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A perfect Oscar story: Why ‘The King’s Speech’ won
VO L . X X X V N O. 1 2 6
(India facsimile Vol. 2 No. 187)
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ASIA
asia.WSJ.com
Gadhafi attacks rebel cities Libya’s government moved Monday to recapture key sections of the country controlled by rebel forces, launching attacks in two coastal cities to the east of the capital Tripoli, according to witnesses and rebel army commanders. By Margaret Coker in Tripoli, Charles Levinson in Benghazi, Libya, and Stephen Fidler in Geneva Forces loyal to Libyan leader Col. Moammar Gadhafi attempted to bomb Benghazi, Libya’s second-largest city and a stronghold of opposition to the Gadhafi regime, with airplanes, according to an opposition commander there. The planes were repulsed by rebel anti-aircraft weapons and forced to retreat, said Col. Tareq Saad Hussein, one of the colonels on the committee in charge of running defense matters in Benghazi. Closer to the capital, in the nation’s third-largest city of Misrata, which has been held by rebel forces for more than a week, city defense patrols claimed to have shot down an attack helicopter sent from the direction of Tripoli. Residents said that for the
Groupon’s China play
The deals website is teaming up with China's Tencent in a move that could put it ahead of other U.S. social-networking sites in the fast-growing market. Page 13
Inflation prompts subsidy spree BY PATRICK BARTA
Associated Press
SK. MENPEN R.I. NO: 01/SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998
Australia: A$6.00(Incl GST), Brunei: B$7.00, China: RMB25.00, Hong Kong: HK$18.00, India: Rs25.00, Indonesia: Rp18,000(Incl PPN), Japan: Yen500(Incl JCT), Korea: Won2,500,
MICA (P) NO. 164/10/2010
Malaysia: RM6.00, Pakistan: Rs140.00, Philippines: Peso80.00, Singapore: S$4.00(Incl GST), Sri Lanka: Slrs180(Incl VAT), Taiwan: NT$60.00, Thailand: Baht50.00, Vietnam: US$2.50
KKDN PP 9315/10/2011 (026992)
LIFE & STYLE Page 7
OPINION: India can’t take growth for granted Page 9, 11
Libyan boys played on a destroyed tank in Benghazi on Monday, a day when Western governments weighed actions against Gadhafi. previous two days they have repelled attacks from government forces on the city’s radio antenna, an installation that rebel city commanders are using to muster defensive patrols and organize services.
The bombings came as the West moved on several fronts against Col. Gadhafi—sending its first concrete aid to Libya’s rebellion in the east of the country while implementing asset freezes and keeping
alive the threat of military intervention. U.S. Secretary of State Hillary Clinton joined other governments Monday in calling for the Libyan leader to step down immediately. Mrs. Clin-
ton, on a day trip to Geneva to address the United Nations Human Rights Council, dePlease turn to page 14 Bahrain, Oman tensions........ 6 Europe faces oil bill.................. 6
Web’s hot commodity: privacy BY JULIA ANGWIN AND EMILY STEEL
As the surreptitious tracking of Internet users becomes more aggressive and widespread, tiny start-ups and technology giants alike are pushing a new product: privacy. Companies including Microsoft Corp., McAfee Inc.—and even some onlinetracking companies themselves—are rolling out new ways to protect users from
having their movements monitored online. Some are going further and starting to pay people a commission every time their personal details are used by marketing companies. “Data is a new form of currency,” says Shane Green, chief executive of a Washington start-up, Personal Inc., which has raised $7.6 million for a business that aims to
help people profit from providing their personal information to advertisers. The Wall Street Journal’s yearlong What They Know investigation into online tracking has exposed a fast-growing network of hundreds of companies that collect highly personal details about Internet users—their online activities, political views, health worries, shopping habits, financial situations and even, in some cases, their real names—to feed the $26 bil-
lion U.S. online-advertising industry. In the first nine months of last year, spending on Internet advertising rose nearly 14%, while the overall ad industry grew only about 6%, according to data from PricewaterhouseCoopers LLP and WPP PLC’s Kantar Media. Testing the new privacy marketplace are people like Giles Sequeira, a London realestate developer who recently began selling his own perPlease turn to page 12
SINGAPORE—As prices for food and other essentials climb across Asia, a growing number of governments are adding or extending subsidy programs, price controls and other short-term fixes that many economists fear will only make inflation pressures worse. On Monday, India extended longstanding subsidies on diesel and cooking fuels, and the government is expected to lay on additional subsidies for food in the coming weeks. Hong Kong authorities last week said they will waive public-housing rents for two months and told residents they will get subsidies for electricity bills, and cash handouts of 6,000 Hong Kong dollars (US$770) for retirement funds as inflation heads toward a government estimate of 4.5% this year. In Singapore, meanwhile, the government is offering tax rebates, cash grants for small and medium-size businesses and other benefits after inflation hit 5.5% in January. Indonesia, which was planning to lift longstanding subsidies for fuel users beginning in March, is now considering delaying that plan after inflation hit 7% in January. The moves follow earlier steps in China, where authorities directed local governments in November to provide subsidies or use price controls as needed to combat the effects of rising prices. China’s Ministry of Finance followed that in December by Please turn to page 14 India lays out aggressive deficit measures ........................ 5
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Tuesday, March 1, 2011
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Business & Finance n HSBC’s 2010 profit more than doubled, mostly because of lower bad-loan charges. But costs jumped, and the bank said new capital rules would reduce its return on equity. Its new CEO received a $8.4 million bonus through deferred shares. 15 n The IEA’s chief economist said Europe’s rising bill for imported oil could endanger its fragile economic recovery as Libya’s uprising keeps oil prices high. 6
Life & Style: Why tailor Luca Rubinacci is crazy for colors. 8
n U.S. stocks were set to end February with their third month of gains in a row. Indian stocks rose as the government forecast a smaller-than-expected deficit. 23 n Deals website Groupon and Chinese Internet giant Tencent agreed to create a group-buying website in China. 13
n Goldman Sachs relinquished its shares in Japanese real-estate firm Simplex Investment Advisors to private-equity firm Aetos Capital, which is betting on a recovery in Tokyo property prices. 16 n New bank credit in China is likely to shrink this year, one of China’s senior bankers said. 3 n Buyout giant Blackstone’s winning $9.4 billion bid for Centro Properties’ 588 U.S. shopping centers gives the Australian company cash to reduce its debt. 16 n Hutchison Port Holdings’ listing seeks to raise $6.4 billion, which would make it the largest IPO in Singapore’s history. 20 n China Unicom’s parent will offer a new mobile-phone brand that will use the company’s own operating system. 18 n A leading South Korean pastor backed off criticism of President
Associated Press
n Korea Exchange is considering an IPO so that it can more easily participate in the global consolidation of stock exchanges. 22
India’s finance minister unveiled a $277.89 billion national budget that outlined aggressive plans to shrink the country’s deficit. Above, activists from the socialist Samajwadi Party burn effigies of Prime Minister Manmohan Singh, ruling Congress party President Sonia Gandhi and Finance Minister Pranab Mukherjee, at a budget protest in Allahabad. Page 5 Lee over a plan to boost Islamic finance in the country, but the pastor said he still believes it will cause “big danger.” 5 n China plans to more than double the value of its entertainment and other cultural industries within the next five years. 17 n Equinox Minerals said it will offer $4.9 billion to take over Lundin Mining in a hostile bid that could derail Lundin’s planned merger with Inmet Mining. 17 n Twitter is in negotiations for a J.P. Morgan fund to take a minority stake in the microblogging company that would value it at more than $4 billion. 18
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World-Wide n Mideast tensions escalated as protesters temporarily blocked access to Bahrain’s Parliament and massed outside the state-owned broadcaster, while moderate government concessions in Oman failed to quell demonstrators. 6 n Experts are questioning why many buildings damaged in last year’s earthquake in New Zealand were given the all-clear, an alleged oversight some say added to the calamity from last week’s quake. 4 n A Vietnamese dissident is being detained for posting an Internet appeal for the overthrow of
Corporate News: U.S. sees a threat from China Inc. 18
the Communist government, a state-run newspaper reported. 3 n The Iranian government arrested opposition leaders Hossein Mousavi and Mehdi Karoubi, along with their wives, according to their children. WSJ.com n Somali pirates released a Japanese ship that was hijacked in October with a crew of 20 Filipinos. n The PKK, the Kurdish separatist organization that has been at war in Turkey since the 1980s, said it is ending a unilateral cease-fire.
Markets: The Street bets on debt that doesn’t exist. 20
n An Iraqi court sentenced a Briton to 20 years in jail in the 2009 deaths of two contractors.
ONLINE TODAY Most read in Asia
1. Buffett Is ‘Itchy’ for Big Deal 2. China Mobilizes Against Activists 3. Google’s Search Cleanup Has Big Effect 4. North Korea Threatens to Attack South 5. Week Ahead: New iPad
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A Tokyo couple’s high-rise home was built for parties. They spent $400,000 on furnishings.
By 2025, India will have the world’s largest labor force, but will the country be able to absorb those workers?
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Heard on the Street: Some firms thrive in a cheaper Japan. 28 THE WALL STREET JOURNAL ASIA Dow Jones Publishing Company (Asia) 25/F, Central Plaza, 18 Harbour Road, Hong Kong Tel 852-2573 7121 Fax 852-2834 5291 www.wsj-asia.com SUBSCRIPTIONS and Address Changes, please telephone our local customer service hotline, Hong Kong/Taiwan: 852-2831 2555; Beijing: 86-10 6581 4090; Shanghai: 86-21 5836 8228; Indonesia: 62-21 527 7592; Japan: 81-3 6269-2760; Korea: 82-2 756 1695; Malaysia: 60-3 2026 4061; Philippines: 63-2 848 5873; Singapore: 65-6415 4000; Thailand: 66-2 652 0871; India: 91-11 6462 0215. Or email:
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WORLD NEWS
BEIJING—China’s flow of new bank credit is likely to shrink to around $1.06 trillion this year, one of China’s most senior bankers said, offering a glimpse of government thinking on lending for 2011 in the absence of a widely anticipated official target. In an interview published Monday in the People’s Daily, the Communist Party’s official mouthpiece, Bank of China Ltd. Chairman Xiao Gang said Beijing this year has done away with formal lending limits, which had been one of the government’s key economic controls. He said new loans this year will likely total around seven trillion yuan,
Declining relevance New yuan loans as percentage of total funds raised formally in China's economy 100% 75 50 25 0 2002
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'06
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Source: People's Bank of China
compared with nearly eight trillion yuan in 2010, and attributed the likely decline to the tightening of China’s monetary policy. Lending projections in China are closely watched by economists and investors because the country’s huge loan volumes in recent years have funded investment that helped drive rapid domestic growth in the face of global economic weakness. In recent years, Beijing has set an annual target for the volume of new loans the country’s banks can grant. The number is usually leaked to the local media well before the end of February. However, the effectiveness of the quota was called into question last year after banks created large amounts of new credit that didn’t turn up in the formal lending data. That has caused some examination among China’s financial regulators, particularly as inflation, fueled in part by the cash created through the lending boom, has hit worrying levels in recent months. China’s consumer-price index rose 4.9% in January, faster than December’s 4.6% pace. The National Development and Reform Commission, the country’s top economic planning agency, has set an inflation target of around 4% for 2011. Chinese officials in recent months have discussed using broader measures of credit creation to manage monetary policy. In midFebruary, the People’s Bank of China floated a formula to measure overall credit created in the economy,
Hanoi detains critic after uprising call BY JAMES HOOKWAY One of Vietnam’s best-known dissidents is being detained by police in Ho Chi Minh City for posting an Internet appeal for the overthrow of the Communist government, a state-run newspaper reported Monday. Nguyen Dan Que posted his call to the people to rise up last week, and the Tuoi Tre newspaper reported that the endocrinologist was arrested Saturday while distributing pamphlets calling for a revolution like those sweeping the Middle East in recent weeks. At the same time, attempts in China to organize similar protests were drawing a swift government reaction, with police in Beijing deploying a SWAT team and dogs Sunday to disrupt online efforts to ignite a Middle East-style “Jasmine Revolution.” Dr. Que, 69 years old, is one of few Vietnamese to openly criticize the country’s one-party system. His detention Saturday was his fourth arrest in 33 years; he has spent a total of 20 years in prison. Most recently detained in 2003 and convicted in 2004 of “abusing his democratic freedoms by jeopardizing the state,” he was freed in 2005 under a New Year’s amnesty. He won the Robert F. Kennedy Human Rights Award in 1995. Vietnamese police officials couldn’t be reached to comment. State media reported Dr. Que explicitly referred to mass protests that have shaken regimes across the Middle East this year, overthrowing
the leaders of Egypt and Tunisia. Reports said he urged young Vietnamese to follow the lead of the Arab world. Those uprisings have rattled authoritarian governments elsewhere, too, evidenced by rigorous police action to break up embryonic protests in countries such as China and Malaysia in recent days. Authorities in Vietnam also appear to be on edge. Prices in February were up 12.31% from a year earlier, the highest inflation rate in more than two years, and the government has been forced to raise fuel prices by up to 24% because a series of currency devaluations have made it increasingly expensive to subsidize diesel and gasoline. Dr. Que’s detention is the only action taken by Vietnamese authorities since the spate of Middle East protests. Previously, Vietnam’s leaders have stamped out any efforts to push for multiparty democracy, have arrested dozens of dissidents and have restricted Internet access across the country, curtailing protesters’ ability to organize. Despite Vietnam’s worsening inflation problem, the country has enjoyed economic growth averaging 7% a year over the past decade, The Washington Post newspaper Sunday published an opinion piece by Dr. Que in which he wrote that “if Washington is looking to Vietnam for a long-term partner for peace and regional stability, America would do well to recognize publicly that only a Vietnam that is free and democratic can provide one.”
China has done away with formal lending limits, according to Bank of China’s chairman. Above, a branch in Nantong. which adds new loans to a bundle of alternative sources of funding such as some of the banks’ off-balancesheet liabilities, corporate bonds, funds raised by companies selling their stock, and insurance payouts. According to the PBOC, banks created more than 11 trillion yuan in
new credit last year, including offbalance-sheet lending, a category that includes credit guarantees and loans by which banks arrange for one company to lend to another directly while taking a fee for its matchmaking services. In the interview, Mr. Xiao didn’t
mention the outlook for off-balancesheet lending. Analysts have broadly forecast this year’s new lending to fall somewhere between 7 trillion and 7.5 trillion yuan. —Eliott Gao contributed to this article.
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WORLD NEWS: ASIA Concentrated Impact | City’s older brick and concrete buildings were hardest-hit ChristChurch Cathedral
Pyne Gould Corp.
Gloucester G er Street
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Grand d Chancellor Ch ll Hotel H t l
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Christchurch Photos: Agence France-Presse/Getty Images (Pyne Gould, ChristChurch Catherdal); Bloomberg News (Grand Chancellor Hotel, Canterbury TV)
Worcester Street
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Canterbury Television
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Experts question quake safety ratings BY GEOFFREY ROGOW CHRISTCHURCH—Experts are questioning why so many of the buildings damaged in last year’s earthquake in New Zealand were given the all-clear, an alleged oversight that some say added to the calamity brought by last week’s quake in Christchurch. “Everything had been weakened by that first quake, that’s for sure,” said Steve Calanog, a federal “on scene” coordinator for the U.S. Environmental Protection Agency’s emergency-response team in San Francisco. The Feb. 22 6.3-magnitude earthquake was an aftershock of a larger 7.0-magnitude tremor in September. Following the first quake, buildings were assessed by local engineers and given green, yellow or red tags to show whether the structures were fully cleared, required structural changes, or needed to be condemned. Codes that determine the tags—updated in New Zealand about five years ago—have provoked the most debate among experts. Mr. Calanog, an incident commander following Hurricane Katrina, and the staff at the EPA say even green-tagged buildings in Christchurch should probably have been strengthened before last week with some structural improvements to their foundations. The New Zealand Department of Building and Housing oversees the classification of buildings. A spokesman declined Monday to elaborate on its tagging practices, saying only that it takes its lead from industry experts on the ground, including educators and workers in the public and private sectors. Globally, engineers have argued for tougher standards to help avoid the level of destruction seen in Christchurch, where more than 200 people are feared dead. Speaking outside the smashed Canterbury Television building, where 120 people are thought to
have died, a New Zealand engineer called for better regulations governing the survey of buildings possibly damaged by earthquakes. “We should have a more defined process of how buildings are reviewed after an earthquake,” said Quincy Ma, a structural-dynamics expert at the University of Auckland. “Hopefully, our current standards will improve over time as we continuously look at our buildings and see how they develop.” Work to recover bodies continued Monday in Christchurch, where almost a third of buildings in the central business district have been deemed unsafe. Prime Minister John Key all but ruled out a tax to cover reconstruction. He said damage by the two earthquakes could total 20 billion New Zealand dollars (US$15 billion) and that rebuilding Christchurch would become “core” to the May budget. “I don’t want to put on another levy because I think it will slow the economy,” he said.
Engineers have argued for tougher standards to help avoid the destruction seen in Christchurch. The Treasury confirmed the government had asked about possible taxation to raise funds. Also Monday, the prime minister announced an emergency business-recovery package valued between NZ$100 million and NZ$120 million for businesses in Christchurch that are unlikely to reopen soon—and for their employees. First NZ Capital economist Chris Green, using what he said may turn out to be “conservative assumptions,” said that relative to gross domestic product, the earthquake may cost five times what Hurricane Katrina did.
According to Miyamoto International, a global earthquake and structural-engineering concern, brick buildings and concrete structures built in Christchurch in the mid-1970s—before improved standards were put in place in response to better understanding of seismic events—are in dire need of reinforcement. Kit Miyamoto, the company’s chief executive, said New Zealand building standards are among the world’s most rigorous, but not thorough enough given the scale of the September seismic activity and the level of ground liquefaction. Liquefaction happens when soil loses its strength because of an applied stress—such as an earthquake. “Building codes are minimum guidelines and give a false sense of security,” he said. “A building is not earthquake-proof because it passes some guidelines; these buildings must be anchored.” Mr. Miyamoto’s company has a team in Christchurch assessing the damage as he oversees similar work in earthquake-torn Haiti. His firm says about 40% of the buildings in Christchurch either collapsed or were heavily damaged by the quake. In 2004, authorities in New Zealand required that older buildings be strengthened to at least onethird of the preferred standard. Buildings in Christchurch and other areas were given 20 years or more to meet the standards due to the cost of improvements. Standards accounting for ground liquefaction weren’t included in the new rules. After the September quake, some business owners decided to go beyond the law’s requirements. Stephen Mateer, owner of the Lyttelton Coffee Club, added reinforcements for his 110-year-old building that was full of lunchtime diners when the quake hit Tuesday. “The seismic strengthening saved us,” said Mr. Mateer. —Lucy Craymer contributed to this article.
Available: Chinese tech for putting down protests To get an idea of how wellequipped China is to prevent antigovernment protests, look at some of the security equipment being touted by Chinese companies at last week’s IDEX arms fair in Abu Dhabi. When China’s leaders crushed pro-democracy protests around Tiananmen Square in 1989, they sent in the army with tanks and live ammunition. These days, there are many other ways of dispersing such crowds—or preventing them forming at all. Chinese companies produce advanced surveillance, crowd control and other security equipment, some of it modeled on U.S. technology developed during the wars in Iraq and Afghanistan, and are starting to sell it globally. Among the companies at IDEX, several offered counterterrorism and public security equipment, according to National Defense Magazine’s blog post on the exhibition. The products ranged from body armor, riot shields and armored vehicles to sniper detection devices, explosives scanners and, perhaps most importantly in this age of techsavvy insurgents, mobile phone and Internet jamming equipment. One of the Chinese companies at the exhibition was CETC International,, which was founded International in 2002 and now says it supplies several Chinese government agencies, as well as exporting to dozens of foreign countries. CETC’s website lists jamming devices, surveillance drones, cameras and command-andcontrol systems, some of which, it proudly claims, were used at the 2008 Beijing Olympics. It also advertises what it calls Directed High-intensity Acoustic Low-lethal Weapons for Police, a sound-based crowd-control device that appears similar to the sonic weapon commonly known as a long-range acoustic device. CETC International, whose mission is to “Dedicate to the Motherland, Contribute to the Society, Serve the Customers” its website says, is the export arm of the state-run China Electronics Technology Corp and notched foreign sales of $1.2 billion in 2009, according to state media. —Jeremy Page
Will Huawei ever break into the U.S. market? The relative exclusion of Huawei, the world’s secondlargest telecom-equipment vendor, from the U.S., a coveted telecommunications market, has underscored U.S. concerns about China as threat, both politically and commercially. Huawei sought to address those concerns Friday through an open letter from Deputy Chairman Ken Hu, who says the company is prepared to cooperate with American authorities in proving that it isn’t a national-security threat. Will Huawei ever have a chance to make it big in the U.S.? If so, what will it take? Two China experts surveyed by China Real Time came at the issue from different angles. Huawei “has a trust issue in America” where China is perceived as a near peer competitor, said David Wolf, chief executive of Wolf Group Asia, a Beijingbased marketingstrategy firm. “For all the reasons that America is concerned about China’s rise...they’re equally concerned with Huawei’s entering into the United States.” Huawei’s lack of transparency is going to arouse suspicion, Mr. Wolf said. One problem is the mystery surrounding Huawei’s founder and CEO, Ren Zhengfei. “Any problem that a company has begins with its CEO. As Terry Gou at Foxconn discovered, it isn’t enough to hide behind the success of your company or the quality of its products. More is expected.” While Mr. Wolf put the onus on Huawei, Duncan Clark put it on the U.S. “Its time for Huawei to press the issue I think, and [for the U.S. government] to lay out its cards,” said Mr. Clark, chairman of consulting firm BDA China Ltd. He doubts the U.S. will do so. “There is never any disclosure by the U.S. authorities of what evidence or suspicions they have,” he said. “It’s up to the authorities to...share the evidence of what they have against Huawei.” —Loretta Chao Keep up on China minute by minute with The Wall Street Journal’s China Real Time Report at blogs.wsj.com/chinarealtime
Bloomberg News
Chinese-made missiles on display at last week’s IDEX arms fair in Abu Dhabi.
Tuesday, March 1, 2011
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WORLD NEWS: ASIA
India reins in spending increases BY ABHRAJIT GANGOPADHYAY
Looking up India's GDP growth rate 10% 8
4 2 0 FY2006 ’07 ’08
SEOUL—The pastor of South Korea’s largest church on Monday backed off criticism of President Lee Myung-bak over a plan to boost Islamic finance in the country, but the pastor said he still believes it will cause “big danger.” David Yonggi Cho—pastor of Yoido Full Gospel Church, which with 800,000 members also claims to be the church with the largest congregation in the world—used his sermon on Sunday in part to criticize a proposal by South Korea’s Finance Ministry to make it easier for the nation’s financial institutions to issue Islamic bonds, or sukuk. Mr. Cho criticized Mr. Lee in his sermon, according to local media, saying that if the legislation passes, “I will fight for Lee’s resignation.” The controversy marks a rare moment of friction for Mr. Lee with a core base of supporters, the nation’s evangelical Christian churches, attended by about onethird of South Korea’s population. The impact of the move is expected to be small since the Muslim presence in South Korea is negligible. Mr. Cho wasn’t more specific about the danger posed by the measure. Other critics have alleged that Muslim finance, which also encourages charitable donations, will lead to funding of extremist groups. Mr. Cho issued an apology Sunday for some of the remarks, specifically those criticizing Mr. Lee. And Monday, the church-owned, generalinterest newspaper Kookmin Ilbo printed a statement from Mr. Cho under the headline “Explanation.”
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Note: Fiscal years ending March 31 Source: Government of India
Indian businesspeople watch the budget unveiling on TV at a session organized by a trade group Monday in New Delhi. Lybecker Eskesen, chief economist for India and Asean at HSBC. The budget presentation, following months of parliamentary paralysis in the wake of corruption scandals last year, marked a political victory for the Congress party-led ruling coalition. It offered a sign that the government might be able to pass its major policy initiatives, including plans to substantially increase the food subsidy to the poor and ease the acquisition of farmland by companies for infrastructure and industrial projects.
Korean pastor modifies remarks denouncing Lee BY EVAN RAMSTAD
Forecast
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Associated Press
NEW DELHI—India’s finance minister unveiled a national budget Monday that surprised markets with his aggressive plans to shrink the deficit, which has risen in recent years. In doing so, Finance Minister Pranab Mukherjee dismissed critics’ assertions that India would fail to curb its budget deficit at 5.1% of gross domestic product this year. Mr. Mukherjee is also facing political pressure to increase socialwelfare spending to help his party in state elections set for later this calendar year. But instead, he is reining in overall government spending in his 12.58 trillion-rupee ($277.89 billion) budget for the fiscal year beginning April 1, reflecting a spending increase of 3.4% from the current year. Recent budgets have had spending increases of as much as 20% year to year. Mr. Mukherjee is betting on substantially higher tax revenues to shrink this year’s fiscal deficit to 5.1% of gross domestic product, down from an earlier target of 5.5%. He set the target for next year’s deficit at 4.6% of GDP, less than the 4.8% target for the current year. The government projects the deficit will decline to 4.1% in 2012-13. “By targeting a lower-thanplanned deficit, the government certainly signaled its commitment to fiscal consolidation and its intent to help the Reserve Bank of India contain inflation pressures,” said Leif
“I just wanted to stress that the flow of Islam money could pose a big danger to our nation and society,” Mr. Cho’s statement said. “I didn’t intentionally bring up the removal of the president.” The Finance Ministry in 2009 proposed legislation to provide the same tax breaks for sukuk as for traditional bond issuance, a measure that officials thought would amount to a normal expansion of business for the nation’s banks. But work stopped when some lawmakers and the Christian lobby cited cultural and religious conflicts and said tax benefits for sukuk would be unfair. The ministry’s attempt to revive the legislation has produced new criticism from religious circles and has led the ruling Grand National Party to delay consideration until after an off-year election in April. Some government officials say critics misunderstand the nature of sukuk, bonds that conform to Islamic law by banning interest payments. In his sermon Sunday, Mr. Cho said he met Finance Minister Yoon Jeung-hyun Friday to make his opposition clear. “I told him this will be a life-or-death fight,” Mr. Cho said from the pulpit Sunday, according to local media reports. A ministry spokeswoman confirmed the meeting but did not disclose details. Other Christian organizations are divided over the sukuk proposal. Leaders from Buddhist temples and organizations, who have tended to be more critical of Mr. Lee, have said the sukuk proposal is a tax issue, not a religious one. —Jaeyeon Woo contributed to this article.
Disappointing foreign investors, the government didn’t announce big-ticket economic reforms, such as higher foreign ownership limits in the retail and insurance sectors. But it did raise the cap on the amount foreign investors can put into infrastructure bonds for Indian projects, to $25 billion from $5 billion. That should help the government finance plans to improve decrepit roads, airports and other infrastructure. “This budget matches the challenges that our economy faces—sustained growth and a determined ef-
fort to curb inflationary expectations,” Prime Minister Manmohan Singh said. Parliament is expected to approve the budget this month. To boost revenue, Mr. Mukherjee said, the government will continue to sell stakes in state-run companies without ceding control. He said the government would raise 1.25 trillion rupees in nontax revenue; 400 billion rupees of that will come from sales of stakes in state-owned enterprises such as Steel Authority of India and Indian Oil Corp.
The signs of stricter fiscal discipline encouraged analysts, though some expressed caution. Some said there are doubts over whether the government will be able to stick to the budget amid rising crude-oil prices and the ruling party’s commitment to substantially increase food subsidies. The parameters of the “food security” bill are still being debated by the ruling party, Mr. Mukherjee said. Experts have predicted it could cost between $15 billion and $30 billion. Aninda Mitra, an analyst at Moody’s Investors Service, said India’s local-currency debt rating could be upgraded if the government meets its fiscal-deficit aims in the medium term. India is rated Ba1 by Moody’s, one notch below its foreign-currency rating of Baa3.
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Tuesday, March 1, 2011
WORLD NEWS: MIDDLE EAST
BY JOE PARKINSON MANAMA, Bahrain—Antigovernment protesters temporarily blocked access to Bahrain’s Parliament and amassed outside the state-owned broadcaster on Monday, broadening a strategy of gathering at sensitive locations to boost pressure on the ruling family after two weeks of protests that have left seven dead. Following marches on the foreign ministry and the justice ministry in recent days, protesters targeted the Parliament to coincide with a meeting called by Bahrain’s 40-member upper chamber, which is appointed by the country’s ruler, King Hamad bin Isa al-Khalifa. The session was shelved after protesters formed a human chain to block the entrance, although some council members congregated in a nearby hotel. Protesters then marched to state-television headquarters, many chanting slogans claiming that state media coverage of the unrest sought to widen rifts between the king-
dom’s overwhelmingly Shiite protesters and the Sunni community. Monday’s demonstrations, which attracted smaller numbers than in recent days, came hours after President Barack Obama extended Washington’s support for a “national dialogue” in Bahrain, stressing it
The move broadens a strategy of gathering at sensitive locations to boost pressure on the rulers. should be “inclusive, nonsectarian and responsive” to the people of the Gulf kingdom. Crown Prince Salman bin Hamad al-Khalifa ordered the army off the streets on Feb. 19 and called for dialogue with the opposition after a series of clashes between security forces and mainly Shiite antigovernment demonstrators. Bahrain sits in a key strategic
position in the Persian Gulf, through which a fifth of the world’s oil supply passes. The country hosts the headquarters of the U.S. Fifth Fleet—a home to 3,000 military personnel who oversee 30 naval ships and some 30,000 sailors. Bahrain’s Shiite-majority population has for years pushed for more political and economic opportunities under the Sunni rulers. In the mid-1990s, Shiite opposition groups fought bloody skirmishes with security forces that eventually pressured the royal family to open its political system to more Shiite representation. Following clashes that erupted two weeks ago, the ruling family has unveiled a series of concessions to lure opposition groups to the negotiating table. On Saturday, the ministry of information confirmed a cabinet reshuffle and reduction in citizens’ monthly housing costs by 25% in a move to assuage protesters. That came after Bahrain freed 308 political prisoners Wednesday and par-
Reuters
Bahrain protesters block Parliament
Bahraini protesters targeted the Parliament building in Manama on Monday. doned two others who have been in self-imposed exile. Opposition leaders and protesters have yet to agree on a unified
set of demands, but have labeled the government’s concessions “superficial” and unlikely to hasten direct talks.
Oil’s rise on Libya unrest threatens Europe BY GUY CHAZAN As unrest in Libya keeps oil prices high, Europe’s bill for imported oil could be bigger this year than it was in 2008, when crude jumped to $147 a barrel, potentially endangering the Continent’s fragile economic recovery, the International Energy Agency’s chief economist said. The IEA’s Fatih Birol said if the price of European oil averages $100 a barrel this year, the European Union will have to spend $375 billion on oil imports—slightly more than the $369 billion it spent in 2008 and much higher than the $221 billion paid in 2009 and the $299 billion spent last year. As a percentage of gross domestic product, $375 billion would be more than double what the EU paid for imports on average from 1971 to 2008. Record-high crude prices in 2008 were widely considered a trigger for the global recession. “This is very risky, especially be-
cause Europe is the weakest link in the chain of the global economic recovery,” Mr. Birol said in an interview. He was speaking as global oil markets continued to gyrate, driven by fears that the chaos in Libya could spread to the oil-rich Persian Gulf. Protests in Oman have raised concerns that it could be the next oil producer after Libya to experience upheaval. Oil has been trading at its highest level in 2½ years. Brent, the main European benchmark, which broke through $100 a barrel in January, was trading at $112 a barrel Monday morning, while U.S. crude was trading at around $98. Libya, the world’s 13th-largest oil exporter, produces 1.6 million barrels a day. That figure has halved since the uprising began, as international oil companies suspended operations and evacuated hundreds of employees. Staff shortages and production outages have also forced the closure
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of most of Libya’s ports, severely hampering exports. Natural-gas deliveries were slashed when Italian energy giant Eni SpA shut down a
gas pipeline under the Mediterranean from Libya to Sicily last week. It could take months for Libyan supply to return to precrisis levels, analysts say. In theory, the world can easily deal with any supply shortage. The Organization of Petroleum Exporting Countries has spare production capacity, and the industrialized countries have 1.6 billion barrels in strategic petroleum reserves. Saudi Arabia, the biggest producer in OPEC, has increased output to cover the shortfall. Mr. Birol said the kingdom was doing an “excellent job,” showing once again that “in an emergency they’re prepared to play the role of central banker and make oil available.” But one concern in the market is that replacing Libya’s high-quality, light sweet blends will be difficult to do at short notice. The oil that Saudi Arabia has available is of poorer quality with a higher sulfur content, and harder to turn into transportation fuels.
Analysts from Bank of America Merrill Lynch suggested Monday that since most of the oil in the IEA’s strategic reserves was medium-sour crude, “gasoline-rich light-sweet barrels will remain in short supply.” The analysts also said OPEC’s spare capacity was down substantially, meaning the oil market’s ability to deal with further outbreaks of unrest in the Middle East “remains limited.” “The Libyan supply disruption could be the eighth-largest supply shock since 1950, on our estimates,” Bank of America went on to say. “More worryingly, with other countries like Algeria, Syria, Yemen or Saudi Arabia scoring high on social discontent, the risk of continued tensions in the region remains high.” Mr. Birol said he feared that if oil remained at or above $100 a barrel this year, it could stoke inflationary pressures in Asia, potentially putting a brake on economic growth in key Asian countries such as China.
Oman moves fail to quiet dissenters
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BY ANGUS MCDOWALL DUBAI—Omani protesters in the town of Sohar where at least one person was killed Sunday, said they wouldn’t give up their demands for better pay and working prospects despite some modest government concessions. On Monday, in the third consecutive day of unrest, striking workers and unemployed protesters blocked major entrances to the north Omani industrial town, home to a major port and aluminum refinery. Earlier, a crowd of demonstrators set fire to a supermarket, according to Associated Press, in rare show of violence in protests that have flared here and in Salalah in the country’s south. “We want better pay and more jobs,” said a young English graduate near the main junction for Sohar’s industrial port. Behind him several hundred angry protesters, some with their faces masked by tradi-
tional headscarves, blocked the road. Two armored vehicles manned by Omani soldiers looked on. The Omani government isn’t considered to be in danger of falling, but the protests appear to be gaining momentum, analysts said. “The regime at the moment is a step behind what the people want,” said Marc Valeri, lecturer in political economy, Institute of Arab and Islamic Studies, University of Exeter. In recent days, hundreds of people are reported to have taken to Omani streets, prompting a series of reforms and cabinet changes by the country’s ruler, Sultan Qaboos bin Said Al Said. His changes have included switching six ministers, including the civil service, education, and commerce and industry portfolios, raising the minimum wage by 40% and increasing student grants. The former commerce and industry minister, Maqbool bin Ali bin Sultan, is a member of a large busi-
ness family, which Mr. Valeri said caused resentment among some Omanis. He has now been given the transport and communications brief. Sultan Qaboos also ordered the government to employ 50,000 people and to bring members of the Majlis al-Shura advisory body, which is partly elected, into the cabinet. “In Oman the challenge is not really to the Sultan or the regime,” said Mustafa Alani, director of security studies at the Gulf Research Center in Dubai. “Last week the protesters were shouting ‘long live the Sultan’, but they think there are some corrupt officials.” Sultan Qaboos has transformed Oman since ascending to power in 1970, when the gates to the capital, Muscat, were locked every evening. “For people in their 20s and 30s who are educated but can’t find a job, the Sultan’s achievements of the past 40 years don’t count for much,” Mr. Valeri said.
A style master’s tips 8 BOOM IN BESPOKE 8
TUESDAY, MARCH 1, 2011
LIFE & STYLE
asia.WSJ.com
All hail the prints of England Flora, fauna and Fabergé eggs inspire vibrant colors and patterns BY BETH SCHEPENS
Reuters
Colin Firth with his Best Actor Academy Award.
‘King’s Speech’ is perfect story for the Oscars BY GERARD BAKER
Getty Images (3)
London The runway collections last week showed off the city’s reputation for fashion innovation, with a kaleidoscope of electric colors and cutting-edge prints. Designers at the shows, which ended last week, seemed to be in a cheery mood, at least in terms of color. “There’s a strong trend for color and very loud color, you might say,” said Colin McDowell, a fashion writer and fixture at the London shows. Nowhere was that more evident than in the designs of Daniella Helayel and Roksanda Ilincic. The atmosphere at the show for Ms. Helayel’s Issa brand—a favorite of Prince William’s fiancée, Kate Middleton—was euphoric, with the final look, a bright red gown, summing up the party feel as the 1980 song “Celebration” played. Meanwhile, Ms. Ilincic’s eponymous line punctuated oatmeal and black looks with “shockingly strong” oranges, purples and reds that the Serbian-born designer said she worked closely with mills to create. Many of the vibrant colors on the runway were showcased in strong graphic prints. From the prim yet decadent plants of Jonathan Saunders to Erdem’s artsy collages and Mary Katrantzou’s home décor, the use of digitally manipulated prints put London’s creative talents on display. “In the past five years, there have been so many prints going on, and it’s kind of amazing because it allows you to express this desire for color,” said Christopher De Vos, one half of the Peter Pilotto label. Peter Pilotto’s youth-inspired collection was rife with chain prints that mimicked a checked pattern as they crisscrossed dresses and trousers and blurred into beams of color. Erdem Moralioglu used vibrant color to a different effect. Erdem’s darkly beautiful collection combined a modern artist’s brush stroke of bright, chaotic patterns with luscious black velvet, chiffon and satin, moving away from his trademark feminine florals into something slightly more sinister. Meanwhile, prints altered the mood of Jonathan Saunders’s minimalist creations. This season, influenced by seductive 1940s photographs by Paul Outerbridge, the Scottish designer created patterns of flora and fauna in vibrant oranges, greens and blues that added an old-fashioned elegance to modern shapes. Mr. Saunders, whose background is in printed textiles, often begins his collections with hand-crafted designs and builds his pared-down silhouettes around them. He says that with this collection, it felt right to combine simple shapes “with the kind of opulent, opium, poppy prints and the jewel-like colors.” Clements Ribeiro also went for a feeling of decadence. The label, designed by husband-wife team Inacio Ribeiro and Suzanne Clements, photographed antique documents of Ottoman and Persian textiles and morphed them into one another, using digital technology to blend and dissolve the patterns. When the prints were paired with Victorian jet beads, North African embroideries and longer, leaner silhouettes, the designers’ collection took on a decidedly luxurious feel. But no one is pushing the boundaries of printing quite like Ms. Katrantzou, a Greek designer who has made waves ever since
From left: A structured dress from Emilio de la Morena’s autumn collection; Mary Katrantzou’s designs pushed the boundaries of print; Peter Pilotto’s chain prints mimicked a check pattern she came on the scene three years ago. Last season, in her first solo show, she referenced interior design by sending out models dressed in skirts that resembled lamp shades and strong structured shapes, along with prints that replicated living spaces you’d expect to see in Architectural Digest. This season, Ms. Katrantzou built on that idea with designs inspired by Fabergé eggs and Meissen porcelain, moving deeper into the realm of decorative arts. “I was giving myself a master class in print and pattern and color,” the designer said. Her well-received trompe l’oeil and bias-cut dresses were fashion at its most innovative. They were also London at its best, proving that this city, with its plethora of design colleges, is an incubator for the kind of talent that isn’t afraid to question established rules. “I think the great vibe about London is that people aren’t scared to ex-
press themselves,” said Bridget Cosgrave, fashion and buying director at U.K. boutique chain Matches. “It’s that sort of quirky individuality. “ But the city’s autumn runways also included a refined, buttoned-up side that seemed an homage to history—and, perhaps, a delayed reaction to government austerity measures. Whether it was high ruffled collars and leather corsets over silk gowns at Giles, longer hemlines at Clements Ribeiro or Emilio de la Morena’s sheer and structured refinement, designers seemed inspired by the prim past. But their creative twists offered a glimpse of London’s future.
WSJ.com ONLINE TODAY: Keep up with the latest news from the runway during fashion week in Milan and Paris at WSJ.com/runway.
“If I want to send a message,” Sam Goldwyn is supposed to have said, in a swipe at the pompous self-righteousness of the auteurs of his profession, “I’ll use Western Union.” Of course, his heirs have no such inhibition. They really do see themselves as purveyors of great cultural, social and political messages. The less restrained can’t resist making their points in their acceptance speeches. The rest hope their movies suffice to convey the idea. “The King’s Speech” was the big winner Sunday night, as widely expected. What’s the message? Tom Hooper, Best Director, told of how it was his mother who first suggested he turn “The King’s Speech” into film—and said the lesson was “always listen to your mother.” The film’s writer, David Seidler, picking up the Oscar for Best Screenplay, said the win was a triumph for stutterers everywhere. Well, we’ve had prostitutes, maniacs and drug addicts getting their moment in the Hollywood sun so it’s only fair that stutterers should get a bit of love. But Mr. Seidler’s observation of course, carried a larger truth about the film’s success. It surely appealed perfectly to the Academy’s self-image as the voice of the disadvantaged (even kings can be disadvantaged, apparently). But it also hit all Oscar’s other key messaging points—grand themes of human endeavour, struggles between good and evil. In sum, it was a perfect Oscar story: Unlikely Hero Overcomes Flaw to Achieve Greatness. And not just any Hero or any Greatness. A king, no less, whose triumph over adversity was critical in defeating the greatest tyranny the world has ever seen. That’s the kind of message no one can resist. The acting awards were a familiar mix of Rewards for Best Portrayal of Psychological Breakdown (Natalie Portman), Female Acting Tour de Force (Melissa Leo) and Compulsory Tribute to The Enduring Talent of British Actors (Colin Firth). That last one is surely a message worth hearing.
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THE WALL STREET JOURNAL.
Tuesday, March 1, 2011
LIFE STYLE
Why Luca Rubinacci is crazy for colors The managing director of Rubinacci—an Italian tailor that is expanding in Asia—talks about his style
Luca Rubinacci is managing director of a tailor shop in Naples owned by his family bridge mall. The shop, which will be run by a friend of Mr. Rubinacci’s and sell Rubinacci clothes as well as other labels, is the tailoring house’s only retail presence
in Asia, outside of Japan. Mr. Rubinacci, the brand’s managing director, says he views this expansion into Singapore as “a good start to China.” As with
What was your worst fashion mistake? I am fortunate in that I can experiment...I make mistakes maybe everyday, but others have to say what it is. Next Friday, some guys from Style Forum [an online menswear forum] are coming to Naples. Maybe they will tell me. They think I am the devil of classic [clothing]!
What are you wearing right now? Right now, I’m wearing a gray Prince of Wales check [also known as glen plaid] 12-ounce flannel twopiece suit with a wool knit tie in dark burgundy and blue, and a red shirt with blue stripes. People think I’m crazy with colors! I’m also wearing brown Safari boots, which my father made in the 1990s. All of them are from Rubinacci.
Favorite fashion designer? I like Tom Ford a lot.
What’s the most expensive piece of clothing you’ve ever bought? Except for things like snowboarding clothes, I usually don’t buy outside Rubinacci. But I made myself a denim cashmere jacket. It’s not as expensive as vicuna cashmere but if we sold it, it’d cost about €5,500 (US$7,452).
Sunglasses? I’m very fond of Oakley Frogskins. They’ve recently remade the models from the 1980s. The lenses are very good so I have six, seven pairs in different colors.
Jeans? Marc by Marc Jacobs. Watch? Men wear watches to put something on their arms. I have many bracelets and they give me the same feeling.
WSJ.com ONLINE TODAY: Read more about fashion, food & drink, arts & culture, travel and wealth at Scene Asia by clicking on WSJ.com/scene.
What will your next purchase be? [I will make] a sport jacket made with cotton and wool, without lining on the inside.
Tailors enjoy a boom in bespoke clothes BY NATHANIA ZEVI Rome Custom-made clothes—which were popular in the ’50s and ’60s—are making a big comeback in Europe. “People have come to realize that the expensive designer suit they are used to buying is made to fit a thousand other people,” says Romebased tailor Luigi Gallo, who has been in the trade for more than 30 years. “In addition, they’re paying a huge price for that logo sewed into the jacket.” Amid the buzz of New York and Milan fashion weeks, designers have been saying they see a pick-up in luxury spending after the steep drop-off from the economic crisis. But many custom tailors say business held up even during the recession. Mr. Gallo says he has been swamped with orders for custommade, or bespoke, suits, dresses, wedding gowns and raincoats. Predicting a boom in business, Mr. Gallo even opened a small tailoring school in 2007 to groom young artisans. Business is thriving as well on London’s Savile Row, where an average of 10,000 handmade garments are sold every year. The Row has seen a steady increase in business in the past five years despite the economic downturn. In 2010, order books swelled more than 10% from 2009, says Mark Henderson, founder and chairman of Savile Row Bespoke, a group of 14 companies formed to protect and promote the art of handcrafted tailoring on
Alamy
You may not have heard of Luca Rubinacci, but he is the subject of a major online following and intense debates over his vibrant color sense. His grandfather, Gennaro Rubinacci, founded the original London House for menswear in 1930 in Naples after getting numerous questions about where he got his suits. Eight decades later, London House is known now as Rubinacci and is famous for its soft-shoulder jackets and woven ties. Today, Rubinacci offers its ready-to-wear, made-to-measure and bespoke collections in Rome, Milan, New York, London and Tokyo, but all of its clothes are still made in the same Neapolitan atelier it has occupied since it was founded. In Tokyo, the tailoring house sells its ready-made clothes at Isetan department store, but its shops in other cities are run by the Rubinacci family. Come April, Mr. Rubinacci will be the “face” of a store in Singapore, called the Rake, which will open at the Malmaison shopping gallery within the Knights-
Luca Rubinacci
BY KRISTIANO ANG
his other retail stores around the world, he will travel there frequently with his father, Mariano, to conduct made-to-measure fittings for customers. A regular face on popular online photoblog The Sartorialist, Mr. Rubinacci, who lives in Milan, is the subject of heated online debates about his flamboyant dress sense. He shared some of his style secrets with us.
Tailors at the Savile Row shop Henry Poole in London specialize in custommade clothes. Savile Row. Mr. Henderson said he’s convinced the recession has made people question the true value of things. “People have started to look for real quality,” he says. It’s an opinion shared by Simon Cundey, owner and director of Henry Poole, the first firm to open on the Row. “Customers like to see where things come from, how their suits are cut and sewed, in the exact same way they have come to appreciate seeing the kitchen of the restaurant,” he says. Prices for tailor-made men’s suits in Italy, France and Britain range from €400 (US$550) to several thousand euros. Mr. Gallo sells men’s made-to-measure suits that range in price from €1,500 to €10,000. His women’s gowns sell for at least €1,800, depending on fabric and style. By comparison, high-end ready-to-wear men’s suits start at around €1,000.
Tuesday, March 1, 2011
9
THE WALL STREET JOURNAL.
OPINION: REVIEW OUTLOOK
India’s Lingering Leviathan
T
wenty years ago, India’s then Finance Minister Manmohan Singh brought out a budget that drastically reduced state intervention in the economy and kicked off a period of high growth. Today as prime minister, Mr. Singh is presiding over a government that is growing the state sector and imperilling future growth. Yesterday’s budget increased social welfare spending while offering little reform to decrease regulatory meddling. Reform-minded critics expressed concerns in the years after Mr. Singh’s historic 1991 budget that those reforms didn’t go deep enough. Later rounds of liberalization didn’t either. And Mr. Singh, once he came to power as prime minister in 2004, never mustered the political will to push further reforms through. Instead, his Congress party-led government has kept echoing “inclusive growth” as its mantra, in an attempt to exploit class divides in a growing economy. The party has touted the idea of “two Indias,” the urban rich versus the rural poor. But if there’s one reason the poor in rural areas have remained poor is that reforms never reached sectors such as agriculture and land. Instead the benefits have been concentrated in urbancentric industries. Take agriculture itself, a sector that employs more Indians than any other. Farmers in one state often face restrictions in selling their crops in another. When they are allowed to sell, infra-
structure bottlenecks slow down trans- the economy. But, as Niranjan Rajadportation and storage. Supply chains are hyaksha explained on these pages last notoriously inefficient in India, largely month, Mr. Singh has in practice found because restrictions on foreign direct it easier to promote “inclusiveness” by investment prevent the expanding the dole entry of a Wal-Mart or than by embarking on a Carrefour. Whatever The 2011 budget fails to genuine deregulation. chains exist are domiWhich brings us to nated by a few traders, honor the legacy of the the spending addiction who don’t allow new 1991 reforms by cutting that’s characterized Mr. entrants into the marSingh’s Congress Partyket. Moreover, com- back regulation. led government. Somodity exchanges that called social-sector can offer farmers betspending, as a share of ter price signals haven’t been fully liber- total expenditure, rose to 19.27% from alized; they are still regulated by a po- 13.75% in 2005-06. Finance Minister litical ministry instead of an Pranab Mukherjee continued that tradiindependent entity. tion in his budget speech yesterday. Another threat to growth is the lack Mr. Mukherjee proudly announced of an efficient market in land, a prob- that social spending will rise an extra lem that’s starting to affect urban in- 17% next year. In January, the governdustries as they try to expand capacity. ment said it would index its rural jobs The nature of India’s eminent domain scheme, which guarantees 100 days of laws has left land acquisition and prop- (often) make-work employment to the erty rights murky. The greatest victim rural poor, to inflation. The government here is, of course, the rural poor who is also contemplating increasing its food can’t earn a proper profit from selling subsidies dramatically through a new their land. “food security” law; one liberal estimate Then there are the socialist-era labor pegs the increase in subsidy at nearly 1 laws still on the books that prevent trillion rupees ($22.1 billion). Total govfactories from providing employment to ernment spending is set to rise by 13.4% the poor, stalling the necessary process from last year’s budgeted estiof urbanization. And New Delhi’s stran- mates—though readers should note that glehold on higher education means the New Delhi ended up spending more last poor can’t be easily educated. year than it budgeted for. As these examples show, growth This level of spending in the past has could be much more “inclusive” if re- been cause for alarm, especially with forms were extended to more areas of the bond markets. This time may be dif-
ferent, because increased revenue from taxes and one-time privatizations, as New Delhi estimates, can offset what it plans to spend. Of course, these estimates and plans invite skepticism, as Ruchir Sharma writes nearby. Investors should nevertheless keep careful watch on spending and regulatory policies to understand the longterm sustainability of India’s public finances. Asset sales to the private sector won’t come every year; tax revenues are higher only because nominal GDP, thanks to high inflation, is buoyant. What investors should care about instead is New Delhi’s recurring, or revenue, expenditure. It’s a little suspicious that the one accounting trick Mr. Mukherjee pulled out of his hat yesterday was rearranging how the government measures the deficit between revenue spending and receipts. Perhaps investors have already started to rethink the sustainability of India’s growth. This year has seen foreigners pull $2 billion out of the stock market this year, as they question both regulatory and macroeconomic trends. FDI shrank last year. The best way for New Delhi to reassure investors about the long-term potential of its economy would be to cut spending and, more importantly, enact a second generation of reforms targeting land acquisition and labor laws. It’s past time for Mr. Singh’s second supplyside revolution, one that finally reaches rural India.
Regulating ‘Mental Activity’
A
nother U.S. federal judge ruled last week that ObamaCare is constitutional, and Democrats are saying this makes the score 3-2 for their side. We disagree with the decision, but it’s worth noting the judge’s reasoning because it so neatly illustrates the constitutional stakes. The crux of these cases is whether the government’s power to regulate
“Commerce . . . among the several States” is so broad that it can mandate that everyone buy health insurance. Judge Gladys Kessler of the D.C. district court says in her 64-page opinion that this power includes regulating even “mental activity, i.e., decision-making.” The distinction between activity and inactivity is “of little significance,” Judge Kessler writes. “It is pure seman-
tics to argue that an individual who makes a choice to forgo health insurance is not ‘acting’ . . . Making a choice is an affirmative action, whether one decides to do something or not do something. They are two sides of the same coin.” Whoa. In other words, there is no constitutional principle that limits federal coercion. Any decision that doesn’t
conform to what the government thinks you should do is an economic decision and therefore everything is subject to regulation. Though she may not have intended it, Judge Kessler has shown that the real debate is between a government of limited and enumerated powers as understood by the Founders, and a government whose reach includes “mental activity.”
An Embarrassment of Riches
W
hile most advanced economies struggle to control their deficits, Hong Kong has the opposite problem: a massive surplus. Last week Financial Secretary John Tsang unveiled the city’s budget for 2011-12, but it was the final reckoning on last year’s finances that drew most attention. Revenues exceeded spending by $9.1 billion last year, Mr. Tsang announced, the sixth surplus in as many years. This naturally raises the question: Why does the government keep taking more out of its citizens’ pockets than it needs? Many in Hong Kong are starting to resent the government’s wealth when they themselves are struggling amidst rising prices. A poll taken after Mr. Tsang’s speech last Wednesday suggested that only 36% of Hong Kong people approve of his performance, 17.4 percentage points fewer than last year. Members of the Legislative Council threatened to veto the new budget, saying that it does not go far
enough to aid the city’s poor. Various po- cumulate in the first place. This year the litical groups and unions are planning to city’s fiscal reserves are estimated to hit march on Government House in protest. $75.8 billion, or 34% of GDP. This doesn’t Part of the problem is that the govern- count the Exchange Fund, which is supment has conditioned the public to expect posed to back the Hong Kong dollar; the a raft of new giveaways fund totaled $268.9 bilat budget time. Each lion at the end of last year the financial secre- Give Hong Kong’s year, almost double the tary nods in the direcmonetary base. massive public surplus tion of rebating excess The government has reserves but only offers back to the people. a host of excuses to jusone-off sweeteners that tify its hoarding. It please no one entirely. fears the fiscal drain This year’s goodies include rent relief for that any economic downturn would bring, public housing tenants, a subsidy for resi- particularly in lost revenues from land dential electricity bills and a $770 injec- sales. The local property market does intion into residents’ pension accounts. This deed provide a substantial and volatile last measure in particular has drawn ire contribution to the city’s fiscal takings, among civil-service unions, which say that but the degree of government caution tomany of their members have been ex- day is excessive. Even a massive recession cluded from the fiscal gravy. such as the one that followed the 1997 The more fundamental issue is that Asian financial crisis would only put a these great piles of cash are allowed to ac- small dent in the current reserves.
Amid the uncertainty that Mr. Tsang highlights, Hong Kong’s best option is to play to its strength as a low-tax, low-regulation environment for business. Hong Kong residents enjoy top marginal tax rates of 15% for salaries and 16.5% for company profits; these were once considered remarkably low, but the city’s Asian peers are catching up. Hong Kong’s comfortable fiscal position makes it wellplaced to solidify its status as the preferred destination for footloose capital. Across-the-board tax cuts would further incentivize growth and entrepreneurship while avoiding the economic distortions and political stickiness of ad hoc rebates. Hong Kong Chief Executive Donald Tsang has repeatedly waffled on his 2007 promise to cut the corporate tax rate to 15%. If the ongoing public embarrassment of pointless surpluses does not spur the city’s leaders to action, then perhaps the erosion of its regional competitiveness will.
10
THE WALL STREET JOURNAL.
Tuesday, March 1, 2011
OPINION
BY ROBERT BARRO How ironic that Wisconsin has become ground zero for the battle between taxpayers and publicemployee labor unions. Wisconsin was the first state to allow collective bargaining for government workers (in 1959), following a tradition where it was the first to introduce a personal income tax (in 1911, before the introduction of the current form of individual income tax in 1913 by the federal government). Labor unions like to portray collective bargaining as a basic civil liberty, akin to the freedoms of speech, press, assembly and religion. For a teachers union, collective bargaining means that suppliers of teacher services to all public school systems in a state—or even across states—can collude with regard to acceptable wages, benefits and working conditions. An analogy for business would be for all providers of airline transportation to assemble to fix ticket prices, capacity and so on. From this perspective, collective bargaining on a broad scale is more similar to an antitrust violation than to a civil liberty. In fact, labor unions were subject to U.S. antitrust laws in the Sherman Antitrust Act of 1890, which was first applied in 1894 to the American Railway Union. However, organized labor managed to obtain exemption from federal antitrust laws in subsequent legislation, notably the Clayton Antitrust Act of 1914 and the National Labor Relations Act of 1935. Remarkably, labor unions are
not only immune from antitrust laws but can also negotiate a “union shop,” which requires nonunion employees to join the union or pay nearly equivalent dues. Somehow, despite many attempts, organized labor has lacked the political power to repeal the key portion of the 1947 Taft Hartley Act that allowed states to pass right-to-work laws, which now prohibit the union shop in 22 states. From the standpoint of civil liberties, the individual right to work—without being forced to join a union or pay dues—has a much better claim than collective bargaining. (Not to mention that “right to work” has a much more pleasant, liberal sound than “collective bargaining.”) The push for right-to-work laws, which haven’t been enacted anywhere but Oklahoma over the last 20 years, seems about to take off. The current pushback against labor-union power stems from the collision between overly generous benefits for public employees—notably for pensions and health care—and the fiscal crises of state and local governments. Teachers and other public-employee unions went too far in convincing weak or complicit state and local governments to agree to obligations, particularly definedbenefit pension plans, that created excessive burdens on taxpayers. In recognition of this fiscal reality, even the unions and their Democratic allies in Wisconsin have agreed to Gov. Scott Walker’s proposed cutbacks of benefits, as long as he drops the restrictions on collective bargaining. The
Associated Press
Unions vs. the Right to Work
problem is that this “compromise” leaves intact the structure of strong public-employee unions that helped to create the unsustainable fiscal situation; after all, the next governor may have less fiscal discipline. A long-run solution requires a change in structure, for example, by restricting collective bargaining for public employees and, to go further, by introducing a right-to-work law. There is evidence that right-towork laws—or, more broadly, the pro-business policies offered by right-to-work states—matter for economic growth. In research published in 2000, economist Thomas Holmes of the University of Minnesota compared counties close to the border between states with
and without right-to-work laws (thereby holding constant an array of factors related to geography and climate). He found that the cumulative growth of employment in manufacturing (the traditional area of union strength prior to the rise of public-employee unions) in the right-to-work states was 26 percentage points greater than that in the non-right-to-work states. Beyond Wisconsin, a key issue is which states are likely to be the next political battlegrounds on labor issues. In fact, one can interpret the extreme reactions by union demonstrators and absent Democratic legislators in Wisconsin not so much as attempts to influence that state—which may be a lost cause—but rather to deter
politicians in other states from taking similar actions. This strategy may be working in Michigan, where Gov. Rick Snyder recently asserted that he would not “pick fights” with labor unions. In general, the most likely arenas are states in which the governor and both houses of the state legislature are Republican (often because of the 2010 elections), and in which substantial rights for collective bargaining by public employees currently exist. This group includes Indiana, which has recently been as active as Wisconsin on labor issues; ironically, Indiana enacted a right-to-work law in 1957 but repealed it in 1965. Otherwise, my tentative list includes Michigan, Pennsylvania, Maine, Florida, Tennessee, Nebraska (with a nominally nonpartisan legislature), Kansas, Idaho, North Dakota and South Dakota. The national fiscal crisis and recession that began in 2008 had many ill effects, including the ongoing crises of pension and health-care obligations in many states. But at least one positive consequence is that the required return to fiscal discipline has caused reexamination of the growth in economic and political power of public-employee unions. Hopefully, embattled politicians like Gov. Walker in Wisconsin will maintain their resolve and achieve a more sensible long-term structure for the taxpayers in their states.
Mr. Barro is a professor of economics at Harvard and a senior fellow at Stanford University’s Hoover Institution.
Ireland Votes for Stability BY OLIVER O’CONNOR Predictions about social unrest in Ireland as a result of the financial crisis have been proved wrong. On Friday, more than two million votes were cast in peaceful elections. People chose upheaval at the ballot box, not on the street. The outgoing Fianna Fáil party was punished for overseeing Ireland’s economic decline, and is set to lose more than two-thirds of its seats, according to near-complete results Sunday. Sinn Fein more than doubled its small base, but remains far from government power. Voters chose political stability by making Fine Gael the largest party. The center-right party campaigned to cut the employers’ payroll taxes to stimulate jobs, reduce certain VAT rates and the air travel tax, and sell state assets. At the same time, Fine Gael promised not to raise income taxes, and most of all, not the 12.5% rate for corporations. Most of the next €9 billion of fiscal correction will come from spending cuts, not tax hikes. There will be some dilution of Fine Gael policies as it will be likely forced into a coalition government with the Labour Party, the second biggest election winner. But the new government can be expected to stick to the con-
straints of the European Union/ IMF austerity package. It will continue Ireland’s big, long budget correction, while trying to reduce 14% unemployment. Both parties pledged to renegotiate the interest rate on EU loans to reduce the burden to Irish taxpayers. The November EU/IMF deal, with loans of up to €67.5 billion by the year 2013, is no longer seen as the last word on Ireland’s financial situation. The average interest rate of 5.8% for seven years on the European portion of €45 billion is seen as contributing to the high cost of Ireland’s debt problem. It hasn’t escaped Irish attention that the renegotiated deal between Iceland and the U.K. and Netherlands involves a cut of Iceland’s interest rate to 3.2% from 5.5%. The Irish have also noticed that the interest rates for the EU balance-of-payments support for Latvia and Romania are around 2.5%-3%. Irish government debt is already about 100% of GDP (€160 billion) and will rise to between 115% and 124% of GDP in 2014 before possibly stabilizing. Many fear it won’t. The government bailout of Ireland’s banks alone could rise to 36% of debt this year, according to Goodbody Stockbrokers. In addition, Irish banks remain reliant on emergency funding from the European Central
Bank and Irish Central Bank. Nobody can yet say what the final costs of the banks’ bailout will be. The Irish people are wondering why they should make whole the remaining €21 billion of private bank debt that is not yet guaranteed by the state. Why should Irish taxpayers have to suffer for bad lending decisions made elsewhere in Europe?
The new Irish government will neither default on its sovereign debt nor its corporate-tax promises. The simple answer is that the ECB, Germany and other member states insist that national taxpayers have to bear these costs. When and how this became ECB policy is unclear. It seems to have been implicitly in place even before the 2008 Irish bank guarantee. According to outgoing finance minister Brian Lenihan, the Irish government wanted creditors to share some of the costs. The ECB refused. But there is near consensus in Ireland, if not quite in the EU, that some form of restructuring of at least the debt attributable to bank losses will be necessary. What type of restructuring
would best support growth, business and jobs is not clear yet. Some senior bank debt, for example, is owned by Irish institutions, including pension funds. The bottom line is that while each one percentage point reduction of the interest rate on the EU loans could ease the cost to Ireland by 0.4% of GDP, every 10% haircut on the unguaranteed, unsecured bank debt is equivalent to 1.3% of GDP, according to Goodbody analysis. That 3:1 ratio makes haircuts look tantalizing. Does this mean Ireland is heading for imminent insolvency, from which it must be saved at the EU summit next month? Not quite. Monday morning markets don’t yet matter for Ireland. New bank stress tests will be completed only after the summit. But domestic political pressure will drive the next government to seek lower interest rates. The wider euro zone is also under pressure to find a coherent response to the overall European debt problem. In these circumstances, it would be madness for Dublin to bargain away its corporate-tax policy. Some EU leaders may choose to pressure the incoming Taoiseach, Enda Kenny, on this issue to deflect domestic political heat. If so, Mr. Kenny will absorb the heat, but not move. Suggestions in the media that
Ireland should exchange a one percentage point increase in the corporation tax rate for a one percentage point reduction in the EU interest rate might appeal to an accountant’s mindset, but would be a strategic blunder. Hiking the corporate tax rate would break the promise made to the thousands of international investors who own €172 billion of foreign direct investment in Ireland, the equivalent of 107% of the country’s GDP. It cannot make sense for Ireland, or Europe, to pursue a policy of protecting sovereign debt investors by burning direct investors. Breaking that commitment would be tantamount to a default in the eyes of foreign investors and would undermine Ireland’s growth prospects. The Irish political class understands this, which is why the new Irish government will neither default on its sovereign debt nor its corporate-tax promises. Fortunately, Ireland still has a real economy that is increasing its competitiveness and exports. The agri-food, medical devices, pharma and international services sectors are all vibrant. Hotel prices are now the cheapest in Western Europe. There is hope.
Mr. O’Connor, a business consultant based in London, is a former adviser to the Irish government.
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OPINION
BY RUCHIR SHARMA The financial markets’ response to India’s budget yesterday was telling. Stocks inched higher, bond yields drifted lower and the rupee didn’t budge against the dollar. In other words, the budget just managed to exceed the low expectations of most analysts. But the muted reaction from traders still indicates how difficult a task Indian authorities face in the coming year.
After years of rapid growth, New Delhi’s policy makers think it is inevitable. They see no urgency in reforms. With India’s total fiscal deficit—for the central government and the states—still nearly 10% of GDP, investors were intensely focused on the government’s finances before the budget speech. To their surprise, Finance Minister Pranab Mukherjee seemed to chart a path of fiscal responsibility by increasing total spending a mere 3.4% (over what it ended up spending last year) and projecting a 5% reduction in the government’s borrowing program for the fiscal year that begins April 1. These numbers represent a break from the past, as the current government has otherwise been on a spending spree in its apparent effort to create a welfare state for India. Yet while investors weren’t exactly disappointed, they were clearly not impressed by the budget arithmetic. To wit, they doubt if the government can
keep spending under such a tight leash and cut subsidies in oil, food and fertilizers by the 12% promised. It will have to do that in the face of surging oil prices and the ruling Congress party’s commitment to extending food subsidies to more than 70% of India’s population. Doubts also prevail over whether the government will be able to meet its revenue targets, with the estimated 17% increase in tax receipts based on an economic growth assumption of 9% for the fiscal year. Recent data showing cement shipping in lower volumes (a sturdy proxy for construction activity) and less robust auto sales suggest that economic momentum is decelerating. Many were excited by India’s resilience to the global financial crisis, but it may not last. Both fiscal and monetary stimulus played a major role in buoying the economy, and the stimulus effects are now beginning to fade as the government loses its enthusiasm for sustained stimulus spending. As it should. India’s public finances have never inspired great confidence, and now public debt is hovering around 70% of GDP. With high inflation, it’s necessary for the central bank to further tighten monetary policy. This means that for India to achieve its ambitious growth target in a sustainable fashion, the private sector has to take the baton from the government. Private investment has to surge. Unfortunately, the budget signs on that front are not too encouraging in what they say about the government’s commitment to encouraging that kind of investment. Large parts of India’s corpo-
Reuters
A Budget That Sells India Short
Finance Minister Pranab Mukherjee prepares to unlock his economic strategy. rate sector have been reluctant to make fresh investment commitments at home given the widespread corruption involved in setting up new projects. Foreign investors increasingly find that the need to have the right government connections trumps any other business criteria. Concerns about crony capitalism have been shoved under the carpet because New Delhi policy makers think that it’s part and parcel of quick development. And after many years of rapid growth over the past decade, aided in part by the boom across emerging markets, there is a sense of complacency that India is destined to grow at a trend rate of 8-9%, come what may, so combating corruption is needless. Policy makers have also had little incentive to carry out any meaningful economic reform
when growth seemed to effortlessly chug along at more than 8%. But in recent months, cracks have begun to show up in the much touted “India story,” with inflation surfacing as a major issue and the private sector showing more inclination to invest abroad than at home. Indian policy makers need to realize that the global environment is unlikely to be as favorable in the coming years as it was in 2003-08, buoyed as it was then by easy money and relatively healthy demand in the developed world. Money is again easy in the West, but damaged balance sheets mean lower demand in that debt-stricken part of the world, which then hurts export growth. India isn’t as export-dependent as China, but it is still affected by trade slowdowns. And with commodity
prices rising sharply, capital that would have gone to, say, emerging markets gets siphoned into commodities; India is dependent on capital inflows to fund a current account deficit of more than 3% of GDP. The budget picture is not entirely bleak, especially compared to the budgets before this one. By not carrying on with the streak of populist announcements that characterized earlier budgets, the government did show greater sensitivity this time to the changed economic environment, where investors are more circumspect of India’s growth profile. Perhaps New Delhi isn’t taking high growth to be the birthright it assumed in the past, and isn’t simply preoccupied with dividing the revenue pie for populist measures. But the less-than-enthusiastic reaction from the international community shows that a lot more economic reform must happen for the verve to come back into India’s markets. These reform measures need to include further liberalization of foreign direct investment in the multibrand retail sector as well as legislative changes in India’s land acquisition laws and tax codes to entice more investment, and especially longer-term investment. The budget gave few, if any, concrete indications along such reform lines. It was more in the nature of “do no harm” to the economy. That’s not a bad start. But it’s not good enough to get to the 9% growth and 5% inflation marks to which Indian policy makers aspire.
Mr. Sharma is head of emerging markets at Morgan Stanley Investment Management.
The Libyan Uprising: Lessons From Iraq BY AHMAD CHALABI Baghdad As we watch Libyan despot Moammar Gadhafi lash out at his subjects with all the murderous force at his disposal, those of us in Iraq are reminded of another uprising and another dictator who butchered thousands to preserve his reign of terror. In 1991, at the end of the first Gulf War, the Iraqi people heeded President George H.W. Bush’s call to rid themselves of the regime of Saddam Hussein. The regular
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Iraqi army had either disappeared or was in open mutiny, and Saddam’s loyalist forces were in disarray. Within days, 14 of Iraq’s 18 provinces were out of the regime’s control, and more than half of Iraq’s population had their first taste of freedom in a generation. The noose was closing around Saddam’s neck when a fateful decision was made in Washington. Prompted by foreign policy “realists” in his administration—such as Joint Chiefs of Staff Chairman Colin Powell, National Security Adviser Brent Scowcroft and National Security Council Senior Director for Near East and South Asian Affairs Richard Haass—Mr. Bush allowed Saddam to fly military aircraft to put down the uprising. What followed was a massacre. Up to 330,000 Iraqi civilians were killed by Saddam’s brutal tactics, which included using helicopter gunships to strafe neighborhoods and tanks to blast schools, hospitals and places of worship. While thousands of U.S. troops were still on Iraqi soil and in some cases were close enough to watch, the tyrant unleashed the power of modern
weaponry against men, women and children. The news from Libya is an alltoo-chilling reminder of those dark days in Iraq. It is no coincidence that Gadhafi often mentions Iraq in his tirades. He
The Security Council’s immediate first step should be to authorize a no-fly zone to prevent further butchery. knows how Saddam clung to power by sheer brute force while playing on the West’s fear of instability. The Libyan regime has already used aircraft against unarmed protesters, among other atrocities. That’s why it is imperative for the United Nations Security Council to impose a no-fly zone over the most populous areas of Libya. Its resolution this weekend imposing sanctions on the regime was necessary but not sufficient to help the Libyans who have voted with their lives against dictatorship.
The international community that sold Gadhafi his arsenal now has a responsibility to help the Libyans liberate themselves. Direct assistance to the forces of change and democracy is the best way to ensure a transition to democracy. The Security Council should open a dialogue with the Libyan opposition immediately with the aim of providing humanitarian, and possibly military, assistance. It was only after Saddam’s mass killings provoked a tidal wave of refugees from Iraq into neighboring countries in March and April 1991 that the international community sprung into action. The Security Council passed Resolution 688, which established a legal separation between the Iraqi people and the regime, and called on Saddam to cease the repression of the people. The coalition used Resolution 688 as the legal basis for imposing a no-fly zone first in northern and later in southern Iraq. These actions may have come too late for hundreds of thousands of Iraqis in 1991, but they serve as a good precedent for preventing a similar bloodbath in Libya. In all the debate about the
rights and wrongs of the Iraq war, it is hardly ever mentioned that after Saddam was removed we found 313 mass graves in Iraq. I will never forget the day in May 2003 when we visited a newly uncovered site south of Baghdad near the town of Hilla. Saddam’s forces had dumped 12,000 bodies from the 1991 uprising there. The victims were civilians, killed for daring to stand up to a dictator and yearn for freedom. A surviving Gadhafi regime, murderous and wounded, would be a nightmare for the Libyan people and a threat to international peace. The international community owes it to the Libyans to help them remove the tyrant and prevent history from repeating itself. No foreign troops are necessary, just assistance. Twenty years ago in these pages I called on the West to drop its policy of supporting Arab dictatorship in order to maintain stability. The best way to consign that shortsighted and immoral policy to the ash heap of history is to help Arabs liberate themselves.
Mr. Chalabi is an Iraqi legislator.
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Tuesday, March 1, 2011
IN DEPTH
Privacy: hot item as Web tracking grows numbers or email addresses that make pering out new privacy services in hopes of sonal tracking tougher. Still others sell paid heading off regulation. Most let users opt services, such as removing people’s names out of seeing targeted ads, though they from marketing databases. generally don’t prevent tracking. “Entrepreneurs smell opportunity,” says The privacy market has been tested beSatya Patel, venture capitalist at Battery fore, during the dot-com boom around Ventures, which led a group of investors 2000, a time when online tracking was just that poured $8 million in June into a startbeing born. A flurry of online-privacy-reup called SafetyWeb, which helps parents lated start-ups sprang up, but only a few monitor their children’s activities on socialsurvived due to limited consumer appetite. networking sites and is rolling out a new As recently as 2008, privacy was so hard privacy-protection to sell that entrepreservice for adults, neur Rob Shavell myID.com. says he avoided even For the lightly using the word when regulated tracking he pitched investors industry, a big test of on his start-up, A WAll Street JournAl InveStIgAtIon the new privacy marAbine Inc., which ketplace is whether it will quiet the growblocks online tracking. Today, he says, ing chorus of critics calling for tougher Abine uses the word “privacy” again, and government oversight. Lawmakers in Febru- has received more than 30 unsolicited apary introduced two separate privacy bills in proaches from investors in the past six Congress, and in December the Obama admonths. ministration called for an online-privacy In June, another company, TRUSTe, “bill of rights.” The U.S. Federal Trade raised $12 million from venture capitalists Commission is pushing for a do-not-track to expand its privacy services. At the same system inspired by the do-not-call registry time, Reputation.com Inc. raised $15 million that blocks phone calls from telemarketers. and tripled its investments in new privacy The industry is hustling on several initiatives including a service that removes fronts to respond to regulatory concerns. people’s names from online databases and a Last week, Microsoft endorsed a do-nottool to let people encrypt their Facebook track system. Microsoft also plans to add a posts. powerful antitracking tool to the next ver“It’s just night and day out there,” says sion of its Web-browsing software, Internet Abine’s Mr. Shavell. Explorer 9. That’s a reversal: Microsoft’s Online advertising companies—many of earlier decision to remove a similar privacy which use online tracking to target feature from Explorer was the subject of a ads—are also jumping into the privacy-proJournal article last year. tection business. AOL, one of largest online The online-ad industry itself is also rolltrackers, recently ramped up promotion of
What they
KNOW
privacy services that it sells. And in December, enCircle Media, an ad agency that works with tracking companies, invested in the creation of a privacy startup, IntelliProtect. Last month IntelliProtect launched a $8.95-a-month privacy service that will, among other things, prevent people from seeing some online ads based on tracking data. In its marketing material, IntelliProtect doesn’t disclose its affiliation with the ad company, enCircle Media, that invested in it. When contacted by the Journal, IntelliProtect said it would never give or sell customer data to other entities, including its parent companies. A co-founder of Allow, Justin Basini, also traces his roots to the ad industry. Mr. Basini came up with the idea for his new business when working as head of brand marketing for Capital One Europe. He says he was amazed at the “huge amounts” of data the credit-card companies had amassed about individuals. But the data didn’t produce great results, he says. The response rate to Capital One’s targeted mailings was 1-in-100, he says—vastly better than untargeted mailings, but still “massively inefficient.” Mr. Basini says. “So I thought, ‘Why not try to incentivize the customer to become part of the process?’ ” People feel targeted ads online are “spooky,” he says, because people aren’t aware of how much personal data are being traded. His proposed solution: Ask people permission before showing them ads targeted at their personal interests, and base the ads only on information people agree to
Gareth Phillips for The Wall Street Journal
Continued from first page sonal data. “I’m not paranoid about privacy,” he says. But as he learned more, he says, he became concerned about how his data were getting used. People “have no idea where it is going to end up,” he says. So in December, Mr. Sequeira became one of the first customers of London startup Allow Ltd., which offers to sell people’s personal information on their behalf, and give them 70% of the sale. Mr. Sequeira has already received one payment of £5.56 ($8.95) for letting Allow tell a credit-card company he is shopping for new plastic. “I wouldn’t give my car to a stranger” free of charge, Mr. Sequeira says, “so why do I do that with my personal data?” As people are becoming more aware of the value of their data, some are seeking to protect the data, and sometimes sell the data. In January at the World Economic Forum in Davos, Switzerland, executives and academics gathered to discuss how to turn personal data into an “asset class” by giving people the right to manage and sell the data on their own behalf. “We are trying to shift the focus from purely privacy to what we call property rights,” says Michele Luzi, a director at consulting firm Bain & Co. who led the Davos discussion. Allow, the company that paid Mr. Sequeira, is just one of nearly a dozen startups hoping to profit from the nascent privacy market. Several promise to pay people a commission on the sale of their data. Others offer free products to block online tracking, in the hopes of later selling users other services—such as disposable phone
Testing the new privacy marketplace are people like Giles Sequeira, a London real-estate developer who recently began selling personal details about himself to advertisers.
Tuesday, March 1, 2011
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THE WALL STREET JOURNAL.
IN DEPTH The nascent privacy marketplace Companies are introducing free and paid products that help people manage the way companies track their online activities. Some services pay people when their personal details are used. Selected offerings:
Reputation.com: Paid service helps people manage their image across social-networking sites and other online databases.
Allow: Manages and sells people’s personal information, promising to pay them 70% of the money it makes.
PrivacyChoice: Free product allows people to opt out of online tracking.
THREE TYPES OF PRIVACY PRODUCTS:
Data vault: Collects and stores users’ data, pays a commission
Tracking protection: Alerts users when they are being monitored online Al
Reputation management: Helps control users’ online profile
COMPANY:
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provide. In 2009, Mr. Basini left Capital One and teamed up with co-founder Howard Huntley, a technologist. He raised £440,000 ($708,400) from family, friends and a few investors, and launched Allow in December. The company has attracted 4,000 customers, he says. Mr. Basini says his strategy is to first make individuals’ data scarce, so the data can become more valuable when he sells the data later. To do that, Allow removes its customers from the top 12 marketing databases in the U.K., which Mr. Basini says account for 90% of the market. Allow also lists its customers in the official U.K. registries for people who don’t want to receive telemarketing or postal solicitations. Currently, Allow operates only in the U.K., which (unlike the U.S.) has a law that requires companies to honor individuals’ requests to be removed from marketing databases. Then, Mr. Basini asks his customers to
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create a profile that can contain their name, address, employment, number of kids, hobbies and shopping intent—in other words, lists of things they’re thinking about buying. Customers can choose to grant certain marketers permission to send them offers, in return for a 70% cut of the price marketers pay to reach them. Allow says it has finalized a deal with one marketer and has five more deals it hopes to close soon. Mr. Basini says Allow tries to prevent people from “gaming” the system by watching for people who state an intention to buy lots of things, but don’t follow through. Because Allow’s data come from people who have explicitly stated their interest in being contacted about specific products, the data can command a higher price than data gathered by stealthier online-tracking technologies. For instance, online-tracking companies routinely sell pieces of information about people’s Web-browsing habits for less than
a penny per person. By comparison, Allow says it sells access to Mr. Sequeira for £5 to £10 per marketer. Mr. Sequeira, the London real-estate executive, says that after he filled out an “intention” to get a new credit card, he received a £15.56 credit in his Allow account: a £10 signing fee plus a £5.56 payment from the sale of his data to a credit-card marketer. So far, he says, he hasn’t received a card offer from the company. “I don’t think it’s going to make a lifechanging amount of money,” says Mr. Sequeira. But, he says he enjoyed the little windfall enough that he is now letting Allow offer his data to other advertisers. “I can see this becoming somewhat addictive.”
As people are becoming more aware of the value of their data, some are seeking to protect the data, and sometimes sell the data. In January at the World Economic Forum in Davos, Switzerland, executives and academics gathered to discuss how to turn personal data into an ‘asset class’ by giving people the right to manage and sell the data on their own behalf.
WSJ.com ONLINE TODAY: Read more from the Journal’s series on Internet privacy at WSJ.com/WhatTheyKnow
Groupon, Tencent to create Chinese retail-deals site BEIJING—Deals website Groupon Inc. is teaming up with Chinese Internet giant Tencent Holdings Ltd. to create a group-buying website in China, which will place the U.S. company ahead of many other major online companies in building a presence in the world’s biggest Internet market. Groupon has grown rapidly since its creation in late 2008 by selling discounted products and services from local merchants, such as restaurants and nail salons, to large groups of consumers. For Chicago-based Groupon, which announced the joint venture Monday, the deal represents an attempt to expand overseas in a market where many foreign Internet companies have failed. For Shenzhen-based Tencent, whose nearly $50 billion in market capitalization makes it one of the world’s most valuable Internet companies, the Groupon tie-up is an attempt to move further beyond its core businesses of online gaming and messaging. Groupon’s move could prompt other U.S. Internet companies to redouble their efforts to enter China, a difficult market to penetrate because of its murky regulatory landscape and fierce domestic competition. China continues to block access in the country to Facebook and
Twitter, two prominent U.S. social-networking companies, apparently because Chinese censors otherwise would be unable to control content on the overseas sites. Groupon’s move also will add to rising competition in China’s nascent, fast-grow-
ing market for group-buying services, where more than 1,000 Chinese services were started in the past year. Last week, Taobao—the online consumer marketplace of Alibaba Group Holding Ltd., another of China’s biggest Internet companies—said it would pro-
Associated Press
BY OWEN FLETCHER
Groupon’s move could prompt other U.S. Internet companies to redouble their efforts to enter China. Above, a user recently browsed the Chinese website of Groupon.com in Beijing.
mote domestic businesses on its groupbuying website. Taobao said it has agreements with 10 Chinese group-buying sites to include their offerings on its platform. Groupon said that its new China site with Tencent, GaoPeng.com, will offer customers discounts at shops in China via daily emails. The service will initially cover Beijing and Shanghai before expanding to other cities. “The collaboration combines Groupon’s global group-buying experience with Tencent’s in-depth knowledge of Chinese online communities,” the U.S. company said. GaoPeng.com, which in Chinese sounds roughly like “Groupon,” is accepting user registrations and will begin delivering deals in March, the company said. The website is funded by Groupon, a Tencent investment vehicle called the Tencent Collaboration Fund and Yunfeng Capital, a fund founded by investors including Alibaba Group Chairman Jack Ma. Yahoo Inc. owns a roughly 40% stake in Alibaba Group. According to the China Internet Network Information Center, China had 18.75 million group-buying users by the end of last year, and the category is likely to have rapid growth this year. —Aaron Back and Loretta Chao in Beijing contributed to this article.
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THE WALL STREET JOURNAL.
Tuesday, March 1, 2011
FROM PAGE ONE
Subsidies stir concern
Agence France-Presse/Getty Images
Rebels on Monday hold antitank rockets in the eastern city of Benghazi, Libya’s second-largest city.
Libyan rebels get assistance Continued from first page manded Col. Gadhafi leave office “without further violence or delay.” She said she had discussed with foreign ministers of European and other governments further steps to follow on from a U.N. Security Council resolution passed Saturday that established an arms embargo and imposed an asset freeze on people close to the Libyan leader. Mrs. Clinton said she had discussed setting up a U.N.-controlled zone for humanitarian assistance in Libya and a no-fly zone over Libyan airspace in a meeting Monday with foreign ministers of Germany, France, the U.K. and Italy. ”We continue to explore all possible plans for action. Nothing is off the table so long as the Libyan government continues to threaten and kill Libyan citizens,” she said. “A nofly zone is an option we are actively considering.” U.S. Defense Department spokesman Col. Dave Lapan said Pentagon planners are working on various options and contingency plans as the violence aimed at overthrowing the government continues in the North African nation, the Associated Press reported. Col. Lapan told reporters Monday that as part of that planning, the Pentagon is repositioning some naval and air forces. British Prime Minister David Cameron said Monday his country wouldn’t rule out the use of “military assets” in confronting Col. Gadhafi, and told Parliament that he has asked the U.K.’s Ministry of Defence to work with “our allies” on plans for a no-fly zone. Britain on Monday also announced an immediate freeze of the assets of Col. Gadhafi and those of five of his children. U.K. Foreign Secretary William Hague said Britain had stopped the shipment of banknotes to Libya worth £900 million ($1.45 billion). Further details of the shipment weren’t immediately available from his staff. Earlier Monday, German Foreign Minister Guido Westerwelle said he had proposed a 60-day payments freeze to Libya. Italy’s Foreign Minister Fraco Frattini said “he wouldn’t exclude” a moratorium on payments to Libya for oil and gas. In Paris, Prime Minister François Fillon said Monday that France was sending two planes with humanitarian aid to Benghazi, the opposition stronghold in eastern Libya. The planes would leave “in a few hours”
for Benghazi with doctors, nurses, medicines and medical equipment. The Libyan leader’s regime clamped down in its stronghold in the capital, where residents said food prices have skyrocketed. The sides in Libya’s crisis appeared entrenched, and the direction it takes next could depend on which can hold out longest. Col. Gadhafi’s opponents, including mutinous army units, hold nearly the entire eastern half of the country, much of the oil infrastructure and some cities in the west. Col. Gadhafi is dug in in Tripoli and nearby cities. Around the capital, the government appeared to be strengthening a defensive perimeter. Residents reported seeing tanks setting up positions on the eastern outskirts. The Libyan dictator has launched by far the bloodiest crackdown in a wave of antigovernment uprisings sweeping the Arab world, the most serious challenge to his four decades in power. In Benghazi, Col. Hussein said the aircraft that had attempted Monday to bomb the city rerouted and dropped their payloads on Ajdabiya, a rebel-controlled city about 120 miles west of Benghazi. The planes bombed the munitions storage facilities of the rebel army, according to Col. Hussein. Col. Hussein said Ras Lanoof, a small seafront town that had been the last rebel-controlled town in the west, fell to about 150 government troops late Sunday. Col. Hussein said pro-Gadhafi forces are on the move, consolidating along the de facto front line between the rebel controlled east and pro-Gadhafi western half of the country. About 3,000 pro-Gadhafi forces came from the pro-Gadhafi desert stronghold of Sebha to reinforce Sirte, which is Mr. Gadhafi’s hometown and stronghold that sits halfway between the de facto rebel capital of Benghazi and Tripoli. An additional 1,000 troops moved on Monday to reinforce Ras Lanoof, according to Col. Hussein. Earlier Monday, Libyan spokesman Musa Ibrahim said the government still had control of more than three-quarters of the country and he blamed both al Qaeda and Western nations for the unrest and bloodshed experienced in the North African nation during the past two weeks. Mr. Ibrahim said al Qaeda sympathizers had hijacked what he said were peaceful protests earlier in
February and that Islamic radicals were now in control in Benghazi, Baida and Durna, three cities in the eastern part of the country. Within the capital, where two million of the country’s estimated six million people live, most neighborhoods were calm. The city remained firmly within the government’s control—and residents were divided about their loyalties. Many stores downtown reopened, and traffic in the streets increased. Long lines were formed outside banks by Libyans wanting to receive the equivalent of $400 per family that Col. Gadhafi pledged in a bid to shore up public loyalty. At a bank located on the main commercial street in Fashloom, a neighborhood that has seen multiple antigovernment protests in the past two weeks, people lining up for the newly announced cash subsidy said they believed foreign agitators were behind the rebellion in the east. “They aren’t real Libyans in Benghazi,” said Ahmad, 17, whose father was in line for money. “They are radicals trying to destroy us and our beautiful nation.” In the eastern suburb of Tajura, several hundred angry protesters took to the streets in the early afternoon to denounce Col. Gadhafi and his regime after burying a man residents and neighbors said had been shot in the head during Friday’s antigovernment street protests. Standing on a hilltop cemetery overlooking the Mediterranean Sea, men from Tajura shouted “Gadhafi, Tajura will be your grave.” While the funeral progressed, blue pickups belonging to the Ministry of Interior forces and white unmarked Toyota Tundra sport-utility vehicles carrying paramilitary forces armed with AK-47s amassed on the traffic circle on the other side of the hill from the cemetery. When the men started speaking to foreign journalists, two of the SUVs sped down the street past the journalists, opening fire in a brief blast of bullets into the air. The Tajura residents scattered but regrouped about half a mile away from the cemetery at one of the city’s main squares in an impromptu antiregime protest. Two men who described themselves as rebel subcommanders of the area urged foreign journalists to leave before government security forces tried to forcibly break up the protest.
Continued from first page announcing it would spend more than $52 million on subsidies for poor residents of the country’s interior to pay for food, clothing, and housing, among other costs. The policies are popular with governments because they can temporarily prevent inflation from accelerating further, while helping consumers cope with higher costs. Although analysts aren’t expecting widespread inflation-related protests in Asia, where incomes have risen in recent years and job markets remain relatively tight, governments nevertheless are mindful that rising prices helped trigger the latest unrest in the Middle East. “Most Asian economies do not have the luxury of just leaving everything to adjust through market mechanisms—because the poor are already living on such thin margins,” said Thai Finance Minister Korn Chatikavanij in an emailed response to questions about that country’s subsidy policies, which include a recent move to extend until June programs that offer free electricity and bus and train rides for the poor. He noted that Thailand is making other moves to rein in inflation such as cutting the country’s budget deficit and raising interest rates. Several Middle East governments have taken steps to maintain or boost food and fuel subsidies in an effort to calm popular discontent that has already swept away the regimes in Tunisia and Egypt, even if such measures mean unsustainable rises in budget spending. Subsidies and handouts let governments avoid more painful moves, such as larger interest-rate rises. Many Asian governments fear rate rises will slow growth and attract more speculative capital, which can destabilize their economies. But over the long haul, economists warn, the programs create a number of problems, and may only add to the pressures that are driving prices higher. Subsidies and handouts encourage consumers to spend more than they would otherwise, which in turn could fuel more inflation. Price controls, meanwhile, discourage farmers and manufacturers from producing more of their goods—which is needed to help bring prices down—and can create other distortions. “Governments in Asia are basically kicking the can down the road, because subisdies and price controls in the long run are counterproductive,” says Frederic Neumann, an economist at HSBC in Hong Kong. Giving people more money to spend
through subsidies and handouts is the last thing governments should be doing when prices are rising, he says. “What should be happening in this kind of situation is a tightening of policy, not a loosening of policy,” says Mr. Neumann. Another downside of the policies is that they are expensive. That may not matter much to Asian governments now, at a time when many are rolling in large surpluses after a strong recovery from the recent global financial crisis. But it could matter a lot if inflation sticks around a long time, as some analysts expect. Singapore’s plan, for instance, is expected to cost 6.6 billion Singapore dollars (US$5.2 billion). Mr. Korn, the Thai finance minister, said Thailand should be able to afford most of its subsidies, but a similar program that subsidizes diesel isn’t sustainable in the long run, he said. Thailand can subsidize diesel at its current rate for another four months before the program goes into the red, he said. Rolling back subsidies and price caps could incite unrest in and of itself, especially if consumers come to rely on them. Moves to cut subsidies or float fuel and other prices helped trigger protests that brought down the government of former Indonesian strongman Suharto in the late 1990s, and also led to big street protests in Myanmar in 2007. In Bolivia, President Evo Morales recently had to rescind a move to eliminate popular fuel subsidies after the threat of a nationwide transport strike. Meanwhile, as consumers get used to subsidies, they want more. “I want the government to take care of the expensive price of goods,” says Sukanya Puangsamran, a 20-year-old food vendor in Bangkok. “They have been doing all right about the palm-oil price, but it would be good if they could decrease the price of other stuff by 50%,” she said. “The government should work harder to do something about the cost of living of their people,” said Yupin Srimek, a 46-year-old hairdresser, who says her customers are tipping less and less these days. Some countries have already determined that certain subsidies are unsustainable. Vietnam, which saw its inflation rate surpass 12% on year in February, recently said it would lift fuel prices by up to 24% after it determined subsidies were too costly. China, too, has allowed some prices to rise. Last month, Beijing raised fuel prices for the third time in four months. —Wilawan Watcharasakwet in Bangkok and Jason Dean in Beijing contributed to this article.
Helping hand? Many Asian countries offer subsidies and other handouts to help residents cope with high prices, but many economists worry the measures only add to inflation. Some of the latest: Hong Kong: Two-month waivers of public-housing rents; subsidies for electricity bills; cash handouts worth HK$6,000 for retirement funds. Thailand: Extensions of programs to provide free electricity and bus and train rides for the poor. Singapore: Rebates, cash grants for small and medium-size businesses and other benefits.
India: Extensions of subsidies on diesel and cooking fuels, with additional subsidies for food expected. China: Local governments directed to use subsidies and price controls where needed in November. Indonesia: Considering extending fuel subsidies that were supposed to be lifted this year. Source: WSJ reporting
As of 11 a.m. ET
Euro 1.3814 À 0.49%
Yen/US$ ¥81.91 À 0.21%
Yen/A$ ¥83.42 À 0.43%
Oil 98.08 À 0.20%
Gold 1413.90 À 0.37%
Goldman bails out of Simplex as Aetos bets on a recovery
10-year Treasury À 19/32 yield 3.416%
3-month Libor 0.30950
India’s good first steps on food, infrastructure
BUSINESS& FINANCE. BUSINESS & FINANCE 16
HEARD ON THE STREET 28
THE WALL STREET JOURNAL.
Tuesday, March 1, 2011
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asia.WSJ.com
HSBC’s net rises, but costs gain, too By Sara Schaefer Muñoz, Margot Patrick And Joanna Chiu The bank’s 2010 net profit was US$13.2 billion, up from US$5.83 billion a year earlier. Loan-impairment charges fell to US$14 billion from US$26.5 billion, the lowest in four years, the bank said. Costs also jumped at the London bank, with a key cost-measuring ratio rising to 55.2% in 2010 from 52% in 2009. HSBC said this was due in part to items like a U.K. tax on bonuses, as well as hiring in places like Asia and Latin America as the bank expanded its business there. The bank also lowered the target
HSBC Net profit, in billions of U.S. dollars $20 15 10 5 0
2004 '05 '06 '07 '08 '09 '10
Source: the company
range for its return on equity to 12% to 15%, down from 15% to 18%, the result of new rules that require banks to hold more capital. In London, HSBC’s shares fell 4.7%, to 678 pence (US$10.93).
Japan pays a steep price for slow deal-making pace [ Asia Deal Journal ] BY MARIKO SANCHANTA AND ATSUKO FUKASE TOKYO—When Nippon Steel and Sumitomo Metal Industries announced plans to merge last month in a watershed deal, a few crucial ingredients were missing: Neither company had enlisted financial advisers and merger ratios and a new management structure hadn’t been agreed upon. The deal is set to be consummated by October. October 2012, that is. Welcome to the curious world of domestic mergers and acquisitions in consensus-focused Japan. In a country that is quickly losing its competitiveness to other Asian nations in part because of overcapacity in the manufacturing sector, the pace of consolidation in Japan has been glacial. The Nippon Steel-Sumitomo deal was the steel industry’s first big merger in a decade. In that time, Nippon Steel, once one of Japan’s “national champions,” was overtaken by both Baosteel Group of China and Posco of South Korea in terms of crude steel production. The dearth of details surrounding the Nippon Steel deal has left many analysts scratching their heads. “In the U.S. or Europe, by the time two companies announce a big merger,
they’re at about 50 on a scale of one to 100, if 100 means the deal is done,” says one M&A banker in Japan. “In Japan, it’s in the low single digits. Companies need a long time to build consensus from stakeholders.” Maybe too long, in the case of Nippon Steel and Sumitomo. Several promising deals that were short on details fell apart last year, including a proposed combination of Japan’s top beer maker Kirin Holdings Co. and closely held Suntory Holdings Ltd., because of squabbling over who would control the merged entity. Both Nippon Steel and Sumitomo dispute the idea that a lengthy consummation period and lack of details could derail the deal, citing an alliance between the two that dates to 2002 and cements their relationship. Nobuo Sayama, managing director of GCA Savvian, an independent investment-banking firm, said tie-ups in Japan can fall apart when companies make announcements without hammering out the contentious details first: the merger ratio, the management structure and how integration will proceed. “Can Nippon Steel-Sumitomo Metal clear such hurdles? It really depends on how much trust the top executives have for each other,” Mr. Sayama said. Outbound M&A has increased rapidly in the past few years as Please turn to page 21
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LONDON—HSBC Holdings PLC more than doubled its profit in 2010, mostly the result of lower bad-loan charges, but the bank reported a jump in costs and said new capital rules would reduce its return on equity.
An HSBC bank in London
New Chief Executive Officer Stuart Gulliver, who succeeded Michael Geoghegan on Jan. 1, said the 2010 results reflected “a well-balanced and diversified business.” But Mr. Gulliver added that the
cost ratio is “unacceptable to me” and that HSBC needs to “re-engineer the business to remove inefficiencies.” The bank was able to increase its dividend to 36 U.S. cents a share for
the full year from 34 cents in 2009. It said it plans to pay nine cents a share for each of the first three quarters of 2011. “There is not enough clarity on how they plan to reduce costs,” said Ronit Ghose, a Citigroup bank analyst. The increase in profit comes as the bank digs out from losses it suffered from its foray into U.S. subprime lending, a business it is now exiting. Bad-loan charges in its U.S. division fell by nearly half, to US$8.3 billion in 2010 from US$15.7 billion in 2009. Mr. Gulliver said the impairment charges still are conservative, reflecting the risk that high unemployment in the U.S. could weigh on loan performance in the U.S. portfolio as it winds down. Impairment charges also fell in the bank’s Middle East division, to US$627 million compared with US$1.3 billion in 2009, when many Please turn to page 20
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THE WALL STREET JOURNAL.
Tuesday, March 1, 2011
BUSINESS FINANCE
BY ALISON TUDOR HONG KONG—Goldman Sachs Group Inc. has relinquished its shares in Japanese real-estate firm Simplex Investment Advisors to private-equity firm Aetos Capital LLC, which is betting on a recovery in Tokyo property prices. New York-headquartered Aetos said it renegotiated Simplex’s 150 billion yen ($1.8 billion) worth of debt, a lot of which had been short term, and put an extra 10 billion yen of capital into the firm from its second fund. “We believe the recovery of the Japanese real-estate market has been gathering momentum and anticipate more attractive investment opportunities in the future,” said Scott Kelley, founder and head of real estate at Aetos Capital. Meanwhile, Goldman sold shares in Simplex to Aetos for a small fraction of its original investment, said people familiar with the deal. Aetos and Goldman Sachs took Simplex private in October 2007 for $1.3 billion, plus the assumption of roughly $2.9 billion in debt, In 2007,
Japanese land prices rose for the first time in 16 years. Banks aggressively lent against Japanese property in 2006 and 2007, while global and domestic opportunistic funds competed to buy offices in the country. But the Japanese real-estate bubble popped when the financial crisis erupted in the U.S., and investment banks sharply curtailed new lending. Many real-estate loans taken out during the go-go years are maturing. In Japan, commercial-mortgagebacked securities loans are usually due in about three years, compared with five to seven years in Europe and about a decade in the U.S. Most of Simplex’s property portfolio is office space, and 87% of the value is located in Tokyo, the most resilient part of the Japanese property market. Even so, since the buyout Simplex has had to sell about 120 billion yen worth of assets to help repay creditors, according to a person familiar with the matter. After many bankruptcies in the Japanese property market, global investors are once again starting to put money to work in Japanese real
Bloomberg News
Goldman exits Japan’s Simplex
Private-equity firm Aetos Capital is betting on a rebound in Tokyo property prices. Here, the Tokyo skyline. estate, and bankers are extending capital and rolling over debt. “Lender relationships are critical,” Mr. Kelley said in an interview. “Funds that were dabbling in the Japanese market have retreated.” Sumitomo Mitsui Banking Corp. had the biggest exposure to the
company and led the creditors in the negotiations with Aetos. Now that Aetos has sorted out Simplex’s finances, its biggest deal to date, it can spend more time on looking for new deals. Founded in 1999, Aetos is looking to raise about $1 billion for its fourth real-estate
fund, again focused on Japan and China, the person said. “The worst is over,” said Andy Hurfurt at real-estate consultancy CB Richard Ellis in Tokyo, who believes the high-end Tokyo office market has stabilized and vacancy rates are coming down.
Centro to sell U.S. shopping centers to Blackstone BY KRIS HUDSON Debt-laden Centro Properties Group agreed to sell its 588 U.S. shopping centers to private-equity giant Blackstone Group LP for $9.4 billion in a deal that will allow Centro’s Australian operations to continue as a stand-alone company, according to people familiar with the matter. Blackstone prevailed in bidding against two other groups, one a partnership of Morgan Stanley Real Estate Fund VII and Starwood Capital and the other a partnership of NRDC Equity Partners and AREA Property Partners. Centro Chief Executive Officer Robert Tsenin declined to comment late on Sunday. Blackstone’s $9.4 billion bid exceeds the $8 billion of debt on Centro’s U.S. portfolio, meaning Centro
will get more than $1 billion from the deal to use in paring the debt on its Australian operations. Centro, based in Melbourne, owns 112 malls in Australia and New Zealand. The bid is only slightly less than the value Centro had assigned to the U.S. portfolio on its books. For Blackstone, with $100 billion in assets under management, the deal is a huge bet on the recovery of U.S. retail property. Blackstone last year had bought stakes in a handful of U.S. malls and made a $500 million investment in General Growth Properties Inc., owner of 185 malls. The Centro deal dwarfs those earlier forays into U.S. shopping centers by Blackstone. It brings Blackstone 588 strip centers across the U.S., most of them small centers anchored by grocery stores or bigbox retailers. Major retail landlords in the U.S.
have reported slight gains in the second half of 2010 in occupancy, lease rates and tenant sales. The real-estate investment trusts that own most of the best-quality malls and shopping centers in the U.S. are optimistic about a continued recovery, with expansion from retailers such as Forever 21 Inc. However, the industry continues to suffer store closings by others, such as bankrupt Blockbuster Inc. and Borders Group Inc. Indeed, Blackstone paid a hefty price for the Centro portfolio, which U.S. retail-property executives consider inferior in quality to those of REITS such as Kimco Realty Corp. and Regency Centers Corp. Centro’s U.S. centers were 87.7% occupied at the end of last year. As a whole, U.S. retail-property values are on a rebound but still haven’t fully recovered from the reces-
sion. Strip-center values, in particular, have increased by 34% since hitting their nadir in May 2009, according to Green Street Advisors Inc. Still, they remain 17% below their peak value from July 2007. Centro amassed its U.S. portfolio in a global buying spree led by since-ousted CEO Andrew Scott. Most of the U.S. portfolio was pieced together from Centro’s acquisitions of New Plan Excel Realty Trust, Kramont Real Estate Trust and Heritage Property Investment Trust Inc. Centro was one of the first major commercial-real-estate holders to hit the wall when, in late 2007, it failed to refinance portions of its $16 billion debt as they came due. Since then, it has repeatedly won reprieves from its lenders to push back the due dates. But, late last year, it started soliciting buyout and
recapitalization bids in an effort to resolve its fate before $5.5 billion of debt comes due in December. Centro still must contend with some of the debt coming due in December. Mr. Tsenin mentioned last week that some of the hedge funds that own that debt, such as Centerbridge Partners LP and Davidson Kempner Capital Management LLC, would be willing to covert it into equity in the Australian company. Blackstone prevailed in the bidding partly because it didn’t need to gain the consensus of a consortium of bidders as the other groups did, people familiar with the matter said. Blackstone pressed Centro in recent days to accept its bid because, among other things, Blackstone could provide the quickest and most certain closure of the deal, these people said.
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. Aetos Capital LLC.........16 Alibaba Group Holding.13 American International Group..........................20 Antofagasta..................17 Apple.............................18 AREA Property Partners.....................16 ASX ............................... 20 Asymmetry LLC............21 Bank of America...........28
Barclays.........................20 Berkshire Hathaway.....23 Blackstone Group ......... 16 Blekko............................19 Blockbuster...................16 Borders Group...............16 Capital Research and Management..............20 Centerbridge Partners..16 Centro Properties.........16 CETC International.........4 Changjiang Securities .. 23 China Mobile.................18 China Telecom...............18 China Unicom (Hong Kong)..........................18 China United Network Communications........18 Citadel Resource...........17 Citic Securities.............23 Coal India......................23 Credit Suisse Group 17,28 Daihatsu Motor............28 Davidson Kempner Capital Management.16 Deutsche Bank..............20 Deutsche Boerse .......... 22
ENI...................................6 Equinox Minerals..........17 Facebook ....................... 19 Ford Motor....................20 Forever 21.....................16 Freeport-McMoRan Copper & Gold............17 Gecamines.....................17 General Growth Properties..................16 General Motors.............20 Goldman Sachs Group...........16,17,19,20 Google......................18,19 Groupon....................13,19 Hajime Construction .... 28 Hang Seng Bank...........20 Hewlett-Packard...........23 Hong Yuan Securities...23 HSBC Holdings ............. 15 HTC................................18 Huawei Technologies ... 18 Hutchison Port Holdings Trust...........................20 Hutchison Whampoa....20 Inmet Mining................17 ITC.................................23
J.P. Morgan Chase...18,28 Kimco Realty ................ 16 Lehman Brothers Holdings.....................20 London Stock Exchange Group..........................22 Lone Pine Capital ......... 20 Lundin Mining...............17 Mahindra & Mahindra..23 Mizuho Financial .......... 23 Mizuho Investors Securities...................23 Mizuho Securities ........ 23 Morgan Stanley Real Estate Fund VII.........16 Motorola Mobility Holdings.....................18 Nationwide Health Properties..................23 NEC................................23 Nippon Steel.................15 NRDC Equity Partners . 16 NYSE Euronext.............22 Paulson..........................20 Pfizer.............................23 Redfin............................19
Regency Centers...........16 Ryanair Holdings..........19 RyanThai Ltd.................19 Samsung Electronics....18 Sany Heavy Industry....23 Shantui Construction Machinery..................23 Simplex Investment Advisors.....................16 Starwood Capital..........16 Sumitomo Metal Industries...................15 Sumitomo Mitsui Banking......................16 Suzuki Motor................28 Tagged Inc.....................19 TCL ................................ 18 Teck Resources.............17 Temasek Holdings........20 Tencent Holdings..........13 Thai Airways International..............19 3M.................................23 Tiger Airways Holdings.....................19 TMX Group....................22 Toyota Motor................28
Twitter.....................18,19 UBS ............................... 21 Ventas...........................23 Wells Fargo...................28 Yahoo.............................13 ZTE................................18 Zynga Inc ................. 18,19
People This index lists the names of businesspeople and government regulators who receive significant mention in Today’s Journal. Akerson, Daniel............20 Birol, Fatih......................6 Buffett, Warren............23 Certo, Russ ................... 22 Cheng, Vincent ............. 20 Cho, David Yonggi .......... 5 Clark, Duncan..................4 Cox, Jamie.....................23
Daly, Nova.....................18 de Silva, Pri .................. 28 Dimon, Jamie................28 Dudley, William............22 Flint, Douglas ............... 20 Friedman, Alexander....21 Geoghegan, Michael.....15 Green, Chris....................4 Gulliver, Stuart.............15 Haefele, Mark...............21 Hu, Ken ........................... 4 Hurfurt, Andy...............16 Inadome, Katsutoshi....23 Li Ka-shing....................20 Kelley, Scott ................. 16 Kelman, Glenn .............. 19 Kennedy, William ......... 21 Knapp, Barry.................23 Magidson, Matthew.....20 Ma, Jack........................13 Ma, Quincy......................4 Mateer, Stephen.............4
McCreary, Colleen.........19 McPartland, Kevin........20 Miyamoto, Kit.................4 Neumann, Frederic.......14 Oettinger, Gunther.......22 Plummer, Bill................18 Quinn, Jason.................20 Ren Zhengfei..................4 Roth, Thomas...............22 Ryan, Declan.................19 Sayama, Nobuo.............15 Scott, Andrew...............16 Sutphen, Mona.............21 Trichet, Jean-Claude.....22 Tseng, Greg...................19 Tsenin, Robert..............16 Williams, Craig.............17 Wolf, David.....................4 Xiao Gang........................3 Yu, Geoffrey..................22 Zeltner, Jürg.................21 Zhijun, Sun ................... 17
Tuesday, March 1, 2011
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THE WALL STREET JOURNAL.
BUSINESS FINANCE
China banks on its entertainment industry BY LAURIE BURKITT BEIJING—China plans to more than double the value of its entertainment and other cultural industries to nearly three trillion yuan, or roughly $460 billion, within the next five years to boost domestic consumption and propel Chinese culture overseas. Beijing will expedite bank loans and facilitate public listings for companies involved in film and television production, live entertainment, as well as gaming and publishing, said Sun Zhijun, director general of the Office of Central Leading Group for Reform of Cultural Systems, in a meeting Monday. “We will deepen the cultural industries because they are a new
Equinox makes bid for Lundin BY DAVID FICKLING
AND EDWARD WELSCH
Equinox Minerals Ltd. said Monday it will offer 4.8 billion Canadian dollars (US$4.9 billion) in cash and shares to take over Lundin Mining Corp. in a hostile bid that could derail Lundin’s planned C$9 billion merger with Inmet Mining Corp. Toronto-based Equinox, which produces around 110,000 metric tons a year of copper concentrates from its Lumwana mine in the southern African country of Zambia, said the offer represented a 26% premium to the closing price of Lundin’s shares in Toronto on Friday. “It’s pretty simple: we’re a 26% premium, the merger is a zero premium,” Craig Williams, Equinox chief executive, said. “Together, this company will have one of the best profiles in the copper business.” He said the takeover could raise the copper production of the combined group to 500,000 tons a year by 2016, making it the world’s eighth-largest copper producer based on current world production levels and overtaking the current production of major copper miners Antofagasta PLC and Teck Resources Ltd. However, Lundin Chairman Lukas Lundin told Swedish business daily Dagins Industry the premium in Equinox’s offer was too low and that he preferred to retain control through the merger with Inmet. Lundin has operations in Sweden and is listed on that country’s stock exchange, as well as on the Toronto Stock Exchange. “It’s interesting that he thinks [our offer] is far too low when he’s already accepted a zero premium,” Mr. Williams said in response to Mr. Lundin’s published comments. “To me, it just doesn’t make sense.” Lundin said in a release that it was in the process of reviewing Equinox’s offer. Representatives of Lundin and Inmet weren’t immediately available to comment further on Equinox’s offer. They planned to hold a joint conference call late Monday afternoon.
growth point of our national economy,” Mr. Sun said, noting that China’s entertainment market revenue was estimated at 1.3 trillion yuan last year. Focus on the entertainment industry comes as Chinese leaders aim to expand domestic consumption in effort to reduce reliance on exports. The National People’s Congress, convening March 5, is expected to unveil its five-year plan, which will largely entail efforts to increase consumers’ appetites for goods and services. Growth of the film industry, a government priority in recent years, has played into a broader plan to create more profitable home-grown businesses. The number of locally produced films shot up 15% in 2010
from a year earlier, to 526 films, according to media-research firm EntGroup Inc. China’s film industry generated revenue of 10.17 billion yuan in 2010, up from 6.2 billion in 2009, while online gaming revenue was estimated at $4.4 billion, according to San Francisco-based Niko Partners, an Asian gaming-research company. The government also says that if China becomes a major player in entertainment, it will help to export a friendlier image overseas, establishing a more approachable diplomatic presence. Emphasis on film and TV expansion will remain a priority, Mr. Sun said. China also is aiming to spur industry expansion in videogame and digital-book production, he said.
Agence France-Presse/Getty Images
Beijing to expedite loans and facilitate public listings for companies involved in film and television production
A poster at a Beijing movie theater advertises Jiang Wen’s ‘Let the Bullets Fly.’
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THE WALL STREET JOURNAL.
Tuesday, March 1, 2011
CORPORATE NEWS
China Unicom steps up BY OWEN FLETCHER
BY ANUPREETA DAS AND AMIR EFRATI
BEIJING—The parent company of China Unicom (Hong Kong) Ltd. will offer a new mobile-phone brand that will use the company’s own operating system, placing it in competition with Apple Inc.’s iPhone and devices using Google Inc.’s Android operating system. The launch of China United Network Communications Group Co.’s “Wophone” brand comes after rival network operator China Mobile Ltd. in 2009 revealed its own mobilephone platform, called “OPhone,” which failed to attract much interest. China Unicom is competing with China Mobile and China Telecom Corp. to attract more users of their third-generation mobile services, which generate more revenue and offer faster data speeds than older second-generation services. Companies that will offer Wophone devices include China’s ZTE Corp., Huawei Technologies Co. and TCL Corp., as well as South Korea’s Samsung Electronics Co., Motorola Mobility Holdings Inc. of the U.S. and HTC Corp. of Taiwan, Unicom’s parent said Monday. It said the launch of the devices is imminent, but didn’t elaborate. The Wophone platform has an operating system with a Linux core aimed at devices like smartphones
A fund run by J.P. Morgan Chase & Co. is in talks with Twitter Inc. to take a minority stake in the rapidly growing micro-blogging company, people familiar with the matter said. The investment, which is expected to value Twitter at more than $4 billion, will be made from the bank’s new $1.2 billion digital growth fund, these people said. Exact terms of the proposed deal couldn’t be learned. Discussions between J.P. Morgan and Twitter are continuing, and there is no guarantee a deal will be struck, the people added. J.P. Morgan also has purchased a significant amount of Twitter’s shares on exchanges for privatecompany stock, separate from its talks for a direct stake in the company, said a person familiar with the matter. A Twitter spokesman said the company doesn’t comment on interest by other companies. A J.P. Morgan spokesman declined to comment. J.P. Morgan said in a regulatory filing last week that it had raised $1.2 billion for the new fund, much more than the initial target of between $500 million and $750 million reported by The Wall Street Journal. The fund, being run out of J.P.
ImagineChina
Network operator to launch its own mobile operating system
Twitter in talks to sell a stake to J.P. Morgan
The Wophone platform has a Linux operating system aimed at smartphones and tablets. Above, people walk past a China Unicom branch in Chongqing, China. and tablets and will help shorten product-development cycles for mobile-phone makers, the company said. That could help China Unicom more quickly expand its range of attractive handsets to gain users for its 3G services. Chinese government agencies including the National Development and Reform Commission and the Ministry of Industry and Information Technology supported development of the Unicom operating system, the company’s statement said, without elaborating. The iPhone and Android operating systems, which are dominant
among smartphones in the U.S., are gaining market share in China but remain eclipsed there by Symbian, an operating system used by Nokia Corp., according to Beijing research firm Analysys International. Symbian accounted for 60.1% of the 102.3 million smartphones being used in China in the fourth quarter, according to Analysys. Microsoft Corp.’s Windows Mobile accounted for 13.1%, and third-place Android 10.7%, Analysys said. Apple’s iPhone had a 5.4% share. The Android category includes China Mobile’s OPhone devices since they are based on Android.
Morgan’s asset-management unit, aims to target private Internet and digital-media companies that have an up-and-running business model, steady revenue and cash flow. Besides the potential deal with Twitter, which was reported earlier by the Financial Times, the J.P. Morgan fund also could be interested in online gaming firm Zynga Inc., which is in discussions to raise nearly $500 million from institutional investors, one of the people familiar with the matter said. Twitter’s revenue and valuation have risen as the company continues to work on ways to translate its more than 200 million registered users into a profitable business. Research firm eMarketer said it expected the San Francisco-based company to generate $150 million in revenue this year, largely from offering marketers the chance to advertise on the site. Twitter, which was created in 2006 and now has about 350 employees, introduced advertising into its service last year. Twitter’s value has more than quadrupled over the past year or so to nearly $4 billion, based on the last round of financing raised by the company, which was disclosed in December. In low-level, informal talks with potential suitors in recent months, the company has said it is worth an additional several billion dollars, people familiar with the matter have said.
In Huawei drama, U.S. sees threat from China Inc. The Chinese opera starring Huawei Technologies Co. and Washington regulators hit another high note Friday when a spurned Huawei issued a public plea for understanding, fairness—and access to the rich U.S. telecom market. There are two lessons to draw from all the yodeling: First, this ANALYSIS drama isn’t just about the Chinese suitor Huawei. It’s about China Inc. and cybersecurity in the U.S. Because of that, Huawei may not be getting into the U.S. market in a big way any time soon. And second, Huawei—one of the biggest suppliers of telecommunications equipment in the world—might be the least of America’s problems when it comes to thwarting aspiring cyberspies. Huawei’s latest travails stem from a tiny deal the company struck in California. It bought some patents and hired some employees from an outfit called 3Leaf Systems that did work in cloud computing. The Pentagon demanded Huawei retroactively seek approval of the transaction from a secretive panel called CFIUS, which reviews foreign investment that might threaten national security. Huawei cried foul and said the deal didn’t merit review because it wasn’t an outright acquisition. Sens. Jim Webb and Jon Kyl and other U.S. lawmakers fired back, likening Huawei to a dangerous arm of communist China intent on snatching U.S. secrets. This month, CFIUS essentially ordered Huawei to unwind the purchase. As the dust settled, a Chinese government spokesman condemned the decision and, in an ironic foot-
Associated Press
BY JOHN BUSSEY
Sen. Jon Kyl and other U.S. lawmakers have likened Huawei Technologies to a dangerous arm of communist China intent on snatching U.S. secrets. The company is one of the largest suppliers of telecommunications equipment in the world. note, grumbled that the U.S. should be “more transparent” in how it treats foreign investors. Then on Friday, Huawei publicly challenged the U.S. to investigate the company. “Huawei is Huawei,” says Bill Plummer, the company’s spokesman. “It’s a multinational company. It isn’t China. It shouldn’t be held hostage to the tense relationship between the two governments.” Huawei’s supporters say U.S. companies are missing out on quality Huawei gear that’s safely sold to virtually every major phone company in the world. Maybe so, but intelligence agencies that sit on CFIUS, or the Committee on Foreign Investment in the
U.S., appear to feel differently. Huawei’s plea “seems disingenuous,” says an individual familiar with the government’s thinking. “Why come out with that offer publicly? We’ve been asking for transparency” from the company for years. The problem is that Huawei lives in a certain context. Its founder served in the People’s Liberation Army. The company has prospered greatly in its home market and has grown almost overnight into a global giant. And while Huawei insists it is entirely independent of the Chinese government, the company thrives in an authoritarian country where success on so large a scale is usually carefully observed, and care-
fully prescribed. There are few subjects of greater interest to Beijing than telecommunications and technology—and creating national champions in both. Rightly or wrongly, Huawei to many people in Washington is a proxy for China. They fear the company’s equipment might contain bugs that could spy on American industrial secrets, shut down communications during a conflict, or make networks easier to hack. Huawei says that’s nonsense. CFIUS proceedings are secret, and a spokeswoman declined to comment on the Huawei case. But actions speak loudly. The committee, which includes the departments of Homeland Security and
Defense, has blocked Huawei’s access to the U.S. repeatedly, including Huawei’s bid to buy electronics maker 3Com Corp. in 2008, its effort to upgrade Sprint Nextel Corp.’s network in 2010, and now the 3Leaf deal. Even Washington knows that at the end of the day Huawei is but a blip on a much larger radar screen of worry. Virtually every technology company is plugged into a global supply chain and gets its products from multiple sources. A given piece of consumer or industrial electronics can cross borders dozens of times as it is designed, coded and assembled before landing in the U.S. The rogue might be anywhere: in China, or in equipment stamped INDIA that was preassembled in China. “The cyber side is where the real national-security issues are growing exponentially, the vulnerabilities created by the global supply chain,” says Nova Daly, a consultant with Wiley Rein in Washington who previously managed the CFIUS program at the Treasury Department. “We need clear cyberpolicy from the administration and Congress.” That effort is under way. Scrubbing software and hardware before it crosses the border is a tricky business. Experts say it’s almost impossible to find every bug. So trusting the source of origin becomes all the more important. That’s the hill Huawei must climb.
WSJ.com ONLINE TODAY: Watch a video with John Bussey on Huawei’s bid to crack the U.S. market, at WSJ.com/Business.
Tuesday, March 1, 2011
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THE WALL STREET JOURNAL.
CORPORATE NEWS
Talent war grips Internet start-ups Frenzy fueled by success of Facebook and Twitter puts pressure on smaller rivals in competition for new recruits BY PUI-WING TAM AND STU WOO SAN FRANCISCO—Internet startups across Silicon Valley are struggling to compete for talent amid the investment frenzy gripping Facebook Inc., Twitter Inc. and Zynga Inc., with many smaller companies beefing up pay and recruiting and wading into the private-company share market to keep pace with their larger rivals. Online real-estate brokerage Redfin Corp. is feeling the fallout. The 200-person company, which is based in Seattle and has offices in San Francisco, typically hires new engineers fresh out of college, relying on competitive compensation and the allure of working at a profitable start-up. Redfin said it has recently been up against salary-and-bonus offers of $100,000 to $150,000 a year for new college grads from social-gaming start-up Zynga, among others—far above the $80,000 or so a year Redfin would normally offer. “Zynga and others have introduced such great financial incentives that it’s hard to win candidates anymore,” said Glenn Kelman, Redfin’s chief executive. He added that he has since increased Redfin’s compensation offers to recent college grads—though that hasn’t prevented it from losing some potential recruits to competitors at the center of the Web boom that attract deeppocketed investors. (J.P. Morgan has been in talks for a stake in Twitter, said people familiar with the matter Sunday.) “To get top-flight engineers, we now have to play in Facebook’s and Zynga’s world,” added Mr. Kelman. Colleen McCreary, Zynga’s chief people officer, acknowledged that the hiring environment has become more “aggressive” in the past two months. She said Zynga, which is known for FarmVille and other games played on Facebook, has been “exceptionally lucky to ride a little of the buzz wave.” She added that the San Fran-
Silicon Valley froth Average annual salaries for software engineers in Silicon Valley versus other parts of the U.S. in 2010
$106,242 $98,031
$98,214
New York
Baltimore/ Washington
$89,419
National average Source: Dice Holdings
cisco-based start-up, which now has more than 1,500 employees and expects to nearly double its work force this year, offers compensation in line with other tech companies like Facebook, but declined to give specifics. Redfin’s experience shows how the Web boom surrounding Zynga, social-networking site Facebook, microblogging service Twitter is spilling over to other Web start-ups. Flush with funds from investors eager to buy a piece of their rapid growth, Facebook, Zynga and Twitter have been on recruiting tears with robust job offers, raising the compensation bar for others start-ups. At the same time, Facebook and other have allowed some employees to cash out of their private-company stock, putting pressure on smaller start-ups to set up similar programs. Some of the boom’s effects became apparent in 2009, following the recession—particularly the escalating competition for talent. Giants
Thai Air and Tiger Air to create budget carrier BANGKOK—Thai Airways International PCL and Tiger Airways Holdings Ltd. said Monday they have signed an agreement to establish a low-cost carrier called Thai Tiger Airways. Under the agreement, Thai Airways will hold 49.9% of the new airline, Singapore-based Tiger Airways will hold 39% and RyanThai Ltd., a company linked to the founders of European budget carrier Ryanair Holdings PLC, will own 10%. The remaining 1.1% will be owned by individual Thai investors, the two Asian airlines said in a written statement. Thai Airways’ plan to invest 99.8 million baht ($3.3 million) for its stake in Thai Tiger is still pending approval from relevant authorities, including the Ministry of Transport and the National Economic and Social Development Board. Declan Ryan, one of the founding shareholders of both Tiger Airways
Silicon Valley
and Ryanair, will represent RyanThai on Thai Tiger’s board. “His involvement signals his strong commitment to the airline and brings invaluable low cost airline experience to Thai Tiger,” Thai Airways said in the statement. According to Thai Tiger’s business plan proposed to the Ministry of Transport, the airline is scheduled to begin operations in July, starting with five Airbus 320-200 aircraft. The carrier expects to expand its fleet to 20 by 2015, a ministry official said. The first 10 aircraft are expected to be transferred from Tiger Airways via an operating lease, the official said. Thai Tiger aims to operate nine routes during the airline’s first year of operation, including three domestic routes and six regional routes. It projects to record a positive bottom line starting in the third year of operation, the official said.
like Google Inc. have already responded. Last year, the Internetsearch company gave a 10% raise to all employees. But the pressure has picked up following recent investment rounds for many Web start-
ups. Facebook in January raised more than $500 million from Goldman Sachs Group Inc., valuing the fastgrowing company at $50 billion, while deal-of-the-day start-up Groupon Inc. closed on nearly $1 billion that same month, and Twitter raised $200 million in December. Zynga, meanwhile, has been in talks for new funding of as much as $500 million that would value it at as much as $10 billion, people familiar with the matter have said. Greg Tseng, CEO of website Tagged Inc., which allows people to meet online, said he has recently fielded queries from his employees about how they can cash out of their private-company shares, given that Facebook has sometimes allowed employees to liquidate their stock. Private-company share trading is tricky because it potentially raises financial disclosure issues and can bring unwanted investors into a company; the Securities and Exchange Commission has recently scrutinized the practice. As a result, “it’s not something I’m actively seeking out like, ‘yes, give me more shareholders,’ ” said Mr. Tseng, who co-founded Tagged in 2004. But, with some of the com-
pany’s 64 employees having worked there for more than four years, he said he realizes it is “good to let them cash out and show that they have real value to their stock options.” Facebook declined to comment. In January, Tagged also gave a 10% across-the-board raise to its employees. Mr. Tseng said the move was a reward for a strong 2010, but added that “we definitely keep a pulse on compensation, and we always like to pay above market.” Tagged, in addition, launched an unlimited-vacation policy for its employees last September, he said. That means Tagged’s workers can take an unlimited amount of time off, as long as they are getting their work done. The talent wars are frustrating for many start-ups where engineers are prized. “We have people who walk in through the door and they like what we’re doing, but they’ve already got four offers from big companies,” said Rich Skrenta, CEO of Blekko, a search-engine company in Redwood Shores, Calif. “A significant fraction of them go elsewhere. ...They’ll say, I like what you’re doing, but I’m going to Twitter or Facebook,” he said.
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20
THE WALL STREET JOURNAL.
Tuesday, March 1, 2011
MARKETS
Hutchison unit seeks $6.4 billion BY P.R. VENKAT SINGAPORE—Hutchison Port Holdings Trust said it plans to raise as much as US$6.4 billion in an initial public offering in Singapore. If successful, it would be the largest IPO in the city-state’s history. In a prospectus filed with Singapore’s central bank on Monday, Hutchison Port Holdings said that it will offer up to 3.9 billion units to institutional investors and the public between 91 U.S. cents and US$1.08 per unit. The offer includes an overallotment option of about 15% of the total number of units in the event of strong demand. The US$6.4 billion proceeds from the IPO are based on the company pricing its units at the top end of the range, investment by so-called cornerstone investors and the use of the overallotment option. If the overallotment option isn’t exercised, Hutchison would raise US$5.8 billion at the top end of the range, which includes proceeds from cornerstone investors, whose presence can boosting an offering’s appeal. Eight cornerstone investors have agreed to invest US$1.62 billion, Hutchison said. A person familiar with the situation said that the eight cornerstone
Singapore’s biggest| Top 10 IPOs on record Date
Company
Oct. 11, 2010
Global Logistic Properties
Value, in millions of U.S. dollars
Oct. 28, 1993
Singapore Telecommunications
Nov. 17, 2009
CapitaMalls Asia
Aug. 5, 2009
Avago Technologies
745
Oct. 12, 2010
Mapletree Industrial Trust
718
Oct. 29, 1999
Chartered Semiconductor Manufacturing
$2,995 2,743 2,050
575 510
Nov. 18, 2010
Sabana REIT*
Dec. 6, 2004
Suntec Real Estate Investment Trust
506
Nov. 26, 2002
MobileOne
466
May 7, 2003
Singapore Post
452
*Sabana Shari'ah Compliant Industrial Real Estate Industrial Trust
investors are likely to get a total of between 1.5 billion and 1.8 billion units depending upon the final pricing. Among the cornerstone investors, U.S.-based Capital Research and Management Co., which manages the American Funds Group, will invest US$634 million; Singapore state investment company Temasek Holdings Pte. Ltd. at US$100 million; U.S.-based Paulson & Co. Inc. at US$350 million; and Lone Pine Capital LLC at US$186 million, Hutchison said.
Source: Dealogic
Separately, another person familiar with the situation said the listing could be March 18. The listing of the port assets of Hutchison Whampoa Ltd., the listed flagship of Hong Kong tycoon Li Kashing, would top the S$4 billion Singapore-dollar IPO of Singapore Telecommunications Ltd. in 1993. Hutchison Port Holdings Trust will hold Hutchison’s key deep-water port assets located in Hong Kong, Shenzhen and Macau through a business trust. Together, these represent the most active port region in
the world by volume, and the assets account for roughly half of the overall earnings before interest, taxes, depreciation and amortization at Hutchison’s highly profitable ports unit, Hutchison Port Holdings, analysts said. The IPO of Hutchison—a bluechip Hong Kong-listed conglomerate with interests that include telecommunications, retail, power and oil—comes after an upturn in global trade following the global financial crisis, which has helped lift container traffic at its ports. China’s
growth story remains a draw for global investors at a time when the economies of the U.S. and Europe remain weak. In recent years, Singapore has been one of the preferred destinations for property developers looking to raise funds through real-estate investment trust or business trust listings. A business trust uses most of the company’s cash flow to pay dividends, making the stock more attractive to long-term investors seeking steady income. It was the existence of an established business trust structure in Singapore that was key in Hutchison’s decision to list there, not Hong Kong. While Hong Kong’s listing rules allow real-estate investment trusts to list on the local exchange, they don’t allow the listing of business trusts. Last week, Perennial China Retail Trust, a unit of property investment firm Perennial Real Estate, said that it plans to raise 1.1 billion Singapore dollars (US$860.25 million) through an initial public offering via a business trust in Singapore. In 2010, several big companies listed REITs, including a S$1.2 billion IPO by Mapletree Industrial Trust Ltd. and Sabana Sharia’ah Compliant Industrial REIT’s S$666 million IPO.
Street bets on GM bonds that don’t exist Glitch halts BY MATT WIRZ AND KATY BURNE Fresh from Wall Street’s alchemy labs: credit derivatives tied to General Motors Co. debt. The rub is, no such debt exists. Banks and hedge funds are trading credit-default swaps, which make payments to holders of General Motors bonds in the event of a default. But GM canceled $40 billion of debt in bankruptcy and has pledged to cut its remaining $4.6 billion bank loan to the bone this year. That is merely a technicality for the banks and hedge funds that have been actively trading the CDS. Banks, some of which have made loans to the car maker, have been buying the CDS even though it is unclear whether the contracts would cover their debts, according to people familiar with the matter. Hedge funds have been happy to sell the protection, which allows them to make bullish, or “long,” bets on the auto maker. For proponents, the existence of the GM swaps is a sign of a market
at work. It also is a reminder of how CDS can be used as a way to speculate on a company’s creditworthiness, rather than purely as a hedge against exposure to its bonds. Lawmakers and regulators have blamed credit derivatives for exacerbating the financial crisis and helping bring down companies like American International Group Inc. and Lehman Brothers Holdings Inc. Investors who bought “naked CDS” to bet on the likelihood of default, rather than to hedge risk from other investments, are credited with worsening the liquidity crisis that gripped those financial powerhouses, prompting calls for tighter regulation of the industry. “Sure, having CDS without debt looks odd, and people may balk because credit derivatives were at the center of the AIG collapse, but that doesn’t change the fact that CDS prices are the de facto benchmark used to measure the state of the credit market,” said Kevin McPartland, senior analyst at research firm TABB Group. About $750 million of GM creditdefault swaps have changed hands
Trading places A new market for GM credit-default swaps shows traders think GM is a better credit than Ford. CDS spreads in percentage points 3.6 3.4
BY DAVID ROGERS GM
3.2 3.0
Ford
2.8 2.6 2.4 Dec. ’10
Jan.
Note: As of Thursday, latest data available
since investment banks, including Barclays PLC, Deutsche Bank AG and Goldman Sachs Group Inc., started trading in December, according to traders of the contracts. Some are also trading the CDS in anticipation that GM, which exited bankruptcy protection in 2009, will one day issue bonds again. The good news for GM: Trading in its CDS indicates that many view the car maker as a better bet than
Feb. Source: Markit
rival Ford Motor Co. Some hedge funds have been selling GM CDS and buying Ford CDS, traders said. On paper, the socalled “pair trade” paid off. In December, buyers of GM CDS paid $348,000 a year to insure a notional $10 million of bonds for five years; protection on Ford cost $282,000, according to Markit. As of Thursday, the GM swaps cost $290,000 and Ford’s cost $295,000.
HSBC’s earnings climb as bad-loan charges decline Continued from page 15 loans were made to businesses in Dubai. HSBC, like its global peers, has been pushing back against proposed higher liquidity requirements, which the bank sees as “overly conservative,” Chairman Douglas Flint said Monday. Mr. Flint also said the bank doesn’t oppose a new U.K. levy on banks, “but it constitutes an additional cost of basing a growing multinational bank in the U.K.” HSBC has faced speculation over whether it will move its headquarters back to Hong Kong, the bank’s
original home, after executives suggested they would consider leaving if regulations in the U.K. became too onerous. Executives say they have no current plans to move. The bank, which derived 5% of its 2010 profit from the Middle East, said it would remain committed to the region, despite the recent turmoil there. The bank on Monday also disclosed that Mr. Gulliver received a 2010 bonus valued at £5.2 million (US$8.4 million) in deferred shares, down from the £9 million all-share bonus he received in 2009.
Australia’s stock trade
Separately, HSBC said Vincent Cheng will retire as an executive director in May, marking the end of a decades-long career at the lender for the Hong Kong banker. In his 33 years at HSBC, Mr. Cheng rose through the ranks of the firm to become the first Chinese person to become chairman of Hongkong & Shanghai Banking Corp., the lender’s Asian unit, in 2005. Before heading the Asian operations, Mr. Cheng was chief executive of Hang Seng Bank Ltd., a Hong Kong-based HSBC unit, startin Under Mr. Cheng’s leadership,
HSBC invested heavily in China, and was among the first foreign banks to locally incorporate its operations in the nation in April 2007. HSBC has about 100 branches across 23 cities in China. Hang Seng Bank, which is 62%owned by HSBC, said its net profit rose 14% in 2010, boosted by strong loan growth, higher fee income and trading gains. Its net profit totaled 14.92 billion Hong Kong dollars (US$1.92 billion), up from HK$13.14 billion in 2009. —Chester Yung contributed to this article.
SYDNEY—Trading on the Australian Securities Exchange, or ASX, was halted midway through the afternoon on Monday, as a technical glitch cost the exchange an estimated 1.5 billion Australian dollars (US$1.53 billion) of turnover. ASX Ltd., which is awaiting regulatory approval for a US$7.9 billion takeover by the Singapore Stock Exchange, said it was experiencing technical difficulties regarding trade dissemination on so-called Partition 3 Securities and that all ASX markets would be placed on hold pending an investigation. The ASX normally handles around A$1 billion worth of trading per hour. The trading halt follows a technical problem that hit the London Stock Exchange late last week. “The system has been halted because there was a problem with the confirmation messaging of executed trades, which normally go to participants and the market as a whole, for [a] segment of the market,” said Matthew Gibbs, a spokesman for ASX. “To fix the problem, we have to halt the entire market.” Mr. Gibbs said all trades, including those that may have been affected by the lack of confirmation, would stand. “This feeds into the argument for multiple exchanges in Australia,” said Chris Weston, an institutional dealer at IG Markets. “You saw it on the London Stock Exchange last Friday, where people could still deal through the other exchanges. You need to be able to trade in and out of positions at all times within the parameters given.”
Tuesday, March 1, 2011
21
THE WALL STREET JOURNAL.
MARKETS
Japan’s steep price for slow pace of deals Continued from page 15 Japanese companies race to globalize their operations and take advantage of the purchasing power of the strong yen. But when it comes to domestic consolidation, the number of deals has declined. Outbound cross-border M&A deal volume rose 25% in 2010 to $34.4 billion from a year earlier, while domestic M&A volume fell to $87 billion from $128.4 billion, according to Dealogic. The Japanese government, watching as monolithic South Korean and Russian industrial consortiums snag lucrative infrastructure projects overseas, wants to make it easier for Japanese companies to merge. The country’s antimonopoly watchdog, the Japan Fair Trade Commission, is to unveil new guidelines about its merger-screening
UBS makes three big hires at private bank BY KATHARINA BART ZURICH—UBS AG named the former financial head of the Gates Foundation as chief investment officer of its flagship private bank, one of several prominent hires at the unit, signaling a more assertive tone since the bank halted massive outflows of wealthy-client funds. The Zurich-based bank said Alexander Friedman will join UBS on Tuesday. Mr. Friedman left the Bill and Melinda Gates Foundation, the world’s largest private philanthropy fund, early last year to start private investment firm Asymmetry LLC. Before his role as chief financial officer at the Gates Foundation, Mr. Friedman worked as a Lazard mergers-and-acquisitions banker. At the same time, UBS has hired former White House Deputy Chief of Staff Mona Sutphen and Mark Haefele, an alternative asset manager. Ms. Sutphen, formerly a managing director at Stonebridge International LLC who left the White House last month, will lead macro analysis, while Mr. Haefele will be in charge of investment analysis. Mr. Haefele is co-founder of Sonic Funds, a Boston-based hedge fund. Over time, Mr. Friedman, Ms. Sutphen and Mr. Haefele will hire a global team, the bank said. “The chief investment officer function will focus on wealth protection and optimized financial returns consistent with client objectives,” UBS said in a statement. “Friedman and his team will be responsible for defining and proposing appropriate investment allocations and strategies and for communicating them across the platform.” The bank declined to make the three available for comment. “The three new joiners will initially spend some time familiarizing themselves with UBS, its needs and its client offering before they begin delivering market observations,” private-banking head Jürg Zeltner said in an internal memorandum. Last week, UBS named William Kennedy as new head of its investment-products and services unit, a group set up last year to more closely tie its flagship private bank with the investment-banking arm.
process in the near future, and bankers hope they will include abandoning the practice of engaging in advance consultations with companies pursuing mergers, which can take months to resolve. An FTC spokesman declined to comment. Sectors rife for consolidation include steel, chemicals, consumer electronics, auto makers, retailers and beverages. Other transactions may follow if the Nippon Steel-Sumitomo deal goes as planned. “When these domestic deals start happening, it’s like dominoes falling,” the M&A banker said. But given Japan’s track record, holding one’s breath might not be a good idea. That could leave the nation’s companies at a continuing disadvantage against bigger, united rivals elsewhere.
Merging | Largest Japan transactions announced in 2010 Date
Target
Acquirer
Aug. 24
Chuo Mitsui Trust Holdings
Sumitomo Trust & Banking
Aug. 26
Resona Holdings*
Resona Holdings
$5.0
Aug. 31
Japan Airlines
Enterprise Turnaround Initiative Corp. of Japan
$5.0
Sept. 10
Japan Nuclear Fuel
Tokyo Electric Power & 12 Others
Sept. 30
AIG Japanese units†
Prudential Financial
Jan. 25
Jupiter Telecommunications
KDDI
Nov. 9
BB Mobile
Softbank
July 29
Panasonic Electric Works
Panasonic
July 29
Sanyo Electric
Panasonic
Dec. 21
Sanyo Electric
*Preferred shares
Panasonic
†AIG Edison Life Insurance; AIG Star Life Insurance
Value in billions of dollars $6.0
$4.8 $4.2 $4.0 $3.7 $3.0 $3.0 $1.9 Source: Dealogic
22
THE WALL STREET JOURNAL.
Tuesday, March 1, 2011
INTERNATIONAL INVESTOR
Euro gains steam with focus on ECB BY ANDREW J. JOHNSON
self for event risk [with the ECB meeting Thursday],” said Geoffrey Yu, currency strategist at UBS on London, with some degree of hawkishness expressed by ECB President Jean-Claude Trichet. The euro rose to new three-week highs against the dollar after U.S. personal income data. In noon trading, the euro was at $1.3802 from $1.3753 late Friday. It traded as high as $1.3857. The dollar was at 81.90 yen from 81.66 yen, while the euro was at 113.02 yen from 112.99 yen. The U.K. pound rose to $1.6255 from $1.6116, while the dollar fetched 0.9298 Swiss franc from 0.9283 franc.
NEW YORK—The euro continued its recent strong rise Monday as investors positioned themselves aggressively ahead of a European Central Bank meeting later this week. Divergent cenCURRENCY tral-bank policies MARKETS are increasingly the catalyst for recent currency moves, and investors are bidding up the common currency on expected euro-zone rate increases later this year. That contrasts with accommodative U.S. and Japanese central-bank stances. “The market is prepositioning it-
Short-term Treasurys edge up BY MIN ZENG
tured debt in the indexes on the last trading session of a month. A rise in U.S. stocks, a barometer of risk appetite, limited bonds’ strength. In midday trading, the benchmark 10-year note was flat to yield 3.418%; the two-year note was up 1/32 to yield 0.704%. The Federal Reserve Bank of New York bought $6.69 billion in Treasury debt on Monday, part of the Fed’s quantitative easing. Dealers offered the central bank $38.868 billion in Treasurys maturing from 2013 to 2015.
NEW YORK—Shorter-dated Treasurys rose Monday, boosted by weak consumer spending and supportive comments from a main policy maker of the Federal Reserve. The bond market U.S. CREDIT rebounded from MARKETS overnight losses, with the benchmark 10-year note trading flat, as some fund managers bought securities to match the month-end adjustments of the benchmark bond indexes. Newly minted bonds replace ma-
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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 02/24 EUR
52.93
3.5
8.5
22.2
15.5 14.6 20.9 21.6 19.7 20.3 21.8 10.1 10.1 10.1 10.2 10.2 9.3 9.3 9.3 9.3 9.3 9.6 9.6 10.7 10.3 10.4 10.3 9.3 9.2 9.3 9.8 9.8 10.9 18.3 17.2 17.8 19.3 8.8 8.8 8.8 8.8 8.8
29.6 28.5 31.7 32.5 30.4 31.1 32.7 19.0 19.0 19.0 19.0 19.0 18.1 18.1 18.1 18.1 18.1 18.4 18.4 19.6 27.0 27.0 27.1 25.8 25.8 25.8 26.5 26.5 27.7 44.7 43.3 44.1 45.9 26.0 26.0 26.0 26.0 26.1
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
Emerging Europe Equity
BY JIEUN SHIN
Leading 10 Performers
02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 HKD 02/25 USD 02/25 HKD 02/25 USD 02/25 USD 02/25 HKD 02/25 USD 02/25 HKD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 EUR 02/25 USD 02/25 EUR 02/25 USD 02/25 EUR
11.76 10.94 36.36 39.51 30.22 32.73 40.67 8.82 165.62 21.25 68.90 8.84 8.82 141.54 18.16 69.21 8.88 8.82 27.09 8.82 16.12 22.37 16.25 16.12 21.30 16.21 16.12 21.87 16.12 37.99 31.83 32.76 42.51 6.88 9.45 14.33 19.69 6.90
3.3 3.3 8.0 8.1 7.8 7.9 8.1 0.6 1.0 1.0 1.1 1.1 0.6 0.9 0.9 0.8 0.8 0.6 0.9 0.7 -1.3 -0.8 -0.8 -1.4 -1.0 -0.9 -1.3 -0.9 -1.2 -4.0 -4.1 -4.0 -3.8 1.5 1.5 1.9 1.9 1.9
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
02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25
NAV
EUR USD EUR USD EUR EUR USD EUR USD EUR USD EUR USD EUR USD EUR USD USD EUR EUR USD USD EUR USD EUR EUR USD EUR USD EUR USD USD USD USD
6.88 9.45 13.22 18.16 6.89 6.88 9.45 14.21 19.52 6.88 9.45 9.31 12.79 9.62 13.22 10.13 13.92 12.65 9.21 9.75 13.39 16.22 11.81 11.50 8.37 7.44 10.22 6.30 12.65 9.21 17.24 16.60 17.04 17.69
—%RETURN— YTD 12-MO 2-YR 1.4 1.4 1.8 1.8 1.7 1.4 1.4 1.9 1.9 1.5 1.5 3.7 3.7 3.9 3.9 3.7 3.7 3.5 3.5 3.7 3.7 3.9 3.9 6.5 6.5 6.3 6.3 6.2 6.6 6.6 NS NS NS NS
8.0 8.0 8.0 8.0 7.9 8.3 8.3 8.3 8.3 9.4 9.4 15.1 15.1 15.9 15.9 16.3 16.3 15.1 15.1 15.9 15.9 17.3 17.3 22.9 22.9 21.8 21.8 22.3 24.0 24.0 NS NS NS NS
4 3 3 NS 3 3 3 2 2 2
FUND MGM'T CO.
NAV GF AT LB DATE CR
NAV
25.2 25.2 25.2 25.2 25.1 25.5 25.5 25.4 25.4 26.6 26.6 26.5 26.5 27.6 27.6 28.8 28.8 27.4 27.4 28.2 28.2 29.8 29.8 28.1 28.1 26.9 26.9 27.4 29.2 29.2 NS NS NS NS
—%RETURN— YTD 12-MO 2-YR
2352.40
1.7
32.3
54.4
100.56
-18.0
-0.2
10.5
n CREDIT PACIFIC ASSET MANAGMENT www.creditpacific.com GL OT WSM 02/25 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
for international investors to trade. In the latest round of exchangeindustry consolidation, NYSE Euronext and Deutsche Börse AG agreed in mid-February to a combination that would create the world’s biggest exchange group, with Deutsche Börse shareholders owning about 60% of the combined entity.
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
02/25 USD 02/25 USD 02/25 USD 02/25 EUR 02/25 USD 02/25 USD 02/25 HKD 02/25 USD 02/25 HKD 02/25 USD 02/25 USD 02/25 HKD 02/25 USD 02/25 HKD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD
FUND NAME
NAV GF AT LB DATE CR
Platinm-Gbl Dividend Platinm-Nordic Platinm-Premier Platinm-Turnberry
GL OT OT OT
NAV 17.99 16.90 17.66 12.85 18.80 9.43 133.43 17.12 73.65 9.45 9.43 115.51 14.82 73.89 9.48 9.43 14.77 9.43 15.58 18.09 15.55 16.99 15.59 17.60 15.68 12.82 11.90 12.53 13.65 46.37 38.26 44.27 51.97 4.69
—%RETURN— YTD 12-MO 2-YR 2.7 2.5 2.6 2.6 2.8 -0.3 0.1 0.1 0.1 0.1 -0.4 -0.1 -0.1 -0.1 -0.1 -0.3 0.0 -0.3 1.4 1.3 1.2 1.2 1.3 1.3 1.4 4.4 4.3 4.3 4.5 3.3 3.2 3.3 3.5 1.7
12.0 10.8 11.6 11.6 12.7 4.7 4.8 4.8 4.8 4.8 3.7 3.8 3.8 3.8 3.8 4.2 4.3 5.2 8.0 7.5 6.8 6.5 7.4 7.0 8.4 16.3 15.3 15.9 17.4 16.2 15.0 15.7 17.2 16.5
23.3 22.1 23.0 23.0 24.2 10.8 10.8 10.8 10.8 10.8 9.7 9.7 9.7 9.7 9.7 10.3 10.3 11.3 15.1 14.8 13.9 13.7 14.5 14.3 15.8 31.4 30.1 30.8 32.5 29.0 27.7 28.4 30.1 37.4
CYM USA USA USA USA
01/31 10/31 01/31 01/31 05/29
USD USD USD USD USD
NS 129.92 NS 113.15 35.02
CYM CYM CYM USA
01/31 01/31 08/29 01/31
USD SEK USD USD
NS NS 28.37 60.53
—%RETURN— YTD 12-MO 2-YR 2.1 -3.2 NS -0.6
26.3 3.2 NS -0.4
33.5 8.8 NS NS
GL GL GL GL GL
OT OT OT OT OT
CYM LUX CYM CYM AUT
02/22 02/22 02/22 02/22 02/22
USD USD USD USD EUR
52.89 2490.00 1257.12 1217.36 7298.00
-3.3 -3.2 -4.1 -5.2 -2.4
56.4 32.0 41.5 49.4 19.0
-22.3 -18.7 -1.7 -10.8 -9.4
11.2 11.4 11.3 0.1 14.4 0.1 0.1
8.1 8.3 8.3 17.5 14.4 17.4 17.7
NS NS 3.5 3.9 4.8 3.2 4.0
n WINTON CAPITAL MANAGEMENT LTD Tel: +44 (0)20 7610 5350 Fax: +44 (0)20 7610 5301
n PLATINUM CAPITAL MANAGEMENT Tel: +44 207 024 9840, www.platinumfunds.net OT OT OT OT OT
EQ OT OT OT
NAV
n SUPERFUND ASSET MANAGEMENT GMBH For info about open funds, contact
[email protected] and www.superfund.com *Closed for New Investments Superfund Cayman* Superfund GCT USD* Superfund Green Gold A (SPC) Superfund Green Gold B (SPC) Superfund Q-AG*
OT OT OT OT OT
0.4 NS -0.5 2.0 -18.2
4.5 NS 5.5 19.5 -63.7
LEGAL CURR. BASE
YTD
BGF Emerging Blackrock EURLUX Europe A2 EUR (Luxembourg) S.A. Schroder ISF Schroder EURLUX Emerg Europe A Acc Investment Mgmt Luxembourg SA Schroder Schroder SGDSGP Emerging Europe SGD Investment Mgmt (Singapore) Ltd Invesco Invesco Global USDLUX EmergingEuropeEquityA Asset Management Limited PineBridge PineBridge USDIRL Emerging Europe Equity Y Investments Ireland Ltd Pictet-Eastern Pictet Funds EURLUX Europe-P EUR (Europe) S.A. ING (L) ING Investment EURLUX InvestEmergingEuropePAcc Management Luxembourg S.A JPM Eastern JPMorgan Asset EURLUX Europe Eq A (dist)-EUR Mgmt (Europe) S.a.r.l. BNPP L1 BNP Paribas EURLUX Equity Europe Emerg Acc Investment Partners Lux Amundi Funds Amundi EURLUX Emg Europe AE C
[ALTERNATIVE INVESTMENT FUNDS www.WSJ.com] Advertisement
AlexandraConvertibleBondFundI,Ltd.(ClassA) OT OT VGB 01/31 USD
Platinm-All Star Platinm-All Weather Platinm-Dynasty Platinm-Emancipation Platinm-Equity Plus
FUND FUND RATING * NAME
% Return in $US ** 1-YR 2-YR 5-YR
3.70 31.60 76.08
3.91
3.45 30.83 70.85
3.54
3.52 30.63 68.94
3.16
1.93 28.83 68.12
0.82
1.63 27.70 72.31
3.40
1.76 27.22 89.16
3.14
2.84 26.69 74.63
2.81
-1.44 26.63 82.38
5.51
2.27 24.96 67.78
1.04
1.35 24.89 72.98
1.60
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
Also this month, the London Stock Exchange Group PLC and Canada’s TMX Group Inc. agreed on a trans-Atlantic tie-up, creating an exchange group with a particular strength in the trading of naturalresource and commodities companies. —Jung-Ah Lee contributed to this article.
[ 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
Funds that invest primarily in equities of companies based in Emerging Europe. At least 75% of total assets are invested in equities. Ranked on % total return (dividends reinvested) in Euros for one year ending February 28, 2011
SEOUL—The Korea Exchange is considering an initial public offering to make it easier to participate in the consolidation of global stock exchanges. “Major stock exchanges around the world have already completed an IPO, and the listing of KRX is inevitable to guarantee participation in the mergers and acquisitions and exchanging of equity stakes involved in the restructuring process,” Kim Bong-soo, chairman of South Korea’s main bourse operator, said Monday in a statement issued to mark his first anniversary in the post. He didn’t give a time frame for a potential listing. Mr. Kim also said the bourse will prepare for merger-and-acquisition deals in the consolidation of global stock exchanges, adding that the Korean exchange will look to forge partnerships with advanced global stock markets. “The global capital market is expected to be controlled by four or five exchanges in three to four years from now. If the KRX is left out of such a consolidation trend, it could remain just a small local stock exchange,” he said. The move comes as global exchange operators move to develop partnerships and other links to create megaexchange groups that straddle borders and make it easier
INTERNATIONAL INVESTMENT FUNDS FUND NAME
FUND SCORECARD
KRX weighs IPO to develop partnerships
9.9 NS 11.8 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
85.34 10.95 4.67 36.40 4.69 135.54 17.39 36.94 4.74 4.69 16.14 4.69 17.82 15.40 20.05 12.23 11.10 11.82 13.13 42.38 37.07 41.63 131.35 115.21 136.01 97.34 120.09 139.39 116.22 132.90 153.71 139.72 119.68 134.33 158.12 6100.00 5822.00 5973.00 5714.00 5455.00 5596.00 6743.00 6444.00 6595.00 17.07 15.42 18.52 7.45 10.34 7.45 7.45 10.24 7.46 7.45 14.47 7.45 20.09 19.96 20.03 20.19 11.20 10.19 12.16
2.2 2.2 2.3 2.3 1.6 2.0 2.0 2.0 2.0 1.6 2.1 1.7 2.6 2.4 2.7 5.6 5.3 5.4 5.7 -4.3 -4.5 -4.4 -14.0 -14.0 -14.2 -14.1 -13.9 1.7 1.5 1.6 1.8 7.6 7.4 7.5 7.7 2.1 2.0 2.1 1.7 1.6 1.6 6.6 6.4 6.5 2.5 2.4 2.7 0.6 0.8 0.7 0.6 0.7 0.7 0.6 0.6 0.6 7.0 6.9 6.9 7.2 7.1 6.9 7.2
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
02/25 HKD 02/25 USD 02/25 USD 02/25 HKD 02/25 USD 02/25 HKD 02/25 USD 02/25 HKD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 JPY 02/25 JPY 02/25 JPY 02/25 JPY 02/25 JPY 02/25 JPY 02/25 JPY 02/25 JPY 02/25 JPY 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 USD 02/25 EUR 02/25 EUR 02/25 EUR 02/25 EUR 02/25 USD 02/25 USD 02/25 USD
16.5 16.5 16.5 16.5 15.3 15.2 15.2 15.2 15.2 16.0 15.9 17.1 26.5 25.1 27.5 17.1 15.9 16.6 18.1 14.4 13.2 13.8 8.4 8.7 7.3 7.6 9.2 0.8 -0.2 0.4 1.6 33.1 31.8 32.5 34.2 4.4 3.4 4.0 2.8 1.8 2.3 10.7 9.7 10.2 23.2 22.0 24.3 5.1 5.0 4.9 4.6 4.6 4.5 4.6 4.5 5.6 NS NS NS NS 31.6 30.3 32.6
37.4 37.4 37.4 37.4 35.9 36.0 36.0 35.9 35.9 36.8 36.8 38.3 49.3 47.8 50.5 34.3 32.9 33.6 35.3 33.1 31.7 32.5 NS 45.5 NS 44.1 46.2 11.9 10.8 11.4 12.8 45.1 43.7 44.5 46.3 16.1 15.0 15.6 9.8 8.7 9.3 25.1 23.9 24.5 46.3 44.8 47.5 9.8 9.7 9.8 9.3 9.2 NS 9.3 9.2 10.4 NS NS NS NS 33.3 32.0 34.4
Tuesday, March 1, 2011
23
THE WALL STREET JOURNAL.
INTERNATIONAL INVESTOR
U.S. stocks find the love for third month in row BY DONNA KARDOS YESALAVICH
Investors were also encouraged by comments from Federal Reserve Bank of New York President William Dudley, who said that although rising commodity prices argue for increased inflation vigilance, the economy is unlikely to mount strong enough growth to change the path of monetary policy over coming months. Berkshire Hathaway’s Class A shares climbed 1.8% while its Class B shares jumped 2.1% after Chairman Warren Buffett said in his annual letter to shareholders that he is prepared for “more major acquisitions.” The conglomerate reported a 61% jump in 2010 earnings and a growing cash hoard.
NEW YORK—U.S. stocks climbed, putting the market on track for its third positive month in a row, as investors were relieved by easing oil prices and reassuring comments from a top Federal Reserve official. The Dow Jones Industrial Average was up 73.94 points, or 0.6%, at 12204.01 in midday ABREAST OF trade, led by 3M’s THE MARKET 2.4% climb. Pfizer and Hewlett-Packard each added 2.1%. The Nasdaq Composite edged up 0.1% to 2783.55. The Standard & Poor’s 500-stock index gained 0.4% to 1325.75, with all of its sectors in the black. The Dow and the S&P 500 are up more than 2% for February. Monday’s climb came as crudeoil futures fell slightly, trading below $98 a barrel on the New York Mercantile Exchange as oil producers Saudi Arabia and Kuwait appeared ready to make up for crude supplies lost due to the unrest in Libya. The easing of oil prices and supply concerns helped alleviate investors’ recent worries about how consumer spending and business spending might be affected by higher energy costs. “Oil is not necessarily dropping a lot, but it’s not up as high as it theoretically could go if things were going in the opposite direction, so it’s kind of a sigh of relief,” said Jamie Cox, managing partner at Harris Financial Group.
European stocks Shares generally rose, buoyed by upbeat U.S. economic data. The Stoxx Europe 600 index gained 0.8% to end at 286.49. The German DAX 30 index rose 1.2% to 7272.32, as shares of engineering conglomerate Siemens surged 3.6%. But London’s FTSE 100 index eased 0.1% to 5994.01, as HSBC Holdings slumped 4.7%. The bank said 2010 net profit more than doubled, to $13.16 billion from $5.83 billion in the prior year, but this was still shy of analyst expectations. Associated British Foods slumped 5.9% as it warned that operating profit for its Primark unit would be hit by higher raw-material prices.
BY TAKASHI MOCHIZUKI
BY V. PHANI KUMAR AND SHRI NAVARATNAM
TOKYO—Japanese government bond yields edged higher ahead of Tuesday’s auction of 10-year debt. The benchmark 10-year yield crept up 0.005 percentage point to 1.25%. The government will offer 2.2 trillion yen ($26.94 billion) of 10-year bonds in the BOND auction, and anaMARKETS lysts expect the new issue will carry a 1.3% coupon, 0.1 percentage point higher than the previous issue and the highest since June. Analysts in general said the coupon level should mean a smooth result. “In terms of coupon levels, the new issue will be attractive,” said Katsutoshi Inadome, a fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities. He also said that there is usually a surge of demand from Japanese investors toward the end of the fiscal year on March 31, which could be stronger this year because the outstanding value of total bonds held by main Japanese financial firms is a tad lower than the average seen in recent years. “Japanese investors held 55 trillion yen in the last fiscal year. But at this point this year they have only 47 trillion yen, meaning there’s room for them to buy up more bonds,” he said.
Indian stocks rose Monday after the finance minister said the government’s fiscal deficit and borrowings in the next financial year will be less than the market expected. Most other Asian markets also gained, with stocks in Shanghai and Hong Kong shrugASIAN-PACIFIC ging off high STOCKS crude-oil prices and Beijing’s lower target for economic growth over the next five years. India’s Sensex closed up 0.7% at 17823.40, but came off the days highs as investors took profits after the index had climbed as much as 3.4%. Japan’s Nikkei Stock Average gained 0.9% to 10624.09, the Shanghai Composite rose 0.9% to 2905.05, and Hong Kong’s Hang Seng Index advanced 1.4% to 23338.02. Australia’s S&P/ASX 200 slipped 0.1% to 4831.66, with trading ending early because of a technical glitch. South Korea’s Kospi fell 1.2% to 1939.30 on worries over North Korean attack threats as a joint military exercise by South Korea and the U.S. got under way. In Tokyo, Mizuho Securities jumped 12% and Mizuho Investors Securities climbed 7% on a Nikkei report that Mizuho Financial Group, which rose 1.8%, is weighing acquiring full ownership of the units. NEC fell 3.4% after cutting its full-year profit forecast.
[ 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 02/25 EUR EU EQ DEU 02/25 EUR EU BD DEU 02/25 EUR
62.77 76.19 39.09
1.5 -1.1 -3.3
28.2 8.3 5.0
39.5 23.8 5.8
n CHARTERED ASSET MANAGEMENT PTE LTD - TEL NO: 65-6835-8866 Fax No: 65-6835 8865, Website: www.cam.com.sg, Email:
[email protected] CAM-GTF Limited
OT
OT MUS 02/18 USD 396377.48
-4.5
35.3
72.7
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 02/22 USD OT OT IRL 02/25 USD AS EQ IRL 02/24 EUR EU EQ IRL 02/25 EUR EU EQ IRL 02/24 EUR EU EQ IRL 02/24 USD JP EQ IRL 02/24 EUR JP EQ IRL 02/24 JPY JP EQ IRL 02/24 USD GL EQ IRL 02/24 EUR
NAV 10.74 13.99 115.26 12.67 197.63 16.65 100.52 981.22 12.29 11.72
—%RETURN— YTD 12-MO 2-YR -3.0 -5.6 -0.8 0.5 -0.8 2.2 3.1 4.9 4.6 2.4
5.3 13.0 10.6 20.4 10.5 12.7 9.1 6.1 8.7 15.2
NS 37.7 23.5 27.5 22.4 26.9 21.0 19.3 22.4 25.5
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
02/21 02/25 02/22 02/21 02/21 02/21 02/21 02/21 02/21 02/21 02/21 02/21 02/18 02/21 02/21 02/21 02/21 02/24 02/24 02/22 02/21 02/21 02/21 02/21 02/21 02/25 02/25 02/24 02/24 02/21 02/21 02/21 02/21 02/21 02/21 02/18 02/25 02/21 02/07 02/21 02/21 02/21 02/24 02/23 11/30
USD USD USD EUR USD EUR USD EUR USD EUR SGD USD USD EUR USD USD USD EUR USD USD USD USD USD USD JPY USD JPY EUR USD EUR USD EUR EUR USD USD USD USD GBP EUR USD USD USD USD USD USD
276.70 680.92 1423.51 107.02 142.29 117.27 150.79 100.10 143.88 151.38 109.35 908.21 319.38 639.50 73.80 676.11 206.38 234.36 217.10 1075.20 295.65 246.94 324.45 134.11 9262.49 1251.45 9585.37 51.06 100.08 90.19 674.78 290.54 149.52 122.60 507.48 3408.32 2762.22 251.84 341.84 1031.32 334.99 649.55 2451.02 8139.31 116.46
2.3 -5.8 2.7 2.7 2.7 4.5 4.5 3.5 3.5 1.2 1.6 1.6 9.4 1.8 4.2 1.9 1.7 -4.5 -3.9 4.0 7.1 2.4 4.9 5.2 5.3 6.0 6.2 -0.1 0.0 -2.1 -1.0 3.5 3.5 3.6 3.6 3.4 -5.6 2.4 -0.3 0.1 0.1 3.3 5.4 0.1 2.5
6.7 12.7 14.2 13.3 13.3 23.5 23.5 16.9 16.9 6.6 7.3 7.7 34.5 -1.0 -4.6 -0.4 -1.4 6.9 6.7 34.8 22.3 -3.2 17.9 8.1 8.4 11.8 8.8 0.2 0.3 -19.8 5.8 10.0 10.1 10.3 10.4 28.6 15.5 13.1 5.7 6.8 6.8 17.1 17.2 6.5 10.3
30.2 37.8 23.6 15.3 15.3 24.5 24.5 17.6 17.6 8.0 8.5 8.9 35.2 1.4 1.0 1.8 0.9 10.4 10.9 44.0 27.3 33.5 47.5 13.0 16.4 23.0 19.0 0.5 0.1 -10.0 14.0 6.9 6.9 7.0 6.8 45.9 36.9 29.3 4.6 5.5 5.5 48.4 29.7 3.5 NS
AS OT OT OT
EQ OT OT OT
IRL IRL IRL IRL
02/24 02/23 02/22 02/24
USD USD USD USD
19.29 10.64 11.06 10.45
-4.6 -2.8 1.9 -0.9
11.2 NS 8.9 NS
57.6 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
02/21 02/21 02/21 02/21 02/21 02/21 02/21 02/21
JPY JPY USD EUR JPY JPY USD EUR
9936.91 9042.72 97.76 114.90 10250.88 9276.99 99.54 106.60
1.2 4.9 4.5 3.2 2.4 5.8 5.2 1.1
LIST YOUR FUNDS
0.0 -3.4 4.7 15.0 3.5 -0.2 8.1 7.6
NS NS NS NS NS NS NS NS
n J.P. MORGAN ASSET MANAGEMENT For additional fund prices, please visit www.jpmorganam.com.sg Tel: +65 6882 1328 JF ASEAN Eq (SGD)A(acc) JF ASEAN Eq (USD)A(acc) JF Asia Pac ex-Jap Eq(SGD)A(acc) JF Asia Pac ex-Jp (USD)A(acc) JF China (SGD)A(acc) JF China (USD)A(dist) JF Greater China (SGD)A(acc) JF Greater China (USD)A(dist) JF India (SGD)A(acc) JF India (USD)A(acc) JF Korea Equity (USD) A (acc) JF Pacific Tech (USD) A (acc) JF Singapore (SGD)A(acc) JF Singapore (USD)A(dist) JPM Africa (USD) A (acc) JPM Asia Pac Bond (USD)A(acc) JPM Brazil Alpha+ (USD)A(acc) JPM Brazil Alpha+(SGD)A(acc) JPM East Eur (EUR)A(dist)(JF) JPM Emerg EMEA (SGD)A(acc) JPM Emerg EMEA (USD)A(dist) JPM Emerg Mid East Eq(SGD)A(acc) JPM Emerg Mid East(USD)A(dist) JPM Emerg Mkt Eq (SGD)A(acc) JPM Emerg Mkt Eq (USD)A(dist) JPM Emerg Mkt Infra(USD)A(acc) JPM Emerg Mkt LC Debt(USD)A(mth) JPM Glb Dyn (SGD)A(acc) JPM Glb Dyn (USD)A(dist)(JF) JPM Glb Nat Res (EUR)A(dist) JPM Glb Nat Res (SGD)A(acc) JPM Glb Nat Res (USD)A(acc) JPM Latin Amer Eq(SGD)A(acc) JPM Latin Amer Eq(USD)A(dist)JF JPM Russia (USD) A (dist)
AS EQ LUX 02/25 SGD AS EQ LUX 02/25 USD AS EQ LUX 02/25 SGD AS EQ LUX 02/25 USD AS EQ LUX 02/25 SGD AS EQ LUX 02/25 USD AS EQ LUX 02/25 SGD AS EQ LUX 02/25 USD EA EQ LUX 02/25 SGD EA EQ LUX 02/25 USD AS EQ LUX 02/25 USD OT EQ LUX 02/25 USD AS EQ LUX 02/25 SGD AS EQ LUX 02/25 USD OT OT LUX 02/25 USD AS BD LUX 02/25 USD OT OT LUX 02/25 USD OT OT LUX 02/25 SGD EU EQ LUX 02/25 EUR GL EQ LUX 02/25 SGD GL EQ LUX 02/25 USD OT OT LUX 02/24 SGD OT OT LUX 02/24 USD GL EQ LUX 02/25 SGD GL EQ LUX 02/25 USD OT OT LUX 02/25 USD OT OT LUX 02/25 USD GL EQ LUX 02/25 SGD GL EQ LUX 02/25 USD GL EQ LUX 02/25 EUR GL EQ LUX 02/25 SGD GL EQ LUX 02/25 USD GL EQ LUX 02/25 SGD GL EQ LUX 02/25 USD EE EQ LUX 02/25 USD
Budget boosts India; units of Mizuho surge
Japan yields rise ahead of 10-year sale
14.72 15.15 14.22 19.77 12.57 47.79 14.06 27.60 14.08 24.97 10.87 17.04 15.33 32.11 11.03 10.68 11.13 13.59 33.52 14.38 61.18 12.88 22.35 14.26 31.35 8.52 15.77 15.04 13.89 21.77 26.28 21.26 14.11 43.94 16.46
-6.7 -5.7 -5.5 -5.0 -4.8 -4.3 -6.2 -5.8 -14.7 -14.3 -4.3 -0.1 -5.7 -5.3 -7.3 -1.4 -7.3 -8.3 -3.8 -6.1 -5.7 -12.4 -11.6 -7.0 -6.6 -5.5 -0.9 3.2 3.6 -4.2 -2.3 -1.8 -8.1 -7.1 1.7
In print & online. Contact:
NS 37.4 NS 16.4 -0.9 9.7 7.2 18.6 2.4 13.3 35.4 17.6 11.6 23.5 24.9 NS 14.7 NS 24.6 NS 25.6 NS 14.4 7.7 19.2 22.9 14.3 11.3 23.1 44.6 32.9 47.0 NS 19.8 28.9
NS NS NS 46.8 NS 35.0 NS 41.4 NS 47.0 61.1 38.5 NS 56.5 58.0 NS 55.9 NS 75.3 NS 61.1 NS 30.0 NS 45.5 51.7 NS NS 33.8 63.8 NS 69.7 NS 60.9 98.0
In Mumbai, shares jumped after Finance Minister Pranab Mukherjee said in his budget speech to Parliament that the fiscal deficit is expected to narrow to 4.6% of gross domestic product in the year starting April 1, from 5.1% this year. Consumer-goods maker ITC soared 8.2% after a feared 8% to 10% increase in the excise tax on cigarettes didn’t appear in the budget. ITC gets half its sales from cigarettes. Tractor maker Mahindra & Mahindra rose 3.2% on a slew of budget measures aimed at helping farmers and boosting grain output. Coal India rose 12% after the company said it raised coal prices, effective Sunday. In Shanghai, stocks gained even after Premier Wen Jiabao said Sunday the government’s official target for average gross-domestic-product growth over the next five years will be 7% annually, down from a target of 7.5% in the past half decade. Construction-machinery companies surged after the premier said the government plans to construct 36 million public-housing units in the next five years. Sany Heavy Industry gained 8.5% and Shantui Construction Machinery rallied 6.1%. Securities firms strengthened on expectations that regulators will allow more firms to participate in a program for margin trading and short-selling. Changjiang Securities rose 5.6%, Hong Yuan Securities advanced 3.3%, and Citic Securities climbed 2.9%.
INTERNATIONAL INVESTMENT FUNDS
FUND NAME
NAV GF AT LB DATE CR
NAV
—%RETURN— YTD 12-MO 2-YR
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FUND NAME
NAV GF AT LB DATE CR
Eq. MENA EURO A Eq. MENA USD A Eq. US Rel Val A Money Market EURO A Money Market USD A
OT OT LUX OT OT LUX US EQ LUX EU MM LUX US MM LUX
02/24 02/24 02/24 02/24 02/24
EUR USD USD EUR USD
NAV 37.78 52.10 24.89 27.56 15.89
—%RETURN— YTD 12-MO 2-YR -9.8 -9.8 5.4 0.1 0.0
2.3 2.3 22.2 0.6 0.3
22.2 22.2 36.8 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 02/25 USD US EQ LUX 02/25 USD OT OT LUX 02/25 USD OT OT LUX 02/25 USD OT OT LUX 02/25 USD AS EQ LUX 02/25 USD AS EQ LUX 02/25 USD AS EQ LUX 02/25 USD AS EQ LUX 02/25 HKD EU EQ LUX 02/25 USD EU EQ LUX 02/25 USD EU EQ LUX 02/25 USD EU EQ LUX 02/25 USD GL EQ LUX 02/25 USD OT EQ LUX 02/25 USD GL EQ LUX 02/25 USD OT EQ LUX 02/25 USD EA EQ LUX 02/25 USD GL EQ LUX 02/25 USD GL EQ LUX 02/25 USD JP EQ LUX 02/25 USD JP EQ LUX 02/25 USD GL EQ LUX 02/25 USD OT OT LUX 02/25 USD OT OT LUX 02/25 USD EE EQ LUX 02/25 USD AS EQ LUX 02/25 USD OT OT LUX 02/25 USD US BD LUX 02/25 USD US EQ LUX 02/25 USD US BD LUX 02/25 USD OT OT LUX 02/25 USD
17.98 1.03 2.79 0.90 1.52 7.87 2.47 1.71 8.35 5.43 2.33 10.17 0.73 1.15 0.81 1.31 1.04 1.12 3.36 0.78 3.14 0.81 1.38 1.12 1.34 0.84 1.23 0.90 1.18 1.08 1.02 1.20
4.3 4.3 -2.6 -2.7 -3.7 -4.8 -4.8 -3.6 -3.4 1.2 1.2 5.6 5.6 -1.9 2.2 1.1 2.5 -14.9 4.4 4.4 4.0 4.2 -5.2 1.7 -3.2 2.9 -5.0 -10.0 1.2 1.6 1.7 0.9
20.1 19.8 22.5 22.2 35.4 20.7 20.4 12.4 12.5 24.1 24.0 21.3 21.0 26.9 24.6 29.1 10.0 10.4 14.3 14.0 14.2 12.0 15.8 12.4 21.6 30.7 27.7 25.3 8.3 25.5 20.9 5.8
29.4 29.1 44.6 44.2 65.1 38.8 38.5 34.6 34.6 65.5 65.3 39.6 39.3 67.1 50.1 39.6 14.6 41.5 25.1 24.8 23.0 22.1 53.3 NS NS 81.7 51.3 72.1 13.4 52.7 58.1 7.0
n PT CIPTADANA ASSET MANAGEMENT Tel: +62 21 25574 883 Fax: +62 21 25574 893 Website: www.ciptadana.com Indonesian Grth Fund
GL
EQ BMU 02/23 USD
168.58
-7.4
29.0
75.3
n THE NATIONAL INVESTOR TNI Tower | Zayed 1st Street Khalidia| Web:www.tni.ae TNI Mena Real Estate Fund TNI MENA Special Sits Fund TNI MENA UCITS Fund TNI UAE Blue Chip Fund
OT OT OT OT
EQ BMU OT BMU OT IRL OT ARE
02/17 01/31 02/17 02/17
USD USD USD AED
770.87 1092.55 1042.90 4.92
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
01/31 02/15 02/25 02/25 02/14
USD USD USD USD USD
36.07 134.40 214.60 99.45 57.33
-2.5 -2.9 -4.3 -4.3 0.3
28.2 23.7 20.6 20.0 32.3
52.4 50.8 47.6 46.9 51.4
JP
EQ IRL 02/28 JPY
10060.00
5.1
10.9
17.4
JP JP
EQ IRL 02/25 JPY EQ IRL 04/27 JPY
6104.00 5230.34
5.6 -7.3
6.8 -5.4
10.1 -27.3
EQ IRL 02/25 JPY EQ IRL 02/25 JPY
7003.00 8435.00
4.4 7.0
7.2 12.0
14.2 13.7
4544.00 5253.00 5242.00
5.3 4.2 5.3
1.4 2.9 10.9
8.8 10.0 14.6
4272.00 4589.00 6736.00 9071.00 6545.00 7805.00 5174.00 12158.00 7588.00 7461.00 5873.00 2650.00
5.1 5.1 5.4 5.9 4.5 4.0 4.4 6.2 3.7 6.4 5.2 5.5
3.5 5.3 3.4 11.8 9.0 5.4 4.5 7.6 3.0 14.6 7.7 0.1
9.6 10.7 13.7 16.0 12.6 6.9 11.7 15.7 8.8 19.8 14.6 11.2
n YUKI MANAGEMENT & RESEARCH n YMR-N Series YMR-N Growth Fund
n Yuki 77 Series Yuki 77 General Yuki 77 Growth
n Yuki Chugoku Series
[email protected]
Yuki Chugoku Jpn Gen Yuki Chugoku JpnLowP
n Yuki Hokuyo Japan Series
n SENSIBLE ASSET MANAGEMENT LIMITED www.samfund.com.hk Tel: (852) 2868 6848 Fax: (852) 2810 9948 Asia Value Formula Fd-B
OT
OT CYM 02/25 USD
10.17
-3.8
31.4
61.5
n SGAM FUND AMUNDI HONG KONG LIMITED Hotline in Hong Kong (852) 2521 4231 Bonds US OppsCoreplus A Bonds World A Eq. AsiaPac Dual Strategies A Eq. China A Eq. Global Energy A Eq. Global Resources A Eq. Gold Mines A Eq. India A Eq. Luxury & Lifestyle EURO A Eq. Luxury & Lifestyle USD A
US BD LUX 02/24 USD OT OT LUX 02/24 USD AS EQ LUX 02/25 USD AS EQ LUX 02/25 USD OT EQ LUX 02/24 USD GL EQ LUX 02/24 USD OT EQ LUX 02/24 USD EA EQ LUX 02/25 USD OT EQ LUX 02/24 EUR OT EQ LUX 02/24 USD
JP JP
Yuki Hokuyo Jpn Gen Yuki Hokuyo Jpn Inc Yuki Hokuyo Jpn Sm Cap
JP JP JP
EQ IRL 02/25 JPY EQ IRL 02/25 JPY EQ IRL 02/25 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 40.56 43.83 11.21 22.89 21.06 134.70 37.86 133.17 89.98 124.08
0.9 -0.2 -5.3 -5.6 9.0 1.5 -6.9 -15.0 -2.4 -2.4
8.7 5.5 16.1 5.9 22.4 32.2 36.6 10.1 37.5 37.5
12.0 8.3 41.2 29.3 28.5 42.8 35.0 41.2 56.3 56.3
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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[email protected]
IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL
02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25 02/25
JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY
24
THE WALL STREET JOURNAL.
Tuesday, March 1, 2011
BLUE CHIPS BONDS Dow Jones Asia Titans: Monday'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.
Dow Jones Country Titans INDEX PERFORMANCE Previous session
Year-to-date
52-week
11.3%
Italy
1.32%
Spain
0.71
France
1.55
8.5
9.2
Russia
2.06
8.0
35.1
Japan
0.80
5.9
4.9
Netherlands
0.93
5.7
13.9
Canada
0.52
5.5
18.2
Germany
1.63
5.3
23.8
Switzerland
1.52
4.8
2.6
China 88
1.18
3.1
-8.4
U.K.
0.21
2.3
9.6
Australia
10.7
1.44
7.4
2.3
-0.24
Hong Kong
6.8%
0.54
-1.4%
11.5
1.30
-1.9
19.3
South Africa
0.70
-2.4
15.4
South Korea
-0.76
Turkey
-0.59
Industry
China Life Insurance
Hong Kong
Life Insurance
-4.7
12.4%
25.9%
1.73
11.7
15.6
10.4
30.8
Ind Gds Svcs
1.42
Chemicals
1.79
Global 50
9.4 7.8 6.7 5.2
0.09
Asian 50
0.37
Tiger 50*
0.68
44.1
4.11
28.7
10.60
Indl Comm Bk China
Hong Kong
Banks
66.6
5.98
1.87
11.0
12.3
Mizuho Financial Grp
Japan
Banks
39.6
168.00
1.82
-2.3
-100.0
Nintendo
Japan
Toys
$37.5
23,970
-4.12%
-0.8
-57.4
-1.77
Shinhan Financial Grp
South Korea
Banks
19.9
47,100
QBE Insurance Group
Australia
Reinsurance
19.4
18.14
Arab 50
-0.48
-1.41
Electricity
41.4
2,114
-0.89
-13.3
-21.7
71.5
23.53
-0.84
-10.0
-1.2
Market value, in billions (U.S)
Toyota Motor 147.0 Japan (Automobiles) China Construction Bank 210.2 Hong Kong (Banks) Woodside Petroleum 33.7 Australia (Exploration Production) Mitsui 32.9 Japan (Industrial Suppliers) Nippon Steel 22.8 Japan (Steel) Takeda Pharm 39.2 Japan (Pharmaceuticals) Sun Hung Kai Prop 41.4 Hong Kong (Real Estate Holding Development) Rio Tinto Ltd. 37.6 Australia (General Mining) Shin-Etsu Chml 24.3 Japan (Specialty Chemicals) Cheung Kong 36.0 Hong Kong (Real Estate Holding Development) Sony 36.4 Japan (Consumer Electronics) Sumitomo Mitsui Finl 52.6 Japan (Banks) Tokio Marine Hldgs 25.8 Japan (Property Casualty Insurance) Mitsubishi UFJ Finl 76.9 Japan (Banks) Canon 59.4 Japan (Electronic Office Equipment) Westfield Grp 22.9 Australia (Retail) Panasonic 27.8 Japan (Consumer Electronics) BHP Billiton 157.3 Australia (General Mining) CNOOC 101.4 Hong Kong (Exploration Production) Mitsubishi 45.4 Japan (Industrial Suppliers)
12.0 12.6 18.3 2.3
Latest, in local currency
STOCK PERFORMANCE Latest 52-week Three-year
3,820
1.73%
14.7%
-35.4%
6.81
1.64
19.6
16.0
42.58
1.57
-1.8
-23.5
1,486
1.57
7.8
-37.4
296.00
1.37
-10.8
-48.4
4,065
1.25
1.0
-30.4
125.80
1.21
16.7
-11.4
84.93
1.19
20.5
-37.3
4,695
1.19
-1.8
-19.1
121.20
1.08
28.0
1.1
2,993
0.88
-1.9
-42.7
3,085
0.82
8.0
-99.6
2,679
0.79
6.9
-32.9
453.00
0.67
0.9
-54.1
3,940
0.64
6.6
-20.1
9.75
0.62
3.9
-29.9
1,101
0.46
-10.9
-51.6
46.11
0.35
12.2
16.4
17.68
0.23
44.4
31.5
2,261
0.22
1.8
-32.3
Latest, in local currency
Market value, in billions (U.S)
Company/Country (Industry)
China Mobile (HK) 186.4 Hong Kong (Mobile Telecommunications) JFE Hldgs 16.6 Japan (Steel) Honda Motor 79.2 Japan (Automobiles) Kansai Elec Power 23.6 Japan (Electricity) Nippon T&T 64.5 Japan (Fixed Line Telecommunications) Woolworths 33.1 Australia (Food Retailers Wholesalers) Commonwlth Bk of Aus 82.9 Australia (Banks) NTT DoCoMo 78.3 Japan (Mobile Telecommunications) Taiwan Smcndtr Mfg 61.4 Taiwan (Semiconductors) Hon Hai Precision Ind 35.4 Taiwan (Electrical Components Equipment) Seven I Hldgs 24.6 Japan (Broadline Retailers) Japan Tobacco 39.5 Japan (Tobacco) East Japan Railway 27.5 Japan (Travel Tourism) POSCO 31.5 South Korea (Steel) Samsung Electronics 106.4 South Korea (Semiconductors) Nissan Motor 42.7 Japan (Automobiles) Reliance Industries 69.8 India (Exploration Production) KDDI 28.6 Japan (Mobile Telecommunications) Aus NZ Bk 62.8 Australia (Banks) National Australia Bk 55.6 Australia (Banks)
STOCK PERFORMANCE Latest 52-week Three-year
73.05
0.21%
-4.6%
-39.4%
2,575
0.16
-22.1
3,545
0.14
15.1
5.5
2,146
0.14
2.0
-15.8
3,990
0.13
3.1
-99.1
26.88
0.11
0.1
-10.3
-45.6
53.11
0.04
-1.5
20.6
153,500
...
11.7
-1.6
70.50
...
19.9
10.8
109.00
...
-3.9
-36.4
2,277
-0.04
13.6
-14.2
337,000
-0.15
4.5
-37.7
5,690
-0.18
-7.0
-99.3
460,000
-0.22
-13.2
-15.4
923,000
-0.32
24.1
59.1
835.00
-0.36
18.4
-15.7
42.66
-0.37
0.6
-33.1
530,000
-0.38
11.8
-15.5
24.13
-0.41
4.3
6.3
25.80
-0.77
1.4
-13.9
Sources: Dow Jones Indexes; WSJ Market Data Group
Credit derivatives
Credit-default swaps: Asian companies
Spreads on credit derivatives are one way the market rates creditworthiness. Regions that are treading in rough waters can see spreads swing toward the maximum—and vice versa. Indexes below are for five-year swaps.
At its most basic, the pricing of credit-default swaps measures how much a buyer has to pay to purchase-and how much a seller demands to sell-protection from default on an issuer's debt. The snapshot below gives a sense which way the market was moving yesterday.
Markit iTraxx Indexes Index: series/version
Europe: 14/1 Eur. High Volatility: 14/1 Europe Crossover: 14/1 Asia ex-Japan IG: 14/1 Japan: 14/1
Mid-spread, in pct. pts. Mid-price
Coupon
SPREAD RANGE, in pct. pts. since most recent roll Maximum Minimum Average
Spreads on fiveyear swaps for corporate debt; based on Markit iTraxx indexes.
And the most deterioration
CHANGE, in basis points
CHANGE, in basis points
100.04%
0.01%
1.20
0.94
1.03
1.37
98.39
0.01
1.84
1.29
1.52
Rep Indonesia
148
–6
1
–8
TAISEI
218
...
1
18
3.95
104.13
0.05
5.37
3.83
4.47
GS Caltex Oil
117
–5
5
–2
Sumitomo Metal
70
...
...
–16 7
Yesterday Yesterday Five-day 28-day
Yesterday Yesterday Five-day 28-day
1.11
99.51
0.01
1.25
0.93
1.08
Rep Philippines
138
–5
1
–1
Mizuho Corporate
100
...
5
1.04
99.80
0.01
1.16
0.90
1.02
Expt Import Bk Korea
116
–4
3
–1
OBAYASHI
109
...
2
7
HYUNDAI
113
–3
1
–2
Sumitomo Mitsui
80
...
2
–2
In percentage points
Index roll
1.60 t Australia t
Spreads
Showing the biggest improvement...
0.99
Note: Data as of February 25
All statistics published in The Wall Street Journal Asia from markets outside the Asian-Pacific region reflect preliminary data.
-9.9 -24.7
Banks
Source: Dow Jones Indexes
— NOTICE TO READERS —
13.6 -15.2
Japan
*Asia excluding Japan
Tracking credit markets dealmakers
26.4 -12.1
Australia
36.4
-8.0%
13.7 22.3
Tokyo Elec Power
28.0
2.2
2.24 2.12
Westpac Bking
10.3
0.4
-6.8%
Banks
17.6
1.06%
0.73
Three-year
-13.9%
Integrated Oil Gas
Company/Country (Industry)
Insurance
0.90
52-week
2.42%
...And the rest of Asia's blue chips
Oil Gas Media
29.65
Hong Kong
Dow Jones Regional Sector Titans
Banks
$28.3
STOCK PERFORMANCE Previous session
Hong Kong
11.9
-8.6
Previous close, in local currency
Bank of China
23.6
-4.9
Market value, in billions of US$
PetroChina
12.8
Brazil
-0.38
Country
1.6
0.2
Sweden
Singapore
Company
1.20 0.80
Japan
Samsung Electrs
70
–3
2
–4
ACOM
329
1
–9
–105
Bk of China
132
–3
2
–5
ORIX
158
2
–12
–28
Korea Dev
117
–3
3
–1
SK Telecom Woori
89
–2
2
2
143
–2
4
–2
Source: Markit Group
0.40 0 Sept. Oct. Nov. Dec. Jan. Feb. 2010 2011 Source: Markit Group
Behind Asia's deals: Bank revenue rankings, Global (ex US) Behind every IPO, bond offering, merger deal or syndicated loan is one or more investment banks. Here are investment banks ranked by year-to-date revenues from recent deals.
Deutsche Bank
PERCENTAGE OF TOTAL REVENUE Debt Mergers & capital markets acquisitions
Revenue, in millions
Market share
Equity capital markets
$298
5.3%
19%
51%
24%
5%
4.6
46
28
19
6
Bank of America Merrill Lynch
255
Loans
Goldman Sachs
250
4.5
24
29
47
1
WSJ.com
Morgan Stanley
245
4.4
38
18
40
3
Credit Suisse
239
4.3
27
51
16
5
Follow the markets throughout the day, with updated stock quotes, news and commentary at WSJ.com. Also, receive emails that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com/Email.
JPMorgan
235
4.2
30
36
27
7
Nomura
220
3.9
70
9
20
2
Barclays Capital
206
3.7
25
48
21
5
Citi
205
3.7
24
47
25
5 Source: Dealogic
Tuesday, March 1, 2011
25
THE WALL STREET JOURNAL.
GLOBAL MARKETS LINEUP Commodities
Currencies
Prices of futures contracts with the most open interest
EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; NYBOT: New York Board of Trade; MDEX: Bursa Malaysia Derivatives Berhad; LIFFE: London International Financial Futures Exchange; LME: London Mercantile Exchange; NYMEX: New York Mercantile Exchange; ICE: IntercontinentalExchange Contract ONE-DAY CHANGE Commodity Exchange Last price Net Percentage high
-1.00 -9.00 -8.25 0.725 43 5.70 0.62 7.00 -43 9 37
448.80 1411.70 3387.00 2,559.00 32,200.00 9,840.00 2,526.00 2,503.50 28,755
3.30 2.40 95.90 0.00 375.00 166.00 27.00 16.50 1,030
98.08 2.9588 2.9100 4.155 113.04 936.00
0.20 0.0133 0.0014 0.082 0.90 11.00
CBOT CBOT CME ICE-US ICE-US ICE-US ICE-US MDEX LIFFE LIFFE COMEX
Copper (cents/lb.) Gold ($/troy oz.) Silver (cents/troy oz.) Aluminum ($/ton) Tin ($/ton) Copper ($/ton) Lead ($/ton) Zinc ($/ton) Nickel ($/ton)
721.00 1366.00 803.00 114.825 3,682 273.50 29.36 191.23 3,472.00 2,377 2,376
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)
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
744.25 1,467.50 925.50 116.600 3,686 278.40 33.11 211.76 3,930 2,383 2,417
-0.14% -0.65 -1.02 0.64% 1.18 2.13 2.16 3.80 -1.22 0.38 1.58 0.74 0.17 2.91 unch.
1.18 1.72 1.08 0.66 3.72
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 1,434.10 1,005.00 3,431.50 18.50 2,565.00 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 18,005 136.90 3.0767 3.0354 10.050 133.58 977.00
0.20 0.45 0.05 2.01 0.80 1.19
67.95 1.7225 1.9900 3.882 68.02 634.25
Source: Thomson Reuters; WSJ Market Data Group
WSJ.com
Price-to-
earnings ratio* 16
Region/Country Index ASIA-PACIFIC DJ Asia-Pacific
PREVIOUS SESSION
Net change
Percentage change
19
Denmark
OMX Copenhagen
1.3
10.8
14
Finland
-13.1
8.5
12
France
-6.3
35.8
14
0.92
3.9
4.4
0.99
5.8
5.8
-1.8
16.2
23338.02
325.65
India
Sensex
17823.40
122.49
0.69
...
Indonesia
Jakarta Composite
3470.348
26.818
0.78
...
Japan
Nikkei Stock Average
10624.09
97.33
951.27
9.34
1491.25
1.98
Topix
...
Malaysia
Kuala Lumpur Composite
...
New Zealand
NZSX-50
3370.523
6.609
8
Pakistan
KSE 100
11289.22
65.70
13
Philippines
Manila Composite
3766.73
29.69
...
Singapore
Straits Times
3010.51
-14.65 -24.13
0.52% -0.10% 1.31 1.42
0.13 0.20 0.59 0.79 -0.48
-2.5
10.6
8.0
9.0
Germany
DAX
7272.32
87.15
1.21
5.2
27.3
12
Italy
FTSE MIB
22466.57
116.86
0.52
11.4
5.4
14
Netherlands
AEX
369.13
2.36
0.64
4.1
13.8
...
Russia
RTSI
1969.91
37.09
11.3
37.8
Spain
IBEX 35
10850.8
28.1
Switzerland
SMI
6610.44
73.24
Turkey
ISE National 100
61283.87
-83.47
-0.14%
-7.2
19.7
U.K.
FTSE 100
5994.01
-7.19
-0.12
1.6
10.9
1.9
6.5
9
-6.1
18.9
10
-10.3
22.3
...
-5.6
8.5
13
-5.4
21.6
17
-4.2
13.5
...
-4.3
36.9
...
2.49
0.88
3.9
15.3
16
Stoxx Europe 50
2714.92
19.99
0.74
5.0
8.8
*P/E ratios use trailing 12-months, as-reported earnings European and Americas index data are as of 12:00 p.m. ET.
PERFORMANCE YearThree-yr., to-date 52-wk. annualized
Daily
0.92% 0.96 0.09 0.54 0.34 1.74 0.97 0.37 0.66 1.31 1.48 1.27
4.2% 6.1 5.2 -0.5 -4.0 7.3 -4.1 2.2 -2.0 3.3 -0.5 4.0
19.8% 16.3 12.0 16.8 17.6 19.2 17.1 12.6 13.9 -0.2 8.4 -0.6
-2.2% -4.7 -5.6 -2.3 -1.7 -6.5 -3.1 -3.8 -3.9 -9.2 -4.1 -8.6
Price-toDividend earnings yield* ratio* Dows Jones Index
2.27% 13 1.69 19 5.48 14 5.67 11 3.61 7 4.03 14 1.47 20 1.81 15 2.21 14 1.19 19 3.17 21
Last
Shenzhen -c U.S. TSM Global Select Div -d Asia/Pacific Select Div -d Hong Kong Select Div -d U.S. Select Dividend -d Islamic Market Islamic Market 100 Islamic China/HK Titans 30 Sustainability Korea Brookfield Infrastructure DJ-UBS Commodity -p
Euro Stoxx 50
AMERICAS
DJ Americas
Brazil
Bovespa
Argentina
Merval
Mexico
IPC
447.63 13887.51 224.23 297.51 215.28 366.94 2315.93 2345.21 1662.59 1445.82 2356.62 165.34
Net change
6.31 87.66 0.77 -0.28 2.13 2.13 21.58 24.99 15.65 -19.30 5.25 2.99
*Fundamentals are based on data in U.S. dollar. Footnotes: c-in local currency. d-dividends reinvested. p-previous day. Note: All data as of 11:30 a.m. ET.
PERFORMANCE YearThree-yr., to-date 52-wk. annualized
Daily
1.43% 0.64 0.35 -0.09 1.00 0.58 0.94 1.08 0.95 -1.32 0.22 1.84
2.6% 5.8 3.5 0.0 -2.2 2.4 4.0 4.5 -0.3 -3.0 4.0 1.8
9.2% 21.0 17.5 13.3 13.8 15.2 19.7 13.8 12.1 27.5 18.6 23.5
-2.4% 0.3 -5.6 -8.4 3.8 -4.9 0.3 -1.4 -4.6 0.8 -0.2 -7.5
Source: DowJones Indexes
U.S.-dollar and euro foreign-exchange rates in global trading
1.597 1.007 0.149 1.356 0.126 0.0217 0.0001 0.012 0.738 0.0009 0.322 0.023 0.773 1.057 0.033 0.032
0.631 0.094 0.849 0.079 0.0136 0.0001 0.008 0.462 0.0005 0.202 0.014 0.484 0.662 0.021 0.020
0.148 1.347 0.125 0.0215 0.0001 0.012 0.733 0.0009 0.320 0.022 0.767 1.049 0.033 0.032
YUAN 6.572 6.693 10.687 6.741 9.078 0.844 0.1452 0.0007 0.080 4.940 0.0058 2.154 0.151 5.171 7.072 0.221 0.215
EURO 0.724 0.737 1.177 0.743 0.110 0.093 0.0160 0.0001 0.009 0.544 0.0006 0.237 0.017 0.570 0.779 0.024 0.024
HK$ 7.789 7.933 12.668 7.990 1.185 10.760 0.1721 0.0009 0.095 5.856 0.0069 2.553 0.179 6.129 8.382 0.262 0.255
RUPEE 45.265 46.100 73.614 46.433 6.888 62.527 5.811 0.0051 0.553 34.028 0.0402 14.839 1.038 35.618 48.711 1.522 1.480
RUPIAH 8821.45 8984.21 14346.33 9049.04 1342.36 12185.52 1132.52 194.88 107.70 6631.53 7.84 2891.81 202.37 6941.38 9493.09 296.55 288.38
YEN 81.905 83.416 133.202 84.018 12.463 113.139 10.515 1.8095 0.0093 61.572 0.0728 26.850 1.879 64.449 88.141 2.753 2.678
NZ$ 1.330 1.355 2.163 1.365 0.202 1.838 0.171 0.0294 0.0002 0.016 0.0012 0.436 0.031 1.047 1.432 0.045 0.043
WON 1124.85 1145.60 1829.34 1153.87 171.17 1553.81 144.41 24.85 0.13 13.73 845.60 368.74 25.81 885.11 1210.49 37.81 36.77
359.02
2.41
67204.03
301.50
0.98
1.92 0.26
10.1
4.0
2.7
-2.7
1.12
5.3
21.1
-3.0
-0.1
0.68 0.45
3460.58
25.14
0.73
-1.8
53.2
37084.53
204.33
0.55
-3.8
16.5
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
Dow Jones Indexes
0.87%
0.98
2.00
0.20
Percentage change
0.63
987.91
Closed
PERFORMANCE Yr.-to-date 52-wk. 6.4% 11.9%
PREVIOUS SESSION
Net change 2.52
39.97
286.61
-1.23
Close 291.90
46.66
Stoxx Europe 600
C$ 0.975 0.993 1.585
1.5731
4110.35
SET
£ 0.615 0.626
0.6357
7471.45
EUROPE
A$ 0.982
1.1388
CAC-40
Thailand
US$
0.8781
OMX Helsinki
16
1.018 1.626 1.026 0.1522 1.381 0.128 0.0221 0.0001 0.012 0.752 0.0009 0.328 0.023 0.787 1.076 0.034 0.033
SDR -f
0.3771 2.6522 5.8910 0.1698 3.6230 0.2760 0.7088 1.4109 0.2785 3.5907 1507.50 0.0006634 3.7506 0.2666 6.9407 0.1441 3.6731 0.2723
8.8
10
U.S. Australia Britain Canada China Euro Hong Kong India Indonesia Japan New Zealand South Korea Malaysia Philippines Singapore Switzerland Taiwan Thailand
MIDDLE EAST/AFRICA Bahrain dinar 0.5208 1.9200 Egypt pound-a 8.1375 0.1229 Israel shekel 5.0046 0.1998 Jordan dinar 0.9790 1.0214 Kuwait dinar 0.3847 2.5994 Lebanon pound 2082.39 0.0004802 Saudi Arabia riyal 5.1809 0.1930 South Africa rand 9.5875 0.1043 United Arab dirham 5.0738 0.1971
29.5
1939.30
Cross rates
1.3814 1.3808 1.3797 1.3770 0.0566 0.1853 0.005101 0.1786 0.3484 0.03465 0.1580 1.0761 1.0764 1.0770 1.0778 0.6251 1.6263 1.6259 1.6247 1.6220
7.9
8599.65
Last
0.7239 0.7242 0.7248 0.7262 17.654 5.3974 196.04 5.5995 2.8700 28.858 6.3293 0.9293 0.9290 0.9285 0.9278 1.5998 0.6149 0.6151 0.6155 0.6165
3.0
Kospi
Global TSM 2718.13 24.80 Global DOW 2215.25 21.03 Global Titans 50 186.22 0.16 Asia/Pacific TSM 1403.09 7.52 Asia/Pacific ex-Japan TSM 3467.78 11.65 Europe TSM 2948.91 50.50 Emerging Markets TSM 4601.62 44.36 Asian Titans 50 148.93 0.55 BRIC 50 641.83 4.24 CBN China 600 -c 27582.50 357.23 China Offshore 50 4224.20 61.72 Shanghai -c 370.47 4.65
1 0.9996 0.9988 0.9969 0.0410 0.1341 0.003693 0.1293 0.2522 0.02509 0.1144 0.7790 0.7793 0.7797 0.7802 0.4525 1.1773 1.1770 1.1761 1.1742
0.60
Weighted
17 15 14 17 17 16 12 14 13 13 13 13
In U.S. dollars
2.64
South Korea
2.06% 1.83 2.14 2.27 2.45 2.49 2.08 2.20 2.57 2.57 2.27 2.27
Per U.S. dollar
439.81
Taiwan
Net change
In euros
29.39
11
Price-toDividend earnings yield* ratio* Dows Jones Index
Per euro EUROPE Euro zone euro 1 1-mo. forward 1.0004 3-mos. forward 1.0012 6-mos. forward 1.0031 Czech Rep. koruna-b 24.386 Denmark krone 7.4557 Hungary forint 270.79 Norway krone 7.7349 Poland zloty 3.9644 Russia ruble-d 39.863 Sweden krona 8.7429 Switzerland franc 1.2836 1-mo. forward 1.2833 3-mos. forward 1.2825 6-mos. forward 1.2817 Turkey lira 2.2099 U.K. pound 0.8494 1-mo. forward 0.8496 3-mos. forward 0.8502 6-mos. forward 0.8516
3014.41
15
14
Region/Country Index Euro Zone Euro Stoxx
-0.2
Hang Seng
...
Price-to-
earnings ratio* 14
3.3
Hong Kong
16
PERFORMANCE Yr.-to-date 52-wk.
13
357.23
14
0.9819 1.0185 6.5716 0.1522 7.7892 0.1284 45.2650 0.0221 8822 0.0001134 81.91 0.012209 81.89 0.012212 81.85 0.012218 81.77 0.012230 3.0505 0.3278 1.3302 0.7518 85.750 0.0117 43.590 0.0229 1.2709 0.7869 1124.85 0.0008890 29.747 0.03362 30.590 0.03269
3.1
27582.50
China
1.3563 0.7373 9.0777 0.1102 10.7596 0.0929 62.5268 0.0160 12186 0.0000821 113.14 0.008839 113.12 0.008840 113.06 0.008845 112.95 0.008854 4.2138 0.2373 1.8375 0.5442 118.451 0.0084 60.213 0.0166 1.7555 0.5696 1553.81 0.0006436 41.091 0.02434 42.255 0.02367
16.8%
CBN 600
...
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
1.8
0.74 -4.87
SPX/ASX 200
4.0260 0.2484 1.6582 0.6031 0.9749 1.0258 0.9755 1.0251 0.9769 1.0237 0.9794 1.0210 476.35 0.002099 1906.80 0.0005244 1 1 12.0981 0.0827 2.7745 0.3604 19.450 0.0514 1 1 4.29 0.232848
In euros
-0.4%
141.98 4831.66
Australia
In U.S. dollars
5.5613 0.1798 2.2906 0.4366 1.3466 0.7426 1.3475 0.7421 1.3494 0.7411 1.3530 0.7391 658.01 0.001520 2633.96 0.0003797 1.3813 0.7239 16.7117 0.0598 3.8326 0.2609 26.867 0.0372 1.3813 0.7239 5.93 0.168565
Per euro
Stock indexes from around the world, grouped by region. Shown in local-currency terms.
Close
...
Per U.S. dollar
AMERICAS Argentina peso-a Brazil real Canada dollar 1-mo. forward 3-mos. forward 6-mos. forward Chile peso Colombia peso Ecuador US dollar-f Mexico peso-a Peru sol Uruguay peso-e U.S. dollar Venezuela bolivar
a-floating rate b-commercial rate c-government rate c-commercial rate d-Russian Central Bank rate f-Special Drawing Rights from the International Monetary Fund ; based on exchange rates for U.S., British and Japanese currencies. Note: Based on trading among banks in amounts of $1 million and more, as quoted by Thomson Reuters.
Follow the markets throughout the day with updated stock quotes, news and commentary at WSJ.com Also, receive email alerts that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com/Email
Major stock market indexes
London close on Feb. 28
RINGGIT PH. PESO 3.051 43.590 3.107 44.394 4.961 70.890 3.129 44.715 0.464 6.633 4.214 60.213 0.392 5.596 0.0674 0.9630 0.0003 0.0049 0.037 0.532 2.293 32.769 0.0027 0.0388 14.289 0.070 2.400 34.300 3.283 46.909 0.103 1.465 0.100 1.425
S$ S FRANC 1.271 0.929 1.294 0.946 2.067 1.511 1.304 0.953 0.193 0.141 1.755 1.284 0.163 0.119 0.0281 0.0205 0.0001 0.0001 0.016 0.011 0.955 0.699 0.0011 0.0008 0.417 0.305 0.029 0.021 0.731 1.368 0.043 0.031 0.042 0.030
TW$ 29.747 30.296 48.378 30.514 4.527 41.091 3.819 0.6572 0.0034 0.363 22.362 0.0264 9.752 0.682 23.407 32.012
BAHT 30.590 31.154 49.749 31.379 4.655 42.255 3.927 0.6758 0.0035 0.373 22.996 0.0272 10.028 0.702 24.071 32.919 1.028
0.972
Source: Thomson Reuters via WSJ Market Data Group
MSCI indexes Developed and emerging-market regional and country indexes from MSCI Barra as of February. 28, 2011 Price-toDividend earnings yield ratio Morgan Stanley Index
LOCAL-CURRENCY PERFORMANCE
Last
Daily
YTD
52-wk.
2.30% 16
ALL COUNTRY (AC) WORLD* 342.19
-1.07%
3.5%
19.5%
2.30
16
World (Developed Markets) 1,341.30
-1.06
4.8
19.8
1.60
26
World Small Cap
246.31
-1.73
4.2
32.8
2.40
16
Kokusai (World ex-Japan)
1,327.34
-1.08
4.9
20.3
2.90
15
EAFE
1,731.57
-0.97
4.4
14.6
2.10
14
Emerging Markets (EM)
1,099.45
-1.12
-4.5
17.8
2.60
16
AC ASIA PACIFIC EX-JAPAN 461.70
-1.28
-3.6
18.4
2.20
15
AC Far East ex-Japan
503.51
-1.32
-4.1
19.3
1.90
16
Japan
588.12
0.83
4.8
4.3
2.20
14
China
64.03
1.58
-3.7
8.0
1.00
21
China A (China Domestic)
3,146.67
0.14
1.9
2.7
2.40
23
Hong Kong
11,908.42
2.05
-2.5
25.1
1.00
19
India
696.98
0.65
-14.1
4.9
1.10
12
Korea
562.83
0.61
-4.1
23.3 17.9
2.40
18
Malaysia
546.70
0.03
-2.5
2.80
15
Singapore
1,665.99
1.86
-5.1
9.1
3.10
16
Taiwan
306.58
0.77
-4.0
10.9
2.70
13
Thailand
398.84
1.23
-3.0
40.2
4.10
17
Australia
988.53
0.55
2.3
4.9
5.10
17
New Zealand
86.72
-0.19
3.5
2.5
1.70
18
US BROAD MARKET
1,496.25
-1.23
5.1
25.4
3.10
15
EUROPE
98.37
1.23
3.1
14.8
*Twenty-three developed and 26 emerging markets
Source: MSCI Barra
26
THE WALL STREET JOURNAL.
Tuesday, March 1, 2011
SCANNING THE GLOBE Dow Jones Industrial Average
Nasdaq Composite Index
P/E: 15
s 89.61, or 0.74%
LAST: 12220.06 YEAR TO DATE: OVER 52 WEEKS
s 9.74, or 0.35%
LAST: 2790.79 YEAR TO DATE: OVER 52 WEEKS
s 642.55, or 5.5% s 1,816.27, or 17.5%
S&P 500 Index
P/E: 13*
P/E: 19 s 8.18, or 0.62%
LAST: 1328.06 YEAR TO DATE: OVER 52 WEEKS
s 137.92, or 5.2% s 517.22, or 22.7%
s 70.42, or 5.6% s 212.35, or 19.0%
High Close Low
12500
2800
1350
12000
2700
1300
11500
2600
1250
11000
2500
1200
10500
2400
1150
t
50–day moving average
10000 3 Dec.
10
17 23
31
7
14
21
Jan.
28
4 Feb.
11
2300
18 25
3 Dec.
10
17 23
31
7
14
21
28
Jan.
4 Feb.
11
1100
18 25
3 Dec.
10
17 23
31
7
14
Symbol
Latest
AT&T Alcoa AmExpress BankAm Boeing Caterpillar Chevron CiscoSys CocaCola Disney DuPont ExxonMobil GenElec HewlettPk HomeDpt Intel IBM JPMorgChas JohnsJohns KftFoods McDonalds Merck Microsoft Pfizer ProctGamb 3M TravelersCos UnitedTech Verizon
T AA AXP BAC BA CAT CVX CSCO KO DIS DD XOM GE HPQ HD INTC IBM JPM JNJ KFT MCD MRK MSFT PFE PG MMM TRV UTX VZ
6.5 10.8 3.6 67.8 1.7 1.6 3.7 16.4 2.8 4.6 1.7 7.3 15.5 11.1 3.6 25.0 1.6 10.6 5.3 3.5 4.7 6.7 19.2 20.6 3.6 2.1 1.2 0.8 4.0
$28.16 16.77 43.52 14.23 72.31 102.75 102.71 18.63 64.37 43.62 54.53 86.01 20.93 43.58 37.31 21.55 161.96 46.62 60.58 31.57 74.68 32.52 26.62 19.28 63.10 92.29 59.66 83.74 36.35
0.03 0.09 –0.01 0.03 0.01 0.75 0.61 –0.01 0.06 0.67 0.46 0.67 0.11 0.90 0.23 –0.31 –0.32 –0.06 0.94 –0.14 0.24 0.33 0.07 0.42 0.26 2.04 0.06 0.37 0.38
0.12% 0.54 –0.02 0.21 0.01 0.74 0.60 –0.05 0.09 1.56 0.85 0.79 0.55 2.11 0.62 –1.42 –0.20 –0.14 1.58 –0.44 0.32 1.03 0.26 2.23 0.42 2.26 0.10 0.44 1.05
WalMart
WMT
6.8
52.18
0.43
0.83
Stock
CHANGE Points Percentage
4 Feb.
11
18 25
Sources: WSJ Market Data Group; Birinyi Associates
U.S. stocks: most active...
Volume, in millions
28
Jan.
*Price-to-earnings ratio for the Nasdaq 100 Note: Price-to-earnings ratios are for trailing 12 months
DJIA component stocks
21
Stock
Volume, Symbol in millions
Citigroup BankAm SPDR S&P 500 FordMotor SiriusXM Intel iShrMSCIEmrgMkt DeltaPet MicronTch PwrShrs QQQ iShrRu2000 Pfizer LECG Cp Microsoft SPDR FnclSelSct
C BAC SPY F SIRI INTC EEM DPTR MU QQQQ IWM PFE XPRT MSFT XLF
ADRs of Asian companies* Latest
CHANGE Points Percentage
210.1 67.8 53.0 29.2 27.1 25.0 23.9 23.2 22.6 22.2 21.5 20.6 20.4 19.2 19.1
$4.69 14.23 132.90 15.02 1.79 21.55 45.73 1.21 11.23 57.77 82.29 19.28 0.15 26.62 16.82
–0.01 0.03 0.56 –0.05 0.02 –0.31 0.21 0.22 –0.21 0.13 0.11 0.42 –0.56 0.07 0.05
–0.21% 0.21 0.43 –0.33 1.41 –1.42 0.47 22.21 –1.84 0.22 0.13 2.23 –78.38 0.26 0.29
4,555.2 4.2 147.1 950.5 74.2
$31.98 5.28 5.93 7.40 2.77
6.16 0.83 0.93 1.14 0.42
23.86% 18.65 18.60 18.21 17.87
143.2 572.1 3.0 1,017.4 565.0
$23.90 12.70 4.13 7.01 7.65
–11.13 –1.28 –0.39 –0.62 –0.66
–31.78% –9.16 –8.63 –8.13 –7.94
52-WEEK High Low
$13.85 131.63 15.55 37.65 3.94 96.23 53.16 27.48 7.27 12.55 58.22 22.81 54.70 5.66 9.21 77.92 21.59 48.70 17.60 93.74 19.24 17.32 44.56 8.94 9.90 40.45 64.55 75.00 14.75 3.56
Biggest gainers... MedicisPhrm PrnctnNtlBcp NewConceptEngy BluDolp RadioOne
MRX PNBC GBR BDCO ROIA
...Biggest losers CntlPacFnl KenCole A IncoOppRlty PrtlxBioThera NPS Pharm
CPF KCP IOT PLX NPSP
Volume, Symbol in OOOs
Stock
TaiwanSemi Baidu ADS SuntechPwr TataMtrs ADS UtdMicro ADS BHPBilton ADS CtripInt ADS FocusMediaHldg Slcnwr ADS AU Optrncs ICICI Bk ADS KT Crp ADS ChinaMobile MitsuUFJ ADS SilicnMotnTch Infosys LG DisplayADS Netease.com ChinaUnicomHK ToyotaMtr ADS SK Tele ADS KoreaElecPwr HondaMtr ADS TeleNZ ADS Rediff ADS SonyCp 51job ADS ChinaLfIns ADS ChMedTech ADS SifyTech ADS
$9.30 51.25 7.05 15.25 2.50 58.38 31.35 14.35 4.45 8.38 33.21 17.48 44.36 4.48 3.00 53.28 13.75 26.16 10.91 67.56 14.58 10.43 28.33 5.90 1.69 25.85 16.64 55.47 9.40 1.18
CHANGE Latest Points Percentage
TSM 10,281.3 $12.31 0.02 BIDU 2,474.8 120.82 0.23 STP 2,387.9 9.73 –0.25 TTM 1,740.4 24.58 0.22 UMC 1,656.3 2.82 –0.04 BHP 1,447.4 94.80 0.89 CTRP 1,072.7 38.71 –1.06 FMCN 950.2 26.63 –0.41 SPIL 903.7 6.68 –0.03 AUO 880.9 9.02 0.04 IBN 737.0 43.54 –0.34 KT 654.8 19.90 –0.07 CHL 646.3 47.20 0.23 MTU 551.7 5.52 0.02 SIMO 535.0 9.08 0.58 INFY 507.5 67.08 –0.26 LPL 436.8 16.02 –0.18 NTES 431.0 45.86 –0.29 CHU 417.9 16.72 0.28 TM 377.6 93.10 1.35 SKM 363.7 17.56 0.04 KEP 333.1 12.23 –0.21 HMC 241.0 43.57 0.20 NZT 206.2 7.88 0.04 REDF 204.6 5.92 –0.24 SNE 204.5 36.87 0.39 JOBS 201.4 60.38 0.15 LFC 159.5 57.18 1.03 CMED 159.2 13.19 ... SIFY 157.2 2.67 0.06
0.14% 0.19 –2.45 0.90 –1.40 0.94 –2.67 –1.52 –0.45 0.45 –0.77 –0.38 0.49 0.33 6.82 –0.39 –1.11 –0.63 1.70 1.47 0.23 –1.69 0.46 0.51 –3.89 1.07 0.25 1.83 ... 2.30
*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
4.940% 5.477 1.872 3.643 2.399 4.275 1.837 3.304 1.479 3.221 1.620 3.568 1.535 3.170 0.727 2.977 2.504 4.841 0.250 1.265 1.314 3.388 5.749 7.537 3.199 5.385 0.617 1.894 1.390 3.682 0.700 3.411
SPREAD OVER TREASURYS, in basis points Latest Previous Month ago Year ago
424.0 206.6 117.2 23.2 169.9 86.4 113.7 -10.7 77.9 -19.0 92.0 15.7 83.5 -24.1 2.7 -43.4 180.4 143.0 -45.0 -214.6 61.4 -2.3 504.9 412.6 249.9 197.4 -8.3 -151.7 69.0 27.1 ... ...
422.8 207.9 117.1 19.4 171.1 86.2 107.5 -13.4 81.5 -22.1 90.9 9.5 82.1 -27.8 -1.3 -42.0 180.5 142.1 -47.9 -218.1 59.2 -8.8 498.9 411.8 251.7 198.2 -12.7 -154.3 67.6 27.3 ... ...
431.5 214.5 129.0 30.4 189.5 98.5 112.9 -8.3 91.9 -12.0 100.9 22.4 82.2 -15.4 0.9 -44.1 207.1 144.6 -36.0 -211.1 74.5 0.7 385.8 373.4 266.4 214.5 10.3 -144.2 72.0 33.1 ... ...
374.1 188.3 51.1 -3.6 31.0 5.5 46.2 -22.0 86.0 -19.5 13.6 -19.2 4.0 -50.5 -15.6 -81.3 61.4 37.6 -66.4 -230.5 9.9 -21.3 130.0 90.3 46.5 27.9 -38.2 -170.6 12.3 41.9 ... ...
Previous
YIELD Month ago
Year ago
4.952% 5.508 1.895 3.623 2.435 4.291 1.799 3.295 1.539 3.208 1.633 3.524 1.545 3.151 0.711 3.009 2.529 4.850 0.245 1.248 1.316 3.341 5.713 7.547 3.241 5.411 0.597 1.886 1.400 3.702 0.724 3.429
4.870% 5.474 1.845 3.633 2.450 4.314 1.684 3.246 1.474 3.209 1.564 3.553 1.377 3.175 0.564 2.888 2.626 4.775 0.195 1.218 1.300 3.336 4.413 7.063 3.219 5.474 0.658 1.887 1.275 3.660 0.555 3.329
4.560% 5.497 1.330 3.578 1.129 3.669 1.281 3.394 1.679 3.419 0.955 3.422 0.859 3.109 0.663 2.801 1.433 3.990 0.155 1.309 0.918 3.401 2.119 4.517 1.284 3.893 0.437 1.908 0.942 4.033 0.819 3.614
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 1.200 10 5.000 Netherlands 2 3.500 10 5.450 Portugal 2 4.800 10 2.300 Spain 2 5.500 10 4.000 Switzerland 2 2.000 10 4.500 U.K. 2 3.750 10 0.625 U.S. 2 3.625 10
Yield
3 2 s
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
Thursday 1 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
4.535% 3.442 2.874 2.195 2.502 1.229 0.735 0.244 0.162 0.165 0.132
16.13 8.32 6.32 4.72 6.73 2.91 1.98 0.96 0.50 0.45 0.25
0.80 % –0.23 –0.64 –0.82 –0.28 –0.60 –0.24 0.04 0.03 0.03 0.02
–2.65 % –0.63 –0.34 –0.19 –0.69 –0.34 –0.08 0.11 0.07 0.06 0.03
–2.65 % –0.63 –0.34 –0.19 –0.69 –0.34 –0.08 0.11 0.07 0.06 0.03
One-month bill
0.122
0.08
0.01
0.02
0.02
a-Performance of a cash investment
Year to-date 12-month
7.47 % 5.76 6.16 4.59 4.79 2.63 1.25 0.74 0.32 0.37 0.25 0.16
Source: Ryan ALM
Key money rates Latest
52 wks ago
Prime rates
Latest Euro Libor One month
52 wks ago
0.82313%
0.38250%
1.04750
0.60000
Six month
1.32813
One year
1.69500
Offer Eurodollars One month
Bid
0.3500%
0.2500%
Three month
0.5500
0.4500
0.91125
Six month
0.7500
0.6000
1.19750
One year
1.0500
0.8500
Latest
52 wks ago
U.S.
3.25%
3.25%
Canada
3.00
2.25
Japan
1.475
1.475
Britain
0.50
0.50
ECB
1.00
1.00
Switzerland
0.61
0.53
Hibor One month
0.15036
0.07857%
Australia
4.75
3.75
Three month
0.22964
0.13000
U.S. discount
0.75%
0.75%
Hong Kong
5.25
5.25
Six month
0.29000
0.23000
Fed-funds target
0.25
0.25
One year
0.64000
0.51000
Call money
2.00
2.00
Libor One month
Three month
Asian dollars One month
0.2720%
0.26100%
0.22813%
Three month
0.30950
0.25169
Three month
0.3150
0.2550
Six month
0.46400
0.38375
Six month
0.4755
0.3838
U.K. (BBA)
0.502
0.510
One year
0.79025
0.83938
One year
0.8035
0.8388
Euro zone
0.62
0.29
0.24%
Overnight repurchase rates U.S. 0.21%
0.31%
Sources: WSJ Market Data Group; Reuters
Tuesday, March 1, 2011
27
THE WALL STREET JOURNAL.
MARKETS LINEUP Asian index movers…
Moving the markets
At right, Japan’s benchmark stock index and the biggest movers among the larger Asian stocks indexes and stocks Monday. Below each index are its most actively traded stocks. The charts show the percentage change in each index’s or stock’s value, rather than the point change, for purposes of comparison. The index level or stock price is indicated on each axis. All indexes and stocks are shown in local currency terms.
Nikkei Stock Average
Hang Seng
Japan
Hong Kong
s
10624.09 0.92% or 97.29
The benchmark rose 3.8% in February, its best showing since November and its fourth consecutive monthly gain. Namco Bandai rose after announcing a share buyback.
s
CBN 600 23338.02 1.41% or 325.62
Tencent rose on a deal with U.S. Internetdeals website Groupon to launch a site in China. The index’s 0.5% loss for February rated as its worst month since August.
Volume in millions
Close
Mizuho Financial
167.31
168
Shinsei Bank
Stock
1939.30 1.23% or 24.13
t
The market got help from construction-machinery firms on expectations of robust demand and from brokerages on hopes of higher revenue.
Shares snapped a five-month winning streak, sliding 6.3%. Monday’s losses came on concerns about oil prices and ahead of a national holiday on Tuesday.
45000
3000
12500
25000
37500
2500
10000
20000
30000
2000
7500
15000
22500
1500
10000
15000
M A M J J A S O N D JF 2010 2011 %
Stock
Volume in millions
Close
3
1.82
CCB
338.37
6.81
Change Net
South Korea
30000
M A M J J A S O N D JF 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
27582.50 1.31% or 357.20
15000
5000
WSJ.com
Kospi
China
M A M J J A S O N D JF 2010 2011
Change Net
Volume in millions
Close
TCL
264.53
4.82
%
Stock
0.11
1.64
Change Net
0.44
%
10.05
1000 M A M J J A S O N D JF 2010 2011 Stock
Chinhung Int
Volume in millions
Close
41.67
232.00
Change Net
%
-35.00
–13.11 2.28
127.89
104
–1
–0.95
Bank Of China
325.99
4.11
0.09
2.24
CiticSecurities
202.68
14.71
0.41
2.87
Foosung
6.17
5,390.00 120.00
MizuhoTrstBnkg
68.85
89
5
5.95
Icbc
298.58
5.98
0.11
1.87
ChangshaZoomHvyInd
163.16
15.20
0.68
4.68
Maniker
6.16
1,095.00
30.00
2.82
Hitachi
63.90
495
13
2.70
ChinaPetroChem
146.67
7.94
0.16
2.06
SanyHeavyIndustry 162.40
25.20
1.98
8.53
Mirae
5.69
421.00
-5.00
–1.17
Toshiba
53.55
535
6
1.13
PetroChina
76.21
10.60
0.22
2.12
ChinaBaoanGroup
139.33
21.88
–2.05
–8.57
Seong An
5.47
950.00
-85.00
–8.21
Asian stocks in the news Mahindra & Mahindra Ltd. Mizuho Tr & Bking India
614.10 rupee Japan
¥89
s 3.2% or 19.00 rupee
s 6.0% or ¥5
Evergrande Real Est
ITC
Hong Kong
India
HK$3.66
s 6.7% or HK$0.23
Government measures aimed at farmers are expected to boost demand for tractors and utility vehicles.
Mizuho Financial Group is considering acquiring full ownership of its brokerage and trust bank units
Credit Suisse raised its target price on the stock.
In rupee
In yen
In Hong Kong dollars
1250
150
3
180
300
500
60
2
120
200
22.8% 21.9%
A$5.31
t 2.9% or A$0.16
The company’s shares went ex-dividend.
10
30 J A S O N D JF 2011
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
16 5.60 1.1
0.6% 6.0%
-1.5% 2.3%
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
13.3% ...
Philippines
M A M J 2010 16 0.22 0.1
231.00 peso
t 2.9% or 7.00 peso
J A S O N D JF 2011
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Real Estate Evergrande Real Est
0.8% -0.9% 6.7% -3.4%
13.7% 8.0%
NEC Japan
27 6.19 1.3
¥225
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Personal & Hshld Gds ITC
0.2% 8.2%
-1.6% 6.7%
11.7% 45.7%
Nintendo t 3.4% or ¥8
100 M A M J J A S O N D JF 2010 2011
Japan
None N.A. None
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Basic Resources Coal India Ltd.
0.5% 12.4%
-1.2% 8.8%
20.8% ...
Sesa Goa Ltd. ¥23,970 India
t 4.1% or ¥1,030
262.30 rupee
t 7.3% or 20.70 rupee
The firm expects electricity sales growth to slow down this year compared to last year's robust sales.
The company cut its net profit forecast for the current fiscal year.
Shares failed to benefit from the Saturday launch of its Nintendo 3DS game console.
The government announced an increase in the tax on iron-ore exports to 20% from 5% to 15%.
in peso
In yen
In yen
In rupee
400
500
50000
600
320
400
40000
480
6
240
300
30000
360
4
160
200
20000
240
80
2 M A M J 2010 14 0.38 2.8 14.2% -11.2%
J A S O N D JF 2011
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
0.8% -2.9% -2.9% -5.2%
J A S O N D JF 2011
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Banks Mizuho Tr & Bking
60
1 M A M J 2010
8
J A S O N D JF 2011
Financial Services AMP
500
90
Manila Elec
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
In rupee
300
750
AMP
M A M J 2010
In rupee
400
15 39.99 1.4
In Australian dollars
The coal miner raised product prices by up to 30% for select customers.
240
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Australia
Tobacco makers averted a feared 8% to 10% increase in the excise tax on cigarettes.
4
M A M J 2010
1.0% -1.8% 3.2% -5.7%
328.15 rupee
s 12.4% or 36.25 rupee
120
250
Indus Gds & Svcs Mahindra & Mahindra Ltd.
169.00 rupee India
s 8.2% or 12.85 rupee
1000
M A M J J A S O N D JF 2010 2011 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
5
Coal India Ltd.
100 M A M J J A S O N D JF 2010 2011
30 7.68 3.0
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Utilities Manila Elec
-0.2% -0.9% -2.9% -0.4%
2.4% 26.9%
10000 M A M J J A S O N D JF 2010 2011
None N.A. 1.8
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Technology NEC
0.3% -2.7% -3.4% -7.0%
15.5% -8.2%
120 M A M J J A S O N D JF 2010 2011
38 635.30 2.3
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Personal & Hshld Gds Nintendo
0.2% -1.6% -4.1% -6.7%
11.7% -3.4%
6 46.96 1.2
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Basic Resources Sesa Goa Ltd.
0.5% -1.2% -7.3% -15.0%
20.8% -34.4%
Tuesday, March 1, 2011
THE WALL STREET JOURNAL.
HEARD ON THE STREET Email:
[email protected]
FINA NCIA L A NA LYSIS & COMMENTARY
India’s good first steps It is fashionable to criticize New Delhi’s clumsiness. But on Monday, India’s government got something right. In the annual budget, Finance Minister Pranab Mukherjee took a step toward solving two chronic problems India faces: food insecurity and poor infrastructure. Moreover, he did so despite the fact that this spending won’t yield results for years. On food security, Mr. Mukerjee was detailed in his plans. The entire $450 million increase in funding for rural infrastructure will go toward creating warehouses. This is critical to prevent the waste of tons of food grains and vegetables each year. To further encourage investment in cold storage, he exempted air-conditioning units and refrigeration equipment from excise duty. In addition, India will set aside $330 million for investing in clusters of farmlands and villages that will produce lentils, palm oil and vegetables. Because of supply shortages, these have been key drivers of food inflation in recent months. True, India needs much more, but this shows New Delhi is at last taking practical steps that can be built upon in subsequent budgets. The investment in palm cultivation, for example, in five years will increase palm oil yields fivefold to 300,000 tons annually, Mr. Mukherjee said. On infrastructure, Mr. Mukherjee was less specific. New Delhi has long touted a goal of drawing $1 trillion in infrastructure investment in the coming six years, and on Monday he laid out some steps toward achieving this.
Long-term thinking India’s latest budget outlines several steps aimed at improving food security and infrastructure Sector
Grant amount/measure
Objective
Rural infrastructure development
$445 million
To develop warehousing facilities in villages
Farm clusters
$350 million
To boost productivity of lentils, palm oil, vegetables, high-protein cereals and other food items
Cold storage
Investments in cold storage eligible for government grants
To accelerate expansion of storage capacity
Infrastructure bonds
$6.6 billion of tax-free infrastructure bonds can be sold and foreign-investment limit increased by $20 billion
To encourage domestic and foreign investment in infrastructure projects
Source: WSJ reporting
The limit on foreign investment in bonds issued by infrastructure companies will be increased five times to $25 billion, ensuring that investors wary of investing directly in projects can instead choose to lend to companies. To encourage domestic investors, the option for individuals to buy $450 worth of infrastructure bonds as tax-free investment was extended by one year. Of course not all of this will go smoothly. For example, Mr. Mukherjee has a target of building 15 new mega food parks—zones for growing, storing and processing food—in the coming year. This is as many as New Delhi has managed to build in the prior four years. And not everything was a break from the usual. Increasing the limits on income-tax exemption and lowering the age to be eligible for seniorcitizen benefits are surely aimed at
Cloud over bank returns has silver lining for some Banks face a lower-return future. While that may not be great for shareholders, it could be to the advantage of debt investors. In recent weeks, banks such as Credit Suisse Group have lowered expectations for long-term returns on equity. J.P. Morgan Chase Chief Executive Officer Jamie Dimon has spoken about banks within the next year possibly holding too much capital—something that damps returns and is largely a result of the new regulatory environment. Wednesday’s quarterly banking report from the Federal Deposit Insurance Corp. showed declining returns on assets across the industry. Such factors could cap share-price valuations below historical norms. The flip side is, lower returns may also signal lower risk. That is usually good for holders of bank debt. Another potential positive for bank debt, toxic only two years ago, may be that industrial companies increasingly appear likely to take shareholder-friendly actions such as leveraged buyouts or dividend recapitalizations. Such events pose a risk to bondholders. In the past, heightened risk at industrial companies has benefited
banks, and vice versa. In 2006, investors favored bank debt over industrial debt because of heightened leveraged-buyout risk, notes Pri de Silva, a bank analyst at CreditSights. What they failed to recognize was how leveraged the banks were, until the 2008 credit crunch, when investors fled bank debt. Today, the tide may again go in banks’ favor, helping continue the marked improvement in the value of bank debt seen since the dark days of the financial crisis. One potential fly in this ointment is the probability many big banks may soon be allowed to return capital to investors. If the Federal Reserve lets banks raise dividends or share buybacks too quickly, that would be a negative to bondholders. Given the recent history of bailouts, though, the Fed is likely to take a measured approach. It may take a more cautious stance given head winds banks may face from a possible settlement of mortgage-servicing investigations, as noted in annual filings released Friday from Bank of America and Wells Fargo. There again, negatives for the banks could turn out to be positives for debt investors. —David Reilly
assuaging Indians irked by inflation—in other words, motivated by short-term political concerns. But thanks to the nation’s fastgrowing economy, New Delhi expects gross tax collections to rise 25% next year. It means Mr. Mukherjee has the luxury of making the political handouts, while also channeling resources toward long-term solutions to India’s problems. It’s a small start but a welcome one. —Harsh Joshi
WSJ.com/Heard
Some firms thrive in Japan’s frugal era Where have all of Japan’s shoppers gone? Down market. Perhaps best highlighted by the slow decline of the nation’s famous department stores, at which sales have declined for 14 consecutive years, this is a phenomenon that has spread to everything from electronics to food. It is fueled by two developments. While Japan has a high per-capita income, an increasing number of jobs—one-third of the work force now—are for nonpermanent, parttime or contract workers. Moreover, by a broad definition—when pay is equal to half or less of median income—poverty is on the rise in Japan and among the worst in the industrialized world, the OECD says. It isn’t all bad news, though. There are more than a few Japanese companies well positioned to profit from the trend. Because of the high cost of owning a car in Japan, and the nation’s shrinking population, auto sales have been in a secular decline. One segment catering to frugality—cars with engine displacements below 660 cu-
bic centimeters—is faring better. These autos carry lower taxes, run cheaply and can cost less than $10,000, and these minicars now account for 30% of the car market by volume, up from 20% in 1995, according to the Japan Automobile Manufacturers’ Association. On this front, Daihatsu Motor and Suzuki Motor are standouts. Both companies are manufacturing minicars under their own brands, as well as for other auto makers. Orders from Toyota Motor and Subaru, for example, will add nearly 23% to Daihatsu’s mini production volume over the next two years, letting the company enjoy some economies of scale, Macquarie Research says. It isn’t just autos. Builders of lowprice homes are also well placed. Hajime Construction, which is gaining market share, sells detached houses for an average of $308,000, less than its rivals and just over half the average price in the Tokyo metropolitan area, Macquarie says. Frugality by Japanese consumers doesn’t have to mean sparing returns for investors. —James Simms
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