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Obama announces re-election bid: Why the 2012 race is off to a slow start CAPITAL JOURNAL Page 6

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(India facsimile Vol. 2 No. 212)

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OPINION: Gary Becker on how to cut budgets Page 11

Tuesday, April 5, 2011

ASIA

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Tepco dumps radioactive water in sea BY MITSURU OBE

Agence France-Presse/Getty Images

A protester is carried away during demonstrations in Taiz, in southern Yemen, where uniformed police killed at least 11 people.

Police kill Yemen protesters BY ERIK STIER SAN’A, Yemen—Police opened fire on protesters in the southern city of Taiz Monday, killing at least 11 and injuring more than 200, in an abrupt return to violence that increases pressure on President Ali Abdullah Saleh to break a dangerous political stalemate with the opposition.

Uniformed police fired directly into crowds of protesters during a march near the main demonstration area, in the second straight day of violence in Taiz, a city of nearly 500,000, about 200 kilometers south of the capital, San’a a witness said. Many of the injured suffered gunshot wounds to the neck and chest, he said.

Mr. Saleh, bolstered by two weeks of massive pro-regime demonstrations, has refused to bow to weeks of protests calling for his resignation. Negotiations with the opposition have stalled recently, with no clear solution in sight. The violence in Taiz broke out near a school, witnesses said, placing city residents

and children in middle of the chaos. More than 600 people were have been hospitalized from injuries associated with tear gas, which include seizures and temporary loss of consciousness, medical workers said. Monday marks the most lethal crackdown in Yemen’s uprising since snipers killed Please turn to page 14

TOKYO—Tokyo Electric Power Co. began dumping 11.5 million liters of low-level radioactive water into the Pacific Ocean on Monday in an effort to ward off the release of even-more-dangerous material from its damaged nuclear-power plant. Government officials, who approved the move, said the radiation in the water was too low to pose a threat to human health. But the release, which will conclude Friday, demonstrates the tough choices the company and the government are making as they fight to keep the stricken plant under control and prevent more radioactive material from being released. “This is an inevitable measure because we are running out of time,” Hidehiko Nishiyama, a spokesman for the Nuclear and Industrial Safety Agency, told a news conference.

Asia’s banking bonanza: resource deals BY ALISON TUDOR HONG KONG—Deals involving natural-resource companies helped drive investment-bankin ASIAN DEAL g revenues JOURNAL for the AsiaPacific region to a record in the first quarter, despite a decline in share sales, another key revenue source. Underscoring the depth of Asia’s interest in acquiring mining, energy and other re-

sources, China’s Minmetals Resources Ltd. said Monday it intends to offer 6.3 billion Canadian dollars (US$6.5 billion) for Australian-based copper-miner Equinox Minerals Ltd. More deals look likely. “Given the rise in commodities prices, we see the natural-resources sector leading the way [in deal-making]. National oil companies are really scouring the market for opportunities and we think they will find several in the coming months,” said Rob

Sivitilli, head of mergers and acquisitions for Southeast Asia at J.P. Morgan Chase. U.K. oil giant BP PLC’s acquisition of oil and naturalgas assets controlled by India’s Reliance Industries Ltd. for up to $9 billion, depending on the success of future exploration, is one of the largest M&A deals in the region so far this year, according to data provider Dealogic. Investment banks generated $3.8 billion in revenue across the Asia-Pacific region

from M&A, syndicated loans and equity and bond deals in the first three months of the year, up from $3.5 billion in the same period a year earlier, according to Dealogic estimates. Excluding Japan, revenue was $3.0 billion, up 35% from the $2.2 billion a year earlier and a record for the first quarter of a year. While M&A was strong, share sales, including initial public offerings, fell. So-called equity-capital-market deals around the region fell to

$66.2 billion from $77.5 billion a year earlier, hit by a 53% slide in Japanese deals to $12.5 billion from $26.6 billion a year ago, according to Dealogic. Several deals were withdrawn in the wake of the March 11 earthquake in Japan, including real-estate investment trust United Urban InPlease turn to page 16
A Chinese bid for an Australian resources firm... 15
Heard on the Street: Merger insurance ................... 28

Disaster in Japan
Japan banker group voices support for Tepco .............. 12
Food-supply issues spark debate on imports ............ 12
U.S. aid shifts to nuclear response ................................. 13
Tankan survey reveals pessimistic outlook ........... 13

The five-day-long operation began Monday evening after the government approved the action, which was prompted by the recent discovery of the leakage of highly radioactive water, believed to be originating from the heavily damaged No. 2 reactor. By discharging the lesstoxic water into the sea, the government can free up more space for storing the moretoxic water that has been hobbling efforts to repair the reactors and bring them under Please turn to page 14

Ai Weiwei

Authorities in China detained Ai Weiwei, one of the country’s most prominent artists, for a second day, raising fears he could be charged with subversion or detained indefinitely in extrajudicial custody. Page 3

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THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

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Business & Finance n Minmetals Resources plans to make a $6.5 billion offer for copper miner Equinox Minerals. An offer, which could upset Equinox’s hostile move on Lundin Mining, would be China’s biggest takeover bid for an Australian-listed resources company as Beijing pursues deals to guarantee commodity supplies. 15, 28 n The Japanese Bankers Association’s chairman said Tepco shouldn’t be nationalized but that the government should support it as needed. 12

Business & Finance: Fujitsu chief reflects on challenges. 15

n The devastating March quake and tsunami have made Japanese companies, especially smaller ones, more pessimistic, according to a special release of the tankan survey. 13 n Big South Korean oil refiners are cutting prices, putting pressure on smaller companies to follow suit as the government pushes to curb inflation. 16 n Vivendi agreed to purchase Vodafone’s 44% stake in telecom group SFR for $11.31 billion, allowing the firm to take full control of its biggest cash generator. 18

Corporate News: Making Facebook ads more buyer-friendly. 19

n Kingway Brewery’s parent is increasing its stake in the beer maker, thwarting an attempt by the maker of Snow beer to gain a shareholding. 17 n Woolworths Ltd. CEO is leaving after five years at the helm of Australia’s biggest retailer. 17 n Oil prices hit 2½-year highs and corn surged, adding to fear of inflation and boosting gold. Silver reached a 31-year peak. 22 n Central banks in South Korea, Malaysia and Indonesia appeared

Associated Press

n A REIT controlled by Li KaShing plans to raise as much as $1.83 billion from a Hong Kong listing this month, in what would be the first yuan-denominated IPO outside mainland China. 20 Police in Bangladesh clashed with demonstrators and arrested dozens during a paralyzing general strike protesting a new policy giving women equal inheritance rights. The protesters smashed vehicles and set fire to a fuel station and attacked a convoy of devotees on their way to an Islamic shrine in southeastern Bangladesh. Dozens were injured in clashes across the country, media reports citing police said. Above, riot police detain an activist during a general strike in Dhaka. to intervene in foreign-exchange markets, continuing their fight to slow the rise of their currencies as demand for the region’s assets intensifies. 20 n U.S. stocks edged higher as investors debated the impact of higher commodity prices. WalMart rose 1.2% on a report it is considering selling groceries online. Hope for mergers boosted resources stocks in Australia. 23

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World-Wide n The Libyan regime and rebel leaders are offering proposals on how to reach a cease-fire, a Turkish official said. 14 n Fighters aligned with Ivory Coast’s president-elect began another push into the heart of Abidjan, but frictions within the rebel force have slowed the advance

and complicated efforts to dislodge strongman Laurent Gbagbo. n A Hanoi court sentenced the son of a prominent Vietnamese revolutionary to prison for allegedly calling an end to the oneparty system. 4

Markets: U.S. targets wealthiest taxpayers with more audits. 20

n International monitors criticized Kazakhstan’s presidential election, citing of ballot box-stuffing and a lack of transparency.

ONLINE TODAY Most read in Asia

1. Gadhafi Push Tests Allies 2. Workers Fail to Plug Leak at Reactor 3. Focus at Japan Plant Turns to Water 4. Worries Grow for Those Still by Power Plant 5. Inside the Massacre at Afghan Compound

Scene

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Sports

A triptych by Zhang Xiaogang sold for $10 million, a record for contemporary Chinese art sold at auction.

Alpha vehicles of another era: All the ‘special’ is gone. The B7 is essentially an overwrought parade float.

Most emailed in Asia 1. Bali: Trouble in Paradise 2. Opinion: We’ve Become a Nation of Takers, Not Makers 3. The Coolest Ferrari Ever 4. Google Loses Ground in China 5. Stepping on the Gas

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Live updates from the NCAA basketball tournament: blogs.wsj.com/dailyfix

Heard on the Street: The forecast is sunny for Sotheby’s. 28 THE WALL STREET JOURNAL ASIA Dow Jones Publishing Company (Asia) 25/F, Central Plaza, 18 Harbour Road, Hong Kong Tel 852-2573 7121 Fax 852-2834 5291 www.wsj-asia.com SUBSCRIPTIONS and Address Changes, please telephone our local customer service hotline, Hong Kong/Taiwan: 852-2831 2555; Beijing: 86-10 6581 4090; Shanghai: 86-21 5836 8228; Indonesia: 62-21 527 7592; Japan: 81-3 6269-2760; Korea: 82-2 756 1695; Malaysia: 60-3 2026 4061; Philippines: 63-2 848 5873; Singapore: 65-6415 4000; Thailand: 66-2 690 4222 to 7; India: 91-11 6462 0215. Or email: [email protected] ADVERTISING SALES worldwide through Dow Jones International. Hong Kong: 852-2831 2504; Singapore: 65-6415 4300; Tokyo: 81-3 6269-2701; Frankfurt: 49 69 29725390; London: 44 207 842 9600; Paris: 33 1 40 17 17 01; New York: 1-212 659 2176. Or email: [email protected] Trademarks appearing herein are used under license from Dow Jones & Company. USPS 337-350ISSN 0377-9920

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WORLD NEWS

BY JEREMY PAGE BEIJING—Chinese authorities held Ai Weiwei, one of China’s most famous artists, for a second day Monday, raising fears among his supporters that he could be charged with subversion or detained indefinitely in extra-judicial custody as dozens of other activists have been over a six-week crackdown on dissent. Mr. Ai, an outspoken critic of the government who has more than 70,000 followers on Twitter, has been out of contact since Chinese officials prevented him from boarding a flight from Beijing to Hong Kong on Sunday morning and then led him away, according to several of his friends and assistants. Once seen by the Chinese government as a cultural ambassador, he helped to design the Bird’s Nest stadium for the 2008 Beijing Olympics, but then boycotted the Opening Ceremonies. He has since become increasingly politically active, prompting frequent confrontations with Chinese authorities, who demolished his studio in Shanghai in January. Police also took in Mr. Ai’s wife, Lu Qing, and eight of his assistants for questioning Sunday after raiding his studio in Beijing and cutting off its power supply. Ms. Lu and the studio staff were released by Monday afternoon, according to one of the assistants. But the 53-year-old artist remained out of contact and apparently in custody more than 24 hours after he was prevented from boarding the flight to Hong Kong, from where he planned to travel to Taiwan to discuss plans for a possible exhibition, the assistant said. The French and German governments both expressed concern about Mr. Ai’s apparent detention, and called for him to be released without delay. Chinese authorities were thought to have tolerated the artist—who exhibited last year at London’s Tate Modern gallery—because of his international profile and because his father, Ai Qing, was one of China’s most famous modern poets. They now appear to be widening their crackdown to include China’s highest-profile and best-connected government critics, in an indication of how concerned the Communist Party leadership is about the potential for the kind of unrest that has rocked the Arab world this year. “If they are willing to go this far with someone like him, then all bets are off,” said Joshua Rosenzweig, who heads the Hong Kong office of the Dui Hua Foundation, a humanrights organization. Dozens of other political activists, lawyers, writers and critics have been detained in similar ways—confined to their homes or placed under surveillance—since anonymous calls for a “Jasmine Revolution” in China began circulating online in mid-February. At least three have been formally charged with state subversion, while several others have disappeared without their families being officially informed of their detention. Mr. Ai keeps an informal tally of those detentions on Twitter, which is blocked in China, but is accessed by tech-savvy urbanites who know how to circumvent China’s filters. Mr. Rosenzweig said the number of people targeted in the current crackdown so far is far fewer than in the campaigns against Tibetan and Uighur activists in the past three years, or the one against the

banned Falun Gong spiritual movement, which started in 1999. But he called the current crackdown unusual—and troubling—because it targeted people for expressing political views rather than organizing political activity, and because it violated legal procedures that already allow huge scope to detain people for long periods. “So many people are just disappearing,” Mr. Rosenzweig said. “That suggests a willingness to sacrifice the rule of law and legal procedure in the name of stability.” The fact that Mr. Ai hasn’t contacted his lawyer or his wife sug-

gests he is being held in a form of legal limbo that rights activists say is being increasingly used to coerce government critics into curtailing their political activities. Chinese authorities haven’t acknowledged detaining Mr. Ai. A spokesman for Beijing police declined to comment, and an officer from the local police station in the district where Mr. Ai’s studio is located hung up the telephone as soon as he heard Mr. Ai’s name. Mr. Ai said last week he was setting up a studio in Germany because of the problems he faced showing his work in China.

Associated Press

Artist’s arrest linked to political activism

Ai Weiwei is seen in Beijing in November last year. He was detained Sunday.

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Tuesday, April 5, 2011

WORLD NEWS: ASIA

European Pressphoto Agency

Cu Huy Ha Vu is escorted from his trial in Hanoi after being convicted Monday of spreading propaganda against the state.

Vietnam convicts prominent dissident BY JAMES HOOKWAY The son of one of Vietnam’s prominent Communist revolutionaries was sentenced to seven years in prison for allegedly calling for an end to the country’s rigid one-party system, as Hanoi continues a stretch of fierce resistance to perceived criticism. Cu Huy Ha Vu, a 53-year-old legal scholar, was sentenced after a tempestuous hearing in a Hanoi court. Denying the charges against him, he was left to defend himself after one defense lawyer was ejected from the court by the judge and three others quit the trial in protest. The case, and the charges that Mr. Vu spread propaganda against the state by calling for multiparty elections, was all the more striking given his father’s role in establishing the political system that sent Mr. Vu to prison. His father, Cu Huy Can, is revered as a poet and revolutionary leader who served in the late Presi-

dent Ho Chi Minh’s first government after Vietnam declared independence from France in 1945. “Born and raised into a revolutionary family, [Mr. Vu] did not sustain that tradition but instead committed erroneous acts,” Judge Nguyen Huu Chinh said, according to the Associated Press. Mr. Vu told the court that he “did not the commit the crime of spreading propaganda against the state,” the AP said. “This criminal case was invented against me. This case is completely illegal.” Mr. Vu was arrested in November, a year after he filed a lawsuit against Prime Minister Nguyen Tan Dung for approving a Chinese-financed bauxite ore-mining project in Vietnam’s environmentally sensitive Central Highlands region. Bauxite mining, a destructive process in which much of a mining area’s topsoil is removed, is a sensitive issue in Vietnam. In recent years it has brought together nationalists wary of China’s growing influence in Vietnam as well as an

increasingly vocal environmentalist lobby. Vietnamese court officials said at the time they didn’t have the authority to put Mr. Dung on trial and dropped Mr. Vu’s complaint. Mr. Vu later tried to sue Mr. Dung for prohibiting class-action lawsuits. Several Vietnamese dissidents have been jailed in recent months for allegedly spreading propaganda against Hanoi’s Communist leaders. Many, like Mr. Vu, were accused of pressing for multiparty elections. In addition, Vietnamese authorities from time to time have moved to block access to websites such as Facebook, a strategy that analysts say is designed to prevent dissidents from forging fresh links or organizing protests. Human Rights Watch in a statement last week called Mr. Vu “one of the most prominent defenders of cultural, environmental and human rights in Vietnam.” The New Yorkbased rights group said Vietnam should repeal its national-security laws instead of using them to silence critics.

India to issue regular job data BY ABHRAJIT GANGOPADHYAY NEW DELHI—India plans for the first time to issue periodic data on new jobs created in the economy, a government official said Monday, underscoring the country’s recent attempts to add to macroeconomic indicators to help inform policy makers. If India provides employment statistics frequently, just as it does with inflation on a weekly basis, the government’s policy stance might change, the official told Dow Jones Newswires, asking not to be named. “We will launch the employment report in June,” said S.K. Das, direc-

tor general at the Central Statistical Organisation, which is preparing the report. The federal agency, which handles key macroeconomic data, is currently conducting employment surveys across selected households, Mr. Das added. The jobs data plan follows the government’s recent rollout of a monthly wholesale-price index and a consumer-price index for urban workers. The changes mark the biggest effort in several years to address archaic data-collection processes and outdated inputs that have hampered getting timely and accurate readings

of price trends essential to central bankers, government officials and financial-market participants. “The employment number is the one big missing gap in our policy framework,” the official said. According to the federal labor ministry, nearly 63.5 million people age 15 to 59 years will add to the employable labor pool from 2011 to 2016. The government is conducting initial surveys to construct the structure of the employment data, but is still some time away from firming up the process and frequency of release of such data, the official said.

The Empire State Building cost about $41 million. So does a single floor in China’s tallest building. The owner of the 101-story Shanghai World Financial Center says that in recent weeks it has set deals to sell five high-level floors in the building for as much as 273 million yuan, or $41.6 million, each. Transactions for single floors of super-tall office buildings are rare, particularly at the heights listed in the Shanghai deals. The tower’s developer, Japan’s Mori Building Co., says it has done three so-called strata deals this year: floor 68 for 273 million yuan, or 82,300 yuan per square meter; floor 72 for 267 million yuan, also 82,300 yuan per square meter; plus floors 69, 70 and 71 for a total of 769 million yuan, representing a discounted price of 82,000 yuan per square meter. Only one of the buyers has been identified: Tomson Group Ltd. In its own announcement about its purchase of floor 72, the Taiwan property group disclosed conditions Mori said apply to all the floors, primarily that they can’t be sold or leased without the developer’s permission for seven years. Michiho Kishi, a spokesman for Mori Building China, said by email the company has waved off expressions of interest from investment buyers—rather than endusers—since before construction was completed in 2008 but now has decided to seek buyers for a limited portion of the building. Lina Wong, a managing director of Colliers International in Shanghai, who acted on behalf of Tomson, says she isn’t aware of strata title deals anywhere involving office floors at such heights. “It’s not a normal market situation,” she said. While eye-catching and unusual, the transactions aren’t globally significant in terms of price per square meter, says Ms. Wong. Office property in Hong Kong costs four times as much as it does in Shanghai, she says, while prices in Singapore are three times as high. While property agents have complex formulas for determining the value of a building, dividing total cost by number of floors provides a rough, back-of-theenvelope perspective on relative property prices. If built today, the Empire State Building of course would cost more than its 1931 price tag of $41 million—about $595 million in today’s dollars, or $5.83 million for each of its 102 floors. Mori has said developing Shanghai World Financial Center cost about $1.13 billion, roughly $11.2 million per floor. —James T. Areddy

Study: world is unprepared for Chinese tourists China is poised to become the world’s second-largest tourism

Bloomberg News

A Shanghai benchmark: the $40 million office floor

Tallest: Shanghai World Financial market in the next two years, but is the world ready for the flood of Chinese travelers? According to a new study from the Boston Consulting Group, the answer is no. Chinese consumers, thanks to rising incomes and a bustling economy, are powering a travel boom that is set to catapult China’s tourism market past Japan’s by 2020, the study says. According to BCG’s projections, China’s combined domestic and international tourism revenues are expected to increase 14% annually for the next nine years—creating a 5.5 trillionyuan, or roughly $838 billion, tourism market, up from 1.5 trillion yuan last year—with revenues from outbound Chinese tourism alone expected to grow 381% over that span. Despite the numbers, the research group says, few companies in or outside the country are equipped to cater to Chinese voyagers. Among the most obvious indications, the study says, is the failure of many restaurants, hotels and airports to use Chinese characters on signs and menus—a simple gesture that would attract China’s international travelers and keep them coming back. Meanwhile, retailers should think about adding customer services, such as Chinese translation or specially trained sales forces, says the study, which was based on a survey of 4,250 Chinese travelers. Of course, some companies are already making the effort to win over Chinese tourists. Luxury retailers, such as Burberry, have hired Chinese-speaking sales staff at their Europe-based stores to cater to Chinese shoppers, who make 56% of their luxury purchases overseas, according to investment research group CLSA Asia-Pacific Markets. —Laurie Burkitt Keep up on China minute by minute with The Wall Street Journal’s China Real Time Report at blogs.wsj.com/chinarealtime

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Tuesday, April 5, 2011

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WORLD NEWS

Inside massacre at Afghan compound A reconstruction of the assault indicates ordinary citizens protesting Quran burning played critical role in attack MAZAR-E-SHARIF, Afghanistan—Officials are painting the weekend killings at the United Nations mission in northern Afghanistan’s largest city—which sparked cascading violence across the nation—as the handiwork of a small band of insurgents that used a protest against a Quran-burning as cover for a murderous plot. But a Wall Street Journal reconstruction of Friday’s assault, based on unreleased videos, interviews with demonstrators and the U.N.’s own recounting of events, shows a more complex picture and indicates that ordinary Afghan demonstrators played a critical role in the attack. Stirred to action by a Quranburning at a Florida church, thousands of people swarmed past hapless Afghan police officers, heading toward a lightly protected U.N. compound. There, members of the tight-knit staff had been paying little attention to the angry protest unfolding at the city’s central mosque. Mazar-e-Sharif has long been considered one of the safest cities in Afghanistan. So the diverse U.N. staff—including a female Norwegian fighter pilot, a seasoned Russian diplomat and German woman who had been at the mission for only a week or so—took few precautions even when the mob converged on their compound, burned an American flag and threw stones at the blast walls. By sunset, seven U.N. workers were dead. In the ensuing days, demonstrations cascaded across Afghanistan, claiming more lives Saturday and Sunday in Kandahar, far to the south. Based on interviews with survivors, Staffan de Mistura, head of the U.N. mission in Afghanistan, concluded that a handful of insurgents—including Afghans with accents suggesting they came from other parts of the country—spearheaded Friday’s attack on a safe room in the compound. The rioting, which the Taliban say erupted spontaneously, adds a disturbing new threat in a country that is fighting a mostly rural insurgency. Foreign and local military forces alike are ill-prepared for riot control. “Every security-force leader’s worst nightmare is being confronted by essentially a mob,” said Gen. David Petraeus, the commander of 150,000 U.S.-led coalition forces, in an interview Sunday, “especially [a mob] that can be influenced by individuals that want to incite violence, who want to try to hijack passions, in this case, perhaps understandable passions.” The Quran-burning, held March 20 at the Dove World Outreach Center by church leader Terry Jones in Gainesville, Fla., was “hateful, extremely disrespectful and enormously intolerant,” Gen. Petraeus said. Mr. Jones called Gen. Petraeus’ remarks “unconstitutional” and disputed that his actions complicate U.S. efforts to fight the Taliban. “I do not necessarily think that our actions make his job more difficult,” he said in an interview Sunday. “The Taliban or radical Islam will use any excuse to incite more violence. If they don’t have one,

Associated Press

BY DION NISSENBAUM AND MARIA ABI-HABIB

Afghans in Jalalabad protesting the Florida Quran burning beat a burning effigy of President Obama Sunday. they will make up an excuse.” Friday, thousands of people gathered in Mazar-e-Sharif’s revered Blue Mosque. Speaker after speaker denounced the Quran-burning, which for Muslims is abhorrent because Islam teaches that the physical book is holy. “Stand up against the enemies of the Quran with your pen,” one of the men shouted from the podium, videos show. “Stand up against them with your voices. Stand up against them with weapons. It is everyone’s right to stand up against them and make a jihad.” The protesters then surprised police by pouring into the street and marching toward the U.N. office, more than 1.5 kilometers away. At one point, according to videos reviewed by the Journal, the badly outnumbered police tried to use a 1.8-meter wood beam to hold back the crowd. The protesters easily surged past. Only about 60 police were deployed, and they appeared uncertain how to respond. Initial attempts to disperse the crowd by firing warning shots appeared only to inflame the demonstrators. The besieged U.N. staffers headed to two safe rooms intended to shield against intruders and bombs. They phoned for help from the

nearby military bases of German and Swedish forces, according to a person briefed on the situation. The U.S.-led military said the situation “escalated rapidly” and that a swiftreaction team didn’t arrive until after rioters were gone. Once demonstrators flooded the compound, a dozen Afghan police guards—the first line of defense—dropped their weapons, said Brig. Gen. Esmatullah Alizai, the provincial police chief. “They were surrounded and confused,” he said. Inside the compound, a small contingent of Nepalese Gurkha guards working for the U.N. faced a conundrum: They were under U.N. orders not to open fire on demonstrators. The videos show one guard feebly trying to wave an elderly demonstrator out of the compound. Nearby, videos show, demonstrators used bent metal rods to smash a row of white U.N. SUVs. Among those attacking the U.N. vehicles was a young religious student from a small village not far from the city. The student said in an interview that he and one of his friends found a propane tank that they shoved under one vehicle and set off an explosion. Nearby, the student said, two Afghan policemen were hiding with a

foreigner behind a tanker. When one of the officers shot and injured a young demonstrator, the student said he saw a chance to disarm him. “Grab his weapon,” the student said he shouted to his friend, who wrestled a Kalashnikov assault rifle and used it to shoot the unarmed foreigner. Inside the building, other attackers targeted one of the safe rooms. The door proved little protection against the mob. As intruders penetrated the safe room, Pavel Ershov, a Russian diplomat who speaks fluent Dari sought to protect three staff members by distracting the assailants, the U.N.’s Mr. de Mistura said. “Are you Muslim?” the assailants asked Mr. Ershov, according to one diplomat briefed on the attack. Mr. Ershov lied and said he was, the U.N. said. The assailants tested him by asking him to recite the traditional profession of belief in Islam, which begins, “There is no God but Allah.” When he successfully completed the test, his life was spared. Still, he was dragged into the street and beaten badly, according to a local shopkeeper who said he participated in the assault. The attackers searched the darkened bunker with a lamp and discovered Lt. Col. Siri Skare, a 53-

year-old Norwegian military attaché—the former fighter pilot—seconded to the U.N., along with Joakim Dungel, a 33-year-old Swede who had been working in the human-rights office for less than two months, and Filaret Motco, a 43year-old Romanian who headed the mission’s political section. As Lt. Col. Skare attempted to flee the bunker, she was intercepted by the Afghan demonstrators who had set the car on fire. She was shot with the rifle commandeered from the police officer, one of the men said. Lt. Col. Skare died of her wounds. Messrs. Dungel and Motco were killed elsewhere. Four Afghans—men also described as “insurgents” by Gen. Alizai, the police official—were also killed. Video footage of demonstrators leaving the U.N. compound shows two men carrying Kalashnikovs and one showing off a large, blood-spattered knife. As the attackers focused on the four U.N. workers who had been hiding in the first safe room, diplomats said, three or four others, including the German newcomer, were sheltered in a safe room in another building. They survived. —Yaroslav Trofimov, Zamir Saar, Michael Allen and Betsy McKay contributed to this article.

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WORLD NEWS

[ Capital Journal ] BY GERALD F. SEIB President Barack Obama’s formal declaration of his re-election bid Monday actually serves as a reminder that the 2012 campaign is off to such a slow start that it has shattered one piece of conventional wisdom: the notion that each presidential sweepstakes starts earlier than the last one. Instead, although both parties expect a still-wheezing economy to produce a highly competitive race, the second quarter of 2011 has dawned without a single officially declared candidate on the Republican side. At this time four years ago, by contrast, the top three Republican candidates had raised collectively some $50 million, and the top three Democratic contenders had been running for several months. America doesn’t need longer presidential campaigns, so this isn’t a bad thing for the country. Moreover, the Republican contenders are coming, and soon. But the reasons the race is slow to form say a lot about the times and the state of politics—as well as the ways that technology and pervasive communications are changing the process. Conversations with advisers to

several potential candidates suggest that the first reason for the slow ramp-up is a basic one: The coming campaign isn’t for an open seat in the White House, but rather will be a race against an incumbent president. For Republicans, the idea of running against a sitting president, even one who may seem vulnerable, is far more daunting than running to take over an empty seat, and doubtless has given some candidates—think Indiana Gov. Mitch Daniels—reason to pause and ponder. Other factors have to do with the unique political climate of 2011. Last year’s midterm elections produced a Republican wave that enabled the party to take back the House of Representatives and to eliminate the Democrats’ filibuster-proof Senate majority. The big event in the party became reclaiming a share of power in Washington now, not starting on an election two years hence. One Republican campaign operative says that after the 2010 election “there wasn’t a lot of political oxygen in the party for candidates to break through with interesting messages or a startling program.” It seemed wise to let House GOP leaders John Boehner and Eric Cantor, and new Republican governors, be the party leaders for a while. Moreover, some Republican

European Pressphoto Agency

Why the 2012 U.S. race is off to such a slow start

President Barack Obama, seen here last month, announced his 2012 bid Monday. operatives argue that the 2008 campaign showed that starting early doesn’t really offer much of an advantage, and may be a disadvantage. An early start didn’t get Hillary Clinton the Democratic nomination, and early Republican front-runner John McCain flamed out and had to basically resurrect his campaign from the ashes before he prevailed. Notably, the GOP Iowa caucuses were won not by one of the big early juggernaut candidates, but by the underfinanced Mike Huckabee. “If you look at the results last cycle it’s hard to argue that being early or being big was much of an advantage,” says Alex Conant, an

adviser to former Minnesota Gov. Tim Pawlenty. At the same time, some of most notable Republican possibilities—Haley Barbour of Mississippi and Mr. Daniels in Indiana in particular—are sitting governors who argue they need to tend to their states’ pressing budget business before turning to presidential politics. At a minimum, it might appear unseemly to jump in before taking care of the home front. But the most intriguing force behind the campaign’s pace lies in the way technology has changed the art and practice of both campaigning and fund-raising. A combination of Facebook,

Twitter and other online organizing tools, along with perches on the Fox News Network and other cable outlets, have given Sarah Palin, in particular, and Mr. Huckabee and Newt Gingrich plenty of exposure that allows them to gather supporters and organize virtually without having to formally declare. This new reality also gives Ms. Palin and Mr. Huckabee an incentive to continue earning money from TV contracts while waiting to decide. Perhaps as important, the Internet is a fund-raising tool that allows candidates to quickly scoop up large amounts of money, if they strike a spark with voters, without having to rely as much on the traditional, time-consuming slog through fund-raising events night after night. It’s hard to know for sure who might benefit most from the new dynamic. It may well help former Massachusetts Gov. Mitt Romney, the perceived front-runner, by allowing him to stay above the fray and out of the line of fire longer. And it seems to be benefiting Mr. Pawlenty, who’s taking advantage of the extra time and space to quietly line up support in the early-voting states of Iowa and New Hampshire. Like all twists in the political game, this delayed start doubtless comes with less-obvious consequence, easier to see at the end of the road than the beginning.

Factory-gate price surge adds to pressure on ECB BY NICHOLAS WINNING LONDON—Factory-gate prices in the euro zone posted their sharpest annual gain for nearly two-and-ahalf years in February, putting further pressure on the European Central Bank to raise interest rates later this week, official data showed Monday. Industrial producer prices rose 0.8% from January and 6.6% from a year earlier, the strongest annual increase since September 2008, the European Union’s Eurostat agency said. The data are likely to cement expectations that the ECB, which aims to keep inflation just below 2% over the medium term, could raise interest rates several times this year, starting with the first rise in almost three years after its policy meeting Thursday. The ECB left its main interest rate at a record low of 1% at its last policy meeting March 3, but ECB President Jean-Claude Trichet said that risks to price stability were on the upside and that an April rate rise was possible though not certain. In the past month, Mr. Trichet and other ECB policy makers have stuck to the language in the central bank’s March 3 statement that “strong vigilance” was needed on inflation, seen by market participants as a sign that policy action is in the pipeline. The producer-price figures showed energy continued to fuel inflation across the euro zone, with producer prices rising 1% since January and 12.8% since February last year, the strongest annual gain for

Price pressures growing Euro zone’s factory–gate prices, change from previous year 10% 5 0 –5 –10 2008

’09

’10

Source: Eurostat

28 months. However, in a sign that inflationary pressures are broadening, factory-gate prices excluding construction and energy rose 0.6% monthly and 4.5% on an annual basis, the strongest annual increase since October 1995, Eurostat said. On an annual basis, producer prices for intermediate goods, such as steel, were 8.1% higher in February, the sharpest annual gain since mid-1995. Factory-gate prices for nondurable consumer goods were 2.6% higher in February, the biggest percentage increase since October 2008. More up-to-date surveys suggest the rally in producer prices is continuing. A survey of euro-zone manufacturers by financial information firm Markit released Friday showed factory-gate prices rose at record rates in March.

New life for old lace 8 FACING DOWN YOUR FASHION DOUBLE 8

TUESDAY, APRIL 5, 2011

LIFE & STYLE **

asia.WSJ.com

The Gagosian effect—can it last? How the art dealer uses a network of galleries and clients to fetch ever higher prices for his artists Over Oscar weekend in late February, art dealer Larry Gagosian held a private lunch at the $15.5 million home he recently bought in the Holmby Hills section of Los Angeles. His glass-enclosed house had been decorated for the occasion by the artist Richard Prince, so its walls were lined with his portraits of beach beauties and pulpnovel nurses. As guests including financier Ron Perelman and actress Renée Zellweger navigated the home’s skylit hallways, Mr. Gagosian and his staff mingled, discreetly passing a rolled-up sheet of paper between them like a baton. The sheet listed prices for nearly every artwork in sight. With an unrelenting focus on selling, Mr. Gagosian, 65, has become the most powerful art dealer in the world. He represents the estates and careers of 77 of the world’s top artists, including Pablo Picasso, Alberto Giacometti, Cy Twombly, Richard Serra, Jeff Koons, Damien Hirst and Ed Ruscha. Dealers who track how he prices his gallery shows estimate he sells upwards of $1 billion worth of art a year. Sotheby’s, by comparison, auctioned off $870 million worth of contemporary art last year. As the contemporary art market rebounds from the recession, Mr. Gagosian’s art empire is exploding. In the last few years, he has opened new galleries in London, Paris, Rome, Geneva, Athens and Hong Kong, expanding his global art network to 11 galleries world-wide—the largest blue-chip franchise ever attempted in the industry. Mr. Gagosian’s position affords him a lifestyle on par with his billionaire clients, who include hedge-fund manager Steven Cohen, money manager Leon Black, Christie’s owner Francois Pinault and billionaire philanthropist Eli Broad. He flies in a roughly $40 million Bombardier Global Express private jet and has a personal chef on call at his Madison Avenue headquarters. He has homes in New York, the Hamptons and St. Bart’s in addition to his home in Los Angeles, speckled with his own collection of vintage photographs, Giacometti busts and canvases by Picasso and Andy Warhol. Rapid global expansion has its risks. Mr. Gagosian now needs to supply about 60 distinct shows a year with fresh art. Collectors in Rome and Paris so far have shown little inclination to buy million-dollar contemporary art. And it was only two years ago that prices for some of Mr. Gagosian’s trendiest artists, like Mr. Hirst, plummeted at auction. Contemporary art, the most volatile segment of the art market, remains subject to sudden, improbable leaps and jarring crashes. The Los Angeles son of Armenian-American parents, Mr. Gagosian got his start peddling framed posters at a markup for $15 apiece. Since 1979 he has built his gallery empire largely on his own hard-charging deal-making abilities—he still conducts many of his biggest sales himself—and it’s not clear who will eventually replace him as the head of his business. The dealer says he “lives in complete denial” about a successor. It’s a critical issue, since Mr. Gagosian plays such a central role in elevating and maintaining the amount paid for his artists’ work. Unlike other dealers, who often spend decades helping to nurture and promote artists on their way up, Mr. Gagosian typically waits

Gagosian Gallery/Robert McKeever (art); Noah Rabinowitz for The Wall Street Journal (Larry Gagosian)

BY KELLY CROW

until an artist’s market is poised to skyrocket—after a big museum show or an auction spike—and then he pounces. The dealer recruited nearly all of his current artists from rival galleries. This approach has helped him build an enviable stable, but it has also earned him enemies. Dealer David Zwirner said Mr. Gagosian is known for “aggressively poaching” talent from his peers. Mr. Gagosian has never joined his industry’s top club, the Art Dealers Association of America. President Lucy Mitchell-Innes said potential members need to be nominated but demurred on whether he had been. There’s a reason that many artists are willing to leave dealers who have nurtured them for years to join Mr. Gagosian’s camp: Once they do, their prices often rise precipitously. Twelve years ago, Cecily Brown’s swirling abstractions were selling for as little as $8,000 when Mr. Gagosian ushered her into the fold and encouraged curators from the Tate and the Museum of Modern Art to buy her work. Today, Ms. Brown’s new paintings sell for around $800,000, the gallery says. In the contemporary art market, there is no standard formula for determining what an artist is worth. It’s famously difficult to determine which artist will have lasting cultural significance over decades or centuries, and which will be a flash in the pan. This gives top dealers like Mr. Gagosian enormous power to influence and even set the markets for the artists they represent. Anyone who wants his art must pay his prices. Mr. Gagosian is aggressive about boosting and protecting his artists’ prices in the auction market when he can. Though he doesn’t get a commission from auction sales, a

Gagosian art: ‘EUPHORIAINAHAT’ by John Chamberlain, top left, and ‘War in Peace’ by Glenn Brown, right. Larry Gagosian, above. work’s standing in the auction market is the most public, concrete marker of its value, so it’s in Mr. Gagosian’s interest to keep prices up. If bidding is lackluster for one of his artists, he’ll often buy the work himself and hold onto it until the market improves. An instantly recognizable figure at auctions, always taking a seat up front and on the aisle, Mr. Gagosian usually bids on a few big-ticket paintings at any major sale, either for his gallery or for clients. During the last big round of sales in London, he bought the week’s priciest piece, Christie’s $17.4 million Andy Warhol self-portrait. He declined to

say whether he plans to keep it or resell it. Artists that Mr. Gagosian still wants, according to sources at his gallery, include Zeng Fanzhi, Rirkrit Tiravanija and Ai WeiWei. Mr. Gagosian said he recently met with Jasper Johns, who at age 80 shows with dealer Matthew Marks, but added, “Jasper seems happy with his gallery.” Mr. Gagosian employs a far-flung staff of close to 150, many hired from auction houses, museums and banks, to manage his empire. In New York, Los Angeles and London, which have booming contemporary-art collecting scenes, Mr. Gagosian’s galleries have thrived. But he faces bigger challenges at his outposts in France and Rome, where some collectors have more conservative tastes or gravitate to lower-priced contemporary art. His greatest chance for faraway profits may lie with Hong Kong, where his gallery opened a space in the Central district two months ago. He’s renting the top floor of a colonial building with a 2.4-meter-tall elevator, so workers installing Mr. Hirst’s inaugural show there had to hoist the artist’s three-meter sculpture of Saint Bartholomew up through the stairwell. Questions of local taste pervaded the launch: Mr. Hirst’s gold-plated sculpture depicts a gruesome classic—the martyr holding his own flayed skin—yet the artist added a gold fig leaf to the nude before its Hong Kong debut. “There was some feeling it might offend,” Ms. Wilner said. The saint’s three editions sold within the first week, however, all to Asian buyers. Mr. Gagosian said the Hong Kong launch means he’s always got a gallery open somewhere in the world, no matter the time zone. “The sun never sets on my gallery,” he said.

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THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

LIFE
STYLE

New life for historic art of lace-making [ On Style ] BY CHRISTINA BINKLEY Caudry, France Lace, suddenly, is everywhere. Looking nothing like your grandmother’s doilies, lace is the fabric of whole dresses and suits for summer, as well as next fall. Lace hasn’t been this popular since Queen Victoria sat on the throne. The lavish lace is a dramatic change—not only for high fashion but also for a European industry that has been dwindling since the 1920s. Europe was once famous for lace—hundreds of types of Swiss, Belgian, French and at one point even English lace. Now, much of the lace shown on highend runways comes from one town in northeastern France. The French lace industry was famous when Jerry Lee Lewis crooned, “Chantilly lace and a pretty face....” in the 1950s. But Chantilly lace is no longer made in the French town of Chantilly. The high-end lace industry has mostly shrunk to the area around a town called Caudry, where rival companies Sophie Hallette and Solstiss supply the likes of Christian Dior, Chanel, Jean Paul Gaultier, Jason Wu and Valentino. The region is known for its stinky Maroilles cheese and the slurry of its “Ch’tis” dialect, made famous in France by the 2008 comedy “Bienvenue Chez Les Ch’tis” or “Welcome to the Sticks.” The factories here specialize in “Leavers” lace, using looms that imitate the intricate knotting of 18th-century handmade lace. These machine looms, named after the Englishman who invented them, can work cotton, silk, rayon, polyester, wool or other materials into exquisite laces that are sturdier than they look. (Handmade lace is now a hobbyist’s product, though some machine lace is embellished by hand.) Of course, the Leavers machines are far slower than the

knitting machines now used to make mass-market lace in China. Heidi Cho, who trades in lace at Victorian Lace & Trim, a Los Angeles-based lace wholesaler, sells large quantities of Chinese lace to fast-fashion and budget-clothing manufacturers in the U.S. “The China quality is low, but the price is low, Ms. Cho says. Created with an entirely different technique, it isn’t nearly as nuanced or beautiful. Still, Chinese factories haven’t made headway into the market for couture-level lace—largely because new Leavers machines haven’t been manufactured in decades. Outside of bridal trims and lingerie, lace hasn’t been a big part of women’s wardrobes in recent decades. Perhaps that’s partly because it’s so truly, almost wholly feminine—in an era when women have been focused on competing with men. The fashion industry’s most contrarian designer, Miuccia Prada, prepared the way for lace’s comeback. For fall 2008, she used heavy Swiss-made lace—a type more often used in curtains—in Prada’s skirts, dresses and accessories. French lace makers celebrated, knowing Prada was likely to influence other designers. Sophie Hallette’s U.S. sales representative, Jane Pincus, recalls that she was at a Paris fabric trade show in the spring of 2008 when word spread about the huge Prada order. “There was champagne popping in the booth,” she says. “The sheer size—they put it on every product—the shoes, the bags.” Then the financial crisis hit, with Lehman Brothers collapsing in September. Many designers stripped expensive details from their collections to slash prices. In late 2009, Don O’Neill, designer of the midpriced Theia line, used a wedge of Sophie Hallette lace at the neck of a gown that was priced for retail at $450. He says one U.S. luxury retailer asked him to use cheaper Chinese lace to bring the price of the dress closer to $350. The French lace cost $22.33

Daily Express/Zuma Press (Brioni); Getty Images (2)

The return of lace as a major fashion trend is giving a boost to a once-faltering European business

From left, lace looks from Prabal Gurung, Marc Jacobs and Brioni. Lace is spreading across runways around the world. per yard, compared with $2 or $3 per yard for lace from China, he says. This wasn’t the most expensive lace—in fact, the average wholesale price of Sophie Hallette lace is about $63 a yard, says Maud Lescroart, the company’s head of marketing. At retail, a garment is often priced at five or six times what it cost the designer to make, after markups by the brand, the retailer and sometimes middlemen. So $20 of lace can raise the ultimate price of a dress by $100. “They didn’t understand why I wouldn’t just put Chinese lace on it,” says

Mr. O’Neill, who refused to switch laces. Not every designer made the same decision. During the financial crisis, Sophie Hallette, which also owns the Riechers Marescot lace brand, laid off 25% of its work force in Caudry—a painful time for the family-owned company. Now, as the world economy sputters along in recovery mode, lace has a fresh new appeal for designers. Indeed, European couture lace provides a near-perfect metaphor for what’s going on in the luxury market, where designers

have been rethinking classic materials from mink to pearls. Lace is expensive and utterly traditional, yet it’s being put to use in a modern, whole-hog way, such as a hoop-shaped lace skirt from Yohji Yamamoto or Valentino’s winter coat with lace stitched over a more substantial fabric. Some of the machines in action at the Sophie Hallette factory in Caudry are 100 years old, says Ms. Lescroart, who is the 38-year-old granddaughter of the company’s founder. Many jobs are inherited from parents. Eric Lernon operates a tulle loom that his father worked on as a tulliste. “It’s like a 19th-century company in the 21st century,” Ms. Lescroart says, glancing around the factory floor where she spent a good deal of her childhood. In a showroom, she and creative director Pierre Alain Cornaz pull out lace trims so complex that it takes a person two days to make one meter. Often details such as embroidery, sequins and other embellishments are added by hand. New lace patterns from Mr. Cornaz are drawn by hand—every single thread —by a team at the factory. The lace patterns they were drawing in February 2011 will be seen on runways more than a year later, in September 2012, and the clothes will hit stores in January of 2013. Threading the tulle loom takes two months and two people, says Ms. Lescroart. “Tell the designers that’s why it takes so long to fill their orders,” she jokes. In another room, women mend tiny faults by hand, holding the lace on their laps. “This is a woman’s room,” says Ms. Lescroart. “It takes patience.” Down a hallway in a laboratory, chemist Philippe Desmaretz measures dyes in beakers and vials. “He’s got a lot of work now because of the shows,” Ms. Lescroart says. “All the designers want special colors.” Contact me at Christina. [email protected] or twitter.com/ BinkleyOnStyle.

ASK TERI | By Teri Agins

Q: I was in the drinks line at a cocktail party behind a woman in the same dress as mine: black and low-cut, with a full skirt and an appliqué border around the bottom. I told her, “I like your dress,” and she turned around to smile. Then I told her we were wearing the same dress, at which point she stepped back and looked me up and down, totally mortified, and then walked away. (She was very top-heavy and about 12 centimeters shorter.) I realized I had made the wrong decision. Now I have some new large tortoise-shell glasses and keep encountering people with the same glasses. What should I do? —K.H., Los Angeles

A: It always feels awkward when you encounter a “twin”—someone dressed in the same outfit as you—at a fancy social outing. I’m surprised it doesn’t happen more often, given all the branches of fashion chains that carry the same merchandise. At the office, we used to joke to each other “Don’t you know not to wear Ann Taylor in public?”—because several of us owned a black-velvet Ann Taylor cocktail dress that had become everybody’s go-to frock for after-work functions. Here’s what you can do the next time you spot a twin at an event. (1) Stand far enough away that nobody will notice, or (2) Smile warmly and declare to your twin: “Don’t we have great taste?” or “Don’t we both look

marvelous?” You should also lob a compliment at people you meet who are wearing the same tortoise-shell glasses. I gather from your description that you looked better in that dress than your twin did. Bless her heart; no wonder she fled so quickly. Now turn the tables. What should you do if someone upstages you in the same dress? It’s your turn to force a smile and then discreetly check her out: her jewelry, shoes or any other details that made her look so put-together. Consider this a teachable moment to help you sharpen your critical eye for fashion. Email questions for Teri Agins to [email protected]

Tom Kuhlenbeck

What to do when you meet your fashion doppelganger

THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

9

OPINION: REVIEW
OUTLOOK

The Arab Revolt and U.S. Interests

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s a general rule, Middle Eastern regimes divide into two types: the bad—and the bad. To understand where the American interest lies in this season of Arab revolt, it’s important to know the difference. We don’t write that in jest. The unenviable task that has confronted the Obama Administration since Tunisia’s Jasmine Revolution sent its pro-Western dictator packing in January has been to safeguard America’s core interests in the Middle East without betraying its core values, not the least of which is supporting local aspirations for a more liberal (in the 18th-century sense of that word) political order. In an ideal world the U.S. would not have to make that choice. But we’re talking about the Middle East, where the Obama Administration has so far been dealing with successive crises on an ad hoc basis. What it needs going forward is a strategy. i

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We think that U.S. strategy should be to seek regime change among our enemies while encouraging its friends in the region to reform their domestic institutions along more liberal lines. That, in turn, requires an understanding of who its friends and foes really are—a challenge for an Administration that at times has seemed eager to blur or overlook the difference. So it has been in recent days with Syria, whose dictator Bashar Assad was recently described by Hillary Clinton as a “reformer.” So it was, too, in April 2009, when Mrs. Clinton welcomed Moammar Gadhafi’s son Mutassim to the State Department, saying the U.S. “deeply valued” its relationship with Libya and wanted to “deepen and broaden our cooperation.” Those are words Mrs. Clinton surely regrets today. But she could have spared herself the embarrassment had she kept more clearly in mind that the Gadhafi regime—with the blood of hundreds of Americans on its hands, its declaration of jihad against Switzerland, its capricious habit of taking foreign nationals hostage and its unabated repression of its own people—could never be a friend of the United States, whatever pragmatic concessions the West made as a reward for abandoning its WMD program. The story is even worse with Syria, a regime the U.S. has unsuccessfully attempted to woo since Richard Nixon’s visit to Damascus in 1974. In the intervening years, the Syrians brutally occu-

pied Lebanon for 29 years, allowed ter- Western forces in Lebanon, that Egypt rorist groups such as the Palestinian and Jordan signed and honored peace Hamas and the Kurdish PKK to set up treaties with Israel, and that Qatar has headquarters in Damascus, became contributed to the military effort Iran’s principal ally in the Arab world, against Gadhafi. These are marks of served as a transit center for al Qaeda friendship that deserve reciprocal treatterrorists en route to kill Americans in ment. This isn’t to say that U.S. friendship Iraq and championed the interests of Hezbollah, which itself has killed hun- with these regimes should be uncritical or unstinting. Not dreds of U.S. Marines. least among the iroThen there is Iran, a nies of the current regime that President A strategy has moment is that the Obama spent his first Obama Administrayears in office trying to begin by tion’s dilemma in to court on the theory distinguishing between choosing between U.S. that only the pig-headinterests and values edness of his predeces- friends and enemies. might have been less sor had prevented an stark had President earlier rapprochement. It took a stolen election, terrible do- Bush’s freedom agenda been pressed mestic repression and endless bad faith more insistently on regimes like Mubain nuclear negotiations to persuade the rak’s. Much of the U.S. foreign policy Obama Administration that Iran’s hos- establishment carped that such an tility to the U.S. was more than Bush- agenda only got in the way of more imdeep. Yet even now Mr. Obama seems portant Mideast priorities, like the Isto hold out hope that some deal can be raeli-Palestinian peace process. Mr. struck with Tehran over its nuclear am- Bush’s vision looks largely vindicated, even if the execution of his policies bitions. i i i was often flawed. By contrast, U.S. friends in the rei i i Today the Obama Administration gion do not engage in this kind of behavior. This is obviously not to say that does not always have the luxury of rethese are model countries. With the winding history so that a gradual proclear exceptions of Iraq and Turkey and cess of reform can take root. Instead, in the arguable ones of Lebanon and the Egypt, Tunisia, Bahrain and perhaps Palestinian Authority, nowhere in the soon in Yemen it has been forced to region are leaders elected democrati- make a choice between standing by cally. Civil rights are enjoyed tenuously friendly autocratic regimes or the peoat best. Human rights are often treated ple in the streets who oppose those rewith contempt. Saudi Arabia supports a gimes. That’s a tough call and we symas the Administration vast religious establishment that pathize preaches an extreme brand of Islam and maneuvers amid rapid change and new incubates militantly anti-Semitic and actors with often murky motivations. The task is all the more difficult anti-Western views. The list goes on. Yet one need not be an apologist for among U.S. friends, because the alternathese regimes to note that, even at tive to the current rulers can be worse. their worst, Hosni Mubarak in Egypt, That is true in particular in Bahrain and Ben Ali in Tunisia, or the Khalifa family Saudi Arabia, which are allies against in Bahrain never came close to ap- Iranian imperialism and targets of radiproaching the levels of brutality rou- cal Islamic overthrow. Preventing either tinely practiced by Gadhafi, Assad or is crucial to American interests in the Ahmadinejad. During the Cold War Middle East, not least because either thinkers such as Jeane Kirkpatrick outcome could require the U.S. military made the crucial distinction between to intervene. The U.S. may do best here via mostly autocratic regimes that were capable of a gradual process of reform and much quiet diplomacy that retains its influmore repressive totalitarian ones that ence while encouraging reform and were not—and were also inveterately steering leaders away from damaging hostile to the U.S. A similar distinction choices like Bahrain’s recent violent crackdown. Bahrain has to find a way to applies today in the Middle East. It matters for American interests better accommodate the political aspithat a dictator like Yemen’s Ali Saleh rations of its Shiite majority, but the has cooperated in fighting al Qaeda, U.S. will not make that result more that Saudi Arabia helped bolster pro- likely by appearing to be an unreliable

friend. Likewise in Yemen, if the U.S. can’t choose with any wisdom among conflicting tribes, then it should first seek to do no harm to its ability to confront the country’s worrying al Qaeda presence. In Tunisia and Egypt, the dictator is gone, and the U.S now has a chance to openly promote a more stable liberal order. The Obama Administration can help liberal voices and parties organize, encourage the institutions of free markets and modern civil society, and explain the benefits of pluralism and constitutional checks and balances. The U.S. should be telling Arab publics what it is for, not merely what it opposes. At the same time, it should warn Egyptians that the likeliest result of a Muslim Brotherhood victory in elections will be less tolerance of Christians, less opportunity for women, and perhaps democracy of the one-man, one-vote, once variety. No similar dilemma confronts the Obama Administration regarding America’s enemies. Mr. Obama may be the last to admit it, but the West has cast its lot with Libya’s rebels, and its interests lie in the swift collapse of the Gadhafi regime. What are the alternatives? A Gadhafi victory would be a disaster for NATO; an interminable civil war would be a tragedy for Libyans with spillover damage to American credibility. U.S. interests would also be wellserved by the collapse of the Assad regime, which would deprive Tehran of its major Arab client, deprive Hezbollah of one of its principal backers and save Lebanon from once again becoming a province of Greater Syria. A successful popular uprising in Syria would also embolden Iran’s Green Movement, on whose success America’s core strategic interests in the Middle East ultimately depends. But that won’t happen until the Obama Administration openly aligns itself with that movement in the same (if often covert) way the Reagan Administration did with Poland’s Solidarity. i

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U.S. foreign policy has traditionally looked with suspicion at concepts of the balance of power, and often with good reason. But as in the 1980s, the U.S. can pursue a strategy in this Arab spring that combines calculations of national interest with the promotion of freedom, a balance that marries its values and its interests. Now is the time for President Obama to pursue it.

Mr. Goldstone Recants

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egrets, Richard Goldstone has a few, if you can believe it. The principal author of the U.N. Human Rights Council’s notorious “factfinding mission” report on the Gaza war of 2008-09 now concedes he didn’t have enough facts when he equated Israel with Hamas in deliberately targeting innocents. The South African jurist delivered his mea culpa in a Washington Post op-ed that is astonishing for its self-justifying apologetics. In his September 2009 report, Mr. Goldstone and his U.N. comrades took 575 pages to denounce Israel

for “a deliberately disproportionate at- come his way? tack designed to punish, humiliate and Well, it turns out that Israel didn’t deterrorize a civilian population,” and that liberately target innocents, and that its Israeli soldiers should be held criminally military and courts are doing a thorough liable for prosecution in and conscientious job international courts. of investigating cases Hamas endorsed the re- A hatchet job on in which civilians in port and the Financial Gaza were accidentally Times praised it as Israel falls apart. killed. Oh, and he now “balanced” and “damnregrets that “that there ing” in regard to Israel. has been no effort by Now, Mr. Goldstone says, “If I had Hamas in Gaza” to investigate its own known then what I know now,” his re- acts of terror in aiming hundreds of misport “would have been a different doc- siles at Israeli cities. ument.” What revelations have since We would welcome this apologia if we

didn’t think a jurist of Mr. Goldstone’s stature should have known the difference between a democracy like Israel with a history of investigating its own failings under the rule of law, and a self-avowed terrorist state like the one Hamas runs in Gaza. “Hundreds more rockets and mortar rounds have been directed at civilian targets in southern Israel,” Mr. Goldstone now concedes in stating the obvious, which at least proves he wants to retain a shred of his former reputation. As our friends at the New York Sun note, Mr. Goldstone should now have the decency to retire from public life.

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THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

OPINION

for his own account, ending up with a $10 million stake. He also told Mr. Buffett that Lubrizol was worth looking at, mentioning his own stake in passing. Mr. Buffett decided to buy the company with Berkshire’s money, giving Mr. Sokol a $3 million profit. Now let us hasten to add that Berkshire’s shareholders aren’t out a dime unless Mr. Sokol has somehow put out word that Lubrizol was in play, thus driving up the price—which he didn’t. Mr. Buffett, in an unusual press release last week, laid out Mr. Sokol’s Lubrizol trading history and announced Mr. Sokol’s decision to resign. Mr. Buffett said he was surprised by the resignation, which Mr. Sokol said was unrelated to Lubrizol, and that he saw nothing “unlawful” in Mr. Sokol’s trading. To the normal business eye, though, there was a conflict in the fact that Mr. Sokol was shopping for tips in Berkshire’s name and then appropriated one of those tips for his own enrichment. Shades of insider trading enter, however reluctant some are to say so, because Citi was offering its considered judgment on companies Berkshire might want to buy. Mr. Sokol can say he didn’t know whether Berkshire would be interested, but it doesn’t change the fact that Lubrizol was on the shopping list Citi had drawn up for Berkshire. Worse, Mr. Sokol apparently

[ Business World ] BY HOLMAN W. JENKINS, JR. One biblical injunction we all break is “No man can serve two masters.” Biblical injunctions often are all the more valuable for their impracticality in the real world. David Sokol, reading between the lines, seems to be a guy who loved his employer at Berkshire Hathaway even though he may have suspected he wasn’t going to inherit the top job. He loved the idea of being Warren

It might be ‘wrong’ in another company’s culture, but is it wrong at Berkshire? Buffett, if not at Mr. Buffett’s firm, then at his own. And thus, with a lack of skepticism about himself, he fell into the trap of trying to give the gift of Lubrizol to both. If you’ve been hiding under a Geico commercial, here’s what happened. Mr. Sokol was vetting acquisition targets with Citigroup when it dropped the name Lubrizol. Mr. Sokol immediately started buying and selling shares

Associated Press

St. Warren Casts Not the First Stone

went so far as to order Citi to open communications with Lubrizol’s management on Berkshire’s behalf. Put it this way: As a stock trader, wouldn’t you like to know that a Buffett deal scout had eyed a list of targets and found one particularly interesting? None of this means Mr. Sokol isn’t believable when he says he didn’t buy Lubrizol because he knew Berkshire would buy it. He didn’t know and, unless everything we believe about Warren Buffett is wrong, Mr. Buffett isn’t a guy to be buffaloed into a deal just to suit Mr. Sokol. Mr. Sokol wasn’t gaming his employer. He bought Lubrizol purely because he thought it was a good proposition and recommended it to Mr. Buffett for the same reason.

He is therefore exculpated on the grounds of ill motive, but not (perhaps) adherence to ethical form. In connection with that parenthetical, we just have to wonder about the internal ethical culture of Berkshire (and we truly mean this non-pejoratively). The public sometimes confuses ethics with the absence of qualities that people find unattractive, such as inordinate interest in money or opportunism. These are not sins in Mr. Buffett’s world, or in the worlds of many investing sophisticates, who take a relaxed view of people around them buying and selling as long as they do so at their own risk. For that matter, many market cognoscenti long ago figured out

that the SEC’s attitude toward insider trading, that it victimizes small investors, is humbug. The “investing public” is not worse off because a buyer or seller is well-informed. But an even more rarefied version of this opinion holds that companies would actually be wise to countenance insider trading by their employees. It would allow firms to save money on direct compensation. It would provide a means for what employees know to find its way into the stock price. Investors and management would get better feedback through the stock price about what’s really going on. It would help close the circle of the modern corporation, with its problem of separated ownership and control. Our guess is that Mr. Buffett’s feelings about the Sokol affair will track the public’s attitude, since Mr. Buffett usually is reluctant to be on the wrong side of public opinion. He certainly doesn’t relish the embarrassing situation Mr. Sokol has put him in. Leaving aside the optics, however, our guess also is that Mr. Sokol didn’t really commit a sin in Mr. Buffett’s world. Mr. Buffett doesn’t care about Mr. Sokol’s trading of Lubrizol as long as he didn’t ramp up the price on Berkshire. Mr. Buffett makes his own judgments, and only cares whether he was getting a good price himself.

Immigration Lessons From English Soccer San Francisco Here in Silicon Valley, immigrants and first-generation Americans provide the drive and hunger for almost every company worth its salt. But these days protectionism and xenophobia are choking off the supply of H1-B visas for the best and brightest foreigners. Sadly, we no longer lay out the welcome mat for people with names like Grove, Brin, Yang, Bechtolsheim, Huang, Nguyen, Omidyar and Wadhwani. Some say that the effect of immigrants on Silicon Valley is exaggerated and that venture capitalists should provide more opportunities for homegrown Californians. But the state’s xenophobes and protectionists need only take a look at the recent history of the English Premier League

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BY MICHAEL MORITZ

Didier Drogba (left): From the Ivory Coast to Chelsea stardom. to see the staggering and transformative effect that immigrants can have on a market. Twenty years ago, English professional soccer was in a shambles. Most of the stadiums had just a few seats. Stabbings and fights on the terraces were part of the entertainment. In 1989, 96 people were trampled to death during one tragic game. Almost all the players in the league had been born in England—many within sight of the stadiums in which they played. Clubs in Italy, Spain, Brazil and Argentina provided a more scintillating version of the sport. Revenues from television coverage were small. In less than two decades all that has changed, and today the best soccer in the world is played in England. The reason: immigrants. The English Premier League is

a testament to what happens when immigration barriers are broken down and a market attracts the most talented people from around the world. In 1992, the year of its formation, there were only 11 soccer players in the English Premier League who had not been born in the United Kingdom or Ireland. Now that number is more than 250—in a league where the total number of players in the overall starting lineup is 220. In 1999, Chelsea became the first team to field a Premier League starting lineup composed entirely of foreign-born players. The main reason behind this dramatic change was a labor ruling in 1995 by the European Court of Justice. The court ruled that arcane rules restricting the free movement of soccer players were

in breach of the law of the European Union. When the rules were lifted, the English Premier League was flooded with the best players in the world. The economic result of the influx of talented immigrants has been profound. Today the soccer on view in the English Premier League is far and away the most attractive in the world. The domestic market has expanded—hooliganism is in decline, and women and children flock to stadiums on Saturdays. Meanwhile, the export market is more lucrative than ever. More than half a billion people in some 200 countries follow the exploits of Chelsea, Manchester United, Aston Villa, Blackpool and Tottenham Hotspur. A preseason tour of Asia has become de rigueur for the best clubs. The league has also drawn foreign capital with club owners from the United States, India, Russia and the Middle East. Only three sports leagues—the NFL, MLB and NBA—top the English Premier League in revenues. But these leagues, it should be noted, compete in a domestic market sixtimes larger than England’s. In 1986, a two-year TV agreement for the top flight of English soccer was sold for 6.3 million pounds, the equivalent of about $10 million today. In 2007, a set of three-year rights was sold for 1.7 billion pounds, or $2.7 billion. It’s little wonder that last year the English Premier League won the Queen’s award for enterprise in international trade.

Players like Chelsea’s Didier Drogba (Ivory Coast), Arsenal’s Cesc Fabregas (Spain), and Manchester United’s Nemanja Vidic (Serbia) may not possess the technical chops to start technology companies in Silicon Valley. But they answered the same clarion call that rang out to the founders and families that once spawned Intel, eBay, Google, Nvidia, Yahoo and hundreds of other companies formed between San Jose and San Francisco. These soccer players are living proof that the best people score the most goals. Turning away talent—wherever it’s from—only weakens the market and brings down everyone’s game.

Mr. Moritz is a member of Sequoia Capital.

Pepper . . . and Salt

THE WALL STREET JOURNAL

“It started with just a wastepaper basket and crumpled paper.”

THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

11

OPINION

Time for a Budget Game-Changer BY GARY S. BECKER, GEORGE P. SHULTZ AND JOHN B. TAYLOR Wanted: A strategy for economic growth, full employment, and deficit reduction—all without inflation. Experience shows how to get there. Credible actions that reduce the rapid growth of federal spending and debt will raise economic growth and lower the unemployment rate. Higher private investment, not more government purchases, is the surest way to increase prosperity. When private investment is high, unemployment is low. In 2006, investment—business fixed investment plus residential investment—as a share of GDP was high, at 17%, and unemployment was low, at 5%. By 2010 private investment as a share of GDP was down to 12%, and unemployment was up to more than 9%. In the year 2000, investment as a share of GDP was 17% while unemployment averaged around 4%. This is a regular pattern. In contrast, higher government spending is not associated with lower unemployment. For example, when government purchases of goods and services came down as a share of GDP in the 1990s, unemployment didn’t rise. In fact it fell, and the higher level of government purchases as a share of GDP since 2000 has clearly not been associated with lower unemployment. Above all, the federal government needs a credible and transparent budget strategy. It’s time for a game-changer—a budget action that will stop the recent discretionary spending binge before it gets entrenched in government agencies. Second, we need to lay out a

path for total but it is likely federal governto entail a ment spending An Easy Path to Sustainable Spending gradual reducGovernment outlays as a percentage of GDP growth for tion in spendnext year and 26% ing as a share later years of GDP that that will grad- 25 would, in a reaually bring sonable number 24 Congressional Budget Office Baseline spending into of years, lead to 23 balance with a balanced budthe amount of 22 get without tax Budget strategy tax revenues rate increases. 21 starting with HR1 generated in To make the in 2011 20 later years by path credible, the current tax 19 the budget ressystem. Assur- 18 olution should ance that the '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 include instruccurrent tax tions to the apSources: Congressional Budget Office, the authors system will repropriations main in place—pending genuine in 2010, a sharp 22% increase over subcommittees elaborating reform in corporate and personal the $378.4 billion a mere three changes in government programs income taxes—will be an immediyears ago. HR1 reverses this bulge that will make the spending goals ate stimulus. by bringing these appropriations a reality. These instructions must All this must be accompanied to $394.5 billion, which is 4% include a requirement for reforms by an accurate and simple explahigher than in 2008. Spending of the Social Security and healthnation of how the strategy will ingrowth is greatly reduced under care systems. Health-care reform crease economic growth, an expla- HR1, but it is still enough to cover is particularly difficult politically, nation that will counteract scare inflation over those three years. although absolutely necessary to stories and also allow people outThere is no reason why govget long-term government spendside of government to start makernment agencies—from Treasury ing under control. It is absolutely ing plans, including business and Commerce to the Executive essential to make wholesale plans, to invest and hire. In this Office of the President—cannot changes in ObamaCare, and many respect the budget strategy get by with the same amount of of its approaches to health reshould be seen in the context of a funding they had in 2008 plus inform. larger pro-growth, pro-employcreases for inflation. Anything The nearby chart shows an exment government reform strategy. less than HR1 would not represent ample of a path that brings total We can see such a sensible a credible first step. Changes in federal outlays relative to GDP budget strategy starting to budget authority convert to govback to the level of 2007—19.5%. emerge. The first step of the ernment outlays slowly. According One line shows outlays as a share strategy is largely being adto the Congressional Budget Ofof GDP under the CBO baseline redressed by the House budget plan fice, outlays will only be $19 billeased on March 18. The other for 2011, or HR1. Though voted lion less in 2011 with HR1, meanshows the spending path starting down in its entirety by the Sening it would take spending to 24% with HR1 in 2011. With HR1 fedate, it is now being split up into of GDP in 2011 from 24.1% today. eral outlays grow at 2.7% per year “continuing” resolutions that add If HR1 is the first step of the from 2010 to 2021 in nominal up to the same spending levels. strategy, then the second step terms, while nominal GDP is exTo see how HR1 works, note could come in the form of the pected to grow by 4.6% per year. that discretionary appropriations budget resolution for 2012 also Faster GDP growth will bring a other than for defense and homecoming out of the House. We do balanced budget more quickly by land security were $460.1 billion not know what this will look like, increasing the growth of tax reve-

nues. Critics will argue that such a budget plan will decrease economic growth and job creation. Some, such as economists at Goldman Sachs and Moody’s, have already said that HR1 will lower economic growth by as much as 2% this quarter and the next and cost hundreds of thousands of jobs. But this is highly implausible given the small size of the change in outlays in 2011 under HR1, as shown in the chart. The change in spending is not abrupt, as they claim, but quite gradual. Those who predict that a gradual and credible plan to lower spending growth will reduce job creation disregard the private investment benefits that come from reducing the threats of higher taxes, higher interest rates and a fiscal crisis. This is the same thinking used to claim that the stimulus package worked. These economic models failed in the 1970s, failed in 2008, and they are still failing. Control of federal spending and a strategy for ending the deficit will provide assurance that tax rates will not rise—pending tax reform—and that uncontrolled deficits will not recur. This assurance must be the foundation of strategy for a healthy economy.

Mr. Becker, the 1992 Nobel economics laureate, is professor of economics at the University of Chicago and senior fellow at the Hoover Institution. Mr. Shultz, secretary of Labor (1969-70), secretary of Treasury (1972-74) and secretary of State (1982-89), is a fellow at Stanford University’s Hoover Institution. Mr. Taylor is a professor of economics at Stanford and a senior fellow at the Hoover Institution.

Colombia Trade: A Different Kind of Jobs Bill BY MAX BAUCUS AND JOHN KERRY The U.S.-Colombia Free Trade Agreement is not a partisan political issue. It is an accord in our national economic and foreign policy interests. After the two sides quickly conclude the current negotiations to address outstanding issues, it will be time for Congress to move the agreement without further delay. Let’s be clear: Trade is critical to American innovation and economic growth. It can expand opportunity for workers and entrepreneurs, both at home and abroad. Colombia is a prime example. The International Trade Commission estimates the Colombia Free Trade Agreement, or FTA, will increase U.S. exports by more than $1 billion a year. To the farmers and workers whose jobs these exports would help sustain, that’s much more than a statistic. To help our economy continue to recover, we should unite around a trade agenda that includes approval of this FTA and extension of Trade Adjustment Assistance for American workers. Colombia is an important trading partner for American farmers, businesses and workers. But our exporters face a disadvantage be-

cause Colombia maintains tariffs on U.S. products while Colombian products have nearly complete access to U.S. markets. U.S. farmers face an average tariff of roughly 30% in Colombia. U.S. manufacturers face an effective tariff rate of 14%. And nearly 90% of these manufacturers are

Why not help U.S. exporters by opening up a new market for them? the small and medium-sized businesses we count on to create jobs and continue moving our economy forward. The Colombia FTA will eliminate tariffs for U.S. exports and level the playing field. But if we fail to act, we will continue to lose ground. Over the last two years, the U.S. share of Colombia’s corn, wheat and soybean imports dropped by more than 60%. Argentina has surpassed the United States as Colombia’s top supplier of agricultural products. China has tripled its share of the Colombian market and is now Colombia’s secondlargest trading partner. And Co-

lombia is signing trade agreements with countries in Europe, Asia and the Americas that further disadvantage U.S. exporters. Each day we fail to act costs American jobs and sales—and sends them elsewhere. Passing the FTA is also good American foreign policy. It will cement a longstanding relationship with a strategic partner in South America. Building on lessons learned from our 10-year $8 billion collaboration under Plan Colombia, Bogota is providing counternarcotics assistance in Mexico and training Mexican police and judicial officers. It is no secret that violence and labor rights concerns are the major reasons the Colombia agreement has stalled. These are concerns we share, and we are encouraged by Colombia’s progress. The International Labor Organization has removed Colombia from the list of countries that fail to comply with international labor standards. We commend President Juan Manuel Santos’s commitment to compensate the victims of violence and return confiscated land to poor farmers. And we applaud efforts to reduce homicides of union members, which Colombia reports have declined by nearly 90% since 2002. These are

significant steps. Make no mistake: The assassination of even one union member is unacceptable. The FTA will further Colombia’s progress by providing clear protections for fundamental labor rights. And those protections will be fully enforceable. In fact, the U.S.-Colombia FTA has far stronger labor provisions than the trade agreements that Colombia has signed with any other country, including Canada. We also believe that the Colombians want to reduce violence further and using our collective energy and efforts, we will. Beyond our negotiations on the FTA and trade, we encourage Colombia to continue its efforts to promote justice and national reconciliation by investigating and prosecuting human-rights abuses. And the investigation of past abuses of the presidential intelligence agency should continue. In addition to the FTA, we must take other steps to strengthen our economy here at home, including renewal of Trade Adjustment Assistance, or TAA, which expired in February. TAA helps our economy in the short term by providing assistance to American workers in industries affected by global trade. And it helps avoid layoffs by assisting

trade-distressed companies retool and become more competitive. TAA also pays dividends over the long term because it retrains workers for the 21st century economy—empowering workers to enroll in community college or earn a bachelor’s degree in growing fields like health care and cutting edge industries like high-tech manufacturing. Simply stated, TAA puts people in Massachusetts, Montana and across the nation back to work. There is support on both sides of the aisle for TAA and for the Colombia Free Trade Agreement. But we will not realize the jobs and opportunities that the Colombia agreement and TAA have the potential to create if Washington fails to act. We need to restore a broadly shared bipartisan consensus on trade. We cannot do that if we do not treat our friends in the hemisphere with the respect they deserve as neighbors and allies, or if we ignore the needs of American workers adjusting to an increasingly globalized economy. It’s time for Congress—and our country—to get back in the game.

Mr. Baucus is chairman of the U.S. Senate Finance Committee. Mr. Kerry is chairman of the Senate Foreign Relations Committee.

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THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

DISASTER IN JAPAN

Japan banker group supports Tepco Chairman says that utility company should not be nationalized but that the government and banks should back it TOKYO—The chairman of the Japanese Bankers Association said that Tokyo Electric Power Co. shouldn’t be nationalized but that the government should support it however necessary, and added that the banking industry also will continue to assist the embattled utility. “We need to secure a stable power supply for our country,” Masayuki Oku, the chief of Japan’s most influential banking group, said Monday, adding that the government is legally responsible for keeping Tepco on a sound footing. Mr. Oku cited a law stipulating the government must support power companies during unprecedented crises. He said the area for which Tepco supplies power accounts for about 40% of total gross domestic product and needs to be protected as the country’s infrastructure. “We will give financial support to the company” on the understanding that the government will support Tepco, Mr. Oku said. Japan’s leading banks and trust banks already have provided close to ¥2 trillion ($23.78 billion) in loans to Tepco since the earthquake hit on March 11. The core banking units of Sumitomo Mitsui Financial Group Inc., Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc. provided about ¥600 billion, ¥300 billion and ¥500 billion, respectively, in loans. The Development Bank of Japan also is preparing to provide about ¥100 billion in financing to the power supplier this month, according to people familiar with the matter. Mr. Oku, who is also chairman of SMFG, said the government and the private sector have to cooperate to reconstruct the nation, and said imprudent remarks among politicians over Tepco’s nationalization should be avoided. Over the past week, speculation has grown that the government is

Bloomberg News

BY ATSUKO FUKASE

Masayuki Oku, chairman of the Japanese Bankers Association and of Sumitomo Mitsui Financial Group, at an interview in Tokyo in November. considering nationalizing Tepco and the media quoted some politicians as saying it could be a possibility. Prime Minister Naoto Kan, however, 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,” the prime minister said on Friday.

Mr. Oku added that, “without sharing some burdens, there wouldn’t be reconstruction for the nation,” and said such burdens may include an increase in power fees or disaster tax. He said the disaster has spread too far beyond the banking industry to measure its impact on the economy. “We have to draw a big picture

on how we tap such funds [for the repairs and reconstruction],” he said, adding that the government will likely have to issue Japanese government bonds or relief bonds. From the banking side, there are household assets valued at ¥1,400 trillion in Japan, Mr. Oku said, and shifting it into such investment could be an option as long as it

won’t lead to a liquidity crisis. He said loan demand is yet to pick up as companies aren’t ready for capital spending or repairs. He also said big companies can still issue bonds despite the high price, unlike during the period after the collapse of Lehman Brothers when companies struggled to raise funds.

Food-supply issues spur debate on imports BY MARIKO SANCHANTA

European Pressphoto Agency

TOKYO—The disruptions to food production in Japan, coupled with the questions about the country’s food safety in light of possible radiation contamination, have raised the

thorny question as to whether the country should scrap some of its protectionist tariffs on certain products and welcome more imports. Those products would likely include milk, yogurt and rice, which are essentially 100% domestically

A Japanese dairy farmer disposes of radioactive milk in Fukushima prefecture.

controlled. Nearly a month after Japan’s devastating earthquake and tsunami, those items are aren’t readily available in stores countrywide. Production levels at Meiji Holdings Co., Japan’s leading producer of dairy products, have plummeted to 20% to 50% of pre-earthquake levels, mainly because of the rolling power blackouts in the Tokyo area. For yogurt in particular, which requires at least four to seven hours of consistent cooling while it ferments, the power outages—many of which still come on short notice— can wipe out a day’s batch. The power outages will continue at least through the summer months, if not longer. In a normal year, Meiji churns out 320,000 kiloliters of yogurt. A Meiji spokesman pointed to another pressing issue facing the company. It is having difficulty securing the packages for milk and yogurt, after the tsunami incapacitated some factories that make plastics that are used in containers. “We are not sure how long these disruptions will last,” he said.

Many have started to ask whether the country will be forced to open its heavily protected dairy and rice industries to foreign competition. “What is the dairy industry going to do, and [will the disaster] make them rethink the high import quotas and force a questioning of trade rules?” asked Scott Price,

Many ask whether the country will be forced to open its heavily protected dairy and rice industries. chief executive of Wal-Mart Stores Inc.’s Asian operations. “How do we balance food safety with the aging [farming population] and what’s happening now? Sometime shocks help the system re-evaluate.” For years, Japan has vowed to increase its food self-sufficiency. The country produces only 40% of the calories it consumes collectively, according to the ministry of agricul-

ture, and it had targeted raising this figure to 50% by the year 2020. But with recent concerns about local food production, even a 50% selfsufficiency target seems like a difficult goal. Government officials in Japan say it is far too early to judge whether the current crisis will force the country to shift its trade rules. “I think this could go either way; it’s really difficult to discuss it at this point. Our task is to make this positive in the long run, and one of the ways to alleviate anxiety is to certify the distinct areas where food comes from,” said one official at the ministry of trade. Prime Minister Naoto Kan last week pushed back a June deadline on whether to join the Trans-Pacific Partnership talks—a wide-ranging trade agreement that aims to eliminate all tariffs within 10 years— given the situation in Japan. Meanwhile, Japan’s exports to China of milk with a long shelf life have been halted, though a ministry of agriculture official said these exports were too small to affect the industry in any tangible way.

THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

13

DISASTER IN JAPAN

U.S. aid response shifts gears BY CHESTER DAWSON

BY JURO OSAWA

Agence France-Presse/Getty Images

ABOARD THE USS RONALD REAGAN—U.S. and Japanese officials met aboard a Pacific Fleet aircraft carrier Monday to mark the drawdown of humanitarian efforts by American military forces, even as the U.S. ramps up its presence to help Japan deal with a damaged nuclear plant. The U.S. deployed more than 15,000 military-related personnel after the March 11 earthquake and tsunami in northeastern Japan, including 12,750 attached to the U.S. Navy Seventh Fleet. Many of those troops will soon start moving back to normal duty posts in Japan or elsewhere. At the same time, the U.S. has stepped up the dispatch of military experts in response to the damaged Fukushima Daiichi nuclear power plant. More than three weeks after the facility’s backup generators failed, the cooling and cleanup effort has vexed Japanese government officials and plant operator Tokyo Electric Power Co. A succession of problems at the nuclear facility, which was rendered inoperable by the earthquake and tsunami, has resulted in the release of radiation in the air and water around the plant. “It’s a radiologically contaminated environment,” U.S. Adm. Patrick Walsh, the Honolulu-based commander of the U.S. Pacific Fleet, told reporters. “This is something that we’ve had to learn a lot about very quickly because we’ve never been exposed to this sort of environment before. It’s really been a challenge over the past three weeks.” On Monday, in a hangar bay surrounded by jet fighters and hundreds of U.S. Navy sailors and Marines, top-level civilian and uniformed military officials from both countries praised the countries’ cooperation during the crisis, and affirmed a longer-term security commitment. “Our efforts will not diminish,” said U.S. Ambassador to Japan John Roos. Japanese Defense Minister Toshimi Kitazawa said the U.S. aid underscored the importance of the military alliance. He also suggested it might help resolve a contentious issue over a U.S. base, the Futenma Air Station in Okinawa, that has loomed over U.S.-Japan security ties in recent years. “At no other time have I felt as proud of our alliance with the United States,” Mr. Kitazawa said.

GE’s chief defends nuclear industry

Japanese Defense Minister Toshimi Kitazawa shakes hands with U.S. servicemen aboard the USS Ronald Reagan Monday. After the ceremony, he told reporters aboard the ship: “We will solve whatever problems we face on the basis of priorities, and within that framework Futenma will be assigned a heavy weighting.” U.S. ground forces assigned to the recovery effort will fall to fewer than 500 in the near future. The San Diego, Calif.-based USS Ronald Reagan Carrier Strike Group, which includes seven destroyers and other vessels, will likely depart this week, U.S. military officials said. Meanwhile, 245 U.S. military specialists were expected to have arrived in Japan by Monday, including 150 U.S. Marines, to help advise and train the Japanese Self Defense Forces, said a U.S. military official attached to the Pacific Fleet. The Marines’ chemical, biological and incident response force, or CBIRF, forms the nucleus of a deployment of 450 U.S. military nonconventional warfare troops, said the official, who said the scale and timing of the dispatch wasn’t linked to a worsening of the prognosis at the Fukushima Daiichi plant. “We want to make sure we have everything at hand to stay ahead of potential problems,” said Capt. Jeff Breslau, a spokesman for the multiservice U.S. military task force in Ja-

pan, who added that the specialists would primarily operate out of Yokota Air Force base outside of Tokyo. “They are not going into the reactors, they’ll be on standby for potential scenarios,” he said. U.S. Naval forces deployed off the coast of northeastern Japan said they have used models to track and monitor the content of a radioactive plume extending above and around the plant, as well as in nearby seawater. All military personnel and passengers bound for U.S.-flagged vessels participating in the Japanese humanitarian effort have been scanned for radioactive contamination immediately after boarding. U.S. forces helped deliver food, water, fuel and other emergency relief to hundreds of thousands of Japanese evacuees in shelters. Over the past few days their role has shifted to focus on supporting search and recovery efforts. The USS Ronald Reagan Carrier Strike Group, including the flagship aircraft carrier, has been deployed in waters about 180 miles northeast of Sendai, one of the cities hardest hit by the quake. It has served as a floating refueling base for relief aircraft flown by both the U.S. and Japanese militaries, along with those of civilian au-

thorities involved in the humanitarian mission. The head of U.S. forces supporting Japan’s quake relief efforts—known as Operation Tomodachi, which means “friend” in Japanese—spoke of the strain being placed on his Japanese counterparts, some of whom have reported being overstretched by the scale of the devastation. Standing in front of the seniormost officials in the Japanese forces, U.S. joint task force head Adm. Walsh said: “The men behind me have not rested in three weeks. All of them bear the burden that there is no rotation, that they will see this through to the end.” Nearly half of Japan’s 240,000person Self Defense Forces has been deployed in northeastern Japan. Those in attendance at the ceremony included Japanese Joint Chiefs of Staff head Gen. Ryoichi Oriki, Maritime SDF Chief of Staff Adm. Masahiko Sugimoto and Ground SDF commander of the joint task force Lt. Gen. Eiji Kimizuka. Among the ranking U.S. military officials on hand were the head of the U.S. Forces Japan and commander of the 5th Air Force, Lt. Gen. Burton Field, and U.S. Seventh Fleet commander Vice Adm. Van Buskirk.

TOKYO—The head of General Electric Co. said Monday that the nuclear industry has had a “safe track record” without directly answering a question from reporters in Tokyo about GE’s potential liability as a manufacturer of three of the six reactors at Japan’s stricken Fukushima Daiichi power plant. “This is an industry that’s had an extremely safe track record for more then 40 years,” said Jeffrey Immelt, chairman and chief executive officer of the U.S. conglomerate. Mr. Immelt and Hiroaki Nakanishi, the president of GE’s nuclearpower business partner Hitachi Ltd., met with Japanese industry minister Banri Kaieda on Monday afternoon to discuss the situation at the Fukushima Daiichi plant, which was badly damaged by the March 11 earthquake and subsequent tsunami. “With a partnership with Hitachi, and working with Tepco, we will offer great support,” Mr. Immelt said. “I think this will be a big team effort to work on Fukushima.” Plant operator Tokyo Electric Power Co. is struggling to keep under control reactors at the plant to prevent further leakage of radioactive materials. GE supplied the Nos. 1, 2 and 6 reactors at the Fukushima Daiichi plant, the company said. The Nos. 1 and 2 reactors are considered among the most troubled, while the No. 6 reactor is considered to be firmly under control. GE and Hitachi formed a nuclearpower business alliance in 2007 by creating a joint venture in Japan and another in the U.S. While Mr. Immelt didn’t touch on the potential liability of reactor manufacturers resulting from the accident, Mr. Nakanishi responded to the same question, saying “the work that we are doing now is meant to fulfill such a responsibility.” Hitachi supplied the No. 4 reactor at the Fukushima Daiichi plant. That reactor had been considered one of the more worrisome because of spent fuel rods stored near it, but company and government officials have shifted much of their focus to reactors Nos. 1, 2 and 3 in recent days.

Survey results reflect dimmer corporate outlook BY MEGUMI FUJIKAWA TOKYO—Japan’s devastating March earthquake and tsunami have made Japanese companies, especially smaller ones, more pessimistic, according to a special release of data from the Bank of Japan on Monday. The central bank’s tankan survey is one of the most closely watched gauges of the economic mood in Japan. Responses for the latest quarterly survey, released on Friday, were due just as the earthquake struck on March 11, prompting the BOJ to issue a special set of data for reports received after that date. Of 11,101 companies surveyed, 24% sent in responses after March 11. The new figures show that big

companies turned pessimistic in their outlook for the next three months, posting a minus-2 reading, compared with a plus-2 reading in the overall figures released Friday. The index represents the percentage of companies saying business conditions are expected to be good minus those saying conditions will be bad. But the mood is much more negative among smaller companies that depend most heavily on the domestic economy. The outlook for small manufacturers worsened to minus-18 from minus-16, while small nonmanufacturers were highly pessimistic at minus-29, from minus-27, in the overall survey. The outcome shows that there are “worries among smaller firms, even if they were not directly af-

fected,” said Hideo Kumano, chief economist at Dai-ichi Life Research Institute. “Their businesses may be hurt indirectly as large firms cut back on orders or shift their operations elsewhere.” Economists also said the data don’t likely reflect the full extent of the turmoil ahead. Some of the responses were mailed before the disaster and companies hit most directly probably didn’t respond, they said. The central bank itself said Monday’s data should be used for “reference purposes only.” To help reconstruction efforts, Japan’s central bank may set up a special lending program. —Kosaku Narioka and Takashi Mochizuki contributed to this article.

Tankan survey Japan’s quarterly survey of corporate sentiment of large manufacturers For current sentiment

0

For three months ahead

–15 –30 –45 –60 2008

'09

'10

'11

Source: Bank of Japan

14

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THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

MIDDLE EAST

ISTANBUL—The Libyan regime and leaders of the rebel opposition are each offering proposals on how to reach a cease-fire in the Arab nation’s civil war, a Turkish official said Monday, as an envoy from Col. Moammar Gadhafi arrived in Ankara for talks. Libya’s rebel government in Benghazi has indicated it also will visit Ankara to discuss a possible cease-fire, in the wake of Monday’s visit by opposition Deputy Foreign Minister Abdelati al-Obeidi, the Turkish official said. No date for the visit had been set, he said. Mr. Obeidi, deputy to recently defected Foreign Minister Moussa Koussa, wasn’t carrying any personal message from Col. Gadhafi, according to the official, countering speculation in Turkish media that terms for Col. Gadhafi’s exit from Libya might be under negotiation. Others have cautioned the visit by Libya’s official could be another delay tactic by Col. Gadhafi as he presses with an offensive against the rebels on the ground. In a news conference following the decision by Italy to recognize the governing body of rebel forces as Libya’s sole “legitimate interlocutor,” the country’s foreign minister said the offer by Col. Gadhafi’s envoy was “not credible.” Italy became the third country to recognize the rebel group, after France and Qatar, as Rome seeks a way to re-establish its access to Libyan oil and natural gas. Speaking at a news conference after meeting with Ali al-Essawi, the foreign envoy of the rebel-backed Libyan National Transitional Council, Italian Foreign Minister Franco Frattini said Italy planned to send an envoy to Libya in the coming days. He also said Italy is also seeking to send medical supplies and other aid to the embattled Libyan city of Misrata. Rome’s support is a boost to rebel forces, because Italy is Libya’s biggest trading partner and the biggest buyer of the North African

Associated Press

BY MARC CHAMPION

Rebel fighters took positions on the top of sand dunes near Brega, Libya.. country’s oil and natural-gas. Mr. Frattini said Paolo Scaroni, chief executive of Italian oil giant Eni Spa, recently traveled to Benghazi to meet with council members and discuss plans to revive the oil company’s operations in Libya. But a foreign ministry spokesman said Mr. Scaroni spoke to council members over the phone without traveling to Benghazi, adding that Mr. Frattini had misspoken. An Eni spokesman declined to comment. In Libya, rebels on Monday took back much of Brega, a strategic oil town that has repeatedly changed hands over weeks of fighting with Col. Gadhafi’s forces, the Associated Press reported. Women and children were seen fleeing the coastal town as the battle raged. In Turkey, Mr. Obeidi arrived by coincidence as North Atlantic Treaty Organization Secretary-General Anders Fogh Rasmussen was in the capital. Mr. Rasmussen spent an hour each in talks with Prime Minister Recep Tayyip Erdogan and Foreign Minister Ahmet Davutoglu. Turkey has been a reluctant supporter of Western military intervention in Libya, and its leaders were furious at being initially sidelined

by the Western allies from decisionmaking. Turkish officials were tightlipped about the content of Monday’s discussions. A spokesman for Mr. Erdogan said the talks with Mr. Rasmussen concerned “how to bring peace to Libya in line with United Nations Security Council resolutions 1970 and 1973.” The resolutions, adopted in February and March, imposed sanctions on the Libyan regime and called for a cease-fire, while also imposing an arms embargo, a no-fly zone and a mandate to use “all necessary means” to protect civilians. In a statement to reporters after the meeting, Mr. Davutoglu called Libya talks with Mr. Rasmussen “extensive,” but focused on Turkey’s efforts to evacuate wounded from Misrata and Benghazi. According to Mr. Davutoglu, Turkey had been trying for a week to dock a ship in Misrata, but succeeded in getting security pledges from both sides only on Friday. The ship docked in Misrata on Saturday, and collected 250 wounded there before receiving more in Benghazi. It was expected to arrive in Turkey on Tuesday with a total of about 475 passengers, Mr. Davutoglu said.

Police fire on rally Continued from first page 52 demonstrators following Friday prayers in the capital, San’a, on March 18. Violence also erupted in the southern coastal city of Hodeida, where gunmen dressed in civilian clothes shot into crowds of demonstrators, wounding seven, according to local reports. On Saturday, the Joint Meeting Parties, a coalition of opposition parties, drafted a plan for the transition of power to Mr. Saleh’s deputy, Vice President Abdrabuh Mansur Hadi. According to Yemen’s constitution, in the event that the office of the president is vacated, the vice president assumes control for an interim period. The opposition parties have agreed to give the vice president a free rein in appointing key officials in charge of security and antiterrorism operations in the country. The opposition has agreed it won’t get involved in the choice of the top security officials, according to a Yemeni government official. The opposition plan was rejected on Sunday by Speaker of the Parliament Yahya al-Raee, a senior official in Mr. Saleh’s General Peoples Congress party, but the plan has yet to be formally presented to the president, according to a government official. The return to violence could also increase pressure on Mr. Saleh from the international community to agree to a transition process and hand over power. “The deaths today in Taiz will be the nail in the coffin of this regime,” said Mohammed al-Sabri, a spokesman for the Joint Meeting Parties. Mr. Sabri said he expects the U.S. and EU to weigh heavily on Mr. Saleh to come to a resolution quickly. The U.S. has relied on Mr. Saleh and members of his family who lead military units, in the battle against al Qaeda in Yemen, and given millions of dollars in aid. U.S. officials have also encouraged Mr. Saleh to accelerate reforms. On Sunday night, the six-member Gulf Cooperation Council, led by Yemen’s largest foreign donor Saudi Arabia, urged dialogue between the government and opposition, but stopped short of supporting either side of the conflict. “We respect the Yemeni people’s

Agence France-Presse/Getty Images

Turkey takes role of Libya mediator

Antiregime protesters demonstrated in San’a, Yemen, on Monday. will and choices that would ensure the country’s unity, security and stability,” the GCC said in a statement. The GCC also indicated it would take a more active role in negotiations between the two sides. Mr. Saleh has announced a willingness to transfer power, but has taken few public steps toward that end, claiming that opposition demands that he resign are unconstitutional. On Sunday, Mr. Saleh announced that only a “halt to all protests and the mutiny by some units in the military,” would pave the way toward a peaceful handover. Some top military officials have sided with the protesters, taking military units with them. “We are standing firm, and we will defend constitutional legitimacy by all means. We will stand as firm as mountains and will remain faithful to the people,” Mr. Saleh said Monday. The U.S. Embassy hasn’t commented on its efforts, saying only in a statement over the weekend that “Saleh has publicly expressed his willingness to engage in a peaceful transition of power; the timing and form of this transition should be identified through dialogue and negotiation,” the Associated Press reported. Marches in solidarity with the Taiz protesters erupted in the cities of Mukalla, in the east, and Hodeida, on Yemen’s western Red Sea coast, the AP said.

FROM PAGE ONE

Tepco dumps radioactive water into the ocean Continued from first page control. “We wanted to avoid releasing radioactive water into the ocean,” Mr. Nishiyama said. But other storage options for the contaminated water, such as a large barge and a floating pier known as the megafloat, are taking too much time to implement, he said. The water the utility began releasing Monday has radioactive iodine-131 contamination around 500 times what is considered safe in normal times and cesium-134 and cesium-137 of some 50-70 times. While iodine dissipates relatively quickly, cesium remains in the environment for many years. The more dangerous water leaking from the plant is far higher than the safe limits for these contaminants. The most dangerous water

currently flowing into the ocean from a cracked concrete pit is giving off radioactivity of 1,000 millisieverts an hour, an extremely high level, too high to allow properly protected workers from getting close enough to make repairs. The government said no advance consultations were held with other countries, although embassies from countries including Russia, South Korea, China and the U.S. had been advised of the decision. Tepco is undertaking two separate releases. In the first step, 10,000 tons of water that flooded a radioactive waste processing facility because of the magnitude-9 earthquake and a tsunami on March 11 are being pumped out. It wants to use the space as storage for the highly radioactive water that is collecting in the basement of the reactor No. 2

building. Separately, Tepco is releasing 1,500 tons of water that have been collecting in soil under reactors Nos. 5-6 due to seepage. Such water is normally pumped away on a continuing basis but has been left accumulating since normal operations were stopped after the earthquake. Authorities are concerned that the water may flood the rooms holding the recirculating pumps that have prevented those two units from dangerously overheating. The Nuclear and Industrial Safety Agency argues that the release of this level of radioactive water will cause little or no health risk to people who live near the plant. Even if fish caught just outside the one-kilometer radius of the plant are consumed every day for a year, the

amount of radiation will total only 0.6 millisievert per year, a quarter of the amount humans usually receive naturally, it said. However, one expert on the marine environment said it is very difficult to determine how such contamination will spread through the aquatic food chain. “How contaminants spread in the sea and how they accumulate in specific types of sea creatures are questions that belong to different areas of research, and there is no established method that can address both,” said Shigeru Tabeta, associate professor of marine environmental engineering at the University of Tokyo. The large quantities of contaminated water at the plant have been caused by the frantic efforts to cool the nuclear units over the past three

weeks to avoid a catastrophic release of nuclear material. This would normally be done via a closed system that keeps recirculating and cooling the same water. But with those systems taken out by the disaster, Tepco has had to pour in outside water that becomes contaminated and then leaks out. The scale of the problem became clear when the nuclear-safety agency said that a sample of seawater taken 40 kilometers south of the plant on March 30 showed a level of radioactive iodine-131 twice as high as legally permitted. That appeared to belie earlier assurances from authorities that contamination would dissipate in the open ocean and raised new questions about the viability of the fishing industry in an area dotted with numerous fishing villages.

As of 12 p.m. ET

Euro 1.4235 À 0.62%

Yen/US$ ¥83.90 g 0.53%

Yen/A$ ¥86.83 g 0.69%

Oil 108.10 À 0.15%

Gold 1432.50 À 0.31%

Asian central banks struggle to rein in their currencies

10-year Treasury À 10/32 yield 3.411%

Bubble trouble in French real estate

BUSINESS& FINANCE. MARKETS 20

Tuesday, April 5, 2011

THE WALL STREET JOURNAL.

3-month Libor 0.29675

HEARD ON THE STREET 28

asia.WSJ.com

Minmetals’ offer stirs up Australia BY DAVID FICKLING AND DAVID WINNING SYDNEY—China’s Minmetals Resources Ltd. said it intends to make a 6.3 billion Canadian dollar (US$6.5 billion) offer for copper miner Equinox Minerals Ltd. It would be China’s biggest takeover bid for an Australian-listed resources company as Beijing pursues deals to guarantee commodity supplies. Minmetals Resources’ offer for Equinox, which is based in Toronto and listed on the Australian and Toronto stock exchanges, would eclipse Yanzhou Coal Mining Co.’s 3.54 billion Australian dollar (US$3.68 billion) acquisition of Felix Resources Ltd. in 2009. Minmetals Resources on Monday said its offer would be contingent on Zambia-focused Equinox drop-

ping its hostile bid for Lundin Mining Corp., whose main assets are in Europe and Democratic Republic of Congo. The Minmetals offer, valued at C$7 a share, also sparked hopes of a bidding war for Equinox. The rush of deals for Australian resources in recent years has alarmed many politicians sensitive to the country’s main generator of export revenue increasingly falling into foreign hands. Minmetals Resources is listed in Hong Kong and 75%-owned by China Minmetals Corp., a stateowned company with interests in base metals, iron ore, steel and shipping. An attempted US$19.5 billion inPlease turn to page 18
Heard on the Street: China offers merger insurance................................... 28

Fujitsu chief reflects on challenges ahead BY JURO OSAWA Top executives at major Japanese companies are collectively facing the biggest test in crisis management they have ever experienced. The massive quake that struck Japan on March 11 has left tens of thousands dead or missing. The quake BOSS TALK and tsunami not only disrupted the country’s communications and transportation systems, but also seriously damaged a nuclear-power plant in northeastern Japan, where the worst nuclear disaster since Chernobyl in 1986 is still unfolding. As the president of Fujitsu Ltd., Masami Yamamoto is leading the Japanese technology conglomerate through the biggest challenge it has ever faced, one year after he took the helm at the company last April. “I never experienced World War II myself, but I think this is the biggest crisis for Japan since the war,” said 57-year-old Mr. Yamamoto, who has been at Fujitsu for 35 years. Fujitsu, whose wide-reaching operations include chips, computers and information-technology services, is one of many Japanese companies that have reported damage to their production facilities and disruption to their supply chains following the earthquake and tsunami. Fujitsu, like all of its Japanese peers, is grappling with issues that are far beyond the physical damage from the quake, as utility companies carry out rolling blackouts and the nuclear accident threatens to slow

down the country’s reconstruction efforts. The quake, tsunami and subsequent power-supply problems have affected a total of nine plants at Fujitsu. But as of Monday, all nine plants have resumed operations, at least partially. In an interview in Tokyo, Mr. Yamamoto talked about how he has been coping with the crisis so far, and also shared his view on Japan’s recovery. Excerpts:

WSJ: Where were you when the quake hit on March 11? Mr. Yamamoto: I was in Australia. I was in the middle of a meeting with our local staff when I got a call from my secretary in Tokyo. I tried to come back to Japan immediately, but no direct flight was available, so I had to fly to Singapore and then to Tokyo. [He arrived back in Tokyo on Saturday, March 12, at night.] At Fujitsu we use satellite mobile phones, so even in Australia I had no problem communicating with our people in Japan. But even so, the initial information was limited and it wasn’t possible to immediately grasp the impact. But as soon as I heard that it was a massive quake, I knew almost intuitively that there would be a lot of work to be done. WSJ: How has Fujitsu been dealing with the crisis? Mr. Yamamoto: Because of other big earthquakes in northern Japan in recent years, Fujitsu was relatively Please turn to page 19

Bloomberg

Planned $6.5 billion bid for Equinox Minerals would be China’s biggest takeover of Sydney-listed resources stock

Equinox Minerals is focused on copper mining in Zambia, above. The company is listed in Australia and Canada.

16

THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

BUSINESS
FINANCE

South Korean oil refiners reduce prices Cuts by large companies are likely to pressure smaller rivals as government pushes to curb high inflation rate BY MIN-JEONG LEE AND KANGA KONG

South Korea’s CPI Year-to-year percentage change 5% 4 3 2 1 Bloomberg News

SEOUL—Pushed by the government, South Korea’s big oil refiners are cutting prices, putting pressure on smaller companies to follow suit. The government has been casting about for ways to curb uncomfortably high inflation in Asia’s fourth-largest economy, with general prices heavily affected by commodities, such as oil, as well as by the country’s brisk economic growth. Authorities appear to have chosen to clamp down on refiners rather than cut oil taxes. The moves by industry leaders have come ahead of a report Wednesday from a Ministry of Knowledge Economy task force on how prices of oil products are decided. SK Energy Co., the country’s largest refiner, said Sunday it will cut prices of gasoline and diesel fuel at some 4,400 gasoline stations by 100 won (nine cents) a liter for three months. GS Caltex Corp., Korea’s No. 2 refiner by capacity, said Monday it plans to cut prices as well. A GS Caltex executive said the cuts likely will be similar to those by SK Energy. Smaller refiners Hyundai Oilbank Co. and S-Oil Corp. said they hadn’t decided how to respond to

M 2009

’10

’11

Source: Statistics Korea

SK Energy will cut prices of gasoline and diesel at stations like the one above by nine cents a liter for three months. the cuts. Political and competitive pressure suggested that the smaller companies would be hard-pressed to hold the line. Global crude-oil prices are around two-and-a-half-year highs. Beyond that, Korea’s retail oil prices long have been relatively high compared with those of other nations. A controversy has raged for months here over why, with President Lee Myung-bak saying, “Do-

mestic oil prices are peculiar.” Some industry observers blame opaque pricing by refiners, while others say taxes are too high. Finance Minister Yoon Jeung-hyun in February said Korea’s oil tax is low compared with the country’s peers in the Organization for Economic Cooperation and Development. Pressure on refiners likely will increase with Wednesday’s publication of the task force’s findings and

just days after the government reported that inflation hit a 29-month high of 4.7% in March. The Bank of Korea raised interest rates by a quarter of percentage point last month. The central bank prefers inflation in the 2%-4% range. Analysts said reduced oil prices will do little to tame inflation over time. “The cut in oil prices will ease the volatility in inflation. But we have to bear in mind that the refiners won’t cut as much as needed when oil prices fall later,” said Korea Investment & Securities econo-

mist Jun Min-kyoo. “Also, if we’re unlucky, and global oil prices continue to rise, private firms won’t tolerate the pain and fully reflect the gains at once, leading to a spike in oil prices after all.” Nomura Holdings Inc. said government pressure on refiners will do more harm than good. “In the long run, Korea needs to increase the efficiency of gasoline and diesel consumption by letting higher prices affect household behavior,” Nomura economist Kwon Youngsun wrote in a report. The bank estimated that a 5% month-to-month decline in gasoline and diesel prices will subtract 0.2 percentage points from the annual inflation rate for the second quarter. Oil refiners’ stock prices slumped Monday on the view the price reductions will hurt earnings. Though SK Energy’s cuts are only slated to last three months, “it doesn’t look easy to raise prices back to their previous levels in July, like they say it will be,” given the government’s drive to curb inflation, said Tong Yang Securities analyst Hwang Kyuwon. Shares of SK Innovation Co., SK Energy’s parent, ended 10% lower and S-Oil shares fell 5.6%. Shares of GS Holdings Corp., the parent of GS Caltex, dropped 7.5%.

Revenue a record as investment banks mine natural-resource deals Continued from first page vestment Corp.’s plans to raise about ¥65 billion (about $750 million). Excluding Japanese share sales, volume stood at $53.7 billion across 518 deals, up 5.5% from a year earlier. The region’s biggest share deal for the quarter was Hutchison Port Holdings Trust’s $5.4 billion IPO in Singapore. Bankers said the first quarter seemed relatively quiet after the busy autumn of 2010. One reason for the drop in activity was that the flood of money from global investors that flowed into Asia last year streamed back into U.S. and European markets because of fear inflation was rising in countries such as

Indonesia and China. This year through March 30, investors pulled a net $5.9 billion from the Asia-Pacific region, although capital flowed into the region in the final week of the period, according to data from EFPR Global. Bankers hope the flow of cash picks up enough momentum to support the growing band of global brand names seeking Hong Kong listings. Headline deals expected in the coming months include offerings from the Italian fashion house Prada SpA and the Swiss commodities company Glencore International AG. Steven Barg, Goldman Sachs Group Inc.’s co-head of equity capi-

tal markets for Asia excluding Japan, said 2011 should rival 2010 in terms of IPO volume, with most deals coming towards the second half of the year. Goldman was the busiest firm in the region excluding Japan during the first quarter measured by the value of equity-capitalmarkets deals. In anticipation of a flood of deals later this year, UBS AG is raising its investment-banking staffing for the Asia-Pacific region by 20% this year, said Matthew Hanning, the bank’s regional head of investment banking. The bulk of the new hires will work on share sales for Chinese companies. In volume terms, equitycapital-markets business from Chinese companies reached the highest

level for any first quarter on record. A total of $28.1 billion was raised via 150 deals, up 30% from a year earlier. UBS remained the top-ranked bank in terms of investment banking revenue from M&A, syndicated loans and equity and bond deals for the Asia-Pacific region excluding Japan, according to data from Dealogic. The Asia-Pacific area made up about 22% of revenues for banks globally. Mr. Hanning calculated that the region’s share of the global revenue pie has been growing at about six times the global average, attracting more banks to the region. “I think there must be nine or 10 banks that see being within the top

Flying start Record first-quarter investmentbanking revenue* in Asia Pacific $5 billion 4 3 2 1 0

2005 ’06

’07

’08

’09

’10 ’11

* Includes M&A, equities, debt and loan transactions Source: Dealogic

three in Asia as a core part of their strategy,” he said.

INDEX TO BUSINESSES AND PEOPLE Businesses This index of businesses mentioned in today’s issue of The Wall Street Journal is intended to include all significant reference to companies. First reference to the companies appears in bold face type in all articles except those on page one and the editorial pages. Aluminum Corp. of China..........................18 American International Group..........................22 Anheuser-Busch InBev.17 Asia Pacific Breweries.17 Banca Monte dei Paschi di Siena......................23 Bank of America...........22 Bank of Ireland.............23 BlackRock......................22

Blinq Media...................19 BOC International Holdings Ltd..............20 Boeing...........................23 BP...............................1,18 Cairn India.....................23 Cheung Kong Holdings.20 China Minmetals.....15,28 China NT Pharma.........20 China Resources Group 17 Chrysler Group LLC.......19 Citic Securities.............20 Citigroup ....................... 21 Cnooc.............................23 David Jones .................. 17 Deutsche Bank.........21,23 Eni ............................ 14,18 Equinox Minerals........1,15,23,28 Facebook ....................... 19 Fast Retailing...............23 France Télécom.............18 Fufeng Group................23 Fujitsu...........................15

GDH...............................17 General Dynamics.........23 General Electric.......13,23 Glencore International.16 Goldman Sachs Group..21 Google...........................17 GS Holdings..................16 Gulfstream Aerospace . 23 Harvey Norman Holdings.....................17 Havas ............................ 19 Heineken.......................17 Hitachi...........................13 Hong Kong Exchanges & Clearing......................23 HSBC Holdings ........ 20,23 Hui Xian REIT...............20 Hutchison Port Holdings Trust......................16,20 Hutchison Whampoa....20 Hyundai Oilbank...........16 ICP Asset Management LLC ............................. 21 IHI..................................23

Inmet Mining................18 Interpublic Group..........19 J.P. Morgan Chase...21,28 Kenshoo ........................ 19 Kingway Brewery Holdings.....................17 Kohlberg Kravis Roberts ...................... 23 Lundin Mining..........15,28 Mazda Motor................23 Meiji Holdings .............. 12 Minmetals Resources ..... 1,15,23,28 Mitsubishi UFJ Financial Group..........................12 Mizuho Financial .......... 12 Molycorp ....................... 23 Morgan Stanley.......21,28 Mori Building..................4 Nikon.............................23 Nortel Networks...........17 NTP................................17 Oz Minerals...................23 PanAust ........................ 23

Pfizer.............................23 Prada.............................16 Reliance Industries.........1 Rio Tinto.......................18 Royal Dutch Shell.........18 SABMiller......................17 SK Energy.....................23 SK Innovation..........16,23 Société Générale .......... 23 S-Oil ......................... 16,23 Sotheby’s ...................... 28 Southwest Airlines ...... 23 Sumitomo Mitsui Financial Group..........12 Tokyo Electric Power.................1,12,13 Tomson Group.................4 UBS................................21 United Urban Investment ................ 16 Verizon Communications...18,19 Vivendi..........................18 Vivus ............................. 23

Vodafone Group............18 Wal-Mart Stores ..... 12,23 Webtrends .................... 19 Wells Fargo & Co..........21 Wesfarmers..................17 Woolworths .................. 17 Yahoo.............................19 Yanzhou Coal Mining....15

People This index lists the names of businesspeople and government regulators who receive significant mention in Today’s Journal. Allen, Paul .................... 17 Barg, Steven.................16 Brunick, Michael...........19 Byeon Ji-young.............20 Colao, Vittorio .............. 18 Ebihara, Shinji .............. 23 Fischer, David...............19

Foran, Greg ................... 17 Gero, George.................22 Gluskie, Angus..............17 Goldman, Eric ............... 17 Griffin, Rob...................19 Hagy, Janet...................20 Hanning, Matthew ....... 16 Hwang Kyu-won...........16 Immelt, Jeffrey.............13 Jun Min-kyoo................16 Keator, Matthew..........23 Keith, Peter .................. 28 Kraus, Robert................21 Kronick, Charlie ............ 18 Kumano, Hideo.............13 Kwon Youngsun............16 Lai, Frank......................17 Levy, Jean-Bernard.......18 Lifson, David.................20 Li Ka-Shing...................20 Luscombe, Michael Gerard ........................ 17 Mattson, Andrew.........20

Michelmore, Andrew....18 Miller, Adrian K............22 Nakanishi, Hiroaki........13 Nester, John ................. 21 Nishiyama, Hidehiko ...... 1 O’Brien, Grant...............17 Press, Martin................20 Price, Scott...................12 Priore, Thomas.............21 Riedel, George..............17 Shulman, Doug.............20 Sivitilli, Rob....................1 Tabeta, Shigeru ............ 14 Taloputra, Aldian..........20 Taylor, Ann......................8 Trichet, Jean-Claude.......6 Tsuchiyama, Naoki ....... 23 Walker, Kent.................17 Weinberg, Stuart..........17 Weston, Chris...............23 Williams, Dave ............. 19 Wong, Lina......................4 Yamamoto, Masami ..... 15

THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

17

BUSINESS
FINANCE

Woolworths CEO to quit Maker of Snow beer Luscombe is retiring after five years at helm of Australian retailer BY ROSS KELLY

BY POLLY HUI

Bloomberg News

SYDNEY—Woolworths Ltd. Chief Executive Michael Luscombe is ending a five-year tenure at the helm of Australia’s biggest retailer, passing the baton to a senior executive in its key supermarkets division. Following months of speculation of an imminent retirement, Woolworths said Mr. Luscombe will stand down at the end of September, when he will be succeeded by food and gasoline Chief Operating Officer Grant O’Brien. It is still unclear whether Mr. O’Brien’s appointment will mark a change of strategy for Woolworths, although the company’s selection of a 12th internal successor may suggest that there is no dramatic change afoot. Most analysts agree that Mr. O’Brien’s work setting up a joint venture with Lowe’s Cos. indicates that Woolworths wants to grow its fledgling home-improvement store offering. Mr. Luscombe wasn’t available for comment Monday, while Mr. O’Brien said in a statement he intends to “continue Michael’s legacy.” Talk of Mr. Luscombe’s future was sparked in February by a media article quoting him as suggesting that there is more to life than being a public figure. A month earlier, Woolworths had downgraded its annual earnings forecast in response to waning consumer confidence, partly hampered by higher interest rates designed to cool Australia’s booming resource sector-driven economy. Shares in Woolworths and discretionary retailers including David Jones Ltd. and Harvey Norman Holdings Ltd. have slipped substantially since October, despite a gradual rise in the

Michael Luscombe, above, will be succeeded by Grant O’Brien in September. wider Australian market. The new CEO will also have his work cut out resisting a resurgent Coles, which is winning back market share as a turnaround strategy initiated by Wesfarmers Ltd. after it bought Coles in 2007 gains momentum. Woolworths supermarkets boss Greg Foran was considered a likely successor to Mr. Luscombe, so investors could be a little surprised that Mr. O’Brien was tapped for the top job instead. The 49-year-old Tasmanian-born Mr. O’Brien has 24 years experience at Woolworths and sits on its management board. He set up Australia’s first supermarket loyalty program, and developed the company’s liquor strategy. Mr. O’Brien’s experience setting up the Lowe’s deal shows that the board is committed to the hardware-store venture as the company’s next growth platform, said Angus Gluskie, a fund manager at White

Funds Management. “The replacement seems to be someone who’s reasonably OK with Luscombe’s strategy, which suggests it’s more an appointment that’s going to keep things running in very much the same way,” Mr. Gluskie said. Still, one analyst from a large global investment bank noted that while Mr. Foran has experience in all of Woolworths major divisions, Mr. O’Brien’s experience is mostly in supermarkets and group strategy. “This would tend to suggest that their future growth is going to be more coming out of new business than existing business,” said the analyst, who wished to remain anonymous. While home improvement is an obvious growth path, “it will probably extend further than that,” the analyst said, adding that Woolworths could reconsider expanding overseas, given the competition concerns of local regulators.

Google bids for Nortel patent portfolio BY AMIR EFRATI AND SCOTT MORRISON Google Inc. has bid $900 million for a patent portfolio held by Canadian telecom-equipment maker Nortel Networks Corp., a move the Internet company said could provide a shield against patent litigation. Nortel, a onetime telecom giant, is auctioning off the patents as part of bankruptcy-court proceedings. The companies said Monday that Nortel has selected Google as the “stalking horse” bidder, meaning it will be the starting point against which others will bid prior to an auction expected to be held in June. Courts in Delaware and Ontario, Canada, must approve the auction

results, according to Nortel. Nortel has said it has about 6,000 patent and patent applications, including 2,600 in the U.S., that cover a range of technologies including computer science, wireless, Internet search and online social networking. The Google move comes amid a big jump in patent litigation. Firms such as NTP Inc.—which enforce patents without making products, and have been called “patent trolls” by critics—have found recent success in going after technology companies. Courts have tried to rein in patent litigation, with mixed results, and Congress has yet to act on legislation that would do the same. As a deep-pocketed player in the

technology sector, Google is a magnet for patent-infringement suits by patent trolls as well as industry rivals. The Nortel patents could provide ammunition to countersue rivals that threaten to sue Google, or be used as bargaining chips in patentlicensing negotiations, legal experts say. Google, which dominates Internet search and has expanded its business to include everything from mobile-device software to selling digital books and business software, has been on the receiving end of several recent high-profile patent lawsuits, whose claims it denied. —Stuart Weinberg contributed to this article.

Global chip sales fell 1.1% in February BY MATT JARZEMSKY Global semiconductor sales fell 1.1% in February from a month earlier, according to the Semiconductor Industry Association. Chip sales reached $25.2 billion in February, up 14% from a year earlier. The figures represent a threemonth moving average. The semiconductor outlook has been mixed amid strong demand by businesses and relatively weak de-

loses Kingway stake

mand for personal computers. The growth in smartphones and tablet computers also has affected the industry. Sales for last month are likely to be affected by the March 11 earthquake and tsunami in Japan, which led to supply-chain and other disruptions in the semiconductor industry and other sectors. In the Asian-Pacific region, which accounts for more than half of global chip sales, February sales

jumped 12% from a year earlier but decreased 0.5% from January. Chip sales in the Americas rose 27% from a year earlier but declined 0.3% from January. In January, the industry association had forecast single-digit-percentage increases for this year, a view it called encouraging amid a sluggish economy. Last year, global chip sales jumped 32% to a record $298.3 billion following weakness in 2009.

HONG KONG—Kingway Brewery Holdings Ltd., maker of Kingway Beer, said Monday its state-owned parent company exercised a right to buy a 21.37% stake in the brewer held by Heineken-APB (China) Pte., a Singaporean-Dutch joint venture. In buying the stake, GDH Ltd., Kingway’s parent company, thwarts a plan by conglomerate China Resources Enterprises Ltd. to acquire the holding. GDH, which currently owns 52.5% of Kingway Brewery, will acquire the additional shares on the same terms that Heineken-APB (China) earlier proposed to sell to China Resources, which makes China’s top-selling beer, Snow. Last month, Heineken-APB (China), a 50-50 joint venture between Singapore-listed Asia Pacific Breweries Ltd. and Dutch brewer Heineken NV, said it was selling 365.8 million shares in Kingway, in a deal valued at CNY1.08 billion ($164.7 million). The sale marks the end of a seven-year tie-up between Kingway and Heineken-APB, which first bought a stake in Kingway in 2004 as a strategic investment. China Resources—which makes its popular Snow beer in a joint venture with London-based SABMiller PLC—is owned by one of China’s biggest state-owned conglomerates, China Resources Group. China Resources has been steadily buying up stakes in small brewers in China, the world’s largest market for beer, in its efforts to remain China’s biggest beer maker amid intense competition. The conglomerate said last month it has completed several acquisitions of brewing assets in China’s Heilongjian and Henan provinces, as

part of its plan to broaden its geographical coverage and strengthen its market position. Kingway said last month when it announced the sale of the stake to China Resources that its parent, GDH, had a pre-emption right to acquire the shares. GDH is owned by an investment arm of the Guangdong provincial government and said it will have a 73.82% stake in Kingway following its exercise of the pre-exemption rights. It wasn’t immediately clear if GDH will need to make a mandatory general offer for all Kingway shares it doesn’t already own as per Hong Kong stock exchange regulations. A spokesman for China Resources Enterprises said the conglomerate wouldn’t comment on Kingway’s announcement at this stage. Two weeks ago, China Resources’ chief financial officer, Frank Lai, said the proposed stake acquisition of Kingway was a long-term investment for the group. China Resources’ Snow brand is the world’s No. 1 brand by volume and the largest beer brand in China, with a market share of about 21% in the country at the end of 2010, the company said following the release of fourth-quarter earnings last month. Its beer is produced by China Resources Snow Breweries Ltd, which is 51%-owned by the Chinese conglomerate and 49% by SABMiller. Citing government data, China Resources said Tsingtao beer had a 14% market share and AnheuserBusch InBev had a 12% share. It didn’t give a share for Kingway. As of the end of 2010, China Resources had more than 70 breweries in China with an annual production capacity of more than 14.5 billion liters, or 3.8 billion gallons.

18

THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

CORPORATE NEWS

BY MAX COLCHESTER AND PAUL SONNE

SA—last year accounted for just under half of Vivendi’s €28.87 billion in revenue. By seizing full control, Vivendi SA agreed to buy out Vivendi will have more say over the Vodafone Group PLC’s stake in a unit’s strategy, potentially leading French telecommunications com- to greater cooperation with Vivpany, giving Vivendi full control of endi’s other businesses. Vivendi also its biggest cash generator and help- can harness SFR’s cash to pay a biging Vodafone to clean up its sprawl- ger dividend to shareholders. ing portfolio. “This is not a major change in Paris-based Vivendi agreed to strategy for us,” Mr. Levy said. “We pay €7.95 billion ($11.31 billion) for still want to be in content on all the 44% stake in SFR that it doesn’t platforms.” The company will not already own. The deal values Voda- become a pure telecoms player, he fone’s stake at €7.75 billion, and the said. U.K. company will receive SFR and Vodafone will an additional €200 million maintain certain joint operaas a final dividend after tions for three years, includthe deal is completed. ing roaming agreements “This is a turning point that allow Vodafone customfor us,” Vivendi Chief Exers to use SFR’s network ecutive Jean-Bernard Lévy while in France. said in an interview. “This The sale is part of Vodawill enable us to pay a fone Chief Executive Vittorio larger dividend in 2012.” Colao’s effort to streamline Vodafone said €4.5 bilhis company’s portfolio by lion of the net proceeds selling its ragtag array of will be returned to shareminority stakes. Vodafone holders in a share buy- Jean-Bernard last September sold its 3.2% Lévy back, with the remainder stake in China Mobile Ltd. of the proceeds used to refor £4.3 billion ($6.93 bilduce debt. The deal is expected to lion). Two months later Vodafone close by June, subject to regulatory agreed to sell back its interest in approval. Japanese telcom provider SoftBank Vivendi for months has been Corp. for $5 billion. seeking full control of cellphone and Vodafone still holds several asInternet-service provider SFR. Viv- sets it doesn’t control, with the endi has been attempting to tighten most closely watched its 45% share its grip over its telecom and enter- in Verizon Wireless of the U.S. The tainment holdings, which includes holding, valued at roughly $50 bilrecord company Universal Music lion, hasn’t paid dividends in more and pay-TV group Canal Plus. Ana- than five years because Verizon lysts have criticized Vivendi for Wireless has been servicing its debt. what they have said is a holding Though a sale of its stake to partner structure that does little to increase Verizon Communications Inc. or a its subsidiaries’ revenue and adds a merger have been seen as possibililayer of costs. ties, Vodafone signaled last fall that SFR—France’s No. 2 telecom by it planned to wait for dividends inrevenue, behind France Télécom stead of pursuing a sale or merger.

BP pursues U.S. permits Despite spill, oil giant aims to resume drilling in the Gulf of Mexico BY GUY CHAZAN BP PLC is pursuing permits to resume drilling in the Gulf of Mexico this summer, some 15 months after one of its wells there exploded, killing 11 workers and setting off the worst offshore oil spill in U.S. history. BP is seeking permission to drill 10 development wells that had been under way when the moratorium on deep-water drilling imposed by the Obama administration in the aftermath of the Deepwater Horizon explosion forced their suspension, a person familiar with the matter said. The company is waiting for a final sign-off from U.S. authorities, and hopes to restart the wells by the summer, the person said. Development wells are those designed to increase or maintain production at existing fields. So far, BP hasn’t received permission for any new exploration wells. The Bureau of Ocean Energy, Management, Regulation and Enforcement, which issues permits for drilling, said it had so far not issued any to BP. A representative said only that the bureau issues permits based on the merits of the application. The person familiar with the matter said as a condition of its permit, BP will agree to give government overseers 24-hour access to its drilling operations. Environmentalists said that wasn’t enough. “It’s hard to see how such monitoring will adequately mitigate the dangers of deep-water drilling,” said Charlie Kronick, senior climate adviser at Greenpeace U.K. The bureau has approved permits for eight deep-water wells since Feb. 17—the latest to Italian energy firm Eni SpA on April 1. Last month it granted Royal Dutch Shell

Associated Press

Vivendi buys rest of SFR subsidiary

The Deepwater Horizon after it exploded this past April in the Gulf of Mexico, setting off the worst offshore oil spill in U.S. history. PLC the first permit for a new deepwater well that hadn’t been approved before the spill—a move that was seen as a major milestone for both the oil industry and regulators. The permit will allow Shell to drill an exploration well about 400 kilometers southeast of Houston. The U.S. Gulf of Mexico is crucial to BP, which has 20 oilfields there. The company has sought to expand into other areas, but has faced obstacles. A share swap and Arctic exploration deal signed in January

with Russia’s OAO Rosneft was blocked last month by BP’s partners in its Russian joint venture, TNK-BP Ltd., who claimed it violated their shareholder agreement with BP. Separately, BP said Monday that it agreed to sell its Arco Aluminum Inc. unit to a Japanese consortium for $680 million, as it steps up a divestment program to recoup costs related to the oil spill. —Benoit Faucon and Jana Weigand contributed to this article.

Minmetals’ offer for Equinox Minerals stirs up Australia Continued from page 15 vestment in Anglo-Australian miner Rio Tinto by Aluminum Corp. of China Ltd. in 2009 fell apart amid political opposition and accusations that the government was “selling Australia.” Andrew Michelmore, Minmetals Resources’ chief executive, said the company had been looking at a takeover of Equinox for well over a year. He said Minmetals, which already owns 4.2% of Equinox, was moving now because it thought the Lundin takeover would be detrimental to Equinox. “Timing is never ideal,” he said. “We needed to go out today to give Equinox shareholders an alternative.” The acquisition would create the world’s 14th-largest copper producer, based on forecasts for 2013 production. “This creates a globally significant copper producer, it extends our mine lives and extends [Minmetals Resources] into two new regions of the world,” Mr. Michelmore said. Copper miners have been engaging in a wave of merger activity in recent months amid record prices for the commodity. Equinox in January completed its takeover of Citadel Resources Group Ltd., which is focused on Saudi Arabia. Equinox moved on Lundin at the end of February, upsetting a

Digging deep Ten biggest takeovers of Australian resources firms by Chinese companies Announced

Target

Acquirer

Aug. 2009

Felix Resources

Yanzhou Coal Mining

April 2009

Mining assets

China Minmetals

1.4

Dec. 2007

Midwest Corp

Sinosteel

1.0

Oct. 2010

Minerals & Metals Group Australia Minmetals Resources

Deal value, excluding debt, in billions of U.S. dollars $2.8

0.7

March 2008 Oil and gas assets

China Petrochemical

Feb. 2008

SOCO Yemen

Sinochem

0.5

Feb. 2008

Mining assets

China Metallurgical

0.4

Oct. 2009

Moly Mines

Sichuan Hanlong Group

0.3

Aug. 2008

Mining assets

China Shenhua Energy

0.3

Dec. 2010

Ashton Coal mines

Yanzhou Coal Mining

0.3

Note: Shows only completed transactions where the acquirer ended with more than 50% of the target’s shares

deal between Lundin and Inmet Mining Corp. Copper is used in applications such as electricity lines and air conditioners, which are heavily in demand in China amid the country’s rapid urbanization and upgrades to its infrastructure. Three-month copper futures on the London Metal Exchange hit an all-time intraday record of US$10,190 a ton on Feb. 15, doubling in 18 months.

Whether a Minmetals deal goes ahead will depend largely on Equinox’s shareholders and Australian regulators. Shares in Equinox surged 29% on the Australian Securities Exchange after the planned offer was announced, climbing above the offer price to C$7.35 a share as investors bet that the bid would be raised or would flush out other suitors. Minmetals Resources’ shares in Hong Kong rose 2.4% to 6.73 Hong

0.6

Source: Dealogic

Kong dollars (87 U.S. cents) a share. Holders of Equinox’s Australian shares said the bid is too low, arguing that Minmetals’ statement that it was offering a 33% premium to Equinox’s 20-day average share price ignored that the shares had been depressed in the aftermath of its own C$4.8 billion offer for Lundin. The stock was around 8% below its preoffer level on the eve of Monday’s bid from Minmetals Resources.

Ben Lyons, an analyst at Above the Index Asset Management in Sydney, said a price of C$10 could be justified by more-bullish assumptions regarding copper prices. “We wouldn’t be surprised to see an incredibly drawn-out struggle for control,” he said. Lawyers experienced with Australia’s foreign-investment process said the deal wasn’t likely to attract serious opposition from the country’s Foreign Investment Review Board since Equinox’s main assets—the Lumwana copper mine in Zambia and the Jabal Sayid coppergold project in Saudi Arabia—are offshore. “Equinox doesn’t have the same sensitivities as a resource play with Australian assets,” said Malcolm Brennan, a special counsel for Mallesons in Canberra. Mr. Michelmore said an application was lodged with the Foreign Investment Review Board on March 11 and he expects no problems in winning the backing of Investment Canada, Ottawa’s regulator. Applications with China’s regulators, including the National Development and Reform Commission, also were under way. They weren’t expected to complicate Minmetals Resources’ ambition to complete the deal by the middle of this year, Mr. Michelmore said.

Tuesday, April 5, 2011

19

THE WALL STREET JOURNAL.

CORPORATE NEWS

Facebook makes marketing friends A new generation of agencies is trying to crack the code for placing ads on Facebook Inc. in a bid to lure more big-ticket marketers to the website. In February, more than a third of all online-display ads in the U.S. appeared on Facebook, according to comScore Inc. That is more than three times as many as its closest rival, Yahoo Inc., had. But Facebook doesn’t come close to capturing a third of the online-ad budgets of major marketers, partly because its ad rates are relatively low, and also because of its hard-tonavigate in-house systems for buying ads. Enter a new set of specialized Facebook agencies that seek to offer an easier way to buy ads on the social-networking site. The emergence of more than a dozen firms, including Blinq Media LLC, Kenshoo Ltd. and Web-trends Inc., follows a move by Facebook in 2009 to start opening direct access to its internal ad systems to select outsiders. The Facebook agencies sell marketers the ability to manage the buying of thousands of different versions of their ads, with varying text and images. They also make it easier for advertisers to buy ads targeted at niche groups of consumers, based on their ages, locations, interests and other factors. The agencies also offer tools that track the performance of an ad campaign,

Rob Bennett for The Wall Street Journal

BY EMILY STEEL AND GEOFFREY FOWLER

Dave Williams, center, CEO, president and co-founder of Blinq Media, which is one of more than a dozen agencies that has emerged to offer marketers an easier way to buy ads on Facebook. such as how many users click on the ads or become fans of the brand on Facebook. Blinq Media Chief Executive Dave Williams started his firm in 2008, predicting that a new advertising “ecosystem” would emerge tied to Facebook, and that marketers would

need help to buy ads on the site, just as new agencies cropped up about a decade ago to help the marketers buy ads on search engines. “With search, advertisers can match their ads to user intent. With Facebook, advertisers match their ads to user interests,” said Mr. Will-

iams, who co-founded the search marketing firm 360i, now owned by Dentsu Inc. “It’s like fishing.” Facebook said it welcomes the specialized agencies because they bring in new customers and can handle large-scale campaigns. “The ecosystem that these third parties

are developing and building on Facebook is healthy and of benefit to everyone,” said David Fischer, Facebook’s vice president of advertising and global operations. Already, he said, he is seeing signs that agencies are encouraging big marketers to spend more. While Facebook’s own ad-sales team sells premium ads directly to big marketers, much of its inventory is sold through a self-service tool built by the website. The tool lets marketers create an ad by manually inserting text and images, then selecting targeting features, such as the location, age and interests of users they want to reach. But Facebook’s in-house system is unwieldy, ad executives say, especially for big brands, which often want to place thousands of versions of their ads, with different texts and images, to target different audiences. “It wasn’t built with large advertisers in mind,” said Michael Brunick, vice president of strategic partnerships at Interpublic Group of Cos.’ digital-ad buying unit Cadreon, whose clients include Chrysler Group LLC and Verizon Communications Inc. Mr. Brunick said his agency doesn’t buy any Facebook campaigns for its clients at present. “The infrastructure is still in its infancy,” said Rob Griffin, a senior vice president at Havas Digital, part of French ad group Havas SA. “It makes working with them very challenging.” Havas Digital recently signed a deal to work with Blinq.

Continued from page 15 well prepared. The very first step was to ensure that all our employees were safe. We have internal emergency procedures for checking on our employees. That’s something we developed through past experiences of other quakes and flu outbreaks. After confirming the status of most employees, we started looking at the conditions at our plants in the quake-hit region. This quake was so massive that you couldn’t compare its impact to any other quakes in the past. It took us a while to figure out the exact situation at local plants and offices. For quakes and other unusual situations, Fujitsu has contingency plans for revising its production system. If we have to shut down one plant, for example, we know exactly where to shift its production. That’s why it didn’t take long to make the decision to shift part of our PC production in Fukushima prefecture to Shimane prefecture [in western Japan]. But even though the decision was quick—because the quake damaged logistics and caused a gasoline shortage—the actual shift in production turned out to be more challenging and time-consuming. WSJ: How have you been communicating with your employees since the quake? Mr. Yamamoto: Usually I send an email to all Fujitsu employees once a week. But since the quake I’ve been sending such an email every other day. In each email I talk about specific day-to-day developments and also what Fujitsu is doing to help Japan deal with the crisis. And so many employees have emailed me with ideas and proposals. Some are trying to set up a

charity fund, while others want to organize a team of volunteer workers for the affected region. WSJ: What do you think is the biggest challenge facing Japan’s industries? Mr. Yamamoto: The initial recovery from the physical damage caused by the quake will be quite fast. But the bigger challenge may be the expected power-supply shortage. I think Japan should first and foremost secure a power supply for the people in quake-hit areas to help improve their living conditions. Then the next priority in the power supply should be industries, particularly manufacturing. If industrial output remains weak, unemployment and other social problems will emerge. That would seriously delay Japan’s recovery. The third priority should be households in unaffected regions. I know putting industries before households would upset some people, but a recovery in industries is essential for securing employment and protecting people’s lives. If unemployment grows and some businesses go bankrupt, households will suffer the consequences. In any case, this is an important issue we need to discuss more. WSJ: How will this crisis affect the global business environment? Mr. Yamamoto: What’s happening now may have a lasting impact on the global supply chain in manufacturing. If certain products have been relying heavily on Japan, companies may now reconsider their dependence on one country and start diversifying their sourcing. But other parts of the world are not free from risks either. This time, a natural disaster struck Japan, but that doesn’t mean it won’t happen elsewhere.

Bloomberg News

Fujitsu president reflects on challenges ahead for Japan

Masami Yamamoto calls the disaster the ‘biggest crisis for Japan since the war.’ How to diversify risks will be a major issue, and that won’t necessarily be negative for Japanese companies. If more companies seek multiple suppliers, that could actually create opportunities for Japanese companies in some industries that have been dominated by non-Japanese players. WSJ: How well do you think the Japanese government has been handling this so far? Mr. Yamamoto: I would like politicians to think beyond the framework of ruling and opposition parties. We need a more united government to overcome this crisis for Japan as a whole. We can’t just leave this to Prime Minister [Naoto] Kan or Chief Cabinet Secretary [Yukio] Edano. Politicians, bureaucrats and businesses all have to team up. But at the moment I don’t think we have enough of such cooperation for dealing with this emergency situation.

WSJ: What’s your view on the situation at the Fukushima Daiichi nuclear plant? Mr. Yamamoto: I think we need to let experts who know about the plant deal with the problems. There would be no use in government officials and other outsiders who don’t really understand the technology giving their opinions and getting involved. Government officials should instead focus on what they can do, like minimizing risks for Japanese products [from radioactive contamination]. I see that the government is summoning experts to address the problems and look for the best possible solution. The accident has already happened. Now is not the best time to discuss how it could have been prevented. For the time being, we must concentrate on how we can bring this situation under control. On one hand, people are very forward-looking and are determined to

work hard to overcome this crisis. But at the same time, what’s worrying is that the nuclear-plant situation is creating a lot of mental stress for everyone. WSJ: What can Fujitsu do to help Japan overcome the crisis? Mr. Yamamoto: For example, some small towns and villages in northeastern Japan were almost completely swept away by the tsunami. As the region recovers from the damage, there will be a question of how to retrieve the lost family-register records for those towns and villages. With Fujitsu’s technology, it might be possible to recreate those lost registers using tax-payment records and other data. The nuclear accident will surely trigger more debates on how we create electricity, but at the same time we also have to discuss how we consume electricity. I think the whole disaster will accelerate a shift toward a more energy-efficient society. Fujitsu can contribute to that shift by providing necessary technology for building a more efficient power-distribution system. How to cut wasteful power consumption will be a major theme for the world. WSJ: What have you learned from this crisis? Mr. Yamamoto: I think it’s still too early to look back and say what I’ve learned. For now I have to keep moving forward. I have to protect Fujitsu’s businesses from possible damage, and also think about what the company can do to help Japan recover. Perhaps a half year or a year from now, I may be able to reflect on the whole experience and talk about how I handled it and what other things I could have done.

20

THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

MARKETS

Strong Asian currencies spur action Central banks buy U.S. dollars to slow the advance of the won, ringgit, rupiah and Singapore dollar BY JIEUN SHIN Central banks in South Korea, Malaysia and Indonesia appeared to intervene in the foreign-exchange market Monday, continuing the fight to slow the rise in their currencies as demand for the region’s assets intensifies. Big trade surpluses, world-beating economic growth and low interest rates in the U.S. CURRENCY and Europe have MARKETS pushed a wall of capital into Asia-Pacific economies, driving up currencies to levels that cause worry in export-reliant economies. Several central banks responded in recent weeks by selling their currencies for dollars in a bid to tame the advances and keep their economies competitive with those of their neighbors. They are looking over their shoulders at China, where a tightly contained rise in the yuan is putting other Asian exporters at a

Growing stronger The value of 1,000 South Korean won in dollars $0.93 Monday: $0.9199, up 3.1% this year

0.92 0.91 0.90 0.89 0.88 0.87

Jan.

Feb.

March

Source: Thomson Reuters via WSJ Market Data Group

competitive disadvantage. Beijing has let the yuan rise 4.4% against the dollar since unpegging the local currency from the U.S. dollar in July. In the same period, the Korean won has climbed 11%, the

Malaysian ringgit 7.8% and the Indonesian rupiah 5.6%. South Korea, Malaysia and Thailand appeared to have intervened on Thursday, while banks thought to be agents of the Monetary Authority of Singapore also have been seen selling the Singapore dollar. On Monday the Bank of Korea sought to weaken the won from a 30-month high, Seoul traders said, estimating the bank bought $500 million at around 1,085 won. The intervention helped lift the dollar to 1,086.60 won late in the session, but that was still down from 1,087.07 won late Friday in New York. The head of the BOK’s currencymarket team declined comment. Seoul looks set to dig in. The government has notified several asset-management firms that it is withdrawing some of the funds it had placed with them, apparently to fund more dollar buying, the Korea Economic Daily said Monday, estimating the total at two trillion won.

The central bank and Finance Ministry, like their counterparts elsewhere in Asia, aren’t trying to turn the tide in the region’s currencies, just slow their advance. “The weakness of the dollar against the other currencies, except the yen, is the main reason for the won’s recent strength,” said Byeon Ji-young, a currency analyst at Woori Futures. Unless stock prices in Seoul pull back strongly or risk aversion returns and scares global investors off Asian assets, “players will likely continue to place short orders on the dollar,” she said Similarly, Bank Indonesia appeared to sell the rupiah, buying an estimated $50 million at 8,675 rupiah. But the dollar still fell to 8,665 rupiah late in the day, versus 8,696 rupiah late Friday. “The central bank didn’t go all out in defending” the initial level, said a local trader. Aldian Taloputra, an economist at Mandiri Sekuritas, expects the dollar to fall to 8,600

rupiah by the end of the year. Indeed, the central bank confirmed it isn’t trying to halt the rupiah’s rise. “The rupiah appreciation is still in line with our fundamentals,” Bank Indonesia deputy governor Budi Mulya told reporters. “Besides that, all currencies in the region are in a strengthening trend, so it’s a question of how authorities can maintain stability of their currencies.” The Malaysian central bank appeared to combat the ringgit’s surge, buying dollars at 3.0250 ringgit, traders said. The dollar was around that level late in the day, below Friday’s 3.0266 ringgit. In broader trade, the dollar lost ground to the Japanese yen and edged higher against the euro. The dollar was buying ¥83.83 from ¥84.10 late Friday in New York, while the euro was at $1.4218 from $1.4223. The British pound was at $1.6144, up from $1.6115.

U.S. conducts audit offensive against ultra wealthy BY LAURA SAUNDERS The Internal Revenue Service is stepping up audits of wealthier U.S. taxpayers as part of a multiyear effort to crack down on tax avoidance. According to the agency’s latest statistical report for the fiscal year ended Sept. 30, the percentage of taxpayers who were audited increased in every category of adjusted gross income above $500,000, compared with a year earlier. The biggest jumps came at the top of the income ladder. About 18% of Americans earning at least $10 million were audited in fiscal 2010, up from 11% in fiscal 2009, according to the IRS. For those earning $500,000 to $1 million, the audit rate rose to 3.4% from 2.8%. Accountants and tax preparers said the IRS’s heightened scrutiny of wealthier taxpayers is in sharp contrast to the agency’s audit practices during the previous decade. David Lifson, an accountant in

Audit rates jump The IRS is ramping up its scrutiny of wealthy taxpayers' returns. Percentage of returns audited: ADJUSTED GROSS INCOME

$75,000–$100,000 $100,000–$200,000 $200,000–$500,000

0.64% 0.57% 0.71 0.67 1.92 1.86

$500,000–$1 million

$5 million–$10 million $10 million or more

New York for Crowe Horwath LLP, said the number of audits among his high-earning clients has “at least doubled, if not tripled” in the past two years. The audits often are “correspondence” exams in which a se-

11.55 7.52 18.38 10.6

ries of letters is exchanged. Such exams account for more than 70% of IRS audits of individuals. “They are touching a broader group of high-income taxpayers, asking about one or two issues at a

intense. In the process of setting up a comprehensive audit for one taxpayer with an income of more than $10 million, the IRS tapped six agents and a lawyer, said Martin Press, a tax lawyer in Florida. The agency also submitted a battery of detailed questions, including which magazines the taxpayer subscribed to and how deeply involved the client’s wife was in the business. Andrew Mattson, a certified public accountant in Campbell, Calif., has a redacted copy of a nine-page document request from an IRS “wealth squad” in June 2010 that contained more than 60 detailed questions. Among the demands: details on assets transferred to children or relatives, hedge-fund or private-equity investments, asset appraisals and copies of compensation agreements. Complying with such requests can cost thousands of dollars in accounting and legal fees.

REIT sets yuan IPO for Hong Kong BUSINESS OPPORTUNITIES

200’ Feadship


   


    

        !"! ##$


      

   
       

     
       



          






    

Call (852) 2831-2553, (65) 6415-4279 or (813) 6269-2701

6.67 5.36

Source: 2010 IRS Data Book

BOATING

Businesses For Sale.

3.37 2.77

$1 million–$5 million

THE MART Delivered in 2000 Excellent condition Motivated seller Tel: 1 954 646 3090

2010 2009

time,” Mr. Lifson said. Common issues include high deductions for mortgage interest and charitable gifts. In 2009, IRS Commissioner Doug Shulman offered limited amnesty for U.S. taxpayers with undeclared offshore accounts, and created the agency’s Global High Wealth Industry group, known as the “wealth squad,” to undertake detailed audits of the highly affluent. The IRS announced in February another limited amnesty, with tougher terms, for undeclared foreign accounts. It ends Aug. 31. Janet Hagy, a certified public accountant in Austin, Texas, with about 800 affluent clients, said she has handled more than a dozen audit cases in the past year, up from none in “four or five years” of the past decade. Those cases were resolved relatively easily, such as by substantiating capital gains or interest expense, she said. The scrutiny can be much more

TRAVEL
                  
               ! " !#!$ % &' 

BY PRUDENCE HO HONG KONG—Hui Xian REIT, the Beijing-focused real-estate investment trust controlled by Hong Kong tycoon Li Ka-Shing, plans to raise between 10 billion yuan and 12 billion yuan ($1.53 billion and $1.83 billion) from a Hong Kong listing on April 29, in what is IPO set to be the first FOCUS yuan-denominated initial public offering outside mainland China. The news of the listing of the REIT, part of Mr. Li’s flagship Cheung Kong Holdings Ltd., comes less than three weeks after he raised $5.4 billion from the listing in Singapore of Hutchison Port Holdings Trust, which owns deep-water ports in Hong Kong and China. The Hui Xian IPO will bank on the growing demand outside China for investment products denominated in the Chinese currency. Yuan

deposits reached 407.7 billion yuan at the end of February, from 370.6 billion yuan in January, as investors bet on yuan appreciation following China’s easing of some capital-control restrictions in Hong Kong last year. Hui Xian REIT, which started informal meetings with investors on Monday to gauge potential interest, plans to start offering the retail tranche April 11 and will close subscriptions April 19, a person familiar with the situation said Monday. The company will price the deal April 19. Hui Xian REIT is backed by the Oriental Plaza, a commercial building in Beijing, the people familiar with the matter said earlier. Cheung Kong owns 33.4% of Oriental Plaza, while Hutchison Whampoa Ltd., also controlled by Mr. Li, owns 18%. Citic Securities Co., BOC International Holdings Ltd. and HSBC Holdings PLC are handling the REIT deal, people familiar with the situa-

tion said earlier. The share offering would be the latest yuan-denominated product offered to Hong Kong investors seeking returns from their growing yuan deposits. Currently, yuan investments in the city are limited to yuan bonds, also known as “dim sum bonds,” which international companies began selling last year. In another Hong Kong IPO, pharmaceutical company China NT Pharma Group Co. aims to raise up to US$275 million with a listing on April 20, according to a term sheet seen by Dow Jones Newswires. The company, which was established in 1995, started institutional bookbuilding Monday and aims to sell 357.032 million shares in a price range of HK$4.54 to HK$6 (58 U.S. cents to 77 U.S. cents) each, the term sheet said. The deal also has an option to increase the offering size by 15% in the event of strong demand.

Tuesday, April 5, 2011

THE WALL STREET JOURNAL.

21

MARKETS

BY DAN FITZPATRICK AND JEAN EAGLESHAM The U.S. Securities and Exchange Commission is preparing to bring civil charges against Wachovia Corp., the once-troubled bank now owned by Wells Fargo & Co., for allegedly overpricing mortgage-bond deals, according to people familiar with the matter. The agency has focused on the amounts Wachovia charged investors for collateralized debt obligations, a type of security created by packaging mortgages, according to people familiar with the matter. SEC officials believe the Charlotte, N.C., bank applied excessive markups that didn’t reflect the diminishing value of the underlying loans, according to people familiar with the matter. Wells Fargo, which assumed Wachovia’s liabilities when it purchased the bank for $19.36 billion in 2008, declined to comment. John Nester, a spokesman for the SEC, also declined to comment. The Wachovia inquiry is part of a broader probe by the SEC into Wall Street’s sales of about $1 trillion worth of CDOs. Banks’ appetite for the lucrative deals fueled the demand for the risky subprime mortgages underlying many of the bonds. But the housing collapse dragged down the value of CDOs, spreading losses to investors around the world. As part of its broad probe, the SEC, which has stepped up efforts to hold Wall Street accountable for some of the losses during the financial crisis, has issued subpoenas for documents and interviewed officials from nearly every bank or securities firm that was a major player in creating, selling or trading CDOs. The agency is in discussions with firms and could announce charges and settlements concurrently, said one person familiar with the matter. Banks that received SEC subpoenas include Citigroup Inc., Deutsche Bank AG, J.P. Morgan Chase & Co., Morgan Stanley and UBS AG. None of those banks has been charged as a result of the investigation, and representatives for all of them declined to comment. The alleged misconduct of the banks includes their failure to disclose to investors that hedge funds betting on a fall in the housing market helped choose the risky mortgages that went into the bonds. That was the charge behind one of the two CDO-related cases that the SEC has brought since the crisis. Goldman Sachs Group Inc. agreed last year to pay $550 million to settle SEC civil charges that it misled investors by failing to disclose that it manufactured one CDO, called Abacus 2007-AC1, with input from a hedge-fund client intending to bet against it. Goldman didn’t admit or deny wrongdoing. In the second CDO case, the agency last year charged a New York-based investment advisor, ICP Asset Management LLC, and its chief executive, Thomas Priore, with defrauding investors in four multibillion-dollar CDOs by causing them to pay inflated prices for mortgagebacked securities. In a statement at the time, Mr. Priore said: “We at all times acted in the best interest of our clients and intend to vigorously defend ourselves against these alle-

gations.” Since the crisis, Wall Street has faced a wave of civil litigation and come under intense scrutiny from lawmakers as well. The Senate Permanent Subcommittee on Investigations is expected to release a report that will address, among other things, whether another Goldman CDO, dubbed Hudson Mezzanine Funding 2006-1, was created in large part for Goldman to bet against even though the firm sold bullish positions in the security. A Goldman spokesman has declined to comment on the report. The SEC’s mortgage-bond inves-

tigation of Wachovia is one of a number of issues related to the bank and its decline that the SEC has examined since its 2008 desperation sale to Wells Fargo. By 2008, Wachovia was stuffed with a portfolio of nontraditional loans. Two years earlier, the bank had bought Golden West Financial Corp., which specialized in loans like option-adjustable-rate mortgages. These option ARMs, also called “pick-a-pay” loans, had sliding interest rates and a minimum-payment feature that wouldn’t trim the loan’s principal; it would raise it. When borrowers defaulted on

Bloomberg News

Wachovia targeted over sale of CDOs Wells Fargo took over Wachovia in a desperation sale in 2008. option ARMS and other loans, Wachovia’s $120 billion loan book took losses. Other losses from manufacturing CDOs contributed to Wachovia’s precarious condition by 2008. In 2009, the SEC subpoenaed documents from a former Wachovia

controller, Robert Kraus, according to Mr. Kraus and another person familiar with the matter. Mr. Kraus told SEC investigators Wachovia hid losses when selling its commercialmortgage-backed securities to investors, according to Mr. Kraus.

22

THE WALL STREET JOURNAL.

* *

Tuesday, April 5, 2011

INTERNATIONAL INVESTOR

FUND SCORECARD

Treasurys advance amid debate on rates BY MIN ZENG

what the Fed will do. Comments from Fed officials this week will be highly scrutinized, especially from Fed Chairman Ben Bernanke, who was scheduled to speak Monday evening. “The doves are not getting anyway close to caving in yet,” said Adrian K. Miller, senior fixed-income strategist at Miller Tabak Roberts Securities in New York. “The battle between the doves and hawks means more volatility in bond yields. I don’t think the Fed will change its monetary policy unless there is something dramatic happening in the economy.” In noon trading, the benchmark 10-year note rose 10/32 to 101 25/32 to yield 3.4105%. The 30-year bond gained 9/32 to 104 18/32 to yield 4.4714%. Yields and prices move in opposite directions. The two-year note added 2/32 to 99 31/32, yielding 0.7659%. The

NEW YORK—Treasurys climbed as traders and investors continued to debate the outlook for monetary policy. Bets that bond prices would decline, known as shorts, had accumulated in recent U.S. CREDIT weeks as several MARKETS Fed officials said the Federal Reserve needed to start withdrawing stimulus to tame an inflation threat. But they were hit on Friday after Federal Reserve Bank of New York President William Dudley, a key advocate of monetary stimulus to support the economy, warned against prematurely reversing the easy monetary policy as the economic recovery remains tenuous. The disagreement among Fed policy makers added to the debate among market participants over

Fed set to auction subprime bonds BY SERENA NG AND ANUSHA SHRIVASTAVA

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 04/01 EUR

NAV

52.15

—%RETURN— YTD 12-MO 2-YR

2.0

-4.2

19.3

n ALLIANZ GLOBAL INVESTORS KAPITALANLAGEGESELLSCHAFT Concentra AE Industria AE InternRent AE

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

64.11 75.67 38.22

3.7 -0.8 -5.5

18.4 4.0 3.4

32.5 19.3 7.0

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

81.2

n GAM Star Fund Plc

n GAM FUND MANAGEMENT LIMITED George's Court, 54-62 Townsend Street, Dublin 2, Ireland Tel +353 1 609 3927 Fax +353 1 611 7941, Internet: www.gam.com GAM Asia Equity Hedge US GL EQ VGB 03/31 USD GAM Asia Equity USD OT OT VGB 04/01 USD

274.33 724.89

1.5 0.3

-0.7 9.7

30.0 35.4

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

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

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

FUND FUND RATING * NAME

NS NS NS NS NS NS NS NS NS NS NS

FUND MGM'T CO.

LEGAL CURR. BASE

Nikko Nikko Asset Strategic Alloc Alt Management Co., Ltd. Nikko Nikko Asset Inflation Strategy Gr Management Co., Ltd. Nikko Nikko Asset Inflation Strategy D1M Management Co., Ltd. Okasan Okasan Asset Russia Balance Open Management Co., Ltd. Daiwa Global Daiwa Asset Equity REIT 1M Management Co.Ltd. DIAM Glbl 3 DIAM Co., Ltd. Asset Open Monthly Fidelity FIL Investments ASIA 3 Asset 2M (Japan) Limited DIAM Glbl 6 DIAM Co., Ltd. Asset Balance DIAM Glbl DIAM Co., Ltd. Income Open M Daiwa World Daiwa Asset Asset Gr DC Management Co.Ltd. MHAM Asian Mizuho Asset Sweet Div Management Co., Ltd.

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

BY MATT WHITTAKER

NAV GF AT LB DATE CR

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

Leading 15 Performers

yield, the most sensitive to changes in monetary policy outlook, has dropped from an intraday high of 0.901% hit Friday. Debate on the Fed’s policy is likely to intensify with the central bank’s $600 billion Treasury bondbuying program approaching the completion date of the end of June. Many investors were worried that a shift of policy from the Fed, so far the biggest buyer of the market, could push bond yields much higher, which could boost borrowing cost for U.S. consumers, businesses and the federal government. Federal Reserve Bank of Philadelphia President Charles Plosser, who votes on monetary policy this year, said on Friday that the central bank may have to tighten policy soon, and aggressively, depending on how the economic outlook plays out. The central bank has held the policy rate near zero since December 2008.

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

03/29 03/28 03/28 03/28 03/28 03/28 03/28 03/28 03/28 03/28 04/01 03/28 03/28 03/28 03/28 03/31 03/31 03/31 03/31 03/31 03/28 03/31 03/31 04/01 04/01 04/01 04/01 03/28 03/28 03/28 03/28 03/28 03/28 03/25 04/01 03/31 02/28 03/28 03/28 03/31 04/01 03/30 11/30

Worries about rising prices were heightened as Nymex crude for May delivery touched an intraday high of $108.78 a barrel. In afternoon U.S. trading it was up 20 cents at $108.14. Libyan rebels reclaimed the oil town of Brega over the weekend, according to the Associated Press. The city has been the site of fierce fighting between the rebels and forces loyal to Col. Moammar Gadhafi. The back-and-forth battles have sent a clear signal that Libya’s 1.3 million barrels a day of oil exports are unlikely to return to the market soon. Corn for May delivery on the Chicago Board of Trade was up 24 cents, or 3.3%, at $7.60 a bushel after matching its record high of $7.65 a bushel from June 2008. News that

NEW YORK—Worries about global inflation worsened as oil prices hit 2½-year highs and corn surged for a third session, boosting gold and sending silver to a 31-year peak. The most actively traded gold contract, for June delivery, was up $5.30 at $1,434.20 a troy ounce on the Comex diviCOMMODITIES sion of the New MARKETS York Mercantile Exchange in afternoon trade. Earlier, gold was up $8.40, or 0.6%. “Gold is one of the things that people who fear inflation like to buy,” said George Gero, vice president with RBC Capital Markets Global Futures.

INTERNATIONAL INVESTMENT FUNDS FUND NAME

These funds seek to provide both capital appreciation and income. Portfolios have large positions in stocks Ranked on % total return (dividends reinvested) in U.S. dollars for one year ending April 04, 2011 YTD

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

JPYJPN

-0.52 25.72 32.73

NS

JPYJPN

3.93 22.09 35.78

NS

JPYJPN

3.93 22.07 35.70

NS

JPYJPN

10.56

18.53 50.70

NS

JPYJPN

5.10

17.63 36.14

NS

JPYJPN

5.05

16.79 28.63

NS

JPYJPN

-0.18

16.22 38.33

NS

JPYJPN

-0.41

16.10 23.56

NS

JPYJPN

4.56 16.09 25.86

6.75

JPYJPN

-0.03 16.08 25.55

2.11

JPYJPN

1.04 16.05 30.59

NS

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

Inflation fears boost gold and silver

Wall Street dealers that are participating in the auction. Traders were expecting something in the range of $100 million to $2 billion worth of securities to be on offer for sale. The actual amount gives an indication of the pace at which the Fed intends to dispose of the assets in a vehicle known as Maiden Lane II. It holds roughly 800 securities with a fair market value of $15.9 billion, according to Fed data, and a face value of roughly $30 billion. The New York Fed and BlackRock had no comment.

NEW YORK—The Federal Reserve Bank of New York and a unit of BlackRock Inc. are to sell $1.5 billion of subprime mortgage bonds this week, according to traders. The move marks the start of a series of auctions for assets in a large portfolio of residential mortgage-backed bonds the Fed acquired in 2008 as part of the bailout of American International Group Inc. Investors who are interested in the bonds will have to bid through

Asset Allocation Aggressive

NAV

U.S. corn stockpiles had fallen 15% in the year through March 1 pushed the May contract up the 30-cent daily limit on Thursday. Prices for energy and food have been on the rise in the U.S., although core inflation, which excludes energy and food, remains subdued. Other nations, many of which don’t strip out food and energy from their inflation calculations, have faced rising consumer prices as their economies grow. The inflation fears also benefited silver. Comex May silver was up 75.8 cents at $38.495 a troy ounce. Its intraday high of $38.620 was the metal’s highest price since Feb. 13, 1980. —Tom Polansek contributed to this article.

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

—%RETURN— YTD 12-MO 2-YR

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

1332.47 103.39 139.46 111.65 146.77 95.34 139.91 147.26 106.65 886.01 320.66 634.27 72.08 670.41 204.56 236.02 218.69 1093.68 281.28 238.58 334.16 126.13 8740.47 1148.87 8884.14 51.05 100.08 87.67 672.56 287.23 147.82 121.12 501.51 3380.11 2894.37 257.11 340.43 1010.73 328.31 666.65 2498.78 7939.17 116.46

-3.8 0.6 0.6 1.7 1.7 0.6 0.6 -1.5 -0.9 -0.9 9.9 1.0 1.8 1.0 0.8 -3.8 -3.1 5.8 1.9 -1.1 8.1 -1.1 -0.6 -2.7 -1.5 -0.1 0.0 -4.8 -1.3 2.4 2.4 2.4 2.3 2.5 -1.1 4.6 -0.7 -1.9 -1.9 6.0 7.5 -2.3 2.5

-1.5 6.9 6.9 12.2 12.2 8.4 8.4 1.5 2.5 2.9 22.1 -2.7 -8.7 -2.1 -3.2 4.8 4.7 26.3 6.4 -13.4 12.2 -7.8 -7.3 -8.4 -11.7 0.1 0.3 -22.3 2.9 6.8 6.9 7.1 7.1 21.4 12.4 11.3 6.0 4.9 5.0 12.9 10.8 2.8 10.3

15.6 15.4 15.4 24.7 24.7 17.4 17.4 7.0 7.5 7.8 37.6 1.1 0.3 1.5 0.5 10.9 11.3 45.1 25.1 29.5 56.7 7.0 7.8 11.9 8.3 0.4 0.1 -11.2 13.4 6.3 6.3 6.4 6.5 43.7 39.9 35.2 4.6 4.1 4.1 52.6 27.2 3.2 NS

AS EQ IRL 03/31 USD OT OT IRL 03/25 USD OT OT IRL 03/30 USD OT OT IRL 03/31 USD OT OT IRL 03/30 USD GL EQ IRL 03/31 USD

19.99 10.12 10.68 10.51 10.52 151.35

-1.2 0.2 -2.4 5.1 3.9 7.5

5.1 NS NS NS NS NS

53.9 NS NS NS NS NS

FUND NAME

NAV GF AT LB DATE CR

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

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FUND NAME

OT OT GL OT OT OT AS EU EU EU JP

OT OT BD EQ OT OT EQ EQ EQ EQ EQ

IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL

03/29 03/31 03/29 03/31 03/28 03/31 04/01 04/01 04/01 04/01 04/01

USD USD USD USD USD USD EUR EUR EUR USD EUR

NAV 10.95 10.29 10.86 9.93 9.80 14.73 108.82 12.73 200.69 17.44 91.20

—%RETURN— YTD 12-MO 2-YR 0.9 -2.4 -1.9 NS NS -0.6 -6.0 -0.1 -0.6 5.2 -5.3

4.6 NS 1.4 NS NS 11.0 -4.7 9.1 3.4 8.5 -9.4

NS NS NS NS NS 35.2 16.6 25.6 22.3 26.5 11.2

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-JpnEq JPY Acc GAMStar-JpnEq USD Acc

JP EQ IRL 04/01 JPY JP EQ IRL 04/01 USD

NAV

—%RETURN— YTD 12-MO 2-YR

922.25 11.44

-1.2 -2.1

-10.9 -7.8

9.6 12.9

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

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

CPS-Master Priv Fund

FUND NAME

1.5 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.

Tuesday, April 5, 2011

23

INTERNATIONAL INVESTOR

Copper bid lifts Sydney

U.S. stocks flounder; Southwest Airlines falls BY BRENDAN CONWAY AND POLYA LESOVA

Weaker yen helps Nikkei edge higher; Korean oil refiners slide

in at least three other 737-300 jets, according to the National Transportation Safety Board, which is supervising the inspections. Boeing slipped 0.3%. Pfizer added 0.5% after the company sold its Capsugel unit to Kohlberg Kravis Roberts, which gained 0.9%. General Dynamics dropped 5.3% after a Gulfstream G650, made by its Gulfstream Aerospace unit, crashed during a flight test Saturday, killing the four people on board. Vivus climbed 10% after it said patients treated with its investigational drug QNEXA showed reductions in blood pressure. Molycorp surged 11% after the rare-earth mining company said it acquired a 90% stake in rare-earth processing company AS Silmet, an $89 million deal that gives Molycorp a foothold in Europe and doubles its production capacity.

NEW YORK—U.S. stocks struggled for direction as investors debated the impact of rising prices for oil and other commodities as well as the outlook for U.S. monetary policy. The Dow Jones Industrial Average rose 12.22 points, or 0.1%, to 12388.94 in earlyABREAST OF afternoon trading, THE MARKET led by Wal-Mart Stores, which gained 1.2% on a report that it is considering selling groceries online, and General Electric, which firmed 0.7%. But the Standard & Poor’s 500stock index fell fractionally to 1331.76, and the Nasdaq Composite eased 0.1% to 2787.15. Investors were looking for direction from several Federal Reserve officials scheduled to speak this week, highlighted by Fed Chairman Ben Bernanke at 7:15 p.m. EDT. Last week brought hawkish commentary from Fed officials, which prompted more investors to consider when a policy shift might occur. “There’s some uncertainty out there. You get the sense that we’re in the last innings” of the central bank’s policy deliberations, said Matthew Keator, partner at the Keator Group in Lenox, Mass. Atlanta Fed President Dennis Lockhart, who spoke earlier Monday, made no mention of the U.S. interest-rate outlook, but said the economy was undergoing a “great rebalancing,” supported by expansionary monetary policies, that will likely entail muted consumer spending. Meanwhile, crude-oil futures traded above $108 a barrel after reaching a fresh 2½-year high earlier in the session. Among stocks in focus, Southwest Airlines dropped 2.6% after the Texas-based airline canceled more than 50 flights Monday. It continued to inspect its fleet of Boeing 737-300 jetliners for fuselage cracks, which have been found

European stocks

Deal news lifted some shares including French chemicals manufacturer Rhodia, while banks were mostly lower amid worries over capital levels and potential regulatory changes. Overall, the Stoxx Europe 600 index edged up 0.1% to 280.26. Rhodia soared 48% in Paris after Belgian chemicals and plastics company Solvay agreed to buy it. Solvay added 2.3% in Brussels. Among the region’s banks, Société Générale fell 2.8% in Paris, Deutsche Bank declined 0.9% in Frankfurt, and HSBC Holdings dropped 1.1% in London. Irish banks, however, continued to rally, extending the previous session’s strong gains following the publication of the country’s bank stress tests. Shares in Bank of Ireland rose 9.3% and Allied Irish Banks added 9.5% in Dublin. Banca Monte dei Paschi di Siena fell 1.9% in Milan following weekend news reports that the group may raise around €2 billion of capital. A bank spokesman didn’t respond to a request for comment.

BY SHRI NAVARATNAM AND GAURAV RAGHUVANSHI

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

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LIST YOUR FUNDS

-0.5 9.8 5.8

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

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

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

04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 03/31 03/31 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01 04/01

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

15.59 16.20 15.11 21.19 13.56 52.04 14.91 29.54 15.62 27.96 11.91 16.56 15.88 33.59 11.00 10.99 11.81 14.28 35.17 15.24 65.42 12.96 22.79 15.14 33.60 9.21 16.36 15.11 14.09 21.38 26.18 21.39 14.74 46.34 17.53

-1.1 0.9 0.4 1.8 2.7 4.2 -0.5 0.8 -5.3 -4.0 4.8 -2.9 -2.3 -0.9 -7.6 1.5 -1.7 -3.6 0.9 -0.5 0.8 -11.9 -9.8 -1.2 0.1 2.1 3.0 3.7 5.1 -5.9 -2.6 -1.2 -4.0 -2.0 8.3

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NAV GF AT LB DATE CR

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2010

2011

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Chinese company made a per-share offer of seven Canadian dollars, equal to 6.99 Australian dollars, for Equinox, sending the copper miner’s stock up 29% to A$7.35 (US$7.63). The C$6.3 billion (US$6.5 billion) offer represents China’s largest full takeover bid for an Australia-listed mining company, eclipsing Yanzhou Coal Mining’s A$3.54 billion acquisition of

NS 32.1 NS 12.8 -0.7 9.9 5.7 16.8 1.8 12.6 32.8 4.2 8.8 20.4 14.1 10.0 11.5 NS 11.5 NS 15.5 NS 3.6 1.6 12.3 19.6 11.9 1.8 12.6 22.8 15.5 27.8 NS 12.5 20.4

BY TAKASHI MOCHIZUKI

said Naoki Tsuchiyama, a strategist at Mizuho Securities. But analysts said that overall, it isn’t an obvious time to buy bonds. With some central banks outside Japan likely to raise interest rates in the coming months, bond yields there likely will rise, they said. In turn, Japanese investors will buy more overseas assets, weakening the yen and resulting in selling of Japanese government debt. In addition, investors were cautious ahead of Tuesday’s auction of 10-year government bonds. The Finance Ministry will offer ¥2.2 trillion ($26.16 billion) of the maturity with an expected coupon of 1.3%.

TOKYO—Japanese government bond yields rose in advance of Tuesday’s auction of 10-year debt. The benchmark 10-year yield firmed 0.015 percentage point Monday to 1.29%. The BOND 20-year and the 30MARKETS year yields both increased 0.025 percentage point to 2.06% and 2.20%, respectively. Bonds around the seven-year zone appeared relatively cheap when compared with other maturities, attracting some buying interest from non-Japanese hedge funds,

NAV

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FUND NAME

NAV GF AT LB DATE CR

NAV

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FUND NAME

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Analysts were divided over how strong demand will be. “It’s very uncertain to predict a likely outcome, and also the offered assets aren’t that attractive,” said Shinji Ebihara, a senior strategist at Credit Suisse. Among Asian borrowers, Fufeng Group is seeking to sell a global dollar bond to yield in the “high 7s to 8%,” people familiar with the proposed deal said Monday. The planned speculative-grade bond from the Chinese biochemical company is likely to be $200 million to $300 million in size, and is expected to price mid week, one of the people said.

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Felix Resources. Minmetals Resources rose 2.4% in Hong Kong. Other copper miners climbed on the news. Oz Minerals gained 2.2% and PanAust jumped 8.4%. “PanAust is seen as the market’s most likely takeover target in the copper sector after Equinox,” said IG Markets institutional dealer Chris Weston. In Tokyo, a weaker yen supported shares of exporters, but market sentiment continued to be hurt by caution about how the March 11 quake and tsunami will affect earnings. Nikon added 0.5% and Mazda Motor rose 1.1%. Fast Retailing jumped 3.4% on a Credit Suisse upgrade to “outperform” from “neutral.” IHI climbed 4% after signing a marketing deal with Sweden’s Atlas Copco. In Hong Kong, Hong Kong Exchanges & Clearing jumped 5.3% after Citigroup upgraded the bourse operator to “buy” from “sell.” In Seoul, refiners’ stocks sank on news that SK Energy will cut gasoline and diesel prices, under pressure from the government to help curb inflation. SK Innovation dropped 10%, while S-Oil slid 5.6%.

Japan yields climb ahead of auction

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Most Asian stock markets gained Monday, with copper miners boosting Australian shares after China’s Minmetals Resources made a takeover offer for Equinox Minerals, while Japanese stocks were supported by a weaker yen. The broad regional advance was underpinned by the stronger-thanexpected U.S. jobs ASIAN-PACIFIC data Friday and STOCKS gains on Wall Street. Japan’s Nikkei Stock Average edged up 0.1% to 9718.89. Australia’s S&P/ASX 200 climbed 0.5% to 4886.85, Hong Kong’s Hang Seng Index rose 1.5% to 24150.58, and India’s Sensex gained 1.4% to 19701.73. But Seoul’s Kospi slipped 0.2% to 2115.87. Markets in China and Taiwan were closed for holidays. Rising global crude prices lifted regional energy shares. Cairn India rose 3.9% in Mumbai, Cnooc added 1.7% in Hong Kong. In Sydney, takeover activity was at the forefront after Minmetals Resources’ bid for Equinox. The

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

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

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

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

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

3.04 0.98 1.65 8.67 2.72 1.86 9.05 6.02 2.58 10.36 0.74 1.22 0.82 1.35 1.09 1.26 3.40 0.79 2.85 0.74 1.47 1.13 1.43 0.93 1.27 1.02 1.19 1.11 1.02 1.21

6.2 5.4 4.6 4.8 4.7 4.7 3.2 12.4 12.3 7.6 6.0 3.0 3.6 4.7 6.6 -4.3 5.5 4.9 -5.3 -4.7 1.2 2.8 3.1 11.0 -2.0 -1.2 1.7 3.8 1.1 2.3

22.3 21.1 32.3 22.9 22.6 12.8 11.0 21.8 21.7 14.8 12.9 27.5 17.7 24.1 7.4 11.5 8.5 7.6 -2.3 -3.6 13.8 10.3 21.2 24.7 21.5 19.2 7.6 18.0 15.4 6.9

38.0 41.6 64.0 38.2 37.9 32.6 34.9 56.2 56.0 30.0 34.6 57.8 41.1 31.9 20.7 41.3 20.9 23.6 12.1 13.8 45.6 NS NS 71.9 37.8 72.3 13.6 42.6 52.7 6.2

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1.2 -0.4 1.3 2.4 12.0 4.7 -3.1 -5.7 -1.9 -1.9 -5.3 -5.3 7.1 0.2 0.1

8.3 6.2 12.6 5.2 21.3 27.2 32.6 9.4 26.0 26.0 -1.2 -1.2 16.7 0.6 0.3

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3.4 4.0

4242.00 4908.00 4874.00

-1.3 -2.3 -0.7

-14.3 -14.0 -4.9

3.0 3.6 9.2

3988.00 4243.00 6297.00 8461.00 6113.00 7311.00 4789.00 11179.00 7113.00 6975.00 5433.00 2412.00

-1.8 -2.8 -1.5 -1.3 -2.4 -2.6 -2.9 -2.3 -2.7 -0.5 -2.7 -3.9

-14.0 -12.7 -13.1 -8.9 -6.8 -10.7 -13.2 -11.9 -12.8 -4.0 -10.7 -14.7

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24

THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

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

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

Giants around the world

In U.S.-dollar terms.

Dow Jones Country Titans INDEX PERFORMANCE Previous session

Year-to-date

52-week

Russia

0.29%

11.2%

Spain

0.30

10.9

Italy

-0.01

28.9% 0.6

7.2

-5.2 14.8

1.50

6.6

Closed

6.3

-8.1

France

-0.33

6.1

-0.2

Canada

0.72

5.8

14.0

Netherlands

-0.08

5.2

5.1

Brazil

-0.17

4.8

10.2

Australia

0.22

3.6

-1.9

Germany

-0.07

3.4

11.4

South Korea

Hong Kong China 88

-0.20

3.3

21.6

U.K.

0.07

2.3

3.5

Switzerland

-0.10

1.2

-4.8

Turkey

2.36

0.3

12.5

Sweden

0.42

0.1

13.1

South Africa Singapore Japan

-0.24

-0.2%

0.71

-1.0

-0.28

Company

Country

Industry

Tokio Marine Hldgs

Japan

Property Casualty Insr

0.47%

Media

0.18

9.0

4.0

8.9

18.4

Chemicals

0.72

8.6

29.9

Constructn Mat

0.78

7.8

10.8

Tiger 50*

5.5

0.92

Global 50

0.23

Asian 50

0.43

22.4

51,500

27.6

523,000

Cheung Kong

Hong Kong

Real Estate Hldg Dev

38.7

129.90

2.12

26.7

8.3

QBE Insurance Group

Australia

Reinsurance

19.6

18.01

1.87

-14.3

-28.5

Mizuho Financial Grp

Japan

Banks

$33.9

132.00

-27.9

-100.0

Tokyo Elec Power

Japan

Electricity

8.4

442.00

-1.56

-82.1

-84.4

Honda Motor

Japan

Automobiles

64.7

3,010

-1.31

-9.7

3.1

Arab 50

0.40

5.3

-3.65%

Banks

64.9

385.00

-1.28

-21.1

-61.0

Consumer Electronics

31.4

2,640

-1.20

-26.1

-38.0

...And the rest of Asia's blue chips Market value, in billions (U.S)

Company/Country (Industry)

Indl Comm Bk China 74.6 Hong Kong (Banks) Mitsubishi 46.3 Japan (Industrial Suppliers) CNOOC 119.8 Hong Kong (Exploration Production) Sun Hung Kai Prop 41.9 Hong Kong (Real Estate Holding Development) China Construction Bank 232.5 Hong Kong (Banks) China Mobile (HK) 190.0 Hong Kong (Mobile Telecommunications) China Life Insurance 28.6 Hong Kong (Life Insurance) Bank of China 47.5 Hong Kong (Banks) Japan Tobacco 34.2 Japan (Tobacco) POSCO 35.7 South Korea (Steel) Mitsui 32.7 Japan (Industrial Suppliers) Takeda Pharm 36.6 Japan (Pharmaceuticals) Rio Tinto Ltd. 38.5 Australia (General Mining) NTT DoCoMo 73.2 Japan (Mobile Telecommunications) Woodside Petroleum 38.4 Australia (Exploration Production) Reliance Industries 78.0 India (Exploration Production) Nippon T&T 59.2 Japan (Fixed Line Telecommunications) Samsung Electronics 112.5 South Korea (Semiconductors) BHP Billiton 162.7 Australia (General Mining) Westfield Grp 22.3 Australia (Retail)

6.6

-3.8

Latest, in local currency

STOCK PERFORMANCE Latest 52-week Three-year

6.68 2,364

1.83%

12.5%

1.72

-4.6

-27.3

Company/Country (Industry)

Nissan Motor 36.5 Japan (Automobiles) National Australia Bk 58.5 Australia (Banks) PetroChina 32.7 Hong Kong (Integrated Oil Gas) Nintendo 33.8 Japan (Toys) Canon 53.7 Japan (Electronic Office Equipment) Taiwan Smcndtr Mfg 62.6 Taiwan (Semiconductors) Nippon Steel 19.8 Japan (Steel) Hon Hai Precision Ind 35.0 Taiwan (Electrical Components Equipment) Aus NZ Bk 64.1 Australia (Banks) Panasonic 29.1 Japan (Consumer Electronics) East Japan Railway 21.5 Japan (Travel Tourism) Westpac Bking 75.2 Australia (Banks) Toyota Motor 125.4 Japan (Automobiles) Commonwlth Bk of Aus 83.2 Australia (Banks) JFE Hldgs 14.9 Japan (Steel) Sumitomo Mitsui Finl 43.0 Japan (Banks) Woolworths 33.8 Australia (Food Retailers Wholesalers) Kansai Elec Power 19.0 Japan (Electricity) Seven I Hldgs 21.9 Japan (Broadline Retailers) Shin-Etsu Chml 20.5 Japan (Specialty Chemicals)

15.8%

20.85

1.71

59.4

70.6

127.10

1.44

8.1

-4.6

7.52

1.35

19.3

18.9

73.65

1.24

-2.5

-40.5

29.85

1.19

-21.4

0.8

4.42

1.14

9.5

29.1

298,700

1.08

-12.3

-42.6

505,000

1.00

-7.3

-2.3

1,514

0.93

-6.9

-28.8

3,890

0.91

-5.4

-29.9

85.50

0.77

7.4

-34.7

147,000

0.68

2.7

-6.4

47.71

0.65

1.7

-14.9

47.68

0.61

-3.0

-19.4

3,755

0.54

-4.3

-99.2

945,000

0.53

10.3

45.4

46.88

0.43

6.7

21.5

9.35

0.32

0.1

-33.7

Market value, in billions (U.S)

Latest, in local currency

STOCK PERFORMANCE Latest 52-week Three-year

731.00

0.27%

-11.1%

-13.8%

0.27

-5.8

-16.2

26.05 12.04

0.17

30.3

15.3

22,180

0.09

-31.2

-59.2

3,650

...

-17.0

-25.4

70.70

...

13.3

9.8

264.00

...

-28.8

-50.2

106.00

...

-14.9

-33.1

23.86

-0.04

-5.7

1.3

1,055

-0.28

-26.7

-50.8

4,555

-0.33

-29.5

-99.5

24.32

-0.37

-12.9

-3.2

3,340

-0.45

-11.5

-33.1

52.44

-0.57

-7.7

15.3

2,363

-0.63

-38.2

-48.9

2,583

-0.69

-16.8

-99.7

26.95

-0.70

-4.4

-12.2

1,769

-0.90

-16.4

-33.0

2,078

-0.95

-11.4

-24.2

4,045

-1.10

-26.3

-29.9

Sources: Dow Jones Indexes; WSJ Market Data Group

Credit derivatives

Credit-default swaps: Asian companies

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

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

Markit iTraxx Indexes Index: series/version

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

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

Coupon

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

And the most deterioration

CHANGE, in basis points

CHANGE, in basis points

100.06%

0.01%

1.04

0.99

1.02

1.36

98.32

0.01

1.42

1.36

1.40

JX Hldgs

51

–7

–1

10

CHUBU Elec Pwr

78

10

9

41

3.73

105.35

0.05

3.93

3.73

3.84

Mizuho Corporate

142

–17

10

45

Renesas Electrs

178

8

17

30

1.07

99.68

0.01

1.16

1.07

1.11

Tokyo Elec Pwr

367

–39

38

333

1.42

97.94

0.01

1.43

1.39

1.41

KDDI

45

–2

...

10

Shimizu

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

Showing the biggest improvement...

0.99

Yesterday Yesterday Five-day 28-day

Yesterday Yesterday Five-day 28-day

Ajinomoto Co

34

2

2

10

104

4

1

10

GS Caltex Oil

110

–5

–7

–6

Bridgestone

54

2

3

15

In percentage points

Sumitomo

84

–3

–1

19

West Japan Rwy

41

2

1

12

Index roll

Bk of Tokyo Mitsubishi

109

–4

5

32

Canon

40

1

2

12

ITOCHU

109

–4

6

23

OBAYASHI

118

3

1

12

Honda

70

–2

3

16

AEON

100

2

–1

14

Asahi Breweries

51

–2

–1

5

49

1

9

22

Note: Data as of April 1

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

-21.2

Japan

Source: Dow Jones Indexes

— NOTICE TO READERS —

-5.7

9.0

Japan

*Asia excluding Japan

Tracking credit markets
dealmakers

12.0

Mitsubishi UFJ Finl

0.6

-8.6

3.10 2.55

Sony

17.4

-2.4%

-46.7%

Banks

19.2

0.41

Ind Gds Svcs

Three-year

-14.5%

Mobile Telecomms

20.8%

-0.07

Insurance

52-week

3.80%

South Korea

-16.0

9.9

2,293

Japan

8.8

15.1%

$21.5

STOCK PERFORMANCE Previous session

Shinhan Financial Grp

Dow Jones Regional Sector Titans Oil Gas

Previous close, in local currency

KDDI

12.1

-5.7

Market value, in billions of US$

Europe Crossover

6.00 4.50

t

3.00 Europe

East Japan Rwy

Source: Markit Group

1.50

t

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

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

Behind Asia's deals: Bank revenue rankings, Asia (ex Japan) Behind every IPO, bond offering, merger deal or syndicated loan is one or more investment banks. Here are investment banks ranked by year-to-date revenues from recent deals. PERCENTAGE OF TOTAL REVENUE Debt Mergers & capital markets acquisitions

Revenue, in millions

Market share

Equity capital markets

Deutsche Bank

$109

4.7%

64%

28%

7%

1%

Goldman Sachs

91

3.9

81

12

6

1

Guosen Securities Co Ltd

88

3.8

98

1

...

...

Morgan Stanley

80

3.4

59

14

25

2

Ping An Securities Co Ltd

79

3.4

96

3

1

...

Loans

UBS

77

3.3

51

27

17

5

JPMorgan

67

2.9

50

25

20

5

Citi

67

2.9

43

35

13

9

Credit Suisse

52

2.2

55

6

38

1 Source: Dealogic

THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

25

GLOBAL MARKETS LINEUP Commodities

Currencies

Prices of futures contracts with the most open interest

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

Corn (cents/bu.) Soybeans (cents/bu.) Wheat (cents/bu.) Live cattle (cents/lb.) Cocoa ($/ton) Coffee (cents/lb.) Sugar (cents/lb.) Cotton (cents/lb.) Crude palm oil (ringgit/ton) Cocoa (pounds/ton) Robusta coffee ($/ton) Copper (cents/lb.) Gold ($/troy oz.) Silver (cents/troy oz.) Aluminum ($/ton) Tin ($/ton) Copper ($/ton) Lead ($/ton) Zinc ($/ton) Nickel ($/ton)

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

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

NYMEX NYMEX NYMEX NYMEX ICE-EU ICE-EU

761.25 1385.75 782.00 120.825 3,010 259.50 25.68 194.79 3,382.00 1,961 2,308

25.25 -8.00 22.50 -0.425 -1 -0.40 0.28 -0.76 42 11 -34

424.95 1432.80 3832.00 2,640.00 31,700.00 9,435.00 2,765.00 2,418.00 25,645

-0.90 3.90 58.80 19.50 345.00 84.00 100.00 70.50 95

108.10 3.1572 3.1628 4.309 119.81 1,006.00

0.16 0.0227 0.0115 -0.053 1.40 9.00

757.75 1,467.50 925.50 121.625 3,775 296.65 29.75 219.70 3,872 2,348 2,543

3.43% -0.57% 2.96 -0.35 -0.03 -0.15 1.10 -0.39 1.26 0.56 -1.45

Contract low

366.50 909.25 521.75 89.575 2,650 133.75 11.82 68.05 3,163 1,837 1,604

465.75 280.00 1,450.00 775.00 3,862.00 18.50 2,640.00 1,857.00 32,590.00 15,925.00 10,123.00 6,120.00 2,765.00 1,580.00 2,584.00 1,617.00 29,050 18,005

-0.21 0.27 1.56 0.74 1.10 0.90 3.75 3.00 0.37

129.16 3.5800 3.1758 10.050 134.60 1,008.50

0.15 0.72 0.36 -1.22 1.18 0.90

66.00 1.6000 2.0122 3.805 58.40 637.00

Source: Thomson Reuters; WSJ Market Data Group

WSJ.com

PREVIOUS SESSION

Region/Country Index

Close

Net change

14

ASIA-PACIFIC DJ Asia-Pacific

140.48

0.79

15

Australia

SPX/ASX 200

4886.85

25.01

China

CBN 600

27725.61

...

In euros

Per U.S. dollar

In U.S. dollars

5.7668 0.1734 2.2988 0.4350 1.3770 0.7262 1.3779 0.7257 1.3799 0.7247 1.3835 0.7228 675.93 0.001479 2630.96 0.0003801 1.4234 0.7025 16.8738 0.0593 4.0006 0.2500 27.188 0.0368 1.4234 0.7025 6.11 0.163580

4.0513 1.6150 0.9674 0.9680 0.9694 0.9719 474.85 1848.30 1 11.8542 2.8105 19.100 1 4.29

0.2468 0.6192 1.0337 1.0330 1.0315 1.0289 0.002106 0.0005410 1 0.0844 0.3558 0.0524 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

1.3753 0.7271 9.3205 0.1073 11.0660 0.0904 63.1941 0.0158 12331 0.0000811 119.42 0.008374 119.40 0.008375 119.35 0.008379 119.24 0.008386 4.3075 0.2322 1.8551 0.5390 121.306 0.0082 61.643 0.0162 1.7939 0.5574 1547.36 0.0006463 41.636 0.02402 43.024 0.02324

0.9662 6.5478 7.7741 44.3950 8663 83.90 83.88 83.85 83.77 3.0261 1.3033 85.220 43.305 1.2603 1087.05 29.250 30.225

1.0350 0.1527 0.1286 0.0225 0.0001154 0.011920 0.011922 0.011927 0.011938 0.3305 0.7673 0.0117 0.0231 0.7935 0.0009199 0.03419 0.03309

Per euro

Per euro EUROPE Euro zone euro 1 1-mo. forward 1.0006 3-mos. forward 1.0018 6-mos. forward 1.0044 Czech Rep. koruna-b 24.455 Denmark krone 7.4570 Hungary forint 265.35 Norway krone 7.8253 Poland zloty 4.0236 Russia ruble-d 40.279 Sweden krona 8.9847 Switzerland franc 1.3094 1-mo. forward 1.3092 3-mos. forward 1.3086 6-mos. forward 1.3079 Turkey lira 2.1804 U.K. pound 0.8819 1-mo. forward 0.8822 3-mos. forward 0.8831 6-mos. forward 0.8847

SDR -f

0.8984

Percentage change

PERFORMANCE Yr.-to-date 52-wk.

Price-to-

Region/Country Index Euro Zone Euro Stoxx

0.57%

-1.4%

0.51

3.0

-0.4

13

3.8

-2.3

19

Denmark

OMX Copenhagen

Closed

8.2%

Close 289.18

Euro Stoxx 50

Net change 0.34

6.0

-0.7

1.8

21.3

0.62

1.46

4.8

12.1

14

Finland

OMX Helsinki

7595.25

46.72

1.45

-3.9

9.8

12

France

CAC-40

4042.92

-11.84

-0.29

17

Indonesia

Jakarta Composite

3700.047

-7.440

-0.06

Japan

Nikkei Stock Average

9718.89

10.50

859.75

-2.87

1555.48

0.10

0.01 0.21

Malaysia

Kuala Lumpur Composite

New Zealand

NZSX-50

3459.509

7.373

Pakistan

KSE 100

11873.28

-13.85

14

Philippines

Manila Composite

4209.43

79.89

...

Singapore

Straits Times

3140.62

20.15

11

South Korea

Kospi

2115.87

-5.14

15

Taiwan

Weighted

8705.13

10

Thailand

SET

1078.66

16

EUROPE

Stoxx Europe 600

280.47

0.45

Stoxx Europe 50

2623.02

-0.82

Last

9.91 7.66 0.43 7.94 29.15 21.38 40.59 0.61 7.40 ... 53.50 ...

-0.12 1.93 0.65 -0.24 Closed

1.34 0.16 -0.03

-0.1

28.2

13

Germany

DAX

-5.0

-14.3

12

Italy

FTSE MIB

-4.3

-13.7

12

2.4

15.9

...

4.5

5.6

9

-1.2

13.6

10

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

Daily

0.36% 0.35 0.23 0.57 0.79 0.73 0.83 0.43 1.07 ... 1.17 ...

4.8% 5.6 5.3 -1.4 2.4 7.9 2.9 -2.4 6.6 3.8 8.9 5.7

12.4% 7.7 6.6 8.3 15.8 11.3 14.6 0.6 12.5 -2.3 13.3 -1.9

-1.9% -5.5 -5.9 -1.5 2.1 -7.0 1.3 -4.6 1.4 -1.3 0.8 -0.4

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

US$

1.035 1.614 1.034 0.1527 1.423 0.129 0.0225 0.0001 0.012 0.767 0.0009 0.330 0.023 0.793 1.087 0.034 0.033

Netherlands

AEX

369.01

-0.44

Russia

RTSI

2095.25

18.47

1.559 0.999 0.148 1.375 0.124 0.0218 0.0001 0.012 0.741 0.0009 0.319 0.022 0.767 1.050 0.033 0.032

£ 0.620 0.641 0.640 0.095 0.882 0.080 0.0140 0.0001 0.007 0.475 0.0006 0.205 0.014 0.492 0.674 0.021 0.020

C$ 0.967 1.001 1.561 0.148 1.377 0.124 0.0218 0.0001 0.012 0.742 0.0009 0.320 0.022 0.768 1.052 0.033 0.032

YUAN 6.548 6.777 10.568 6.768 9.320 0.842 0.1475 0.0008 0.078 5.024 0.0060 2.164 0.151 5.196 7.118 0.224 0.217

EURO 0.703 0.727 1.134 0.726 0.107 0.090 0.0158 0.0001 0.008 0.539 0.0006 0.232 0.016 0.557 0.764 0.024 0.023

HK$ 7.774 8.046 12.548 8.036 1.187 11.066 0.1751 0.0009 0.093 5.965 0.0072 2.569 0.180 6.169 8.451 0.266 0.257

RUPEE 44.395 45.949 71.656 45.891 6.780 63.194 5.711 0.0051 0.529 34.064 0.0408 14.671 1.025 35.227 48.261 1.518 1.469

RUPIAH 8662.51 8965.70 13981.72 8954.42 1322.96 12330.65 1114.28 195.12 103.25 6646.74 7.97 2862.60 200.03 6873.64 9416.79 296.15 286.60

YEN 83.895 86.831 135.411 86.722 12.813 119.420 10.792 1.8897 0.0097 64.373 0.0772 27.724 1.937 66.570 91.200 2.868 2.776

0.89

15.1

9.1

-5.2

4.1

5.0

18.4

28.8

0.24

10756.1

26.2 -25.31

67581.95

1867.55

6016.98

7.06

0.12

2.0

4.7

362.42

0.26

0.07

6.3

14.4

Turkey

ISE National 100

U.K.

FTSE 100

3.2

22.7

18

AMERICAS

DJ Americas

-3.0

8.5

11

Brazil

Bovespa

69599.52

331.23

4.4

33.5

9

Argentina

Merval

3514.69

42.74

1.7

4.8

11

Mexico

IPC

37950.82

175.75

1.4

-1.7

-0.39

9.1

-2.8

-0.3

-6.9

2.4

15.2

2.84

0.48 1.23 0.47

0.4

-2.7

-0.3

43.8

-1.6

12.6

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.

Last

Net change

Shenzhen -c 441.45 0.01 U.S. TSM 13982.84 2.07 Global Select Div -d 229.11 1.18 Asia/Pacific Select Div -d 305.53 1.55 Hong Kong Select Div -d 226.87 3.15 U.S. Select Dividend -d 377.12 -0.35 Islamic Market 2347.12 9.49 Islamic Market 100 2347.66 8.08 Islamic China/HK Titans 30 1741.04 22.48 Sustainability Korea 1640.13 1.54 Brookfield Infrastructure 2433.04 6.57 DJ-UBS Commodity -p 170.02 0.46

359.23 25.10 862.57 1181.71 37.16 35.97

-0.12

3.8

6414.60

...

0.0012 0.431 0.030 1.034 1.417 0.045 0.043

0.18

IBEX 35

13

WON 1087.05 1125.10 1754.55 1123.68 166.02 1547.36 139.83 24.49 0.13 12.96 834.09

0.2

SMI

5.8

NZ$ 1.303 1.349 2.104 1.347 0.199 1.855 0.168 0.0294 0.0002 0.016

2.7

6.3

Spain

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

Daily

... 0.01 0.52 0.51 1.41 -0.09 0.41 0.35 1.31 0.09 0.27 0.27

1.2% 4.7% 6.5 14.2 5.7 13.0 2.7 10.3 3.0 15.0 5.2 11.9 5.4 14.1 4.6 8.6 4.4 14.5 10.0 29.6 7.4 16.2 4.7 27.0

6.6% 0.5 -4.4 -6.3 6.1 -3.7 0.8 -1.1 -0.7 5.4 1.4 -5.2

Source: DowJones Indexes

U.S.-dollar and euro foreign-exchange rates in global trading A$ 0.966

-0.9

Switzerland

32.1

*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.

Cross rates

-4.48 40.04

0.2

Price-toDividend earnings yield* ratio* Dows Jones Index

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

7175.33 22007.81

-1.5

Sources: Thomson Reuters; WSJ Market Data Group

Dow Jones Indexes Global TSM 2735.23 Global DOW 2204.90 Global Titans 50 186.53 Asia/Pacific TSM 1390.44 Asia/Pacific ex-Japan TSM 3700.27 Europe TSM 2966.48 Emerging Markets TSM 4939.26 Asian Titans 50 142.25 BRIC 50 697.73 CBN China 600 -c 27725.61 China Offshore 50 4623.42 Shanghai -c 376.38

0.11 -0.33

14.31

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

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

-0.20%

PERFORMANCE Yr.-to-date 52-wk. 5.4% 2.8%

-0.05

281.34

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

1.5845

-0.21

348.68

Net change

0.6311

434.89

19701.73

Price-toDividend earnings yield* ratio* Dows Jones Index

1.1131

0.12%

24150.58

14

0.3770 2.6523 5.9525 0.1680 3.4632 0.2888 0.7090 1.4104 0.2773 3.6057 1500.50 0.0006665 3.7502 0.2667 6.6960 0.1493 3.6728 0.2723

-0.13%

Hang Seng

8

1.4235 1.4226 1.4208 1.4172 0.0582 0.1909 0.005365 0.1819 0.3538 0.03534 0.1584 1.0871 1.0873 1.0878 1.0884 0.6528 1.6141 1.6135 1.6119 1.6089

-3.85

Sensex

18

0.7025 0.7029 0.7038 0.7056 17.180 5.2387 186.41 5.4975 2.8267 28.297 6.3119 0.9199 0.9197 0.9193 0.9188 1.5318 0.6196 0.6198 0.6204 0.6215

2959.07

Hong Kong

...

1 0.9994 0.9982 0.9956 0.0409 0.1341 0.003769 0.1278 0.2485 0.02483 0.1113 0.7637 0.7638 0.7642 0.7646 0.4586 1.1339 1.1335 1.1324 1.1303

Percentage change

India

Topix

In U.S. dollars

PREVIOUS SESSION

earnings ratio* 14

13

...

Per U.S. dollar

MIDDLE EAST/AFRICA Bahrain dinar 0.5367 1.8633 Egypt pound-a 8.4731 0.1180 Israel shekel 4.9296 0.2029 Jordan dinar 1.0092 0.9909 Kuwait dinar 0.3948 2.5331 Lebanon pound 2135.89 0.0004682 Saudi Arabia riyal 5.3382 0.1873 South Africa rand 9.5314 0.1049 United Arab dirham 5.2280 0.1913

18 ...

In euros

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

Price-to-

earnings ratio*

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 4

RINGGIT PH. PESO 3.026 43.305 3.132 44.821 4.884 69.896 3.128 44.764 0.462 6.614 4.308 61.643 0.389 5.570 0.0682 0.9754 0.0003 0.0050 0.036 0.516 2.322 33.228 0.0028 0.0398 14.310 0.070 2.401 34.362 3.290 47.076 0.103 1.481 0.100 1.433

S$ S FRANC 1.260 0.920 1.304 0.952 2.034 1.485 1.303 0.951 0.192 0.140 1.794 1.309 0.162 0.118 0.0284 0.0207 0.0001 0.0001 0.015 0.011 0.967 0.706 0.0012 0.0008 0.416 0.304 0.029 0.021 0.730 1.370 0.043 0.031 0.042 0.030

TW$ 29.250 30.274 47.211 30.236 4.467 41.636 3.762 0.6589 0.0034 0.349 22.444 0.0269 9.666 0.675 23.210 31.797

BAHT 30.225 31.283 48.785 31.244 4.616 43.024 3.888 0.6808 0.0035 0.360 23.192 0.0278 9.988 0.698 23.983 32.857 1.033

0.968

Source: Thomson Reuters via WSJ Market Data Group

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

LOCAL-CURRENCY PERFORMANCE

Last

Daily

YTD

52-wk.

2.40% 15

ALL COUNTRY (AC) WORLD* 345.66 -0.58%

4.5%

12.4%

2.40

15

World (Developed Markets) 1,341.44

-0.49

4.8

11.7

1.60

25

World Small Cap

251.04

-0.28

6.2

23.2

2.40

15

Kokusai (World ex-Japan) 1,344.65

-0.77

6.2

13.4

3.10

14

EAFE

1,709.08

-0.38

3.1

7.9

2.20

14

Emerging Markets (EM)

1,185.12

-1.20

2.9

17.3 16.0

2.70

15

AC ASIA PACIFIC EX-JAPAN 490.35

-0.87

2.4

2.30

14

AC Far East ex-Japan

539.19

-1.00

2.7

19.2

2.00

15

Japan

536.45

-0.64

-4.4

-12.4

2.20

14

China

69.36

1.35

4.3

8.6

1.00

22

China A (China Domestic)

3,199.40

1.39

3.6

-0.2

2.60

20

Hong Kong

12,177.58

0.47

-0.3

17.0

1.00

19

India

767.33

0.04

-5.4

7.4

1.20

12

Korea

608.17

0.65

3.6

26.7 18.7

2.60

18

Malaysia

574.78

0.71

2.5

2.90

14

Singapore

1,724.78

0.55

-1.8

8.1

3.20

15

Taiwan

309.08

0.27

-3.2

9.4

2.80

14

Thailand

435.93

2.07

6.0

32.3

4.10

16

Australia

993.79

0.56

2.9

-1.6

4.80

19

New Zealand

88.59

0.64

5.7

4.3

1.70

17

US BROAD MARKET

1,515.62

-0.52

6.4

16.1

3.30

13

EUROPE

96.90

1.50

1.6

6.0

*Twenty-three developed and 26 emerging markets

Source: MSCI Barra

26

THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

SCANNING THE GLOBE Dow Jones Industrial Average

Nasdaq Composite Index

P/E: 15

s 21.12, or 0.17%

LAST: 12397.84 YEAR TO DATE: OVER 52 WEEKS

s 2.66, or 0.10%

LAST: 2792.26 YEAR TO DATE: OVER 52 WEEKS

s 820.33, or 7.1% s 1,424.29, or 13.0%

S&P 500 Index

P/E: 13*

P/E: 18 s 0.87, or 0.07%

LAST: 1333.28 YEAR TO DATE: OVER 52 WEEKS

s 139.39, or 5.3% s 362.73, or 14.9%

s 75.64, or 6.0% s 145.84, or 12.3%

High 13000

2925

1375

12500

2800

1300

12000

2675

1225

11500

2550

1150

11000

2425

1075

Close Low

t

50–day moving average

10500 7

14 21

Jan.

28

4 Feb.

11

18 25

4 Mar.

11

18

25

2300

1

7

14 21

28

Jan.

4 Feb.

11

18 25

4 Mar.

11

18

25

1000

1

7

14 21

28

Jan.

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

10.0 7.9 1.9 44.6 2.0 2.3 2.4 35.2 3.8 2.4 1.9 5.3 27.2 11.3 2.9 38.9 1.6 8.2 4.8 2.6 1.6 5.6 19.9 25.3 3.2 1.0 1.2 1.0 5.9

$30.74 17.57 45.34 13.43 73.72 113.05 108.15 17.04 67.66 42.71 55.65 84.56 20.51 40.45 37.40 19.44 164.08 46.20 60.12 31.50 76.38 33.30 25.57 20.49 62.25 93.70 59.57 85.12 38.61

0.12 0.10 –0.02 0.06 –0.29 –0.07 –0.17 ... 0.44 –0.14 0.46 –0.12 0.17 –0.53 –0.16 –0.28 –0.19 0.10 0.63 –0.11 0.39 0.23 0.09 0.11 0.17 0.57 –0.14 –0.20 0.14

0.38% 0.54 –0.04 0.45 –0.39 –0.06 –0.16 ... 0.65 –0.33 0.82 –0.14 0.85 –1.29 –0.44 –1.42 –0.12 0.22 1.06 –0.35 0.51 0.70 0.37 0.54 0.27 0.61 –0.23 –0.23 0.36

WalMart

WMT

4.8

52.70

0.57

1.10

Stock

CHANGE Points Percentage

11

18

25

1

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

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

ADRs of Asian companies* Latest

CHANGE Points Percentage

157.0 63.0 51.1 44.6 38.9 35.2 27.2 25.3 24.2 23.0 22.9 21.4 20.7 19.9 19.6

$4.41 15.63 133.19 13.43 19.44 17.04 20.51 20.49 3.89 57.24 84.82 49.72 16.47 25.57 1.69

–0.04 0.47 0.04 0.06 –0.28 ... 0.17 0.11 –0.07 –0.22 0.28 0.27 –0.06 0.09 0.04

–0.90% 3.09 0.03 0.45 –1.42 ... 0.85 0.54 –1.77 –0.38 0.33 0.55 –0.36 0.37 2.42

MSSR 818.2 OREX 9,309.7 PFIN 29.8 AIB 2,602.4 COOL 2,404.1

$9.20 3.43 4.19 3.37 3.82

2.08 0.55 0.61 0.48 0.54

29.14% 19.10 17.04 16.61 16.46

$0.77 4.28 3.54 10.02 1.80

–2.03 –1.21 –0.89 –1.94 –0.34

–72.50% –22.04 –20.09 –16.22 –15.89

52-WEEK High Low

$5.68 142.79 13.85 15.55 98.21 3.94 44.56 7.67 17.60 9.90 7.27 3.91 31.10 53.16 37.65 54.70 58.22 52.09 22.81 38.63 19.24 12.55 77.92 16.58 52.30 4.50 93.90 6.66 21.59 55.46

Biggest gainers... McrmkSchmkRes OrexigenThera P&F Ind AldIrhBk ADS MajescoEntn

...Biggest losers AmbasIntl DuoyGlblWtr ADS JiangboPharms RAD Vision AscentSolarTch

AMIE DGW JGBO RVSN ASTI

3,180.3 5,409.9 83.4 270.2 1,232.7

Volume, Symbol in OOOs

Stock

MitsuUFJ ADS Baidu ADS TaiwanSemi SuntechPwr BHPBilton ADS UtdMicro ADS HondaMtr ADS NmuraHldg ChinaUnicomHK Rediff ADS Slcnwr ADS SifyTech ADS FocusMediaHldg CtripInt ADS TataMtrs ADS ChinaMobile ICICI Bk ADS Netease.com KT Crp ADS SonyCp SK Tele ADS AU Optrncs Infosys KoreaElecPwr Canon ADS PranaBiotech ToyotaMtr ADS AdSemEg ADS LG DisplayADS KBFinc ADS

$4.44 59.67 9.30 7.05 58.38 2.49 28.33 4.75 10.91 1.69 4.45 1.18 14.36 31.35 15.25 44.36 33.21 26.16 17.48 25.85 14.58 8.14 53.28 10.43 36.80 1.09 67.56 3.33 13.75 37.06

MTU BIDU TSM STP BHP UMC HMC NMR CHU REDF SPIL SIFY FMCN CTRP TTM CHL IBN NTES KT SNE SKM AUO INFY KEP CAJ PRAN TM ASX LPL KB

CHANGE Latest Points Percentage

5,559.5 $4.57 –0.06 5,412.1 142.05 3.22 4,215.0 12.22 0.01 2,060.6 9.08 –0.29 1,443.3 97.87 1.03 1,362.1 2.80 0.05 1,141.1 35.96 –0.86 1,028.0 5.04 –0.07 884.1 17.53 0.27 824.2 7.98 0.49 821.7 6.20 0.02 692.9 3.91 0.26 686.6 30.70 0.07 658.1 42.25 0.60 627.0 28.27 0.49 601.3 47.39 0.46 600.3 50.89 0.81 557.6 51.78 1.15 544.8 20.16 –0.14 515.3 31.57 –0.30 507.4 19.09 0.17 501.4 8.66 –0.01 460.6 73.39 0.28 408.2 12.58 0.06 391.7 43.61 –0.28 389.8 2.52 –0.10 385.2 79.78 –0.73 315.1 5.52 0.03 301.3 16.49 0.13 69.2 53.74 1.53

–1.30% 2.32 0.08 –3.09 1.06 1.82 –2.34 –1.37 1.56 6.54 0.32 7.19 0.23 1.44 1.76 0.98 1.62 2.27 –0.69 –0.94 0.90 –0.12 0.38 0.48 –0.64 –3.81 –0.90 0.55 0.79 2.93

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

U.S. Treasury yield curve

Global government bonds

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

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

4.930% 5.523 2.187 3.811 2.209 4.244 1.808 3.344 1.813 3.438 1.838 3.726 1.822 3.371 0.778 2.893 2.841 4.758 0.211 1.297 1.800 3.655 8.930 8.802 3.190 5.289 0.713 1.998 1.376 3.726 0.770 3.418

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

416.0 210.5 141.7 39.3 143.9 82.6 103.8 -7.4 104.3 2.0 106.8 30.8 105.2 -4.7 0.8 -52.5 207.1 134.0 -55.9 -212.1 103.0 23.7 816.0 538.4 242.0 187.1 -5.7 -142.0 60.6 30.8 ... ...

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 ... ...

431.4 206.6 142.5 24.3 178.1 81.6 115.8 -15.8 110.8 -12.4 112.9 16.6 107.4 -20.0 6.9 -58.1 241.0 140.0 -45.1 -219.2 87.8 -3.1 539.2 410.3 258.1 189.9 4.9 -158.9 72.6 22.5 ... ...

383.7 181.3 8.7 -47.2 -4.8 -40.3 62.0 -38.8 47.7 -56.0 -18.3 -53.0 -15.2 -84.7 -27.7 -103.2 40.2 -9.0 -92.9 -258.0 -19.3 -61.3 53.7 25.2 3.8 -11.4 -63.6 -201.9 -13.5 -0.9 ... ...

Previous

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

YIELD Month ago

4.999% 5.558 2.110 3.735 2.466 4.308 1.843 3.334 1.793 3.368 1.814 3.658 1.759 3.292 0.754 2.911 3.095 4.892 0.234 1.300 1.563 3.461 6.077 7.595 3.266 5.391 0.734 1.903 1.411 3.717 0.685 3.492

TOTAL RETURN Year ago

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 0.175 1.363 0.911 3.330 1.641 4.195 1.142 3.829 0.468 1.924 0.969 3.934 1.104 3.943

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

Coupon

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

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

Latest Euro Libor One month

52 wks ago

Offer Eurodollars One month

Bid

0.93625%

0.36563%

0.3500%

0.2500%

1.20313

0.57563

Three month

0.5500

0.4500

Six month

1.51688

0.88188

Six month

0.7500

0.6000

One year

1.97063

1.18875

One year

1.0500

0.8500

Latest

52 wks ago

U.S.

3.25%

3.25%

Canada

3.00

2.25

Japan

1.475

1.475

Britain

0.50

0.50

ECB

1.00

1.00

Switzerland

0.53

0.53

Hibor One month

0.21000

0.09821%

Australia

4.75

4.00

Three month

0.26000

0.14893

U.S. discount

0.75%

0.75%

Hong Kong

5.00

5.25

Six month

0.32143

0.24929

Fed-funds target

0.25

0.25

One year

0.64143

0.56857

Call money

2.00

2.00

Libor One month

Three month

Asian dollars One month

0.2489%

0.23990%

0.24863%

Three month

0.29675

0.29150

Three month

0.3070

0.2929

Six month

0.45875

0.44156

Six month

0.4645

0.4420

U.K. (BBA)

0.532

0.507

One year

0.78100

0.91500

One year

0.7865

0.9180

Euro zone

0.56

0.30

0.26%

Overnight repurchase rates U.S. 0.09%

0.22%

Sources: WSJ Market Data Group; Reuters

THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

27

MARKETS LINEUP Asian index movers…

Moving the markets

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

Nikkei Stock Average

Hang Seng

Japan

Hong Kong

s

9718.89 0.11% or 10.50

Optimism over a weaker yen and Friday’s upbeat U.S. jobs report helped lift the index, but caution over the corporate earnings outlook after the March 11 quake capped gains.

s

Sensex 24150.58 1.46% or 348.68

The benchmark rose to its highest close since Jan. 19, tracking Friday’s gains on Wall Street after a better-than-expected jobs report. Country Garden rose on higher sales.

12500

30000

25000

3000

10000

24000

20000

2400

7500

18000

15000

1800

Close

12000

Mizuho Financial 299.50

132

Tokyo Elec Power

124.95

442

Mtshbsh Fin Grp

83.80

385

TaiheiyoCement

75.62

157

5

3.29

Nippon Steel

33.38

264

…

…

Stock

%

Volume in millions

Close

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

Change Net

%

Stock

0.05

1.14

Jaiprak Asso-A

Volume in millions

Close

Change Net

2.00

98.40

3.10

3.25

%

–3.65

Bank Of China

398.13

4.42

–7

–1.56

Icbc

395.42

6.68

0.12

1.83

Reliance Com-A

1.98

109.15

–2.50

–2.24

–5

–1.28

CCB

349.23

7.52

0.10

1.35

Dlf-A

0.72

271.55

0.25

0.09

PetroChina

110.03

12.04

0.02

0.17

Sterlite (I)-A

0.55

173.10

–0.65

–0.37

ChinaPetroChem 100.84

7.89

0.07

0.90

Tata Steel-A

0.48

629.80

4.15

0.66

–5

Golden Agri-Resources rose further as palm planters were boosted by a report last week that said U.S. soybean stocks fell. Singapore Airlines slid on fears of rising fuel costs. 3600

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

Change Net

s

3140.62 0.65% or 20.15

30000

Volume in millions

Stock

Technology and banking shares led the market to its ninth day of gains in the past 10. Infosys Technologies, Tata Consultancy Services, ICICI Bank and HDFC Bank rose.

Singapore

36000

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

19701.73 1.45% or 281.34

15000

5000

WSJ.com

Straits-Times

India

1200 A M J J A S O N D J F M 2010 2011 Volume in millions

Close

71.83

2.09

Golden Agri

58.11

GlbLogisticProp

31.24

Noble Grp NeptuneOrientLines

Stock

Genting Spore

Change Net

%

0.03

1.46

0.72

0.01

1.42

1.98

0.06

3.13

29.38

2.22

0.04

1.83

25.82

1.99

0.04

2.05

Asian stocks in the news Fast Retailing Japan

Cairn India ¥11,050 India

s 3.4% or ¥360

Credit Suisse upgraded the stock to “outperform” from “neutral.”

In yen

25000

Mahindra & Mahindra Ltd. Hong Kong Exchanges & Clearing Wynn Macau Ltd. 367.40 rupee

s 3.9% or 13.80 rupee

The exchange operator jumped amid signs of reviving IPO activity.

Macau casino operators strengthened after March gaming revenue surged to a record.

In rupee

In rupee

In Hong Kong dollars

In Hong Kong dollars

650

1250

350

30

1000

280

24

15000

390

750

210

18

10000

260

500

140

12

130 A M J 2010

5.3% -25.9%

Nippon Elec Glass Japan

HK$23.70

s 10.2% or HK$2.20

520

22 499.70 1.5

2.7% 8.2%

HK$180.90 Hong Kong

s 5.3% or HK$9.10

Auto makers gained as sales volume in March grew strongly across the board.

J A S O N D J F M 2011

¥1,138

J A S O N D J F M 2011

0.7% 3.9%

Oil & Gas Cairn India

4.1% 4.0%

22.8% 18.7%

Japan

¥1,395

t 2.4% or ¥35

70 A M J 2010

19 39.99 1.2

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

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Mitsubishi Estate

t 2.2% or ¥26

250 A M J 2010

17 21.72 None

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

PERCENTAGE CHANGE Daily 1 wk. 52 wks

0.8% 3.4%

Hong Kong

Some regional energy shares got a boost from rising crude-oil prices.

5000

Retail Fast Retailing

743.85 rupee

s 4.8% or 33.75 rupee

20000

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

India

J A S O N D J F M 2011

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Indus Gds & Svcs Mahindra & Mahindra Ltd.

0.7% 4.8%

1.7% 9.9%

10.8% 35.9%

39 4.68 2.3

Price-to-earnings ratio Earnings per share, past four quarters Dividend yield Financial Services Hong Kong Exchanges & Clearing

0.8% 5.3%

2.7% 9.6%

Sumitomo Rlty & Dev

Korea

Japan

504,000 won

J A S O N D J F M 2011

6.3% 37.0%

39 0.61 None

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

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Hyundai Heavy Industries t 3.1% or 16,000 won

6 A M J 2010

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Travel & Leisure Wynn Macau Ltd.

0.7% -0.2% 10.2% 8.2%

8.2% 98.5%

SK Innovation Co. Ltd. ¥1,633 Korea

t 3.4% or ¥57

191,000 won

t 10.3% or 22,000 won

Deutsche Securities downgraded the stock to “hold.”

The shares retreated after rising Friday when Goldman Sachs reinstated a “buy” rating for the stock.

Shipbuilders eased after the Baltic Dry Index, which tracks the cost of shipping key commodities, slipped.

Credit Suisse downgraded its stance on the real-estate sector to “market weight” from “overweight."

Its SK Energy unit will cut gasoline and diesel prices after pressure from the government to help curb inflation.

In yen

In yen

In won

In yen

In won

2500

2500

3000

240000

1500

1500

450000

2250

180000

1000

1000

300000

1500

120000

500 A M J 2010

9 132.60 1.1

J A S O N D J F M 2011

0.7% -2.2%

1.7% 0.3%

10.8% -16.6%

150000 A M J J A S O N D J F M 2010 2011

31 45.30 0.9

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

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Indus Gds & Svcs Nippon Elec Glass

300000

600000

J A S O N D J F M 2011

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

3750

2000

500 A M J 2010

750000

2000

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

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Real Estate Mitsubishi Estate

0.8% -2.4%

2.7% 0.4%

8.6% -10.5%

750 A M J 2010

8 61791.63 1.4

J A S O N D J F M 2011

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Indus Gds & Svcs Hyundai Heavy Industries

0.7% -3.1%

1.7% 3.4%

10.8% 118.2%

15 112.40 1.2

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

60000 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

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Real Estate Sumitomo Rlty & Dev

0.8% -3.4%

2.7% 0.7%

8.6% -10.9%

15 12994.23 1.1

PERCENTAGE CHANGE Daily 1 wk. 52 wks

Oil & Gas SK Innovation Co. Ltd.

0.7% 4.1% -10.3% -10.7%

22.8% 57.9%

THE WALL STREET JOURNAL.

Tuesday, April 5, 2011

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

Email: [email protected]

WSJ.com/Heard

Equinox copper mine in Lumwana, Zambia

Daily share price. At noon in Toronto: 7.43 Canadian dollars, up 30% 7.0 6.5 6.0 5.5

at a 23% premium to Friday’s closing price, merely closes those discounts. Given that, Equinox likely will hold out for more. Minmetals clearly has an appetite for copper—where Equinox is strong. Given Chinese backing, it can access deep-pocketed lenders and investors. The flip side to that, however, is

Runaway French housing sparks warning to banks When it comes to bubbles and France, Champagne comes to mind. But runaway mortgage lending by French banks has raised the prospect of a bubble of the real-estate kind. Home prices rose an average of nearly 9% in 2010 and climbed 18% in Paris. Fixed-rate mortgage lending jumped 73% in February from a year earlier, to €149.9 billion ($213.2 billion), prompting the Bank of France to warn banks to rein in lending. A subprime debacle is unlikely, given low loan-to-value ratios and conservative lending practices. French banks typically won’t lend if repayments exceed 30% of pretax household income. But low interest rates have proved a powerful incentive for home buyers in a country where banks traditionally lend at fixed, not variable, rates. The average mortgage rate in February was 3.5%, three percentage points below the 6.5% peak at the end of 2008. Other factors are also fueling the

Equinox Minerals

7.5 Canadian dollars

Equinox/Reuters

China’s voracious appetite for raw materials has earned it a special place in the hearts of mining company shareholders. These days, it also offers them something else: Insurance against ill-conceived deals. Minmetals Resources’ unsolicited 6.3 billion Canadian dollar (US$6.5 billion) offer for Equinox Minerals, announced Monday, emerged partly from Equinox’s own boardroom. The Toronto-listed Australian miner’s unsolicited bid for Lundin Mining has weighed on its stock since late February as shareholders fretted about Equinox taking on too much debt to enter the trouble-prone Democratic Republic of Congo. This weakness gave Minmetals, the Hong Kong-listed subsidiary of state-owned China Minmetals Corp., its chance. Prior to the offer, Equinox’s stock commanded multiples of 7 times 2012 earnings and 1.6 times 2012 book value; discounts of 20% and 11%, respectively, to the peer-group average. Minmetals’ C$7 bid, while

rise. The 2009 Scellier law entitled purchasers of a €200,000 qualifying buy-to-let apartment to a €50,000 tax rebate over nine years, as part of an effort to encourage more investment in housing. The planned extension of France’s mandatory retirement age to 62 from 60, and the prospect of future extensions, is convincing people they will have longer to finance home loans than they were expecting. Fortunately, there are already signs the market is cooling. Mortgage rates have recently risen to 4% in anticipation of rising euro-zone interest rates. Prices in some regions are down 7% this quarter compared with the end of last year. French banks rebuilt capital in the past year partly due to buoyant mortgage lending. The lesson of the financial crisis is that regulators must be prepared to follow up their warnings with action when they spot signs of overexuberance in individual asset classes. —Matthew Curtin

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Feb.

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that Chinese involvement could deter competitors from launching bids of their own. Equinox’s shareholders can be thankful for Minmetals’ entry. But there is no guarantee of a bidding war erasing fully the legacy of the miner’s move on Lundin. —Liam Denning

In “The Picture of Dorian Gray,” a work of art has the power to protect a man from harm. The same may go for Sotheby’s if surging small-cap stocks take a hit. Shares of the auction house have risen 60% in the last year in a broad rally in companies worth a few billion dollars or less. Sotheby’s trades at 18 times consensus earnings, comparable to the Standard & Poor’s SmallCap 600 Index. With the U.S. economic recovery far from guaranteed, valuations could get squeezed. But Sotheby’s would likely be a survivor. For one thing, the wealthy are shielded from the threat of unemployment or loss of income. Inflation is one of the key risks to the consumer recovery but could stimulate demand for art as investors seek assets that hold up when prices rise. And the art market is still gaining momentum, considering recent record-breaking sales of works by the likes of Joseph Mallord William Turner, Francis Bacon, and Pablo Picasso. Such blockbuster sales suggest volumes will expand because they make sellers more comfortable

Press Association/Associated Press

Resource-hungry China Picture this: Skies offers merger insurance bright for Sotheby’s A Francis Bacon triptych of Lucian Freud at Sotheby’s in London. and encourage buyers who want to buy in a hot market. What is more, this art boom has become more broad-based. Auctions in Asia accounted for 16% of total sales in 2010, twice the percentage just two years earlier, says Peter Keith of JMP Securities. That is likely to rise as Chinese investors take interest in an increasingly broad range of art. Consensus estimates indicate Sotheby’s auction sales will rise 15% this year, after surging 90% in 2010. With analysts apparently reluctant to predict an art boom, investors can still bid early. —John Jannarone

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OVERHEARD An old Wall Street rivalry hit boiling point last week when the Nasdaq Stock Market took a run at buying the New York Stock Exchange. Not to be outdone, competition between the wings of the House of Morgan seems to be heating up—at least, when it comes to the Morgan name. J.P. Morgan Chase and Morgan Stanley have competed without much fuss since they were split in the 1930s. But things have

gotten more complicated. J.P. Morgan’s 2008 purchase of Bear Stearns added bulk to its investment-banking business, making it a stronger competitor to Morgan Stanley. They are also competing more in wealth management. Maybe that is why some have started editing out the name Morgan when referring to their rival. At Morgan Stanley it means using “J.P. Chase.” Some across town now see their old corporate cousin as “MStanley,” or “Stanley.”

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