288 0.2482 1.6450 0.6079 0.9711 1.0298 0.9717 1.0292 0.9731 1.0277 0.9756 1.0250 473.55 0.002112 1888.35 0.0005296 1 1 11.9947 0.0834 2.7695 0.3611 19.400 0.0515 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

1.3820 0.7236 9.1894 0.1088 10.8969 0.0918 62.9363 0.0159 12298 0.0000813 115.25 0.008677 115.23 0.008679 115.17 0.008683 115.06 0.008691 4.2384 0.2359 1.8965 0.5273 119.689 0.0084 60.537 0.0165 1.7721 0.5643 1561.13 0.0006406 41.116 0.02432 42.622 0.02346

0.9878 1.0124 6.5683 0.1522 7.7888 0.1284 44.9850 0.0222 8791 0.0001138 82.38 0.012140 82.36 0.012142 82.32 0.012148 82.24 0.012159 3.0295 0.3301 1.3556 0.7377 85.550 0.0117 43.270 0.0231 1.2667 0.7895 1115.85 0.0008962 29.389 0.03403 30.465 0.03282

Per euro

In euros

PREVIOUS SESSION

Close

Net change

Percentage change

PERFORMANCE Yr.-to-date 52-wk.

Price-to-

earnings ratio* 14

Region/Country Index Euro Zone Euro Stoxx

143.85

1.44

1.01%

0.9%

16.8%

57.83

1.20

2.5

2.0

13

CBN 600

27782.53

385.25

1.41

4.0

2.4

20

Denmark

OMX Copenhagen

Hong Kong

Hang Seng

23408.86

286.44

1.24

India

Sensex

18486.45

-3.31

...

Indonesia

Jakarta Composite

3542.903

48.364

...

Japan

Nikkei Stock Average

ASIA-PACIFIC DJ Asia-Pacific

...

Australia

SPX/ASX 200

24

China

14 17

...

10693.66

107.64

Topix

955.59

6.90

1522.61

15.73

-0.02% 1.38 1.02 0.73

...

Malaysia

Kuala Lumpur Composite

...

New Zealand

NZSX-50

3418.106

20.798

9

Pakistan

KSE 100

12000.03

238.03

12

Philippines

Manila Composite

3882.71

48.66

...

Singapore

Straits Times

3061.31

23.96

11

South Korea

Kospi

2004.68

34.02

15

Taiwan

Weighted

8784.40

46.03

0.53

10

Thailand

SET

995.91

5.83

0.59

16

EUROPE

14

1.04 0.61 2.02 1.27 0.79 1.73

Euro Stoxx 50

US$ 1.012 1.627 1.030 0.1522 1.399 0.128 0.0222 0.0001 0.012 0.738 0.0009 0.330 0.023 0.789 1.080 0.034 0.033

SDR -f

0.8865

1.1281

0.3770 2.6523 5.8995 0.1695 3.6090 0.2771 0.7078 1.4129 0.2783 3.5939 1507.50 0.0006634 3.7498 0.2667 6.8941 0.1451 3.6730 0.2723 0.6336

1.5782

PREVIOUS SESSION

Close 286.95

Net change -1.75

Percentage change

-0.61%

2949.18

-20.06

-0.68

436.07

-1.05

PERFORMANCE Yr.-to-date 52-wk. 4.6% 5.9%

-0.24

5.6

2.5

2.1

25.2 6.0

OMX Helsinki

7385.55

-73.15

-0.98

-3.6

CAC-40

4020.21

-40.55

-1.00

5.7

2.8

-4.3

37.4

13

Germany

DAX

7178.90

-47.06

3.8

22.1

4.5

3.1

12

Italy

FTSE MIB

22138.44

-15.79

9.7

-0.6

6.3

4.9

13

Netherlands

AEX

367.95

0.35

0.2

17.1

...

Russia

RTSI

2012.68

-5.14

3.3

6.3

9

-0.2

24.7

10

Spain

IBEX 35

10498.7

-68.2

Switzerland

SMI

6530.54

-68.67

-0.65 -0.07

3.8

8.6

13.7

33.2

0.10% -0.25

6.5

-4.7

1.5

-4.6

-7.4

16.1

-0.65 -1.04

-7.6

27.7

...

Turkey

ISE National 100

61112.83

725.79

-4.0

9.7

13

U.K.

FTSE 100

5990.39

-14.70

-2.3

22.6

18

AMERICAS

DJ Americas

358.32

-1.88

-2.1

14.6

...

Brazil

Bovespa

68012.10

-133.43

-0.20

-1.9

-1.2

-3.6

37.6

...

Argentina

Merval

3467.72

-7.25

-0.21

-1.6

50.9

16

Mexico

IPC

36900.84

-232.14

-4.3

13.8

-0.59

2.2

9.7

-0.77

2.9

3.3

1.20 -0.24 -0.52

-0.63

1.5

7.0

5.1

17.9

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

MSCI indexes Last

Net change

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

Daily

-0.07% -0.36 -0.45 1.00 1.18 -0.16 0.49 1.01 0.68 1.41 1.41 1.46

4.3% 5.4 5.4 0.8 -1.7 6.6 -2.3 2.7 1.2 4.0 1.9 5.2

16.8% 12.3 10.1 16.8 17.7 13.6 15.7 11.6 13.8 2.4 11.7 2.4

-1.0% -3.7 -4.4 -0.3 0.9 -5.5 -0.7 -2.0 -0.6 -9.3 -0.7 -8.7

Price-toDividend earnings yield* ratio* Dows Jones Index

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

Last

Shenzhen -c 445.42 U.S. TSM 13818.36 Global Select Div -d 224.73 Asia/Pacific Select Div -d 299.77 Hong Kong Select Div -d 219.50 U.S. Select Dividend -d 367.01 Islamic Market 2326.79 Islamic Market 100 2345.25 Islamic China/HK Titans 30 1700.68 Sustainability Korea 1526.40 Brookfield Infrastructure 2375.59 DJ-UBS Commodity -p 169.28

Net change

5.42 -97.95 0.91 3.06 2.43 -2.65 -0.86 -4.70 30.44 37.83 -0.32 1.02

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

Daily

1.23% -0.70 0.41 1.03 1.12 -0.72 -0.04 -0.20 1.82 2.54 -0.01 0.61

2.1% 10.8% 5.2 17.8 3.7 15.0 0.7 12.2 -0.3 15.9 2.4 13.2 4.4 17.5 4.5 11.8 1.9 14.9 2.4 28.8 4.8 17.3 4.2 25.7

-3.3% 1.2 -3.8 -6.3 6.0 -3.6 1.4 -0.4 -1.8 4.6 1.3 -7.5

Source: DowJones Indexes

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

0.633 0.094 0.860 0.079 0.0137 0.0001 0.007 0.454 0.0006 0.203 0.014 0.485 0.664 0.021 0.020

1.8958 0.1212 0.1981 1.0099 2.5688 0.0004741 0.1906 0.1037 0.1946

France

-1.68

1.607 1.017 0.150 1.382 0.127 0.0220 0.0001 0.012 0.729 0.0009 0.326 0.023 0.780 1.067 0.034 0.032

MIDDLE EAST/AFRICA Bahrain dinar 0.5275 Egypt pound-a 8.2537 Israel shekel 5.0492 Jordan dinar 0.9902 Kuwait dinar 0.3893 Lebanon pound 2109.07 Saudi Arabia riyal 5.2462 South Africa rand 9.6452 United Arab dirham 5.1387

Finland

-20.58

£ 0.615 0.622

1.3991 1.3985 1.3970 1.3938 0.0577 0.1876 0.005153 0.1797 0.3514 0.03550 0.1579 1.0800 1.0803 1.0807 1.0812 0.6238 1.6265 1.6261 1.6248 1.6221

12

281.90

A$ 0.988

0.7148 0.7151 0.7158 0.7175 17.330 5.3301 194.05 5.5636 2.8458 28.168 6.3316 0.9259 0.9257 0.9253 0.9249 1.6031 0.6148 0.6150 0.6155 0.6165

14

*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.

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

1 0.9996 0.9985 0.9962 0.0412 0.1341 0.003683 0.1285 0.2512 0.02538 0.1129 0.7720 0.7721 0.7725 0.7728 0.4459 1.1626 1.1623 1.1613 1.1594

8.8

2661.42

Global TSM 2719.88 -1.94 Global DOW 2200.15 -7.97 Global Titans 50 186.72 -0.84 Asia/Pacific TSM 1421.89 14.03 Asia/Pacific ex-Japan TSM 3551.41 41.37 Europe TSM 2930.04 -4.69 Emerging Markets TSM 4688.48 22.73 Asian Titans 50 149.65 1.49 BRIC 50 662.28 4.47 CBN China 600 -c 27782.53 385.25 China Offshore 50 4325.81 60.03 Shanghai -c 374.57 5.39

Cross rates

In U.S. dollars

12.6

Dow Jones Indexes 16 15 14 16 16 15 12 14 12 12 13 13

Per U.S. dollar

1.6

Stoxx Europe 600

*P/E ratios use trailing 12-months, as-reported earnings European and Americas index data are as of 5:00 p.m. ET.

2.09% 1.90 2.18 2.30 2.56 2.64 2.12 2.60 2.56 2.56 2.29 2.29

In euros

-9.9

Stoxx Europe 50

Price-toDividend earnings yield* ratio* Dows Jones Index

Per euro EUROPE Euro zone euro 1 1-mo. forward 1.0004 3-mos. forward 1.0015 6-mos. forward 1.0038 Czech Rep. koruna-b 24.246 Denmark krone 7.4571 Hungary forint 271.49 Norway krone 7.7838 Poland zloty 3.9813 Russia ruble-d 39.408 Sweden krona 8.8582 Switzerland franc 1.2954 1-mo. forward 1.2951 3-mos. forward 1.2946 6-mos. forward 1.2939 Turkey lira 2.2428 U.K. pound 0.8602 1-mo. forward 0.8604 3-mos. forward 0.8611 6-mos. forward 0.8625

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

4864.28

16

In U.S. dollars

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 4

C$ 0.971 0.983 1.579 0.148 1.359 0.125 0.0216 0.0001 0.012 0.716 0.0009 0.321 0.022 0.767 1.049 0.033 0.032

YUAN 6.568 6.649 10.683 6.764 9.189 0.843 0.1460 0.0007 0.080 4.845 0.0059 2.168 0.152 5.186 7.094 0.223 0.216

EURO 0.715 0.724 1.163 0.736 0.109 0.092 0.0159 0.0001 0.009 0.527 0.0006 0.236 0.017 0.564 0.772 0.024 0.023

HK$ 7.789 7.885 12.668 8.021 1.186 10.897 0.1731 0.0009 0.095 5.746 0.0070 2.571 0.180 6.149 8.412 0.265 0.256

RUPEE 44.985 45.541 73.168 46.326 6.849 62.936 5.776 0.0051 0.546 33.185 0.0403 14.849 1.040 35.515 48.585 1.531 1.477

RUPIAH 8790.44 8899.00 14297.64 9052.51 1338.31 12298.26 1128.61 195.41 106.71 6484.70 7.88 2901.61 203.15 6939.91 9493.94 299.11 288.54

YEN 82.375 83.392 133.983 84.831 12.541 115.247 10.576 1.8312 0.0094 60.768 0.0738 27.191 1.904 65.034 88.967 2.803 2.704

NZ$ 1.356 1.372 2.205 1.396 0.206 1.897 0.174 0.0301 0.0002 0.016 0.0012 0.447 0.031 1.070 1.464 0.046 0.044

WON 1115.85 1129.63 1814.93 1149.11 169.88 1561.13 143.26 24.80 0.13 13.55 823.16 368.33 25.79 880.94 1205.15 37.97 36.63

RINGGIT PH. PESO 3.030 43.270 3.067 43.804 4.927 70.379 3.120 44.560 0.461 6.588 4.238 60.537 0.389 5.555 0.0673 0.9619 0.0003 0.0049 0.037 0.525 2.235 31.920 0.0027 0.0388 14.283 0.070 2.392 34.161 3.272 46.733 0.103 1.472 0.099 1.420

S$ S FRANC 1.267 0.926 1.282 0.937 2.060 1.506 1.304 0.954 0.193 0.141 1.772 1.295 0.163 0.119 0.0282 0.0206 0.0001 0.0001 0.015 0.011 0.934 0.683 0.0011 0.0008 0.418 0.306 0.029 0.021 0.731 1.368 0.043 0.032 0.042 0.030

TW$ 29.388 29.751 47.800 30.265 4.474 41.116 3.773 0.6533 0.0033 0.357 21.680 0.0263 9.701 0.679 23.202 31.740

BAHT 30.465 30.841 49.551 31.373 4.638 42.622 3.911 0.6772 0.0035 0.370 22.474 0.0273 10.056 0.704 24.052 32.903 1.037

0.965

Source: Thomson Reuters via WSJ Market Data Group

Developed and emerging-market regional and country indexes from MSCI Barra as of March. 04, 2011 Price-toDividend earnings yield ratio Morgan Stanley Index

LOCAL-CURRENCY PERFORMANCE

Last

Daily

YTD

52-wk.

2.30% 16

ALL COUNTRY (AC) WORLD* 345.70

-1.07%

4.6%

19.4%

2.30

16

World (Developed Markets) 1,352.05

-1.04

5.6

19.3

1.60

26

World Small Cap

249.13

-1.27

5.4

31.4

2.40

16

Kokusai (World ex-Japan)

1,339.41

-1.19

5.8

19.9

2.90

15

EAFE

1,743.22 -0.40

5.1

16.4

2.20

14

Emerging Markets (EM)

1,127.45

-1.25

-2.1

20.5

2.70

15

AC ASIA PACIFIC EX-JAPAN 468.09

-0.78

-2.3

18.8

2.40

14

AC Far East ex-Japan

513.34

-1.28

-2.2

21.3

1.80

16

Japan

591.73

0.56

5.4

5.9

2.30

14

China

66.03

0.83

-0.7

9.0

1.00

22

China A (China Domestic)

3,163.34

-0.94

2.4

0.5

2.50

22

Hong Kong

11,984.21

0.01

-1.9

21.2

1.10

19

India

726.73

0.19 -10.4

8.1

1.30

11

Korea

566.51

2.14

-3.5

25.8

2.50

17

Malaysia

552.29

0.50

-1.5

18.5

3.10

14

Singapore

1,662.87

0.25

-5.3

8.0

3.30

15

Taiwan

311.95

1.44

-2.3

16.7

2.80

14

Thailand

402.52

0.10

-2.2

36.3

4.10

17

Australia

981.51

0.08

1.6

2.1

4.80

17

New Zealand

87.76

0.67

4.7

4.4

1.70

18

US BROAD MARKET

1,508.54

-1.75

5.9

22.6

3.10

15

EUROPE

98.16

0.31

2.9

15.0

*Twenty-three developed and 26 emerging markets

Source: MSCI Barra

28

Monday, March 7, 2011

THE WALL STREET JOURNAL.

SCANNING THE GLOBE Dow Jones Industrial Average

Nasdaq Composite Index

P/E: 15

t 88.32, or 0.72%

LAST: 12169.88 YEAR TO DATE: OVER 52 WEEKS

s 1,603.68, or 15.2%

High Close Low

t 14.07, or 0.50%

LAST: 2784.67 YEAR TO DATE: OVER 52 WEEKS

s 592.37, or 5.1%

S&P 500 Index

P/E: 13*

P/E: 18 t 9.82, or 0.74%

LAST: 1321.15 YEAR TO DATE: OVER 52 WEEKS

s 131.80, or 5.0% s 458.32, or 19.7%

s 63.51, or 5.0% s 182.45, or 16.0%

12500

2800

1350

12000

2700

1300

11500

2600

1250

11000

2500

1200

10500

2400

1150

t

50–day moving average

10000 3 10 Dec.

17 23

31

7

14

21

28

Jan.

4 Feb.

11

18 25

2300

4

3 10 Dec.

17 23

31

7

14

21

28

Jan.

4 Feb.

11

18 25

1100

4

3 10 Dec.

17 23

31

7

14

21

Jan.

U.S. stocks: most active...

Symbol

Volume, in millions

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

26.5 18.6 6.3 146.0 5.7 5.7 9.8 57.4 11.5 11.1 6.0 20.0 61.1 27.7 9.3 64.6 4.9 27.7 11.4 19.3 5.4 38.8 70.4 51.0 11.9 2.8 4.3 3.9 13.4

$27.92 16.57 43.72 14.12 71.80 103.04 103.75 18.40 65.21 43.55 53.87 85.08 20.37 42.61 37.22 21.56 161.83 45.52 61.06 31.58 76.03 33.06 25.95 19.66 62.03 92.19 59.18 82.86 36.08

–0.21 –0.05 –0.58 –0.15 0.09 –1.21 –0.44 –0.13 –0.36 –0.52 –0.68 –0.74 –0.38 –0.59 –0.33 –0.23 –1.65 –0.56 0.01 –0.23 –0.21 –0.04 –0.25 –0.11 –0.52 –0.62 0.13 –0.99 –0.28

–0.76% –0.33 –1.31 –1.05 0.13 –1.16 –0.42 –0.70 –0.55 –1.18 –1.25 –0.86 –1.83 –1.37 –0.88 –1.06 –1.01 –1.22 0.02 –0.72 –0.28 –0.12 –0.94 –0.56 –0.83 –0.67 0.22 –1.18 –0.77

WalMart

WMT

15.7

52.07

0.06

0.12

Stock

CHANGE Points Percentage

4 Feb.

11

18 25

4

Sources: WSJ Market Data Group; Birinyi Associates

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

DJIA component stocks

28

Stock

Volume, Symbol in millions

Citigroup SPDR S&P 500 BankAm SPDR FnclSelSct FordMotor Microsoft AlcatelLucent ADS iShrMSCIEmrgMkt Intel PwrShrs QQQ GenElec iShrRu2000 MarvellTch CiscoSys Pfizer

C SPY BAC XLF F MSFT ALU EEM INTC QQQQ GE IWM MRVL CSCO PFE

ADRs of Asian companies* Latest

CHANGE Points Percentage

716.1 276.7 146.0 104.6 81.4 70.4 68.0 66.6 64.6 62.3 61.1 60.9 60.9 57.4 51.0

$4.54 132.47 14.12 16.52 14.42 25.95 5.66 46.90 21.56 57.97 20.37 82.44 16.13 18.40 19.66

–0.14 –1.00 –0.15 –0.21 –0.34 –0.25 0.29 0.04 –0.23 –0.30 –0.38 –0.36 –2.09 –0.13 –0.11

–2.99% –0.75 –1.05 –1.23 –2.30 –0.94 5.40 0.09 –1.06 –0.51 –1.83 –0.43 –11.47 –0.70 –0.56

MNOV 145.8 LEI 25,678.8 UDRL 486.1 FUQI 2,712.4 HDY 7,019.6

$5.33 4.24 9.70 4.98 6.35

1.63 1.07 2.13 0.86 0.95

44.05% 33.75 28.14 20.87 17.59

$9.07 1.75 2.25 2.90 15.58

–2.65 –0.30 –0.37 –0.46 –2.44

–22.61% –14.63 –14.12 –13.69 –13.54

52-WEEK High Low

$13.85 15.55 131.63 3.94 96.44 6.66 53.16 5.68 7.27 12.55 37.65 19.24 17.60 22.81 28.15 58.22 54.70 25.18 21.59 77.92 17.32 75.00 48.70 44.56 16.81 9.50 10.06 93.90 61.70 40.45

Biggest gainers... MediciNova LucasEnergy UnionDrill FuqiIntl HyperDyn

...Biggest losers Bsquare ThomasGp ThermoGen Cerus NeoPhotonics

BSQR TGIS KOOL CERS NPTN

1,165.9 17.5 1,048.5 2,759.7 1,096.0

Volume, Symbol in OOOs

Stock

TaiwanSemi SuntechPwr Baidu ADS UtdMicro ADS BHPBilton ADS AdSemEg ADS CtripInt ADS MitsuUFJ ADS Slcnwr ADS AU Optrncs TataMtrs ADS SK Tele ADS ChinaUnicomHK KT Crp ADS FocusMediaHldg ICICI Bk ADS ChinaMobile Nippon ADS LG DisplayADS Infosys KoreaElecPwr ChinaLfIns ADS Netease.com HondaMtr ADS Wipro ADS SilicnMotnTch Kongzhong ToyotaMtr ADS Hitachi SonyCp

$9.30 7.05 51.49 2.50 58.38 3.33 31.35 4.48 4.45 8.38 15.25 14.58 10.91 17.48 14.36 33.21 44.36 19.59 13.75 53.28 10.43 55.47 26.16 28.33 11.30 3.02 5.22 67.56 33.96 25.85

CHANGE Latest Points Percentage

TSM 20,293.1 $12.41 0.15 STP 7,088.5 9.43 –0.06 BIDU 4,460.8 122.34 0.49 UMC 2,752.8 2.94 0.02 BHP 2,463.3 95.76 –0.26 ASX 1,938.5 6.00 0.06 CTRP 1,882.2 39.04 0.16 MTU 1,777.9 5.46 –0.06 SPIL 1,768.1 6.90 –0.08 AUO 1,765.3 9.22 –0.06 TTM 1,709.7 25.83 –0.29 SKM 1,681.7 18.23 0.33 CHU 1,626.0 16.96 0.10 KT 1,603.5 19.49 –0.28 FMCN 1,567.4 27.50 –0.59 IBN 1,482.5 45.35 –0.65 CHL 1,323.4 47.96 0.19 NTT 1,269.2 24.92 –0.23 LPL 901.3 16.12 –0.18 INFY 860.8 67.67 –0.73 KEP 849.0 12.35 0.07 LFC 732.8 57.67 0.41 NTES 602.4 47.33 0.13 HMC 591.8 43.00 –0.79 WIT 506.4 13.45 –0.40 SIMO 480.6 8.86 –0.14 KONG 473.1 8.72 0.55 TM 440.7 90.99 –1.20 HIT 436.7 61.24 –0.12 SNE 423.9 35.95 –0.41

1.22% –0.63 0.40 0.68 –0.27 1.01 0.41 –1.09 –1.15 –0.65 –1.11 1.84 0.59 –1.42 –2.10 –1.41 0.40 –0.91 –1.10 –1.07 0.57 0.72 0.28 –1.80 –2.89 –1.56 6.73 –1.30 –0.20 –1.13

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

U.S. Treasury yield curve

Global government bonds

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

Coupon

Country/ Maturity, in years

4.965% 5.520 2.086 3.716 2.461 4.284 1.835 3.326 1.713 3.328 1.816 3.640 1.746 3.266 0.817 3.044 3.100 4.887 0.234 1.300 1.521 3.440 6.011 7.575 3.234 5.388 0.664 1.859 1.404 3.713 0.677 3.483

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

428.8 203.7 140.9 23.3 178.4 80.1 115.8 -15.7 103.6 -15.5 113.9 15.7 106.9 -21.7 14.0 -43.9 242.3 140.4 -44.3 -218.3 84.4 -4.3 533.4 409.2 255.7 190.5 -1.3 -162.4 72.7 23.0 ... ...

426.0 203.0 133.3 20.7 179.2 80.1 113.2 -14.6 93.3 -18.0 107.5 13.0 98.9 -23.1 -3.2 -55.7 232.1 133.1 -52.0 -224.5 77.3 -3.9 510.4 400.6 252.9 184.9 -6.7 -166.3 68.8 25.6 ... ...

428.6 206.2 124.1 19.1 168.9 78.8 109.8 -9.5 85.7 -17.5 93.3 13.6 77.4 -23.0 -8.4 -56.9 183.9 120.8 -41.5 -220.8 69.2 -6.3 375.4 346.3 228.7 177.7 4.4 -153.5 77.8 26.2 ... ...

372.4 185.2 42.1 -4.2 26.3 5.0 60.9 -18.9 81.3 -18.6 9.0 -16.9 1.8 -47.6 -21.2 -82.6 49.2 35.1 -70.3 -227.1 7.7 -19.4 104.9 72.5 35.1 28.4 -49.1 -174.3 18.5 39.5 ... ...

Previous

YIELD Month ago

Year ago

5.020% 5.570 2.093 3.747 2.552 4.341 1.892 3.394 1.693 3.360 1.835 3.670 1.749 3.309 0.728 2.983 3.081 4.871 0.240 1.295 1.533 3.501 5.864 7.546 3.289 5.389 0.693 1.877 1.448 3.796 0.760 3.540

4.901% 5.505 1.856 3.634 2.304 4.231 1.713 3.348 1.472 3.268 1.548 3.579 1.389 3.213 0.531 2.874 2.454 4.651 0.200 1.235 1.307 3.380 4.369 6.906 2.902 5.220 0.659 1.908 1.393 3.705 0.615 3.443

4.584% 5.460 1.281 3.566 1.123 3.658 1.469 3.419 1.673 3.422 0.950 3.439 0.878 3.132 0.648 2.782 1.352 3.959 0.157 1.337 0.937 3.414 1.909 4.333 1.211 3.892 0.369 1.865 1.045 4.003 0.860 3.608

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 1 s

Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year and 10-year government bonds around the world. Data as of 11 a.m. ET

Friday 0

1

3

6

month(s)

1

2 3 5 710

years maturity

30

Month to-date

TOTAL RETURN

Ryan Index

Yield to maturity

Modified duration

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

4.601% 3.494 2.884 2.178 2.505 1.185 0.688 0.234 0.153 0.153 0.122

16.03 8.30 6.31 4.71 6.70 2.89 1.97 0.93 0.49 0.44 0.25

–1.69 % –0.61 –0.32 –0.17 –0.46 –0.02 0.02 0.01 0.01 0.01 0.01

–3.58 % –0.98 –0.35 –0.06 –0.85 –0.19 0.03 0.13 0.08 0.07 0.04

–3.58 % –0.98 –0.35 –0.06 –0.85 –0.19 0.03 0.13 0.08 0.07 0.04

5.00 % 4.54 5.39 4.03 3.96 2.58 1.31 0.73 0.33 0.37 0.26

One-month bill

0.102

0.07

0.01

0.03

0.03

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 U.S.

3.25%

3.25%

Canada

3.00

2.25

Latest Euro Libor One month Three month

0.85188%

52 wks ago

Offer Eurodollars One month

Bid

0.3500%

0.2500%

1.11813

0.59813

Three month

0.5500

0.4500

0.38188%

Japan

1.475

1.475

Six month

1.42625

0.90813

Six month

0.7500

0.6000

Britain

0.50

0.50

One year

1.85250

1.19750

One year

1.0500

0.8500

ECB

1.00

1.00

Switzerland

0.54

0.53

Hibor One month

0.16929

0.07929%

Latest

52 wks ago

Australia

4.75

4.00

Three month

0.23929

0.13000

U.S. discount

0.75%

0.75%

Hong Kong

5.25

5.25

Six month

0.30000

0.23000

Fed-funds target

0.25

0.25

One year

0.64714

0.51643

Call money

2.00

2.00

Libor One month

Asian dollars One month

0.2720%

0.26000%

0.22906%

Three month

0.30950

0.25363

Three month

0.3145

0.2576

Six month

0.46250

0.39000

Six month

0.4711

0.3910

U.K. (BBA)

0.508

0.510

One year

0.79200

0.85063

One year

0.7980

0.8460

Euro zone

0.37

0.29

0.24%

Overnight repurchase rates U.S. 0.20%

0.19%

Sources: WSJ Market Data Group; Reuters

Monday, March 7, 2011

29

THE WALL STREET JOURNAL.

MARKETS LINEUP

Moving the markets

Asian index movers… Nikkei Stock Average

Kospi

At right, Japan’s benchmark stock index and the biggest movers among the larger Asian stocks indexes and stocks Friday. 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.

Japan

South Korea

s

10693.66 1.02% or 107.66

“All the positives lined up, with oil prices down, U.S. stocks going up, and the yen weakening,” one analyst said. The benchmark gained 1.7% for the week.

CBN 600 s

2004.68 1.73% or 34.02

The index rose on the back of continued foreign buying. Construction shares also recovered after heavy losses in the wake of Libyan turmoil. Stocks rose 2.1% for the week.

Stock

Close

142.34

169

…

Mizuho Financial

s

23408.86 1.24% or 286.46

Positive sentiment on the global recovery helped boost stocks 1.7% for the week. Trading hours expand Monday: 9:30 a.m. to 4 p.m., with a lunch break from noon to 1:30.

45000

30000

12500

2500

37500

25000

10000

2000

30000

20000

7500

1500

22500

15000

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

Volume in millions

The index closed at a 2011 high, gaining 2.1% for its sixth straight weekly advance. Banks were mostly higher on expectations they will report strong 2010 earnings.

Hong Kong

3000

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

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

s

27782.53 1.41% or 385.23

15000

5000

WSJ.com

Hang Seng

China

Change Net

Stock

%

…

Chinhung Int

Volume in millions

Close

66.01

277.00

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

Change Net

%

Volume in millions

Close

MaanshanIron&Steel

238.16

3.92

Stock

11.00

4.14

1,180.00 –145.00

Change Net

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

%

Stock

0.28

7.69

Icbc

Volume in millions

Close

Change Net

436.01

6.17

0.10

1.65 1.16

%

Shinsei Bank

57.12

112

3

2.75

Ilshin Stone

17.39

–10.94

AgricBkofChina

223.42

2.68

0.01

0.37

CCB

343.61

6.97

0.08

Mtshbsh Fin Grp

54.19

454

1

0.22

Mirae

10.18

423.00

–12.00

–2.76

ChinaMerchantsBk

197.26

14.22

0.19

1.35

Bank Of China

297.84

4.18

0.05

1.21

Hitachi

52.52

500

3

0.60

Seong An

8.36

1,100.00

–5.00

–0.45

ChinaMinshengBkg

179.48

5.35

0.06

1.13

ChinaPetroChem

93.67

7.78

0.02

0.26

MazdaMtr

40.74

210

7

3.45

Hynix Semi

6.73

29,200.00 750.00

2.64

Everbright Bank

160.41

3.99

0.01

0.25

PetroChina

66.23

10.86

0.08

0.74

Asian stocks in the news Newcrest Mining Australia

Sumitomo Elec Inds A$40.02

Japan

s 4.7% or A$1.79

The gold miner extended Thursday’s gains after being depressed by fund selling in late February. In Australian dollars

¥1,259

s 8.1% or ¥94

The Nikkei reported that the company had developed a less-expensive rechargeable battery. In yen

70

2000

56

1600

42

1200

28

800

400

14 M A M J 2010

J A S O N D J F 2011

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

M A M J J A S O N D J F 2010 2011 28 1.44 0.2

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

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Basic Resources Newcrest Mining

1.0% 4.7%

1.8% 3.6%

Japan

PERCENTAGE CHANGE Daily 1 wk. 52 wks

17.6% 17.8%

Mitsubishi Hvy Inds

Automobiles & Parts Sumitomo Elec Inds

Aboitiz Equity ¥367

t 1.3% or ¥5

Philippines

QBE Ins Grp 42.50 peso

t 1.5% or 0.65 peso

The stock retreated a bit following a fivesession rally that had sent the share price up 9.7%.

Shares gave back Thursday’s gains that followed the company’s report that 4thquarter net doubled.

In yen

in peso

600

1.1% -1.3%

In Australian dollars

40

Singapore

31.1% 15.4%

Larsen & Toubro S$2.13 India

t 2.3% or S$0.05

1,610.80 rupee

t 3.1% or 51.20 rupee

The commodities firm raised US$493 million in a private-placement sale of 306.5 million new shares.

Shares fell after a 3-session run-up in engineering firms amid hopes of more government contracts.

In Singapore dollars

In rupee

3.75

3500

32

3.00

2800

360

24

24

2.25

2100

240

16

16

1.50

1400

8 M A M J 2010

56 6.50 1.1 2.8% 7.3%

While Australian financials shares were generally firm, the stock fell as it traded exdividend. 40

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

Indus Gds & Svcs Mitsubishi Hvy Inds

A$17.63

t 2.2% or A$0.40

2.1% 4.9%

32

J A S O N D J F 2011

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

Australia

Noble Grp

1.1% 8.1%

480

120 M A M J 2010

12 107.10 1.4

23.3% 8.6%

8 M A M J 2010

12 3.49 3.7

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

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Indus Gds & Svcs Aboitiz Equity

1.1% -1.5%

2.8% 23.3% 6.3% 277.8%

J A S O N D J F 2011 14 1.22 3.7

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

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Insurance QBE Ins Grp

1.5% 2.6% -2.2% -4.2%

9.8% -14.0%

700

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

M A M J 2010 16 0.13 2.4

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

Indus Gds & Svcs Noble Grp

1.1% -2.3%

2.8% 2.9%

23.3% 1.0%

27 58.98 0.8

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Constructn & Matl Larsen & Toubro

1.3% -3.1%

3.0% 6.5%

11.5% 1.6%

30

Monday, March 7, 2011

THE WALL STREET JOURNAL.

HEARD ON THE STREET Email: [email protected]

FINA NCIA L A NA LYSIS & COMMENTARY

Beijing can’t have it all China’s government wants to fight inflation and redistribute income, giving households a bigger slice of the pie. Higher interest rates would achieve both. That’s not, apparently, how Beijing sees it. Parsing the language in Chinese government communiqués is never easy. But Premier Wen Jiabao’s work report, delivered to the National People’s Congress on Saturday, certainly didn’t suggest that many more increases in rates, already raised three times in the past six months, are likely. Instead, pride of place goes to “creating a good atmosphere for transforming the pattern of economic development.” That suggests the government believes buoyant growth is necessary to cushion the impact of vital but painful reforms to increase the share of domestic consumption in gross domestic product. At first blush, that makes some sense. Hammering industry with higher interest rates could be a recipe for disaster. But on inflation, it is too early for the government to declare mission accomplished. Higher oil prices, higher wages and a global liquidity glut all suggest that bringing prices under control won’t be as simple as

When it

With inflation higher than the deposit interest rate, savers face a loss 10%

5

CPI

0

One-year deposit rate Real deposit rate* ’05

’06

’07

’08

’09

’10

’11

* One-year deposit rate - CPI; Sources: National Bureau of Statistics, People’s Bank of China, WSJ reporting

releasing a little grain from the reserves. And while keeping rates low means easy money will keep flowing to business borrowers, it also means household depositors will be kept in the red. With the consumer-price index rising 4.9% year-to-year in January and the one-year deposit rate at 3%, household savers are facing a real interest rate of negative 1.9%. These negative real interest rates are effectively a tax on China’s households, which do most of the

saving, and a subsidy to government and business, which do most of the borrowing. That inequity is one of the main causes of the skewed income distribution the government says it wants to address. By trying to have everything, Beijing risks ending with nothing. Going slow on rate increases might leave the government’s targets on inflation and raising the share of household income unmet. —Tom Orlik

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 consumer-friendly application remain wary about hidden costs and ask

Chinese thirst for art might be satiated

China’s depositors in the red

–5 2004

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WSJ.com/Heard

Getting a clear picture of China’s asset bubbles is tricky. Beijing’s whack-a-mole approach to controlling prices pushes hot money from sector to sector. Speculators chased out of property put their cash in stocks. If they fall, cash can target assets such as art and antiques. The new Mei Moses Traditional Chinese Works of Art Index, which tracks repeat sale prices for more than 1,400 jades, painted screens and other artworks, has been on a tear. From 1999 to the end of last year, the index rose more than 300%, beating the total returns of the Shanghai and Hong Kong stock markets handily. The index’s authors put its performance down to newly wealthy local collectors adding to existing world-wide demand. It is worth noting, however, that half the index’s gains over that period came in just the two years after

2008. That coincides with Beijing’s stimulus effort to head off recession. The increase in broad money supply in 2009 was equivalent to 39% of gross domestic product, says Lombard Street Research, against a prior peak of 27% in 2003. Last year’s monetary increase was equivalent to 30% of GDP. Some of that easy money likely has found its way into art auctions, bidding up prices. Similar signs of excess can be found in the property market; steel consumption and cement production, building blocks of construction, stepped up noticeably after 2008. With the government taking aim at the property bubble since early last year, prices already have leveled off, presenting a risk to commodity investors. Now that the government is turning off the liquidity taps as well, art collectors could be left feeling a bit jaded. —Liam Denning

India’s budget makers are facing a crude reality Barely a week has passed since India’s government promised to keep its spending under control. Already, this claim is in serious doubt. One big threat comes from oil prices. Nymex crude-oil futures for April delivery settled at more than $104 a barrel Friday, up sharply for the week. India isn’t the only importer facing trade-deficit pain, but it fares worse than its neighbors because of its policy of setting low market prices for most fuels to make them affordable and then compensating its oil refiners for some of their losses. When oil prices rise, so does that bill. Every $10 increase in the price of a barrel of crude oil costs New Delhi up to $3.3 billion, or 0.2% of gross domestic product, assuming it compensates companies for onethird to one-half of the lost revenue, CLSA estimates. So in predicting its budget deficit to equal just 4.6% of gross domestic product this year, New Delhi may have the math wrong. That target, which is lower than 5.1% of GDP this year, is based in part on expectations that expenditures will rise by just 3.4% in the year starting in April. But

Oil’s curse India’s spending on fuel and food mounts as global prices rise

*Nymex daily settlement price on the continuous front-month contract Note: Fiscal years end March 31 Sources: Citi (subsidies); Thomson Reuters via WSJ Market Data Group

the understatement of fuel-cap related subsidies means the shortfall could be higher by as much as 5.4%, Morgan Stanley says. Oil doesn’t affect just expenditures. New Delhi is counting on solid tax collections to offset some of its spending, but that depends on the economy delivering strong growth in the coming year, and companies churning out big profits. Both these scenarios look uncertain. HSBC says the 9% economic growth target is too optimistic—the house expects 8.1% growth—and vulnerable to the fragile global recovery and the commodity-price cycle. For companies, which don’t benefit from subsidized fuel as consumers do, input cost pressures are mounting and passing them on to consumers remains difficult. It means that investors, and bond investors in particular, may have cheered the budget too soon. Government-bond prices have risen since the budget was announced, mainly because New Delhi set a lower-thanexpected target for borrowing from the market. The cost of crude, alone, could soon douse this euphoria. —Harsh Joshi

Subsidies 1,500 billion rupees

Oil futures* $150

1,000

100

500

50 Estimates

0

FY2006 FY’07 FY’08 FY’09 FY’10 FY’11 FY’12

0

Monday, March 7, 2011

31

THE WALL STREET JOURNAL.

MANAGEMENT

[ My China ] BY LI YUAN Zhang Xin, the billionaire chief executive of Soho China Ltd., insists she’s not the woman she once was. Religion has changed everything. At age 45, Ms. Zhang is reinventing herself as a moral and modest Baha’i convert who has transcended materialistic pursuits and now wants to focus on charity and education. “Baha’i has transformed me,” she says. It’s hard to square this vision of Ms. Zhang with her public image. Millions in China know her rags-to-riches success story: a textile factory worker at age 14 in Hong Kong, a night school student who made it to Cambridge University in the U.K., an early career with Goldman Sachs and Travelers Group. Together with her husband, Pan Shiyi, she founded Soho China and took it public in 2007, raising more than $1.9 billion. They are the “It Couple” of China, known for their glitzy parties, designer clothes and celebrity friends. But when I sat down with Ms. Zhang recently in her chic whitetoned office in Beijing’s central business district, she tells me, “If you knew me six years ago, you would think, ‘This is a very annoying woman.’ ” She was “very arrogant” then, she says. “We’ve put too much confidence in that materialistic abundance will bring along better education, which will in turn facilitate progresses in civilization,” she wrote on Sina Weibo, a microblogging service where she has more than 1.4 million followers. “But China’s development has smashed our illusion.” She hopes that religion, and Baha’i in particular, can help China to bridge the gap between fast economic growth and spiritual development that lags behind. A new religion with about six million believers globally, Baha’i em-

phasizes the spiritual unity of all humankind. It’s curious to hear Ms. Zhang, of all people, lament the results of materialism in modern China. After all, she’s lived the China Dream more exuberantly than almost any other woman in the country. And for the past 16 years she and her husband have built their fortune selling that dream to the aspiring Chinese middle class. They are known for their futuristic buildings designed by Riken Yamamoto, Peter Davidson and Zaha Hadid. In China, the property-developer label is synonymous with greed and excessive profits. Just last month, Premier Wen Jiabao pointed his finger at developers when talking about the country’s housing problems. He urged developers to “take all their social responsibilities,” adding that he believes “the blood flowing in their bodies should be moral too.” I can’t help but ask Ms. Zhang why anybody would want to listen to her preaching about being good? Hasn’t anybody called her hypocritical? She’s well aware of the image problem. “For many people who don’t know me, they will naturally think, ‘a developer, corrupted, not a good person,’ ” she says in her usual fast-talking, enthusiastic way. “I think many people, including me, are biased against many things. And bias comes from ignorance. Just like many Chinese, having never been to Japan, think all Japanese are bad people. Once the knowledge is there, the ignorance will go away, and bias will go away.” Does she find any conflict between ethical behavior and money-making, particularly in China’s current business environment when abiding by rules can mean you’ll be less likely to succeed? No, Ms. Zhang says. If you’re more honest than the other people, your business will perform better than them because your business partners will trust you more and want to do more business with you, she says. Besides, talented people like working for

ethical companies. To be sure, Ms. Zhang isn’t the only businessperson in the country hoping to tackle social problems with religion. How Chinese society has lost its morality—and how to regain it—is a hot topic on both the Internet and around dinner tables. One of the more dominant theories goes like this: the Communist Party made all Chinese atheists; then the Cultural Revolution destroyed all Confucian doctrines that guided Chinese society for thousands of the years; finally, in their relentless pursuit of wealth in the past 30 years, Chinese broke away from whatever moral boundaries that were left. It’s a country that has no reverence, no respect and no fear. People blame the loss of morality for social ills from pollution to corruption and infidelity. Along with higher living standards have come higher levels of anxiety. Some have turned to religion for solace. According to a 2010 survey by the Chinese Academy of Social Science, there are more than 20 million Christians in China, and 73% of them were converted after 1993, just about the time the economy went into overdrive. Ms. Zhang says she converted to Baha’i in 2005 after a family crisis made her question the meaning of the success she had worked so hard for. She found that prayer could be calming. Mr. Pan converted about the same time. Now they sometimes post their prayers and their interpretations of Baha’i teachings on Sina Weibo, where Mr. Pan has about 3.5 million followers. Ms. Zhang never lets her musings on religion stray into the area of politics. She claims to be apolitical, and doesn’t believe that changing the political system will lead to a better society. She says that the revolution in Egypt didn’t really change its society, citing the sexual assault on CBS correspondent Lara Logan immediately after Hosni Mubarak stepped down as president. It doesn’t make any difference if it’s a democracy or a dictatorship, she says. “The real change comes

Bloomberg News

How religion changed a rich developer

‘Baha’i has transformed me,’ says Zhang Xin, the billionaire CEO of Soho China. when people’s hearts change. When everybody has a better heart, the whole society will change.” Then will the religious beliefs of China’s most famous business couple have as much influence on young people as their previous glamorous lifestyle? “I hope so,” she says. “In our early days, we tried to be a creative developer. And we tried to throw the best parties. Now there are [other] creative developers like us. And we’ve come to the

point in our lives that we believe that Chinese society needs spiritual guidance, and we’re privileged to receive such a beautiful thing. We need to share it with everyone.” “But you’re a developer, and in China…” I asked again. Ms. Zhang smiles, “It is indeed very interesting that we’re doing this. This is so ironic.” Li Yuan is managing editor of Chinese WSJ.com, the Chinese edition of The Wall Street Journal Online.

The Power List The top business leaders in Asia making headlines last week in select global and regional media. Powered by Dow Jones Factiva and edited for relevance and clarity.

STUART GULLIVER

SHELDON ADELSON

WARREN BUFFETT

SHAMSUL AZHAR ABBAS

SU SHULIN

Chief Executive HSBC Holdings

Chairman Sands China

Chairman Berkshire Hathaway

Chief Executive Petroliam Nasional

President China Petrochemical

Mr. Gulliver said the bank’s 2010 results reflected “a well-balanced and diversified business” but added that its cost ratio is “unacceptable to me.”

Parent company Las Vegas Sands said it is being investigated by U.S. authorities over its compliance with antibribery laws in its operations in Macau.

The investor’s holding company set up an Indian unit to distribute general insurance products in Asia’s third-largest economy.

Mr. Shamsul said the next five years “will be all about capex” as Petronas increasingly depends on aging fields.

Mr. Su said Sinopec’s 20-year gas deal with ConocoPhillips and Origin Energy will “meet the rapidly increasing demand of customers in China.”

Photos: Bloomberg News (Gulliver, Buffett, Su); European Pressphoto Agency (Adelson); Reuters (Shamsul)

Compiled by Carlos Tejada/ The Wall Street Journal

Monday, March 7, 2011

THE WALL STREET JOURNAL.

MANAGEMENT

Robson brings his game to Thailand football ‘If it’s good enough for Premier League players … it’s got to be good enough for us,’ players tell ‘Captain Marvel’ [ Bryan Robson ] Thailand football team manager

WSJ: Is it difficult for foreign managers to succeed in Asia? Mr. Robson: As long as you understand the culture of the people in the country that you’re in, then no. I feel that European cultures…people like myself who have coached for England, coached in the Premiership, you understand the football side and you can see where [players] need to improve. You’re not going to get success in countries in Southeast Asia until the mental approach


Playing career: West Bromwich Albion 1974-’81; Manchester United 1981-’94; Middlesbrough 1994-’96.
Managing career: Middlesbrough (playermanager 1994-96, manager 1996-2000, joint manager with Terry Venables 2000-’01); Bradford City 2003-’04; West Bromwich Albion 2004-’06; Sheffield United 2007-’08; Thailand 2009-present.
On being relegated at Middlesbrough: That was a massive disappointment. All the top lads wanted to leave the club because the World Cup was the next year. I had to let them leave and to rebuild again. Thai boys to say because obviously they want to get better and they might think if it’s good enough for a Man United player, or it’s good enough for Premier League players or England, then it’s got to be good enough for us. So I thought they were quite brave in saying that because it’s not the culture of the Thai people.

Associated Press

Bryan Robson was one of the most successful football players of his generation as part of three different professional clubs in England. His time with Manchester United propelled him to stardom and earned him the moniker “Captain Marvel.” He was the longest-serving captain in the club’s history. He is the third Englishman to manage the Thai national squad and joins the list of former European managers MANAGING taking on coaching jobs in IN ASIA football-crazy Southeast Asia, as nearby powers like Japan and South Korea progress in the World Cup and sponsors invest in the region. International and league games—not to mention visiting European clubs—often draw huge, raucous crowds. Mr. Robson, 54 years old, started in Thailand in 2009, and the successes have been few. At the AFF Suzuki Cup last December, Thailand settled for two draws and one loss in the group stages. At the Asian Cup earlier this year the squad again failed to move beyond the qualifying stage, with one win, three draws and two losses. His struggles to lift Thailand to the realm of the region’s football powers contrast with his successes as a manager in Europe, where he shifted into the role of manager in 1994. He led Middlesbrough to three cup finals at Wembley (though Boro did lose them all), and also guided them to promotion to the Premier League. Mr. Robson later moved to West Bromwich Albion, where he had played decades before, and helped the Baggies avoid relegation. He spoke with Leigh Murray recently in Bangkok about adjusting to the challenges of managing across lines of language and culture. The following interview has been edited.

Résumé

is different. Licensed coaches have got to be in place. Coaches need to understand the fitness coaching side of it, when players need rest, nutrition. That’s another side of it that I find in this part of the world—nutrition is not great for being a strong footballer. A lot of players know this and understand it, but because of the culture they don’t really take it on board.

WSJ: Do you use the same philosophy here as in England? Mr. Robson: The management side, coming to a country like Thailand, is a little bit different because in England, British players and European players and even when I’ve had Brazilians they expect to get a bollocking sometimes because that’s just inbred in European football, that the coach will lose his temper now and again as long as it’s in a controlled manner and it’s for the right

reasons. The first thing I learned when I came to this country…you know it’s not in the culture in Thailand to be really aggressive in the way that you manage in any business. So you have to calm that down, or bite your tongue, or count to 10 when something makes you rage a bit.

WSJ: So you’ve had to adjust your management style? Mr. Robson: You’ve got to adjust to what you feel is going to get the best out of the players here. I was quite impressed with the squad of players I have. One of the things one of the senior lads asked me to do recently, he said would I go a little bit more towards the European style of management, and if I felt that I needed to tell anybody off or tell them off as a group, to actually implement that into my management style. So I thought that was a good thing for the

WSJ: What are your career highlights? Mr. Robson: Overall, two of them stand out. I thought my seven years at Middlesbrough were very successful, where Middlesbrough were 14th in Division 1 when I took over then to get them promoted, go to three cup finals when they’ve never been to a cup final in their history. And then obviously still being the only manager and the only premiership club at West Brom to be bottom of the league at Christmas and actually stay up. So for me in management those are probably the two things that stick out. WSJ: What would you tell someone who wants to be a football manager? Mr. Robson: The first thing you’ve got to realize is your family life to a certain degree goes out the window. It’s a 24-hour-a-day job, seven days a week. And there’s always something happening around the football club which you’re concerned about or it plays on your mind, whether it’s picking the team, whether it’s a problem with one of your players, your planning of training, planning the staff, the actual general running of the club if the chairman wants you to have that involvement.

Published by Dow Jones Publishing Company (Asia). Printed in Hong Kong by Superflag Printing and Communication Ltd., 1/F, 8 Chun Ying St., Tseung Kwan O Ind. Est., Tseung Kwan O, NT. Printed in Indonesia by PT Gramedia Printing Group, Jalan Palmerah Selatan 22-28, Jakarta 10270. Printed in Japan by Yomiuri Shimbun, 1-7-1, Otemachi, Chiyoda-ku, Tokyo 100-8055. Printed in Korea by JoongAng Ilbo. 7, Soonwha-Dong, Chung-Ku, Seoul 100-130. 1997 June 04 Registration no.: SeoulKA00020 (Daily Newspaper), Publisher/Editor/Printer: Song, Pil-Ho. Printed in Malaysia by KHL Printing Co. Sdn. Bhd. (ROC No: 235060-A) Lot 10 & 12, Jalan Modal 23/2, Seksyen 23 Kawasan Miel Phase 8, 40000 Shah Alam, Selangor, Malaysia. Printed in Philippines by FEP Printing Corporation, 3817 Mascardo St., Corner Metropolitan Ave., Pasong Tamo, Makati City. Printed in Singapore by KHL Printing Co. Pte Ltd., 57 Loyang Drive, Singapore 508968. Printed and distributed in Taiwan by The China Post, 8 Fu Shun Street, Taipei 104. Printed in Thailand by Nation Multimedia Group Public Co., Ltd., 1854 Bangna-Trad Road, (K.M. 4.5), Prakanong, Bangkok 10260. Published and printed on behalf of the Wall Street Journal India Publishing Pvt Ltd, 517B World Trade Centre, Barakhamba Lane, New Delhi 110001 by Mr Suman Dubey at A-8 Sector 7, Gautam Budh Nagar, Noida -201301 and PLOT No.EL208, TTC Industrial Area, Mahape, Navi Mumbai - 400710 (Maharashtra), India, Editor: Suman Dubey, phone: +91-11-6462 0215. ACP no. F.2 (T/3) Press / 2009 FACSIMILE EDITION.

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