As of 4 p.m. ET
DJIA 12376.72 À 0.46% FTSE 100 6009.92 À 1.71%
Nikkei 225 9708.39 g 0.48% Shanghai Comp. 2967.41 À 1.34% Hang Seng 23801.90 À 1.17% Sensex 19420.39 g 0.13% S&P/ASX 200 4861.83 À 0.50%
VO L . X X X V N O. 1 5 0
(India facsimile Vol. 2 No. 211)
* *
Monday, April 4, 2011
ASIA
Rioting in Afghanistan over Quran burning leads to further deaths
asia.WSJ.com
Workers fail to plug leak at reactor BY TOKO SEKIGUCHI AND TAKASHI MOCHIZUKI
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)
Cricket in India: a gripping affair LIFE & STYLE Page 10
An Afghan protester beats a burning effigy of U.S. President Barack Obama during a rally in Jalalabad, Afghanistan, on Sunday, the third day of deadly rioting sparked by the Quran burning by a Florida church. U.S. Gen. David Petraeus warned the demonstrations pose new dangers for the war against the Taliban. In Kandahar protests Sunday, two Afghans were killed and 40 were wounded. Page 3
Business & Finance
Young exchange drives Nasdaq’s bid for NYSE BY CAROLYN CUI AND AARON LUCCHETTI
Junko Nakagawa, Nomura’s new chief financial officer and the firm’s first female senior executive, says in an interview that she feels no special pressure because she’s a woman. Page 17
Markets How China’s pension rules likely drove Ping An’s odd deal. The View From Hong Kong, page 17
The real upstart of Friday’s takeover bid for the New York Stock Exchange isn’t the 40-year old Nasdaq. It is IntercontinentalExchange Inc., which got its start in 2000 as a place where utilities could trade electricity. Nasdaq OMX Group Inc. couldn’t have made an $11.3 billion offer for NYSE Euronext without ICE, and the Atlanta company would emerge as the biggest winner by some measures if the deal gets done. One example: ICE would swell in size to the fourthlargest derivatives exchange
in the world, up from No. 14 now. ICE has thrived partly because its core business is in the hot commodities market. Less known outside the world of exchange junkies is that the company is widely considered one of the world’s best-run exchange operators. ICE shares, traded on the Big Board, are up more than 70% in the past five years. Most other major exchanges have seen their stocks tumble 30% to 50%. ICE churned out profits of $1.4 billion from 2006 to 2010, just over a third of what far-larger CME Group Inc. earned in the same time. Yet ICE’s stock was the
OPINION: Bernard Lewis on revolts in the Arab world Page 12
TOKYO—Japanese officials concluded over the weekend that radioactive water was leaking directly from the crippled Fukushima Daiichi nuclear plant into the nearby ocean, but failed Sunday in repeated attempts to seal a crack they had identified as one source of the pollution. The workers’ inability to fix the latest problem at the reactor follows a pattern in the stop-and-start repair efforts. Throughout the threeweek campaign to shut the reactors down safely, the plant’s operator has identified several issues—such as flooding and power outages—that have taken far longer to solve than originally projected. Separately, the plant operator, Tokyo Electric Power Co., said Sunday it had discovered the bodies of two workers who had been missing since the March 11 earthquake and tsunami hit Fukushima Daiichi, crippling its
Disaster in Japan Residents near plant agonize over relocation..... 4 The challenges of removing radioactive water ................. 5 The high stakes for the country’s military................... 6 Tepco struggles to weather the financial strain............. 18 Heard on the Street......... 30
backup systems. They were believed to have been killed by the wave, not by the subsequent nuclear accident. It was a chilling reminder of the conditions many of the workers at the plant face as they battle to bring the situation under control, even while dealing in their personal lives with the devastation to families and homes. More than a week ago, officials detected very high levels of radiation in nearby seawater, but for days they said they couldn’t explain exactly Please turn to page 6
“Salesforce Chatter on an iPad makes collaborating with 18,500 employees easy.” Enrique Salem President and CEO, Symantec
loser Friday when the two companies announced their joint offer to torpedo NYSE Euronext’s agreement in February to be acquired by Deutsche Börse AG in a deal now valued at about $9.6 billion. NYSE shares jumped 13% and Nasdaq shares rose 9.2%, but ICE’s shares slumped 3.1% as shareholders fretted about the costs of the deal to ICE and the benefits ICE would get from buying NYSE Euronext’s London futures and options business, known as Liffe. Please turn to page 16 Nasdaq bids for last laugh in NYSE rivalry.......................... 16 Heard on the Street: How to ice the German offer............ 30
Do impossible things as a team. Copyright ©2011, salesforce.com, inc. Salesforce, salesforce.com, Chatter, and chatter.com are trademarks of salesforce.com, inc. ©2011 Dipdive Inc. All rights reserved. iPad is a registered trademark of Apple Inc.
2
THE WALL STREET JOURNAL.
Monday, April 4, 2011
PAGE TWO
What’s News—
Inside
Associated Press
World News: Chinese authorities detain outspoken artist. 7
Rebel fighters shoot the tires out of an unseen vehicle belonging to Col. Moammar Gadhafi’s forces as it sped through the rebel front line, east of Brega, on Sunday. Opposition to Col. Gadhafi’s regime is simmering in the Libyan capital of Tripoli despite an unrelenting crackdown on any sign of dissent. Page 14
i
i
i
Business & Finance n Nomura’s first female senior executive, Junko Nakagawa, says her promotion is consistent with the company’s push to globalize and compete with Wall Street. 17 n Softbank CEO Masayoshi Son will donate about $120 million to support those affected by Japan’s earthquake and tsunami. 4 n Rising costs and liabilities linked to the tsunami-hit Fukushima nuclear power plant have increased scrutiny on its operator, Tepco, and whether it has enough cash to get through the crisis. 18 n Hong Kong has expedited approval of 270 one-year work visas for professionals looking to leave Japan, a move aimed primarily at attracting and retain top talent in the finance industry. 5
n China is pressuring companies that sell food and daily necessities to avoid price increases. 18 n Baidu agreed to compensate some songwriters in a step toward resolving years of tension with the music industry over the company’s music-search service. 21 n Shanghai Pharmaceuticals increased the size of its planned IPO to as much as $1.8 billion in Hong Kong. Glencore won approval for a Hong Kong offering. 24 n Morgan Stanley and Mitsubishi UFJ posted a surprise loss in their Japanese bond-trading venture. 24 n Battle lines are being drawn at the Fed for the debate over when and how to tighten the central bank’s easy monetary policy. 15 n U.S. municipal-bond issuers sold the least debt in 11 years in
the first quarter. Even if governments try to sell more bonds, signs persist that demand is likely to remain weak, investors say. 19
i
i
i
World-Wide n Police in Yemen fired live ammunition and tear gas in an effort to disperse antigovernment demonstrators, leaving scores wounded, amid a stalemate in discussions between President Ali Abdullah Saleh and those calling for his resignation. 14 n Bahrain banned the country's main opposition newspaper on Sunday in a widening effort to muzzle antigovernment media. n Syria’s president appointed a former agriculture minister to form a new government, part of a series of overtures toward reform amid antigovernment protests.
n Bangladeshi security officials opened fire and used tear gas to disperse demonstrators protesting a government policy for women's equal right to inheritance, leaving one protester dead and 25 injured.
Markets: Singapore and Kuwait acquire a slice of TPG. 25
n A jailed tribal leader in the Philippines was temporarily freed to help urge gunmen to safely release 16 hostages. n Frictions among rebel fighters aligned with president-elect Alassane Ouattara have slowed an advance in Abidjan and are complicating efforts to dislodge Ivory Coast strongman Laurent Gbagbo. n Malaysia will allow Malay-language Bibles to be printed locally, in a concession to the minority Christian community .
Heard on the Street: China’s policies might hurt aluminum. 30
n India won the Cricket World Cup, beating Sri Lanka by six wickets in Mumbai. 8
ONLINE TODAY Most read in Asia
Bankruptcy Beat
Korea Real Time
Scene Asia
blogs.wsj.com/bankruptcy
1. Gadhafi Push Tests Allies 2. Japan’s Crisis Bolsters Its Military 3. The Coolest Ferrari Ever 4. Bodies Found as Plant Cleanup Hindered 5. New Arms in Reactor Fight: Mega-Barge, Sticky Resin
The Hong Kong International Film Festival continues through Tuesday. See blogs.wsj.com/scene for a daily roundup of movie highlights.
The Club at PGA West members haven’t been shy in voicing concerns over the bankruptcy of the owners of the Palm Springs, Calif., golf courses.
Most emailed in Asia 1. A Very Public Intellectual 2. Stepping on the Gas 3. Opinion: We’ve Become a Nation of Takers, Not Makers 4. Easier-Than-Pie Meringue 5. Bali: Trouble in Paradise
A movie sends a hopeful message through the lives of North Korean children. blogs.wsj.com/korearealtime
Management: News chief aims for multimedia push. 32 THE WALL STREET JOURNAL ASIA Dow Jones Publishing Company (Asia) 25/F, Central Plaza, 18 Harbour Road, Hong Kong Tel 852-2573 7121 Fax 852-2834 5291 www.wsj-asia.com SUBSCRIPTIONS and Address Changes, please telephone our local customer service hotline, Hong Kong/Taiwan: 852-2831 2555; Beijing: 86-10 6581 4090; Shanghai: 86-21 5836 8228; Indonesia: 62-21 527 7592; Japan: 81-3 6269-2760; Korea: 82-2 756 1695; Malaysia: 60-3 2026 4061; Philippines: 63-2 848 5873; Singapore: 65-6415 4000; Thailand: 66-2 690 4222 to 7; India: 91-11 6462 0215. Or email:
[email protected] ADVERTISING SALES worldwide through Dow Jones International. Hong Kong: 852-2831 2504; Singapore: 65-6415 4300; Tokyo: 81-3 6269-2701; Frankfurt: 49 69 29725390; London: 44 207 842 9600; Paris: 33 1 40 17 17 01; New York: 1-212 659 2176. Or email:
[email protected] Trademarks appearing herein are used under license from Dow Jones & Company. USPS 337-350ISSN 0377-9920
Monday, April 4, 2011
THE WALL STREET JOURNAL.
3
WORLD NEWS
BY YAROSLAV TROFIMOV AND MARIA ABI-HABIB KABUL—The Quran burning by a Florida church, which sparked three days of deadly rioting in Afghanistan, poses new dangers for the U.S.-led war effort against the Taliban, coalition commander U.S. Gen. David Petraeus warned in an interview. Gen. Petraeus, who commands some 150,000 U.S. and allied troops here, spoke after Afghan rioters angered by reports of the sacrilege sacked the United Nations compound in the city of Mazar-e-Sharif, killing seven foreigners, and went on a lethal rampage in the southern city of Kandahar, waving Taliban flags. The deadly rioting, which the Taliban say erupted spontaneously, has shocked the international community and highlighted the vulnerability of the embattled Afghan government. Urban mob violence against Western targets adds a disturbing new threat in a country that is fighting a mostly rural insurgency, and where foreign and local security forces are ill-prepared for riot control. “Every security force leader’s worst nightmare is being confronted by essentially a mob, if you will, especially one that can be influenced by individuals that want to incite violence, who want to try to hijack passions, in this case, perhaps understandable passions,” Gen. Petraeus said in the Sunday interview. “Obviously it’s an additional serious security challenge in a country that faces considerable security challenges.” Back in September, when Terry Jones of the World Dove Outreach Center in Gainesville, Fla., first announced his intention to burn Islam’s holy book, Gen. Petraeus publicly urged the preacher to abandon the plan, saying it would be exploited by the Taliban and endanger the lives of American soldiers. Rev. Jones’s church shelved the idea at the time. But then he reversed course and his church held a “trial” of the Quran and incinerated the book in a videotaped ceremony March 20. “This was a surprise,” Gen. Petraeus said. The Quran burning in Florida, he added, was “hateful, extremely disrespectful and enormously intolerant.” Gen. Petraeus, U.S. Ambassador Karl Eikenberry and other Western envoys Sunday met President Hamid Karzai to discuss the security crisis caused by the Florida incident. While Gen. Petraeus said he had no doubt that Mr. Karzai is taking the situation seriously, some Western officials have complained that the Afghan president himself has exacerbated the tensions with his pronouncements on the issue. Most Afghans learned about the Quran burning in Florida only when Mr. Karzai on March 24 condemned the act as “a crime against the religion and the entire Muslim nation,” called on the U.S. and the U.N. to bring the perpetrators to justice and demanded “a satisfactory response to the resentment and anger of over 1.5 billion Muslims around the world.” Following Sunday’s meeting with Gen. Petraeus and the ambassadors, Mr. Karzai requested in a new statement that “the U.S. government, Senate and Congress clearly condemn [Rev. Jones’] dire action and
avoid such incidents in the future.” Mr. Karzai issued this demand even though President Barack Obama has already described the Quran burning as “an act of extreme intolerance and bigotry”—adding that “to attack and kill innocent people in response is outrageous, and an affront to human decency and dignity.” Friday’s protest march on the U.N. compound in Mazar-e-Sharif followed a fiery sermon by government-paid clerics in that city’s main mosque. By Saturday, however, demonstrators in Kandahar chanted “Death to Karzai” in addition to “Death to America.” Nine Afghans were killed and more than 80 injured in Kandahar on Saturday, as protesters attempted to march on the U.N. officers there; shootouts erupted as they were stopped by Afghan security forces.
In fresh Kandahar protests on Sunday, two Afghans, including a child, were killed and 40 were wounded, according to provincial officials. A crowd of about 600 pelted with rocks the headquarters of the provincial governor, shouting “Death to America” and “Death to the slaves of the infidels.” “We cannot see the difference between that man in Florida and the American soldiers here,” said Karimullah, a 25-year-old religious student who, like many Afghans, goes by one name and took part in Sunday’s Kandahar protests. “They are killing our people here while in the U.S. they burn the Holy Quran. America just wants to humiliate the Muslim world.” —Muhib Habibi and Habib Khan Totakhil contributed to this article.
Associated Press
Petraeus denounces Quran burning
Gen. David Petraeus called the Quran burning in Florida ‘enormously intolerant.’
4
THE WALL STREET JOURNAL.
Monday, April 4, 2011
DISASTER IN JAPAN
Residents agonize over relocation People living near troubled Fukushima nuclear plant grapple with uncertain future as fears of radiation intensify As worries over radiation in Japan continue, concern is spreading about the long-term fate of people who remain close to the country’s crippled Fukushima Daiichi nuclearpower plant.
would like to check on my house and pick up summer clothes, as I only have winter closes here,” he said. If the school for his son resumes, that will be an indication of safety, he added. At Takano Hospital, one of the only hospitals still operating in the 20- to 30-kilometer zone, office administrator Miyo Takano said the facility faces more risk from false rumors and unclear government guidelines than from radiation. She said the lack of clarity over the situation has fostered unconfirmed rumors about safety and has made it hard to secure supplies, especially from companies that won’t let their employees into the zone. Some staff at the hospital, which is in the city of Hirono, about 26 kilometers south of the reactor, have chosen to stay to care for 36 medical and psychiatric patients too fragile to move. The hospital’s head doctor uses a Geiger counter to check radiation levels every day, but he hasn’t encountered any dangerous readings so far. Ms. Takano said many of the hospital’s staff have returned or are commuting from evacuation centers beyond the 30-kilometer border, which is helping operations return somewhat closer to normal. Japanese soldiers bring water to the hospital every day and carry in medicine. In recent days she has seen more cars on the street, and lights on at some homes in the parts of town where there is electricity. But the government hasn’t made any efforts to support rebuilding in the area, Ms. Takano said, making it nearly impossible for life to return to normal. “The view of our staff is that as long as there are patients here, we’re going to keep trying hard,” she said. Mr. Takahashi, the head doctor at the hospital in Minamisoma, said he also is seeing signs of improvement, although things remain far from normal. Three workers at his hospital have returned in the past three days. The hospital was able to start flushing toilets on Friday for the first time since the disaster, rather than using buckets of water brought in from outside the 30-kilometer radius. But heat, however, remains off. —Patrick Barta contributed to this article.
Among those whose fate is causing anxiety: Kyohei Takahashi, the 72-year-old head doctor at a hospital in Minamisoma, a mostly abandoned city some 25 kilometers north of the plant. Fewer than 10 of his 25 staff remain, and many of his patients were evacuated to reduce their potential exposure to radiation. The hospital now relies on donations of instant noodles and curry from volunteers and Japanese soldiers to serve the outpatients that still come looking for care. Some of them feel panicked; others have stopped talking, he says, with all of them worrying about friends and family, including some who were likely swept away by Japan’s March 11 tsunami. “What kind of doctor would I be if I fled over something like this?” he said. The plight of Mr. Takahashi and other residents nearby is becoming one of the most pressing questions of Japan’s nuclear drama, as authorities struggle to regain full control of the embattled Fukushima Daiichi plant. Trapped in a no-man’s land between areas with potentially dangerous radiation and areas without unusual readings, they are agonizing over whether to stay or to abandon communities they may never see again in normal times. Some have disregarded the government’s warnings about considering relocating entirely, and believe that fears and scaremongering over radiation are making it harder to persuade companies to deliver food, medicine and other supplies. Many residents say living conditions have improved considerably in recent days, as more food and water supplies have arrived, but their communities’ fates remain precarious, as fears of radiation intensify. Authorities have ordered all residents within 20 kilometers, or about 12 miles, of the plant to evacuate, while people between 20 and 30 kilometers are being encouraged to
Reuters
By Yoree Koh, Daisuke Wakabayashi and Miho Inada
A food-distribution effort in Ishinomaki, Japan. Some residents of devastated areas have disregarded government warnings about relocating, and say radiation fears could discourage companies from delivering essential supplies. stay indoors or leave voluntarily. Over the weekend, radiation levels right outside of the Fukushima Daiichi plant varied from 55 microsieverts to 800 microsieverts per hour, depending on locations and times. In the 20- to 30-kilometer radius, readings ranged from 0.4 microsieverts per hour to 17 microsieverts. Minamisoma city does its own readings, and on Sunday measured 0.9 microsieverts per hour. That level translates into 7,884 microsieverts per year, which is little above the radiation received by chest CT scan. Experts say that level won’t pose an immediate health threat. Just after the March 11 disaster, authorities evacuated thousands of residents to shelters by bus, with no indication of when they may return. Yet a handful of people—29, according to the government on Friday—have remained in the 20-kilometer exclusion zone, while thousands are in the area between 20 and 30 kilometers out, with many more coming in and out during the day to check on property, pets and friends. Reliable reports about life in the 20-kilometer no-go zone are difficult to obtain. The United Nations
and Japanese media have said there could be scores of victims’ irradiated bodies left behind in the area, but exact details are unknown. The area in the next 10 kilometers, stretching out to the 30-kilometer boundary, is busy, with at least 20,000 of its 140,000 residents still there despite shortages of food and fuel. Most are in the city of Minamisoma, parts of which are within the 20-kilometer to 30-kilometer zone, parts of which are outside. In recent days, authorities have acknowledged they may need to extend the size of the evacuation area, potentially encompassing all of the city, while American authorities have suggested people stay 80 kilometers away from the facility. A spokesman for the joint chief of staff at Japan’s defense ministry said there are about 500 soldiers, prefecture workers and volunteers working within the buffer zone to offer support services. Soldiers visit houses and businesses when they receive reports about people who stayed behind, to make sure they are comfortable, but they haven’t done a comprehensive door-to-door operation. Nearly all the city officials in Minamisoma are still working. A city official who declined to be named
said workers were worried initially, but were reassured when they saw that radiation levels weren’t as high as in some neighboring towns, and that radiation in tap water wasn’t at unsafe levels. Some banks and shops are open, and the city is using vans with speakers to let people know when and where supplies and fuel will be distributed. What’s stressful, the city official said, is being stuck indoors when people need to start rebuilding and repairing roads, some of which were damaged in the disaster. Outside the zone, many people are torn over when, or whether, to go back in. Yasuhiro Abe, 47, was working at Fukushima Daiichi when the quake hit. After the ceiling of his office collapsed, he borrowed a bicycle and made a two-hour ride to his home in the Minamisoma area, where he found his 8-year-old son and wife, and fled the area. He said he has heard that truck drivers are afraid to enter the city with supplies. But he also has heard some evacuees have returned to the city as their employers, such as a local power company, call them back for work. “I myself would like to go back before security becomes tighter. I
BYJURO OSAWA TOKYO—Masayoshi Son, Japan’s wealthiest person and the chief executive of Softbank Corp., said Sunday that he will support the region and people affected by the March 11 earthquake and tsunami by personally donating ¥10 billion, about $120 million, by far the largest amount given by any individual so far to that cause. “I would like my donation to be used to support, for example, the children who have lost their parents in this disaster,” Mr. Son said, speaking live in a program Sunday evening on Ustream, a U.S. livevideo streaming site in which Softbank has a stake. The same online program also
aired on another Japanese video streaming site. Since one of the world’s biggest natural disasters struck northeastern Japan last month, many local companies and business leaders have announced donations. But the sheer size of Mr. Son’s donation stands out. According to Forbes magazine, Mr. Son is Japan’s wealthiest individual, with a net worth of $8.1 billion as of March 2011; he ranks 113th in the world. Mr. Son also said in the online program that he will donate to the same cause all his future compensation as head of Softbank, a mobilephone and Internet-service company he founded in 1981. In the fiscal year through March
2010, his compensation amounted to ¥108 million. The 53-year-old Mr. Son has said he plans to hand over control of the company in his 60s and is currently looking for his successor. Before Mr. Son’s announcement, Tadashi Yanai, CEO of Fast Retailing Co., the company behind the globally expanding Uniqlo clothing chain, had said he would make a personal donation of ¥1 billion to support the quake and tsunami victims. Hiroshi Mikitani, CEO of Rakuten Inc., Japan’s biggest electronic-commerce company, is also donating ¥1 billion personally. While Mr. Son may have discreetly given to charities in the past, this is the first time he has publicly announced a major personal dona-
tion, according to Softbank. Softbank as a company is donating ¥1 billion. Both Mr. Son and the company are considering various channels, including the Japanese Red Cross Society and other charity funds and organizations, for their donations, Softbank said. Mr. Son is one of the most influential and charismatic business leaders in Japan. His Twitter account is followed by nearly one million people. Since the quake hit, he has been particularly outspoken on the unfolding nuclear disaster at the stricken Fukushima Daiichi power plant. On March 22, Mr. Son flew from Tokyo to Fukushima Prefecture to meet the governor and discuss the situation at the nuclear plant.
Agence France-Presse/Getty Images
Softbank’s CEO pledges $120 million
Masayoshi Son, CEO of Softbank
Monday, April 4, 2011
THE WALL STREET JOURNAL.
5
**
DISASTER IN JAPAN
Focus at power plant turns to water BY MITSURU OBE AND ANDREW MORSE TOKYO—As the world anxiously watches for signs of progress at the crippled Fukushima Daiichi nuclear complex, the main repair focus has turned to removing radioactive water from in and around the reactor buildings, because the poison pools prevent workers from doing other tasks. Yet more than a week after the problem was first discovered, very little water has actually been removed. Why? Three main reasons: structural damage to pipes and other reactor parts crucial for water movement; radiation dangers blocking workers from performing essential steps; and a shortage of safe places to put the water. Also, government and company officials seem to have decided to move methodically for this phase of the operation, concluding it is better to get things right than to rush and make more mistakes. And they seem to think they can afford to do so, especially since the reactors appear to have stabilized and the amount of atmospheric radiation released has dropped over the past two weeks. “Obviously, it would be better if we were able to show a clear timetable,” Hidehiko Nishiyama, a top nuclear regulator said at a news conference Friday. “But we do not want to lose trust by setting ambitious targets and missing them.” Yet the buildup of radioactive water does have its own problems, as shown over the weekend, when officials confirmed it is leaking into nearby groundwater and the ocean. When the water problem was first discovered March 24 after three workers got burned stepping in it, officials made the solution sound swift and simple: They would begin pumping the water out of the flooded buildings. It turned out that wasn’t so easy. They needed a place to put the water. And the logical places to do so already were full. The past week has been devoted largely to an elaborate hydraulic chess game of creating a three-link
chain of repositories that ultimately will allow drainage of the reactors. Success is being been measured now not in actually removing the water, but in clearing the space so the water can be removed. Here are the key links in the chain: The most important thing workers need to do is attach the electric cooling systems to Reactors 1, 2 and 3, so the internal cooling process can begin. Absent that, operators are relying on injecting water to keep the reactors from overheating, a process that has stabilized the fuel rods, but doesn’t seem likely to bring them to the desired cold shutdown—and has the dangerous side effect of creating a large buildup of radioactive water in nearby groundwater and seawater. But workers can’t try to hook up the cooling pumps now, because the turbine buildings that power the machinery are flooded. They need to pump the water out of those turbine buildings. But they can’t do that right now either, because the closest place to move that water is the “condenser unit,” so-called because during normal operations it takes the steam that runs the turbines and condenses it into water. Those units are currently full. So the water there needs to be moved to second nearby tanks, called condensate storage tanks, which are located in front of the turbine buildings. When workers discovered the problem a few days ago, those tanks also already had water in them. The water in those tanks needed to be drained into third tanks, called surge tanks, farther from the buildings. Some progress has been reported in the past few days. Tepco appears to have put the highest priority on Reactor 2, where the measured level of radiation in the water is highest, and seems to be leaking into the sea. There, workers began shifting water from the closest tank to the middle tank Saturday, having earlier finished shifting the contents of the middle tank to the far tank. Once that closest tank is empty, they can begin emp-
European Pressphoto Agency/Asahi Shimbun
Radioactive liquid has to be drained from reactors, but progress is slowed by damages and lack of places to put it
A handout photo from Asahi Shimbun on Sunday shows a mega-float being prepared to be transported to the site of the Fukushima Daiichi power plant. tying the turbine building. At Reactor 1, they have finished emptying the middle tank to the far tank, and they started shifting water from the closest tank to the middle tank Sunday. At Reactor 3, they have finished emptying the middle tank, but ha-
ven’t yet started moving water from the closest tank. Officials say that will start soon. Why does all that take so long? First, they need more places to store the water that ultimately leaves the reactors. There isn’t enough storage capacity on the site.
And it isn’t so easy to find largescale storage tanks that can handle such toxic liquid. To help add storage capacity, they are looking at bringing in barges to a nearby port, including a floating fishing pier dubbed “mega-float” from the port city of Shizuoka. Tepco also said Friday it would build new storage tanks and a pond with a combined total capacity of 10,000 tons. Those won’t be completed until mid-April. Officials haven’t said how much water they need to remove. One Japanese newspaper, the Asahi Shimbun, has said there are at least 20,000 tons of water. Mr. Nishiyama couldn’t confirm that estimate. “We don’t know,” he said. It isn’t just a storage problem. It also is difficult to move the water between the links in the chain. They are connected via an intricate network of pipes. Many of the pipes are narrow gauge and can’t carry significant amounts of water, slowing the draining process. And some of the pipes were damaged after the tsunami overwhelmed seawalls and destroyed the reactors back-up systems, according to a government official who asked not to be named. Many of those pipes are in highly radioactive areas, making it hard for workers to conduct repairs. Also, some parts of the pipes can’t be operated via remote control and require workers to adjust manually the valves that control the flow of water, a Tepco spokesman said. Radiation makes that difficult as well. Another factor that appears to be slowing down the water transfer: Tepco is using only three relatively small pumps to conduct the process. The company has one pump assigned to each reactor. At Reactors 1 and 3, the pumps can only move 25 cubic meters—or one metric ton—per hour. At Reactor 2, they have a pump that moves just 10 cubic meters per hour. A regulator said even faster pumps wouldn’t necessarily help because it isn’t clear that the narrow pipes could sustain more volume.
Hong Kong expedites visas for Japan expats BY CATHY YAN HONG KONG—Officials here have taken special measures to speed up approval of 270 one-year work visas for professionals looking to leave Japan after the March 11 earthquake and tsunami, a move aimed primarily at attracting and retain top talent in the finance industry. The visas were approved through an expedited system that took only two days, Hong Kong’s top immigration official, Chan Kwok-ki, said. The typical processing period is six to eight weeks. Mr. Chan, who is new to his post, said his department received 270 visa applications between March 17 and March 31, mostly from highlevel managers and professionals from multinational companies involved in finance who earned roughly US$150,000 to US$300,000 a year. He said the visas were expedited
to woo professionals who may have considered other destinations. “We hope that they consider long-term settlement in Hong Kong,” said Mr. Chan, adding that the applicants would benefit the Hong Kong economy and meet labor-market demand. Singapore, another popular destination for professionals fleeing the disaster, hasn’t yet mentioned any special accommodations for visa applications. Expatriates have been fleeing Japan since the earthquake struck amid continued fears of radiation following leaks and contamination at the Fukushima Daiichi nuclearpower facility. Many foreign companies supported or facilitated their employees in relocating to other cities in Asia or back to their home countries, leading to an exodus of overseas staff, particularly from Tokyo. Hong Kong’s relaxed visa process
could see permanent relocations from Japan. But three weeks after the disaster, some banks are stressing they’re going about business as usual. A spokesman for Citigroup Inc. said that the company wasn’t
Many foreign companies supported employees in relocating after the tsunami, leading to an exodus of overseas staff. facilitating any permanent moves and that all of its Tokyo-based employees are back in Tokyo. A person on a multinational bank’s crisis committee after the quake said that he believes about 80% of those who had fled Japan
are again working in Japan, citing regulatory and logistical issues preventing permanent moves. Other banks have set businesscontinuity plans, whereby a small number of their employees were moved outside of Tokyo, either to other Japanese cities or to Hong Kong or Singapore. But those moves are temporary; European and U.S.based banks said that they intend to move employees back to Tokyo eventually. Hong Kong International School, a popular school for expatriate children of executives in multinational companies, said it had a handful of applications for students looking to relocate from Japan after the earthquake. But since then, those applicants have either relocated to the U.S. or back to Japan, a spokesman said. The school said none of the recent applicants from Japan has enrolled. However, the Tokyo-based Amer-
ican School in Japan, which reopened last Tuesday after being closed for two weeks, said that nearly half of the students were absent on the first week back to school. Some 80 families, 11% of the school, told the school that they wouldn’t be returning before the end of the school year in June. A European working at a Japanese company in Tokyo had gone temporarily to another Japanese city but returned within days. He said that his expatriate colleagues seemed to fall into three categories: those who are using the disaster as an excuse to go home early, those who are considering relocating to other cities in Asia and those who are committed to working in Japan—and eyeing the job openings that fleeing colleagues may leave behind. —Yuka Hayashi in Tokyo and Alison Tudor in Hong Kong contributed to this article.
6
THE WALL STREET JOURNAL.
Monday, April 4, 2011
DISASTER IN JAPAN
In crisis, military grows in stature Dozens of soldiers in camouflage and olive drab helmets now scour the debris-strewn outskirts of Rikuzentakata in search for victims from Japan’s recent quake and tsunami. Military helicopters hover offshore, looking for bodies in the waves, while soldiers offer water—and even wash victims’ clothes—in nearby shelters.
Military mission Japanese defense expenditures, in trillions of yen ¥5.0 trillion 4.9 4.8
By Patrick Barta, Gordon Fairclough and Chester Dawson
4.7 4.6 '10
1990 Note: Does not include costs associated with U.S. forces in Japan; ¥1 trillion = $12 billion
Reuters
The efforts are part of Japan’s largest military mission since World War II, with roughly 106,000 of its 240,000 soldiers rendering aid. The stakes for Japan’s military are high: If the mission is seen as a success, as it has been for the most part so far, it could lead to wider acceptance of a more-active military at a time when it is considering a bigger international role. If it fails, with delays in reconstruction or other problems, it could dent the military’s reputation. Created after World War II, the Self Defense Forces are restricted in their duties by a constitution that renounces war. Although SDF personnel have participated in some international missions, their activities are limited to self-defense or disaster relief, and many Japanese remain wary of expanding their activities. Ambivalence about the military runs so deep in Japan that soldiers have avoided wearing uniforms in public. Political leaders still eschew using terms such as “army” or “navy.” It was only in 2007 that Japan’s postwar defense agency was upgraded to full ministry status. But in the aftermath of the March 11 earthquake and tsunami, SDF forces have been cast into an unusually public role as the lead re-
Self Defense Forces search for victims before demolishing damaged homes in Iwate prefecture three weeks after the March 11 disasters.
Japanese public opinion of Self Defense Forces Favorable
100 % 75 50
sponders across much of Japan’s northeastern coast. Congratulatory profiles are turning up on television, showing soldiers working through rubble with sticks to find bodies. Military helicopters helped to drop water on the Fukushima Daiichi nuclear facility, and soldiers have helped to manage logistics at shelters. The SDF “is the one institution that has performed superbly” in the crisis, said Michael Green, a Japan expert at the Center for Strategic and International Studies in Washington. Political leaders have drawn more mixed reviews, while executives at plant owner Tokyo Electric Power Co. have been criticized. It is unclear whether SDF forces have the manpower and expertise to sustain more than a short-term effort. Japan’s joint SDF chief of staff, Gen. Ryoichi Oriki, said last week the forces have been “pushed to the limit.” Other Japanese officials have
acknowledged the military has been severely tested. “Morale among SDF members remains high, but they’re human after all. They’re exhausted,” said Tetsuya Kono, a spokesman for the Japanese Defense Ministry. The military is talking about creating shifts so soldiers that are deployed early can rotate out to rest while others are sent in as replacements, the spokesman said. Officials have debated whether it makes sense having soldiers deal with disasters at all, since tying them up with such work could potentially leave the country vulnerable or otherwise use up resources needed for national defense. The SDF are “getting some appreciation,” said Yukio Tada, president of the Sojitz Research Institute in Japan. But “there are still lots of risks” the relief effort won’t go well, he said. Japan’s military has seen its stature grow after previous disasters. After the Kobe earthquake in
Unfavorable
25 0 1970s ’80s
’90s
’00s
Note: January 2009 survey of 1,781 Japanese aged 20 or older. Source: Japanese Ministry of Defense
1995, government officials took steps to bolster the SDF so that it could mobilize more quickly in disasters, boosting its credibility. The steps came after authorities failed to deploy SDF soldiers quickly in Kobe because of bureaucratic rules and sensitivities over having soldiers working in urban areas. Since then, the Ministry of Defense has played up the SDF’s role in disaster relief in recruitment posters on neighborhood street corners showing troops engaged in aid efforts and other public outreach. More recently, debates over the military’s role have intensified amid
rising concerns over possible threats from North Korea and China. The U.S., meanwhile, has called on Japan to shoulder more of the burden of helping maintain Asian security. But as Japan has started taking part in more overseas missions, including supporting U.S. forces in noncombat roles in Afghanistan and Iraq, nervousness over Japan’s ambitions has also increased, especially among neighbors scarred by Japan’s aggression in World War II. Another issue: As Japan spends more on a ballistic missile defense program and other advanced hardware, it has less money for soldiers and low-tech troop transports in an era of increasingly tight budgets. Mr. Green, the Japan expert, said he believed a successful disaster mission would make it easier for the SDF to press for a bigger role, including more cooperation with the U.S. military. It would also make it harder for politicians to downsize the military. “No one will want to cut after this,” Mr. Green said. So far, at least, support for the troops appears to be running high in tsunami-affected areas. Toshio Ota, 56 years old, in the seaside suburb of Yamamoto Town south of Sendai, said he was surprised and impressed by the sudden surge of men and women in fatigues that were in his tsunami-struck town within days of the disaster. Yuma Takahashi, 17, a high-school student from Rikuzentakata, said some of his friends are considering enlisting after they graduate. “Before, I used to think the SDF was just for wars,” he said. “Now I see that they are here to help the Japanese people.” —Eric Bellman contributed to this article.
Crack in chamber is leaking radioactive water Continued from first page how the water was contaminated. On Saturday, for the first time, they said they had identified at least one direct source: a crack in a chamber connected to a tunnel for cables running to one of the reactor units. The chamber, or pit, is used to inspect electrical cables that power the intake of seawater. The chamber sits closer to the ocean than a trench that had previously been identified as a possible source of water flowing into the ocean. Tepco said the cracked chamber, which is about two meters deep, contains roughly 20 centimeters of highly contaminated water. Workers set about trying to seal the crack Saturday and Sunday. They started with concrete, and when that failed they poured 60 kilograms of sawdust, eight kilograms of polymer and three bags of shredded newspaper into the pit. Regulators said Sunday night, however, that the materials hadn’t absorbed the radioactive water, which continues to flow into the sea. Tepco officials said they didn’t know why the concrete or other attempted fixes had failed to plug the crack. Authorities offered no indication of how they would approach the problem if the polymer, which expands when it absorbs water, didn’t stop the flow of contaminated water. A spokesman for Tepco said the utility would also add dye to the
water to determine where it was flowing. Levels of radiation in the sea near the plant are above normal levels, sparking concerns about broader contamination. On Saturday, Japan’s Nuclear and Industrial Safety Agency said seawater with radioactive iodine with radioactivity of 79.4 becquerels per liter, roughly twice the permissible limit, was found about 40 kilometers south of the plant. No new readings of the water near the plant were issued over the weekend. But during the week, the water closest to the plant was found to have been thousands of times higher than the permissible level. On Sunday, the bodies of Yoshiki Terashima, 21 years old, and Kazuhiko Kokubo, 24, were found in the flooded basement of the turbine building at the facility’s No. 4 reactor. Tepco said the two workers died about an hour after the earthquake, most likely from injuries sustained at the time of the disaster. The utility waited to release the news until it could notify the workers’ families first. The discovery came as Prime Minister Naoto Kan made his second visit to the area since the earthquake and tsunami caused massive destruction in northern Japan and spawned the nuclear plant crisis. Mr. Kan visited evacuees from the disaster in the city of Rikuzentakata in Iwate Prefecture. “I told them that the government
3
Reuters/Digital Globe
Reactor No. 3
Reactor No. 2
Reactor No. 1
The transfer of water from the condenser hadn’t started. That process was expected to begin soon, but a precise time hasn’t been specified. Tepco believes water radiation levels here are less worrisome than those at reactor No. 2.
The flooding here is worrisome because the water has been found to be highly radioactive and is believed to be leaking outside the plant, contaminating nearby seawater. Water removal is moving fastest here. Workers began transferring water out of the condenser Saturday.
The basement of the turbine building is still flooded, but workers started moving water out of the nearby condenser on Sunday. Once the condenser is empty, they can start pumping water from the turbine building there.
will do its best to help them for as long as necessary,” he told reporters later. In the afternoon, the prime minister landed at the soccer-training facility that has become the head-
quarters for the team trying to bring the plant under control and avoid further radiation leaks. “The government needs to bring the Fukushima Daiichi nuclear power plant under control...to limit
the extent of damage. It is a tough job, but we hope you will make an all-out effort,” Mr. Kan told rescue workers from the Tokyo Fire Department, dispatched to help in pumping water into the units.
Monday, April 4, 2011
THE WALL STREET JOURNAL.
WORLD NEWS: ASIA
BY JEREMY PAGE BEIJING—Chinese authorities detained Ai Weiwei, one of China’s most famous contemporary artists, as he tried to board a flight from Beijing to Hong Kong, making him the latest target of a sustained clampdown on dissent that is raising concern among many Western governments. Mr. Ai, who helped to design the Bird’s Nest stadium for the 2008 Beijing Olympics but is also an outspoken government critic, was out of contact as of late Sunday in Beijing after officials prevented him from boarding his flight Sunday morning and then led him away, according to one of the artist’s assistants. Police also surrounded his studio in Beijing, cut off its power supply and took at least eight of his assistants for questioning, said the assistant. Meanwhile, all references to Mr. Ai were deleted from Sina Weibo, the popular Twitter-like microblogging service, though they remained on many other sites. It wasn’t immediately clear whether Mr. Ai, 53 years old, was being held temporarily for questioning, or had been formally detained—a more serious step that often leads to prosecution and conviction in China. Dozens of other political activists, lawyers, writers and other government critics have been detained or confined to their homes since anonymous calls for a “Jasmine Revolution” in China began circulating online in mid-February. Mr. Ai has been keeping an informal tally of those detentions on Twitter, where he has more than 70,000 followers.
tional security by leaving the country. Also in November, he was briefly placed under house arrest to prevent him from attending a party he had organized in Shanghai to mark the demolition of his studio there. Human-rights groups and the U.S. government have expressed concern over the crackdown on dissent, as well as a tightening of restrictions on foreign journalists.
Last week, a Chinese-Australian spy novelist and political blogger, Yang Hengjun, disappeared in South China, raising fears among friends and relatives that he had been detained by secret police. He reappeared Thursday, saying he had been ill and had lost power on his mobile phone, but he so far has declined to give a more detailed public explanation of what happened.
Agence France-Presse/Getty Images
Authorities in China detain outspoken artist
Chinese artist Ai Weiwei, in a file photo from November.
NOTHING IS AS STRONG AS TEAM SPIRIT
The government promoted Ai Weiwei as a cultural ambassador ahead of the 2008 Olympics, but he has since fallen out of favor owing to his social activism. Twitter is blocked in China, but can be accessed by wealthier, techsavvy urbanites who use tools such as proxy servers or virtual private networks to circumvent China’s Web filters. Mr. Ai, who exhibited last year at the Tate Modern gallery in London, announced last week that he was planning to set up a studio in Germany because of the problems he faced showing his works inside China. The artist, whose father was one of China’s most famous modern poets, was promoted by the government as a cultural ambassador in the run-up to the 2008 Olympics, but he has since fallen out of favor because of his social activism. In November, he was stopped from boarding a flight to South Korea, shortly after he had been invited to attend a ceremony in Oslo marking the award of the Nobel Peace Prize to jailed Chinese dissident Liu Xiaobo. Mr. Ai said at the time that police told him he could endanger na-
R E TA I L B A N K I N G - C O R P O R AT E & I N V E S T M E N T B A N K I N G SPECIALISED FINANCIAL SERVICES & INSURANCE P R I VAT E B A N K I N G , G L O B A L I N V E S T M E N T M A N A G E M E N T & S E RV I C E S Societe Generale is a credit institution and investment services provider (entitled to perform banking activities and/or to provide investment services other than the operation of Multilateral Trading Facilities) authorised and regulated by the French Autorité de Contrôle Prudentiel (Prudential Control Authority) and Autorité des Marchés Financiers (Financial Markets Authority). Societe Generale is subject to limited regulation by the UK Financial Services Authority («FSA») for the conduct of its business in the United Kingdom. Details of the extent of its regulation by the FSA are available from us on request. Societe Generale benefits from the EC passport authorising the provision of certain banking and investment services within the EEA. This material has been prepared solely for information purposes and does not constitute an offer from Societe Generale to buy or sell any securities or financial instruments, or to participate in any trading strategies. Not all products and services offered by Societe Generale are available in all jurisdictions. Please contact your local office for any further information. © 2011 Societe Generale Group and its affiliates. - © GettyImages -
7
8
THE WALL STREET JOURNAL.
Monday, April 4, 2011
WORLD NEWS
India beats Sri Lanka to win Cricket World Cup Associated Press
BY WILL DAVIES
Indian cricket players and their World Cup trophy after Saturday’s game
India won the Cricket World Cup Saturday, beating Sri Lanka by six wickets in Mumbai and sending this cricket-mad nation into a frenzy. It was the first-ever World Cup final win by a host nation—India, Sri Lanka and Bangladesh hosted the tournament—and likely marks the start of a prolonged period of Indian dominance in all forms of cricket.
Indian’s captain, Mahendra Singh Dhoni, hit the winning runs to claim the trophy and secure a place in Indian legend. Mr. Dhoni scored 91 runs not out in a sublime innings that earned him the man-of-the-match award. He was partnered at the end by Yuvraj Singh, who was voted man of the tournament. But it was the captain’s 109-run partnership with Gautam Gambhir that secured victory for In-
Finance new opportunities That’s what commercial lenders can do when they’re smart about managing risk. And smart lenders can seed innovative new businesses by working with CME Group, the world’s leading derivatives marketplace. Emerging growth companies and financial institutions around the world come to us to manage virtually every kind of risk. Interest rate fluctuations, stock market movements, changing currency valuations – whatever the risk, we help the world advance beyond it. Learn more at cmegroup.com/advance.
How the world advances
CME Group is a trademark of CME Group Inc. The Globe logo is a trademark of Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners. Copyright © 2011 CME Group. All rights reserved.
dia. Mr. Gambhir was tantalizingly close to a World Cup final century before being bowled on 97 runs by Sri Lanka’s Thisara Perera. India, like Sri Lanka, had won the World Cup once before. India’s other victory came at Lords in England in 1983, a date so deeply etched in the nation’s memory that survey takers in the recently completed Census 2011 were advised to ask people who couldn’t provide a birth date whether they were born before or after that World Cup victory. This victory on home soil will be remembered even more fondly. India not only won this World Cup, it also beat archrival Pakistan in the semifinal. That match was of such significance that it was wrapped up in an effort at “cricket diplomacy” by India’s government, with Indian Prime Minister Manmohan Singh inviting counterpart Yousuf Raza Gilani to the game as the countries make a renewed effort to improve relations severely strained by the Mumbai terror attacks in 2008 which were launched from Pakistan. Saturday’s final in Mumbai began with a strong innings from Sri Lanka, led by the match’s top scorer and only century-maker, Mahela Jayawardene, who batted superbly for his 103. Mr. Perera played an exciting batting cameo at the end of the innings, smashing 22 runs from just nine deliveries, helping lift Sri Lanka to a total of 274 for six. India’s response got off to the worst possible start, as star opener Virender Sehwag was out LBW to Lasith Malinga for 0 on only the second ball of the innings. All eyes were on his opening partner, Indian cricketing hero Sachin Tendulkar, who was playing in his hometown and was poised to make his hundredth career century. But the fairy-tale script didn’t play out as the man known as the Little Master was soon caught on 18 runs, leaving India reeling. When Mr. Tendulkar was caught by Sri Lanka’s captain Kumar Sangakkara, the crowd at Mumbai’s Wankhede Stadium fell into a stunned silence. But then Mr. Gambhir and 22-year-old Virat Kohli steadied the Indian innings with an 82-run partnership. Sri Lanka sensed a chance when Mr. Kohli was sharply caught and bowled on 35 by Tillakaratne Dilshan, yet that hope was snuffed out when Mr. Dhoni came to the crease. The Indian skipper decided the final was the time for him to take the burden of responsibility for a billion people, promoting himself ahead of the in-form Mr. Yuvraj. Despite playing a disappointing innings by his high standards, Mr. Tendulkar was overjoyed with the victory. “Winning the World Cup is the proudest moment of my life,” he said. Mr. Tendulkar was triumphantly carried around the pitch on the shoulders of his teammates after Dhoni hit the winning runs, leaving Kohli, the face of the new generation of Indian cricket, to sum up the feelings of the champions: “This goes out to the people of India. This is my first World Cup, I can’t ask for more. Tendulkar has carried the burden of the nation for 21 years, it is time we carried him,” he said. Fans await the Indian Premier League tournament Friday............... 10
The Moment INDIAN CRICKET LEAGUE POISED FOR SUCCESS 10
MONDAY, APRIL 4, 2011
LIFE & STYLE
asia.WSJ.com
Headstands with the greatest of ease [ What’s Your Workout? ] BY JEN MURPHY Kim Simone struggled through her first yoga classes. “I just didn’t feel comfortable,” she says. “I didn’t feel like I had the balance and strength to do the postures properly.” Her personal trainer suggested she try aerial yoga: If she didn’t like yoga on the ground, how would she like the same poses while dangling from a hammock suspended in the air? Ms. Simone gave it a try. “It was actually quite easy to pick up,” she says. “It was like a playground activity.” Aerial yoga classes utilize a fabric hammock connected to the ceiling like a swing. Poses are performed sitting, lying or even spinning upside down in the hammock. Proponents of the workout say the force of gravity helps realign the body. Ms. Simone, 45, is vice president for the information-technology department of Verizon Wireless. AntiGravity Yoga is a brand of aerial yoga developed in the ’90s as a training technique for gymnasts. The practice incorporates elements of yoga, Pilates and dance. “In traditional yoga, the balance is all on your own,” she says. “Having the hammock there actually makes it easier to do [inverted poses].” Ms. Simone got so hooked on aerial yoga that she bought a silk hammock for her home. “I don’t try any postures I haven’t perfected in class, but I work on postures I am confident in—and my kids have even tried it.”
The workout Ms. Simone attends group classes two to three times a week at a fitness studio near her home in New Jersey. Class begins with meditation and transitions to stretching activities and traditional yoga poses that have
been modified for the hammock. In traditional yoga, the “warrior three” pose entails balancing on one foot and leaning forward so the torso is parallel to the floor, while the opposite foot is extended back in mid-air. In AntiGravity Yoga, the back foot is supported in the hammock. To do a yoga handstand, the legs are twisted in the hammock to support the body, rather than lifting the legs up into mid-air. The practice includes many inversions, which are poses that flip the body upside down. “You do have to learn to trust the hammock. Once you learn to trust that it has you, it’s much easier to let go,” says Ms. Simone. One position, known as “cannonball,” entails hugging the knees to the chest and swinging upside down in arcs. “It really requires a mind-body connection. You have to concentrate on what you’re doing.” While practicing the various movements, students are exercising and toning their muscles. Simply swinging in the hammock without hands works the abdominal muscles. Like in traditional yoga, class ends with a savasana, or a resting pose, as students cocoon themselves in the hammock. Ms. Simone also has a disciplined cardio routine. Every morning she logs 30 minutes on the treadmill in her basement. She takes a body sculpting and core strengthening class known as the ballet barre fitness classes two times a week. “The class is based on doing high repetitions of exercises with low weights,” she says. “I thought my legs were strong from my treadmill workouts but they were so sore after my first class.”
Michael Rubenstein for The Wall Street Journal
AntiGravity Yoga, developed for gymnasts, involves modified poses; ‘Learn to trust the hammock’
‘It took me four classes to … do a reverse somersault into the hammock,’ Ms. Simone says. or mozzarella cheese with a vinaigrette dressing. She says her family “doesn’t do fast food.” A typical dinner might be grilled salmon with asparagus. For snacking, she turns to walnuts, almonds or apples.
Quick fix Cost & gear
The diet Ms. Simone starts her day with a green smoothie made from spinach, almond milk, fruit, ground-up flaxseeds (for omega-3 fatty acids) and a natural sweetener. Ms. Simone brings her lunch to work: a salad with Romaine lettuce, tomatoes, onions, mushrooms, peppers and either feta
month and includes unlimited access to ballet barre fitness classes, AntiGravity and traditional yoga classes. Her home yoga swing cost $200.
Ms. Simone spent about $4,000 on her commercial-grade treadmill. “I’ve used the same treadmill every day for five years, so though it seems like a lot of money, it really was an investment,” she says. Her family’s membership at a fitness club costs $175 a month. Her Core Connection Studio membership costs $200 a
When Ms. Simone has only 15 minutes to exercise, she walks up and down her basement stairs with three-pound dumbbells, skipping every other step, for five minutes. She’ll then alternate between push-ups (a total of 70) and holding an abdominal strengthening pose. Last, she jumps rope for five minutes and then holds a standing wall squat until her legs shake.
Life is tough for teams in the lower reaches We have to admit that this hasn’t been a vintage season for the English Premier League, world’s most popular and prosperous professional football league. The country’s leading teams all look flawed, the game’s biggest stars—guys like Wayne Rooney, Cesc Fabregas and Fernando Torres—have failed to perform and the league’s overall talent level seems to be at its lowest level in years: Only three Premier League players made FIFA’s long-list for the world player of the year award last October. Yet we’re hooked as always. Only we’re not talking about the championship but about an epic basement race, where the battle to avoid relegation is shaping up to be the craziest climax to a season in top-flight history, where the teams at risk include Premier League stalwarts like Aston Villa and Blackburn Rovers. “This season will be remembered as the greatest relegation fight in living memory,” says Ipswich Town manager
Press Association
BY JONATHAN CLEGG
Wolverhampton Wanderers’ Matthew Jarvis, left, celebrates scoring against Aston Villa, March 19. Paul Jewell, who has coached in the Premier League with three different clubs. This relegation dogfight will likely captivate us until the final day of the season on May 22. But for those involved, the pressure, the packed schedule and the price of failure make English football’s annual battle for survival almost unbearable. Because the Premier League distributes
its television revenue more or less equally, analysts estimate relegation can cost a team $80 million or more per year in lost revenue. This outbreak of parity runs against long-term trends in European football, in which qualification for the Champions League—worth as much as $65 million per season—seems to widen the gulf between haves and have-nots every season. So what’s behind this new era of unpredictability? For starters, recent Premier League reforms limiting clubs to a 25-player roster have prevented the division’s powerhouses from stockpiling superstars. This season is also the first year of the Premier League’s new $2.2 billion overseas television deal, which has increased revenues and spread that income more evenly, helping the division’s smaller clubs attract top players from Germany, Spain and Italy. “Just about every club has international strikers, all playing good football,” says Arsène Wenger, the Arsenal coach. “It is certainly the most level league, with the least predictable re-
sults, since I’ve been in England.” Some say the rise of performance data during the past decade has also helped level the playing field. “What the statistics have done is kick out of the game all the players who cannot run,” Wenger says. “Before you would play a team and know that in the last 20 minutes they would be dead.” This chaos at the foot of the table could have dire consequences for the teams at the top. Typically a club challenging for the title wants to play a bunch of stiffs in the final weeks of the season, when its superior skill and greater motivation should make for a routine win. But the uncertainty in the lower reaches has turned the conventional wisdom upside down. “It doesn’t matter where we play, whether it is away or at home, it is going to be difficult,” said Alex Ferguson, the Manchester United manager. “Any team down the bottom doesn’t want to go down—because the only place you make money is in the Premier League.”
THE WALL STREET JOURNAL.
10
Monday, April 4, 2011
LIFE STYLE
Indian cricket league poised for success Rajasthan Royals CEO Sean Morris confident of return to glory days; expanding to U.S. an ambition ers. We have a very flat egalitarian structure for even the biggest names, as well as extensive cricketing contacts in Australia, South Africa and the United Kingdom, which has enabled us to identify the most talented players and bring them into a club atmosphere that enables them to really enjoy their cricket. The restrictions on the Rajasthan Royals at the IPL auction for this year would have been a serious constraint, but we went in with a very focused strategy. Within the top 27 players, we identified a couple of names that were potential targets and focused our meager resources on the highest quality players that we believed would be undervalued by the market. In the early bidding the possibility arose to buy a legend ( Rahul Dravid), one of the world’s finest batsmen, so we seized the opportunity.
[ The Moment ] The World Cup has only just finished, but cricket fans are already anticipating the start of the Indian Premier League tournament on Friday. Launched in 2008, the IPL is a thriving brand, based on the shorter format Twenty20 version of the game, and attracts the world’s top players, as well as enormous amounts of cash. The Rajasthan Royals won the league in its first season, and the franchise’s chief executive is confident of a return to the glory days—the team’s franchise contract was terminated last year by the Indian Cricket Board over alleged breaches of the contract agreement, though that decision was later overturned. Sean Morris, 42 years old, has spent his lifetime in sport, playing county cricket for Hampshire in England and later working for major international sports brands and organizations. After a stint as chief executive of the Professional Cricketers’ Association in England and Wales, Mr. Morris was snapped up by the Rajasthan Royals in December 2009 and he is now a key figure at the forefront of the IPL, cricket’s cutting edge. My most memorable IPL moment is sitting in the dressing room when Abhishek Raut caught one of the opposition batsmen on the boundary to beat the Deccan Chargers by two runs in an absolute nailbiter. We’d really been out of the game for most of the match and won it from nowhere—that’s when you see the raw emotions of a team. Two things that stand out from my time with the Rajasthan Royals, one is very good, one not so ideal. The first home game in front of 40,000 spectators all roaring the team on is a very unique sporting position to be in,
Getty Images (2); Newscom (Shane Warne)
BY WILL DAVIES
Sean Morris, top left in 2010 and below in 1999, and the Rajasthan Royals have attracted talent like Shane Warne, right. a very different sensation to playing yourself. The other was running a business that is a vibrant flourishing brand but overnight getting presented with the ultimate fight for survival like we did last year. That’s a day you’ll never forget. The secret of the IPL’s success is that it’s a great business model, the best sporting business model. Dynamics, flare and vision and the world’s most passionate sporting audience. The first role in expansion is growing your supporter base locally. We have 60 million fans in our own back yard, Rajasthan, so having a really strong connection with them gives you a very firm base, which you need before you can even look at the bigger picture.
We’ve already had success in expanding the popularity of cricket and the IPL, which was held in South Africa (in 2009). One of my roles is to open the eyes of the players who live in different countries as they are effectively ambassadors for the franchise even when they go home. We invest a lot of time, work and energy into this. Spreading cricket to the United States is absolutely an ambition. There’s a strong local market and a modern design for a modern culture. The world’s biggest sporting market is the U.S. If permitted I would love to take the Rajasthan Royals to the U.S., I’d like to play nowhere more than in the U.S. I don’t think there’ll be a time when
T20 is the dominant form of cricket, because I was brought up and spent so much time in the longest forms of the game where you have to be more of a cricket connoisseur. One of the key drivers of that is the players—international players will tell you that their careers are judged on the format of the game that tests you the most, and that’s five-day Test matches. But the opportunity to gain broader reach is through T20, and it’s the best way to introduce young, female and new fans to the game. The Rajasthan Royals has attracted some of the sport’s superstars, (not least Shane Warne) and we have done this first and foremost by being a cricket-focused business, run by cricketers for cricket-
English players will find it difficult to enjoy as much success in the IPL as cricketers from other nations like Australia and South Africa. The World Cup has shown that their recent season has taken its toll with the number of injuries their players have had. However, England is the world T20 champion, which would suggest that it has some of the most talented players in world cricket. My favorite player, at the moment, has to be Ross Taylor from New Zealand. He’s quality both on and off the field. He’s still young but has the experience and the class of someone who’s been playing internationally for decades. India clearly has an advantage in world cricket. India has the biggest talent pool and its resources are way ahead of any of the other countries, and those two ingredients, if blended successfully, gives it a clear advantage to be the dominant team for the foreseeable future. India is a force to be reckoned with.
Monday, April 4, 2011
THE WALL STREET JOURNAL.
11
OPINION: REVIEW OUTLOOK
Jobs and Wages
T
he U.S. jobs recovery gained speed in March—not ramming speed, or cruising speed, but let’s call it chugging along speed. We’ll take it nonetheless as more welcome evidence that the economy has moved out of recovery mode and into second gear, even if workers still aren’t seeing big increases in their paychecks. The U.S. Labor Department reported 216,000 net new jobs for the month, including 230,000 in the private economy, which is the only source of real wealth creation. A half million Americans have moved into the job market since the start of the year, and the jobless rate ticked down again to 8.8%. Government employment fell by 14,000, which we view as a positive sign as states and cities repair their budgets after being propped up by federal stimulus spending. Another good sign is that there were roughly 100,000 fewer discouraged workers in March, which means that more Americans see their neighbors finding work and are starting to look more energetically themselves. One sour note is that the percentage of Americans out of work for at least six months increased to 45.5% from 43.9%. The danger is that the longer
these 6.1 million gress and the people are out of A Weak Jobs Recovery Obama Adminiswork, the harder tration piled on it can be to find Percentage of job losses relative to peak employment the last two years. in months since the start of the last four recessions. it. One factor has The other dis1% to be Congress’s appointment is decision last year that wages are 0 to extend unemflat, even as 1990 ployment benefits -1 prices for food 2001 to 99 weeks, makand energy are -2 ing it easier to rising rapidly. The hold out for a -3 average wage of 1981 better job rather $22.87 didn’t than accept one -4 budge in March that’s available. and was up only -5 For all the reone penny in Febcent progress, this -6 ruary. That in it2007 jobs recovery re- -7 self is not unusual 0 5 10 15 20 25 30 35 40 45 mains one of the in the early weakest on re- Sources: calculatedriskblog.com, BLS stages of recovery cord. The econwhen there are omy is still seven million jobs shy of pre- lots of idle workers. recession employment, and the labor parThe problem is that consumer prices ticipation rate remains depressed at 64.2%, rose 0.4% in January, 0.5% in February, down from a peak in 2006 of 66.4%. The and March may see a big jump as well. In nearby chart compares the recovery rate in recent weeks, gasoline prices have risen jobs after each of the last four recessions, by 33 cents to more than $4 a gallon in and so far this one has been by far the states like California. Wal-Mart, the bigweakest. It would have been stronger with- gest retailer in the nation, has announced out the costs and other burdens that Con- that it will have to raise prices due to
higher energy costs. And last week, in time for Easter, Hershey announced it is raising its wholesale candy prices by a whopping 9.7%. All of this is putting a squeeze on middle class paychecks and contributing to consumer unease and a rise in inflation expectations. This is what happens in a recovery that has been fueled to a large degree by easy monetary policy. The Federal Reserve has now kept interest rates at near-zero for some 28 months, accompanied by unprecedented asset purchases to keep bond rates low. This great reflation has helped lift the recovery but at the cost of higher prices that are now eating into American incomes. The Fed says food and energy prices don’t matter because they aren’t part of “core” inflation, but you can’t put core prices on the dinner table. If President Obama wants to know why Americans aren’t giving him more credit for the incipient jobs recovery, this is a big reason. Stock market returns are up for those lucky enough to have financial assets, but the middle class still feels squeezed. Mr. Obama and Fed Chairman Ben Bernanke made a bet on inflation to revive the economy, and they and we had better hope it wasn’t a Faustian bargain.
Unserious on Iran Sanctions
T
he Obama Administration has advertised its sanctions regime against Iran as the toughest ever applied and a great diplomatic success. So what are we to make of its decision last week to punish only a single company doing business with Iran’s oil and gas industry—and a small fry at that? The State Department announced that it is punishing Belarusneft, a firm owned by the government of Belarus, for signing a $500 million contract in 2007 to develop an oil field in southwestern Iran. The company is now barred from working with the U.S. Export-Import Bank, receiving large loans from U.S. banks, contracting with the U.S. government and obtaining U.S. export licenses. The effect of all this? Nil. The State Department admits
that Belarusneft doesn’t seek to do any of Tim Geithner last week. They attached a these things. classified 54-page annex detailing interThe sanctions may also be redundant: national firms that are or might be in vioBelarusneft’s parent lation of U.S. sanctions. company, Belneftekhim, We assume the list has been under U.S. The Obama team includes, among others, sanctions since 2007 for the China National Offits connections to Belar- ignores Chinese titans. shore Oil Corporation usian President and in(CNOOC), the China Naternational pariah Alextional Petroleum Corpoander Lukashenko. ration (CNPC), Sinopec, Zhuhai Zhen The failure to sanction bigger offend- Rong, Lukoil and Turpas—all companies ers caught the attention of Congress. “We known to be investing in Iran. None of do not believe this represents full compli- this is news to the Obama Administration, ance with the sanctions regime put in which would appear to lack the political place by Congress,” wrote Senators Mark will to act against firms with friends in Kirk (R., Ill.), Jon Kyl (R., Ariz.) and Joe Beijing, Moscow and Ankara. Lieberman (I., Conn.) to Secretary of State We doubt that sanctions will stop Hillary Clinton and Treasury Secretary Iran’s nuclear program, but without en-
forcement the effort is hopeless. Chinese, Russian and Turkish companies not only allow Iran to tap its resources and access refined petroleum. They also replace the very projects previously abandoned by Western European and Japanese companies in response to U.S. pressure. When CNPC in 2009 invested roughly $2 billion in the South Azadegan fields that Japan’s Inpex had vacated, it nullified the effect of Inpex’s departure. CNPC and other sanctions violators also benefit from having fewer competitors. White House National Security Adviser Tom Donilon said last week that “Even with all the events unfolding in the Middle East, we remain focused on the strategic imperative of ensuring that Iran does not acquire nuclear weapons.” Would that it were so.
Microsoft’s Antitrust Switcheroo
I
nvoking Romeo and Juliet’s Mercutio seems like the most natural response to Microsoft’s complaint to the European Commission over Google’s allegedly anticompetitive behavior—a plague on the houses of Gates-Ballmer and PageBrin would be well deserved. Even Brad Smith, Microsoft’s long-time general counsel, was compelled to call attention to the “irony”—his word—of Microsoft’s calling in the Commission to investigate the search giant. Microsoft, after all, suffered more than perhaps any other at the hands of Brussels’s antitrust cops, and the company knows full well how difficult it is to run a business in the fast-moving tech space with regulators rummaging through your virtual file cabinets for evidence of ill-intent. Not that Google is above playing pinthe-regulator-on-the-rival, either. It
milked the net neutrality crusade for as time, which goes to show why bureaulong as it was useful in keeping Internet crats shouldn’t design software. In the service providers at bay. And four years midst of that brouhaha, iTunes came ago Google filed a brief in court arguing along and made all that huffing about that Microsoft’s Vista operating system “lock-in” and “network effects” look like violated the Redmond, Washington com- the self-serving rationalization of the anpany’s consent decree titrust guild that some stemming from the Jusof us said it was at the tice Department’s inter- Now it’s calling time. minable case against the Now it’s Microsoft’s Google a monopolist. software maker. turn, and its complaint It’s hard to believe shows that it has also now, but Microsoft’s delearned to speak regucade of Brussels purgatory began with a lator-ese. According to Mr. Smith, complaint that Microsoft’s Media Player Google’s sins include: denying competiwas illegally bundled with the Windows tors the ability to index YouTube’s cache operating system. The European Com- of laughing-baby videos (although a nonmission made the world safe for compe- scientific sampling of Microsoft’s Bing tition again by ordering Microsoft to sell search results suggests that Microsoft a version of Windows in Europe without has nevertheless indexed some pretty oba media player. This all seemed very im- scure YouTube clips); restricting adverportant to the antitrust gnomes at the tisers’ ability to copy their search cam-
paigns to competitors’ sites; and locking in large European websites to the exclusive use of Google search boxes. Some of this may be true. But as anyone who’s witnessed Google’s rise and Apple’s resurrection can tell you, dominance in technology is always tenuous and often fleeting. Google’s own Chrome browser is one of several that have given the lie to the notion that nobody could compete with Microsoft’s ownership of the desktop, which was supposed to lead to a world wide Web in which Bill Gates called all the shots. The greater misfortune in all this is that two tech giants, competing in one of the industries most free from the encroachment of regulators, can’t resist asking the government to kneecap its competitor. They have made each other, with apologies to Shakespeare, into fortune’s fools.
12
THE WALL STREET JOURNAL.
Monday, April 4, 2011
OPINION
‘The Tyrannies Are Doomed’ BY BARI WEISS Princeton, N.J. “What Went Wrong?” That was the explosive title of a December 2001 book by historian Bernard Lewis about the decline of the Muslim world. Already at the printer when 9/11 struck, the book rocketed the professor to widespread public attention, and its central question gripped Americans for a decade. Now, all of a sudden, there’s a new question on American minds: What Might Go Right? To find out, I made a pilgrimage to the professor’s bungalow in Princeton, N.J., where he’s lived since 1974 when he joined Princeton’s faculty from London’s School of Oriental and African Studies. Two months shy of his 95th birthday, Mr. Lewis has been writing history books since before World War II. By 1950, he was already a leading scholar of the Arab world, and after 9/11, the vice president and the Pentagon’s top brass summoned him to Washington for his wisdom. “I think that the tyrannies are doomed,” Mr. Lewis says as we sit by the windows in his library, teeming with thousands of books in the dozen or so languages he’s mastered. “The real question is what will come instead.”
The West’s leading scholar of the Middle East sees cause for optimism in the limited-government traditions of Arab culture. For Americans who have watched protesters in Tunisia, Egypt, Iran, Libya, Bahrain and now Syria stand up against their regimes, it has been difficult not to be intoxicated by this revolutionary moment. Mr. Lewis is “delighted” by the popular movements and believes that the U.S. should do all it can to bolster them. But he cautions strongly against insisting on Western-style elections in Muslim lands. “We have a much better chance of establishing—I hesitate to use the word democracy—but some sort of open, tolerant society, if it’s done within their systems, according to their traditions. Why should we expect them to adopt a Western system? And why should we expect it to work?” he asks. Mr. Lewis brings up Germany circa 1918. “After World War I, the victorious Allies tried to impose the parliamentary system on Germany, where they had a rather different political tradition. And the result was that Hitler came to power. Hitler came to power by the manipulation of free and fair elections,” recounts Mr. Lewis, who fought the Nazis in the British Army. For a more recent example, consider the 2006 electorial triumph of Hamas in Gaza. Elections, he argues, should be the culmination—not the beginning—of a gradual political process. Thus “to lay the stress all the time on elections, parliamentary
Western-style elections, is a dangerous delusion.” Not because Muslims’ cultural DNA is predisposed against it—quite the contrary. “The whole Islamic tradition is very clearly against autocratic and irresponsible rule,” says Mr. Lewis. “There is a very strong tradition—both historical and legal, both practical and theoretical—of limited, controlled government.” But Western-style elections have had mixed success even in the West. “Even in France, where they claim to have invented freedom, they’re on their fifth republic and who knows how many more there will be before they get settled down,” Mr. Lewis laughs. “I don’t think we can assume that the Anglo-American system of democracy is a sort of world rule, a world ideal,” he says. Instead, Muslims should be “allowed—and indeed helped and encouraged—to develop their own ways of doing things.” In other words: To figure out how to build freer, better societies, Muslims need not look across the ocean. They need only look back into their own history. Mr. Lewis points me to a letter written by France’s ambassador in Istanbul shortly before the French revolution. The French government was frustrated by how long the ambassador was taking to move ahead with some negotiations. So he pushed back: “Here, it is not like it is in France, where the king is sole master and does as he pleases. Here, the sultan has to consult.” In Middle Eastern history “consultation is the magic word. It occurs again and again in classical Islamic texts. It goes back to the time of the Prophet himself,” says Mr. Lewis. What it meant practically was that political leaders had to cut deals with various others—the leaders of the merchant guild, the craft guild, the scribes, the land owners and the like. Each guild chose its own leaders from within. “The rulers,” says Mr. Lewis, “even the great Ottoman sultans, had to consult with these different groups in order to get things done.” It’s not that Ottoman-era societies were models of Madisonian political wisdom. But power was shared such that rulers at the top were checked, so the Arab and Muslim communities of the vast Ottoman Empire came to include certain practices and expectations of limited government. Americans often think of limited government in terms of “freedom,” but Mr. Lewis says that word doesn’t have a precise equivalent in Arabic. “Liberty, freedom, it means not being a slave. . . . Freedom was a legal term and a social term—it was not a political term. And it was not used as a metaphor for political status,” he says. The closest Arabic word to our concept of liberty is “justice,” or adl. “In the Muslim tradition, justice is the standard” of good government. (Yet judging from the crowds gathered at Syria’s central Umayyad mosque last month chanting “Freedom, freedom!,” the word, if not our precise meaning, has certainly caught on.) The traditional consultation process was a main casualty of modernization, which helps explain modernization’s dubious reputation in parts of the Arab and Muslim world. “Modernization . . .
enormously increased the power of the state,” Mr. Lewis says. “And it tended to undermine, or even destroy, those various intermediate powers which had previously limited the power of the state.” This was enabled by the cunning of the Mubaraks and the Assads, paired with “modern communication, modern weapons and the modern apparatus of surveillance and repression.” The result: These autocrats amassed “greater power than even the mightiest of the sultans ever had.” So can today’s Middle East recover this tradition and adapt it appropriately? He reminds me that he is a historian: Predictions are not his forte. But the reluctant
Jews] in their place” and that the Holocaust “was divine punishment for them.” Yet following a sermon Sheikh Qaradawi delivered to more than a million in Cairo following Mubarak’s ouster, New York Times reporter David D. Kirkpatrick wrote that the cleric “struck themes of democracy and pluralism, long hallmarks of his writing and preaching.” Mr. Kirkpatrick added: “Scholars who have studied his work say Sheik Qaradawi has long argued that Islamic law supports the idea of a pluralistic, multiparty, civil democracy.” Professor Lewis has been here before. As the Iranian revolution was beginning in the late 1970s,
sage offers some thoughts. First, Tunisia has real potential for democracy, largely because of the role of women there. “Tunisia, as far as I know, is the only Muslim country that has compulsory education for girls from the beginning right through. And in which women are to be found in all the professions,” says Mr. Lewis. “My own feeling is that the greatest defect of Islam and the main reason they fell behind the West is the treatment of women,” he says. He makes the powerful point that repressive homes pave the way for repressive governments. “Think of a child that grows up in a Muslim household where the mother has no rights, where she is downtrodden and subservient. That’s preparation for a life of despotism and subservience. It prepares the way for an authoritarian society,” he says. Egypt is a more complicated case, Mr. Lewis says. Already the young, liberal protesters who led the revolution in Tahrir Square are being pushed aside by the military-Muslim Brotherhood complex. Hasty elections, which could come as soon as September, might sweep the Muslim Brotherhood into power. That would be “a very dangerous situation,” he warns. “We should have no illusions about the Muslim Brotherhood, who they are and what they want.” And yet Western commentators seem determined to harbor such illusions. Take their treatment of Sheikh Yusuf Qaradawi. The highly popular, charismatic cleric has said that Hitler “managed to put [the
the name of Ayatollah Ruhollah Khomeini was starting to appear in the Western press. “I was at Princeton and I must confess I never heard of Khomeini. Who had? So I did what one normally does in this world of mine: I went to the university library and looked up Khomeini and, sure enough, it was there.” “It” was a short book called “Islamic Government”—now known as Khomeini’s Mein Kampf—available in Persian and Arabic. Mr. Lewis checked out both copies and began reading. “It became perfectly clear who he was and what his aims were. And that all of this talk at the time about [him] being a step forward and a move toward greater freedom was absolute nonsense,” recalls Mr. Lewis. “I tried to bring this to the attention of people here. The New York Times wouldn’t touch it. They said ‘We don’t think this would interest our readers.’ But we got the Washington Post to publish an article quoting this. And they were immediately summoned by the CIA,” he says. “Eventually the message got through—thanks to Khomeini.” Now, thanks to Tehran’s enduring Khomeinism, the regime is unpopular and under threat. “There is strong opposition to the regime—two oppositions—the opposition within the regime and the opposition against the regime. And I think that sooner or later the regime in Iran will be overthrown and something more open, more democratic, will emerge,” Mr. Lewis says. “Most Iranian patriots
Terry Shoffner
[ Journal Interview ] with Bernard Lewis
are against the regime. They feel it is defaming and dishonoring their country. And they’re right of course.” Iranians’ disdain for the ruling mullahs is the reason Mr. Lewis thinks the U.S. shouldn’t take military action there. “It would give the regime a gift that they don’t at present enjoy—namely Iranian patriotism,” he warns. By his lights, the correct policy is to elevate the democratic Green movement, and to distinguish the regime from the people. “When President Obama assumed office, he sent a message of greeting to the regime. That is polite and courteous,” Mr. Lewis deadpans, “but it would have been much better to send a message to the people of Iran.” Let’s hope the Green movement is effective. Because—and this may be hard to square with his policy prescription—Mr. Lewis doesn’t think that Iran can be contained if it does go nuclear. “During the Cold War, both the Soviet Union and the United States had nuclear weapons but both knew that the other was very unlikely to use them. Because of what was known at the time as MAD—mutually assured destruction. MAD meant that each side knew that if it used a nuclear weapon the other would retaliate and both sides would be devastated. And that’s why the whole time during the Cold War, even at the worst times, there was not much danger of anyone using a nuclear weapon,” says Mr. Lewis. But the mullahs “are religious fanatics with an apocalyptic mindset. In Islam, as in Christianity and Judaism, there is an end-of-times scenario—and they think it’s beginning or has already begun.” So “mutually assured destruction is not a deterrent—it’s an inducement.” Another key variable in the regional dynamic is Turkey, Mr. Lewis’s particular expertise. He was the first Westerner granted access to the Ottoman archives in Istanbul in 1950. Recent developments there alarm him. “In Turkey, the movement is getting more and more toward re-Islamization. The government has that as its intention—and it has been taking over, very skillfully, one part after another of Turkish society. The economy, the business community, the academic community, the media. And now they’re taking over the judiciary, which in the past has been the stronghold of the republican regime.” Ten years from now, Mr. Lewis thinks, Turkey and Iran could switch places. So even as he watches young Middle Eastern activists rise up against the tyrannies that have oppressed them, he keeps a wary eye on the spread of Islamic fundamentalism. It is particularly challenging because it has “no political center, no ethnic identity. . . . It’s both Arab and Persian and Turkish and everything else. It is religiously defined. And it can command support among people of every nationality once they are convinced. That marks the important difference,” he says. “I think the struggle will continue until they either obtain their objective or renounce it,” Mr. Lewis says. “At the moment, both seem equally improbable.”
Ms. Weiss is an assistant editorial features editor at the Journal.
Monday, April 4, 2011
THE WALL STREET JOURNAL.
13
OPINION
BY SHAMSHER M. CHOWDHURY At a time when Congress is considering cutting back U.S. foreign assistance and scrutinizing America’s commitments abroad, Bangladeshis have reason to worry. Bangladesh is an important partner of the U.S. in South Asia, and it receives significant development aid. However, bilateral relations are being jeopardized by Dhaka’s removal of Nobel Laureate and microfinance pioneer Professor Mohammad Yunus from his position as managing director of Grameen Bank last month. Mr. Yunus is the 2006 winner of the Nobel Peace Prize and a recipient of both the American Presidential Medal of Freedom and a Congressional Gold Medal. Grameen Bank continues to have a significant impact in Bangladesh and stands as a model for other microfinance institutions around the world. It is helping empower millions, mostly women, through access to loans without collateral, lifting them out of abject poverty. Dhaka’s action against Mr. Yunus has been quite arbitrary. Shortly after Prime Minister Sheikh Hasina called microfinanciers “bloodsuckers of the poor,” her government said that Mr. Yunus was past the legal age at which he could serve on the bank’s board. But, he’s been older than this 60 year-old age limit for more than a decade. When Mr. Yunus was about to reach the age of 60, the bank’s board of directors unanimously
decided that this limit should not apply to the managing director. That was 1999. On March 8 this year, Bangladesh’s finance minister again confirmed that the board (which includes three government appointees) long ago decided to waive the retirement age limit. So by suddenly removing Mr. Yunus, the Bangladeshi government is attempting to exert greater influence over the operations of Grameen Bank and counter potential political opposition. Mr. Yunus had a brief foray into politics when he started his own political party in 2007. While the experiment was short-lived, it was never forgiven by Ms. Hasina, who has since seen him and his widespread popularity as a major political threat. Beyond the personal vendetta, this represents a major violation of the rights of Bangladeshis to have transparent, open democratic elections and institutions. U.S. State Department officials, including Secretary Hillary Clinton and Assistant Secretary Robert Blake, have expressed deep concern about the government’s treatment of Mr. Yunus and have stated repeatedly that a failure to reach a compromise could impact bilateral relations. In addition, 26 members of the U.S. Congress have written Ms. Hasina calling on her to respect the bank’s independence and warning of the potential impact on the U.S.-Bangladesh relationship. Bangladesh partners with the U.S. on global
Associated Press
Bangladesh Goes Backward
Grameen Bank founder Mohammad Yunus, who suddenly finds himself under attack by the Bangladeshi government. He is scheduled to appear before the country’s Supreme Court this week. health, regional security and engagement with Muslim countries, among other areas. The U.S. Agency for International Development (USAID) provides Bangladesh with $100 million per year to promote democracy, human rights and economic development. But the Bangladeshi government’s action against Grameen Bank threatens to sour diplomatic ties and could result in a reduction of U.S. assistance. This case also reflects broader problems with Bangladesh’s judicial system and widespread corruption that undermines democracy, threatens freedom and destabilizes the country. Amnesty
International has raised serious concerns over the independence of the judiciary in Bangladesh and allegations of torture in custody. The government has been accused of using the judicial system to punish and harass its opponents. For example, last June Reporters Without Borders roundly condemned the arrest of an opposition newspaper editor and the subsequent shuttering of that newspaper. The statement said: “[Ms. Hasina’s] government is clearly unable to tolerate criticism from this opposition newspaper and, in particular, its coverage of the controversial award of energy contracts to foreign companies.”
While it is reprehensible that many victims of these past injustices have gone unnoticed at the international level, Mr. Yunus’s case has helped bring to light the depth of these problems. It demonstrates the urgency for stronger international support of Grameen Bank. With Mr. Yunus’s appearance before the country’s Supreme Court scheduled this week, it is now more crucial than ever that Bangladeshis be heard. The U.S. Congress should further substantiate its support for judicial independence in Bangladesh by passing a resolution stating that bilateral ties depend upon judicial reforms that meet international human rights standards. Through hard work and sacrifice, Bangladeshis have succeeded in building a democracy in which respect for civil rights is an important ideal. That progress is now at risk, and so this step backward requires greater international attention. The importance of the legal case between Mr. Yunus and the Bangladeshi government extends far beyond one individual or institution. If someone of his international reputation and stature can be brought down unjustly by the government, then no citizen is safe, and the society is not free.
Mr. Chowdhury is a former foreign secretary of Bangladesh and ambassador to the United States. He is presently the vice chairman of the Bangladesh Nationalist Party-BNP.
In Libya, Regime Change Should Be the Goal BY JOSEPH I. LIEBERMAN AND JOHN MCCAIN President Obama made a compelling case for American intervention in Libya last Monday, and U.S. actions there deserve bipartisan support in Congress. As the president rightly noted, failure to intervene militarily would have resulted in a humanitarian and strategic disaster. Because of our actions, the Gadhafi regime has been prevented from brutally crushing its opposition. The president was also correct in framing what is happening in Libya within the broader context of the democratic awakening that is sweeping across the broader Middle East—the most consequential geopolitical realignment since the fall of the Berlin Wall. If Gadhafi is allowed to hang
ASI A
Almar Latour, Editor in Chief, Asia Peter Stein, Associate Editor Dean Napolitano, Senior Editor Hugo Restall, Editorial Page Editor Shawn Hiltz, Vice President, Marketing Alice Chai, Research Director Connie Cheng, Operations Director Simon Wan, IT Director Olivier Legrand, General Manager Digital Christine Brendle, Publisher Published since 1889 by
Dow Jones and Company © 2011 Dow Jones & Company. All Rights Reserved
jk
onto power through the use of indiscriminate violence, it will send a message to dictators throughout the region and beyond that the way to respond, when people rise up peacefully and demand their rights, is through repression and slaughter—and that the rest of the world, including the U.S., won’t stand in the way. What is needed now is not a backward-looking debate about what the administration could or should have done differently, but a forward-looking strategy that identifies America’s national interests in Libya and works to achieve them. As President Obama has rightly and repeatedly insisted, a successful outcome in Libya requires the departure of Gadhafi as quickly as possible. It is not in our interest for Libya to become the scene of a protracted stalemate that will destabilize and inflame the region. While both Arab leaders and public opinion are hostile towards Gadhafi personally—a fact that helps explain the Arab League’s unprecedented decision to support intervention in Libya—we are concerned that regional support will waver if Western forces are perceived as presiding over a military deadlock. We cannot allow Gadhafi to consolidate his grip over part of the country and settle in for the long haul. There are several steps urgently needed to prevent this outcome. First, while we understand
the diplomatic reasons behind the Obama administration’s reluctance to make Gadhafi’s removal an explicit goal of the coalition military mission, the reality on the ground is that our coalition’s air strikes against his forces must work toward this objective. In the days ahead, it is imperative that we maintain and if necessary expand our air strikes against Gadhafi’s ground forces, which pose a threat to civilians wherever they are. In doing so, we can pave the way for the Lib-
Forget debates over what Obama could have done. The U.S. needs a forwardlooking plan that recognizes the rebels’ legitimacy. yan opposition to reverse Gadhafi’s offensive and to resume their quest to end his rule. The battlefield reversals suffered by the opposition last week, when weather conditions hampered coalition air strikes, underscore the need for a more robust and coherent package of aid to the rebel ground forces. The U.S. should also expand engagement with the Libyan opposition, led by the interim Transitional National Council currently based in Benghazi. We have been encouraged by the Obama administration’s growing rhetorical sup-
port for the opposition, but we hope to see more tangible manifestations of it in the days ahead. In particular, we and our allies should be providing the council with the communications equipment, logistical support, training, tactical intelligence and weapons necessary to consolidate rule over the territory they have liberated and to continue tilting the balance of power against Gadhafi. We do not need to put U.S. forces on the ground precisely because the Libyans themselves are fighting for their freedom. But they need our help, and quickly, to succeed. Another immediate priority should be getting humanitarian assistance into eastern Libya and restoring telecommunications access there, where Gadhafi has cut off land lines, mobile networks and the Internet. While top opposition leaders have satellite phones, we have both humanitarian and strategic interests in restoring the ability of people in liberated parts of Libya to communicate with each other and the rest of the world. We should also take steps to get Gadhafi's satellite, television, and radio broadcasts off the air, while helping the opposition air its broadcasting. Finally, we should follow France and Qatar in recognizing the Transitional National Council as the legitimate government of Libya, and we should encourage other allies and partners to do the same. Some critics still argue that we
should be cautious about helping the Libyan opposition, warning that we do not know enough about them or that their victory could pave the way for an al Qaeda takeover. Both arguments are hollow. By all accounts, the Transitional National Council is led by moderates who have declared their vision for (as their website puts it) Libya becoming “a constitutional democratic civil state based on the rule of law, respect for human rights and the guarantee of equal rights and opportunities for all its citizens.” If there is any hope for a decent government to emerge from the ashes of the Gadhafi dictatorship, this is it. Throwing our weight behind the transitional government is our best chance to prevent Libya’s unraveling into postwar anarchy—precisely the circumstance under which Islamist extremists are most likely to gain a foothold. We cannot guarantee the success of the Libyan revolution, but we have prevented what was, barely a week ago, its imminent destruction. That is why the president was right to intervene. He now deserves our support as we and our coalition partners do all that is necessary to help the Libyan people secure a future of freedom.
Mr. Lieberman is an Independent Democratic senator from Connecticut. Mr. McCain is a Republican senator from Arizona.
14
THE WALL STREET JOURNAL.
Monday, April 4, 2011
MIDDLE EAST
In Libyan capital, murmurs of dissent TRIPOLI, Libya—Opposition to Col. Moammar Gadhafi’s regime is simmering in the Libyan capital despite an unrelenting crackdown on any sign of dissent. Some opponents of Col. Gadhafi in the country’s largest city—home to almost one-third of the population of more than 7 million—say coalition airstrikes against his military capabilities, including several installations in Tripoli, won’t be enough to dislodge him from power. Hope is also fading that the rebels advancing from the east along the coast will be able to overrun thousands of pro-Gadhafi troops in the fortified city of Sirte, several hundred miles to the east of Tripoli, to reach the capital, or even to hold their ground near the eastern city of Ajdabiya. The impact of Foreign Minister Moussa Koussa’s defection last week remains unclear, and it isn’t known whether other prominent regime members might follow. On Sunday, Libyan rebels skirmished with government forces around the strategic oil town of Brega, making incremental advances backed by international air strikes in the seesaw desert battle for the country, according to the Associated Press. In contrast to the rapid gains and losses of territory that characterized the fighting over the past few weeks, the conflict has stabilized around the oil facilities of Brega, as better-trained rebels join the fight and airstrikes blunt the government advantages in weapons and training. An opposition leader told the AP that the rebels want to install a parliamentary democracy in place of Col. Gadhafi, dismissing Western fears that their movement could be hijacked by Islamic extremists. Also Sunday, Britain said it has sent a diplomatic team to Libya to speak to key figures in the rebel movement, including members of the opposition Interim National Council, the AP reported, while an envoy of Col. Gadhafi will meet with Greece’s prime minister in Athens. Amid increasing pessimism that
Associated Press
BY SAM DAGHER
Rebels shell pro-Gadhafi positions just outside Brega, Libya, on Sunday. Col. Gadhafi will be ousted, and despite the crackdown in the capital, some simple acts of defiance have begun to emerge once more. In some neighborhoods, leaflets with the words “Libya is free” and the image of the monarchy-era flag adopted by the rebels and their interim government in the east have surfaced. Anti-regime graffiti that was whitewashed out by Gadhafi loyalists reappeared on some city walls, albeit briefly. Here in Tripoli, the latest and most drastic tactics adopted by antiregime activists, who work in small, mostly uncoordinated groups, have involved brief and stealthy attacks on government targets. Exchanges of gunfire are heard in the capital almost nightly. On Friday, a government spokesman dismissed that as customary celebratory gunfire, but interviews with several residents and activists gave a different picture. Over the past week, gunmen shot at the main state television building, while a tent for pro-Gadhafi neighborhood guards was attacked with a
homemade bomb, they said. It was unclear if any of these attacks resulted in casualties on either side but one activist suggested that opponents of the regime would step up such activity in coming days. “We do not consider this treason,” he said. “On the contrary, treason is not standing on the side of the rebels.” This is a common refrain in Tripoli, but opinions here diverge on whether residents should take an active role in achieving this goal. There are also differences over methods. One activist describes the acts of defiance that he helps orchestrate as “morale-raising” and “preparing people for the final push.” They include distributing antiregime leaflets, organizing boycotts and burning tires. He said it isn’t yet a good time to resume street protests. “It would be counterproductive for it to happen now,” he said. “If 100 come out, 30 will be shot in the head.” Another activist, who served almost 10 years at Tripoli’s notorious
Abu Salim prison for his criticism of the regime, concurs. But he argues that because of the regime’s brutality, an armed struggle is now the only option. “Going out in a peaceful demonstration means you want to commit suicide,” he said. The challenges facing the underground opposition in Tripoli are formidable. Protests at the start of the uprising in February were met with live ammunition from Col. Gadhafi’s forces, resulting in dozens of deaths. Hundreds of suspected protesters and activists have been arrested or threatened, residents say. Internet service has been down for more than a month, and the regime itself says it is monitoring cellphone conversations. Col. Gadhafi’s loyalists, many of them armed civilians, patrol neighborhoods and stand guard outside mosques, which have been starting points for demonstrations in the past. Military checkpoints ring the city from all directions; it has become a “big prison,” says one resident. Three of Libya’s largest tribes—the Tarhouna, the Warfalla and the
Warshafana—which are anchored in the center and west of the country—remain divided between backers of the regime and those sitting on the fence. This has isolated Tripoli, in the west, from rebel holdouts in the city of Misrata to the east and the town of Zintan in the southwest. The regime’s tactics were on display Friday in Tripoli’s eastern suburb of Tajura, a hotbed of antiregime sentiment. Three weeks earlier, protesters at the Murad Agha mosque were chanting “rebels, rebels, Tajura awaits you.” This past Friday, the mosque was only a quarter full for traditional weekly prayers. The presiding cleric hurriedly read out a strictly religious sermon. There was no eye contact as people made a silent exit. Watching from across the street was a group of pro-Gadhafi armed men, two in desert camouflage. They stayed on guard in the street until the last person came out. Residents are monitored not only by soldiers and members of the security forces, but also by revolutionary committees—neighborhood cells of regime followers who have in recent weeks served as armed militias to enforce Col. Gadhafi’s rule and stamp out dissent. “The committees are everywhere,” reads a sign outside the committees’ Tripoli headquarters. Moammar al-Sharifi, a committee member from the Al-Hani neighborhood, recounted how a teenage boy was apprehended recently for spraying antiregime graffiti on a wall. Committee members detained the boy and beat him, Mr. Sharifi said. He was released only after his father vouched for him. “We told him ‘we will shred you into pieces if you do this again,’ ” said Mr. Sharifi, adding that this was no time for dissent given the perils facing Libya from “outside enemies.” He added, “If someone protests after Friday prayers, we will set him on fire.” Mr. Sharifi spoke during a drive that his committee organized in the central Green Square to collect thumbprints on forms affirming Col. Gadhafi as “leader and symbol of the Libyan people.”
More clashes in Yemen as Saleh stays put SAN’A, Yemen—Police fired live ammunition and tear gas in an effort to disperse antigovernment demonstrators in the southern city of Taiz on Sunday, leaving scores wounded, amid a continuing stalemate in discussions between President Ali Abdullah Saleh and those calling for his resignation. Ten people suffered gunshot wounds and hundreds were temporarily hospitalized because of the effects of tear gas, according to Bushra al-Maqtari, a youth activist at the Taiz demonstration. Taiz, Yemen’s most populous province, has been home to massive antiregime demonstrations for more than seven weeks. The latest outbreak of violence comes as President Saleh has continued to side-step opposition calls for his resignation, raising political tensions in the country. In an attempt to break the standoff, Yemen’s coalition of opposition parties, the so-called Joint Meeting
Reuters
BY ERIK STIER
Protesters carry those injured during clashes with police in Taiz Sunday. Parties, late Saturday drafted a plan for a peaceful handover of power. But the plan was rejected outright on Sunday by the speaker of Yemen’s parliament, Yahya al-Raee, a senior official in Mr. Saleh’s General
Peoples Congress party. “The JMP does not represent the Yemeni opposition,” Mr. al-Raee said, accusing the opposition coalition of manipulating the youth-led movement, which started the calls
for the president to resign. The JMP plan urged Mr. Saleh to step down and pass authority to his deputy, Vice President Abdrabuh Mansur Hadi. Unlike previous plans, the proposal marked the first attempt by the opposition to map out a transitional authority after Mr. Saleh’s departure. It also called for the restructuring of Yemen’s farreaching security institutions, currently controlled by Mr. Saleh’s close relatives. Mr. al-Raee’s rejection of the proposal followed two consecutive weeks of massive pro-Saleh demonstrations in the capital, San’a, that appear to have emboldened the president and his supporters, bringing the country to a deadlock. After saying March 25 that he was prepared to transfer power, Mr. Saleh has more recently appeared defiant in the face of growing calls for his resignation. “I pledge...to sacrifice myself for the people, with my blood and with everything I hold dear,” Mr. Saleh told a huge crowd of loyalists in a speech Friday.
On Sunday, Mr. Saleh said he was prepared to discuss the peaceful transfer of power only if “protests, blocking roads, assassinations and insurgency” come to an end. Negotiations with opposition members, overseen by representatives from the U.S. and the European Union, reached an impasse last week, though talks are continuing, according to a government official familiar with the situation. Following the defections of many of the country’s top military commanders, including Mr. Saleh’s longtime ally Major General Ali Mohsen al-Ahmar, the threat of widespread violence has loomed large in the absence of a political resolution. Outside the capital, many areas have already begun to throw off the vestiges of Saleh’s regime. Government buildings have been captured by opposition members in the provinces of Marib, al-Jowf and Abyan. In the southern port-city of Aden, calls for civil disobedience have brought much of the city to a standstill since Saturday.
THE WALL STREET JOURNAL.
Monday, April 4, 2011
15
WORLD ECONOMY
Battle lines are drawn within Fed BY JON HILSENRATH
‘Economic conditions have improved in the past year. Yet the recovery is still tenuous.’ William Dudley New York Fed President
Bloomberg News
As the U.S. economy slowly improves, battle lines are being drawn at the Federal Reserve for the coming debate about when and how to tighten the central bank’s easy monetary policy. A slew of regional Federal Reserve bank presidents have taken to the public speaking circuit in recent weeks to begin staking out positions on the economy and the Fed’s next moves. A vocal minority is pushing for an early and aggressive shift to push interest rates higher, possibly later this year. But New York Fed President William Dudley sent a clear sign Friday that the Fed’s most powerful decision makers don’t necessarily share that view. “Economic conditions have improved in the past year. Yet the recovery is still tenuous,” Mr. Dudley said in a speech in Puerto Rico. “And we are still far from the mark with regard to the Fed’s dual mandate. In particular, the unemployment rate is much too high.” The Fed’s dual mandate is to maintain low unemployment and stable inflation. Many officials believe unemployment, at 8.8%, is still far too high and inflation is below its objective of 2%. Mr. Dudley’s view: This is no time for the Fed to reverse course. It has held interest rates near zero since December 2008. The New York Fed president has emerged in the past year as an important part of Fed Chairman Ben Bernanke’s inner circle of decision makers at the Fed, with Vice Chairman Janet Yellen. In testimony to Congress last month, Mr. Bernanke said the Fed would need to begin withdrawing its easy money policies—which include low interest rates and large accumulations of government and mortgage bonds—“once we see the economy is in a self-sustaining recovery and
New York Fed President William Dudley has expressed concerns about tightening policy too quickly. employment is beginning to improve” and also when inflation approaches 2%. While he pointed to progress toward these goals, he didn’t indicate that he felt the economy was there yet. Some Fed officials want to tighten policy to head off building inflation. Minneapolis Fed President Narayana Kocherlakota surprised investors Thursday by suggesting, in an interview with The Wall Street Journal, that the Fed might need to raise short-term interest rates this year. Many investors didn’t think such a move was likely until next year. Many other Fed policy makers see the recovery as still fragile and believe the recent surge in commodity prices could be transitory and isolated, meaning tighter policy
won’t be needed for many more months. The most recent data are sending the Fed mixed signals about the economy’s health. Jobs and manufacturing numbers have been robust and inflation has moved up. But consumer spending and housing data look soft; the global economy has been jolted by the earthquake and nuclear crisis in Japan and political upheaval in the Middle East; and many private forecasters are revising down their growth estimates. The latest data do set the stage for one shift in Federal Reserve policy. With the job market gaining more solid footing, a $600 billion program of Treasury bond purchases known as quantitative easing looks likely to run its course as planned in June. This will effectively
mean the Fed is moving to a neutral stance of no longer easing while not beginning to tighten policy. Officials will discuss the Treasury buying program at their next policy meeting April 26 and 27. It will be their last opportunity to formally signal their plans about the program before a June 22 meeting when the program will be near completion. The next debate inside the Fed—about when and how to tighten policy—is only beginning to take shape, as evidenced by the recent chatter. Thirteen Fed officials have spoken publicly in the last two weeks in 23 public speeches all over the world, in places including Fort Myers, Fla.; Puerto Rico; Brussels; Prague and London. Several officials, such as Mr. Kocherlakota, have
given individual interviews to news organizations, adding up to hundreds of newswire headlines that have jarred some traders. Many of the most vocal—as is often the case—have been inflation hawks, who tend to favor higher interest rates to beat back rising consumer prices. “People in the market have been getting freaked out,” said Michael Feroli, chief U.S. economist with J.P. Morgan. “There is this view that Washington has sent out some memo to coordinate everyone to start talking hawkishly.” He said he’s skeptical of that view. The Fed regional bank presidents generally speak for themselves, not the central bank as a whole, and typically don’t coordinate their messages with each other or the Fed board in Washington. Some Fed officials have been frustrated in recent years with a tendency of colleagues, often regional bank presidents, to stake out policy positions in public rather than within the closed-door Federal Open Market Committee, where the decisions are made. Mr. Bernanke has encouraged open debate at the Fed. The debate last year about the bond buying program was a raucous one. A large camp of officials was openly skeptical of the idea, though Mr. Bernanke was ultimately able to forge a strong consensus in favor of it. The public dialogue among officials comes not just at a potential turning point for the economy, but also one for the Fed itself, which has been reviewing since last year how it communicates with the public. Mr. Bernanke, the Fed’s definitive spokesman, will conduct the institution’s first formal press conference after the April policy meeting after experimenting with forums at the National Press Club in which he has taken written questions from journalists.
Asian economic data show growth continued in March
Vietnam raises key rates in fight against inflation
BY MICHAEL S. ARNOLD
HANOI—Vietnam’s central bank raised two interest rates Friday, another step in the government’s new campaign against inflation and economic imbalances. The State Bank of Vietnam raised the recapitalizing rate—charged on its loans to commercial banks—to 13% from 12%, an official with the central bank’s department of monetary policy management told Dow Jones Newswires. It last raised that rate March 8, to 12% from 11%. It also raised the repurchase rate, likewise to 13% from 12% The bank kept its benchmark rate unchanged at 9%, where it has been since November, and the rediscount rate at 12%, after raising it from 7% last month. The latest rate increase “will contribute to reining in credit and money growth,” ANZ Bank said in a note. “The hike will also help bring down inflation expectations, amid new challenges from rising global commodity prices.” ANZ said it expects the central bank, aiming for lower inflation and more robust growth in 2012, will need to raise the recapitalizing rate to 14% to 15% this year.
SINGAPORE—Asian economies continued to grow in March while inflation remained manageable, suggesting that central banks in the region may be able to maintain a moderate pace of monetary tightening. Purchasing managers’ indexes Friday showed continued expansion in several key countries, while exports from South Korea and Indonesia beat expectations. “Generally speaking, the theme is quite positive. Growth is surprisingly robust and inflation readings are lower” than expected, said Frederic Neumann, chief economist for Asia for HSBC bank in Hong Kong. “That should be fairly reassuring for financial markets going into the second quarter.” Two PMIs for China rebounded in March, suggesting that a sharp dip in February was due to the Lunar New Year holiday. China’s official PMI, issued by the China Federation of Logistics and Purchasing, rose to 53.4 in March from 52.2 in February. A reading above 50 indicates expansion, while a figure below 50 indi-
cates contraction. A similar measure produced by HSBC and Markit edged up to 51.8 from 51.7. That helped ease concerns of any sharp economic slowdown after the two indexes fell sharply in February and Chinese authorities tried to slow economic growth with interest-rate increases and other measures.
China’s growth was strong enough to allay concerns tightening measures would produce a hard landing. The China data appeared to hit a sweet spot: Growth was strong enough to allay concerns that tightening measures would produce a hard landing—which could hurt global economic growth—yet not so strong as to raise the prospect of overheating. “There is little doubt that growth momentum has been moderating from highly overheated in [the fourth quarter of 2010] to a signifi-
cantly lower but still-firm level since the start of 2011, driven by a decisive policy tightening package which included monetary, fiscal and other administrative measures,” Goldman Sachs analyst Yu Song wrote in a note. PMIs for Taiwan and South Korea also showed continued expansion, although slower in than past months. HSBC’s index for Taiwan ticked down to 55.6 from 55.8 in February, while the PMI for South Korea fell to 52.8 from 53.4. In India, HSBC’s PMI stayed at 57.9, indicating continued strong growth. Only Australia bucked the regional trend, with the Australian Industry Group-PricewaterhouseCoopers Australian Performance of Manufacturing Index falling 3.2 points to 47.9. “The broad message for Asia is, ‘steady as she goes,’” Mr. Neumann said. “After all the shocks we’ve had in March—with Japan and higher oil prices and the Middle East—that’s fairly reassuring.” —Liu Li in Beijing, Geoffrey Rogow in Sydney and Se Young Lee in Seoul contributed to this article.
BY NGUYEN PHAM MUOI
The rate announcement comes a day after authorities said they will cut public investment by 50 trillion dong ($2.4 billion), or 7.4% of this year’s revised budget, another step in its effort to restore economic credibility to what was once one of the world’s most promising emerging markets. Pressure, both internal and external, finally prompted the Vietnamese government to shift its policy focus from driving growth to combating major imbalances in the economy, which have been highlighted by increasing price pressures. Prices in March were up 13.89% from a year earlier, the largest jump since February 2009 and far exceeding the government’s target of 7% or less. But inflationary pressure is unlikely to ease anytime soon, given that the government also raised electricity prices by more than 15% last month and increased prices of different types of fuel by 10% to 15% last week. Vietnam is also struggling to restore confidence in the dong, which has been devalued four times in the past 15 months. With foreign reserves dwindling, authorities have launched a crackdown on trade in U.S. dollars.
16
THE WALL STREET JOURNAL.
Monday, April 4, 2011
BIDDING FOR THE BIG BOARD
ICE powers Nasdaq’s offer for NYSE Market mover
Jeffrey Sprecher says the Nasdaq-ICE deal for NYSE would “unlock” more value.
NYSE Euronext’s share price rose again as a new bid emerged. $38
Merger talks
Rival bid
36 34 32 30 Jan.
Feb.
March
Source: WSJ Market Data Group
Reuters
Continued from first page The most heavily traded London contracts are based on three-month euro and sterling interest rates as well as on the U.K.’s FTSE 100 stock index. In an interview Friday, ICE Chairman and Chief Executive Jeffrey Sprecher said that separating NYSE’s two main businesses of stocks and futures trading would “unlock” more value than the Deutsche Börse deal. “Increasingly our owners are dissecting these global businesses and looking at them as a sum of the parts,” Mr. Sprecher said. ICE and Nasdaq officials said they could cut about $740 million in costs from NYSE Euronext’s business, with about $200 million of that coming from the futures business Mr. Sprecher wants to buy. The 56-year-old Mr. Sprecher insists the time is right to buy Liffe because the exchange’s interest-rate futures products are due for a rebound. “While the Liffe business has underperformed the derivatives sector, we believe it has tremendous potential,” he told analysts Friday. Mr. Sprecher has had success with previous deals. Last year, ICE had net income of $398.3 million on revenue of $1.15 billion—both records—as the company digested its most recent acquisitions, the Climate Exchange, a play on environmental trading, and Clearing Corp., which helped open the door for ICE to clear over-the-counter credit derivatives. ICE has come a long way since Mr. Sprecher, who has a chemicalengineering degree, bought a struggling trading platform called Continental Power Exchange Inc. in 1997 from Mid-American Energy Co. in hopes of building an “all-digital free-market exchange” for utilities to buy and sell electricity. Since most firms and individuals
still were using dial-up Internet connections at the time, the electronictrading pitch failed to resonate with power traders who relied on phones and faxes. Mr. Sprecher was undeterred, adding crude oil and natural gas to the trading platform. In 1999, the market for trading energy contracts electronically took off when Enron Corp. launched EnronOnline, an electronic-trading platform for natural gas and electric power. The low-cost, real-time system helped the Houston company win deals and dominate the energy market.
Enron’s rise rattled the energy market, sending Wall Street firms and big energy companies to look for a competitor. Mr. Sprecher’s business plan got their attention. In 2000, ICE was launched with an allstar partnership including Goldman Sachs Group Inc., Morgan Stanley, BP PLC and Royal Dutch/Shell Group. In return for stakes in ICE, energy companies and financial institutions made commitments to do some of their business through the new company. “We were able to get these fierce competitors in oil and
metals ... the No. 1, 2 or 3 market maker in each of the contracts we intend to launch,” Mr. Sprecher said at the time. About a year after its launch, ICE was handling one-fourth as many trades as EnronOnline. When Enron collapsed and the dotcom bust eliminated some high-flying trading platforms, ICE saw its business boom. “They’ve benefited from a lot of different events. It’s kind of being at the right place at the right time,” said Peter Vinella, director of Berkeley Research Group LLC. ICE now is eyeing credit derivatives known as credit default swaps, one of the culprits of the 2008 financial crisis. Under the post-crisis regulatory regime, exchanges like ICE are expected to generate more revenue from clearing the credit derivatives contracts. ICE has pushed several open-outcry commodity exchanges into pure electronic platforms, forcing traditional operators to rethink their electronic-trading strategies. ICE’s merger with the International Petroleum Exchange in 2001 led to the closure of the floor at the Londonbased exchange. The New York Mer-
cantile Exchange, a main hub for energy commodities, responded by moving aggressively into electronic trading. It has since been acquired by CME Group, which also operates the Chicago Mercantile Exchange and Chicago Board of Trade. Despite its financial success, ICE’s focus on boosting trading volumes has sparked complaints that it hasn’t paid enough attention to other factors that make a good market. ICE shut down futures pits for sugar, cotton and coffee in lower Manhattan and extended trading hours after it bought the New York Board of Trade. Those niche agricultural markets have seen a spike in volatility as prices soar. Many floor traders say electronic systems can’t handle big orders when trading is thin. An ICE spokeswoman said that Nasdaq plans to maintain a floor at NYSE and adds that ICE “has been the leading acquirer and integrator in the exchange space for several years by buying underperforming assets at a fair price, realizing synergies and enabling them to reach their potential.” Mr. Sprecher complained Friday about instability in fragmented stock markets, including the New York Stock Exchange, because the many trading platforms aren’t tied together very well in his view, leading to more volatility in prices. “I worry about the way my company stock trades,” he said, claiming that regulatory responses to last May’s “flash crash” haven’t been sufficient. In 2007, ICE failed in its unsolicited bid for the Chicago Board of Trade when the Chicago futures market stuck with its deal to sell to the Chicago Mercantile Exchange. “We’re not the young upstart anymore,” Mr. Sprecher said Friday when asked about the possibility of déjà vu. “We’re not the underdog.”
Nasdaq bids for last laugh in long rivalry BY MATT PHILLIPS If you sidled up to a cluster of brokers on the floor of the New York Stock Exchange back in 1971 and told them Nasdaq would one day possibly become part owner of that institution, you would have been met with one sound. “Laughter,” says Peter Low, 69 years old, who worked on the floor as a broker from 1963 until 1999. How things have changed. Some 40 years after the Nasdaq first took shape as a computerized system for trading over-the-counter stocks, Nasdaq OMX Group Inc.—after teaming up with IntercontinentalExchange—hopes to best its long-time competitor, ending one of the most high-profile rivalries in American business. It is a remarkable turn, given that Nasdaq was once viewed as something of a minor league sibling to the Big Board, a place where newish companies could be publicly traded, prove their prowess for generating sales and profits and maybe, if lucky, make their way onto the NYSE one day. On Feb. 8, 1971, the National Association of Securities Dealers Automated Quotations system went live, using cathode-ray terminals to shoot bids to 500 market makers across the country. At first, it was
A tale of two bids Nasdaq’s decision to team up with IntercontinentalExchange to bid for NYSE on Friday is an attempt to wrest control of the 219-year-old Big Board from Deutsche Börse.
$11.3 billion
DEAL VALUE
Nasdaq NYSE Euronext Group
NAME
Expands Nasdaq’s stock and options business in both U.S. and Europe; ICE would become fourth- largest derivatives exchange. Nasdaq’s Bob Greifeld New York Expected to face serious antitrust questions. Deal would create a monopoly in the market for U.S. corporate listings. simply a network on which dealers posted bid and ask prices for small, thinly traded stocks, along with the phone number of the broker to call
COMBINED COMPANY
$9.6 billion Undecided Would dominate the listed derivatives market in Europe and global stock listings
CEO HEADQUARTERS HURDLES
to trade. But the Nasdaq quickly shed its reputation as the market of choice for immature companies by rebranding itself as the technology-
NYSE Euronext’s Duncan Niederauer New York and Frankfurt Antitrust scrutiny in Europe where it would have a dominant position in listed derivatives; faces political resistance in U.S. savvy stock market. The technology worked. By 1973, Nasdaq volume was twice as large as volume on the American Stock
Exchange. In 1983, the Nasdaq topped the NYSE in single-day volume seven times. Still, NYSE officials continued to down play the upstart. “Only people that don’t have great depth of understanding think that Nasdaq is the national market system,” Robert J. Birnbaum, then president of the Big Board, said in 1987. It wasn’t until the 1990s that the extent of the threat seemed to sink in. Nasdaq became associated with the technology sector, the new home of giant companies such as Microsoft and Intel, and later a spate of speculative and failed dot-com start ups. The competition hasn’t always been cordial. The Nasdaq and NYSE have battled fiercely for listings over the years. And they’ve chortled over each other’s stumbles, be it former NYSE Chief Executive Dick Grasso’s 2003 ouster led by thenNew York Attorney General Eliot Spitzer, or the shutdowns of the Nasdaq trading systems when wayward squirrels disrupted power lines in 1987 and 1994. There are far fewer floor brokers left to share a laugh in today’s trading world, which was largely shaped by Nasdaq. “Things have changed,” said Mr. Low, the former floor broker, who now works for Griswold Co., an independent brokerage firm.
As of 4 p.m. ET
Euro 1.4147 g 0.30%
Yen/US$ ¥84.35 À 1.74%
Yen/A$ ¥87.43 À 1.97%
Oil 107.94 À 1.14%
Gold 1428.10 g 0.75%
Japanese government weighs assistance for utility firm Tepco
10-year Treasury À 1/32 yield 3.448%
Appetite for aluminum in China might disappoint
BUSINESS& FINANCE. BUSINESS & FINANCE 18
HEARD ON THE STREET 30
THE WALL STREET JOURNAL.
Monday, April 4, 2011
3-month Libor 0.30100
asia.WSJ.com
BY ATSUKO FUKASE TOKYO—It may have taken 86 years for Nomura Holdings Inc. to appoint its first female senior executive, but Junko Nakagawa, the firm’s new chief financial officer, says she feels no special pressure because she’s a woman: She says her promotion is consistent with the company’s push to globalize and compete with its rivals on Wall Street. Ms. Nakagawa, 45 years old, was named Nomura’s finance chief last month in a broad shuffling of its senior management. In Japan’s traditional finance industry, she stands apart: The country’s top three banks, Mitsubishi UFJ Financial Group Inc., Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc., all have no women on their executive management boards. Two years after acquiring Leh-
man’s Asia and Europe arms, Nomura continues to face challenges as it seeks to build a global investment-banking business. Nomura’s overseas operations were unprofitable for the third straight quarter in the three months to December, losing 3.05 billion yen ($36.3 million). Ms. Nakagawa says that despite some setbacks, Nomura will continue its global push while at the same time expanding its business at home. The bulk of Nomura’s investment-banking revenue still comes from its home market. Nomura is the leading investment bank in Japan by a wide margin, earning nearly one-fourth of the total investment-banking revenue in Japan last year, according to Dealogic. Ms. Nakagawa, who started her new role Friday, intends to be lowprofile as the CFO, but she is also aware that her promotion is a part of Nomura’s efforts to better com-
Set
How pension rules likely drove Ping An’s odd deal [ The View from Hong Kong ]
Daily share price March 14: Stake sale to Cheng Yu-tung announced HK$85 80 75 70
t
A Chinese insurer’s recent decision to raise $2.5 billion by selling shares to one of Hong Kong’s wealthiest businessmen has raised questions about fairness. It also may illustrate the power of unintended consequences. On March 14, Ping An Insurance (Group) Co. of China Ltd. announced a deal to sell a 3.4% stake to a company controlled by Hong Kong’s Cheng Yu-tung, a billionaire whose interests span real estate, jewelry retailers and infrastructure. The sale, which prompted criticism for its impact on minority shareholders, was done at a 12.5% discount to Ping An’s last Hong Kong share price—nice for Mr. Cheng but less so for those shareholders who didn’t participate in the deal. The shares dropped 6.1% immediately after the announcement, but have since recovered, helping Mr. Cheng earn a quick paper profit. A key objection raised by Hong Kong shareholder activist David Webb, among others, is that Ping An didn’t pursue a rights issue that would have allowed all
Deal price: HK$71.50 per share 65 2011
J
F
M
a co
WH
Ping An Insurance
BY PETER STEIN
pete globally with Western rivals such as Goldman Sachs Group Inc. and Morgan Stanley. “I think it’s a part [of our efforts for further globalization]. Being a woman is just one facet of myself—it’s like being a different nationality,” she said. Along with Ms. Nakagawa’s promotion, Nomura promoted Indianborn Jasjit “Jesse” Bhattal to group deputy president and chief executive of the wholesale-banking division, the highest role for a foreigner in the company’s history. Nomura’s board of directors is composed of 12 people, seven of which are outside directors, including one foreign man and one woman. But high-ranking women are still few and far between: There are only ten female general managers and women who run bank branches combined at Nomura. “History [in Japan, in terms of in Please turn to page 24
A
Source: Thomson Reuters
urs
Nomura
Nomura pioneer starts CFO job
Nomura’s Junko Nakagawa says, “Being a woman is just one facet of myself.”
e fo
r
PO AT SSI ’S BLE .
Chartis will help you get there. For over 90 years, we’ve guided our clients through the complex and ever-
changing landscape of risk, with innovative shareholders a chance to buy the shares at a discount. Instead, it sold its shares to one man and diluted everyone else. Placements to select buyers are common in Hong Kong, which lets listed firms conduct sales of up to 20% of their share capital at a discount of as much as 20% to the market price every year. Companies need shareholders to give permission for such deals on an annual basis through special mandates, but controlling shareholders, who generally propose these deals, get to vote on the matter—which means permission is usually granted. It’s less easy in other Please turn to page 19
commercial and personal insurance products. We can do the same for you. Learn more at www.chartisinsurance.com
All products are written by insurance company subsidiaries or affiliates of Chartis Inc. Coverage may not be available in all jurisdictions and is subject to actual policy language. For additional information, please visit our website at www.chartisinsurance.com.
18
THE WALL STREET JOURNAL.
Monday, April 4, 2011
BUSINESS FINANCE
Japan’s Tepco faces financial strain Government weighs plan for utility in wake of nuclear crisis; cash infusion, debt guarantee are seen as likely BY MARIKO SANCHANTA AND KANA INAGAKI Rising costs and liabilities linked to the Fukushima nuclear power plant have increased scrutiny on its operator, Tokyo Electric Power Co., and whether the utility has enough cash to get through the crisis and avoid nationalization. Consensus is rising within the Japanese government that some sort of financial assistance to Tepco, as the sprawling utility is known, is inevitable, as it will take months, if not years, to stabilize the nuclear reactors and decommission them. But Prime Minister Naoto Kan on Friday shot down the idea of a complete government takeover: “It is necessary to provide aid [to Tepco] but basically we want it to remain as a private company,” he said. Tepco, the world’s largest private utility, had a total of ¥677 billion ($8.05 billion) in cash and equivalents and short-term investments at the end of December last year. After the March 11 earthquake and tsunami, Tepco received a ¥1.9 trillion emergency loan from its main banks. “Now that they have ¥2 trillion in loans, they should be OK for another year from a cash perspective,” said Penn Bowers, an analyst at CLSA Asia-Pacific Markets. The most likely scenario is for the government to guarantee some of Tepco’s debt and provide a cash
Associated Press
Tokyo Electric Power Interest-bearing debt In billions of yen
Daily share price Friday's close: ¥449, down 3.6%
¥8,000
¥2,000
6,000
1,500
4,000
1,000
2,000
500
0
0 2006
A Tepco worker points to a maintenance pit near the Fukushima nuclear plant. infusion: The utility has ¥5 trillion in Tepco corporate bonds held by life insurers, banks, individuals and pension funds—including Japan’s Government Pension Investment Fund, the world’s largest. The most pressing financial concern for the utility is how it will cope with its fuel costs and how quickly it will be able to pass on that cost to consumers, according to a Bank of America Merrill Lynch research note. “The company will eventually be able to transfer the rising cost of fuel to users but there will be a time lag,” the note said. Additional fuel were estimated to amount to be-
tween ¥500 billion and ¥600 billion. Mr. Bowers added that the utility might have trouble securing spot contracts of liquefied natural gas and other fuels because of “a perception of counterparty risk that could be a concern to suppliers.” Adding to the utility operators’ woes, Standard & Poor’s on Friday downgraded Tepco’s long-term rating by three notches to BBB+, in its second downgrade since the quake struck. S&P said: “We believe that Tepco’s…free operating cash flows on a standalone basis will remain at a very low level, such that…they will no longer be commensurate with an investment grade rating without po-
'07
'08
'09
'10
March
Note: As of March 31 for each year
April Source: the company
tential extraordinary support from the government of Japan.” On Thursday, Moody’s Investors Service also cut the company’s debt rating for the second time in less than two weeks. Mr. Bowers said the downgrades would have little impact on Tepco’s ability to raise funds, as most of its debt outstanding is held domestically. Tepco says it isn’t facing an immediate cash crunch but that it would need additional funds. “We currently do not have any particular problems with our liquidity at hand. But we do anticipate large-scale capital demands from this fiscal year so we are making efforts to secure
funds accordingly,” company spokesman Taichi Okazaki said. There are no precedents for the type of fund injection or guarantee Tepco might receive. One of the closest examples is when Resona Holdings Inc., Japan’s fourth-largest bank by assets, in 2003 received public funds of around ¥2 trillion, giving the government more than 70% of voting rights. But even then, its ordinary shares remained listed. Tepco’s shares fell 3.6% Friday, ending Tokyo trading at their lowest level since 1962, giving it a market value of ¥722 billion. —Atsuko Fukase contributed to this article.
Beijing’s price fears stay the hands of some firms BY LAURIE BURKITT BEIJING—Ramping up efforts to rein in inflation that has fueled widespread public discontent, China is pressuring companies that sell food and other daily necessities—including global giant Unilever PLC—to avoid price increases. Unilever had planned to raise prices Friday on items including shampoo and laundry detergent to offset higher commodity costs, but the Anglo-Dutch consumer-goods company postponed the increases following a meeting earlier that week with officials from the National Development and Reform Commission, according to a Unilever spokesman. The officials from the NDRC, the
country’s economic-planning agency, said they didn’t want price increases because of concerns over public alarm about inflation, the spokesman said. “We were asked, and we chose to comply,” said the spokesman. He said it was the first time the Chinese government had asked Unilever not to raise prices. The company hasn’t determined the delay’s duration. Tingyi (Cayman Islands) Holding Corp., one of China’s biggest sellers of instant noodles, also delayed plans to raise prices after meeting with the planning agency, a company spokeswoman said, adding that it was ultimately Tingyi’s own decision. The company said it doesn’t
know how long it will hold off the increase. The NDRC didn’t respond to requests for comment. In recent months consumer prices have been rising at their fastest clip in two-and-a-half years—despite a raft of government measures to tame inflation, which Premier Wen Jiabao said last month is the government’s highest economic priority this year. Two surveys of purchasing managers in China released Friday showed that manufacturing activity was up in March from the previous month and pricing pressures stayed high, although there were signs the rate of increase had started to slow. Ultrahigh inflation has historically been a cause of social unrest in
China. While current rates are well below the levels associated with such incidents, there are clear signs that inflation is causing alarm among consumers. Over the past week, Chinese shoppers cleared supermarket shelves of soap, laundry detergent and shampoo following state-media reports that detergent makers including Unilever and Procter & Gamble Co. planned price increases of 5% to 15%. Those figures haven’t been confirmed. P&G declined to comment earlier last week, and again Friday. Food prices—up 11% in February from a year earlier, more than twice the 4.9% rise in the broader consumer price index—have sapped household budgets in recent
months, causing a decrease in consumer confidence, according to a survey by the China Economic Monitoring and Analysis Center and media research firm Nielsen Co. Consumers have begun to stock up on nonperishable goods that they use daily and anticipate will be more expensive in the future. Despite decades of market-oriented reforms, China’s government retains sweeping power over the corporate sector, and it has pressured foreign and domestic companies in the past to help with its economic priorities. During the global recession in 2008, for example, authorities warned firms against layoffs. —Yoli Zhang in Beijing contributed to this article.
INDEX TO BUSINESSES AND PEOPLE Businesses This index of businesses mentioned in today’s issue of The Wall Street Journal is intended to include all significant reference to companies. First reference to the companies appears in bold face type in all articles except those on page one and the editorial pages. Agence France-Presse..32 Agricultural Bank of China..........................23 Alcoa ............................. 25 Allstate.........................19 American International Group..........................19
Asahi...............................5 Baidu.............................21 Bank of China...............24 Berkshire Hathaway.....25 Billion Industrial Holdings Ltd..............24 Bombardier ................... 20 BP..................................16 China Flooring Holding Co ............................... 24 China International Capital........................24 Chrysler Group..............20 Citigroup .................... 5,25 CME Group......................1 Cnooc.............................23 Credit Suisse Group.....24 Deutsche Bank..............24 Deutsche Börse .............. 1 Eni ................................. 23 Far East Horizon...........24 Fast Retailing.................4 Ford Motor....................20
Gary Goldberg Financial Services ..................... 22 General Dynamics.........20 General Motors.............20 Glencore International.24 Goldman Sachs........16,24 Google...........................21 Government of Singapore Investment Corp........25 Griswold Company........16 Gulfstream Aerospace . 20 Honda Motor............20,23 Hyundai Motor..............20 Indian Premier League.10 Industrial & Commercial Bank of China............24 Intel...............................16 IntercontinentalExchange ........................... 1,16,30 Janus Capital Group.....31 Kim Eng Holdings.........24 Kohlberg Kravis Roberts ...................... 25 Kolter Land Partners....31
Kuwait Investment Authority ................... 25 Lubrizol ......................... 25 Malayan Banking..........24 Microsoft.......................16 Mitsubishi UFJ Financial Group.....................17,24 Mitsubishi UFJ Securities Holdings Co................24 Mizuho Financial .......... 17 Morgan Stanley.......16,24 Nasdaq Omx ......... 1,16,30 New World Development ............. 19 Nissan Motor................20 Nomura Holdings..........17 NVR...............................31 NYSE Euronext..........1,30 Orca Digital Inc.............21 PetroChina .................... 23 Ping An Insurance........23 Ping An Insurance (Group) Co. of China.17
Prada.............................30 Procter & Gamble.........18 PulteGroup....................31 Ram Partners LP..........25 Resona Holdings...........18 Royal Dutch/Shell ........ 16 Shanghai Pharmaceuticals Holding.......................24 Shanghai Shendi...........21 Sinochem Group ........... 24 Softbank ......................... 4 Sumitomo Mitsui Financial Group ......... 17 Tingyi (Cayman Islands) Holding.......................18 Tokyo Electric Power............6,18,23,30 Toyota Motor................20 TPG Holdings................25 Unilever.........................18 Walt Disney..................21 Water Resources Holdings Ltd..............24
People This index lists the names of businesspeople and government regulators who receive significant mention in Today’s Journal. Adkins, Paul..................30 Bhattal, Jasjit...............17 Birnbaum, Robert J......16 Bonderman, David........25 Bowers, Penn................18 Buffett, Warren............25 Castignetti, Al..............20 Chang, Yu-Dee..............22 Cheng Yu-tung..............17 Cook, Dan......................22 Feng Gao.......................24 Garg, Rohit....................22 Gaylor, Doug.................19 Green, Michael................6
Greifeld, Robert............30 Hambrick, James L.......25 Harvey, Jim...................31 Hinojosa, Noe ............... 19 Hironari Nozaki.............24 Hoog, Emmanuel..........32 Iger, Robert...................21 Johnson, Don................20 Kuo, Kaiser ................... 21 Lipow, Andy..................23 Low, Peter.....................16 Lunsford, Lynn..............20 Marz, Michael J............19 Matthews, Jeff.............25 McCarthy, Ward............22 Mikitani, Hiroshi.............4 Morris, Sean.................10 Nakagawa, Junko ......... 17 Neumann, Frederic.......15 Niederauer, Duncan......30 Nishiyama, Hidehiko ...... 5 Nystrom, Phyllis...........23 Oba, Shinji .................... 20
Obe, Mitsuru...................5 Okazaki, Taichi..............18 Ostwald, Marc..............22 Poretz, Douglas............31 Pursche, Oliver.............22 Ridout, Heather............15 Rosenberg, David ......... 25 Saville, Paul C...............31 Schar, Dwight C............31 Sen, Amrita .................. 23 Sokol, David..................25 Son, Masayoshi..............4 Spitzer, Eliot.................16 Sprecher, Jeffrey..........16 Staggs, Tom..................21 Vinella, Peter................16 Vogtsberger, Marty......19 Walker, Andy................31 Webb, David ................. 17 Wilson, Thomas J.........19 Wise, David...................31 Yanai, Tadashi.................4 Yu Song.........................15
THE WALL STREET JOURNAL.
Monday, April 4, 2011
19
BUSINESS FINANCE
Behind Ping An’s sale of shares
A drop in debt U.S. municipal-bond issuance, quarterly data $120 billion 90 60 30 0 2000
'02
'04
'06
'08
'10
Source: Thomson Reuters
No relief likely for muni bonds BY JEANNETTE NEUMANN AND SERENA NG With last week concluding the slowest quarter for municipal-bond issuance in 11 years, attention has focused on when borrowers will come back. But several municipal-debt bankers and investors say signs persist that they would meet weak interest from investors. “Even if [supply] were to pick up, I’d like for there to be demand, but personally I ABREAST OF don’t foresee it,” THE MARKET says Michael Marz, vice chairman of First Southwest Co., a Dallas-based investment bank specializing in public finance. “It’s a reality.” That outlook could prove dreary news for current holders or sellers of municipal bonds, as well as for local U.S. governments and other public borrowers hoping to tap the municipal market for construction projects and other finance needs. Lately, industry participants say, neither individuals nor traditional large investors in this market are showing much appetite for municipal bonds, which began to dive late last year and, after making up some losses, saw further pressure on prices in March. Retail investors recently began to slow their vigorous retreat from muni-bond mutual funds, but outflows have continued for twenty weeks, through March 23, according to estimates from the Investment Company Institute, a fund industry trade association. Net outflows slowed to an estimated $569 million for the week ended March 23, the most recent data available from ICI, from a high of $5.7 billion estimated for the week ended Jan. 19. But they haven’t stopped. Doug Gaylor, who manages around $3 billion in municipal assets for Principal Global Investors, says he doesn’t think the streak of withdrawals will subside soon. Persistent concerns among investors over governments’ fiscal health, coupled with seasonal outflows as they sell muni holdings to pay taxes, has led Mr. Gaylor to have twice the cash on hand now compared with years past in anticipation of client withdrawals. “The municipal market isn’t in good shape,” Mr. Gaylor says. Some financial-services companies that have historically been large buyers of municipal bonds have also retreated. Insurer American International Group Inc., whose property and casualty insur-
ance business has long invested a large portion of its U.S. insurance premiums in municipal bonds, pared holdings toward the end of last year based on its view of the risk-return trade-off and its domestic unit’s tax objectives, according to its annual report. At the end of 2010, AIG’s units held $46.6 billion in municipal bonds, down from $54.1 billion a year earlier and $51.2 billion in June. The bailed-out insurer has been shifting more money into taxable investments, in part because it now has less need for the tax benefits that municipal bonds provide. Some say bearish scenarios are overdone. They say individual investor demand has remained relatively robust for bonds maturing within one to five years. Retail buyers have heightened their interest in these bonds recently in part because of the potential for rising interest rates, they say, as well as concerns over the long-term liabilities of state and local governments. And they point to an influx of hedge funds, recently attracted to the sector by the higher yields municipals are offering. But how long hedge funds will remain in the market is unclear, because they often exit positions quickly. The lack of demand is showing up in sluggish trading of both new and outstanding bonds. In the first quarter of this year, $11.6 billion worth of municipal bonds on average were traded daily. That is down from $13.7 billion last year during the first quarter, data from the industry’s self-regulatory body show. “It will take days and maybe a week or longer to clear deals,” says Marty Vogtsberger, head of capital markets at Cincinnati-based municipal brokerage and underwriting firm Fifth Third Securities Inc. “When demand was robust you could pretty much get everything done during the order period,” often one or two days for retail investors. Given current conditions, some worry that even a minor increase in issuance could weigh further on prices, which move inversely to yields. Yields for 10-year triple-A-rated government bonds closed at 3.21% on Friday and those maturing in 30 years at 4.80%, according to Thomson Reuters Municipal Market Data, after rising throughout March. Those yields are down from peaks reached in mid-January, but are above the 2.51% yield on 10-year debt and the 3.86% yield on 30-year bonds seen on Nov. 1, before the market took a downward turn. —Michael Corkery contributed to this article.
Continued from page 17 jurisdictions. In London, institutional-investor pressure effectively limits the scope of share placements to 5% of share capital, at a discount of no more than 5% to the market price. In Hong Kong, Mr. Webb has long campaigned for the adoption of similar limits, but Hong Kong’s stock exchange has yet to follow suit. Mr. Cheng’s role as Ping An’s financier is a bit of a mystery. While he’s a frequent investor in Hong Kong offerings, the $2.5 billion he paid for 272 million Ping An shares is far more than he traditionally puts into deals. A stock-exchange disclosure, however, shows he holds a short position of 196 million shares connected with cash-settled derivative interests. It’s unclear what these interests are or exactly when the positions were established, but people in the market say they are likely agreements involving options that significantly hedge Mr. Cheng’s exposure to Ping An in some way. A spokesman for Mr. Cheng at his flagship New World Development Co. said
only that he was “optimistic” about Ping An’s prospects and saw it as “a long-term investment.” Why didn’t Ping An bring other investors into the deal? One major factor likely was financial obligations connected with China’s national retirement fund. Chinese regulations say that when a company with state backing raises capital in the stock market, its state-owned shareholders have to contribute 10% of the amount raised toward the National Social Security Fund. In many cases, Chinese-listed companies have a big unlisted, state-owned backer that foots the NSSF bill. Ping An’s shareholder base, however, is unusually diverse: Two state-backed companies together hold about 10% of its shares, but its other shareholders are a mixture of private buyers and employee groups. It is still apparently covered by the NSSF rule, though. For reasons not entirely clear, the sale to Mr. Cheng apparently doesn’t trigger an obligation to pay off the NSSF. Ping An wouldn’t comment on
the NSSF issue, but a spokeswoman said it opted for a private placement after doing “lots of research [on] laws and regulations,” and considering the issue of “maneuverability.” She added that Ping An made its decision after communicating with various potential investors and that not many investors were willing to invest such a large sum at one time. The placement will “significantly enhance Ping An’s capital strength [and] drive its sustainable and steady business growth,” she said. Last week executives also said that recent market volatility justified the deep discount in the sale price. Spokespeople for the NSSF declined to answer any questions on the matter. Beijing leaders put the rule regarding contributions to the NSSF in place to make sure the country’s pension liabilities are adequately funded. It would seem the rule may have inadvertently become an incentive to cut an odd deal that does little to enhance Ping An’s standing with investors. —Yolanda Zhang contributed to this article.
20
THE WALL STREET JOURNAL.
Monday, April 4, 2011
CORPORATE NEWS
March U.S. auto sales rise BY SHARON TERLEP AND MIKE RAMSEY
U.S. auto sales Light-vehicle sales in March and change from year earlier
Bloomberg News
U.S. auto sales rose 17% in March, powered by an improving economy, with Chrysler Group LLC, Nissan Motor Co. and Ford Motor Co. leading the industry’s gains. Chrysler reported sales of 121,730 cars and light trucks in March, an increase of 31% from a year ago and its highest monthly total in nearly three years. Nissan nearly matched Chrysler’s total, selling 121,141 new vehicles, thanks to heavy incentives. Ford sales jumped 19% to 212,295, enough to put its monthly total ahead of bigger rival General Motors Co. for only the second time since 1998. GM’s sales increased 10% to 206,621. General Motors pulled back from high sales incentives offered at the beginning of 2011, dampening the month’s sales. Ford edged ahead of GM with the help of expanded sales to fleet customers including government agencies and rental-car companies. GM exceeded Ford in retail sales to individual consumers who buy cars and trucks from dealers. Toyota Motor Co. suffered a 6% decline in March sales, the only major auto maker to lose ground on weaker truck sales. All told, auto makers sold 1,246,623 cars and light trucks in March, putting the month’s sales rate pace at 13.1 million vehicles a year, according to market researcher Autodata Corp. March was the sixth month in a row annualized sales exceeded 12 million vehicles, although it was down slightly from February’s level of 13.4 million.
Sales
Change
206,621
10%
212,295
19%
121,730
31%
176,222
–6%
133,650
23%
Source: Autodata
The improving economy helped U.S. auto sales in March. A Ford dealership in Raleigh, N.C., is shown above. Honda Motor Co. and Hyundai Motor Co. posted 24% and 32% gains, respectively. Amid rising gasoline prices, Americans have again started buying more small cars and fewer large trucks. Ford’s sales of full-size pickup trucks to consumers declined, Ford sales chief Ken Czubay said Friday. “It is something we are keeping our eye on,” he said. Trucks made up 47.5% of all light vehicles sold, and cars 52.5%, Autodata said. A few months ago, the ratios were reversed. Ford said the truck decline is similar to the slump in truck sales in 2008 that was sparked by rising gas prices. This time, however, softer sales of pickups to consumers have been partially masked and off-
set by higher truck sales to fleet buyers including corporations and large construction companies. Ford will idle a truck plant in Louisville, Ky., this week because of softer demand. The company is also concerned about a possible parts shortage due to the earthquake in Japan. A plant in Flat Rock, Mich., that makes the Ford Mustang will shut down this week because of excess inventories of that model. Weaker truck sales are worrisome for Ford, GM and Chrysler since they make a large portion of their operating profits from those vehicles. The auto makers believe they are better able to weather a shift to small cars because of stronger finances and upgraded compact and subcompact offerings. The devastation resulting from
the earthquake in Japan is a further cause for concern. For Nissan, March was its strongest month ever in the U.S. market. But on Friday the company said it expects some popular models may become hard to find by May. The Rogue, a small sport utility vehicle made in Japan, “is really the only vehicle I am concerned about,” said Al Castignetti, U.S. sales chief for the Nissan brand. Nissan will idle plants in Smyrna and Decherd, Tenn., and Canton, Miss., between April 8 and 11, and between April 18 and 21. Two Mexican plants will also take down time. Overall, U.S. demand for autos seems to be moving steadily higher, following another drop in unemployment and further rises in corporate profits, Don Johnson, GM’s top sales analyst, said.
In Japan, quake stalls car buying TOKYO—Japanese auto sales plunged 37% in March, a sign of the heavy blow that last month’s earthquake and tsunami has dealt the country’s economy. The large drop reinforced concerns about the financial impact on the country’s auto makers, a key driver of Japan’s export economy. Toyota Motor Corp.’s sales slumped 46% to 110,667 vehicles in March and sales of its Lexus upscale cars were down 10% to 4,417 vehicles, according to data released Friday by the Japan Automobile Dealers Association. Honda Motor Co.’s sales tumbled 28% to 43,329 vehicles while sales at Nissan Motor Co. sagged 38% to 45,700 vehicles. Overall sales of new cars, trucks and buses fell to 279,389 vehicles in March, marking the largest fall since the oil-supply crunch of May 1974 when sales sank 55%. March typically is the strongest sales month of the year, with auto dealers making last-minute efforts to sell as many vehicles as possible before the fiscal year ends March 31. Auto-industry analysts and dealers said April’s sales are likely to show another significant decline. Sales are expected to tank 50% or more in April, estimates Koji Endo, an analyst at Advanced Research Japan. “We see orders dropping by 30% compared to a year earlier after the earthquake,” said Katsuyoshi Kon, an administration department official at Nagano Nissan Auto Co. in
Reuters
BY YOSHIO TAKAHASHI
A Toyota dealership lies in ruin in Minamisanriku town, Miyagi Prefecture, more than a week after the March 11 quake. Nagano. “It’s just how the consumer mindset will be.” Continued power blackouts prevent some dealers from running showrooms during regular business hours in some central areas of the country, while others in northeastern Japan were damaged by the quake and tsunami. “The rolling blackouts, this is the biggest problem,” said Shinji Oba, manager of the Numazu showroom of Shizuoka Nissan Auto Co. “When the blackout starts in the evening, we close our showroom
[before the closing time]. Just think about working in the dark. It is impossible to keep our staff’s morale up.” The sales dive comes as the country’s vehicle sales were starting to emerge from a slump triggered by the September end of the government’s consumer incentives to spur vehicle demand. Sales were off 14% year over year in February; in October the decline was 27%, the biggest monthly drop in the postgovernment-aid period. Masaaki Akaogi, a 41-year-old
engineer living in the quake-hit Sendai, Miyagi Prefecture, held back his plan to buy a new Toyota hybrid to replace his five-year-old Daihatsu Tanto mini car. He said that even if he buys such a fuel-efficient car, he thinks it will be wasted as it remains unpredictable as to when all the closed gasoline stations in his neighboring area will reopen. “The stocks that I hold took a beating, and looking at all the buildings damaged by [the] tsunami, I just lost my incentive to buy a new car,” he said.
Gulfstream jet crashes during test, kills four BY PETER SANDERS A Gulfstream Aerospace Corp. business jet conducting flight tests Saturday in Roswell, N.M., crashed and burst into flames, killing the four people aboard. The new Gulfstream G650, the largest and fastest big business jet ever developed by Savannah, Ga.based Gulfstream, struck its right wingtip on the ground as it took off from the Roswell International Air Center Airport around 9:30 a.m. local time, according to Federal Aviation Administration spokesman Lynn Lunsford. The plane then hit the ground, causing the landing gear to collapse. The jet then skidded along the runway and burst into flames, Mr. Lunsford said. Two company pilots and two company test engineers aboard the jet were killed in the accident, Gulfstream said. Their identities weren’t immediately disclosed. The Gulfstream name has become synonymous with large, luxurious business jets. The big Gulfstream IV and Gulfstream V models have long been popular with celebrities, athletes, major corporations and wealthy individuals who use the jets to fly long distances—often transoceanic routes. Though the business-aircraft industry was hammered during the recession and has been slow to recover, the large-cabin, long-range segment dominated by Gulfstream, a unit of General Dynamics Corp., and Canadian rival Bombardier Inc. was less affected by the downturn. There were fewer canceled orders and sales of the big jets rebounded more quickly than in other segments of the market, according to industry officials. The crash is a blow to the G650, which hasn’t yet been certified by the FAA for delivery. The company has an order backlog of about 200 and a waiting list of five years for the big business jets. Designed to seat up to 18 passengers and fly as many as 7,000 nautical miles nonstop, the airplane carries a list price of about $64.5 million. Flight tests on the G650 began in late 2009, and before Saturday’s crash, Gulfstream had expected to receive FAA certification of the plane sometime this year. First deliveries were expected to begin in early 2012. Company officials haven’t yet said how the accident will affect that schedule, but one area investigators will likely examine is the G650’s new fly-by-wire flight control system. Unlike traditional flight control systems that connect external surfaces like ailerons, rudders and elevators directly to the yokes and rudder pedals in the cockpit, fly-by-wire systems send electrical signals to various controls, instead of a direct mechanical connection. Fly-by-wire has been standard on some types of commercial jets for years, but is largely new territory in the business-jet industry. Weather conditions were reportedly good at the time of the crash, according to data from FlightAware.com, a flight-tracking website.
THE WALL STREET JOURNAL.
Monday, April 4, 2011
21
CORPORATE NEWS
Disney to break ground in Shanghai Walt Disney Co. plans to break ground this week on a theme park and resort in Shanghai, according to people familiar with the matter, after years of red tape and negotiations with the Chinese government. The groundbreaking ceremony follows recent final approval from the Chinese central government to move ahead with the long-gestating plans for the near 390 hectare Disney park and resort. It is about 1/26th the size of the 104- squarekilometer Walt Disney World in Orlando, Fla. Invitations were issued late last week by Disney, together with an arm of the Shanghai government and a local business partner of Disney’s, inviting recipients to “a special event in Shanghai” on Friday. Disney Chief Executive Officer Robert Iger is expected to attend the groundbreaking ceremony. Shanghai Disneyland will be the Burbank, Calif.-based Disney’s sixth major theme park in the world, and its first in mainland China. Shanghai’s mayor has estimated the cost of the first phase of the theme park will be 24.4 billion yuan, or $3.73 billion. The total cost of the theme park and resort isn’t clear, but it is likely to be one of the largest foreign investments made in mainland China. The resort will be majorityowned by media and entertainment companies that are in turn owned
European Pressphoto Agency
BY ETHAN SMITH AND JAMES T. AREDDY
After years of talks, Disney is to start construction on a Shanghai resort. Above, pedestrians pass a Disney ad in Shanghai. by the Shanghai Municipal Government. Disney’s stake in the endeavor hasn’t been disclosed, though the company is expected to hold a minority interest. In addition to Disney, the parties
Baidu reaches deal to pay songwriters BY OWEN FLETCHER BEIJING—China’s Baidu Inc. has reached a deal with a local music copyright association, in a step toward resolving years of tension with the music industry. The online search provider said Friday it will begin to compensate songwriters belonging to the Music Copyright Society of China when users download or stream their songs from Baidu’s website. Baidu and the Music Copyright Society didn’t disclose the financial terms of their agreement.
Baidu’s MP3 search service has long been controversial for including links to unlicensed copies of songs. The move addresses concerns about Baidu’s approach to copyright issues and could push the company closer to a broader deal with major international music labels. The company’s MP3 search service has long been controversial for including links to unlicensed copies of songs available for free download. Baidu’s deal doesn’t include performance rights for songs, which it aims to cover under a separate pact with Chinese and major international music labels “in the near future,” Baidu spokesman Kaiser Kuo said, declining to elaborate. But it does mean Baidu will offer
licensed versions of certain songs for free download in a separate section of its website, he said. Baidu will use advertising revenue to compensate a song’s writers and lyricists through the Chinese association, he said, declining to say how much the compensation will be. The move comes after Baidu said it removed millions of files from another service, its document-sharing website Baidu Wenku, after Chinese authors accused the company of encouraging copyright infringement and demanded compensation. The company responded by apologizing to writers, promising to remove infringing content and saying it would shut down Wenku, known as Baidu Library in English, if problems persisted. Baidu’s music-search service has stirred more controversy overseas. Baidu still regularly appears on a list of key companies in the world that the Office of the U.S. Trade Representative says are “notorious” sites for piracy. The Recording Industry Association of America calls Baidu “undoubtedly one of the largest distributors of infringing music in the world.” Baidu had a 75.5% share of revenue generated by Web searches in China in the fourth quarter, according to Beijing research firm Analysys International. Its closest competitor, Google Inc., had a 19.6% share. Google, in partnership with Chinese company Orca Digital Inc., offers an ad-supported service in China that lets users download or stream licensed versions of songs free.
issuing the invitation were the Administrative Commission of Shanghai International Tourism and Resorts Zone and Shanghai Shendi Group Co. Ltd. The latter is Disney’s government-owned joint venture partner, a company formed by vari-
ous government-owned businesses that has investors including a subsidiary of broadcaster Shanghai Media Group and another responsible for construction. Negotiations for the park began in the late 1990s, spanning the
terms of two Disney chief executives and five Shanghai leaders. Challenges turned on Disney’s desire to enter China’s television market and Shanghai’s wish to be assured the project would create a guaranteed number of jobs in the region. In the course of the Shanghai negotiations, Disney was able to create a separate theme park in Hong Kong, which opened in 2005. Project planning for Shanghai moved into high gear in 2009 when Disney and the local Shanghai government reached an initial framework agreement, one of several steps that required China’s central government consideration. Approvals have now been obtained in principle, according to people familiar with the situation. Over the weekend, the Xinhua news agency quoted a Chinese government source as confirming this week’s start of construction. The site is expected to include a theme park, two hotels, a retail-anddining complex and a lake. At a recent conference for Disney investors, the head of the company’s parks and resorts division, Tom Staggs, said that Disney expects the project to take five years to complete. To make way for the project, 2,000 households and 300 companies were relocated. Project officials expect 7.3 million visitors the first year. Shanghai intends to extend its subway to the area, located near the Pudong International Airport.
22
THE WALL STREET JOURNAL.
Monday, April 4, 2011
INTERNATIONAL INVESTOR
Treasurys brace for higher rates BY CYNTHIA LIN
Reputed Fed hawks have dominated the spotlight in recent days, including Philadelphia Fed President Charles Plosser and Richmond Fed President Jeffrey Lacker, who both warned on Friday that rates may need to increase before year-end. Friday’s monthly jobs report was a further drag on Treasurys, as signs of a strengthening U.S. labor force provided more ammunition for those eager to shift to a tighter policy. But dovish counterpoints by Mr. Dudley managed to pull Treasurys back into positive territory by late Friday. He argued that unemployment was still “much too high” and he saw “no reason to back away from QE2,” as the current round of quantitative easing has been dubbed. “Debates emerging from the past week show that there are major differences in policy prescriptions among FOMC members,” said Ward McCarthy, chief financial economist at primary dealer Jefferies & Co. “This is the beginning of a long debate, and it’s probably only going to get more heated.” Amid the Fed chatter, Treasurys investors are hoping for more relief from more dovish Fed speakers. Beneath the rosy jobs report, analysts say flat wages ease inflation pressures and suggest tighter consumer spending down the line. “Now that the hawks have spoken, we’re probably ready to move into a more aggressive stance, [though] we do think the doves should come back,” said Rohit Garg, U.S. interest-rate strategist at BNP Paribas in New York. Following Mr. Bernanke, Fed officials scheduled to speak include Mr. Lacker, Atlanta Fed President Dennis P. Lockhart, Fed Vice Chairman Janet Yellen and Minneapolis Fed President Narayana Kocherlakota. Elsewhere, European Central Bank members meet on Thursday and a rate increase is widely expected.
NEW YORK—While Federal Reserve officials openly feud over the right time to begin tightening monetary policy, Treasury investors are starting to lean with the hawks. U.S. Treasurys last week endured their longest losing streak in more than two decades—nine consecutive days—and ended the worst quarter since late 2009 as U.S. government bondholders brace for the end of “quantitative easU.S. CREDIT ing” and a soonerMARKETS than-expected interest-rate increase. The yield on the two-year note, which is traditionally the most sensitive to shifting monetary-policy outlooks, touched 0.901% on Friday, the highest level since May 10, before trading at 0.805% late in the day. Although Fed Chairman Ben Bernanke could pour some cold water on that speculation when he speaks Monday, there is a sense that the train toward tighter monetary policy is now in motion. “There have been very divergent views from the FOMC [Federal Open Market Committee]... but people need to take on board this gradual shift toward a less-accommodative stance,” said Marc Ostwald, a strategist at Monument Securities. “And the more of that there is, the more upward pressure we’re going to see on yields.” Mr. Bernanke’s much-awaited speech in Stone Mountain, Ga., will add to a cacophony of speakers from the Fed, including some who offered especially hawkish appraisals of the inflation outlook. While most believe Mr. Bernanke will echo New York Fed President William Dudley’s defense of accommodative rates and of seeing the $600 billion bond-buying program to the end, analysts say a hint of bias toward tighter monetary policy could signal a key turning point for financial markets.
Advertisement
Data as shown is for information purposes only. No offer is being made by Morningstar, Ltd. or this publication. Funds shown aren’t registered with the U.S. Securities and Exchange Commission and aren’t available for sale to United States citizens and/or residents except as noted. Prices are in local currencies. All performance figures are calculated using the most recent prices available.
FUND NAME
NAV GF AT LB DATE CR
n AHW CAPITAL MANAGEMENT Tel (+49) 1805 - 23 82 82 www.ahw-capital.com AHW Top-Div.Int.
GL
EQ LUX 03/31 EUR
NAV
51.49
—%RETURN— YTD 12-MO 2-YR
0.7
-3.9
20.3
n ALLIANZ GLOBAL INVESTORS KAPITALANLAGEGESELLSCHAFT Concentra AE Industria AE InternRent AE
EU EQ DEU 04/01 EUR EU EQ DEU 04/01 EUR EU BD DEU 04/01 EUR
63.34 74.83 38.34
2.5 -1.9 -5.2
17.0 2.9 3.7
38.7 22.9 5.9
n CHARTERED ASSET MANAGEMENT PTE LTD - TEL NO: 65-6835-8866 Fax No: 65-6835 8865, Website: www.cam.com.sg, Email:
[email protected] CAM-GTF Limited
OT
OT MUS 03/25 USD 389414.36
-6.2
20.3
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
81.2
NS NS NS NS NS NS NS NS
FUND MGM'T CO.
LEGAL CURR. BASE
YTD
Aberdeen Aberdeen Asset GBPLUX GlobalAsianSmallerCosD2 Managers Limited(Lux) BGF Asia Blackrock USDLUX Pacific Equity Inc A2 USD (Luxembourg) S.A. PB China Public Mutual MYRMYS Australia Equity Fund Berhad Sun Life RCM Sun Life Hong Kong HKDHKG MPF Asian Equity A Limited RCM Asian RCM Asia Pacific HKDHKG Fund - B Limited Aberdeen SP Aberdeen Asset SGDSGP Pacific Eq SGD Management Asia Ltd. Public Public Mutual MYRMYS Regional Sector Berhad Skandia Skandia Fund USDIRL Pacific Equity A1 Management (Ireland) Ltd Principal Principal Asset HKDHKG 800 Asian Eq Management Co (Asia) Ltd BNY Mellon BNY Mellon Asset USDIRL Asian Equity A USD Management
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
dent. Gary Goldberg Financial Services started buying international bonds with intermediate maturities about six to eight months ago and continues to slowly increase its exposure, Mr. Pursche said. The precious-metals investment is part of the company’s inflationhedging strategy, but Mr. Pursche said it also provides some potential for gains because of the broadly increasing interest in those assets. The two-pronged strategy isn’t contradictory right now because “never in the history of U.S. markets have we been in an environment where yields are being kept artificially low…and [seen] advancement in growth in emerging markets,” Mr. Pursche said. Investing in normally contradictory assets right now “accomplishes very different goals.” Yu-Dee Chang, principal and chief trader of ACE Investment Strategists in McLean, Va., which
% Return in $US ** 1-YR 2-YR 5-YR
-2.11 30.43 58.65 15.62 2.70 25.45
NS
NS
9.36 24.87
NS
NS
1.84 23.92 39.47
NS
1.16 22.84 40.64 10.54 -1.25 21.88 50.54 12.42 10.06 21.84 42.27 14.71 0.56
21.76 39.15 13.78
1.64
21.67 39.87 10.07
-0.02
21.63 42.47 11.04
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
manages about $160 million in assets, said he has taken a positive view on the Australian dollar against the U.S. dollar. But he’s also buying gold “on the dips.” With gold’s current strength, it’s “heads you win, tails you also win,” Mr. Chang said. He said he profited from the Australian dollar’s recent gains because he sold put options on the Australian dollar in the middle of February. Because the Australian dollar didn’t fall to a level against the U.S. dollar that would trigger the sale, Mr. Chang could book the cost of selling the option as a profit. The options strategy returned 2.3%, better than the rate of return if he had just purchased the currency outright. “The dollar is an unfavorable position right now,” Mr. Chang said. “If you’re holding U.S. Treasurys, you don’t get paid.”
[ Search by company, category or country at asia.WSJ.com/funds ]
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
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
274.33 717.46 1332.47 103.39 139.46 111.65 146.77 95.34 139.91 147.26 106.65 886.01 318.51 634.27 72.08 670.41 204.56 236.60 218.69 1083.25 281.28 235.40 334.16 124.72 8643.33 1154.90 8903.21 51.05 100.08 87.67 672.56 287.23 147.82 121.12 501.51 3380.11 2880.15 256.53 340.43 1010.73 328.31 664.11 2463.93 7939.17 116.46
-0.6 -0.7 -3.8 0.6 0.6 1.7 1.7 0.6 0.6 -1.5 -0.9 -0.9 9.1 1.0 1.8 1.0 0.8 -3.6 -2.9 4.8 1.7 -2.4 8.1 -2.2 -1.7 -2.2 -1.3 -0.1 0.0 -4.8 -1.3 2.4 2.4 2.4 2.3 2.5 -1.6 4.4 -0.7 -1.9 -1.9 5.6 6.4 -2.3 2.5
-1.8 10.6 -1.5 6.9 6.9 12.2 12.2 8.4 8.4 1.5 2.5 2.9 22.7 -2.7 -8.7 -2.1 -3.2 4.5 4.4 24.4 8.0 -14.2 12.2 -5.8 -5.2 -7.2 -10.6 0.1 0.3 -22.3 2.9 6.8 6.9 7.1 7.1 21.4 13.5 12.2 6.0 4.9 5.0 13.3 11.3 3.0 10.3
26.9 35.5 15.6 15.4 15.4 24.7 24.7 17.4 17.4 7.0 7.5 7.8 40.0 1.1 0.3 1.5 0.5 11.7 12.0 43.1 24.6 27.8 56.7 5.7 6.5 14.1 10.2 0.4 0.1 -11.2 13.4 6.3 6.3 6.4 6.5 43.7 39.9 35.9 4.6 4.1 4.1 54.1 28.8 3.0 NS
EQ IRL 03/30 USD OT IRL 03/29 USD
19.97 10.65
-1.3 -2.7
4.5 NS
54.6 NS
GAMStar China EqUSD (SCHUA) AS GAMStar Emer Mkt Rates USD Acc OT
FUND FUND RATING * NAME
NS
NAV
n GAM Star Fund Plc
Leading 10 Performers
NEW YORK—A universal dislike of the dollar is driving investors into a wide variety of assets that historically haven’t been in demand at the same time. Foreign-exchange traders and investment managers are making bets on an eye-catching combination of assets—from gold to Argentinian debt—in an effort CURRENCY to avoid the lowMARKETS yielding dollar. That is having the incongruous effect of simultaneously driving up so-called risk assets as well as those deemed to be safe havens. “There’s no support for the dollar, so [traders are] going anywhere but,” said Dan Cook, chief executive officer at IG Markets in Chicago. A fragmented market with so many geopolitical uncertainties—from unrest in Libya to the continuing attempts to cool down a nuclear reactor in Japan—has led certain investors to seek safety in some markets and growth opportunities in others, all in the goal of finding better returns. The antidollar trend could break if the Federal Reserve begins to tighten monetary policy. However, Federal Reserve Bank of New York President William Dudley on Friday warned against a premature change in policy, saying that the economic recovery remains tenuous. Gary Goldberg Financial Services in Suffern, N.Y., which manages about $500 million in assets, is buying international bonds, including ones from normally risky countries like Argentina and Brazil. It also is holding a basket of precious metals, which historically prosper as safe-haven investments. “We don’t want to own the U.S. dollar, or at least [we want to] lower our U.S. dollar exposure,” said Oliver Pursche, the company’s presi-
NAV GF AT LB DATE CR 03/31 03/31 03/29 03/28 03/28 03/28 03/28 03/28 03/28 03/28 03/28 03/28 03/25 03/28 03/28 03/28 03/28 03/30 03/31 03/29 03/31 03/28 03/28 03/28 03/28 03/31 03/31 03/31 03/31 03/28 03/28 03/28 03/28 03/28 03/28 03/25 03/31 03/28 02/28 03/28 03/28 03/28 03/31 03/30 11/30
Funds investing in equities of companies across Asia/Pacific, excluding Japan. At least 75% of equity assets invested in Asia/Pacific, less than 10% in Japan. Ranked on % total return (dividends reinvested) in U.S. dollars for one year ending April 01, 2011
NS
FUND NAME
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
Asia-Pacific ex-Japan Equity
BY STEPHEN L. BERNARD
INTERNATIONAL INVESTMENT FUNDS 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
FUND SCORECARD
Investors hide from the dollar
—%RETURN— YTD 12-MO 2-YR
FUND NAME
NAV GF AT LB DATE CR
GAMStar Global Rates USD Acc GAMStar Keynes Quant Strategy USD Acc 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
Advertisement
FUND NAME
OT OT IRL 03/29 USD OT OT IRL 03/30 USD GL BD IRL 03/29 USD OT OT IRL 03/31 USD AS EQ IRL 03/31 EUR EU EQ IRL 03/31 EUR EU EQ IRL 03/31 EUR EU EQ IRL 03/31 USD JP EQ IRL 03/31 EUR JP EQ IRL 03/31 JPY JP EQ IRL 03/31 USD
NAV 10.95 10.30 10.86 14.73 109.15 12.59 198.10 17.13 92.26 924.60 11.51
—%RETURN— YTD 12-MO 2-YR 0.9 -2.4 -1.9 -0.6 -6.1 -0.1 0.1 5.6 -5.3 -1.2 -2.1
4.6 NS 1.4 11.0 -6.0 9.1 4.3 10.0 -9.4 -10.9 -7.8
NS NS NS 35.2 15.6 25.6 24.8 29.2 11.2 9.6 12.9
NAV GF AT LB DATE CR
AlexandraConvertibleBondFundI,Ltd.(ClassA) OT OT VGB 02/28 USD
NAV
—%RETURN— YTD 12-MO 2-YR
2364.66
2.2
29.4
52.1
103.64
-15.4
-3.9
11.0
n CREDIT PACIFIC ASSET MANAGMENT www.creditpacific.com GL OT WSM 03/31 USD
GAMStar-World Eq EUR Acc GL
EQ IRL 03/30 EUR
NAV
—%RETURN— YTD 12-MO 2-YR
11.55
0.9
5.8
24.8
10083.64 9248.42 101.66 113.58 10289.83
2.7 7.3 8.6 2.0 2.8
-0.9 -3.5 6.8 11.8 2.2
NS NS NS NS NS
n HSBC Trinkaus Investment Managers SA E-Mail:
[email protected] Telephone: 352 - 47 18471 Prosperity Return Fund A Prosperity Return Fund B Prosperity Return Fund C Prosperity Return Fund D Renaissance Hgh Grade Bd A
JP BD LUX 03/28 JPY OT OT LUX 03/28 JPY OT OT LUX 03/28 USD OT OT LUX 03/28 EUR JP BD LUX 03/28 JPY
OT OT OT OT OT GL
OT OT OT OT OT EQ
CYM USA USA USA USA CYM
02/28 10/31 02/28 02/28 05/29 02/28
USD USD USD USD USD USD
103.48 129.92 114.52 117.39 35.02 NS
FUND NAME
NAV GF AT LB DATE CR
Platinm-Nordic Platinm-Premier Platinm-Turnberry
OT OT CYM 02/28 SEK OT OT CYM 12/31 USD OT OT USA 02/28 USD
NAV 628.58 NS 60.14
—%RETURN— YTD 12-MO 2-YR -6.0 NS -1.2
3.4 NS -3.0
8.6 NS NS
n SUPERFUND ASSET MANAGEMENT GMBH For info about open funds, contact
[email protected] and www.superfund.com *Closed for New Investments Superfund Cayman* Superfund GCT USD* Superfund Green Gold A (SPC) Superfund Green Gold B (SPC) Superfund Q-AG*
GL GL GL GL GL
OT OT OT OT OT
CYM LUX CYM CYM AUT
03/29 03/29 03/29 03/29 03/29
USD USD USD USD EUR
54.89 2548.00 1286.05 1255.71 7409.00
0.4 -0.9 -1.9 -2.2 -0.9
34.1 17.1 33.4 34.5 5.9
-16.5 -14.8 4.9 -3.1 -7.6
3.1 3.1 3.1 1.6 1.6 1.6 1.6
17.8 17.8 18.1 16.5 16.6 16.4 16.7
5.3 5.7 5.4 4.8 5.1 4.4 4.9
n WINTON CAPITAL MANAGEMENT LTD Tel: +44 (0)20 7610 5350 Fax: +44 (0)20 7610 5301
n PLATINUM CAPITAL MANAGEMENT Tel: +44 207 024 9840, www.platinumfunds.net Platinm-All Star Platinm-All Weather Platinm-Dynasty Platinm-Emancipation Platinm-Equity Plus Platinm-Gbl Dividend
NAV GF AT LB DATE CR
[ALTERNATIVE INVESTMENT FUNDS www.WSJ.com] Advertisement
n ALEXANDRA INVESTMENT MANAGEMENT Tel: +1 212 301 1800 Fax: +1 212 301 1810
CPS-Master Priv Fund
FUND NAME
1.5 NS -1.5 5.8 -18.2 2.3
5.7 NS 4.1 24.1 -63.7 23.6
10.7 NS 10.3 30.6 -45.6 38.1
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
For information about listing your funds, please contact: Carson Wong tel: +852 2831-6481; email:
[email protected]
GL GL GL GL GL GL GL
OT OT OT OT OT OT OT
CYM CYM CYM VGB VGB VGB VGB
02/28 02/28 02/28 02/28 02/28 02/28 02/28
EUR NS GBP NS USD NS EUR 228.31 GBP 247.50 JPY 16111.36 USD 813.20
THE WALL STREET JOURNAL.
Monday, April 4, 2011
23
INTERNATIONAL INVESTOR
Nigeria is oil market’s unseen threat NEW YORK—Elections in Nigeria this month are sneaking up on the oil market. The civil war raging in Libya and unrest across the Middle East pushed oil prices to triple digits in recent weeks. But the threat of disruptions to Nigeria’s 2.2 million barrels a day of COMMODITIES crude output has MARKETS barely been factored into prices, despite a history of attacks on the West African nation’s oil infrastructure during election season. “It’s not on the market’s radar,” said Barclays Capital oil analyst Amrita Sen. Nigerians will vote for their president, representatives to their national assembly and governors of the country’s 36 states over the next three weeks. Police, military and other security agencies are being deployed nationwide after political rallies turned violent over the past month. More than 10% of U.S. oil imports come from Nigeria, according
Agence France-Presse/Getty Images
BY JERRY A. DICOLO
Nigeria’s 2007 election disrupted oil output. Above, a Total facility off the coast. to data from the Department of Energy, so any supply drops would be particularly taxing for U.S. energy consumers. Prices rose to $107.94, a 2½-year high, on the New York Mercantile Exchange on Friday. In Nigeria, a blast on March 16 rocked an oil facility run by the subsidiary of Italian energy major Eni SpA. The Movement for the Emanci-
pation of the Niger Delta, a militant umbrella group, claimed responsibility and pledged further action. The attack is a reminder of the supply disruptions that came with Nigeria’s last major election cycle in 2007. Bombings and other attacks on the country’s oil infrastructure stopped the flow of as much as one million barrels a day of oil. A supply drop of that magnitude
Shanghai market leads gains BY V. PHANI KUMAR AND SHRI NAVARATNAM
Financial stocks were among the big gainers, with Ping An Insurance Group rising 3.6% in Shanghai and 4.8% in Hong Kong, after Daiwa increased its price target for the insurer’s shares. Agricultural Bank of China climbed 1.1% in Shanghai and 0.7% in Hong Kong. Rising oil prices lifted energysector shares around Asia. Cnooc soared 4.6% and PetroChina added 2% in Hong Kong as the price of the New York Mercantile Exchange crude-oil futures contract straddled $107 a barrel. In Tokyo, stocks fell as worries over radioactive groundwater just outside a reactor building at the Fukushima Daiichi nuclear-power complex prompted investors to lock in
Chinese stocks snapped a threeday losing streak on Friday as data showing an expansion in the country’s manufacturing activity in March combined ASIAN-PACIFIC with inexpensive STOCKS valuations and strong recent earnings to attract buyers. The Shanghai Composite index climbed 1.3% to 2967.41, though it still ended down 0.4% for the week, the third decline in the past four weeks. Hong Kong’s Hang Seng index added 1.2% to 23801.90, capping its second straight weekly rise, during which the index has leapt 6.7%.
FUND NAME
NAV GF AT LB DATE CR
Renaissance Hgh Grade Bd B JP BD LUX 03/28 JPY Renaissance Hgh Grade Bd C JP BD LUX 03/28 USD Renaissance Hgh Grade Bd D JP BD LUX 03/28 EUR
NAV 9394.74 102.36 106.76
—%RETURN— YTD 12-MO 2-YR 7.2 8.2 1.3
LIST YOUR FUNDS
-0.5 9.8 5.8
AS EQ LUX 03/31 SGD AS EQ LUX 03/31 USD AS EQ LUX 03/31 SGD AS EQ LUX 03/31 USD AS EQ LUX 03/31 SGD AS EQ LUX 03/31 USD AS EQ LUX 03/31 SGD AS EQ LUX 03/31 USD EA EQ LUX 03/31 SGD EA EQ LUX 03/31 USD AS EQ LUX 03/31 USD OT EQ LUX 03/31 USD AS EQ LUX 03/31 SGD AS EQ LUX 03/31 USD OT OT LUX 03/31 USD AS BD LUX 03/31 USD OT OT LUX 03/31 USD OT OT LUX 03/31 SGD EU EQ LUX 03/31 EUR GL EQ LUX 03/31 SGD GL EQ LUX 03/31 USD OT OT LUX 03/31 SGD OT OT LUX 03/31 USD GL EQ LUX 03/31 SGD GL EQ LUX 03/31 USD OT OT LUX 03/31 USD OT OT LUX 03/31 USD GL EQ LUX 03/31 SGD GL EQ LUX 03/31 USD GL EQ LUX 03/31 EUR GL EQ LUX 03/31 SGD GL EQ LUX 03/31 USD GL EQ LUX 03/31 SGD GL EQ LUX 03/31 USD EE EQ LUX 03/31 USD
15.49 16.13 14.91 20.96 13.35 51.32 14.69 29.17 15.54 27.87 11.73 16.47 15.77 33.41 10.91 10.97 11.73 14.16 34.51 15.04 64.67 12.96 22.79 15.04 33.44 9.13 16.33 15.04 14.06 21.25 26.19 21.43 14.58 45.93 17.33
-1.8 0.4 -0.9 0.7 1.1 2.7 -2.0 -0.4 -5.8 -4.3 3.3 -3.4 -3.0 -1.4 -8.3 1.3 -2.3 -4.5 -1.0 -1.8 -0.3 -11.9 -9.8 -1.9 -0.4 1.2 2.8 3.2 4.8 -6.5 -2.6 -1.1 -5.0 -2.9 7.1
In print & online. Contact:
NAV GF AT LB DATE CR
NAV
—%RETURN— YTD 12-MO 2-YR
BY TAKASHI MOCHIZUKI TOKYO—Japanese government bond yields rose Friday on concern that U.S. economic data, due to be released well after the Tokyo market closed, would show more strength, prodding the FedBOND eral Reserve to end MARKETS its super-loose monetary policy. The benchmark 10-year yield climbed 0.025 percentage point to 1.275%. The U.S. employment report for March came in stronger than expected, while the manufacturing purchasing managers’ index from the Institute for Supply Management indicated the U.S. manufacturing expansion slowed slightly.
FUND NAME
NAV GF AT LB DATE CR
NAV
—%RETURN— YTD 12-MO 2-YR
NS NS NS 41.1 NS 30.9 NS 36.6 NS 51.1 49.8 29.3 NS 56.3 47.1 NS 53.0 NS 65.4 NS 54.5 NS 28.2 NS 42.5 48.7 NS NS 31.8 56.0 NS 61.1 NS 57.0 83.3
[email protected]
FUND NAME
Advertisement
NAV GF AT LB DATE CR
NAV
—%RETURN— YTD 12-MO 2-YR
n WEBSITE: WWW.VALUEPARTNERS.COM.HK, TEL: (852) 2880 9263, FAX: (852) 2564 8487 *formerly known as China ABH Shares Fund
n SENSIBLE ASSET MANAGEMENT LIMITED www.samfund.com.hk Tel: (852) 2868 6848 Fax: (852) 2810 9948
NS 34.3 NS 13.1 -0.6 10.3 5.6 17.1 2.4 13.7 33.1 4.8 9.5 21.5 12.2 10.1 13.3 NS 11.9 NS 16.5 NS 3.6 2.7 13.9 20.8 12.5 2.9 14.1 25.4 18.7 31.6 NS 13.2 22.1
Traders and investors also fretted that the Bank of Japan may end up underwriting earthquake reconstruction bonds, some analysts said. The government may increase bond issuance to finance support for areas damaged by the March 11 quake. Some Japanese media reports say a project team within the ruling Democratic Party of Japan may suggest that the BOJ should underwrite the issue. The central bank has been showing strong resistance to the idea, and Finance Minister Yoshihiko Noda and Economy Minister Kaoru Yosano also oppose the idea. Analysts say that the BOJ will therefore probably be able to avoid underwriting the bonds, but yields have risen nevertheless.
INTERNATIONAL INVESTMENT FUNDS
NS NS NS
n J.P. MORGAN ASSET MANAGEMENT For additional fund prices, please visit www.jpmorganam.com.sg Tel: +65 6882 1328 JF ASEAN Eq (SGD)A(acc) JF ASEAN Eq (USD)A(acc) JF Asia Pac ex-Jap Eq(SGD)A(acc) JF Asia Pac ex-Jp (USD)A(acc) JF China (SGD)A(acc) JF China (USD)A(dist) JF Greater China (SGD)A(acc) JF Greater China (USD)A(dist) JF India (SGD)A(acc) JF India (USD)A(acc) JF Korea Equity (USD) A (acc) JF Pacific Tech (USD) A (acc) JF Singapore (SGD)A(acc) JF Singapore (USD)A(dist) JPM Africa (USD) A (acc) JPM Asia Pac Bond (USD)A(acc) JPM Brazil Alpha+ (USD)A(acc) JPM Brazil Alpha+(SGD)A(acc) JPM East Eur (EUR)A(dist)(JF) JPM Emerg EMEA (SGD)A(acc) JPM Emerg EMEA (USD)A(dist) JPM Emerg Mid East Eq(SGD)A(acc) JPM Emerg Mid East(USD)A(dist) JPM Emerg Mkt Eq (SGD)A(acc) JPM Emerg Mkt Eq (USD)A(dist) JPM Emerg Mkt Infra(USD)A(acc) JPM Emerg Mkt LC Debt(USD)A(mth) JPM Glb Dyn (SGD)A(acc) JPM Glb Dyn (USD)A(dist)(JF) JPM Glb Nat Res (EUR)A(dist) JPM Glb Nat Res (SGD)A(acc) JPM Glb Nat Res (USD)A(acc) JPM Latin Amer Eq(SGD)A(acc) JPM Latin Amer Eq(USD)A(dist)JF JPM Russia (USD) A (dist)
FUND NAME
duction capacity, according to Société Générale, enough to keep oil traders relatively sanguine about geopolitical risks. But with that cushion dwindling due to Libya’s civil war, any supply disruptions in Nigeria would quickly lead to shortages. As the official candidate for Nigeria’s ruling People’s Democratic Party—the country’s most influential—incumbent President Goodluck Jonathan easily won early primaries and is expected to win general elections. But he will need support from the oil-rich Niger Delta region in elections seen as the most bitterly contested since Nigeria emerged from military rule 12 years ago. “We lost one million barrels per day [following the last election cycle], which would be a huge amount if that happened now,” said Barclays’ Ms. Sen. She isn’t optimistic about the situation. In the run-up to election season, “there are often promises made in the oil region that are not able to be kept,” Ms. Sen said. —Will Connors contributed to this article.
Japanese yields pick up
recent gains. The Nikkei Stock Average fell 0.5% to 9708.39, though it ended the week 1.8% higher. Tokyo Electric Power, owner of the nuclear-power plant, fell 3.7%, reversing an initial rise of more than 8% following news the Japanese government may inject public funds into the utility. The stock has slumped nearly 80% since the earthquake. Honda Motor fell 2.4% amid uncertainty over when the auto maker will resume full production. Indian shares snapped an eightsession win streak, with the benchmark Sensex slipping 0.1% to 19420.39. Australia’s S&P/ASX 200 rose 0.5% to 4861.83. South Korea’s Kospi advanced 0.7% to 2121.01.
[ Search by company, category or country at asia.WSJ.com/funds ]
could add as much as $8 a barrel to current prices, said Andy Lipow, president of oil-trading adviser Lipow Oil Associates. It is particularly troubling for the U.S. market ahead of the summer driving season. Its refineries rely on Nigeria’s low-viscosity crude to boost output of gasoline. Roughly 40% of Nigeria’s exports flow to the U.S. But so far, the market has kept its gaze centered on Libya. Fighting between rebels and forces loyal to Moammar Gadhafi over the past month has curtailed the country’s 1.6 million barrels a day of oil production. “Every day, what goes on in Libya is taking precedence over what’s happening anywhere else, even Nigerian elections that are only two weeks away,” said Phyllis Nystrom, an energy-markets analyst with Country Hedging. Before unrest spread across the Middle East and North Africa, Saudi Arabia and other members of the Organization of Petroleum Exporting Countries had as much as 3.6 million barrels a day of spare pro-
Asia Value Formula Fd-B
OT
OT CYM 03/31 USD
10.77
1.9
29.1
55.6
Bonds US OppsCoreplus A Bonds World A Eq. AsiaPac Dual Strategies A Eq. China A Eq. Global Energy A Eq. Global Resources A Eq. Gold Mines A Eq. India A Eq. Luxury & Lifestyle EURO A Eq. Luxury & Lifestyle USD A Eq. MENA EURO A Eq. MENA USD A Eq. US Rel Val A Money Market EURO A Money Market USD A
US BD LUX 03/30 USD OT OT LUX 03/30 USD AS EQ LUX 03/31 USD AS EQ LUX 03/31 USD OT EQ LUX 03/30 USD GL EQ LUX 03/30 USD OT EQ LUX 03/30 USD EA EQ LUX 03/31 USD OT EQ LUX 03/30 EUR OT EQ LUX 03/30 USD OT OT LUX 03/31 EUR OT OT LUX 03/31 USD US EQ LUX 03/30 USD EU MM LUX 03/30 EUR US MM LUX 03/30 USD
40.66 43.67 11.85 24.37 21.63 138.87 39.32 148.23 88.42 124.63 38.49 54.71 25.41 27.58 15.89
1.2 -0.6 0.1 0.5 11.9 4.7 -3.3 -5.4 -1.9 -1.9 -5.3 -5.3 7.6 0.2 0.1
8.3 6.4 13.1 5.4 22.4 28.2 33.6 11.1 26.6 26.6 -1.2 -1.2 16.8 0.6 0.4
12.1 7.6 38.9 27.7 29.0 38.4 30.9 44.7 52.2 52.2 22.9 22.9 36.3 0.6 0.3
n MANULIFE ASSET MANAGEMENT TEL:(852)2108 1110 Internet:http://www.manulife.com.hk 47/F Manulife Plaza, Causeway Bay, Hong Kong n SGAM FUND American Growth US EQ LUX 03/31 USD 18.46 7.1 16.4 31.2 AMUNDI HONG KONG LIMITED American Growth AA US EQ LUX 03/31 USD 1.06 7.1 16.1 30.9 Hotline in Hong Kong (852) 2521 4231 Asian Equity Asian Equity AA Asian Sm Cap Equity AA China Value A China Value AA Dragon Growth Dragon Growth AA Emg Eastrn Europe A Emg Eastrn Europe AA European Growth European Growth AA Global Contrarain AA Global Property AA Global Resources AA Healthcare AA India Equity AA International Growth International Growth AA Japanese Growth Japanese Growth AA Latin America Equity AA Manulife GF Strategic Income Fund AA MGF Asia Value Dividend Equity Fund Russia Equity AA Taiwan Equity AA Turkey Equity AA U.S. Bond AA U.S. Sm Cap Equity AA U.S. Special Opportunities U.S. Tsy Inf-ProtSec AA
OT OT LUX 03/31 USD OT OT LUX 03/31 USD OT OT LUX 03/31 USD AS EQ LUX 03/31 USD AS EQ LUX 03/31 USD AS EQ LUX 03/31 USD AS EQ LUX 03/31 HKD EU EQ LUX 03/31 USD EU EQ LUX 03/31 USD EU EQ LUX 03/31 USD EU EQ LUX 03/31 USD GL EQ LUX 03/31 USD OT EQ LUX 03/31 USD GL EQ LUX 03/31 USD OT EQ LUX 03/31 USD EA EQ LUX 03/31 USD GL EQ LUX 03/31 USD GL EQ LUX 03/31 USD JP EQ LUX 03/31 USD JP EQ LUX 03/31 USD GL EQ LUX 03/31 USD OT OT LUX 03/31 USD OT OT LUX 03/31 USD EE EQ LUX 03/31 USD AS EQ LUX 03/31 USD OT OT LUX 03/31 USD US BD LUX 03/31 USD US EQ LUX 03/31 USD US BD LUX 03/31 USD OT OT LUX 03/31 USD
2.98 0.96 1.61 8.47 2.66 1.80 8.78 5.85 2.51 10.23 0.73 1.20 0.81 1.35 1.08 1.24 3.39 0.79 2.93 0.75 1.43 1.13 1.41 0.90 1.26 0.98 1.19 1.10 1.02 1.21
4.1 4.0 2.4 2.4 2.4 1.5 1.6 9.2 9.1 6.2 6.2 2.6 2.4 4.2 6.5 -5.4 5.3 5.2 -2.9 -2.9 -1.8 2.7 2.2 9.9 -3.2 -1.6 1.6 2.9 1.4 1.9
21.9 21.6 30.8 21.5 21.2 11.3 11.3 19.9 19.8 14.5 14.2 28.0 16.6 24.8 6.5 11.3 8.9 8.6 0.9 -1.1 11.1 10.4 21.9 25.3 21.3 18.9 7.6 16.7 15.7 7.0
42.1 41.7 66.7 39.8 39.4 34.5 34.5 61.1 60.9 35.4 35.1 58.5 48.1 35.0 21.0 44.6 24.9 24.6 17.2 16.3 50.7 NS NS 69.8 42.0 74.8 13.6 46.6 54.2 5.6
n PT CIPTADANA ASSET MANAGEMENT Tel: +62 21 25574 883 Fax: +62 21 25574 893 Website: www.ciptadana.com Indonesian Grth Fund
GL
EQ BMU 03/30 USD
180.76
-0.7
28.4
73.3
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
03/15 03/15 03/31 03/31 03/28
USD USD USD USD USD
35.82 133.31 229.12 106.12 57.93
-3.1 -3.7 2.2 2.1 1.3
21.5 19.0 19.1 18.5 21.8
53.6 51.9 46.6 45.9 49.3
JP
EQ IRL 04/01 JPY
9359.00
-0.7
-5.9
10.7
JP JP
EQ IRL 04/01 JPY EQ IRL 04/27 JPY
5710.00 5230.34
-1.2 -7.3
-11.0 -5.4
2.9 -27.3
EQ IRL 04/01 JPY EQ IRL 04/01 JPY
6524.00 7883.00
-2.8 0.0
-10.6 -7.6
6.9 6.1
4262.00 4925.00 4940.00
-1.3 -2.3 -0.7
-14.3 -14.0 -4.9
3.0 3.6 9.2
4007.00 4265.00 6326.00 8508.00 6153.00 7333.00 4812.00 11248.00 7154.00 7058.00 5469.00 2412.00
-1.4 -2.3 -1.0 -0.7 -1.7 -2.3 -2.9 -1.7 -2.2 0.7 -2.0 -3.9
-13.6 -12.3 -12.7 -8.3 -6.2 -10.4 -13.2 -11.4 -12.3 -2.9 -10.1 -14.7
3.2 3.6 6.3 8.1 5.9 1.8 4.3 6.6 2.6 13.9 6.6 4.3
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 Yuki Chugoku Jpn Gen Yuki Chugoku JpnLowP
JP JP
n Yuki Hokuyo Japan Series Yuki Hokuyo Jpn Gen Yuki Hokuyo Jpn Inc Yuki Hokuyo Jpn Sm Cap
n Yuki Mizuho Series
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
03/24 02/28 03/24 03/24
USD USD USD AED
760.83 1066.09 1009.30 4.85
-8.2 -7.1 -8.2 -4.0
-18.0 -3.9 NS -8.1
-5.5 5.6 NS 4.5
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
For information about listing your funds, please contact: Carson Wong tel: +852 2831-6481; email:
[email protected]
JP JP JP
EQ IRL 04/01 JPY EQ IRL 04/01 JPY EQ IRL 04/01 JPY
JP JP JP JP JP JP JP JP JP JP AS AS
EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ
IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL
04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01
JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY
24
THE WALL STREET JOURNAL.
Monday, April 4, 2011
MARKETS
Bank tie-up’s troubles grow
Shanghai Pharma boosts size of its IPO
Soured bond trades hit Morgan Stanley-Mitsubishi UFJ alliance in Japan Morgan Stanley and Mitsubishi UFJ Financial Group posted a surprise bond-trading loss in their Japanese brokerage joint venture, another blow to the Wall Street bank as it seeks to return to growth after the financial crisis.
Partners diverge Year-to-date share performance 20% 10
By Atsuko Fukase in Tokyo and Alison Tudor in Hong Kong
0
–20
J
F
M
A
Source: Thomson Reuters Datastream
A branch of MUFG in Tokyo. The Japanese bank’s joint venture with Morgan Stanley has been struggling financially since its launch. The joint venture may issue new shares to Mitsubishi UFJ Securities Holdings Co., the holding company for MUFG’s brokerage operations to bolster its capital, the people said. The share issuance is likely to take a form that won’t dilute Morgan Stanley’s stake in the joint venture, said one person familiar with the matter. On Sunday, a person familiar with the matter said Mitsubishi UFJ Securities Holdings is considering selling its 29.9% stake in Singapore brokerage Kim Eng Holdings Ltd. It isn’t clear if the contemplated sale is related to the loss. MUFG was weighing the sale before the loss for other reasons. Malaysia’s top financial services group, Malayan Banking Bhd., or Maybank, announced in January that it plans to buy a 44% stake in the bro-
kerage, raising the issue of whether to sell for Mitsubishi UFJ Securities. The joint venture has struggled financially since its launch last May. The joint venture posted losses of about 19 billion yen ($228.4 million) from April to December. It has scaled back staff and branches to cut costs. In February, an early-retirement program targeted about 300 employees, or roughly 4% of its work force. The losses are an embarrassment for MUFG and could tip the balance of power in the relationship further in the U.S. investment bank’s favor, said one person familiar with the matter. Morgan Stanley provided about 100 investment bankers for the venture, but the secondary-market trading activity is conducted mainly by legacy MUFG people.
Yuan options debut in China SHANGHAI—China’s first onshore yuan foreign-exchange options made a muted debut in the country’s opaque and tightly regulated market Friday, after Beijing gave its approval for the longawaited derivatives product that will offer businesses another hedging tool as China relaxes restrictions on its currency. The China Foreign Exchange Trade System, the central-bank division that oversees China’s foreignexchange market, said seven deals were concluded within the first hour and a half of trading. The contracts sold gave banks the right to exchange a combined $41.9 million in currencies in one to six months, CFETS said. Friday afternoon, the average prices of dollar/yuan one-month options implied a volatility of 1.900% over the coming month, 2.195% over the next three months, and 2.745% over the next six months, according to CFETS, which will publish an average implied volatilities curve at 08:15 GMT each trading day. Implied currency volatilities are a measure of how much the market expects a spot exchange rate to move over a coming period, based on option prices. China has vowed to roll out more foreign-exchange derivatives products as part of its broader goal to move toward more market-driven
Mitsubishi UFJ Financial Group (in Japan)
–10
Reuters
The loss occurred at Mitsubishi UFJ Morgan Stanley Securities Co., which is 60% owned by MUFG and 40% by Morgan Stanley, people familiar with the matter said. It will result in a roughly $961 million loss for the joint venture for the fiscal year ended March 31 that will be shared by the two owners, the people said. Morgan Stanley’s share of the loss will be about $385 million, which it is expected to be reflected when it reports first-quarter earnings this month. Analysts had expected the bank to report a profit of $875.2 million. MUFG owns one-fifth of Morgan Stanley, the result of a $9 billion investment made as Morgan Stanley staggered during the financial crisis. The banks wouldn’t say what caused the loss, which appear to be the result of investments made by MUFG traders. Analysts speculated about where the trades went bad at the Morgan Stanley joint venture. “There are thoughts in some quarters that suspended sales of structured bonds in other currencies in mid-March could cause the losses, but in our view another possibility is that they are related to inflation-indexed government bonds,” said Hironari Nozaki, an analyst at Citigroup in Tokyo.
Morgan Stanley (in U.S.)
exchange rates. But the tight restrictions it has placed on yuan options trading hint at the authorities’ wariness over how these complex tools might affect official control over the yuan’s exchange rate. Regulators have yet to name the banks that can trade dollar/yuan options, but people familiar with the matter said only a handful of major state-owned and foreign banks have received approval to trade the product in the initial stage.
China has vowed to roll out more foreign-exchange derivatives products as part of its broader goal to move toward more market-driven exchange rates. Deutsche Bank AG said in a statement it executed one foreignexchange option trade in the morning, without giving details on the deal’s size, tenor and pricing or identifying the counterparty. “This historic transaction marks an important step towards deepening China’s forex derivatives market and the liberalization of the forex system,” Feng Gao, head of markets,
China, at Deutsche Bank said in the statement. Bank of China Ltd. sold an option to Industrial & Commercial Bank of China Ltd., which gave ICBC the right to exchange 6.4840 million yuan for $1 million six months later, a dealer said. Both HSBC Bank (China) Co. and Citibank (China) Co. said they started trading the newly launched product Friday, without elaborating. A company that buys a foreignexchange option has the right to buy or sell a currency at a specified rate at a future date. In February, the State Administration of Foreign Exchange said banks would be allowed to trade options among themselves and to sell them to customers. Businesses would be allowed to buy options from banks, but not sell them unless they are exiting from an option bought earlier, it said. In addition, existing daily limits on foreign-exchange derivative positions will also apply to yuan options. SAFE also said it will allow only European-style options, whereby investors can exercise their rights upon the contract’s expiration, in contrast to American-style options, which allow investors to exercise before or at expiration. —--Wang Ming, Wynne Wang and Jean Yung
Morgan Stanley did appoint a chairman and directors to the joint venture. The terms of the deal were shaped by a lingering insecurity in Japan’s financial industry. Top Japanese institutions sought an infusion of Wall Street perspective in order to help them hold onto business from Japanese companies that are increasingly selling shares to global investors and buying foreign companies. For MUFG, the Morgan Stanley deal represented the culmination of years of effort to globalize in the investment-banking industry. The negotiations over just the partnership in Japan were prolonged and complicated by cultural clashes. People at rival banks and some analysts said at the time that the relationship was fraught with potential conflict that would minimize the gains for either side. For example, their trading operations appear to be rivals, housed in two separate joint ventures.
Female CFO at Nomura: Bid to match Wall Street Continued from page 17 hiring,] is different from Western society; it may take a bit more time to see some change,” Ms. Nakagawa said. Ms. Nakagawa joined Nomura in 1988 after graduating from Kobe University, working in a branch in Nara prefecture. She switched to a career track and worked in the investment-banking division for eight years, and later moved to the finance division, where she got involved in key projects, including Nomura’s listing on the New York Stock Exchange in 2001. She quit Nomura in 2004 and left the work force altogether, when her husband was posted to a position in Hong Kong. Ms. Nakagawa didn’t expect to return to Nomura. But four years later, after returning to Japan, she was asked by a former colleague if she was interested in working for the company’s health-care business. She became president of Nomura Healthcare Support & Advisory in 2008. Last year, she became co-deputy CFO.
BY YVONNE LEE AND KATE O’KEEFFE HONG KONG—Following the recent rebound in Hong Kong shares, Shanghai Pharmaceuticals Holding Co. has increased the size of its planned initial public offering in the city to a range of US$1.5 billion to US$1.8 billion from the earlier US$1.2 billion, a person familiar with the situation said Friday. Meanwhile, Hong Kong’s stock exchange has given the green light to an initial public offering from Swiss commodities trader Glencore International AG, a separate person familiar with the situation said Friday. Glencore, which aims to list shares in both Hong Kong and London and raise up to US$10 billion, will begin taking orders in London first, the person said. Hong Kong orders will start at a later date, though the subscription deadlines in London and Hong Kong will be on the same day, the person said, without giving a time frame. Word of Shanghai Pharmaceuticals’ decision to increase its deal size followed a 2.8% rise over the past week in Hong Kong’s benchmark Hang Seng Index—helped by a rebound in U.S. markets, which just finished the best first quarter in more than a decade. The Shanghai-listed company plans to sell shares in Hong Kong at no less than 17.60 yuan ($2.69) each, the person said. Friday, its Shanghai shares fell 0.2% to 19.52 yuan. If the Hong Kong stock exchange’s listing committee approves the company’s planned listing in early April, Shanghai Pharmaceuticals aims to start trading in the city by the end of the month, another person familiar with the situation said Friday. The company has hired Credit Suisse Group, Deutsche Bank AG, Goldman Sachs Group Inc. and China International Capital Corp. to handle the Hong Kong listing, the people said. A number of companies are looking to raise funds on Hong Kong’s stock market, which last year topped the global list of venues for new share offerings, as measured by the amount raised. Chinese chemical-fiber maker Billion Industrial Holdings Ltd. plans to raise US$400 million to US$500 million ahead of a listing in Hong Kong, other people familiar with the situation have said. China Flooring Holding Co., a flooring maker, plans to raise US$200 million to US$300 million and will seek listing approval in mid-April, another person earlier. Mineral-water producer Tibet 5100 Water Resources Holdings Ltd., of Lhasa, plans to raise US$200 million to US$250 million, and is set to seek approval in April, another person said earlier. Far East Horizon Ltd. on Thursday said it exercised an overallotment option for its Hong Kong initial public offering, bringing the total net proceeds from the deal to US$723 million. Far East Horizon, a financial-leasing unit of state-owned Sinochem Group, said it sold an additional 15% on top of the 816 million shares initially offered.
THE WALL STREET JOURNAL.
Monday, April 4, 2011
25
MARKETS
Mixed signals at meeting with Sokol Citi bankers thought deal pitch was for a senior Berkshire executive, not a high-powered individual investor BY GINA CHON AND SERENA NG
Bloomberg News
When bankers from Citigroup Inc. met David Sokol late last year to talk about potential transactions, they thought they were dealing with him as a senior executive of Berkshire Hathaway Inc., according to people familiar with the matter. Mr. Sokol may have viewed that Dec. 13 meeting in New York differently. When asked by The Wall Street Journal on Wednesday if he met the Citigroup bankers in his capacity as a Berkshire representative or as a private investor, Mr. Sokol said he meets frequently with investment bankers and “I meet them for both” roles. It nonetheless came as a “shock” to the Citigroup bankers when they learned Mr. Sokol bought roughly $240,000 of shares of Lubrizol Corp. a day after their meeting, sold them, and then purchased $10 million shares about two months before Berkshire’s $9 billion deal unveiled March 14 to acquire Lubrizol, according to people familiar with the matter. The shares are valued at nearly $13 million now. The Securities and Exchange Commission is investigating the events surrounding Mr. Sokol’s stock trading and the Lubrizol deal, a person familiar with the matter said. Mr. Sokol was chairman of Berkshire utility arm MidAmerican Energy Holdings Co. and chief execu-
Many financial institutions, money managers and U.S. corporations have codes of conduct that prohibit employees from using company resources or information obtained in the course of their work to buy stocks or achieve personal gain, unless they get approval from their compliance department. Berkshire’s code of conduct states that conflicts of interest could arise when an employee “receives improper personal benefits as a result of his or her position at the company” and all its senior executives have to disclose any material transaction or relationship that could give rise to a conflict. When Mr. Sokol suggested to Mr. Buffett in mid-January that Berkshire buy Lubrizol, he mentioned that he owned shares in the chemicals company. Mr. Buffett didn’t ask Mr. Sokol when he bought the shares or how much he held at the time. He learned of the details only after Berkshire agreed to buy Lubrizol in mid-March, according to his statement on Wednesday. For the Citigroup bankers, who advised Lubrizol on the transaction, it didn’t occur to them that Mr. Sokol was evaluating opportunities for himself in his talks with them, the people familiar with the matter said. Mr. Sokol and Berkshire didn’t reply to requests for comment Friday. A Citigroup spokesman declined comment. —Jean Eaglesham contributed to this article.
The varying roles of David Sokol, here at Berkshire’s 2010 meeting, are at the heart of the controversy over his Lubrizol stock purchases. tive of the Berkshire aircraft unit NetJets Inc. Lubrizol was one of the companies reviewed by Citigroup and Mr. Sokol in that December meeting, at which Citigroup’s bankers touted Lubrizol’s management team and chief executive, according to people familiar with the matter. The bankers viewed those as essential components of how Berk-
shire Chief Executive Warren Buffett would evaluate the chemicals concern as a possible takeover candidate, the people familiar with the matter said. At that meeting, Mr. Sokol didn’t say he was personally interested in buying Lubrizol shares, the people said. When one banker said he knew Lubrizol’s chief executive, James Hambrick, Mr. Sokol asked to set up
a meeting. He subsequently pitched the idea of buying Lubrizol to Mr. Buffett. Mr. Sokol’s varying roles are at the heart of the controversy over his Lubrizol stock purchases, which Mr. Sokol has said weren’t a factor in his decision to resign from Berkshire this week. His state of mind may figure in a regulatory investigation of his actions.
BY GREGORY ZUCKERMAN Private-equity powerhouse TPG Holdings has reached a deal to sell nearly 5% of itself to sovereignwealth funds operated by Kuwait and Singapore. The deal values the firm at about $11 billion and allows it to raise several hundred million dollars, according to people close to the matter. TPG sent a letter Thursday night to its investors informing them of the transaction, although the firm didn’t name the purchasers. People close to the matter say the buyers are the Kuwait Investment Authority, the Gulf country’s sovereignwealth fund, and the Government of Singapore Investment Corp.,
among the world’s most active sovereign-wealth funds. The Kuwait Investment Authority and GIC will pay several hundred million dollars for the roughly 4.5% stake, according to these people, a sum that places a value on TPG close to that of rival Kohlberg Kravis Roberts & Co. The move gives TPG a pot of socalled permanent capital that it will plow into new investments. The deal underscores how the asset-management business is becoming more global, and that foreign investors often have deeper pockets, and a more upbeat outlook for U.S. firms, than domestic institutions. The deal also means TPG, which manages $48 billion, likely won’t go public anytime soon, even as rivals
move to sell shares. “Yesterday we completed a private sale of a small, passive minority economic stake in the consolidated General Partner of TPG,” according to the letter sent by David Bonderman, TPG’s co-founder. Although rivals have raised billions through public markets, Mr. Bonderman said, “we have chosen a private transaction as a path to provide capital to our firm.” The Kuwait Investment Authority and GIC are longtime investors in TPG. GIC has invested more than $100 billion of government reserves in stocks, commodities, bonds and private-equity firms. The Kuwait Investment Authority is one of the oldest and most experienced of a
handful of Middle East government investment funds; it has assets of more than $200 billion. San Francisco-based TPG owns more than 50 companies around the globe and has been among the firms most focused on expanding areas such as China. For TPG, the investment will give it cash to hire employees and expand into areas such as emerging markets and real estate. The deal is the latest by a foreign investor to take a stake in a major private-equity firm. Four years ago, for example, Apollo Management sold a 9% stake in itself to the Abu Dhabi Investment Authority, the investment arm of the Abu Dhabi government.
Bloomberg News
Singapore, Kuwait funds take slice of TPG
TPG co-founder David Bonderman
‘Wage-less’ recovery in the U.S. is boon to companies [ Ahead of the Tape ] BY KELLY EVANS These are pretty heady times for companies, in part because they are painful for many workers. The lack of wage pressure in the U.S. suggests the boom in corporate profits still has room to run. Labor, after all, is typically the biggest cost of business. And as Friday’s employment report showed, there is still little upward
pressure on wages and salaries. Average hourly earnings were flat in March for the fourth time in five months. Their 1% annualized growth during that period is the weakest such stretch in 25 years, according to Gluskin Sheff Chief Economist David Rosenberg. The U.S., he says, is experiencing not a jobless but a “wage-less” recovery. And that’s likely to continue while the unemployment rate, which came in at 8.8% in March, remains high. Of course, that also offers
employers some breathing room, especially with the cost of fuel and other supplies on the rise. Analysts expect S&P 500 firms to post a 12% year-to-year increase in their first-quarter earnings, which start dribbling out later this week, according to FactSet. The season kicks into full swing with aluminum giant Alcoa’s report on April 11. That S&P 500 earnings gain would be a marked slowing from the fourth quarter’s 31% jump, of course, but it’s still a healthy
increase. Indeed, the latest Business Roundtable survey of chief executives showed their sentiment jumped to a new high in the first quarter. Yet recent surveys of consumer confidence, meanwhile, have tanked. The lack of wage gains has much to do with that. It is bad enough that salaries are basically stagnant; it is worse that it comes as living costs are climbing. In fact, after adjusting for inflation, real wages are actually falling. The consumer-price index was up
2.1% in February from a year earlier; average hourly earnings, as of March, were up just 1.7%. The hope is that stronger wage gains lie just ahead. Yet recent history offers little comfort. Census data show the median, or typical, household income in the U.S. in real terms peaked back in 1999 and has since fallen about 5%. The paradox of corporate efficiency, perhaps, is that if you squeeze employees hard enough, at some point even your own customers disappear.
26
THE WALL STREET JOURNAL.
Monday, April 4, 2011
BLUE CHIPS BONDS Dow Jones Asia Titans: Friday's best and worst...
Major players benchmarks At right, a look at the Asia Titans, the biggest and best known companies in Asia. Below, some of the Dow Jones Titans indexes of biggest and most liquid stocks in individual countries and regions
Giants around the world
In U.S.-dollar terms.
Market value, in billions of US$
Previous close, in local currency
Exploration Production
$117.7
20.50
Company
Country
Industry
CNOOC
Hong Kong
STOCK PERFORMANCE Previous session
52-week
Three-year
56.7%
4.59%
78.3%
Hon Hai Precision Ind
Taiwan
Electrical Cmpnts Eqpmnt
35.0
106.00
PetroChina
Hong Kong
Integrated Oil Gas
32.6
12.02
-15.2
-30.4
2.04
30.1
22.2
China Construction Bank
Hong Kong
Banks
229.3
Sun Hung Kai Prop
Hong Kong
Real Estate Hldg Dev
41.3
7.42
1.78
17.7
27.1
125.30
1.70
6.5
1.2
Tokyo Elec Power
Japan
Electricity
$8.5
449.00
-81.9
-83.6
Honda Motor
Japan
Automobiles
65.1
3,050
-2.40
-7.3
5.4
JFE Hldgs
Japan
Steel
14.9
2,378
-2.30
-37.3
-47.6
Japan Tobacco
Japan
Tobacco
33.6
295,500
-1.66
-14.8
-39.3
Kansai Elec Power
Japan
Electricity
19.1
1,785
-1.44
-16.1
-31.3
2.91
Dow Jones Country Titans INDEX PERFORMANCE Previous session
Russia
Year-to-date
52-week
10.9%
1.79%
27.9%
10.6
Spain
1.34
Italy
1.09
7.2
-5.2
France
1.65
6.5
0.2
6.3
-8.1
0.3
China 88
1.81
Netherlands
1.23
5.3
5.2
Canada
0.11
5.1
13.3
Hong Kong
1.37
5.0
13.1
Brazil
1.80
5.0
11.1
South Korea
0.38
3.5
22.6
Germany
1.96
3.4
11.5
Australia
0.61
3.4
-2.1
U.K.
1.78
Switzerland
1.49
1.3
-4.7
South Africa
1.14
0.1
12.4
2.2
0.96
-0.3%
12.6
Singapore
0.41
-1.7
9.0
Turkey
2.47
Japan
-0.52
...And the rest of Asia's blue chips
-2.0
Mitsubishi UFJ Finl 65.3 Japan (Banks) Indl Comm Bk China 73.2 Hong Kong (Banks) China Mobile (HK) 187.6 Hong Kong (Mobile Telecommunications) Woodside Petroleum 38.0 Australia (Exploration Production) China Life Insurance 28.2 Hong Kong (Life Insurance) Woolworths 34.0 Australia (Food Retailers Wholesalers) Bank of China 47.0 Hong Kong (Banks) Samsung Electronics 111.8 South Korea (Semiconductors) Canon 53.4 Japan (Electronic Office Equipment) Mitsubishi 45.2 Japan (Industrial Suppliers) Commonwlth Bk of Aus 83.6 Australia (Banks) Mitsui 32.2 Japan (Industrial Suppliers) Sumitomo Mitsui Finl 43.0 Japan (Banks) National Australia Bk 58.2 Australia (Banks) Westpac Bking 75.3 Australia (Banks) Cheung Kong 37.9 Hong Kong (Real Estate Holding Development) Sony 31.5 Japan (Consumer Electronics) BHP Billiton 161.7 Australia (General Mining) Aus NZ Bk 64.0 Australia (Banks) Shinhan Financial Grp 21.7 South Korea (Banks)
11.0
-5.4
-15.3
Dow Jones Regional Sector Titans Oil Gas
1.05%
Media
0.91
Ind Gds Svcs Insurance
14.6%
21.5%
9.7
19.6
0.67
9.0
18.9
1.21
8.6
3.7
Chemicals
0.81
7.9
29.2
Constructn Mat
0.86
7.0
10.4
Global 50
0.63
Tiger 50*
0.90
Asian 50
-0.25
Arab 50
-0.62
5.1
6.6
4.6
16.7
-2.8%
0.4
-9.6
Market value, in billions (U.S)
Company/Country (Industry)
3.4
Sweden
-3.65%
-4.3
*Asia excluding Japan
Latest, in local currency
STOCK PERFORMANCE Latest 52-week Three-year
390.00
1.56%
-19.4%
-55.5%
6.56
1.55
10.5
20.7
72.75
1.54
-3.7
-38.2
47.40
1.28
1.0
-13.5
29.50
1.03
-22.4
8.5
27.14
0.97
-3.8
-5.8
4.37
0.92
8.2
34.0
940,000
0.86
11.2
47.8
3,650
0.83
-16.4
-22.3
2,324
0.65
-6.6
-21.8
52.74
0.65
-7.1
25.3
1,500
0.60
-6.2
-26.5
2,601
0.58
-15.7
-99.6
25.98
0.50
-6.0
-10.8
24.41
0.33
-12.6
4.3
127.20
0.32
24.1
12.3
2,672
0.30
-25.2
-34.2
46.68
0.26
6.2
27.4
23.87
0.25
-5.6
6.5
49,950
0.20
10.6
-5.9
Company/Country (Industry)
Toyota Motor 125.2 Japan (Automobiles) Taiwan Smcndtr Mfg 62.6 Taiwan (Semiconductors) Rio Tinto Ltd. 38.2 Australia (General Mining) QBE Insurance Group 19.2 Australia (Reinsurance) Panasonic 29.0 Japan (Consumer Electronics) Nippon T&T 58.5 Japan (Fixed Line Telecommunications) NTT DoCoMo 72.2 Japan (Mobile Telecommunications) Westfield Grp 22.2 Australia (Retail) Takeda Pharm 36.0 Japan (Pharmaceuticals) Tokio Marine Hldgs 20.6 Japan (Property Casualty Insurance) Reliance Industries 77.0 India (Exploration Production) Mizuho Financial Grp 35.0 Japan (Banks) Nippon Steel 19.7 Japan (Steel) KDDI 26.7 Japan (Mobile Telecommunications) POSCO 35.3 South Korea (Steel) Shin-Etsu Chml 20.6 Japan (Specialty Chemicals) Seven I Hldgs 22.0 Japan (Broadline Retailers) East Japan Railway 21.4 Japan (Travel Tourism) Nissan Motor 36.1 Japan (Automobiles) Nintendo 33.6 Japan (Toys)
All statistics published in The Wall Street Journal Asia from markets outside the Asian-Pacific region reflect preliminary data.
3,355
0.15%
-9.8%
-33.2%
70.70
0.14
13.8
14.4
84.85
0.12
6.6
-31.7
17.68
0.06
-15.8
-22.3
1,058
...
-26.2
-50.8
3,735
...
-5.6
-99.1
146,000
-0.14
1.2
-3.9
9.32
-0.21
-0.2
-33.0
3,855
-0.64
-7.1
-25.1
2,209
-0.67
-15.7
-42.3
47.10
-0.67
-4.2
-20.9
137.00
-0.72
-25.1
-100.0
264.00
-0.75
-29.0
-48.9
510,000
-0.97
4.7
-15.4
500,000
-0.99
-5.3
6.8
4,090
-1.09
-26.0
-23.0
2,098
-1.13
-9.5
-20.7
4,570
-1.19
-29.7
-99.5
729.00
-1.22
-10.3
-11.1
22,160
-1.38
-30.5
-57.3
Credit derivatives
Credit-default swaps: Asian companies
Spreads on credit derivatives are one way the market rates creditworthiness. Regions that are treading in rough waters can see spreads swing toward the maximum—and vice versa. Indexes below are for five-year swaps.
At its most basic, the pricing of credit-default swaps measures how much a buyer has to pay to purchase-and how much a seller demands to sell-protection from default on an issuer's debt. The snapshot below gives a sense which way the market was moving yesterday.
Markit iTraxx Indexes Index: series/version
Europe: 15/1 Eur. High Volatility: 15/1 Europe Crossover: 15/1 Asia ex-Japan IG: 15/1 Japan: 15/1
Mid-spread, in pct. pts. Mid-price
Coupon
SPREAD RANGE, in pct. pts. since most recent roll Maximum Minimum Average
And the most deterioration
CHANGE, in basis points
CHANGE, in basis points
1.03
99.87%
0.01%
1.04
1.01
1.03
98.14
0.01
1.42
1.39
1.41
CHUBU Elec
68
–6
...
31
JX Hldgs
57
7
6
16
3.88
104.70
0.05
3.93
3.79
3.85
Cen Japan Rwy
48
–2
2
13
Daiwa Secs Gp
177
21
19
39
1.07
99.66
0.01
1.16
1.07
1.12
SK Energy
122
–4
–4
–3
Tokyo Elec Pwr
404
40
146
372
1.43
97.86
0.01
1.43
1.39
1.40
Mitsui Chems
122
–4
8
27
DENSO
59
6
–7
10
Shimizu
100
–3
–3
5
Mizuho Corporate
160
11
24
58 34
In percentage points
Spreads Spreads on fiveyear swaps for corporate debt; based on Markit iTraxx indexes.
Showing the biggest improvement...
1.40
Note: Data as of March 31
— NOTICE TO READERS —
STOCK PERFORMANCE Latest 52-week Three-year
Sources: Dow Jones Indexes; WSJ Market Data Group
Source: Dow Jones Indexes
Tracking credit markets dealmakers
Latest, in local currency
Market value, in billions (U.S)
Index roll Europe Crossover t
6.00 4.50 3.00
Europe
Yesterday Yesterday Five-day 28-day
Yesterday Yesterday Five-day 28-day
Ajinomoto
32
–1
...
7
Bk of Tokyo Mitsubishi
113
8
8
Komatsu
53
–2
–1
8
Sumitomo Mitsui Bkg
112
7
8
33
Shin Han
125
–4
–9
–10
Nippon Stl
92
6
6
29
Mitsubishi Matls
104
–2
–7
16
Oji Paper
87
6
14
26
71
–2
–5
–4
Kintetsu
151
9
9
29
Hutchison Whampoa
Source: Markit Group
1.50
t
0 Oct. Nov. Dec. Jan. Feb. Mar. 2010 2011 Source: Markit Group
Behind Europe's deals: Bank revenue rankings, Germany 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
WSJ.com Follow the markets throughout the day, with updated stock quotes, news and commentary at WSJ.com. Also, receive emails that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com/Email.
PERCENTAGE OF TOTAL REVENUE Debt Mergers & capital markets acquisitions
Revenue, in millions
Market share
Equity capital markets
$105
15.6%
4%
56%
29%
11%
Loans
JPMorgan
59
8.7
...
64
28
9
Credit Suisse
51
7.6
6
76
17
1
Goldman Sachs
49
7.3
57
13
29
1
UniCredit
38
5.7
19
37
5
39
Citi
37
5.5
15
47
30
8
Commerzbank Group
30
4.4
5
63
...
32
Bank of America Merrill Lynch
27
4.1
51
24
16
9
BNP Paribas
25
3.8
12
39
11
37 Source: Dealogic
THE WALL STREET JOURNAL.
Monday, April 4, 2011
27
GLOBAL MARKETS LINEUP Commodities
Currencies
Prices of futures contracts with the most open interest
EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; NYBOT: New York Board of Trade; MDEX: Bursa Malaysia Derivatives Berhad; LIFFE: London International Financial Futures Exchange; LME: London Mercantile Exchange; NYMEX: New York Mercantile Exchange; ICE: IntercontinentalExchange Contract ONE-DAY CHANGE Commodity Exchange Last price Net Percentage high CBOT
Corn (cents/bu.) Soybeans (cents/bu.) Wheat (cents/bu.) Live cattle (cents/lb.) Cocoa ($/ton) Coffee (cents/lb.) Sugar (cents/lb.) Cotton (cents/lb.) Crude palm oil (ringgit/ton) Cocoa (pounds/ton) Robusta coffee ($/ton)
CBOT CBOT CME ICE-US ICE-US ICE-US ICE-US MDEX LIFFE LIFFE COMEX
Copper (cents/lb.) Gold ($/troy oz.) Silver (cents/troy oz.) Aluminum ($/ton) Tin ($/ton) Copper ($/ton) Lead ($/ton) Zinc ($/ton) Nickel ($/ton)
COMEX COMEX LME LME LME LME LME LME NYMEX
Crude oil ($/bbl.) Heating oil ($/gal.) RBOB gasoline ($/gal.) Natural gas ($/mmBtu) Brent crude ($/bbl.) Gas oil ($/ton)
NYMEX NYMEX NYMEX ICE-EU ICE-EU
736.00 1393.75 759.50 121.250 3,011 259.90 27.44 195.55 3,340.00 1,950 2,342
42.75 -16.50 -3.75 0.275 59 -4.25 0.33 -4.68 14 34 -76
425.85 1428.90 3773.20 2,620.50 31,355.00 9,351.00 2,665.00 2,347.50 25,550
-4.90 -11.00 -15.60 -10.50 -190.00 -57.00 -5.00 16.50 -575
107.94 3.1345 3.1513 4.362 118.41 997.00
1.22 0.0220 0.0436 -0.027 1.21 7.75
744.25 1,467.50 925.50 121.500 3,775 296.65 33.11 219.70 3,872 2,348 2,543
6.17% -1.17% -0.49 0.23 2.00 -1.61 1.22 -2.34 0.42 1.77 -3.14
Contract low
366.50 909.25 521.75 89.575 2,650 133.75 11.84 68.05 3,163 1,837 1,604
465.75 280.00 1,450.00 775.00 3,818.00 18.50 2,634.00 1,857.00 32,590.00 15,925.00 10,123.00 6,120.00 2,700.00 1,580.00 2,584.00 1,617.00 29,050 18,005
-1.14 -0.76 -0.41 -0.40 -0.60 -0.61 -0.19 0.71 -2.20
129.16 3.5800 3.1500 10.050 134.60 999.75
1.14 0.71 1.40 -0.62 1.03 0.78
66.00 1.6000 2.0122 3.805 58.40 637.00
Source: Thomson Reuters; WSJ Market Data Group
WSJ.com
Price-to-
earnings ratio* 14
Region/Country Index
PREVIOUS SESSION
Net change
139.69
-0.57
4861.83
23.95
CBN 600
27725.61
390.04
Hong Kong
Hang Seng
23801.90
274.38
India
Sensex
19420.39
-24.83
3707.487
28.813
9708.39
-46.71
862.62
-6.76
1555.38
10.25
Australia
SPX/ASX 200
24
China
13 18 ...
Indonesia
Jakarta Composite
...
Japan
Nikkei Stock Average
...
Topix
...
Malaysia
Kuala Lumpur Composite
Percentage change
PERFORMANCE Yr.-to-date 52-wk.
Per U.S. dollar
In U.S. dollars
5.7348 0.1744 2.2909 0.4365 1.3643 0.7330 1.3652 0.7325 1.3672 0.7314 1.3706 0.7296 674.88 0.001482 2634.17 0.0003796 1.4147 0.7069 16.7717 0.0596 3.9721 0.2518 27.162 0.0368 1.4147 0.7069 6.08 0.164592
4.0538 1.6194 0.9644 0.9650 0.9664 0.9688 477.05 1862.00 1 11.8553 2.8077 19.200 1 4.29
0.2467 0.6175 1.0369 1.0362 1.0348 1.0322 0.002096 0.0005371 1 0.0844 0.3562 0.0521 1 0.232848
ASIA-PACIFIC Australia dollar China yuan Hong Kong dollar India rupee Indonesia rupiah Japan yen 1-mo. forward 3-mos. forward 6-mos. forward Malaysia ringgit-c New Zealand dollar Pakistan rupee Philippines peso Singapore dollar South Korea won Taiwan dollar Thailand baht
1.3648 0.7327 9.2632 0.1080 11.0052 0.0909 62.9329 0.0159 12307 0.0000813 119.33 0.008380 119.31 0.008382 119.26 0.008385 119.14 0.008394 4.2814 0.2336 1.8469 0.5415 120.745 0.0083 61.341 0.0163 1.7859 0.5599 1539.97 0.0006494 41.384 0.02416 42.858 0.02333
0.9647 6.5478 7.7792 44.4850 8700 84.35 84.34 84.30 84.21 3.0264 1.3055 85.350 43.360 1.2624 1088.55 29.253 30.295
1.0366 0.1527 0.1285 0.0225 0.0001150 0.011855 0.011857 0.011863 0.011875 0.3304 0.7660 0.0117 0.0231 0.7921 0.0009187 0.03419 0.03301
0.50% 1.43 1.17 -0.13 0.78 -0.48 -0.78 0.66
...
New Zealand
NZSX-50
3452.136
12.287
Pakistan
KSE 100
11887.13
77.59
13
Philippines
Manila Composite
4129.54
74.40
...
Singapore
Straits Times
3120.47
14.62
11
South Korea
Kospi
2121.01
14.31
15
Taiwan
Weighted
8705.13
21.83
10
Thailand
SET
1064.35
16.87
1.61
16
EUROPE
0.36 0.66
Region/Country Index Euro Zone Euro Stoxx
15 14 14 14 16 14 14 13 15 15 17 17
U.S. Australia Britain Canada China Euro Hong Kong India Indonesia Japan New Zealand South Korea Malaysia Philippines Singapore Switzerland Taiwan Thailand
1.037 1.603 1.037 0.1527 1.415 0.129 0.0225 0.0001 0.012 0.766 0.0009 0.330 0.023 0.792 1.077 0.034 0.033
0.3770 2.6524 5.9595 0.1678 3.4770 0.2876 0.7090 1.4104 0.2774 3.6045 1501.50 0.0006660 3.7501 0.2667 6.7278 0.1486 3.6727 0.2723
SDR -f
0.6325
0.8948
1.1176
1.5811
7548.53
28.70
0.38
-1.5
2.1
65.58
6.6
0.5
Finland
12
France
Euro Stoxx 50
0.1
31.0
13
Germany
DAX
-5.1
-14.0
12
Italy
FTSE MIB
-4.0
-12.8
12
2.4
16.4
...
5.4
9 10
138.50 240.33
1.11 1.05
Netherlands
AEX
369.45
3.83
Russia
RTSI
2076.78
32.58
Spain
IBEX 35
10729.9
Switzerland
SMI
6439.91
5.1 28.6
153.4
1.45
8.8
-3.1
82.36
1.30
0.1
-6.5
-0.4
13.2
...
Turkey
ISE National 100
65714.40
1279.89
13
U.K.
FTSE 100
6009.92
101.16
0.68
3.4
23.1
18
AMERICAS
DJ Americas
362.16
2.23
-3.0
8.5
...
Brazil
Bovespa
69268.29
681.59
3.1
32.9
...
Argentina
Merval
3471.95
83.92
11
Mexico
IPC
37775.07
334.56
4.6 -1.7
15.1 -5.3
4.2
6.0
1.5
3.8 8.9 17.3
30.6
1.4
1.97
1.59
-1.7
1.59
1.64
7179.81
-2.2
0.25
1.79
21967.77
0.47
1.83
1.58%
4054.76
14
9.8
14.1
Percentage change
CAC-40
10.5
4.3
PERFORMANCE Yr.-to-date 52-wk. 5.2% 2.7%
PREVIOUS SESSION
Net change 4.48
OMX Helsinki
3.3
-1.1
Close 288.84
-0.5
-5.3
1.49
1.99 1.71 0.62 0.99 2.48 0.89
1.9
4.6
6.2
15.2
-0.1
-2.6
-1.5
46.3
-2.0
13.6
Thomson Reuters is the primary data provider for several statistical tables in The Wall Street Journal, including foreign stock quotations, futures and futures options prices, and foreign exchange tables. Reuters real-time data feeds are used to calculate various Dow Jones Indexes.
Sources: Thomson Reuters; WSJ Market Data Group
MSCI indexes Last
Net change
Price-toDividend earnings yield* ratio* Dows Jones Index
PERFORMANCE YearThree-yr., to-date 52-wk. annualized
Daily
0.52% 0.50 0.63 -0.40 0.86 1.10 1.17 -0.25 1.24 1.43 1.47 1.58
4.5% 5.3 5.1 -2.0 1.6 7.2 2.1 -2.8 5.4 3.8 7.6 5.7
12.6% 7.6 6.6 8.0 15.5 10.2 14.8 0.4 12.5 -2.3 12.1 -1.9
-1.4% -4.7 -5.7 -0.4 3.0 -6.6 1.7 -2.9 1.8 -0.7 2.6 0.2
2.27% 17 1.72 19 4.83 12 5.94 11 3.82 6 3.94 15 1.56 17 1.92 15 2.44 16 1.23 20 3.16 21
Last
Shenzhen -c 441.44 U.S. TSM 13980.77 Global Select Div -d 227.93 Asia/Pacific Select Div -d 303.98 Hong Kong Select Div -d 223.72 U.S. Select Dividend -d 377.47 Islamic Market 2337.60 Islamic Market 100 2339.58 Islamic China/HK Titans 30 1718.55 Sustainability Korea 1638.59 Brookfield Infrastructure 2426.21 DJ-UBS Commodity -p 170.02
Net change
4.60 72.26 1.69 1.51 2.06 2.47 13.19 12.07 32.15 13.09 17.52 0.46
PERFORMANCE YearThree-yr., to-date 52-wk. annualized
Daily
1.05% 0.52 0.75 0.50 0.93 0.66 0.57 0.52 1.91 0.81 0.73 0.27
1.2% 4.7% 6.5 15.3 5.2 12.6 2.1 9.9 1.6 13.4 5.3 12.9 4.9 14.4 4.3 8.6 3.0 13.1 9.9 30.2 7.1 16.6 4.7 27.0
6.2% 0.6 -4.0 -4.7 6.3 -4.0 1.4 -0.7 0.0 7.6 2.1 -5.2
Source: DowJones Indexes
U.S.-dollar and euro foreign-exchange rates in global trading
0.647 0.095 0.882 0.080 0.0140 0.0001 0.007 0.478 0.0006 0.206 0.014 0.494 0.672 0.021 0.021
MIDDLE EAST/AFRICA Bahrain dinar 0.5334 1.8749 Egypt pound-a 8.4309 0.1186 Israel shekel 4.9189 0.2033 Jordan dinar 1.0030 0.9970 Kuwait dinar 0.3925 2.5479 Lebanon pound 2124.17 0.0004708 Saudi Arabia riyal 5.3053 0.1885 South Africa rand 9.5177 0.1051 United Arab dirham 5.1957 0.1925
21.4
OMX Copenhagen
4.12
1.547 1.000 0.147 1.365 0.124 0.0217 0.0001 0.011 0.739 0.0009 0.319 0.022 0.764 1.039 0.033 0.032
1.4147 1.4139 1.4121 1.4087 0.0578 0.1897 0.005330 0.1813 0.3511 0.03525 0.1581 1.0775 1.0777 1.0781 1.0788 0.6506 1.6032 1.6026 1.6011 1.5982
1.9
Denmark
40.94
£ 0.624 0.647
0.7069 0.7073 0.7081 0.7099 17.295 5.2707 187.62 5.5169 2.8486 28.368 6.3240 0.9281 0.9279 0.9275 0.9269 1.5370 0.6238 0.6240 0.6246 0.6257
6.1
19
280.02
A$ 0.965
1 0.9995 0.9982 0.9957 0.0409 0.1341 0.003768 0.1281 0.2481 0.02492 0.1118 0.7616 0.7618 0.7621 0.7626 0.4599 1.1332 1.1328 1.1317 1.1297
0.45
-2.3
*Fundamentals are based on data in U.S. dollar. Footnotes: c-in local currency. d-dividends reinvested. p-previous day. Note: All data as of 11:30 a.m. ET.
US$
In U.S. dollars
1.94
3.8
2623.84
Global TSM 2725.17 14.22 Global DOW 2197.24 10.83 Global Titans 50 186.11 1.16 Asia/Pacific TSM 1382.50 -5.49 Asia/Pacific ex-Japan TSM 3671.12 31.41 Europe TSM 2945.10 32.18 Emerging Markets TSM 4897.59 56.54 Asian Titans 50 141.65 -0.35 BRIC 50 690.33 8.47 CBN China 600 -c 27725.61 390.04 China Offshore 50 4569.92 66.13 Shanghai -c 376.38 5.87
Cross rates
Per U.S. dollar
435.10
13
Dow Jones Indexes 2.17% 1.95 2.29 2.46 2.57 2.77 2.10 2.67 2.51 2.51 2.27 2.27
In euros
52.01
-0.9
Stoxx Europe 600
Price-toDividend earnings yield* ratio* Dows Jones Index
Per euro EUROPE Euro zone euro 1 1-mo. forward 1.0005 3-mos. forward 1.0018 6-mos. forward 1.0043 Czech Rep. koruna-b 24.467 Denmark krone 7.4564 Hungary forint 265.42 Norway krone 7.8047 Poland zloty 4.0298 Russia ruble-d 40.132 Sweden krona 8.9465 Switzerland franc 1.3130 1-mo. forward 1.3127 3-mos. forward 1.3122 6-mos. forward 1.3113 Turkey lira 2.1744 U.K. pound 0.8825 1-mo. forward 0.8828 3-mos. forward 0.8836 6-mos. forward 0.8852
2962.92
2.5
Stoxx Europe 50
*P/E ratios use trailing 12-months, as-reported earnings European and Americas index data are as of 5:00 p.m. ET.
Price-to-
earnings ratio* 14
7.9%
-2.0%
-0.41%
8
14
In euros
Per euro
Stock indexes from around the world, grouped by region. Shown in local-currency terms.
Close
ASIA-PACIFIC DJ Asia-Pacific
...
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 $1 million and more, as quoted by Thomson Reuters.
Follow the markets throughout the day with updated stock quotes, news and commentary at WSJ.com Also, receive email alerts that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com/Email
Major stock market indexes
London close on April 1
C$ 0.964 1.000 1.546 0.147 1.364 0.124 0.0217 0.0001 0.011 0.739 0.0009 0.319 0.022 0.764 1.039 0.033 0.032
YUAN 6.548 6.787 10.497 6.790 9.263 0.842 0.1472 0.0008 0.078 5.016 0.0060 2.164 0.151 5.187 7.055 0.224 0.216
EURO 0.707 0.733 1.133 0.733 0.108 0.091 0.0159 0.0001 0.008 0.541 0.0006 0.234 0.016 0.560 0.762 0.024 0.023
HK$ 7.779 8.064 12.471 8.066 1.188 11.005 0.1749 0.0009 0.092 5.959 0.0071 2.570 0.179 6.162 8.382 0.266 0.257
RUPEE 44.485 46.111 71.316 46.127 6.794 62.933 5.718 0.0051 0.527 34.076 0.0409 14.699 1.026 35.238 47.931 1.521 1.468
RUPIAH 8699.43 9017.40 13946.50 9020.57 1328.60 12307.09 1118.29 195.56 103.14 6663.77 7.99 2874.52 200.63 6891.19 9373.38 297.39 287.16
YEN 84.350 87.433 135.226 87.464 12.882 119.330 10.843 1.8961 0.0097 64.612 0.0775 27.871 1.945 66.817 90.885 2.884 2.784
NZ$ 1.305 1.353 2.093 1.354 0.199 1.847 0.168 0.0293 0.0002 0.015 0.0012 0.431 0.030 1.034 1.407 0.045 0.043
WON 1088.55 1128.34 1745.12 1128.74 166.25 1539.98 139.93 24.47 0.13 12.91 833.83 359.69 25.11 862.29 1172.88 37.21 35.93
RINGGIT PH. PESO 3.026 43.360 3.137 44.945 4.852 69.513 3.138 44.961 0.462 6.622 4.281 61.341 0.389 5.574 0.0680 0.9747 0.0003 0.0050 0.036 0.514 2.318 33.214 0.0028 0.0398 14.327 0.070 2.397 34.347 3.261 46.719 0.103 1.482 0.100 1.431
S$ S FRANC 1.262 0.928 1.309 0.962 2.024 1.488 1.309 0.962 0.193 0.142 1.786 1.313 0.162 0.119 0.0284 0.0209 0.0001 0.0001 0.015 0.011 0.967 0.711 0.0012 0.0009 0.417 0.307 0.029 0.021 0.735 1.360 0.043 0.032 0.042 0.031
TW$ 29.253 30.322 46.896 30.332 4.468 41.384 3.760 0.6576 0.0034 0.347 22.407 0.0269 9.666 0.675 23.172 31.519
BAHT 30.295 31.402 48.567 31.413 4.627 42.858 3.894 0.6810 0.0035 0.359 23.206 0.0278 10.010 0.699 23.998 32.642 1.036
0.966
Source: Thomson Reuters via WSJ Market Data Group
Developed and emerging-market regional and country indexes from MSCI Barra as of April. 01, 2011 Price-toDividend earnings yield ratio Morgan Stanley Index
LOCAL-CURRENCY PERFORMANCE
Last
Daily
YTD
52-wk.
...%
...
ALL COUNTRY (AC) WORLD* 343.64 -0.07%
3.9%
11.8%
...
...
World (Developed Markets) 1,334.93
0.08
4.3
11.2
...
...
World Small Cap
250.34
-0.35
5.9
22.8
...
...
Kokusai (World ex-Japan)
1,334.32
0.14
5.4
12.5
...
...
EAFE
1,702.55
0.01
2.7
7.5
...
...
Emerging Markets (EM)
1,170.87
-0.97
1.7
15.9
...
...
AC ASIA PACIFIC EX-JAPAN 486.06
-0.78
1.5
15.0
...
...
AC Far East ex-Japan
533.79 -0.80
1.7
18.0
...
...
Japan
539.89
0.33
-3.8
-11.8
...
...
China
68.43
0.65
2.9
7.1
...
...
China A (China Domestic)
3,155.56
-1.04
2.1
-1.6 16.5
...
...
Hong Kong
12,121.02
0.04
-0.7
...
...
India
767.04
0.97
-5.5
7.3
...
...
Korea
604.23
0.61
2.9
25.8
...
...
Malaysia
570.74
0.99
1.8
17.8
...
...
Singapore
1,715.40
0.35
-2.3
7.5
...
...
Taiwan
308.25
0.58
-3.4
9.1
...
...
Thailand
427.11
-0.69
3.8
29.6
...
...
Australia
988.27
0.28
2.3
-2.1
...
...
New Zealand
88.03
0.50
5.0
3.7
...
...
US BROAD MARKET
1,507.76
0.07
5.9
15.5
...
...
EUROPE
95.47
-0.95
0.1
4.4
*Twenty-three developed and 26 emerging markets
Source: MSCI Barra
28
THE WALL STREET JOURNAL.
Monday, April 4, 2011
SCANNING THE GLOBE Dow Jones Industrial Average
Nasdaq Composite Index
P/E: 15
s 56.99, or 0.46%
LAST: 12376.72 YEAR TO DATE: OVER 52 WEEKS
s 8.53, or 0.31%
LAST: 2789.60 YEAR TO DATE: OVER 52 WEEKS
s 799.21, or 6.9% s 1,449.65, or 13.3%
S&P 500 Index
P/E: 13*
P/E: 18 s 6.58, or 0.50%
LAST: 1332.41 YEAR TO DATE: OVER 52 WEEKS
s 136.73, or 5.2% s 387.02, or 16.1%
s 74.77, or 5.9% s 154.31, or 13.1%
High 12500
2800
1350
12000
2700
1300
11500
2600
1250
11000
2500
1200
10500
2400
1150
Close Low
t
50–day moving average
10000 31 7 Jan.
14 21
28
4 Feb.
11
18 25
4 Mar.
11
18
25
2300
1
31 7 Jan.
14 21
28
4 Feb.
11
18 25
4 Mar.
11
18
25
1100
11
31 7 Jan.
14 21
28
4 Feb.
11
18 25
U.S. stocks: most active...
Symbol
Volume, in millions
Latest
AT&T Alcoa AmExpress BankAm Boeing Caterpillar Chevron CiscoSys CocaCola Disney DuPont ExxonMobil GenElec HewlettPk HomeDpt Intel IBM JPMorgChas JohnsJohns KftFoods McDonalds Merck Microsoft Pfizer ProctGamb 3M TravelersCos UnitedTech Verizon
T AA AXP BAC BA CAT CVX CSCO KO DIS DD XOM GE HPQ HD INTC IBM JPM JNJ KFT MCD MRK MSFT PFE PG MMM TRV UTX VZ
121.9 24.9 5.0 94.2 3.9 6.1 6.5 62.6 9.3 8.4 3.8 15.5 48.4 19.2 9.3 82.6 4.4 25.3 9.9 6.3 3.9 11.5 63.1 28.0 8.2 3.5 3.1 3.2 14.7
$30.62 17.47 45.36 13.37 74.01 113.12 108.32 17.04 67.22 42.85 55.19 84.68 20.34 40.98 37.56 19.72 164.27 46.35 59.49 31.61 75.99 33.07 25.48 20.38 62.08 93.13 59.71 85.32 38.47
0.01 –0.19 0.16 0.04 0.08 1.77 0.83 –0.11 0.88 –0.24 0.22 0.55 0.29 0.01 0.50 –0.46 1.20 0.25 0.24 0.25 –0.10 0.06 0.09 0.07 0.48 –0.37 0.23 0.67 –0.07
0.03% –1.08 0.35 0.30 0.11 1.59 0.77 –0.64 1.33 –0.56 0.40 0.65 1.45 0.02 1.35 –2.28 0.74 0.54 0.41 0.80 –0.13 0.18 0.35 0.34 0.78 –0.40 0.39 0.79 –0.18
WalMart
WMT
7.9
52.13
0.08
0.15
Stock
CHANGE Points Percentage
11
18
25
11
Sources: WSJ Market Data Group; Birinyi Associates
*Price-to-earnings ratio for the Nasdaq 100 Note: Price-to-earnings ratios are for trailing 12 months
DJIA component stocks
4 Mar.
Stock
Volume, Symbol in millions
Citigroup SPDR S&P 500 AT&T FordMotor BankAm Intel iShrMSCIEmrgMkt Gnzym PwrShrs QQQ SPDR FnclSelSct Microsoft CiscoSys iShrRu2000 iShrMSCI Jpn GenElec
C SPY T F BAC INTC EEM GENZ QQQ XLF MSFT CSCO IWM EWJ GE
ADRs of Asian companies* Latest
CHANGE Points Percentage
259.3 151.9 121.9 116.1 94.2 82.6 82.2 68.5 68.0 65.4 63.1 62.6 49.2 48.7 48.4
$4.45 133.15 30.62 15.16 13.37 19.72 49.45 76.01 57.46 16.53 25.48 17.04 84.54 10.30 20.34
0.03 0.56 0.01 0.25 0.04 –0.46 0.78 –0.14 0.03 0.14 0.09 –0.11 0.37 –0.01 0.29
0.68% 0.42 0.03 1.68 0.30 –2.28 1.60 –0.19 0.05 0.85 0.35 –0.64 0.44 –0.15 1.45
INHX 4,921.6 BONE 102.8 AIB 2,626.5 RMTR 220.7 ALEX 2,600.4
$4.73 3.78 2.89 2.58 54.47
1.11 0.68 0.49 0.42 8.82
30.66% 21.94 20.42 19.44 19.32
$5.06 2.14 8.23 6.60 15.01
–2.94 –0.73 –2.70 –2.00 –4.38
–36.75% –25.44 –24.70 –23.26 –22.59
52-WEEK High Low
$13.85 139.44 15.55 5.68 97.07 12.55 3.94 7.27 58.22 4.50 44.56 77.92 31.10 37.65 7.67 21.59 22.81 6.66 54.70 53.16 38.67 17.60 51.51 16.58 19.24 93.90 75.00 38.50 16.81 9.10
Biggest gainers... Inhibitex BacterinIntlHldgs AldIrhBk ADS Ramtron Alex&Bldwn
...Biggest losers Omeros AscentSolarTch EXFO CleanDieslTech ResConnInc
OMER 1,318.0 ASTI 2,496.6 EXFO 1,635.5 CDTI 255.3 RECN 3,871.5
Volume, Symbol in OOOs
Stock
TaiwanSemi Baidu ADS SuntechPwr MitsuUFJ ADS BHPBilton ADS AU Optrncs UtdMicro ADS Slcnwr ADS ICICI Bk ADS PranaBiotech HondaMtr ADS Infosys FocusMediaHldg TataMtrs ADS NmuraHldg LG DisplayADS KT Crp ADS AdSemEg ADS ChinaMobile CtripInt ADS SonyCp ChinaUnicomHK Netease.com KoreaElecPwr SK Tele ADS ToyotaMtr ADS ChinaLfIns ADS Yanzhou ADS Wipro ADS O2MicroIntl
$9.30 59.67 7.05 4.44 58.38 8.14 2.49 4.45 33.21 1.09 28.33 53.28 14.36 15.25 4.75 13.75 17.48 3.33 44.36 31.35 25.85 10.91 26.16 10.43 14.58 67.56 53.63 18.29 11.30 4.75
CHANGE Latest Points Percentage
TSM 10,633.2 $12.21 0.03 BIDU 7,243.1 138.83 1.02 STP 5,807.9 9.37 –0.49 MTU 5,774.5 4.63 0.03 BHP 3,335.9 96.84 0.96 AUO 3,154.9 8.67 –0.11 UMC 2,860.6 2.75 0.02 SPIL 2,740.3 6.18 0.14 IBN 1,813.7 50.08 0.25 PRAN 1,665.8 2.62 –0.19 HMC 1,627.7 36.82 –0.69 INFY 1,608.7 73.11 1.41 FMCN 1,523.0 30.63 –0.04 TTM 1,479.6 27.78 –0.01 NMR 1,462.8 5.11 –0.09 LPL 1,458.3 16.36 0.63 KT 1,447.6 20.30 0.77 ASX 1,447.4 5.49 0.01 CHL 1,357.9 46.93 0.68 CTRP 1,321.1 41.65 0.16 SNE 1,291.2 31.87 0.04 CHU 1,265.5 17.26 0.66 NTES 1,096.7 50.63 1.12 KEP 897.6 12.52 0.28 SKM 887.6 18.92 0.11 TM 744.3 80.51 0.26 LFC 651.6 56.84 0.79 YZC 628.3 37.89 1.62 WIT 591.6 14.93 0.28 OIIM 560.0 7.38 –0.22
0.25% 0.74 –4.97 0.65 1.00 –1.25 0.73 2.32 0.50 –6.76 –1.84 1.97 –0.13 –0.04 –1.73 4.01 3.94 0.18 1.47 0.39 0.13 3.98 2.26 2.29 0.58 0.32 1.41 4.47 1.91 –2.89
*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
4.950% 5.543 2.187 3.822 2.262 4.298 1.837 3.375 1.803 3.445 1.856 3.727 1.831 3.374 0.772 2.926 2.895 4.818 0.210 1.284 1.803 3.661 8.799 8.777 3.149 5.305 0.718 1.992 1.397 3.734 0.802 3.444
SPREAD OVER TREASURYS, in basis points Latest Previous Month ago Year ago
414.8 209.9 138.5 37.8 146.0 85.4 103.5 -6.9 100.1 0.1 105.4 28.3 102.9 -7.0 -3.0 -51.8 209.3 137.4 -59.2 -216.0 100.1 21.7 799.7 533.3 234.7 186.1 -8.4 -145.2 59.5 29.0 ... ...
412.8 205.0 139.3 36.2 147.2 86.0 100.2 -12.4 99.8 -1.9 104.4 27.3 101.3 -7.8 -1.6 -57.2 213.3 138.4 -56.7 -219.0 99.0 20.2 805.9 532.7 240.4 185.9 -8.6 -149.0 57.0 24.9 ... ...
428.4 208.7 123.6 22.9 167.2 86.3 114.9 -11.3 92.0 -14.5 94.7 16.4 87.8 -21.8 6.5 -55.8 231.2 140.8 -41.2 -211.8 68.9 -2.6 511.4 411.5 251.9 195.3 2.5 -149.6 75.0 30.8 ... ...
388.5 188.6 13.5 -39.9 0.0 -33.0 66.8 -31.5 52.5 -48.7 -13.5 -45.7 -10.4 -77.4 -22.9 -95.9 45.0 -1.7 -88.3 -250.2 -14.5 -54.0 58.5 32.5 8.6 -4.1 -58.8 -194.6 -8.7 6.4 ... ...
Previous
YIELD Month ago
Year ago
4.910% 5.492 2.175 3.804 2.254 4.302 1.784 3.318 1.780 3.423 1.826 3.715 1.795 3.364 0.766 2.870 2.915 4.826 0.215 1.252 1.772 3.644 8.841 8.769 3.186 5.301 0.696 1.952 1.352 3.691 0.782 3.442
4.941% 5.490 1.893 3.632 2.329 4.266 1.806 3.290 1.577 3.258 1.604 3.567 1.535 3.185 0.722 2.845 2.969 4.811 0.245 1.285 1.346 3.377 5.771 7.518 3.176 5.356 0.682 1.907 1.407 3.711 0.657 3.403
4.941% 5.756 1.191 3.471 1.056 3.540 1.724 3.555 1.581 3.383 0.921 3.413 0.952 3.096 0.827 2.911 1.506 3.853 0.173 1.368 0.911 3.330 1.641 4.195 1.142 3.829 0.468 1.924 0.969 3.934 1.056 3.870
Source: Thomson Reuters
5% 4
One year ago
s
6.500% Australia 2 5.750 10 3.800 Austria 2 3.500 10 4.000 Belgium 2 4.250 10 1.750 Canada 2 3.500 10 4.000 Denmark 2 4.000 10 3.750 France 2 2.500 10 1.500 Germany 2 2.500 10 0.580 Hong Kong 2 2.440 10 2.000 Italy 2 3.750 10 0.200 Japan 2 1.300 10 1.750 Netherlands 2 3.250 10 5.450 Portugal 2 3.850 10 2.300 Spain 2 5.500 10 4.000 Switzerland 2 2.000 10 4.500 U.K. 2 3.750 10 0.750 U.S. 2 3.625 10
Yield
3 2 s
Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year and 10-year government bonds around the world. Data as of 12 p.m. ET
Friday 1 0
1
3
6
month(s)
1
2 3 5 710
years maturity
30
Ryan Index
Yield to maturity
Modified duration
30-year Treasury 10-year Treasury 7 Year Treasury Five-year Treasury Ryan Index 3 Year Treasury Two-year Treasury 1 Year Treasury Six-month Treasury Ryan Cash Index-a Three-month bill
4.488% 3.448 2.900 2.243 2.528 1.282 0.805 0.244 0.153 0.122 0.061
16.09 8.22 6.30 4.70 6.70 2.89 1.98 0.93 0.49 0.44 0.25
One-month bill
0.031
0.07
Month to-date
TOTAL RETURN
Quarter to-date
0.40 % 0.04 –0.02 –0.07 0.04 –0.06 –0.03 0.02 0.01 0.01 0.01
0.40 % 0.04 –0.02 –0.07 0.04 –0.06 –0.03 0.02 0.01 0.01 0.01
...
a-Performance of a cash investment
...
Year to-date 12-month
–1.47 % –0.34 –0.06 –0.04 –0.36 –0.25 –0.10 0.17 0.09 0.09 0.05
9.99 % 7.17 7.11 5.16 5.77 2.96 1.45 0.78 0.33 0.38 0.25
0.04
0.16
Source: Ryan ALM
Key money rates Latest
52 wks ago
Prime rates U.S.
3.25%
3.25%
Canada
3.00
2.25
Latest Euro Libor One month Three month
52 wks ago
Offer Eurodollars One month
Bid
0.92500%
0.36563%
0.3500%
0.2500%
1.19000
0.57563
Three month
0.5500
0.4500
Japan
1.475
1.475
Six month
1.51125
0.88188
Six month
0.7500
0.6000
Britain
0.50
0.50
One year
1.96125
1.18875
One year
1.0500
0.8500
ECB
1.00
1.00
Switzerland
0.55
0.53
Hibor One month
0.21000
0.09821%
Latest
52 wks ago
Australia
4.75
4.00
Three month
0.25964
0.14893
U.S. discount
0.75%
0.75%
Hong Kong
5.00
5.25
Six month
0.33000
0.24929
Fed-funds target
0.25
0.25
One year
0.65000
0.56857
Call money
2.00
2.00
Libor One month
Asian dollars One month
0.2529%
0.24295%
0.24863%
Three month
0.30100
0.29150
Three month
0.3080
0.2932
Six month
0.45950
0.44156
Six month
0.4645
0.4430
U.K. (BBA)
0.532
0.507
One year
0.78525
0.91500
One year
0.7885
0.9120
Euro zone
0.58
0.30
0.25%
Overnight repurchase rates U.S. 0.17%
…
Sources: WSJ Market Data Group; Reuters
THE WALL STREET JOURNAL.
Monday, April 4, 2011
29
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 Friday. Below each index are its most actively traded stocks. The charts show the percentage change in each index’s or stock’s value, rather than the point change, for purposes of comparison. The index level or stock price is indicated on each axis. All indexes and stocks are shown in local currency terms.
Nikkei Stock Average
CBN 600
Japan
China
t
9708.39 0.48% or 46.71
Recent gains led to profit-taking, but the index rose 1.8% for the week, its second straight weekly gain. The nuclear crisis and corporate outlook were drags.
Concerns eased over an economic slowdown, helping snap a four-day losing streak, but stocks still fell 1.2% for the week and are down for three of the past four weeks.
A 2.8% weekly gain was its second straight. Analysts said they expect the index to find support at 22400 and test resistance at 24400 until the end of April.
South Korea s
2121.01 0.68% or 14.31
The won’s recent strength drew strong foreign investment, as the index hit a record close, rising 3.3% for the week. Analysts predict a strong showing in April.
36000
3000
12500
35000
30000
2500
10000
28000
24000
2000
7500
21000
18000
1500
Change Net
14000 A M J J A S O N D J F M 2010 2011 Volume in millions
Close
397.22
7.89
Volume in millions
Close
Tokyo Elec Power
203.61
449
–17
–3.65
InnerMoBaotouSteel
Mizuho Financial
146.97
137
–1
–0.72
ChinaMinshengBkg 304.22
Mtshbsh Fin Grp
91.40
390
6
1.56
AgricBkofChina
210.78
TaiheiyoCement
67.71
152
12
8.57
ShanghaiPudDevBank
139.48
M'bishi Heavy
45.57
379
–3
–0.79
China State Con
118.37
Stock
s
Kospi 23801.90 1.17% or 274.38
42000
A M J J A S O N D J F M 2010 2011
Follow the markets throughout the day, with updated stock quotes, news and commentary at WSJ.com. Also, receive emails that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com/Email.
s
Hong Kong
15000
5000
WSJ.com
Hang Seng 27725.61 1.43% or 390.04
Stock
%
Change Net
12000 A M J J A S O N D J F M 2010 2011 Volume in millions
Close
431.34
6.56
CCB
395.24
7.42
Bank Of China
393.88
4.37
3.82
ChinaPetroChem
122.46
7.82
0.81
PetroChina
115.09
12.02
%
Stock
0.41
5.48
Icbc
5.81
0.22
3.94
2.79
0.03
1.09
14.14
0.52
3.73
0.03
Change Net
%
1000 A M J J A S O N D J F M 2010 2011 Stock
Volume in millions
Close
244.00
Change Net
%
1.55
Chinhung Int
54.84
0.13
1.78
Foosung
10.80
0.04
0.92
Shinwoo
8.17
1,025.00
15.00
1.49
0.02
0.26
Woongjin Chem
7.15
1,400.00
10.00
0.72
0.24
2.04
Hynix Semi
6.44
31,600.00 300.00
0.96
0.10
16.00
7.02
8,200.00 500.00
6.49
Asian stocks in the news CNOOC
Ping An Ins China
Hong Kong
HK$20.50
Hong Kong
s 4.6% or HK$0.90
HK$82.60
s 4.8% or HK$3.75
Energy-sector shares were supported by crude-oil futures, which topped $107 a barrel.
Financial stocks were strong and Daiwa raised its target price on the insurer.
In Hong Kong dollars
In Hong Kong dollars
30
150
24
120
18
90
12
60
6 A M J 2010
30
J A S O N D J F M 2011
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
A M J 2010 14 1.44 2.2
S
1.2% 4.6%
3.1% 8.0%
Insurance Ping An Ins China
Asustek Computer
China Merch Bk
Taiwan
Hong Kong
TW$248.00
Tingyi (Cayman Islands) Hldg Beijing Enterprs Hldgs HK$20.95
t 2.8% or HK$0.60
Shares fell despite positive comments from Goldman Sachs, which kept it at “conviction buy.”
The bank is exploring ways to replenish capital, after conducting a rights issue last year.
In Taiwan dollars
In Hong Kong dollars
500
M
30 2.72 0.8
HK$18.46
t 2.9% or HK$0.56
In Hong Kong dollars
Hong Kong
HK$42.30 Taiwan
t 4.7% or HK$2.10
In Hong Kong dollars
1.2% 7.5%
-3.0% 20.8%
Acer
Goldman Sachs cut its target price after lowering its earnings-per-share forecast.
30
-0.3% 4.8%
TW$57.10
t 4.8% or TW$2.90
Investors appear worried over the PC maker’s future in the face of threats from tablet devices. 100
In Taiwan dollars
150
32
24
80
120
300
24
18
60
90
200
16
12
40
60
8 A M J 2010
8 30.62 5.6
J A S O N D J F M 2011
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
... 1.2% -2.6% -2.2%
Hong Kong
The instant-noodle maker agreed to delay a planned price increase, amid government pressure. 40
100
Technology Asustek Computer
J F 2011
400
A M J J A S O N D J F M 2010 2011 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
D
PERCENTAGE CHANGE Daily 1 wk. 52 wks
22.8% 56.7%
t 2.6% or TW$6.50
N
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Oil & Gas CNOOC
O
4.5% -5.3%
6 A M J 2010
15 1.39 1.1
J A S O N D J F M 2011
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Banks China Merch Bk
... 1.1% -2.8% -3.9%
6.5% -2.8%
20 A M J 2010
28 0.66 1.8
J A S O N D J F M 2011
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Food & Beverage Tingyi (Cayman Islands) Hldg
-0.7% -0.7% -2.9% -11.3%
7.7% 0.2%
30 A M J 2010
16 2.68 1.7
Price-to-earnings ratio Earnings per share, past four quarters Dividend yield
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Indus Gds & Svcs Beijing Enterprs Hldgs
-0.9% 0.2% -4.7% -7.9%
10.7% -24.7%
J A S O N D J F M 2011 10 5.57 5.4
PERCENTAGE CHANGE Daily 1 wk. 52 wks
Technology Acer
... 1.2% -4.8% -21.6%
4.5% -38.2%
30
THE WALL STREET JOURNAL.
Monday, April 4, 2011
HEARD ON THE STREET FINA NCIA L A NA LYSIS & COMMENTARY
Email:
[email protected]
WSJ.com/Heard
Nasdaq ices NYSE’s deal China might can After years of rivalry, Nasdaq OMX Group is ready to take charge of the Big Board. With an unsolicited bid for NYSE Euronext, exchange operators Nasdaq and IntercontinentalExchange are looking to push aside Deutsche Börse, which already has signed a deal with NYSE. Nasdaq and ICE are together offering roughly $43 in cash and stock based on Friday’s close, a 22% premium to the value of Deutsche’s $35 all-stock offer. But with NYSE shares closing Friday well below the offer at $39.60, this is no ordinary contested bid. While price will be key, victory depends heavily on regulators. In assessing Nasdaq-ICE’s bid, NYSE will have to weigh price with the risks of either deal being blocked. The Nasdaq-ICE offer would split NYSE Euronext, its derivatives businesses going to ICE and its stock and options exchanges to Nasdaq. The latter will be the sticking point for regulators. While stock trading is highly competitive, due to the proliferation of electronic-trading platforms, combining NYSE with Nasdaq would form a U.S. monopoly on listings. Nasdaq will have to persuade regulators that the Securities and Ex-
price of aluminum
Exchange student Share performance year to date: 30%
NYSE Euronext
20 10 0
Nasdaq OMX Group Bloomberg News
J
F
M
Bob Greifeld, chief executive officer of Nasdaq OMX Group
Source: WSJ Market Data Group
change Commission’s influence over listing prices is enough. Meanwhile, Deutsche Börse’s combination with NYSE Euronext would establish a dominant firm in European futures trading. That leaves a tough call for the NYSE board as it weighs each bid. There is no love lost between Nasdaq CEO Robert Greifeld and NYSE CEO Duncan Niederauer, but with Nasdaq-ICE offering a bigger premium and NYSE’s own shares trading 12% above the Deutsche Börse offer, it looks tough simply to stick with Deutsche Börse’s offer as is.
To switch horses, NYSE should demand a big break-fee commitment from Nasdaq-ICE to offset the regulatory risk. That would give NYSE a stronger position to push Deutsche Börse to increase its own bid. NYSE’s next move will be influenced heavily by how the stocks trade. If Friday is anything to go by, the pressure could get intense. With shares in Nasdaq and NYSE rising 9% and 13%, the Deutsche Börse bid looks increasingly inadequate. —Rolfe Winkler and Thorold Barker
presented by:
in partnership with:
Is your innovation engineered for success? Sometimes recognition is all that’s needed to elevate an idea onto the world stage. From an entirely new invention to the advancement of a classic, the Asian Innovation Awards and the Credit Suisse Technopreneur Award are committed to finding the next big ideas in Asia. Whether conceptualized in a backyard or a laboratory, we are seeking innovations that break with conventional processes in creative ways to improve quality of life or productivity, as well as those demonstrating the greatest potential for financial success. Entries welcomed from individuals, small businesses, large corporations and academia in Asia Pacific, from any field including health care, technology, medicine, energy, social sciences, government and others.
To enter or to find out more, visit wsj-asia.com/aia
Deadline Extended: April 8, 2011 © 2011 Dow Jones & Company, Inc. All rights reserved.
If only the Chinese would drink more soda. It wouldn’t help their waistlines, but aluminum producers would be grateful. Unlike in developed economies like the U.S., packaging for indulgences like processed food and fizzy drinks accounts for just 6%of aluminum consumption in China, according to Paul Adkins, managing director of Beijing consulting firm AZ China. The U.S. figure is closer to 40%. In China, construction and transportation uses are far more important. Aluminum bulls, who have bid up cash prices by roughly a third since July, should be nervous. On the supply side, the unwinding of energy-efficiency measures has helped reverse a decline in Chinese aluminum production. February saw the biggest monthly increase in a decade, on an annualized basis, according to the Royal Bank of Scotland. At today’s price of about $2,600 a metric ton, even the least efficient Chinese producers cover their cash costs, RBS says. In terms of Chinese demand, construction’s outlook is mixed. On one hand, Beijing has tried to rein in property speculation via targeted restrictions and tighter monetary policy. This should curb property prices and building activity. Against that stand, the government plans to build 10 million new budget residences. Policy also is a wild card in the automotive sector. Beijing and Shanghai have imposed restrictions on vehicle ownership to ease traffic. The medium-term outlook also is debatable. The standard view is that
In favor Aluminum spot prices on the London Metal Exchange, dollars per metric ton $2,600 2,400 2,200 2,000 1,800
2010
'11
Source: WSJ Market Data Group
China is catching up with Western demand levels. Yet Goldman Sachs thinks China’s per capita aluminum consumption of about 26 pounds in 2010 already was high relative to per-capita gross domestic product. Established industrial economies consumed less than half that amount at a similar stage of development. AZ’s Mr. Adkins goes further: “In America, the poorest farmers still drive their cars, drink beer from aluminum cans and eat frozen food. Not in China.” The idea that China’s appetite for aluminum will spiral upward as its population gets wealthier, therefore, is potentially flawed. A catch-up toward Western income levels remains a reasonable view. Wholesale adoption of Western habits isn’t. —Liam Denning
Powering down in Japan A key question for Japan’s economy is how much electricity it will have in the peak summer months. The region around Tokyo, which accounts for 40% of the nation’s economy, most of Japan Inc.’s head offices and a third of the population, can barely meet peak demand now. In the event of a hot summer, there may only be enough electricity to supply three-quarters of demand. Shortfalls could last months, or years. So far, rolling blackouts, conservation, lower industrial demand and spring weather have prevented the situation from turning dire. But the future isn’t bright. First, four of the six reactors at the Fukushima Daiichi nuclear power plant are finished. The other two reactors might be as well, simply by association. Other nuclear plants that powered down after the March earthquake and those that were already off line for regular maintenance may struggle to get local political approval to soon fire up again. Fixing nuclear-facility vulnerabilities such as inadequate backup cooling systems, as well as earthquakeand tsunami-proofing, could take years and billions of dollars. And until this month, barely-contained
spent uranium fuel pools weren’t a focus. They are now. Plants across Japan are sitting on 13,500 tons of spent fuel, much of that in pools like those that proved hazardous in Fukushima. Reactors are forecast to generate that much again over the next decade, Japan’s Federation of Electric Power Companies said last year. Four years after a 2007 quake, three of seven reactors in the Kashiwazaki Kariwa nuclear plant operated by Tokyo Electric Power Co. still aren’t generating power. In August, two more Kashiwazaki reactors are set to shut down for scheduled maintenance. All told, just the nuclear-power shortfall may mean 23% of TEPCO’s generating capacity would be out. That excludes damaged conventional plants, which may not return to use as quickly as the company’s optimistic assumptions.Also, any shortage of rainfall makes it harder to operate pumptype hydroelectric stations. Other types of generation such as natural gas and oil are used for peak periods, but nuclear plants operate as continuously as possible to meet baseload demand. When it comes to electricity, the heat will be on for the foreseeable future. —James Simms
THE WALL STREET JOURNAL.
Monday, April 4, 2011
31
MANAGEMENT
BY ROBBIE WHELAN AND DAWN WOTAPKA One of the fattest executive-pay packages last year went to the chief of a company in an unlikely industry: home building. Even as home prices continued to fall and the number of new houses being built kept sinking, Paul Saville, the chief executive of NVR Inc., received total 2010 compensation valued at nearly $31 million, according to NVR’s proxy statement. That made Mr. Saville, whose compensation was mostly in stock and option awards, the highestpaid executive in the home-building sector and among the highest
Paul Saville and NVR have managed to prosper in an industry that is mired in red ink. paid public-company CEOs overall. In addition, he reaped a gain of $21.7 million from exercising stock options last year. “Historically, this pay level looks more like that of a CEO of one of the big Wall Street banks,” says David Wise, a principal at Hay Group, a consulting firm that researches executive compensation. “It’s a significant pay package for a home builder.” Mr. Saville and a spokesman for NVR, the largest U.S. home builder by market capitalization, declined to comment. Indeed, unlike most public companies, the secretive builder rarely comments to the press on any subject. It also doesn’t announce its earnings dates in advance and doesn’t host quarterly conference calls to discuss results with Wall Street analysts. Nonetheless, the builder has become the darling of analysts. Morningstar recently gushed that the company is “one of the greatest shareholder wealth creators we’ve ever come across,” saying in a client note that it has “out-
gained storied names such as Microsoft, Apple and Cisco by a large margin, not to mention all of its direct competitors.” The praise reflects the company’s ability to post consistently strong earnings despite the recent economic recession. NVR’s quarterly financial statements have shown profits for eight quarters in a row, and last year it delivered annual revenue of about $3 billion. Over the past two years, the company’s stock price has doubled. NVR now trades above $750 a share, making it the only public builder and one of a handful of companies overall that trades in triple-digit territory or above. Douglas Poretz, who was an NVR executive in the late 1980s, says the company believes that encouraging investment by a small group of large institutions reduces stock-price fluctuations, while the high stock price discourages small investors. “It’s a much different investment strategy than having a lot of different stockbrokers hustling their stock,” he notes. Mr. Saville and his Virginiabased company have managed to prosper in an industry mired in red ink in large part because of NVR’s location in one of the nation’s strongest housing markets: the suburbs of Washington, D.C., and Baltimore, where nearly 40% of the company’s 2010 closings occurred. NVR also has a risk-averse culture and the industry’s fastest home-construction turnaround time. And it has generally shied away from the boom-to-bust markets of southern California, Nevada and Arizona. Its sales prices range from $97,000 to $1.7 million, with an average price of about $300,000, according to the annual report. In addition, NVR is very efficient, erecting homes in an average of 80 to 90 days, compared with the industry’s average of about 120 days. Speeding things up: six “depots,” which resemble lumber yards and have equipment to manufacture trusses and as-
Agence France-Presse
Home builder NVR pays top dollar
NVR constructs homes under brands such as Ryan Homes, above. semble home frames for quick transport to building sites. According to its annual report, NVR also plans to buy a facility with about 100,000 square feet of manufacturing space in Dayton, Ohio, this year. “It takes a month or two for [many builders] to get started on their homes,” says Jim Harvey, president of Kolter Land Partners in Tampa, Fla., which sells land to NVR and other builders. “With NVR, it seems like they’re out there with a slab the day after they buy the lot.” Formed in 1980 as NVHomes Inc. by Dwight C. Schar, who is now chairman, the company expanded through the 1980s and went public as NVH LP in 1985. It acquired Ryan Homes Inc. in 1987 and later renamed itself NVR. In 1992, saddled with too much land as the market turned, the company filed for bankruptcy protection and emerged the next year with stock priced at $10.25 a share. Given a second chance, NVR vowed to be conservative with
land. Instead of buying it for future development, it buys options on land, putting down a deposit of up to 10% for the right to buy the land in the future at the price set when the option agreement is signed. Then the company exercises the options as buyers sign purchase contracts. If market conditions change, NVR can forfeit its deposit and walk away. The ap-
proach protected NVR from overpaying for land during the housing bubble, resulting in minimal land-related charges as land values plunged. But, amid increased competition for buildable lots and a shortage of financing for developers, NVR has had to purchase some land without having home buyers lined up., and it conceded in its 2010 annual report that there can be no “assurance that we will not incur impairment charges in the future.” Since early 2006, the nation’s 14 publicly rated builders have taken about $36 billion in land-related write-downs, reflecting the lower value of land, inventory and options, according to Moody’s Investors Service. PulteGroup, the nation’s second-largest builder, leads the list with about $5 billion. NVR’s total is around $600 million. “We avoid purchasing raw ground, developing land, and speculative building,” the company wrote in its 2009 annual report. “We purchase these lots primarily on a just-in-time basis, after we have sold homes on these lots.” Still, “compared to other home builders, they’re doing a lot more on their own, and making the logistics much more efficient,” said Andy Walker, an analyst with Janus Capital Group, one of NVR’s largest shareholders. “They’ve become one of the leanest developers out there.”
Building a nest egg Pay packages of some home-construction chief executives CEO
Company
Paul Saville
NVR
2010 total compensation (in millions)
Stuart A. Miller
Lennar
9.7
Ara Hovnanian
Hovnanian Enterprises
6.3
Jeffrey T. Mezger
KB Home
6.1
Robert I. Toll
Toll Brothers
5.6
Donald Tomnitz
D.R. Horton
4.1
$30.9
Source: Equilar
The Power List
The top business leaders in Asia making headlines last week in select global and regional media. Powered by Dow Jones Factiva and edited for relevance and clarity.
MASATAKA SHIMIZU
GIANFRANCO LANCI
YANG KAISHENG
MASARU ONISHI
LI KA-SHING
President Tokyo Electric Power
Former President, Chief Executive Acer
President Japan Airlines
Chairman Hutchison Whampoa
Mr. Shimizu was hospitalized with elevated blood pressure and dizziness amid scrutiny of his company, owner of Japan’s Fukushima Daiichi nuclear power plant.
Mr. Lanci resigned as part of the Taiwanese company’s efforts to reorganize its operations to tackle the rising challenge from Apple's iPad tablet.
President Industrial & Commercial Bank of China Mr. Yang said that every 0.5 percentage point increase in Chinese banks’ reserve-requirement ratio could reduce ICBC’s interest income by 700 million yuan ($106.9 million).
“We cannot be optimistic” even after the carrier emerged from bankruptcy protection because of continued unease in Japan following the earthquake and nuclear crisis, he said.
Mr. Li’s flagship business posted strong results due in part to its 3G operations and said the business “has entered a new era.”
Photos: Jiji Press/Agence France-Presse/Getty Images (Shimizu); Agence France-Presse/Getty Images (Li); Bloomberg News (Lanci, Yang, Onishi)
Compiled by Carlos Tejada/ The Wall Street Journal
THE WALL STREET JOURNAL.
Monday, April 4, 2011
MANAGEMENT
News chief aims for multimedia push Résumé Career: Most recently was the chairman and chief executive officer of the National Audiovisual Institute. Education: Graduate of the Institute D’Études Politiques in Paris, and a former student of the École Nationale D’Administration. Merits: Awarded the Chevalier of the Order of Merit and Chevalier de la Légion d’Honneur decorations. Extracurricular: Chairman of the House of Poetry in Paris since 2006. Asia are our top regions to produce webclips.
Agence France-Presse/Getty Images
WSJ: Why is Asia one of the quickest areas to adapt to new forms of media, such as videos? Mr. Hoog: Because we have decided so. We have 750 clients in Asia, that’s about one quarter of our clients world-wide. Asia for us covers from Afghanistan to New Zealand.
[ Emmanuel Hoog ] Agence France-Presse These are busy times for Emmanuel Hoog, chief executive officer of Agence France-Presse, the global newswires service. Major news events such as the earthquake, tsunami and radiation threat in Japan, and the continuing MANAGING strife in Libya, typically IN ASIA come around one at a time. But for the past several weeks, Mr. Hoog’s management skills have been tested to the limit as his reporters have been deployed to cover top stories around the world. The risks involved were highlighted last month, when two AFP reporters plus a photographer from another agency were de-
tained in Libya—the AFP chief intervened directly, sending a letter to Libyan leader Moammar Gadhafi, in which he called for their release “in the name of the same freedom of expression and information that you refer to so often.” (The reporters and photographer were later released.) Mr. Hoog took on the top spot at AFP one year ago. The agency traces its roots back to the early 19th century. Mr. Hoog’s task is to ensure it is wired for the digital age, while juggling day-to-day news coverage too. He recently talked to Amy Ma in Hong Kong. The following interview has been edited: WSJ: How are you dealing with covering the major events in Tokyo and the Middle East at the same time? Mr. Hoog: We have a big office in Tokyo of about 20 people, and have sent many more reporters to the ground since the earth-
quake and tsunami. Until this week, we had a team of 15 people reporting in northeast Japan, in text, photo, and video. This major event happened at a time when we had to send many of our journalists to reinforce bureaus in the Middle East and North Africa, and the size of AFP has ensured we are able to simultaneously focus on news in so many regions without affecting our world-wide coverage. WSJ: As the still relatively new CEO, what direction will you be leading AFP? Mr. Hoog: We are transitioning into a true multimedia corporation by 2012. Photos, text, graphics—there is demand for the entire catalog. In two years, we want to offer triple the amount of videos we currently produce. We are aiming for 150 or so video webclips produced daily, offered in [high definition]. Currently, South America and
WSJ: Do you see any Asian news services, such as China’s state-run Xinhua, becoming a world-wide competitor? Mr. Hoog: As long as the regime in China still controls the media, it will be hard for Xinhua to break through internationally because it is too political. WSJ: How is social media affecting your industry? Mr. Hoog: Twitter, Facebook—we use every channel we can. Almost every one of our journalists is on Facebook. WSJ: Is there a danger that in tweeting information directly to the public, your clients end up feeling short-changed? Mr. Hoog: No, I think you can have a public website and still be a professional wire. It is not competing with your clients, just forming new partnerships. WSJ: Will you need to hire additional staff for these plans? Mr. Hoog: We are not hiring new people. We think the staff we have is enough, they just need new training. … Year over year, we have about the same staff figures. And for a media company, this is doing quite well already not to have cuts.
Published by Dow Jones Publishing Company (Asia). Printed in Hong Kong by Superflag Printing and Communication Ltd., 1/F, 8 Chun Ying St., Tseung Kwan O Ind. Est., Tseung Kwan O, NT. Printed in Indonesia by PT Gramedia Printing Group, Jalan Palmerah Selatan 22-28, Jakarta 10270. Printed in Japan by Yomiuri Shimbun, 1-7-1, Otemachi, Chiyoda-ku, Tokyo 100-8055. Printed in Korea by JoongAng Ilbo. 7, Soonwha-Dong, Chung-Ku, Seoul 100-130. 1997 June 04 Registration no.: SeoulKA00020 (Daily Newspaper), Publisher/Editor/Printer: Song, Pil-Ho. Printed in Malaysia by KHL Printing Co. Sdn. Bhd. (ROC No: 235060-A) Lot 10 & 12, Jalan Modal 23/2, Seksyen 23 Kawasan Miel Phase 8, 40000 Shah Alam, Selangor, Malaysia. Printed in Philippines by FEP Printing Corporation, 3817 Mascardo St., Corner Metropolitan Ave., Pasong Tamo, Makati City. Printed in Singapore by KHL Printing Co. Pte Ltd., 57 Loyang Drive, Singapore 508968. Printed and distributed in Taiwan by The China Post, 8 Fu Shun Street, Taipei 104. Printed in Thailand by Nation Multimedia Group Public Co., Ltd., 1854 Bangna-Trad Road, (K.M. 4.5), Prakanong, Bangkok 10260. Published and printed on behalf of the Wall Street Journal India Publishing Pvt Ltd, 517B World Trade Centre, Barakhamba Lane, New Delhi 110001 by Mr Suman Dubey at A-8 Sector 7, Gautam Budh Nagar, Noida -201301 and PLOT No.EL208, TTC Industrial Area, Mahape, Navi Mumbai - 400710 (Maharashtra), India, Editor: Suman Dubey, phone: +91-11-6462 0215. ACP no. F.2 (T/3) Press / 2009 FACSIMILE EDITION.
32
