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Unformatted text preview: As of 4 p.m. ET DJIA 11008.61 g 1.42% FTSE 100 5553.29 g 1.15% Nikkei 225 11057.40 À 1.21% Shanghai Comp. 2870.61 À 0.08% Hang Seng 21108.59 À 1.59% Sensex 17558.71 À 0.32% S&P/ASX 200 4807.37 À 0.46% Swire’s long example of ‘buy low and sell high’ THE VIEW FROM HONG KONG 17 EDITORIAL & OPINION 11 ** (India facsimile Vol. 1 No. 230) Monday, May 3, 2010 ASIA asia.WSJ.com SK. MENPEN R.I. NO: 01/SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998 Buffett sides with the CEO of Goldman BY SCOTT PATTERSON AND ERIK HOLM Bloomberg News MICA (P) NO. 048/10/2009 Australia: A$6.00(Incl GST), Brunei: B$5.00, China: RMB25.00, Hong Kong: HK$18.00, India: Rs25.00, Indonesia: Rp18,000(Incl PPN), Japan: Yen500(Incl JCT), Korea: Won2,500, KKDN PP 9315/10/2010 (025811) Malaysia: RM6.00, Pakistan: Rs140.00, Philippines: Peso80.00, Singapore: S$4.00(Incl GST), Sri Lanka: Slrs180(Incl VAT), Taiwan: NT$60.00, Thailand: Baht50.00, Vietnam: US$2.50 KKDN PPS 648/11/2010 (028507) VO L . X X X I V N O. 1 6 9 The U.S. recovery has yet to kick into high gear Greek Finance Minister George Papaconstantinou outlines the rescue package at the finance ministry in Athens on Sunday. Greece seals bailout deal Fresh budget cuts, higher taxes trigger unrest, but ‘we have no other choice’ Greece reached a historic deal with other euro-zone By Charles Forelle in Brussels and Nick Skrekas in Athens countries and the International Monetary Fund for a three-year, €110 billion ($146.5 billion) bailout, as the country’s prime minister on Sunday exhorted his nation to bear the sacrifices needed to mend broken public finances and vowed that his government won’t “allow the country to become bankrupt.” The rescue involves out- side aid on a scale not attempted in Europe since the U.S.-led effort to reanimate the Continent after World War II. No euro-zone country has ever taken a bailout from a peer. Besides its 2008 rescue of Iceland, the IMF’s last intervention in Western Europe was in 1976, when it lent £2.3 billion ($3.5 billion at current exchange rates) to the U.K. “We have no other choices and no time, so accessing the bailout is inevitable,” Prime Minister George Papandreou said in a televised speech. Greece needs cash to pay back Please turn to page 16 OMAHA, Neb.—Warren Buffett offered a vigorous defense of Goldman Sachs Group Inc., saying the embattled firm hadn’t engaged in improper activity and shouldn’t be blamed for the losses of its clients. Goldman has been reeling from Securities and Exchange Commission allegations that the bank had engaged in fraudulent activities in relation to a mortgage deal called Abacus 2007-AC1. Goldman says it did nothing wrong. Mr. Buffett’s comments—which came early in the day at Berkshire Hathaway Inc.’s annual shareholders meeting Saturday—offer a powerful vote of confidence in Goldman, which has seen its shares slide since the SEC announced the investigation on April 16. Goldman’s stock fell 9.4% on Friday alone after it emerged that the U.S. Attorney’s Office in Manhattan was conducting a preliminary criminal probe into its mortgage-trading activities. “We have had a lot of very satisfactory transactions with Goldman Sachs,” Mr. Buffett Yuan gains world-wide clout, rivals dollar BY ALEX FRANGOS A new heavyweight is flexing its muscles in the $3 trillion-a-day market for currency trading: China. It is an unusual sort of influence given that the Chinese currency, the THE yuan, doesn’t OUTLOOK readily trade in foreign-exchange markets and its value is fixed against the dollar. Yet China’s economy, and speculation that the yuan’s value vis-a-vis the dollar will soon be allowed to rise, is moving currencies around the world. This is especially true in Asia, where the U.S. dollar has long reigned as the most consequential currency. It’s also making waves in countries that are major raw-materials suppliers to China such as Australia, Canada and Brazil. “The U.S. dollar used to be the center of the earth,” says David Bloom, currency strategist for HSBC in London. “Now China is becoming a very powerful influence on the way currencies are working.” Speculators, for instance, bet that other Asian currencies, especially those that are more freely traded, will rise relative to the dollar when the yuan is also allowed to. Investors believe expectations of yuan appreciation give central banks in these countries the leeway to let currencies strengthen without fear of losing export competitiveness. So far this year, the Malaysian ringgit is up 7.5% The China effect Currencies rising against the dollar in anticipation of China letting the yuan strengthen. 8% Malaysian ringgit Korean won Indian rupee Australian dollar 6 4 2 0 -2 -4 Jan. 2010 Feb. March April Source: Thomson Reuters via WSJ Market Data Group against the dollar and the Korean won and Indian rupee are both up about 5%. “We’ve reached a junction where the dollar and yuan are equally important in Asia,” says Hai Xin, head of Asia for Overlay Asset Management, a unit of BNP Paribas Group that hedges currency risk for large investors. “Before, I’d never hesitate to say the U.S. dollar is the most important currency. Now I think it’s both.” To be sure, the U.S. dollar is still the undisputed top dog. It’s the most heavily traded currency in the world and—as the recent financial crisis proved— still the denomination that investors flee to in tough times. Some say talk of the yuan’s prominence is overblown. “This is a country that has never had a real floating exchange rate and has no experience responding to markets,” says Fraser Howie, of CLSA Asia-Pacific markets and a longtime critic of China’s financial system. Even so, China’s growing Please turn to page 16 said. The billionaire investor said he fully supported Goldman CEO Lloyd Blankfein. Asked if he could choose a successor for Mr. Blankfein, Mr. Buffett said: “If Lloyd had a twin brother, I’d go for him.” Speaking to a packed auditorium of some 40,000 investors, Mr. Buffett said Berkshire recorded a first-quarter profit of $3.6 billion, compared with a net loss of $1.5 billion a year earlier. Mr. Buffett said the company’s results indicate the global economy is showing significant signs of recovery for the first time. Operating profit was $2.2 billion, reversing a yearago loss of $3.2 billion, he said, adding that individual units showed major improvement in March, after slight gains in prior months. “What was sort of a sputtering recovery months ago seemed to pick up steam in March and April,” Mr. Buffett said. “We’re seeing a pretty good uptick.” The audience’s reaction to Mr. Buffett’s comments on Goldman was tepid. While a number of comments by the Berkshire chairman in the Please turn to page 8 Oil-spill fight Engineers are trying to corral the gusher of oil in the Gulf of Mexico as it threatens coastal areas. Page 7 Wildlife in danger Spreading slick could cause serious consequences for wildlife into the future. 2 THE WALL STREET JOURNAL. ** Monday, May 3, 2010 PAGE TWO i i What’s News— i Inside Business & Finance n Australia’s government plans to reap billions of dollars more in tax from the nation’s booming resource industry and use the extra revenue to cut corporate taxes to a more globally competitive level and offer more-generous tax concessions for smaller companies. 3 n China’s central bank said it is ordering banks to set aside more of their deposits on reserve for the third time this year. 6 Management: Builder’s CEO talks competition. 32 n The deal to bail out Greece might stop the spread of the country’s financial woes to other struggling European nations, but some investors expect government bond yields to keep rising for all but the healthiest borrowers. 17 n Three companies that aim to go public this week are betting a healthier economy will pull their businesses out of the holes they sank into during the recession. 23 n ICBC asked investment banks to submit proposals to underwrite a share issue that could raise as much as $12 billion. 23 n Private-equity and buyout firms are investing in China’s farm sector as the nation’s middle class grows and concern over food safety mounts. 23 n A unit of Mitsubishi UFJ Financial bought Frontier Bank, a failed U.S. lender, weeks after buying another lender from the FDIC. 22 n GM is preparing to launch new ad campaigns for its Chevrolet brand, part of an overhaul of a marketing strategy that top executives see as a weak point in the company’s turnaround. 18 n Indian telecom operators said the government has been rejecting proposals to purchase equipment ReutersS n Norway’s Norsk Hydro agreed to acquire an aluminum mine and operations in Brazil from Vale in a deal that the two companies valued at $4.9 billion. 20 Thailand’s prime minister said the government is preparing to clear an area of Bangkok defended by thousands of antigovernment protesters, seeking to end a crisis that has virtually paralyzed the capital. Above, Red Shirt protesters watch Sunday as their leaders and police negotiate to move their barricade near Chulalongkorn Hospital. WSJ.com. from China, although no formal ban exists. 18 n Coke’s CEO said the company is on track to achieve its investment goals in China this year, despite a rejected juice deal. 20 n Samsung posted a strong firstquarter profit, but warned that normal seasonal performance gains may not occur this year. 19 n A group of Asian finance ministers agreed to set up a $700 million fund to encourage issuance of local-currency-denominated bonds by giving guarantees. 23 n Bolivia’s president issued decrees nationalizing three power firms and a power distributor. i i i World-Wide n Chinese authorities issued an emergency decree for police to strengthen school security following several attacks against schoolchildren, but the response offered little comfort to those who see the atrocities as a symptom of deepseated social problems in China. 4 n Police in New York City found a potentially powerful bomb that apparently began to detonate but didn’t explode in a parked vehicle in the center of Times Square. n Japan’s finance minister said the nation shouldn’t discontinue its stimulus too early, but it can’t keep piling up deficits either. World News: Expo focuses on Shanghai’s foreign side. 4 n The pope plans to overhaul the Legion of Christ in the wake of a Vatican investigation into decades of cover-ups of sexual abuse. n The U.S., Australia and Canada warned that terror groups likely are planning “imminent attacks’’ in India’s capital and foreigners there should be vigilant. n Islamic fighters seized a pirate haven in central Somalia, residents of the town said, in what could be a bid for a slice of the business of hijacking ships. 16 n An Indian court is expected to hand down a verdict Monday in the trial of a Pakistani accused of killing dozens in the November 2008 terror attacks in Mumbai. Business & Finance: Samsung to boost capital spending. 19 ONLINE TODAY Most read in Asia 1. Third School Rampage in China 2. Buffett Backs Goldman 3. Times Square Reopens After Bomb Scare 4. Politicians Butt In at GM 5. U.S. Warns of India Terror Attack Real Time Economics blogs.wsj.com/economics Continuing coverage More homeowners are willing to walk away from their homes voluntarily, according to new research. When Ahmadinejad goes to New York, who will protect him? Heard on the Street: Macquarie’s employees feel pay pinch. 30 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 Most emailed in Asia 1. China Biggest U.S.-Debt Holder 2. How Plastic Popped the Cork Monopoly 3. Times Square Reopens After Bomb Scare 4. Myanmar Vote Prompts Shuffle 5. Taking Advantage of the Wine Glut Metropolis blogs.wsj.com/metropolis Follow the latest cases and personalities of interest in the legal world at blogs.wsj.com/law 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: 62-21 344 1101; Japan: 81-3 6269-2760; Korea: 82-2 756 1695; Malaysia: 60-3 2026 4061; Philippines: 63-2 848 5873; Singapore: 65-6415 4000; Thailand: 66-2 652 0871. Or email: service@wsj-asia.com 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: wsja.publisher@dowjones.com Trademarks appearing herein are used under license from Dow Jones & Company. USPS 337-350ISSN 0377-9920 Monday, May 3, 2010 3 THE WALL STREET JOURNAL. WORLD NEWS BY RACHEL PANNETT CANBERRA—Australia’s government plans to reap billions of dollars more in tax from the country’s booming resource industry and use the extra revenue to cut corporate taxes to a more globally competitive level and offer more-generous tax concessions for smaller companies. Unveiling a broad-based tax-system proposal Sunday, the government also said it will raise the mandatory pension-fund contribution to 12% of workers’ salaries in stages, from 9% now, with most of the taxsystem changes taking years to implement. Prime Minister Kevin Rudd and Treasurer Wayne Swan said that Australians had increasingly missed out on the benefits of the mining boom, and there was a danger of a two-speed economy developing where non-resource industries struggle to attract workers and investment. The proposed changes follow the most significant review of the country’s tax system in more than three decades, conducted by Treasury Secretary Ken Henry. The move to capture a bigger share of mining-company profits triggered an outcry from the resource industry, which argues that it puts more than 100 billion Australian dollars (US$92.55 billion) in future investment in the mineral industry “under a cloud.” But the government’s proposal to increase taxes on wealthy mining companies while helping out smaller companies and promising higher pension-fund contributions for workers could be smart politically with a federal election due within months. Aside from resource-industry opposition, the proposal could set up a legislative fight. The government lacks a majority in the Senate, Australia’s upper legislative house, with minor parties holding the balance of power. The government has yet to fix a timetable for pushing through the tax proposal, although it has established a panel to discuss it with industry in coming weeks. Tony Abbott, leader of Australia’s main conservative Liberal-National opposition, described it as a “tax grab, not tax reform” that puts at risk investment and jobs in one of the most productive sectors of the economy. But Mr. Rudd defended the government’s proposal, noting that independent models suggest that the planned changes—which also include more-generous incentives for resource exploration—will increase mining activity by 5.5%. Australia has large endowments of nonrenewable resources, including the world’s largest reserves of brown coal, lead, mineral sands, nickel, silver, uranium and zinc—as well as the second-largest global reserves of iron ore, sought after by developing countries such as China. Other resource-rich countries such as Norway and some states of the U.S. and Canada have already moved toward profit-based taxation, setting a “benchmark for Australia,” the government said. Mr. Swan told reporters that he is under “no illusion” about how difficult the changes will be to implement—noting that their success depends entirely on the implementation of the resource rent tax. From July 1, 2012, resource companies such as BHP Billiton Ltd. and Rio Tinto Ltd. will be liable for a 40% tax on profits made from the exploitation of nonrenewable resources. Combined with company taxes and after allowing for extraction costs and recouping capital investment, companies will pay a statutory rate of around 58%. Currently, mining companies are taxed on their production, through royalties of between 2% and 10% imposed by state governments. Those royalties will remain, but companies will be refunded those payments by the federal government. BHP Billiton Chief Executive Marius Kloppers said the Melbourne-based mining giant, which paid taxes totaling A$6.3 billion in 2009, was disappointed with the plan. “If implemented, these proposals seriously threaten Australia’s competitiveness, jeopardize future Agence France-Presse/Getty Images Australia proposes new resource tax Mining companies such as Rio Tinto are opposed to Australia’s new tax plan. investments and will adversely impact the future wealth and standard of living of all Australians,” Mr. Kloppers said in a statement. Mitchell Hooke, chief executive of the Minerals Council of Australia, called the proposal “an unprecedented double-tax that will hit the industry’s work force, the millions of Australians with shares in [pension funds] or minerals companies and the thousands of small businesses that service the industry.” And Rio Tinto, Autralia’s biggest iron ore producer and second-biggest miner, warned the new resource tax could erode Australia’s competitiveness, severely curtail investment and limit jobs growth. But the government is concerned that effective tax rates for the resource sector have more than halved from an average rate of around 34% in the first part of the decade to less than 14% in the year ended June 30, 2009. —Enda Curran and Lyndal McFarland contributed to this article. 4 THE WALL STREET JOURNAL. Monday, May 3, 2010 WORLD NEWS: ASIA Violence prompts unease in China Many see the spate of attacks on schoolchildren as a symptom of greater social ills following nation’s rapid growth BEIJING—Chinese authorities issued an emergency decree for police to strengthen school security following a series of violent attacks against schoolchildren, but the tough response offered little comfort to those who see the atrocities as a symptom of deep-seated social problems in China. In fewer than six weeks, there have been five reported incidents around the country where individual men went on violent sprees in or near schools, assaulting children with crude weapons such as knives and cleavers. The attacks have left 11 people dead and some 70 injured. China’s Ministry of Public Security on Saturday ordered police to add patrols around schools, supply schools with alarms and other protective equipment, and supervise establishments near schools such as Internet cafés, entertainment venues and short-term rental apartments, which pose a potential threat to public order. While the targeting of children, some as young as 3, has garnered universal condemnation, many see the spate of attacks as a symptom of greater social ills that cannot be deterred simply by heavier punishment. The attacks are a stark contrast to the optimistic image of China’s rising wealth and influence, most recently presented by the extravagant Expo 2010 in Shanghai that opened this weekend. China’s remarkable economic growth over the past three decades, while bringing hundreds of millions of people out of poverty, has been accompanied by the emergence of complex problems that tend to undermine the ideals of a “harmonious society,” which Beijing sees as necessary to maintaining the legitimacy of the ruling Communist Party. Offi- Reuters BY SKY CANAVES A police officer demonstrates to a teacher how to use defensive steel forks at a school in Beijing Thursday. cial corruption, rising income inequality and a frayed social-security system are among the most pressing issues, and now violent crime may be added to the mix. “These attackers basically belong to the category of suicide attackers,” says Ma Ai, a professor of criminal psychology at the China University of Political Science and Law in Beijing. “They can’t expect that they can get away from police after they commit the crimes.” To prevent future outbreaks of violence, Mr. Ma says it is necessary “to gradually eliminate the breeding grounds for their hatred toward society.” The recent stabbing sprees are already punishable by death under China’s criminal law and, in any case, potential perpetrators may be too desperate to be stopped. Three of the cases took place on consecutive days last week, prompt- ing anguished questions about dark forces welling in Chinese society, and spurring authorities to clamp down on school security and discourage further media coverage of the crimes. “I can’t stop crying as I cook for my children! I don’t know how to express it! I don’t know what to do! We are helpless,” wrote one commenter on Youlan.com, a Chinese parenting Web site. Tougher security orders may ultimately have little impact, given the impossibility of predicting where violence will strike next in an increasingly fluid society. An eerily similar series of school attacks in 2004 resulted in orders for stricter security measures at schools, including a requirement that all outside visitors provide identification and register, though in practice the rules have slackened over time. Heavy security in the capital during the Beijing Olympics didn’t stop a knife-wielding man from killing the father-in-law of an American volleyball coach and injuring his wife and their guide at a popular tourist destination in the city. Nor did the high alert the city was on last year ahead of the Oct. 1 60th national anniversary celebration prevent two separate stabbing attacks in a crowded shopping area just south of Tiananmen Square, which is one of the most heavily patrolled areas of Beijing. The motives in most of the recent cases aren’t entirely clear, though mental illness appears to have played a role in at least some. Local authorities in the scattered cities where last week’s three incidents took place declined to speculate on the reasons behind the attacks. But media reports have cited social stresses and grievances that may have added to feelings of despair among the attackers. Chen Kangbing, who allegedly stabbed 15 students and a teacher at a school in the southern city of Leizhou on Wednesday, had been on sick leave from another school since 2006. Mr. Chen’s father said his son had been diagnosed with Hepatitis B, which affects as many as 120 million Chinese, and people avoided him as a result of the longstanding stigma associated with the illness in China, adding to his depression, according to local media reports. Descriptions of Xu Yuyuan, the alleged perpetrator in Thursday’s attack on 29 students in Taixing, a city in Jiangsu province, indicate that he was a troubled participant in China’s economic rise. He hadn’t held a steady job since 2001, when he was fired as an insurance salesman after filing a false claim, the state-run Xinhua news agency reported, and participated in various pyramid schemes and entrepreneurial ventures. Yet the 46-year-old Mr. Xu apparently prospered enough to buy eight units in one Taixing apartment building, where he ran two businesses, Xinhua said. Police said Mr. Xu admitted that he sought “revenge on society” for personal and business difficulties, Xinhua reported. Meanwhile, in Weifang in Shandong province, relatives of Wang Yonglai, who beat five children with a hammer before setting himself on fire at a kindergarten Friday, said run-ins with local officials had fueled his rage. Mr. Wang’s wife and sister-in-law told Reuters that authorities planned to demolish a house Mr. Wang had recently built on his farmland for his son, alleging that it was illegal. —Bai Lin in Shanghai contributed to this article. BY JAMES T. AREDDY SHANGHAI—The World’s Fair that kicked off Friday night is designed to focus global attention on Shanghai—but in doing so, it will largely reflect the outsize role foreigners have played in shaping China’s most cosmopolitan city. President Hu Jintao opened the six-month Expo 2010 here with a riverside fireworks-and-armada extravaganza attended by French President Nicolas Sarkozy, South Korean President Lee Myung-bak and others. Aiming to match the prestige of past hosts such as Paris, London and Chicago, China has launched the first World’s Fair hosted by a developing country and the biggest in terms of expected visitors (70 million) and spending ($45 billion, rivaling its preparations for Beijing’s 2008 Summer Olympic Games). The focus will be on pavilions from more than 190 nations, spread on two sides of the Huangpu River, that include Britain’s pin cushionlike light box, a purple worm-shape tent from Japan and the U.S.’s $61 million movie theater styled like a catamaran. The pavilions, due to be torn down after the event ends, mark the latest of more than a century of shifting international influence here. Shanghai’s riverfront Bund zone—waitan in Mandarin, or “the foreign shore”—includes Victor Sassoon’s 1929 Cathay Hotel and, a few doors down, the 1925 Hongkong & Shanghai Banking Corp. building with its mosaic ceiling of Calcutta and Bangkok ports. A historical witness to China’s full-circle journey—from subject of Western influence to strident opponent to, now, international host—is the English Renaissance-style building at No. 2 Bund. Built a century ago as the Shanghai Club, it was frequented by British colonial tycoons. A half-century ago, it was looted as a symbol of Western decadence. Expo preparations sparked fresh attention to Shanghai’s legacy, offering a path-breaker among the newest generation of foreign architects in the city, John C. “Jack” Portman III, a crack at putting his mark on the Bund. His firm is the architect on a job to transform the Shanghai Club into Hilton Hotel Corp.’s first Waldorf Astoria hotel in Asia. Built in 1910, the club and its hallmark 33.5-meter Long Bar hosted the bankers and taipans who helped to make Shanghai Asia’s richest city through the first half of the 20th century. Associated Press Expo puts focus on Shanghai’s foreign side Visitors lined up Sunday, in searing heat, to see the United Kingdom Pavilion. In 1941, the Japanese Navy commandeered it. With Japan’s 1945 defeat, the club’s battered elite returned to discover shortened legs on billiard tables. Communists, taking power in 1949, squeezed the club for liquor taxes that bankrupted it in 1954. It was among some 15,000 other foreign properties appropriated by the Communist government, according to “Building Shanghai” by Edward Denison and Guang Yu Ren. Within two years, it was the International Seamen’s Club with a Mao statue and “Workers of the World Unite” banner in Chinese, English and Russian. In the 1960s Cultural Revolution, Red Guards chopped the bar to pieces amid a purge of Western influences. By 1989, the bar area reopened as Shanghai’s first Kentucky Fried Chicken outlet. Mr. Portman, an Atlanta architect-developer, visited Shanghai in 1979, two weeks after the U.S. and China normalized diplomatic relations. Weeks later, Deng Xiaoping told Mr. Portman’s father—famed architect John Portman Jr.—Shanghai was ripe for a project. The Portmans wanted to build on the Bund but settled for another location. In 1990, their family firm, John Portman & Associates, developed the $195 million Portman Shanghai Center, the city’s tallest building. It quickly lost $18 million as foreign businessmen stayed away in the wake of the 1989 Tiananmen Square crackdown. But the Portman Center, with its own Long Bar, thrived once foreign enthusiasm for Shanghai rebounded. Now with heritage architecture gaining fresh acclaim ahead of Expo 2010, the building’s governmentowned landlord allowed the long-neglected building to be remodeled into a Waldorf Astoria. Serving as architect, the Portman firm is adding a 260-room skyscraper annex. Hilton didn’t respond to requests to comment. Atop the club’s Sicilian marble staircase that he first climbed in 1986, 61-year-old Mr. Portman marveled at the “ornate” ballroom. The building, he said, is “a microcosm of what Shanghai was all about.” Monday, May 3, 2010 THE WALL STREET JOURNAL. WORLD NEWS: ASIA New doubts on Myanmar BY A WSJ REPORTER Top Myanmar officials have resigned from their military posts and created their own political party in a likely bid to contest elections later this year, raising new skepticism about prospects for a valid vote. Analysts said the move by Prime Minister Thein Sein and 22 other officials last week to resign their military titles appears designed to circumvent a 25% quota on the number of parliamentary seats members of the military will hold, enabling them to maintain their grip on power in this resource-rich but secretive nation of 48 million people. If more senior military leaders shed their uniforms to run as civilians, they could lock up far more seats. The demilitarization of Myanmar’s top leadership merely represents “a more sophisticated form of oppression,” says David Mathieson, a researcher at Human Rights Watch in Thailand. The Myanmar regime in recent years has been accused of a range of human-rights abuses, including the imprisonment of more than 2,000 political opponents. Attempts to reach the Myanmar government, which rarely speaks to foreign journalists, were unsuccessful. The country’s most senior military leader, Than Shwe, has in the past said the vote will be fair. The government has yet to announce a date for the elections. Mr. Thein Sein and the other officers resigned from the military on April 26, according to state media reports, though they are expected to keep their cabinet posts. On Thursday, he and 26 other officials applied to register a political group called the Union Solidarity and Development Party. When Myanmar last held a national election, in 1990, opposition groups led by Nobel laureate Aung San Suu Kyi easily won. But the military regime, which has ruled since 1962, ignored the result and has kept Ms. Suu Kyi under house arrest much of the time since then. Her party, the National League for Democracy, recently vowed to boycott the newest vote. Some analysts have argued the new election—which they say was designed at least in part to boost the legitimacy of the current regime—could at least open the door for opposition groups to gain a bit more say in the way Myanmar is run. More than 20 new political parties have applied to participate, including some led by opposition figures, and it is widely hoped that at least some of them could win seats. Analysts speculate that the regime’s efforts to promote the creation of civilian parties could lead to more accountability among top military leaders, some of whom will theoretically have to compete for public support in order to remain in office. But it is unclear whether the government will allow international observers to ensure the voting is free and fair, and the latest moves suggest some current leaders may not intend to retire and hand over the reins to younger leaders as some residents had hoped. Tensions are clearly rising. At least seven bomb blasts have been reported in recent weeks, including an attack at a public park in Yangon on April 15 that killed at least eight people. It is unknown who orchestrated the latest attacks—which have also included smaller blasts at a hydropower project site—or whether they are related. Anxieties are also running high in border areas with Thailand and China, where ethnic minority groups control vast swaths of territory and continue to grapple with the government over a controversial plan to reduce their autonomy before the elections. Military leaders are demanding that the ethnic groups convert their soldiers into “border guards” under the leadership of the Myanmar army before participating in the vote. A deadline for acceptance of the deal passed on Wednesday, with many still refusing to participate. That has left many Myanmar residents to conclude violent conflicts are imminent as the government positions more troops in border areas. The state-run New Light of Myanmar newspaper on Saturday quoted Senior Gen. Than Shwe as saying “internal and external saboteurs” want to harm the election, the Associated Press reported. Associated Press Resignations should help the military win polls, keep grip on power Prime Minister Thein Sein, right, has resigned from the military. He is shown here in October being met by junta chief Senior Gen. Than Shwe, center. I harvest opportunity from risk. J OSÉ A RO L DO GA L L ASS IN I President, Coamo Agroindustrial Cooperative For José Aroldo Gallassini, turning risk into opportunity is second nature. As president of Brazil’s largest agricultural cooperative, he comes to CME Group to mitigate price volatility and protect his organization’s position in the global soybean market. With unparalleled liquidity, transparency and speed, and the security of central counterparty clearing, CME Group guarantees the soundness of every trade. That’s why CME Group is where the world comes to manage risk. Learn more at cmegroup.com. CME Group is a trademark of CME Group Inc. The Globe logo, CME, Chicago Mercantile Exchange, E-mini and Globex are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago. NYMEX, New York Mercantile Exchange and ClearPort are trademarks of New York Mercantile Exchange Inc. COMEX is a trademark of Commodity Exchange Inc. All other trademarks are the property of their respective owners. Copyright © 2010 CME Group. All rights reserved. 5 6 THE WALL STREET JOURNAL. Monday, May 3, 2010 WORLD NEWS: ASIA China lifts required bank reserves B Y J . R . WU AND KENNETH MCCALLUM months, the government will have very few choices but to resort to rate hikes and some price controls in our view,” said Jun Ma, chief economist for Greater China at Deutsche Bank. The People’s Bank of China didn’t provide any reasons for its move in a statement on its Web site. The central bank said rural credit cooperatives and village banks wouldn’t be required to make the increase. China’s central bank raised the reserve requirement by half a percentage point in January and February. Sunday’s announcement makes the standard that major banks keep 17% of deposits on reserve, though the rate can vary for each bank. On Saturday, the China Federation of Logistics and Purchasing said China’s Purchasing Managers Index rose to 55.7 last month from 55.1 in March. The PMI provides an early snapshot of China’s economic activity, and the April reading suggests government efforts to pull back on stimulus measures haven’t yet had a great impact on manufacturing. Economists have been expecting more tightening measures in China in the wake of its first quarter economic performance, which saw gross domestic product expand 11.9% from a year earlier, its fastest year-toyear quarterly pace since the onset of the global financial crisis. China’s financial markets are shut Monday for Labor Day . —Aaron Back contributed to this article. BEIJING—China’s central bank on Sunday announced it was ordering banks to set aside more of their deposits on reserve for the third time this year, amid growing inflationary expectations and Beijing’s crackdown on surging property prices. The move, which will raise the reserve requirement ratio by 0.5 percentage point from May 10, comes a day after an official gauge showed China’s manufacturing activity expanded in April for the 14th straight month, as input prices, a sign of potential inflation, jumped sharply. Soon after the People’s Bank of China announced its move, China Finance Minister Xie Xuren, speaking from the Asian Development Bank meeting in Tashkent, Uzbekistan, reiterated the country’s stance of sticking to a “moderately loose” monetary policy. But as the world’s third-largest economy recovers faster relative to other world economies, economists say Beijing is likely to have to resort to other policy tools to counter the rising pricing pressures and returning capital inflows. “These [reserve ratio hikes and window guidance for banks] policy tools are helpful in controlling liquidity and loan growth, but are not immediately effective in dealing with negative real interest rates, inflation expectations and spot prices. Within a few Zuma Press Move is third jump this year, and comes as manufacturing activity and input prices rise, sparking inflation fears An employee at work on a production line at a television factory of TCL Corp. in Guangdong, China. Xinhua to start English-language channel BEIJING—China’s state news agency announced the launch of a global English-language television channel, part of a broader international push by the country’s government media aimed at countering the dominance of Western news outlets and conveying a Chinese perspective on events. Xinhua news agency said trials of the new 24-hour TV service, called China Network Corp., or CNC, were to start Saturday, and the station will be fully operational by July 1. CNC will be available by satellite, cable systems, the Internet and cellphones, Xinhua said, and will carry a range of news, business and lifestyle programming. “CNC will offer an alternative source of information for a global audience and aims to promote peace and development by interpreting the world in a global perspective,” Xinhua quoted its president, Li Congjun, as saying at a launch ceremony Friday. China’s leadership has grown increasingly frustrated in recent years by its inability to gain influence over international views to match its rising economic and geopolitical clout. The government often bristles at foreign media coverage of China, especially sensitive events like ethnic riots in Tibet in 2008. By pouring funds into the overseas expansion of outlets like Xinhua, it hopes to give China its own versions of CNN or the BBC. The effort is part of a larger campaign to enhance China’s “soft power” through programs such as China-funded “Confucius Institutes” abroad that teach Chinese Xinhua/Landov BY JASON DEAN Xinhua President Li Congjun, shown in a photo taken in October. language and culture. The media push is complicated, however, by the traditional role of major state outlets like Xinhua and China Central Television as propaganda arms. “These are not the kind of organizations that have a reputation for being very flexible and creative,” says David Bandurski, a researcher at the China Media Project at the University of Hong Kong. China does have a growing group of smaller, more independent media outlets that have won plaudits from media experts in China and abroad for their coverage, but those groups aren’t part of the government’s effort. Mr. Bandurski says there is concern within Chinese media circles that the emphasis on major state media could backfire by reinforcing negative perceptions of China abroad. “The danger is that they open up these channels, but they’re sending ideological garbage across them,” he says. It is unclear how sizable a market there is for the new Xinhua station. But such uncertainty isn’t the sort of impediment that would exist for a primarily commercial media venture. Beijing’s goal with this and similar media efforts is to put China’s message out to international audiences in a package that can eventually find enough of an audience to sway public opinion. Xinhua, founded in the 1930s when the Communist Party was still a revolutionary organization, is a sprawling agency, with more than 13,000 employees and bureaus in more than 100 countries. Like other state media outlets, it has been trying to retool its operations along more commercial lines in recent years, and has been making a push to compete with Thomson Reuters and Bloomberg LP in providing financial information in China. The changes in China’s media are increasingly pitting government news outlets against each other after decades of operating in clearly defined domains. Xinhua’s output traditionally was limited to print and photographs, but it is now battling with CCTV, the giant state broadcaster. CCTV is undertaking its own international push, and bolstering its offerings at home with a new online video site that competes with online video by Xinhua. On April 26, CCTV announced a rebranding of its decade-old Englishlanguage station, formerly called CCTV-9, as CCTV News. The network is billing CCTV News, which also is getting some retooled programming, as “China’s contribution to greater diversity and wider perspectives in the global information flow.” CCTV says the channel is accessible via satellite by some 85 million viewers in more than 100 countries. The network also has international channels that broadcast in French, Spanish, Russian and Arabic. The international push has spawned a newspaper battle between China Daily, the English-language broadsheet founded in 1981, and an English edition started a year ago by Global Times, a tabloid published by the People’s Daily, the Communist Party’s official mouthpiece. To some degree, their competition for foreign readers appears to have fueled more aggressive journalistic tactics. Global Times and China Daily have featured stories about sensitive issues such as antigovernment protests and illegal detentions by police—subjects seldom raised by major state media. Xinhua started a Chinese-language international channel on Jan. 1. The new English station will be available via Asia-Pacific Satellite-6, Xinhua said, without specifying how many countries it might reach. Xinhua representatives didn’t respond to requests to comment on how much the new initiative will cost. At a ceremony marking the Jan. 1 launch, Mr. Li, the Xinhua president, said the agency’s goal is to “provide international news with a Chinese perspective and Chinese news with a global perspective for an overseas audience. We will operate based on market rules, but will prevent commercial interests from eroding media responsibility, and will oppose turning news into entertainment.” Dow Jones & Co., publisher of The Wall Street Journal, has a venture with Xinhua to deliver Journalbranded news in Chinese to Chinese consumers through China Mobile Ltd. wireless networks. Dow Jones is owned by News Corp. Monday, May 3, 2010 7 THE WALL STREET JOURNAL. WORLD NEWS Official: spill could be ‘catastrophic’ BY IAN TALLEY AND ALICIA MUNDY The BP PLC oil spill in the U.S. Gulf of Mexico was potentially “catastrophic” and could turn out to be worse than the Exxon Mobil Corp. Valdez spill in Alaska, Interior Secretary Ken Salazar said Sunday. “The worst-case scenario is we could have 100,000 barrels [a day] or more of oil flowing out,” Mr. Salazar said on CNN’s “State of the Union.” The spill occurred after the Deepwater Horizon drilling rig blew out on April 22, killing 11 people and leaking crude oil into the Gulf of Mexico. The slick is threatening the coastal region’s fishing, tourism and shipping industries. BP and the U.S. government have over the past week stuck to their raised estimate of 5,000 barrels a day spilling out of the deepwater well. But Homeland Security chief Janet Napolitano on Sunday told ABC News’s “This Week” that the current spill rate could currently be much higher. “Right now that could be in the tens of thousands of gallons per day, of barrels per day,” she said, without elaborating which figure was more accurate. One barrel of oil is 42 gallons. The Valdez spill, caused by a wrecked tanker, spilled 11 million gallons of crude over three months in 1989, devastating part of Alaska economically and environmentally. U.S. Coast Guard Commandant Admiral Thad Allen, who was named Saturday to oversee the federal oilspill response, said the worst fear was that the Deepwater well could THIN SHEEN OF OIL ALABAMA LOUISIANA MISS. Desoto National Forest Miss. Sandhill Mobile Crane NWR Gulfport Bayou Sauvage National Wildlife Refuge FLORIDA Grand Bay NWR Currents break the oil apart Gulf Islands Bon Secour NWR National Seashore New Orleans Breton NWR Gulf of Mexico Oil spill, as of Sunday Delta NWR Apr. 24 Bubbling up Oil is bubbling up from the damaged well about 1,500 meters below. When it hits the surface, it spreads out into a thin sheen. The oil will evaporate and dissolve—unless it hits land first. Pressure forces oil upward 50 miles Deepwater Horizon rig 50 km Source: National Oceanic and Atmospheric Administration leak at 100,000 barrels a day, if the well head were to break. Industry experts said the well pipe appeared to be crimped, curbing the potential leak rate. Adm. Allen said three leaks have been found at the well, adding that the U.S. government and BP needed to “fight this thing offshore” before the slick reached the wetlands. He said this was currently being done “remotely” with robotic tools, until a relief well could be drilled. The spill is one of the most “asymmetrical, anomalous, and one of the most complex things we’ve ever dealt with,” he said. Officials are considering an increasing variety of techniques to deal with the gusher of oil flowing up from the sea floor a mile below the surface. Adm. Allen said officials were looking into the possibility of adjusting dams to increase the flow from rivers draining into the Alabama’s Mobile Bay and then into the Gulf. The hope would be, he said, that the currents would keep the oil slick at bay. Industry experts on Friday said that based on satellite images and standard measuring indexes, the spill rate was an estimated 20,000 to 25,000 barrels a day. Asked on ABC News’s “This Week” if the 25,000 barrel a day figure was accurate, Lamar McKay, head of BP America, said he didn’t know the actual volume. “Estimates of how much oil is coming out are very difficult because you can’t measure in any way accurately.” OCEAN FLOOR Mr. Salazar said he believed BP could stop the leak, but he feared that it could take 90 days to do so. BP is placing a new rig over the leak and will soon attempt to use drilling tools to close it. WSJ.com ONLINE TODAY: Track the oil slick’s progress toward Louisiana’s coast in an interactive timeline at WSJ.com/US. Threats to wildlife often linger for long time BY ROBERT LEE HOTZ Driven deep into Gulf Coast waterways by wind and seasonally high tides, the spreading oil slick from the Deepwater Horizon accident could cause serious ecological and wildlife-health consequences long after signs of surface damage have been erased. Independent studies of several major oil spills, including the 1989 Exxon Valdez accident, show that oil often reaches farther into tidal estuaries than previously thought and can soak into shoreline sediment where it can continue to affect fish and wildlife for 10 or 20 years. In the aftermath of offshore oil spills in Alaska, Massachusetts and Spain, researchers discovered longterm effects on shellfish, crabs, seabirds, whales and sea otters years after the accidents. The problems ranged from altered blood chemistry and higher levels of stress hormones to erratic behavior, contaminated eggs and long-term population declines. “Everyone assumes all the bad stuff happens immediately after a spill and that things get progressively better,” said wildlife biologist Dan Esler at Simon Fraser University in British Columbia. “There are long-term consequences.” Since the Exxon Valdez spill—one of the most intensively studied marine oil incidents in history, Dr. Esler has tracked the longterm effects of the spill among wildlife in Alaska’s Prince William Sound. Last month, he reported ge- Associated Press Dr. Erica Miller treats a Northern Gannet covered in oil from the spill at a facility in Fort Jackson, La., Friday. netic evidence showing that the harlequin ducks there are still exposed to oil. He cautioned that exposure didn’t by itself prove any adverse effect. “We can safely say that oil is not good for you, but how bad it is at the levels they are encountering, we can’t say,” he said. Other follow-up studies have shown that, a decade after the spill, fish in the original spill zone still were being exposed to hydrocarbons, while 17 seabird species had yet to recover. The National Marine Fisheries Service still lists seven species of oysters, clams, ducks and killer whales as recovering from the oil spill. Two species of herring and salmon have shown no signs of recovery even after 20 years. As long as the underwater well in the Gulf of Mexico continues to spew oil, oil will wash into estuaries on every tidal cycle, building up successive layers of silt and oil along the shoreline. The salt marshes and beaches are home to thousands of nesting waterfowl and a rest stop for millions of migrating birds. Emergency workers continued Friday to set up protective barriers around the most vulnerable coastal regions, but the area’s salt marshes and other wildlife refuges are difficult to sequester. And researchers said mangrove swamps, seagrass shallows and marshes are so fragile that any effort to clean them up would do additional damage. To some extent, the Gulf of Mexico is naturally awash with oil seeping from seafloor sediment. In the early 1990s, researchers discovered more than 600 areas where oil naturally leaks into the Gulf from undersea reservoirs. Based on satellite and radar surveys, the researchers estimated that this natural leakage amounted every year to twice the amount of the Exxon Valdez spill, which was about 260,000 barrels. Last year, researchers at Woods Hole Oceanographic Institution in Massachusetts and the University of California calculated that natural oil seeps off Santa Barbara, Calif., had leaked 20 tons to 25 tons of oil every day for thousands of years. Almost all of it had been naturally contained in seafloor sediment. But the concentrated spillage from the Deepwater Horizon well overwhelms the natural background levels, researchers said, and the oil will be carried into more vulnerable intertidal zones. “The oil will come in on the tide and penetrate as far as the tide penetrates,” said marine ecologist Charles Peterson at the University of North Carolina in Chapel Hill. Exposed to the air, the lighter hydrocarbons in crude oil, such as benzene, toluene, xylene and ethylene, evaporate quickly, researchers said. But the heavier carbon compounds, called polycyclic aromatic hydrocarbons, can persist at toxic levels in sediment for years, isolated from the sunlight and bacteria that ordinarily would break these chemicals down. The oil traces can contaminate fish and animals’ food, impair their ability to breed successfully and even alter their natural behavior. Fiddler crabs, for example, in oil-soaked areas stagger and “act like drunken sailors,” Dr. Peterson said. “These are areas where the oil can come to rest and retrain its toxicity and cause longer-term chronic effects,” Dr. Peterson said, “not killing wildlife outright in some spasm of agony—but affecting their fitness, health and growth.” WWW. DEWITT.CH EVERY DEWITT IS BUILT BY A DEDICATED MASTER HOROLOGIST AND EACH INCLUDES AN AUDACIOUS TWIST ON THE CLASSICAL WATCHMAKERS ART. 8 THE WALL STREET JOURNAL. Monday, May 3, 2010 WORLD NEWS: U.S. ‘The Volcker Rule’ finds new life BY BOB DAVIS WASHINGTON—Paul Volcker appears to be winning his campaign to shackle big banks so they can’t turn to taxpayers if they lose money trading for their own profit. For much of last year, President Barack Obama’s economic advisers dismissed Mr. Volcker’s proposals. But on Jan. 21, Mr. Obama stood beside the former Federal Reserve chairman and embraced what he called “the Volcker Rule,” which would bar banks from the risky, often lucrative, trading for their own account. Now, the spirit, if not the letter, of Mr. Volcker’s proposal is embodied in legislation pending in the Senate – and some senators are vowing to toughen the language before the bill is final. In the wake of Securities and Exchange Commission’s charges against Goldman Sachs, the Senate is considering extending the ban to all bank trading in derivatives. Details remain in flux. But bankers are alarmed. Mr. Volcker, energetic—and recently remarried—at age 82, has reshaped the debate. “We’re talking about changing the rules governing global finance for the next 25 or 50 years,” says Harvard University economist Kenneth Rogoff. “Thought leaders like Paul Volcker help shape the accepted wisdom, what gets negotiated with allies, and what eventually gets put into place.” Mr. Volcker argues that the bailouts of 2008 and 2009 established a presumption that the government will save big players, encouraging them to make risky bets and letting them borrow more cheaply than rivals. His solution: limit the government safety net to banks that stick to taking deposits and making loans, and ban them from trading for their own profit or owning hedge funds or private-equity firms. Firms like Goldman Sachs and Morgan Stanley would be forced to give up proprietary trading or surrender banking licenses. If they choose the first, they would be allowed to fail. “We’ll give you a nice coffin and an easy cushion… but you’re not going to be saved,” Mr. Volcker says. Treasury Secretary Timothy Geithner and White House economic adviser Lawrence Summers weren’t convinced. Proprietary trading didn’t ignite or deepen the crisis, they argued. A Volcker rule wouldn’t have prevented Lehman Brothers or American International Group from imploding. The initial Obama regulatory blueprint instead emphasized stiffened oversight of financial institutions and new government authority to take over failing financial firms. “What Volcker wants to protect are traditional banks,” says Jeremy Agecne France-Presse/Getty Images U.S. Senate weighs the kind of curbs on bank trading the former Federal Reserve chief has been promoting Then-candidate Barack Obama , shown meeting Paul Volcker in Florida in 2008. Stein, a Harvard economist who worked in the White House last year. “We have learned that when push comes to shove, we have an interest in protecting any major institution that generates credit.” Mr. Volcker was relegated to chairing a powerless presidential advisory board. But he had prominent allies from Bank of England Governor Mervyn King to Citigroup executives. Former Citi John Reed has said combining investment and commercial banking was disastrous for Citi because investment bankers “overwhelmed the traditional culture that existed [at Citi] and now Citi is in trouble.” Citi’s current chief executive, Vikram Pandit, re- cently wrote Mr. Obama, “I believe banks should be banks serving clients. I believe banks should not speculate with their capital.” The 6-foot-8 Mr. Volcker is stooped nowadays. He walks slowly and doesn’t hear well. But that didn’t stop him from staging an energetic lobbying campaign with stops in Washington, Los Angeles, Berlin, London and Beijing. The tide began to turn in the fall. Rep. Paul Kanjorski (D., Pa.) who credits a dinner in March with Mr. Volcker with shaping his views, won House backing in November for a provision enabling regulators to dissolve major financial institutions, even if they weren’t bankrupt. In the White House, as polls showed that the public viewed him as too friendly to Wall Street. Mr. Obama wanted to make sure he wasn’t seen as regulating “too timidly,” aides say. He invited Mr. Volcker to the Oval Office on Oct. 28 along with Vice President Joseph Biden and Messrs. Geithner and Summers. Though the meeting ended without a decision, Mr. Volcker understood the importance: “The president wanted to re-explore the issue and that was obviously significant,” a participant says. Mr. Biden, who phoned Mr. Volcker for a fuller briefing, urged the president to back the provision, say White House advisers. Objections from Messrs. Geithner and Summers faded. Mr. Geithner now describes the Volcker rule as “part of a framework to impose constraints on excessive risk taking by firms that have the benefit of the public safety net.” The president assigned Mr. Geithner to craft a proposal based on Mr. Volcker’s ideas. The two men met with Mr. Summers at the White House on Dec .23. Mr. Geithner continued the talks with Mr. Volcker the next day, and says he told Mr. Volcker he would recommend that the president endorse a ban on bank proprietary trading. The president did so on Jan. 21. Mr. Volcker promises to keep battling. “I might be old-fashioned, but I stick with it,” he says. Buffett backs Goldman In Business. In Asia. Indispensable. The Wall Street Journal Asia delivers better, smarter, faster and more reliable business news coverage from around the globe and across the region. That’s what you need and that’s what we provide. Visit asia.WSJ.com/subscribe or call to start your subscription today. Hong Kong 2831 2555; Singapore 6415 4000; Japan 0120-440-971; India 1800-102-4783 asia.WSJ.com Continued from first page morning were greeted with strong applause by the crowd—almost entirely made up of Berkshire investors—his comments on Goldman were largely met with silence. “I was surprised by how strong he stood by [Goldman] out of the gate and that he wasn’t more critical of the Wall Street culture,” said Justin Fuller, partner at Midway Capital Research & Management, which closely tracks Berkshire. The SEC suit alleges that Goldman defrauded investors when it created a mortgage investment with the help of a hedge fund that planned to bet against the investment, failing to disclose the fund’s role and position. Mr. Buffett, who invested $5 billion in Goldman at the height of the financial crisis, said he didn’t believe that Goldman had acted improperly. Rather, counterparties to the deals, which plunged in value when the housing market fell apart in 2007, should be responsible for their own actions, he said. Mr. Buffett also said the fact that Paulson & Co., the New York hedge fund that worked with Goldman and ACA to structure the Abacus deal, was on the other side of the Abacus deal was irrelevant. “It doesn’t make any difference whether it was Paulson on the other side of the deal or whether Goldman was on the other side of the deal or whether Berkshire was on the other side of the deal,” he said. Berkshire Vice Chairman Charlie Munger, who told The Wall Street Journal last month that Goldman was engaged in “socially undesirable” activities, told shareholders that he would have voted against an SEC prosecution. But Mr. Munger indicated he believes Goldman may have come closer to the edge of suspect behavior than Mr. Buffett does. “I think it was a closer case than you do,” he told Mr. Buffett during an exchange. Mr. Buffett said the charges against Goldman have hurt the bank’s reputation. “There’s no question that the allegation alone causes the company to lose reputation,” he said. “The press of the past few weeks hurt the company and hurt morale.” But he said the charges need to be proven if they are to have a lasting impact. “I don’t believe that the allegation of something falls within the category of losing reputation,” he said. “If something is proven then you have to look at it.” Paul Howard, an independent insurance analyst who tracks Berkshire, said the defense wasn’t surprising. “Buffett shows his loyalty to those who have helped him over the years,” Mr. Howard said. Berkshire has never paid dividends, and Mr. Buffett is famous for shunning them. At the shareholder’s meeting, he didn’t say anything about a dividend, nor did he utter the word. However, he said the company is now so large and generates so much cash that it might struggle to find investments that are both big enough and offer enough return. “I think we can go out further than I thought 30 years ago,” Mr. Buffett said. “But there is a limit. There will come a time when we cannot intelligently use 100% of the capital we’ve developed internally. Whatever is in the best interests of the shareholders will be done at this point.” —Alistair Barr contributed to this article. Monday, May 3, 2010 9 THE WALL STREET JOURNAL. SPORTS A tennis ‘pusher’ is now pushing back Britain’s Andy Murray bristles at criticism of his defensive game, believes he can win without altering his strategy For a top-10 tennis player, Britain’s Andy Murray is an odd bird. He doesn’t have a devastating signature shot or a 1,000-mile-perhour serve, and he usually doesn’t even try to hit the ball as hard as he can. Now that he’s in a slump, some coaches, fans and former players are beginning to ask an equally odd question of a player who was recently ranked No. 2 in the world: Is Mr. Murray just a “pusher?” In tennis, a pusher is one of the nastiest names a player can call his opponent—it’s an insult more commonly heard at the junior level, where strength and speed are the qualities that make players stand out. Although the exact definition of the term is debatable, it implies a player who refrains from trying to hit winning shots and is content to return the ball with partial strength in hopes of getting the opponent to make unforced errors. “You can’t get to No. 2 in the world and be a pusher,” says former ATP player Justin Gimelstob, a commentator for the Tennis Channel, adding that Mr. Murray, now ranked fifth, is “a tennis genius.” But the pusher approach, wimpy as it may sound, is exactly what the 22-year-old Mr. Murray says propelled him to No. 2 in August 2009. Despite increasing calls from tennis’s elite for him to become a more offensive, aggressive player, Mr. Murray isn’t shy about the fact that he often passes up hard-hitting shots in order to surprise, confuse, frustrate and ultimately exhaust his opponents, who basically all play “the same way.” “I’m quite happy with the way I play,” says Mr. Murray, who lost in straight sets to David Ferrer at the Rome Masters last week but believes he can win his first major this year without altering his strategy. “I’ve had good results, so obviously the game style that I play does work.” In a sport crammed with superpowerful players who boast 140-mile-per hour serves and backhands with brutal slice, it is hard for some to comprehend how Mr. Murray could sleep at night deliberately playing below his physical potential, as he says he does, not to mention freely admitting to feelings of weakness and frustration, as he’s also wont to do. Many coaches say that all could be turning into a self-fulfilling prophecy for Mr. Murray, who lost in the quarterfinals at Indian Wells in March, crashed out of recent tournaments in Miami and Monte Carlo without winning a single set and is still without a Grand Slam win. (He called his own recent performance in Monte Carlo “rubbish.”) Last year at Wimbledon, Andy Roddick’s coach, Larry Stefanki, called Mr. Murray a pusher playing “negative tennis, and that’s not going to win you Slams.” “Murray has the potential to play a lot more aggressively because he has the foot speed, because he can move the ball very quickly, but he has just chosen not to do that,” Mr. Stefanki added. Earlier this year, Boris Becker joined the critical chorus after Mr. Getty Images BY HANNAH KARP Andy Murray during the BNP Paribas Open in March in Indian Wells, Calif. Murray lost to Roger Federer in the Australian Open final, saying the Scot needed to ingrain a “killer shot so deep inside him that it becomes instinctive to play it at the right moment.” “Andy must practice his aggression,” Mr. Becker said at the time, criticizing Mr. Murray for reverting to “his usual defensive game.” Even coach Nick Bollettieri, one of Mr. Murray’s biggest fans, says it would be “virtually impossible” for him to win a Grand Slam event without a “bread-and-butter shot.” Though the founder of IMG Nick Bollettieri Tennis Academy argues that pushers aren’t the “sissies” they appear to be because they “beat the crap out of a lot of people” by breaking their opponents down mentally, pushing “is not enough to win Slams in today’s world,” he says, adding that Chris Evert, one of history’s most successful pushers, would probably have trained to develop one big shot were she playing on the circuit today. Of course, there have been some pusher standouts. The legendary Bjorn Borg was a pusher who once told Mr. Bollettieri at his academy that his philosophy was simply trying “to get one more ball over the net than my opponent.” American Michael Chang reached No. 2 in 1996; Brad Gilbert, who spent five years among the ATP’s top 10 and coached Mr. Murray from 2006 to 2007, was also notorious for upsetting opponents by destroying their rhythm with his defensive—if not always dazzling—tactics. But Monica Seles says that by the time she hit No. 1 in 1991, the “retrievers,” as she prefers to call them, like Arantxa Sánchez-Vicario and Amanda Coetzer, also had “weapons they could hurt you with.” “I don’t think [Mr. Murray] could be in the top 10 if he was just pushing,” Ms. Seles says, though she added that she hasn’t closely followed his career. But Mr. Murray insists his defensive game is his weapon, unconventional as it might be, and he doesn’t see reverting to it, instead of to a killer forehand or breakneck backhand, as a sign of weakness. He says his failure so far to win a major event isn’t a mental problem, either. “I just need to get back on the practice court,” Mr. Murray says. “That’s what makes me feel good.” Mr. Murray traces his unusual style to his training in Barcelona, where he moved as a 15-year-old to attend the Academia SánchezCasal and improve his skills on clay. There, he says, most of the players were older than him and hit hard from the baseline, so, being small and scrawny by comparison, he had to find “different ways to win points” over more powerful players. “He tangles you up in these rallies and you can’t do anything about it because if you play too aggressively you lose and if you play too passively you lose,” Mr. Federer told reporters after narrowly beating Mr. Murray 6-3, 6-4, 7-6 for the Australian Open title earlier this year. British fans, of course, don’t share Mr. Murray’s patience. The U.K., which hasn’t boasted a player of Mr. Murray’s caliber since England’s Fred Perry in the 1930s, has been salivating over the possibility of Mr. Murray’s first Grand Slam victory since before he hit puberty, when he beat his brother, then the second-best junior player in the world, in an under-12 final. Fans and reporters have taken to lining up outside Mr. Murray’s London home anytime they get wind of a controversial comment, which isn’t all that infrequent given the Scot’s affable nature and his penchant for posting his thoughts on Twitter about everything from fantasy soccer to his least favorite pizza toppings. Now, though, with his 23rd birthday approaching this month, Mr. Murray says his own patience may finally be wearing thin. “I don’t feel that young on the tour anymore, whereas a couple years ago there was less pressure. I need to get a move on,” he says. 10 THE WALL STREET JOURNAL. Monday, May 3, 2010 ON OTHER FRONTS Icelandic translators in high demand BY CHARLES FORELLE Translators wanted from Icelandic to English — plenty of work! “I don’t think I ever did bankruptcy before,” says Keneva Kunz, Vantar þýðendur úr íslensku á a Canadian-born translator workensku—næg vinna! ing in Iceland for over 20 years. If you know what that means, “In the last year and a half, I don’t then Iceland has a job for you. think I’ve done anything else.” Iceland’s banking system has colBusiness erupted last fall when lapsed, its economy is in turmoil Iceland rushed its application to and its volcano has blotted the the European Union. The Icelandic sky with ash. currency had sunk with the banks, As a result, things have never and the island’s leaders were sudlooked better for the small cadre denly anxious to ditch their króna of Icelandic translators who renfor the euro. der the North Germanic tongue of The EU application included 320,000 island-dwellers into 2,500 questions. (Chapter 24, something the rest of the world question 69: “What is done in the can understand. field of crime prevention? The remnants of IceHow is this linked to the land’s three major banks threat assessment model conduct creditors’ meetand identified prioriings in Icelandic. Many of ties?”) Government offithe creditors are foreign. cials answered some of Interpreters are needed. them in Icelandic. Then Among the assignthe translators took over. ments: bankruptcy cases, The responses ran 8,870 criminal probes, fraud pages. suits and, earlier this A decade ago, Iceland month, a 2,000-plus-page didn’t have much of a report on the banking banking sector to speak Keneva Kunz mess—solid gold for a of. A privatization camtranslator—produced by a paign changed that. Add a “truth committee” of the Alþingi bit of Viking derring-do, and soon (that’s parliament). the banks were wheeling and deal“A big uptick for me,” says ing in Britain, the U.S. and Asia. Daniel Teague, an American transEventually, assets of the three big lator who has lived in Reykjavík banks reached 10 times Iceland’s for decades. annual economic output. The trend was great for practically everyone. Translators, too. The banks produced lush reports, which needed to be put in English for foreign investors. Jón Skaptason did a lot of that. After the banks collapsed in 2008, his translating gigs waned. But there was a bright side. “Many of the freelancers who formerly worked for the banks are now busy working for the people who are suing the banks,” he says. Icelandic students learn English in school, and a visitor to Reykjavík will find coffee-bar cashiers, hotel attendants and fishermen who speak like the British Queen. But Icelanders are fiercely proud of their language, which has changed little in 800 years. They’ve resisted the Anglicization of officialdom. Everything is done in Icelandic. There are three genders, four cases and a bewildering rubric of declensions. Not to mention two letters absent from the Latin alphabet. Even the best translators need special skills—especially in areas like finance. Icelanders may have imported their banking fervor, but they made up local words to reference the sector. Like skuldavafningur. (That’s a collateralized debt obligation, to English speakers.) Occasionally several people made up words. That explains why some Icelanders call a CDO a skuldabréfavafningur. Translator Páll Hermannsson prefers the crisper-sounding skuldavafningur for CDO. Literally, he says, it means “debt wrap.” After the financial collapse, each bank got a skilanefnd and a slitastjórn. “Meaning what?” asked the Anglophones who lent gobs of money to the now-defunct banks. No one could agree. A few finance specialists huddled with the central bank’s translator and came up with English definitions: “resolution committee” and “winding-up board.” “The debt is not a problem,” says Ms. Kunz. “But what to call it is.” Gauti Kristmannsson, an associate professor of translation at the University of Iceland, trains the next generation. Fifty students take his two-year masters’ program. He’s expanding next fall, to meet the expected demand from the EU. If Iceland gets in, he says, the bloc will need 100 translators to shuttle between Icelandic and the 23 current official languages. To Mr. Kristmannsson, the world is lost without translation. “Why do people struggle with this Eyjafjallajökull?” he asked, on the topic of the misbehaving volcano. He patiently coached foreign journalists on its pronunciation, which requires a flutter of staccato gurgles and alveolar gymnastics beyond the ken of ordinary Anglophones. One top-10 list’s leader is an also-ran for another’s BY CARL BIALIK Is Vancouver the world’s best city to live in? Or is it Vienna? Two different rankings provide two different answers. No U.S. city makes either rankTHE ing’s Top 20 list, but NUMBERS then American cities GUY are busy competing for such titles as safest, drunkest and worst housing market. Other closely watched lists rate hospitals and schools. “There is something about lists that just draws people’s attention,” says Peter Meyers, who oversees rankings for Relocate America, an informational Web site that last week named Huntsville, Ala., the top place to live in the U.S. While rankings are ubiquitous, so are their flaws. Some suffer from bad or misinterpreted data, or lack of transparency, or arbitrary weightings. Rankings also purport to draw distinctions between top-ranked entities when, statistically speaking, there is very little light between them. The better rankings take steps to mitigate these problems—and let users produce versions that match their own preferences. However rankings are designed, they can’t overcome data problems. Forbes.com learned this last month when it ranked the 10 worst housing markets in the country, with Milwaukee finishing last and Denver second from the bottom. The list quickly drew scrutiny from Denver Mayor John Hickenlooper, who called Forbes to question the results. “We were in the process of coming out of [the housing downturn],” says Mr. Hickenlooper. “To hear that we’re lagging just didn’t make sense.” Two weeks later, Forbes retracted the ranking, blaming a misuse of inventory data from real-estate site Zillow.com. Zillow regularly adds vendors to its database, so an increase in listed houses from year to year might reflect more listings on Zillow rather than a real-world rise in homes that aren’t selling. “It’s not necessarily a complete picture over time of what’s happening in those markets,” says Stan Humphries, Zillow’s chief economist. After announcing the problems with the ranking, Forbes withdrew both the ranking and the retraction from its Web site. “We couldn’t rerank in any meaningful way, so we didn’t,” Paul Maidment, editor of Forbes Media, said in an email. How can consumers know when rankings are based on solid data? It helps when the methodology behind the list is disclosed. The Economist Intelligence Unit, a sister organization to the Economist magazine, is upfront about its methods for ranking the world’s cities by livability. Each of 140 cities is rated by local correspondents on dozens of categories Better living Using different methodologies and data sources, the Economist and Mercer come up with different lists of the world’s most livable cities. Economist Vancouver (B.C.) Vienna Melbourne Toronto Calgary Helsinki Sydney Perth Adelaide Auckland Mercer 1 2 3 4 5 6 7 8 9 10 Vienna Zurich Geneva Vancouver (B.C.) Auckland Dusseldorf Munich Frankfurt Bern Sydney Sources: Mercer, Economist Intelligence Unit; photo by Getty Images (Vancouver) Note: Vancouver and Auckland are tied for fourth in Mercer’s ranking, and Perth and Adelaide are tied for eighth in the Economist’s survey. on a rather dour scale of intolerable to acceptable. (New York’s terrorism risk rates “uncomfortable,” while its roads are classified as “tolerable.”) These are vetted by staff and compared with objective measures such as publicly available statistics on crime, education and climate. Scores are combined and weighted to give more importance to categories deemed significant by the staff. Under that system, the EIU rates Vancouver the world’s best place to live, with a score of 98 out of 100. Vienna is second with 97.9. The variations between the EIU’s rankings and another highprofile list of most-livable cities illustrate the difficulty consumers can have in trying to glean meaningful information from these reports. Consulting firm Mercer uses some similar criteria to the EIU to rate cities, as well as a few unique categories, such as air pollution and currency-exchange rules. The results have some similarities—both rank Vienna and Vancouver in the top four, but in different order—and some major discrepancies, such as Melbourne, which is third on the EIU list but 18th according to Mercer. Livable-city rankings can be misleading even when the methods used are transparent. The differences between the first- and second-place cities on these lists are so minute as to be statistically insignificant, yet Vancouver and Vienna get the bragging rights for first-place scores. Even a 56thplace finisher like New York scored 87 points, according to the EIU, which still places it comfortably in the top tier of cities. Monday, May 3, 2010 THE WALL STREET JOURNAL. OPINION: REVIEW 11 OUTLOOK The Recovery So Far P resident Obama Friday hailed the economy starts to create more new jobs first quarter growth rate of 3.2% than it has so far. as “an important milepost on the We expect better job creation this road to recovery,” and let’s hope he’s year than many economists are predictright. From our own current vantage ing, but it’s notable that White House point, the first quarter numbers reveal economist Larry Summers warned Friday a respectable cyclical recovery, though that joblessness is likely to be an endurone that is so far less robust ing problem even as the economy than we’d expect after an espegrows. White House aides don’t cially deep recession. tend to broadcast such pessimisWhich is not to say the tic thoughts in an election year growth isn’t welcome. The quarwithout cause. ter is the third in a row in which One way to judge the strength the national supply of goods and of a recovery is to compare it to services expanded, after an enthe growth after downturns of tire year of contraction, and the similar severity. The best recent report contained some good comparison to the recession of news. The American consumer, 2008-2009 would be that of 1981who was supposed to have gone Larry Summers 1982. They had different on strike, increased spending by causes—interest rate increases in 3.6%, the most in three years. Ameri- 1981 and a financial shock in 2008—but cans are recovering their spending con- both periods had steep declines in output fidence. Inventories also continued to and jobless rates that hit 10%. rebound, accounting for 1.57% of the The 1982 recession officially ended in 3.2% growth total, another sign of a November, and the recovery came roarnormal upward turn in the business cy- ing out of that year, gaining momentum cle. throughout 1983 and carrying 8% On the down side, fixed investment in growth into 1984 with an expansion the likes of capital goods and buildings that lasted six more years. The nearby added little to growth. This is surprising table shows the growth rates in the given buoyant corporate profits, though first four full quarters after the recesperhaps investment will pick up as resi- sion ended. dential housing and commercial real esBy comparison to that boom, the curtate recover later in the year. This all rent recovery has been about half as means the economy is growing but still strong. The arbiters of the business cynot firing on all cylinders. Consumer cle at the National Bureau of Economic spending will only remain brisk if the Research still haven’t officially called the end of the 2008tries. The groundAfter Deep Recessions 2009 recession, work for a durable Quarterly GDP growth, seasonally though the economy expansion had been adjusted on an annual basis has been growing for laid in lower taxes, 1982 2009 at least 10 months. lower inflation and IV 0.3% III 2.2% Considering how far lower business costs. the economy fell in In the current re1983 IV 5.6 2008 and 2009, and covery, the policy 2010 I 5.1 considering Washingheadwinds are very II 9.3 I 3.2 ton’s extraordinary different. Taxes are monetary and fiscal set to rise signifiIII 8.1 reflation, this recovcantly on January 1, IV 8.5 ery is much less im2011, and the political pressive than that of class is signaling the Source: Commerce Dept., Bureau of Economic Analysis 1983. need for still more The stock market taxes to pay for the has been signaling more growth ahead, costs of stimulus and the expanding entiand the last two recoveries—after the tlement state. mild recessions of 1991 and 2002—also As for monetary policy, the Fed has started slowly but eventually gained held short-term interest rates at close to steam. Perhaps that will happen again. zero for 16 months. The only question is One advantage this time over 1983 is that how soon and how high rates will rise. the emerging economies—China, India Meanwhile, Washington is raising costs and Brazil—are now so much larger and for business by expanding its regulatory are growing much more rapidly. reach via tougher antitrust enforcement, But it’s also worth noting another mandates on health care and energy, less than favorable contrast with the re- more political limits on telecom investcovery of 1983: government policy. The ment, restrictions on bank lending, and full incentive-enhancing impact of the much more. 25% Reagan reduction in marginal tax The White House bet is that the Great rates finally kicked in on January 1, Reflation that began in December 2008 1983, and Paul Volcker’s Federal Reserve has ignited a recovery that is strong was starting to cut interest rates from enough to blow through these obstacles the record highs that broke the back of and become another long-lived expaninflation while causing the recession. At sion. We certainly have a decent recovthe same time, an era of deregulation ery. Regarding its strength and duration, was lowering costs across most indus- the jury is still out. The Price of Greece W e wrote the other day that 13.6% of GDP, Spain’s is 10.4% and PortuGreece was Europe’s version of gal’s is 8.7%. Bear Stearns, but after this On the other hand, S&P’s downgrade weekend we may have to reconsider. The last week cited Spain’s reduced growth better analogy may be Citigroup, albeit prospects. As the nearby table shows, with less upside. Europe is emerging from this recession In 2008-2009, the U.S. Treasury had as the world’s growth laggard. In a global to increase the size of its Citigroup bail- economy that the International Monetary out three times, includFund estimates will exing a guarantee against pand by more than 4% losses on some $300 World Growth Forecasts both this year and next, billion worth of assets. Percentage increase in GDP the euro zone will conIt ended up owning tribute a meager 1% 2010 2011 most of the bank. and 1.5%. Even Japan 1.0% 1.5% Europe’s price for Euro area will do better. So credirescuing Greece is now Brazil tors will have cause to 5.5 4.1 escalating in similar ask which will come 10.0 9.9 fashion, with a bailout China first: faster growth or plan worth up to €120 India the next ratings down8.8 8.4 billion ($158 billion) Japan grade? 1.9 2.0 over three years apThe neo-Keynesians 1.3 2.5 proved yesterday by United Kingdom who dominate today’s Athens and eurozone United States economic decision-mak3.1 2.6 finance ministers. For ing seem to believe that those keeping score at Sources: International Monetary Fund, Milken Greece merely has a liInstitute home, that’s nearly half quidity problem that EU of Greece’s annual cash can solve. Eurogross domestic prodpean politicians and uct. Europe may end up owning Athens their media friends are also blaming the too, or at least its debts. mess on the credit raters for having the Meanwhile, Standard & Poor’s on ill-grace to downgrade debt in the middle Wednesday downgraded the debt of of a crisis. Where were these critics when Spain, which is supposed to be one of the some of us were fighting to get the credit countries rescuing Greece. So in order to raters stripped of their U.S. governmentsave Greece’s creditors from taking favored status? Now the Europeans are losses, Europe’s politicians will further merely shooting the messenger. burden the balance sheets of its other inThe unhappy reality is that Greece is debted nations. This bailout bet might busted and its political-economic model pay off if Europe’s paltry economic re- has reached a dead end. It has lived for covery gains enough steam to reduce years off the one-time credit benefits various national deficits over time as a from entering the euro zone but without share of GDP. Greece’s annual deficit is living up to the discipline of the euro’s Stability and Growth Pact. lead to a major fiscal and also structural Other euro nations were complicit in adjustment.” He has no choice but to say allowing that abdication, and now the this to sell the plan to German taxpaybill is coming due. If a debt restructur- ers, but he may have a harder time selling is inevitable, then ing Greeks on the pain it’s far better to accept once they realize the pain now and get it The euro zone they’ve been saved over with. German and from default. Creditors, will pay dearly French banks would too, will get the mestake losses, but those in credibility. sage that they can keep would be more beartaking a flyer on highable now that the yield euro-zone bonds world economy is recovering. If the without fear of losses. banks do falter, then our guess is that At least Citigroup is making money European taxpayers would rather spend again—thanks to the taxpayers and the their money recapitalizing those banks Federal Reserve—and the U.S. Treasury instead of backstopping the retirement is beginning to sell its ownership stake. benefits of Greek civil servants. The Europeans may not be as lucky with Regarding the costs of a bailout, they Greece. will also be paid in euro-zone credibility. The Greek crisis is precisely the danger that economist Robert Mundell, one of Pepper . . . and Salt the euro’s architects, foresaw in the late THE WALL STREET JOURNAL 1990s if the Stability and Growth Pact wasn’t enforced. The looming bailout is a political shock to Germany and other northern Europeans who were told they wouldn’t have to pay for southern Europe’s bad habits. That shock makes the recent chatter of a new European political union seem fanciful. The single currency can survive this, but you can forget the heady predictions that the euro will soon challenge the dollar as a global reserve currency. For the foreseeable future, the euro zone will be dominated by its sovereign-debt woes. Olli Rehn, the EU’s economic and monetary affairs commissioner, is advertising that the bailout will impose on “I’m no longer the grim reaper. I prefer to be known as an ‘end-of-life provider’.” Greece a “multiannual program that will 12 THE WALL STREET JOURNAL. Monday, May 3, 2010 OPINION The Right’s Happy Warrior BY JAMES TARANTO New York Over lunch in midtown Manhattan, Bob Tyrrell explains his political philosophy: “I define conservatism, stealing heavily from the British philosopher Michael Oakeshott, [as] a temperament to delight in life, liberty and the pursuit of happiness.” This may or may not accurately describe the average American conservative’s temperament, but it certainly captures that of the man who writes under the portentous byline R. Emmett Tyrrell Jr. I’ve known Mr. Tyrrell for years and have yet to see him in an angry or foul mood. His jaunty spirit has seen him through personal and professional adversity, most famously a Clinton Justice Department investigation of the magazine he edits, The American Spectator, which in the 1990s published a series of inves- ‘I’m optimistic, but it’s sort of like being optimistic in 1939 and saying, I think we can beat the Germans.’ tigative pieces about Bill Clinton. (Disclosure: I have been a regular contributor to the Spectator since 2006.) The investigation, which concerned claims of witness tampering in the Whitewater independent counsel probe, produced not a single indictment. More recently the adversity has been political, and this is the topic of his latest book, “After the Hangover: The Conservatives’ Road to Recovery.” As the 2006 election was approaching, Mr. Tyrrell recalls, “I started to notice that the elected Republicans in Washington all looked a little wobbly on their feet, and [had] runny eyes. They looked in absolute ruin. And I said, ‘These guys have all been on a terrible bender. They’re all suffering a terrific hangover.’ . . . I mean no insult to sailors, but they were spending like drunken sailors, and things kept getting worse and worse.” The reason for their dissolute state? “They were veering far from conservative principle,” Mr. Tyrrell says. “People started dabbling with ‘compassionate conservatism’ and ‘heroic conservatism,’ and they kept trying to qualify conservatism. Why didn’t they ASIA Almar Latour, Editor in Chief, Asia Peter Stein, Associate Editor Dean Napolitano, Senior Editor Mary E. Kissel, Editorial Page Editor Philip Owens, Circulation Director Shawn Hiltz, Marketing Director Alice Chai, Research Director Connie Cheng, Operations Director Simon Wan, IT Director Olivier Legrand, General Manager Digital Christine Brendle, Publisher Published since 1889 by Dow Jones and Company © 2010 Dow Jones & Company. All Rights Reserved jk just say ‘libertarian conservatism’ and move on?” The GOP seemed to hit bottom in the fall of 2006—until 2008, when Barack Obama took the White House and Democrats expanded their majorities in Congress. This prompted liberal commentators to pen a spate of triumphant obituaries for conservatism. Typical was an essay by Sam Tanenhaus in The New Republic’s Feb. 18, 2009, issue. Mr. Tanenhaus, the New York Times’s book review editor and author of a well-regarded biography of the storied anticommunist Whittaker Chambers, declared: “Movement conservatism is exhausted and quite possibly dead.” Mr. Tyrrell didn’t believe it. “This writing obituaries for conservatism has been going on a long time,” he says. “Conservatism has been dying, to listen to liberals, ever since it was born in the early ’50s. Conservatism, I suspect, is the longest-dying political movement in the history of American politics.” Last September, Mr. Tanenhaus’s essay was published in book form as “The Death of Conservatism.” By that time it was already clear that Mr. Obama’s pursuit of a sweeping liberal agenda had shocked the movement very much back to life. “You didn’t see Obama running for high office claiming he was going to raise your taxes and expand the government like you’ve never seen before,” Mr. Tyrrell says. “Much the contrary, he talked like he was a moderate.” Mr. Tyrrell finds liberals’ attitudes to be as vexing as their policies: “There is only one political value that they have stood by through three generations, and that is the political value of disturbing your neighbor.” If conservatism is a temperament, he adds, “liberalism is an anxiety—an anxiety about life, liberty and the pursuit of happiness, which explains their eagerness to coerce, to tax, to social-engineer.” Conservatives, by contrast, “react against coercion.” Mr. Tyrrell agrees with activist Grover Norquist’s “wonderful” description of the conservative movement as the “leave-us-alone coalition.” “That doesn’t mean we just want to be left alone to live in some sort of onanistic trance,” he says. “We want to be left alone so that we can take delight in culture, take delight in our farms, take delight in our families, our churches, our lack of churches—whatever.” i i i A disinterested observer might note that many people who lean leftward politically also delight in culture, family and even church. And although I’ve encountered enough exasperating liberals to see more than a grain of truth in Mr. Tyrrell’s characterization, it is also doubtless the case that one is more apt to perceive the disagreeable qualities of people with whom one disagrees. To be sure, Mr. Tyrrell makes no pretense of impartiality. He is very much a movement conservative and has been since his days at Indiana University, where he founded the Spectator (originally called The Alternative) in 1967. The original headquarters was “a rambling old farmhouse that had just been vacated by a former Playboy model, who left an ungodly mound of empty prescription bottles.” Mr. Tyrrell describes how the conservative coalition has grown over the years: “Conservatism started with three branch groups—the limited government [group], who were eventually called libertarians; the traditionalists, like Russell Kirk, who believed in traditional views of employee named Paula—says he considers sexual-harassment law “an abomination. . . . I don’t think that some person working in a cafe, suddenly feeling harassment, sensing hostility, should be going off to the government with a lawsuit. I think they ought to just either tell the person to have proper courtesy or get a different job. . . . I don’t approve of it. I don’t even approve of it applying Western values; and the anticommunists. . . . As life has gone on, we picked up other constituencies, completely—not completely different from us, or we wouldn’t have picked them up, but quite startlingly different from us,” he says. In the 1960s and ’70s, neoconservatives, “which is to say, liberals who had become impatient with liberalism,” joined the fold. Then came the Reagan Democrats and the religious right. “The evangelicals were people that hadn’t been in politics,” Mr. Tyrrell says. “These were people who had thought there were settled customs in this country: Prayer in public schools was going to be allowed; abortion was going to be outlawed; pornography was not going to be available at the corner drugstore. And lo and behold, the liberals foisted all of these things on the evangelicals, who became political—not aggressively political, but defensively political.” One may counter that some liberal policies appeal to leave-usalone sentiments as well. When proponents of legal abortion insist on being described as “prochoice,” for instance, it is not only to veil the unattractive choice they defend, but also to cloak themselves in the mantle of individual freedom. Another example: At one point during our conversation, Mr. Tyrrell—whose magazine was the first to report that a former governor of Arkansas had allegedly made swinish advances on a state to Bill Clinton.” But there’s another way of looking at the question: What is a meritorious claim of sexual harassment other than a plea to be left alone? i i i These objections, however, reinforce Mr. Tyrrell’s broader argument. If most of the right and center and even some of the left consist of people who want, in one way or another, to be left alone, that doesn’t leave much of a constituency for higher taxes and increasingly intrusive government. That explains why ObamaCare is overwhelmingly unpopular, why Mr. Obama himself is increasingly so, and why conservatism has enjoyed a revival sooner than just about anyone thought possible. Mr. Tyrrell also takes heart in the dissipation of what he terms the Kultursmog—his own Germanic coinage, which he defines as “the complete domination of mainstream political culture for so many years by one point of view: the liberal point of view. They’ve polluted the political discourse in our country.” Today’s mainstream liberal culture has absorbed the counterculture of the 1960s, but “there is a conservative counterculture that’s developing,” he says, pointing out the success of Fox News, the Journal, talk radio and conservative websites. “The Kultursmog is losing its influence because of the rise of our counterculture.” The conservative counterculture, like that of the 1960s, in- Terry Shoffner [ The Journal Interview ] with R. Emmett Tyrrell cludes a protest movement. Mr. Tyrrell calls the tea parties “a civic upheaval of people . . . who, without any particular indoctrination, have come forward with an understanding of the American Constitution . . . a high regard for individual liberty, a deeper understanding of the essence of America than some professor of romance languages at Rutgers.” Or, for that matter, than what Mr. Tyrrell calls “reformed conservatives.” These “opportunists,” as he characterizes them, “who advance themselves in the media by slighting and sniping [at] conservatives and conservatism. . . . . They’re ‘reformed,’ they’re ‘enlightened,’ and the reason liberals treat them well is because all of their recommendations are recommendations about how conservatism should move from its conservative foundations, its libertarian foundations, and become good liberals.” Has the Republican Party—staggering and bleary-eyed in 2006, left for dead in 2009—sobered up enough to lead effectively if the voters give it the opportunity? “I think people like Paul Ryan, Mike Pence, Mitch Daniels”—respectively, representatives from Wisconsin and Indiana and the Hoosier State’s governor—“are people of ideas. . . . If they gain influence in the Republican Party, as I hope they will, I think the future’s going to be good for the Republican Party. . . . “This country is facing two grave threats. The one is the ongoing threat from Islamofascism, terrorism, and the other is this enormous budgetary overhang.” Can the GOP, which in the ObamaCare debate positioned itself as Medicare’s resolute defender, credibly take on the entitlement-fueled budget crisis? “I remain an optimist,” Mr. Tyrrell says. “I think things really have gone so far, have gotten so bad, that if the Republicans get in, they’ll have to do something.” He reflects for a moment, then qualifies his assessment: “I’m optimistic, but it’s sort of like being optimistic in 1939 and saying, ‘James, I think we can beat the Germans.’” Mr. Taranto, a member of The Wall Street Journal’s editorial board, writes the Best of the Web Today column for OpinionJournal.com. Notable Quotable Shikha Dalmia writing in an op-ed at asia.WSJ.com/opinion: Progressives in India—as in America—believe that equal protection of individual rights is insufficient to create equality because it does nothing to address private discrimination. Protecting the property rights of persecuted castes is hardly enough if they can’t get jobs in the first place. Hence, in their view, government has to give persecuted groups a leg up to equalize opportunity. But this turns the system into a zero-sum game, triggering a race for the spoils in which powerful groups can seize the advantage. . . . India’s lesson is that abrogating individual rights through group preferences or quotas institutionalizes the very divisions that these policies are supposed to erase. Monday, May 3, 2010 13 THE WALL STREET JOURNAL. OPINION BY NICHOLAS EBERSTADT As the U.S. and its allies frame plans for dealing with North Korea in the aftermath of the recent sinking of a South Korean warship, political leaders must recognize that security will depend not just upon deterring Kim Jong Il today. Northeast Asia’s future security—and America’s—will be profoundly affected by the government presiding over the northern half of Korea in the long run. For this reason, Korean unification—under a democratic, marketoriented Republic of Korea that remains allied with the U.S.—must However difficult, unification must be the ultimate objective. be the ultimate objective. Today that looks like a daunting and risky prospect. But to paraphrase Churchill: Unification would be the worst possible outcome for Korea—except for all the other alternatives. Consider first an indefinite continuation of the Kim Jong Il regime. This means on the one hand terror and grinding immiseration for its people. But on the other, it means a regime that poses a continual threat to its neighbors and to the world. North Korea’s nuclear arsenal is integral to the international military extortion racket by which Pyongyang has been financing its state accounts since the end of the Cold War. More atomic bombs, better missiles by which to deliver them abroad, and a permanently warlike posture are indispensable to the regime’s own formula for long-term security. This is why a voluntary denuclearization by Kim Jong Il’s North Korea is fantasy—no matter what bribes outsiders including the U.S. offer—and true détente with the Dear Leader’s regime can never be in the cards. North Korea’s present leadership will surely wish to ratchet up its threat to America and the Western alliance in the years ahead. It is entirely reasonable to anticipate Pyongyang’s eventual sale of nukes to hostile powers or international terror networks. The regime has already marketed abroad practically everything in its nuclear warehouse short of user-ready bombs. Even worse, there are troubling signs—repeated nuclear tests, continuing missile tests, and attempts at cyberwarfare probing American and South Korean defenses—that the regime is methodically preparing to fight, bizarre as it sounds, a limited nuclear engagement against the U.S. What about an independent, post-Kim Jong Il North Korea? A number of scenarios can be envisioned—none of them pleasant. If succession proceeds on the lines apparently envisioned, the state’s existing “military-first politics” game-plan will continue on its current trajectory, with nuclear proliferation and nuclear war front and center in state strategy. Another future for an independent North Korea could be internal instability, with vicious infighting between rival, heavily armed factions. Under such conditions, a civil war—with nuclear weapons—is by no means out of the question. A national elite that had no qualms about the hundreds of thousands of civilian deaths from famine in the 1990s is unlikely to be troubled by the prospect of mass domestic death from atomic radiation. Such a civil war could all too easily spill into ad- joining territories—necessitating intervention by outside powers, and possibly prompting military confrontation. Then there is the potential for Chinese suzerainty. This notion has been floated by Chinese authors in recent years, in the form of “academic” but officially sanctioned studies that depict an ancient kingdom—conveniently stretching from Manchuria to the current-day Korean DMZ—which was once historically part of greater China. In February, Beijing reportedly offered Pyongyang a massive investment program, valued at $10 billion by sources for Seoul’s Yonhap news agency. But China is apparently interested in North Korea’s natural resources—mines, mineral extraction, and the transport systems to ship these commodities home—not its human resources. Uplifting the beleaguered North Korean population does not appear to figure in these plans. Chinese suzerainty might put an end to the North Korean nuclear threat. But it would change the security environment in East Asia—perhaps radically. Immense pressures would build in South Korea for accommodating Beijing’s interests. Depending on China’s preferences (and how these were parlayed), accommodation could mean an end to the U.S.-South Korea alliance. Japan would find its space for international maneuver correspondingly constricted; continuation of the U.S.-Japan alliance could even look risky. Much would depend upon Beijing’s own conduct—but a Chinese hold over northern Korea would have devastating implications for the current U.S. security architecture in East Asia. It is in the context of the alternatives that the pros and cons of an eventual Korean unification must be weighed. Even under the best of circumstances, a full reintegration of the long-divided peninsula should be regarded as a painful, wrenching and (at least initially) tremendously expensive proposition. That helps to explain why a growing fraction of the South Korean public is unwilling to think about reunification at all. But a successful Korean reunification, in conjunction with a robust alliance with the U.S. security alliance, affords a whole array of potential benefits that no alternative future for North Korea can possibly provide. Apart from the nontrivial question of human rights and living standards for the North Korean people, these include the promotion of regional and international security through a voluntary partnership with shared core principles and values. Furthermore, unification over the long haul can David Klein The North Korea Endgame enhance security throughout Northeast Asia, generating dividends for this dynamic region and the world. Western political leaders—in America, South Korea, Japan and elsewhere—can have no idea when or how opportunities for Korean reunification will present themselves. Much the same was true a generation ago in Europe, on the eve of German unification. It is therefore of the essence that policy makers and statesmen in these allied countries devote themselves to the rigorous thinking and preparations that will help to improve the odds of a successful Korean reunification. This will require “contingency planning,” to be sure—but much more than this as well. Not least will be the need for leaders of vision in the countries concerned to make the public case as to how and why a Korean unification serves their national interests. Compelling arguments to this effect already exist. What they lack are their national champions. Two decades after the collapse of Soviet Communism, political leaders throughout the West all too generally seem in thrall to the hope that we can temporize our way through the North Korean problem. In one possible version of future events, historians might look back on such thinking as an interwar illusion—a reverie maintained at mounting cost until a final hour of reckoning. Mr. Eberstadt is a scholar at the American Enterprise Institute. His latest book is “Policy and Economic Performance in Divided Korea during the Cold War Era” (AEI Press, 2010). Asia’s Next Trade Trend BY LAWRENCE WEBB With all eyes on the lookout for clues as to the direction of a global recovery, look to trade flows. The story that is unfolding is not about the international economic pie being sliced differently, with the winners taking market share from the losers. Rather, the global market is expanding and evolving—a development that will result in more opportunities for more players to benefit. The majority of exporters and importers around the world are bullish about trade prospects in the next six months, according to new data released today by my bank, HSBC. Traders in Latin America, the Middle East and Greater China are the most optimistic. However, across all markets, at least half of all traders—including those from developed markets such as the United States—expect trade volumes to rise. With world GDP growth set to recover to 3.1% by year end, world exports are forecast to rise exponentially by 9.2%. This positive outlook is a reflection of the opportunities pre- sented by the rise of the emerging world and expanding middle classes in countries such as China, India and Brazil. Companies who used to ship to the West are now tapping into the purses of emerging markets households. China’s Haier Group, one of the world’s largest white-goods manufacturers, started distributing washing machines in Latin America last year, diversifying from the competitive and saturated markets of the U.S. and Western Europe. More broadly, U.S. exports to China last year totaled $69.6 billion, according to the U.S.-China Business Council. This represented an increase of 330% from 2000 and significantly outpaced the 29% growth in U.S. exports to the rest of the world during the same period. Similarly, the U.S. has seen exports to Brazil grow by more than 70% in the last decade to total $26 billion in 2009, making it America’s second-fastest-growing export market after China. This export growth is happening despite still-weak demand in the West. From November to January this year, emerging Asia’s exports to its neighbors rose 40% when compared to the same period last year, while shipments to Europe only grew 3%. Exports to the U.S. rose 4% to support inventory restocking, but the value of those goods was still 25% below the pre-crisis peak. As developing economies consume more, new markets open for developed-country exporters to tap. Taken together, these trends suggest intraregional trade will play a greater role in underpinning future global trade activity—especially among developing countries, which increasingly shape trade patterns. By the end of the year, consumer spending in emerging markets is set to grow nearly five times faster than in the West. This is most evident in Asia, where exports are at their highest levels since before the economic downturn and growing domestic consumption continues to propel growth. More and more goods be- ing shipped to China, for instance, are now consumed locally instead of being re-exported to developed markets. In the past few months, shipments of Korean electronics to China spiked but without the corresponding jump in Chinese exports to the U.S. that would reflect the trans-shipment of goods from Korea through China to the U.S. Regionally, electronic exports are down only about 4% from their alltime highs, compared to U.S. retail sales of electronics that are still 13% below their previous peak. This export growth paid off during the turmoil of 2008 and 2009. The U.S. continued to supply China’s and Brazil’s growing appetite for computers and electronics, agricultural products, chemicals and transportation equipment. The resilience of U.S. exports narrowed the trade gap and helped propel GDP growth to a fasterthan-expected pace of 5.7% in the last quarter of the year. The ability of the U.S. to continue to create, manufacture and sell highquality products to international markets has not been lost. American innovation is now benefiting millions of consumers in the emerging world. Our data suggest this trend is sustainable, with onequarter of U.S. traders seeing the best prospects for trade growth in Latin America and Greater China over the next six months. Still, this air of optimism does not mean there are not areas of concern for trade. At the height of the downturn a year ago, importers and exporters were predominantly concerned about access to trade finance and the risks of buyer default and supplier nondelivery. While these concerns have diminished as the economic recovery takes shape, volatile exchange rates remain a concern to many. Traders also worry about the danger of rising protectionism. The new dynamics of global economic power are clearly benefiting emerging economies, particularly in Asia. But if one key theme emerges from our research, it’s that no one—in the developed or developing world—can afford to turn their backs on trade. The benefits are simply too great. Mr. Webb is the global head of trade and supply chain banking at HSBC. 14 THE WALL STREET JOURNAL. Monday, May 3, 2010 IN DEPTH After the crash, auto towns in the U.S. get back to work With companies like GM and Chrysler stabilizing, local economies that depend on them are perking up again Carl Kiilsgaard for The Wall Street Journal Jeff Harr, above, owner of the Ace Hardware store in tiny Flora, Ill., is thinking of adding a staffer if sales keep showing life. He said customers are no longer sticking only to things they absolutely need. BY JEFF BENNETT AND MIKE RAMSEY Flora, Ill. A YEAR AFTER the U.S. government swooped in to rescue two crippled auto giants, the car business is showing signs of life again—and so are local economies across the heartland that depend on it. As soon as General Motors Co. and Chrysler Group LLC finished racing into and out of bankruptcy court last fall, orders for headlamps and other car parts began streaming back to two factories here in this southern Illinois hamlet. The factories quickly re-hired about 400 of their 550 laid-off workers, giving Flora, Pop. 4,772, a big shot in the arm. Local businesses are perking up. The Best Western just outside town occasionally fills all 41 of its rooms again. And shoppers are less scarce in Joe Etchison’s appliance store. “Last year, people were sticking with the basics and skipping the stainless-steel refrigerators,” he said, walking his downtown showroom trailed by Taz, his dog. People have “figured out the world has not ended.” Similar scenes are playing out across the Midwest, where the speedy stabilization of GM and Chrysler appears to have helped towns tied to the auto industry to get back on their feet more quickly than they may have otherwise. One year ago today, the Obama administration took a gamble and forced Chrysler into a Chapter 11 reorganization. Two months later, it did the same to GM, spending almost $65 billion of taxpayer money in an effort to prevent the two giants from collapsing and perhaps gravely injuring the economy as a whole. With Washington pushing the process, both companies exited bankruptcy in just six weeks—lightning speed compared to the years that some firms spend there. Auto-parts supplier Visteon Corp., for example, filed for bankruptcy protection four days before GM and still hasn’t emerged from Chapter 11. The taxpayer bailout remains controversial. The administration says it is unlikely to recoup all its money. GM and Chrysler are far from healthy. Many of the 400,000 auto jobs lost since 2008 are gone for good. And the bailout’s precise economic impact is hard to pin down. Improvements in the U.S. economy, stabilizing home prices and this year’s uptick in new-car sales are undoubtedly helping the industry, too. The industry is by no means booming. In March, motor-vehicle and parts plants were operating at 54.4% of their capacity, according to estimates by the Federal Reserve Bank. That’s a low level, historically—70% to 80% is considered normal—but better than the low of 36.8% last June. In March, motor-vehicle and parts manufacturing was up 24.3% compared to the year-earlier period, according to the Fed. Overall manufacturing was up just 4.6%. “The goal [of the bailout] was to prevent the imminent collapse of two major manufacturers at a time when there wasn’t an answer to when things were going to stop getting worse,” said Thomas Klier, an economist with the Federal Reserve Bank of Chicago. “From that perspective, it was effective.” Now it depends on “how well [the companies] execute their business plans.” If GM and Chrysler had languished in bankruptcy, industry executives argue, things would have been far worse. “I think the supplier industry would have collapsed and, for that matter, the U.S. economy,” said Matthew Simoncini, chief financial officer of seat maker Lear Corp., which itself sought bankruptcy protection last July. “Ultimately the bailout has helped the suppliers. It allowed GM to remain viable, and the fact that it got back up and running quickly really helped the supply chain.” Lear spent about 125 days in Chapter 11 last year, three times as long as GM. Now it, too, is hiring. A plant in Hammond, Ind., that supplies seats to Ford Motor Co. recently said it was adding about 250 more workers to the 170 employed there. In Rogersville, Tenn., and Marion, Va., plants that make steering components recalled many workers once it became clear that Chrysler was staying in business. A Tenneco Inc. factory in Litchfield, Mich., recently rehired the 86 people it let go last Monday, May 3, 2010 15 THE WALL STREET JOURNAL. IN DEPTH time,” said Martin Fischer, president of Hella Corporate Center USA. Their quick return to production “undoubtedly saved jobs and reduced operating losses at major North American suppliers such as Hella.” This year, with Flora’s auto plants humming, downtown merchants are detecting a slow, welcome turnaround. At Shirt Tales, a shop stocked with everything from sporting goods to Jelly Belly jellybeans, a lot of parents were buying socks and belts to match their Little Leaguers’ uniforms—the bare minimum they could get by with—said employee Janice Randall. Now, new gloves and $79 aluminum bats are selling, too. At the Ace hardware on North Street, owner Jeff Harr said customers are no longer sticking only to things they absolutely need. “Sales of our patio furniture have gone from nothing last year to decent this year.” Mr. Harr once had 18 employees but cut back to 12. He’s considering bringing on another person. Mr. Etchison, the appliance-store owner, has mixed feelings about the government’s bailout of GM and Chrysler, particularly the idea of giving the union ownership stakes in the companies. But “we had to stop the bleeding,” he said, shrugging. “In the end, we need to keep manufacturing in this country.” The quick auto-industry bailout was enough to keep Flora from deep decline, the city’s economic development director, Dan Sulsberger said over a drink at the local Elks Club with his brother Louis, a former Elks Club grand exalted ruler. “Although we didn’t know how the bailout was going to work when it was announced, we felt like it was a life preserver,” Mr. Sulsberger said. The activity at Flora’s two auto-parts plants is good news at the Best Western motel, where many guests are factory visitors from Germany or Japan, said general manager Terry Postin. Occupancy has been 73% this year, up from 55% last year—and better than the 65% or so common before the crisis. “Last year was dismal,” said Mr. Postin. “Now we have the highest occupancy rate in at least a 50-mile radius.” Auto sales are picking up. The industry is on track to sell about 11.5 million cars and light trucks in the U.S. market. That’s a long way from the annual sales of 16 million from earlier in the decade, but up from last year’s 10.4 million. One thing in auto makers’ favor: Americans are driving old vehicles, and a better economy might persuade them to buy new ones. WSJ.com ONLINE TODAY: See photos from Flora and Rogersville at WSJ.com/US Mike Belleme For The Wall Street Journal year. TRW Automotive Holdings Corp., a plant in Flora. It employs 300 and anowner of the Rogersville and Marion chors an industrial park on the east side of plants, is also hiring at a Saginaw, Mich., town, near a small airport. plant that supplies GM. North American Lighting Inc., a subsidAuto sales are picking up. The industry iary of Koito Manufacturing Co. of Japan, is on track to sell about 11.5 million cars employs about 500 people here making and light trucks in the U.S. market. That’s a headlamps for Toyota Motor Co. and othlong way from the annual sales of 16 milers. lion from earlier in the decade, but up In April 2009, as GM and Chrysler were from last year’s 10.4 million. sliding toward bankruptcy, Hella began reOne thing in auto makers’ favor: Ameriducing its work force, laying off as many as cans are driving old vehicles, and a better 150 people. North American Lighting elimieconomy might persuade them to buy new nated 200 jobs and cut the hours of those ones. Last year, the average passenger car who were kept. John Hill, an electrician, in service was 10.6 years old, the highest saw his pay drop from about $1,100 a week level in more than a decade, according to to $500. “First it was one day off, then it R.L. Polk Co. was whole week off,” Mr. Hill said. At the same time, employment is brightWhen GM and Chrysler went into bankening a bit. In Hawkins ruptcy protection and shut County, where Rogersville down their U.S. plants, is located, unemployment Factories unplugged many in Flora wondered eased to 11% in March, how the town would The auto industry is on down from 11.6% a year weather the storm. “It was the mend, but U.S. car and ago. In Smyth County, nail-biting time,” said auto-parts plants are still home to the town of MarMayor Bob Tackitt. operating well below full ion, the March rate was There was good reason tilt. Capacity utilization: 11.9%, down from 12.2%. for concern. The auto inThe TRW steering plant, dustry had seen suppliers 80% one of the largest employfall into bankruptcy in the ers in Hawkins county, laid past, and many turned into 60 off 75% of its 275 workers messy affairs. Delphi last year when Chrysler’s Corp., the former parts di40 survival was in doubt. After vision of GM, filed for GM and Chrysler the auto maker was reChapter 11 in 2005, and request aid and later 20 structured and paired with file for bankruptcy battled with investors and partner Fiat SpA, the plant creditors for four years be0 brought back most of its fore finally being reorga1970s 1980s 1990s 2000s workers. Other suppliers, nized. Source: U.S. Federal Reserve including Cooper-Standard But in the cases of both Automotive, which makes Chrysler and GM, the govfuel lines, and Hutchinson Worldwide, ernment’s auto task force hammered out which makes rubber seals, are hiring, too. cost-cutting agreements with creditors, the In Rogersville, in northeastern TennesUnited Auto Workers union and other parsee, home prices are down 20% from where ties before the companies filed. That elimithey once were. Some residents are in dannated much of the in-court wrangling. ger of foreclosure or have already fallen On June 10, after 41 days in bankruptcy victim to it, said Rhenda Carroll, who mancourt, Chrysler emerged as a new company ages a prominent real estate agency. owned by a UAW health-care fund, the U.S. Now, home sales are showing some life, and Canadian governments and Fiat. GM Ms. Carroll said. “It’s less bad, but it sure filed on June 1 and emerged on July 10, aint like it used to be.” with the U.S. government owning 60% and Lynn Lawson, head of the county’s inCanada and the UAW fund holding smaller dustrial recruiting agency, had a big win in stakes. 2008, persuading a Korean copper-wiring Soon after, GM began bringing its plants supplier, Sam Dong Co., to locate a plant back on line. Chrysler likewise restarted in Rogersville. “It’s going to be a two- to production, although at a slower pace than five-year climb back,” he said. But with GM. some auto-supplier jobs coming back, “evGM and Chrysler emerged from bankerybody has a bit of happiness floating ruptcy in “an amazingly short period of around in them.” About 145 kilometers to the northeast, in Marion, Va., several downtown stores were shuttered in the past two years as its TRW steering plant and others cut jobs. “Our economy is so fragile, depending so much on manufacturing, if you lose one, it’s devastating,” said Ken Heath of Marion’s economic-development organization. Marion Mold & Tool Inc., a specialty parts maker, felt the pinch. As orders dried up at the end of 2008, owner Karl Kalber laid off eight of his 42 employees, cut health coverage for the people he kept and suspended contributions to retirement accounts. “I had some guys saying, ‘You better sell out,’” Mr. Kalber, 74 years old, recalled. But orders from aerospace customers kept him going, and then automotive business started coming back in the second half of last year. Today his laid-off workers are back and he’s hired four more. Mr. Kalber said he didn’t vote for President Barack Obama and isn’t persuaded the administration’s auto-industry bailout helped him. “I’m not sure what [Mr. Obama] did affected my business,” he said. He doesn’t directly supply either GM or Chrysler. Tiny Flora, tucked away in Illinois farmland about 195 kilometers east of St. Louis, has long had to scrape for jobs. In the 1980s, Flora formed a singing group known as the Barbed Wire Choir as part of an effort to persuade the state to build a prison there. In a music video, the mayor and other city officials sang, “Is we is or is we isn’t gonna get ourselves a prison?” The answer ultimately was “no.” In 1978, Hella KGaA Hueck & Co., a German maker of electronic sensors for auto Real estate agent Rhenda Carroll, center, is seeing makers including GM and Chrysler, opened more prospective home-buyers in Rogersville, Tenn., as nearby auto-supply factories rev back up. 16 ** THE WALL STREET JOURNAL. Monday, May 3, 2010 FROM PAGE ONE Continued from first page €8.5 billion in borrowings due May 19. A years-long fiscal spiral of debt and deficits has only gotten worse, cutting the country off from capital markets. On Sunday, the finance ministers of the 16 euro-zone nations agreed that the 15 other countries would lend €80 billion over three years, after receiving a positive assessment of the need for a bailout by officials at the European Commission, the bloc’s executive arm, and the European Central Bank. The IMF will, in parallel, offer a €30 billion package. The EU countries will lend as much as €30 billion this year. JeanClaude Juncker, the president of the council of euro-zone finance ministers, said the first tranche will be delivered before the May 19 redemption. The price of the aid is a set of searing measures to cut Greece’s budget gap. The government will slash public-sector wages, raise sin taxes, increase value-added taxes, impose a new levy on businesses, cut pension payments and raise retirement ages for some public-sector workers. The new, more drastic measures have whipped up an already angry populace. In Athens on Saturday, tens of thousands joined a giant May Day protest in anticipation of the aid deal. Rioters threw Molotov cocktails at police, and marchers chanted “get out to the IMF and the European junta.” U nion leaders said on Sunday they will renew protests this week, and a widespread general strike is set for Wednesday. Still, the weekend deal puts a giant check within Greece’s grasp. Approval by the 16 euro-zone leaders is needed, but with their finance ministers having signed off, it is all but a formality. That is expected to be accomplished at an emergency meeting on Friday. Several countries, most notably Germany, which will take on the largest part of the EU loans, must now put the bailout measure Xinhua/ZUMApress.com Greece seals bailout deal with EU, IMF Policemen near a fire in Athens Saturday as tens of thousands of workers took to the streets in a May Day rally. through their parliaments. German Chancellor Angela Merkel has put the legislation on a fast track to approval by the end of the week. Parliamentary approval isn’t likely to be a serious obstacle. Greece’s profligacy and the reaction of the capital markets that financed its deficit spending forced the EU’s hand. The rapid push to ink a bailout deal comes after a turbulent week in the markets that included a downgrade of Greece’s debt—all but forcing Greece to move fast on a bailout and swallow the deep fiscal cuts that will come with it. Atop European leaders’ list of worries is the effect of Greece’s crisis on other fiscally precarious EU countries. Last week, investors shunned the debt of Portugal and Spain, in a dangerous sign that the credit spigot could tighten for others with debt and deficit problems—and potentially vastly raise the bailout tab for Europe’s health- ier nations. Downgrades last week of the Iberian countries’ credit ratings heightened those concerns. The bailout has been percolating since February, when euro-zone leaders said, vaguely, that they would come to Greece’s aid if needed. It has taken form drip-bydrip over the past months in the EU’s glacial, decentralized decisionmaking process. The aid deal has been a political struggle in Europe. A bailout is distinctly against the spirit of the euro zone, which was designed to be a common currency union with purely national fiscal management. The bloc set rules to enforce spending discipline but has been unable to make them stick. European leaders were jolted into action this weekend after a week that began with swirling doubts about Germany’s commitment to a rescue, followed by the revelation that Greece will need far more help than originally indicated, and then a hurried mission to Berlin by the chiefs of the IMF and the European Central Bank. As investors continued to clobber Greek debt in the capital markets, all but ruling out further private borrowing, Greece agreed to fresh new budget cuts and the German parliament relented and agreed to fast-track the bailout. Ms. Merkel earlier said the harsh terms of the bailout for Greece would deter other euro-zone countries from letting their budget deficits spin out of control. Other countries with fast-rising debts, such as Spain, Portugal and Ireland, “see that Greece’s path, with the IMF’s strict terms, is not easy, so they will do everything to avoid that for themselves,” Ms. Merkel told Germany’s mass-circulation tabloid Bild am Sonntag. Opinion polls in recent weeks have shown a solid majority of Germans oppose aid for Greece, which is seen as riddled with government waste and corruption. Bild has led resistance to the bailout with weeks of front-page headlines denouncing the cost to German taxpayers of aid for Greece. The deal comes as Greece detailed even worse projections for its battered public finances. The country now expects it will take until 2014 to get its government deficit under the European Union’s limit of 3% of gross domestic product. It had previously said that could be done by 2012. The deficit was 13.6% of GDP last year. Greece is bracing for a wave of protests. The main opposition party, the conservative New Democracy Party, lashed out at the new cuts. “This is an even heavier dose of the medicine that got us here in the first in place and could kill the patient,” party leader Antonis Samaras said in a televised statement. Mr. Samaras criticized the involvement of the IMF, which has pushed for tough fiscal restraint. The government, he said, imposed the IMF “onto the heads of the Greek people.” Mr. Papandreou’s ruling Socialists, who came to power last October, blame New Democracy for setting Greece on a disastrous fiscal path. Unions promised more demonstrations. “We will start our new struggle with protests on Monday, Tuesday and the strike on Wednesday. We will fight for as long as it takes against this giant injustice,” said Spyros Papaspyros, president of the public-sector umbrella union ADEDY. Civil servants were hit hardest by the measures. They will lose their so-called bonus wages—two extra months of salary paid above the usual 12. Mr. Papandreou urged parliamentarians to also forgo their bonus months. —Alkman Granitsas and Costas Paris in Athens and Marcus Walker in Berlin contributed to this article. Yuan gains world-wide clout, rivals the dollar Continued from first page currency clout is showing up indirectly. For instance, derivatives that investors use to bet on the yuan’s direction have become popular. And these yuan bets are starting to move other currencies, too. Deutsche Bank currency strategist Mirza Baig says that on days when trading is especially volatile, the Singapore dollar moves in tandem with the yuan bets. The Malaysian ringgit, Taiwanese dollar and Korean won are also high on the list of currencies affected by the yuan. The so-called dollar bloc—Australia, Canada and New Zealand, whose currencies have long been considered closely tied to the value of the U.S. dollar—are more sensitive to China these days as well. A large part of that is China’s demand for commodities from those countries. Canada has seen its currency rise to parity with the dollar in recent months, thanks in part to China’s demand for its raw materials, including oil and timber. In theory, the strength of currencies broadly reflects the relative growth rates of underlying economies. China is leading the global recovery, which is part of the reason many economists, especially in the U.S., think the yuan is undervalued at its current level of 6.83 to the dollar, where it’s been since August 2008. China is by far the largest economy whose currency doesn’t float. That’s despite China being set to overtake Japan this year as the world’s second-largest economy after the U.S. China’s economic output will be more than $5 trillion, or around 9% of the world’s economy, according to the International Monetary Fund. The U.S. is a quarter of the world’s economy. The euro zone is 20% and Japan is 9%. The yuan is also becoming more important to the world’s central bankers. The lack of movement in the yuan has put pressure on central banks in countries that compete with China for world trade. As economies recover in Asia and Latin America, some policy makers are reluctant to raise interest rates to fight inflation, for fear the higher rates will also mean stronger local currencies. Strong currencies make their exports more expensive compared with China’s Central banks are key players in currency markets, as they allocate their massive reserves. The dollar is still dominant, making up 62% of the world’s central-bank reserves, according to the IMF. The yuan, which is almost impossible to trade, is many policy changes away from being the kind of currency that risk-averse central bankers want to hold. But central banks or sovereign wealth funds from Malaysia, Norway and Singapore have received special quotas from the Chinese government to allow them to gain a bit of exposure to China’s currency. The bet is that holding yuan-denominated assets is an important feature of a diversified national reserve. Islamic fighters seize pirate haven on Somali coast BY ABDINASIR MOHAMED MOGADISHU, Somalia—Islamic fighters have seized a pirate haven in central Somalia, said residents of the town, in what could be a bid for a slice of the lucrative business of hijacking ships on the high seas. On Sunday, members of the group Hizbul Islam, driving pickups mounted with heavy guns, moved into the town of Haradheere. As the militants arrived, the pirates fled, piling into Toyota Camrys and Land Cruisers to escape potential clashes. “We have to leave this town—those who behead people meaninglessly have arrived,” said Farah Ganey, a Haradheere pirate, in a telephone interview. Hizbul Islam and al Shabaab, a separate militant group aligned with al Qaeda, have vowed to cooperate to overthrow Somalia’s weak transi- tional government in Mogadishu, the capital. But the militants also fight with each other over land and resources. Hizbul Islam’s takeover of the pirate town could lure retaliatory attacks by al Shabaab fighters, who had considered Haradheere their territory. Mohamed Osman, a spokesman for Hizbul Islam, said the groups wanted to capture several more towns in the region, but he declined to comment on plans for the piracy business. “Our troops have captured Haradheere, and shall go into other nearby towns soon,” he said. As of 4 p.m. ET Euro 1.3295 À 0.38% Yen/US$ ¥94.02 g 0.22% Yen/A$ ¥87.51 À 0.11% Oil 86.15 À 1.15% Gold 1180.10 À 1.00% A defense for Goldman: Paulson was no big deal in ’07 10-year Treasury À 17/32 yield 3.663% 3-month Libor 0.34656 What’s the floor for Google’s stock? BUSINESS& FINANCE. THE GOLDMAN SACHS CASE 21 Monday, May 3, 2010 THE WALL STREET JOURNAL. Swire’s classic strategy [ The View From Hong Kong ] BY PETER STEIN The folks at Swire Pacific Ltd. are finishing a 26year-long illustration of the classic investment mantra “buy low and sell high.” A Hong Kong conglomerate with British colonial roots, Swire Pacific is in the process of listing its wholly owned subsidiary Swire Properties Ltd., which holds mostly high-grade retail and commercial real estate. The initial public offering could raise as much as US$3.09 billion, making it the biggest IPO in Hong Kong this year. The shares are expected to list May 14. The “initial” part of this public offering is a little deceptive: Swire Properties traded publicly back in the 1970s and early 1980s, before Swire Pacific bought out minority shareholders who held the 27.5% of the company it didn’t own for US$174.2 million. The year was 1984, when Britain and China signed their agreement to allow China to resume sovereignty over Hong Kong in 1997. Even before then, anticipation that China would take control of Hong Kong had rocked the territory’s economy and was causing anxiety among Hong Kong businesses. A month before Swire announced it was taking the company private, another colonial conglomerate, Jardine Matheson, said it was moving its legal domicile to Bermuda, hammering Hong Kong shares. Property prices were still shaky after crashing in 1982, and prospects for recovery in the market were uncertain. Swire’s own ties to Britain are deep: Long a major force in Hong Greek deal may not halt rise of sovereign yields BY TOM LAURICELLA The deal to bail out Greece reached over the weekend might prevent the country’s financial woes from spreading to other struggling European nations, but some investors expect government-bond yields to keep rising for all but the healthiest borrowers. They argue that yields on bonds issued by countries such as Portugal, Spain and the ABREAST OF U.K. were too low in THE MARKET the first place, given the risks posed by their big budget deficits. At the beginning of April, even as the crisis in Greece was escalating and contagion fears were growing, Portugal’s 10-year notes were yielding 4.11% and Italian 10-years were yielding 3.85%, while U.S. Treasurys were yielding 3.95%, according to Tradeweb data. While the U.S. has its own deficit problems, that yield gap meant investors believed it was only a touch more risky to lend money to Portugal than to the U.S., which has a significantly more diverse and productive economy. As the selloff accelerated over the month, the yield on Portugal’s 10-year notes rose to just above 5% Friday, far above the 3.66% yield on 10-year U.S. Treasurys. Italy’s 10year debt yield stood 0.34 percentage point above the 10-year Treasury. As prices drop, yields rise. “In many ways the markets are behaving more rationally now,” says Scott Mather, head of global portfolio management at Pacific Investment Management Co., where many HEARD ON THE STREET 30 of the firm’s funds have avoided government debt from heavily indebted, developed countries. Only recently have investors begun to differentiate between European countries based on their economic and fiscal outlooks. They are “not relying on the political rhetoric and ratings agencies alone to dictate” bond yields, Mr. Mather says. Investors accepted low yields from countries like Greece and Portugal because they believed that once they had adopted the euro, the European Union’s strict monetary policy and tough fiscal rules would make such countries less risky. Michael Cirami, a portfolio manager on Eaton Vance’s global fixedincome team, says the recent jumps in yield were justified and will likely continue, even if investors stop worrying about a possible government default. Mr. Cirami, whose firm is betting that yields will rise, says yields on five-year debt issued by countries such as Italy and Portugal should be somewhere between four and seven percentage points above those in Germany. Even now, Portugal’s yield is less than three percentage points above Germany’s, and Italy’s five-year yields are less than one percentage point above. “Spreads should be materially higher at this point,” Mr. Cirami says The situation has strong echoes of the underpricing of risk by financial institutions even after the housing crisis began to unfold. Another parallel: the assumption by holders of Fannie Mae and Freddie Mac prePlease turn to page 22 Kong commercial life, its roots date back to 1816, when John Swire first set up a trading firm in Liverpool, England. Today, Swire is more interested in promoting its future with China. Amid a still-weak recovery in the U.S. and a euro-zone debt crisis, China’s growth prospects are drawing investors from around the globe hungry for returns. So Swire Properties, which has developed several iconic retail, commercial and residential projects in Hong Kong, is pitching its potential to do some of the same on the mainland. It already has a budding presence in Beijing, Shanghai and Guangzhou; the popular Sanlitun Village retail area it developed in Beijing is home to China’s first Apple store. It hopes the proceeds of the IPO will help expand its China footprint. Please turn to page 22 asia.WSJ.com Swire Properties' Sanlitun Village commercial development in Beijing. Office Hong Kong rental Residential China Others 2.9 Looking for growth in China Swire Properties rental income HK$7.46 BILLION 54.1% 2009 38.5 3.5 1.0 HK$7.81 BILLION 2010* 51.2% 37.3 2.9 7.7 0.9 HK$8.37 BILLION 47.6% 2011* 34.8 3.3 13.4 0.9 14.4 0.9 HK$8.58 BILLION 2012* *Estimates 47.6% 34.0 3.2 Sources: Citigroup; Bloomberg News (photo) 18 THE WALL STREET JOURNAL. BUSINESS Monday, May 3, 2010 FINANCE Fujitsu bounces back BY JURO OSAWA BY ROMIT GUHA AND R. JAI KRISHNA TOKYO—Fujitsu Ltd. said Friday it swung to a net profit in its fiscal fourth quarter, thanks to a restructuring in its chip business and the sale of unprofitable hard-disk-drive operations. The Japanese technology conglomerate’s improved earnings—the latest example of an overall recovery in the sector—come with a note of irony, as Fujitsu is reaping the benefits of a restructuring under its former president, who is now fighting the company’s management, saying he was forced out on false allegations of ties to organized crime. The company posted a group net profit of 45.7 billion yen ($486.5 million) in the quarter ended in March, recovering from a net loss of 76.3 billion yen a year earlier. Operating profit rose 42% to 78.9 billion yen, while revenue increased 14% to 1.346 trillion yen. Under the leadership of former President Kuniaki Nozoe, who resigned in September, Fujitsu sold its unprofitable hard-disk-drive business to rival Toshiba Corp. and outsourced chip-making operations to Taiwan. For the just-ended fiscal year, Fujitsu posted a net profit of 93.09 billion yen, compared with a loss of 112.39 billion yen in the previous year. Operating profit rose 37% to 94.37 billion yen, while revenue fell 0.3% to 4.68 trillion yen. In chip operations, the cost structure “drastically improved” thanks to outsourcing, said Executive Vice President Kazuhiko Kato. By the end of the fiscal first half through September, the company Indian telecommunications companies on Friday said the government has been rejecting proposals to buy equipment from China, even though the Telecommunications Department says there is no formal ban. The telecom industry, through the Cellular Operators Association of India a trade group, is sending a letter to the department on the matter, a representative for mobile-phone operator Bharti Airtel Ltd. said. The person said that although the government hasn’t issued an import prohibition,the Telecommunications Department responded to a company request by saying “security clearance is not granted for procurement of telecom equipment” from Chinese original-equipment manufacturers. The government has maintained that there is no formal ban, but Chandra Prakash, a member of the Telecom Commission, said all telecom operators need to get security clearance for equipment imports. The Telecom Commission is part of the Telecommunications Department. An official at a Chinese company said the Telecommunications Department had banned procurement of equipment from China and that the ban affected orders with Chinese providers including ZTE Corp. and Huawei Technologies Co. Huawei India, the Indian unit of Huawei Technologies, said it is “evaluating and understanding the latest development and seeking clarifications from the concerned authorities.” Bloomberg News Technology group reports profit amid chip-business restructuring Indian telecom firms say Chinese deals are stalled Masami Yamamoto became president of Fujitsu on April 1. will no longer have any unprofitable segments, he said. For the current fiscal year ending in March 2011, Fujitsu expects a 2.1% rise in net profit to 95 billion yen, a 96% rise in operating profit to 185 billion yen and a 2.6% rise in revenue to 4.8 trillion yen. Fujitsu expects its semiconductor and electronic-parts segment to swing to a profit of 30 billion yen this fiscal year, compared with a loss of 8.7 billion yen in the justended fiscal year. President Masami Yamamoto, who took office April 1, said changes will continue as the company shifts its the emphasis from the reorganization of unprofitable businesses to investment in growth areas. Fujitsu is pinning its hope on new demand created by cloud computing, the concept of selling computing services that are accessed online. Mr. Yamamoto said the company has already spent 50 billion yen on cloud-computing-related investments in the just-ended fiscal year. It plans an additional investment of 50 billion yen in the current fiscal year through March 2011. “It is the hope of Huawei and it is also in the interest of the industry that a fair and nondiscriminatory policy to address this issue is in place,” it said. ZTE said it is “examining the situation and will respond within the next couple of days,” though it hasn’t received any “directive or notifications” from India. Chinese firms such as Huawei and ZTE have made quick inroads into the Indian telecom market, offering products and services at prices about a third lower than global competitors. Overall, more than $20 billion of telecom equipment is imported into India every year. India has expressed concern over the installation of Chinese telecom equipment. Last year, the government said a bid by Huawei to sell equipment to state-run telecom company Bharat Sanchar Nigam Ltd. wasn’t opened because of security policies. In November, the government said it had asked Bharat Sanchar not to buy Chinese equipment for deployment in “sensitive” border areas. The sensitive areas include states bordering China, Bangladesh, Myanmar and Pakistan, the government said at the time. Separately, officials at three Indian telecom operators said proposals to obtain equipment from China were either stalled or rejected. “There is no note against any specific vendor. But the government wants to know where the equipment is coming from,” said an executive vice president for corporate affairs at Uninor, a joint venture between Norway’s and Indian real-estate company Ltd. BY SHARON TERLEP DETROIT—General Motors Co. is preparing to launch new advertising campaigns for its Chevrolet brand in coming weeks, part of a marketing-strategy overhaul that top executives see as a weak point in the company’s turnaround, people familiar with the plan said. The campaign will introduce new tag lines for Chevrolet cars and trucks, the people said. Chevy cars will be marketed with the phrase “Excellence for All.” GM is consider- ing a phrase along the lines of “Most dependable, longest lasting” for its trucks, they said. Hitting the right note with Chevrolet, which accounts for more than 70% of GM’s sales, is seen by GM Chairman and Chief Executive Edward E. Whitacre Jr. as critical to winning back U.S. market share. Last year he pledged to increase GM’s ad budget beyond its previous spending and those of its rivals, making clear the company needs to find more effective ways to connect with consumers. Mr. Whitacre has twice appeared in commercials to plug GM, but in the 10 months since GM emerged from bankruptcy, the auto maker’s marketing strategy has lacked consistency. Campaigns offering incentives such as 0% financing have provided short-term sales spikes, though none has led to a consistent gain in market share. Sales executives have been shuffled several times. GM last week cut ties with ad agency Campbell-Ewald, ending a 91-year relationship with the firm. Reuters GM prepares new Chevy ad campaign Bharti Airtel said a trade group has asked the government about its stance. 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. ABN Amro Group ........... 8 Agricultural Bank of China..........................23 All Nippon Airways......20 Bank of China...............23 Bank of Communications ...................................... 23 Berkshire Hathaway.......1 Bharat Sanchar Nigam.18 Bharti Airtel ................. 18 BHP Billiton....................3 Blackstone Group.........23 Bloomberg LP.................6 Campbell-Ewald............18 Canon ............................ 25 Cathay Pacific Airlines.22 Charm Communications ...................................... 23 China Construction Bank ................................. 23,25 China Huiyuan Juice Group ......................... 20 China Mengniu Dairy ... 23 China Mobile...................6 China Yurun Food Group ...................................... 23 Chrysler Group..............14 Citigroup ....................... 22 Coca-Cola ...................... 20 ConocoPhillips...............19 Continental Airlines.....20 Cooper-Standard Automotive................15 Cosco Pacific.................25 Delphi............................15 Douglas Dynamics........23 Eaton Vance..................17 Fiat................................15 Ford Motor...............14,18 Frontier Bank................22 Fujitsu...........................18 General Motors...14,18,24 Goldman Sachs Group .............................. 1,21,30 Google...........................30 Hella KGaA Hueck........15 Hewlett-Packard...........19 Hilton Hotel....................4 Honda Motor ........... 18,25 Hongkong Land Holdings ...................................... 22 Hongkong & Shanghai Banking........................4 Huawei Technologies ... 18 Hutchinson Worldwide.15 Hyundai Motor ............. 18 Idea Cellular..................18 IMF................................22 Industrial & Commercial Bank of China.......23,25 Japan Airlines...............20 Japan Tobacco...............25 John Portman & Associates...................4 Kia Motors....................18 Kohlberg Kravis Roberts ...................................... 23 Koito Manufacturing....15 Lear...............................14 Macquarie Group..........30 Marion Mold & Tool ..... 15 Microsoft ...................... 30 MIE Holdings................23 Mitsubishi Estate.........25 Mitsubishi UFJ Financial Group ......................... 22 Mitsui Fudosan.............25 Mizuho Financial Group ...................................... 22 Nissan Motor................25 Nokia.............................19 Norsk Hydro..................20 Publicis Worldwide.......18 Rio Tinto.........................3 Royal Dutch Shell.........19 Ryerson Holding...........23 Sam Dong ..................... 15 Samsung Electronics....19 Samsung Group............22 Samsung Heavy Industries...................19 Samsung Life Insurance ...................................... 22 Sino-Ocean Land Holdings.....................22 Smile Brands Group.....23 Sumitomo Mitsui Financial Group ......... 22 Swire Pacific.................17 Swire Properties...........17 Takeda Pharmaceutical 25 Telenor Group...............18 Tenneco.........................14 Thomson Reuters...........6 Toshiba..........................18 Toyota Motor................15 TRW Automotive Holdings.....................15 UAL................................20 Unitech..........................18 Vale ............................... 20 Visteon..........................14 Woodside Petroleum....19 ZTE................................18 People This index lists the names of businesspeople and government regulators who receive significant mention in Today’s Journal. Albrecht, Matthew.......21 Bandurski, David ............ 6 Bawa, Rajiv...................18 Birnbaum, Joshua.........21 Blankfein, Lloyd..............1 Bloom, David .................. 1 Buffett, Warren..............1 Cirami, Michael.............17 Cordonnier, Michael......25 Fan, David.....................22 Fuller, Justin...................8 Hidema, Tomohiro........20 Howard, Paul .................. 8 Howie, Fraser..................1 Hubner, Otmar..............25 Ito, Shinichiro...............20 Kato, Kazuhiko ............. 18 Kent, Muhtar................20 Li Congjun.......................6 Ma Ai .............................. 4 Mather, Scott ............... 17 Mathieson, David ........... 5 Matthews, Jeff...............8 Moszkowski, Guy..........21 Munger, Charlie..............8 Nozoe, Kuniaki..............18 Paulson, John ............... 21 Pellegrini, Paulo............21 Phillippi, Joe.................18 Porcelli, Tom.................24 Prakash, Chandra..........18 Reinhart, Carmen.........22 Reuss, Mark..................18 Rudd, Kevin.....................3 Sidwell, Brady...............23 Swan, Wayne..................3 Tourre, Fabrice..............21 Voelte, Don...................19 Whitacre, Edward.........18 Woolfolk, Michael ........ 24 Xin, Hai...........................1 Xu, Kevin Sr..................23 Yamamoto, Masami ..... 18 Yi, Robert......................19 Monday, May 3, 2010 19 THE WALL STREET JOURNAL. BUSINESS FINANCE East Timor protests Woodside gas project BY ROSS KELLY AND STEPHEN BELL SYDNEY—East Timor accused Woodside Petroleum Ltd. of exhibiting “an unacceptable level of arrogance” by announcing that partners in the Greater Sunrise field will process gas from the Timor Sea on a floating liquefied natural-gas vessel, rather than on East Timorese shores. In his response, Woodside Chief Executive Don Voelte described the floating LNG option as a “phenomenal proposal” that is “almost like manna from heaven” for the people of East Timor. Perth-based Woodside and its Sunrise joint-venture partners, in- cluding Royal Dutch Shell PLC and ConocoPhillips, on Thursday said that they’ve chosen the floating LNG option over piping gas from the Timor Sea to Darwin in northern Australia. But Woodside didn’t mention that East Timor, which jointly administers the Sunrise field with Australia, wants an onshore LNG plant in East Timor, which is also known as Timor-Leste. Offended by Woodside’s original statement, the East Timorese government, which has to approve any development before it can proceed, said Friday that it won’t endorse the floating LNG proposal “now or in the future” because it isn’t technically or commercially sensible. “Woodside was acutely aware of the governments’ position before [Thursday’s] announcement; but chose to proceed regardless,” Secretary of State for the Council of Ministers H.E. Agio Pereira said in a prepared statement. “This is not only a source of great concern but reflects an unacceptable level of arrogance.” “The approach has significantly compromised future relations with the government of Timor-Leste.” Mr. Voelte said East Timor’s negative response was a “bit premature, in the respect that we haven’t even given them the proposal, or the very thick book of detail behind why we came to the decision.” Outside the company’s annual shareholder meeting in Perth, Mr. Voelte told reporters that the floating LNG option will provide more revenue to the citizens of East Timor than any other option. Along with the clear economic superiority of floating LNG, the Greater Sunrise field is a “perfect size” for the capacity of a floating LNG processing plant, he said. Whether the Sunrise floating LNG concept is dead depends on how well Woodside and its partners can negotiate with East Timorese officials. Mr. Voelte and the head of the Sunrise project plan to travel to Dili this week, Mr. Voelte said. Some in the government have already suggested that a floating LNG vessel could work, although they’re also concerned about the untried na- ture of the technology. So far, no floating LNG processing plants have been used anywhere in the world. But Shell has placed an order with Samsung Heavy Industries Co. to build one, at an estimated cost of about US$5 billion, with an agreement to possibly build an additional nine. Shell is already planning to use a floating LNG platform to develop its separate Prelude field offshore Western Australia state by 2016. Floating LNG vessels are increasingly being considered as an effective way to commercialize stranded gas resources too small to support the construction of onshore LNG terminals and their associated pipeline infrastructure. Interactive Brokers lends USD at just 1.30% Reuters 1 Samsung posted a record first-quarter profit. Above, TV sets on display at the company’s headquarters in Seoul Friday. Samsung surges early Executives say year’s strong start could alter usual seasonal gains BY EVAN RAMSTAD SEOUL—Samsung Electronics Co.’s first-quarter net profit—a record four trillion won, or $3.6 billion—was so strong that company executives warned investors not to expect the normal seasonal gains in performance that consumer-electronics companies tend to experience as a year progresses. Analysts expect Samsung this year will surpass the record annual profit of 10.8 trillion won that the company earned in 2004. But already, questions are emerging about how long it can stay at such lofty heights. One preliminary signal came from Samsung on Friday at the time of the first-quarter results announcement. Executives said they plan to increase capital spending on factories and equipment for memory chips and liquid-crystal displays more than previously forecast. Both businesses are cyclical, with revenue and profit shaped by industry patterns of production capacity moving ahead and then behind demand. The prospect of increased factory construction is an indication that the next profit decline—which happens when supply exceeds demand—may come sooner than investors were previously thinking. Samsung executives said they would decide by June how much to boost capital spending over their original 2010 plan, which was for a 22% increase over last year’s capital spending on chips and 42% increase on LCDs. Shares in semiconductor stocks fell on Friday as investors took Samsung’s statement as an indication the cycle may be turning. The Philadelphia Semiconductor Index dropped 4.5% that day. At the moment, however, hardly anything is going wrong inside Samsung. It is expected to pass HewlettPackard Co. this year as the world’s largest technology company by revenue. And executives forecast a stronger quarterly profit for the April-June period than the one just ended. Coming off such a strong start of the year, executives said the typical pattern in which profit rises every quarter through the year, then falls again at the first quarter compared with the fourth, may not play out. “It doesn’t mean the second half will be lower,” said Robert Yi, Samsung’s chief of investor relations. “It’s just that the contribution of the second half may not be as large as normal.” Samsung’s chip business, following a prolonged slump from 2007 through last year, is once again the biggest contributor to the company’s bottom line, accounting for two trillion won in operating profit. Its consumer-electronics business, which is its largest by revenue, tends to be its least profitable but has been buoyed by sales of highmargin, ultra-thin television sets. And its cellphone business, the world’s second-largest after Nokia Co. by revenue, gained market share and held on to an operating-profit margin above the internal target of 10% despite the company’s relatively thin selection of high-margin smartphones. In one notable change to Samsung’s longtime patterns, the company’s shipments of cellphones declined sequentially for the first time. The company said that it shipped 64 million cellphones, down from nearly 69 million in the fourth quarter but up from 53 million a year earlier. The latest results marked the first time that Samsung used international financial-reporting standards, making its performance directly comparable with its global peers. The company until now disclosed net profit based on South Korean standards, which focused chiefly on its operations in the country. Samsung restated its 2009 results for comparative purposes. In the year-earlier quarter, Samsung earned 580 billion won and in the fourth quarter it earned three trillion won. Revenue in the latest quarter was 34.6 trillion won, an increase of 21% from 28.7 trillion won a year earlier. With the disclosure change, the size of Samsung’s Digital Media consumer-electronics division–the company’s largest—was clearly visible for the first time in quarterly results. Because so many of Samsung’s factories for that operation are out of South Korea, the revenue wasn’t directly visible under Korean accounting rules. While the Fed is lending money at almost zero interest rates, why not take advantage of it through IB? Interactive Brokers will lend up to USD 566,000 for every USD 100,000 in a Portfolio Margin2 Securities Trading account. As of April 19, 2010, more than 490 stocks had a dividend yield of 5% or more. Please see Interactive Brokers’ High Dividend Scanner on the IB Trader Workstation. 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Monday, May 3, 2010 CORPORATE NEWS Coke remains on track in China After last year’s failed deal for Huiyuan, U.S. company now focuses on ‘organic growth’ BY ANDREW BROWNE BY MARK NAJARIAN Bloomberg News SHANGHAI—Coca-Cola Co., rebuffed by Chinese regulators in its bid to buy one of the country’s leading juice makers, is now “totally focused” on organic growth in China and is on track to achieve its investment targets, said Chief Executive Muhtar Kent in an interview Friday. Mr. Kent shrugged off the decision last year by regulators to reject on antitrust grounds the company’s $2.4 billion bid to acquire China Huiyuan Juice Group Ltd. “We are the No. 1 juice company with or without Huiyuan,” he said. Coke says that it has now climbed past Huiyuan to become the largest juice company in China in volume terms, with its Minute Maid Pulpy brand taking off among consumers. In China, “we are totally focused on organic growth,” he said. Coke’s setback was seen as an especially bitter blow considering it had spent millions of dollars on sponsorship of the 2008 Beijing Olympics, including the torch relay. Yet that hasn’t deterred Coke from spending heavily on the Shanghai Expo, which opened on Friday. Coke is one of a small number of foreign corporations to erect its own pavilion at Shanghai’s showcase event. Asked how Coke measured its business returns from its Olympic outlays, Mr. Kent said: “The only way to measure it is long term.” The decision to block Coke’s purchase of Huiyuan sent a chill through the foreign investment community because it suggested that authorities were now sensitive about any kind of foreign acquisition, not just those in areas regarded as strategic to the economy. Some U.S. businesses in China are becoming worried about what they perceive as rising market protectionism. Mr. Kent acknowledged Norsk Hydro agrees to buy bauxite assets from Vale CEO Muhtar Kent, above in New York in March, says Coke is now the top juice company in China in volume terms. that “there is some concern” about the investment climate in China, but he argued for a conciliatory approach, saying: “We need dialogue—and to understand why things are the way they are.” Last year, Atlanta-based Coke said it would invest $2 billion in China over three years—as much as the company had pumped into China over the previous 30 years. That plan is now “fully on target, if not ahead of target,” Mr. Kent said. Last year, Coke opened three bottling plants in China, its thirdlargest market after the U.S. and Mexico in terms of volume sales, and plans to open two more this year. Also last year, Coke opened a $90 million research-and-development center in Shanghai. Mr. Kent said Coke’s business in China has been growing at double digits over the past five years. “China offers the greatest opportunity for us in the world,” he said. The company doesn’t break out its China revenue or give any details about its profit margins. With U.S. sales still declining, Coke’s business has been increasingly driven by emerging markets such as China. But Mr. Kent said he believes consumer sentiment in the U.S. is improving. “The doomsday scenario is much further away from the brains of the U.S. consumer than 12 months ago,” he said. Norway’s Norsk Hydro ASA agreed to take over the aluminum businesses of Brazilian mining company Vale SA, in a deal the companies valued at $4.9 billion. Norsk Hydro said Sunday it will pay $1.1 billion in cash for the operations and give Vale shares in Norsk Hydro representing 22% of the company. Norsk Hydro said it will finance the move through a rights issue of $1.75 billion. The deal gives Norsk Hydro control of 60% of Paragominas, one of the world’s largest bauxite mines. It also has the right to take over the remaining 40% stake in two installments, in 2013 and 2015, for $200 million each. Norsk Hydro said the mine will secure its bauxite supplies for the next century. Norsk Hydro is also buying a 91% ownership in the world’s largest alumina refinery, Alunorte; 51% ownership in the Albras aluminum plant; and 81% ownership in the CAP alumina refinery project. All the assets are located in Brazil. As part of the deal, around 3,600 Vale employees will be transferred to Norsk Hydro, which employs around 19,000 people in 40 countries. Norsk Hydro’s largest shareholder—the Norwegian state, which owns 43.8% of the issued shares—supports the purchase and the rights issue, the company said. After the deal, the Norwegian state’s ownership in Norsk Hydro will be reduced to about 34.5%. Norsk Hydro said the closing of the transaction with Vale is expected in the fourth quarter. BY YOSHIO TAKAHASHI TOKYO—All Nippon Airways Co. on Friday posted a wider loss for its fiscal fourth quarter because of fierce competition amid a travel slowdown. But the airline forecast that cost cutting and enhanced international service would help it return to profitability this fiscal year. Japan’s second-biggest airline by revenue expects little impact on earnings from the recent volcanic eruption in Iceland, ANA Executive Vice President Tomohiro Hidema said at a news conference. Meanwhile, ANA is considering taking a closer look at the Airbus A380 superjumbo jetliner. Hitoshi Kawahara, ANA’s director of international and regulatory affairs, said the carrier is now “more interested” in the A380 because if deregulation proceeds rivals may soon be able to use the jet to pick up passengers in Japan and carry them to and from the U.S. and other key markets. He singled out the possibility of an open-skies deal between Japan and Singapore, which he said could happen in less than three years. Mr. Kawahara, speaking Thursday on the sidelines of an industry conference in Phoenix, said ANA—whose main fleet is sourced exclusively from Boeing Co.—had previously suspended an internal study into acquiring A380s. ANA posted a net loss of 22.1 billion yen ($235 million) in the quarter ended in March, compared with a net loss of 13.6 billion yen a year earlier, as the airline continues to ride out the slump in travel demand, which only now is showing signs of recovering from the economic crisis. The year-earlier loss was limited by proceeds from asset sales. Revenue rose 6.8% to 304.5 billion yen. Japan’s airline industry has been going through tough times. ANA’s bigger rival, Japan Airlines Co., filed the country’s biggest nonfinancial bankruptcy-protection case to date in January. ANA President and Chief Executive Shinichiro Ito has argued that JAL’s government-supported restructuring shouldn’t undermine fair competition. Meanwhile, the U.S. and Japan recently agreed to an open-skies pact that will liberalize flight services between the two countries. ANA aims to take advantage of the pact with its U.S. alliance partners, United Airlines, a unit of UAL Corp., and Continental Airlines Inc. UAL and Continental are expected to announce a merger Monday to form the world’s largest airline by passenger traffic. Associated Press ANA reports broader loss amid tough competition ANA expects to post a profit this fiscal year. ANA clerks checked in passengers at Tokyo’s Haneda Airport on Friday. ANA has undertaken a series of turnaround measures, including a push to introduce smaller, fuel-efficient jets to reduce fuel costs. However, such measures haven’t offset the drop in travel demand. As a result, the airline was forced to undertake more cost cutting during the most recent fiscal year. “Demand is coming back mainly in international flight services. But a recovery in income per customer is still slow and we can’t be optimistic about the business environment surrounding us,” Mr. Hidema said. The drop in such income was particularly notable in the international flight business in the last fiscal year. Such business fell 30% year-to-year, as companies tight- ened their business travel budgets. ANA’s weak fourth quarter pushed its loss for the full year to a record 57.4 billion yen, much wider than its loss of 4.26 billion yen in the previous fiscal year, but narrower than the loss of 65 billion yen that the airline forecast in March. —Doug Cameron contributed to this article. Monday, May 3, 2010 THE WALL STREET JOURNAL. 21 MARKETS: THE GOLDMAN SACHS CASE Justice Department faces high stakes Bloomberg News BY EVAN PEREZ AND SUSANNE CRAIG John Paulson, shown in 2008, for years had trouble gaining clout at Goldman. Then his subprime bets scored. ‘No big deal’ defense Goldman says Paulson wasn’t high-profile player in 2007 BY GREGORY ZUCKERMAN Among the defenses Goldman Sachs Group Inc. has laid out in response to the U.S. government’s civil-fraud lawsuit against it is this: John Paulson was no big deal in early 2007. At the time, Mr. Paulson was no “Warren Buffett or E.F. Hutton,” Goldman told the Securities and Exchange Commission last year in an attempt to ward off a fraud lawsuit, eventually filed about two weeks ago. That is one reason, Goldman said, it wasn’t necessary for the bank to tell investors that Mr. Paulson’s hedge fund, Paulson & Co., while bearish on the housing market, participated in developing the mortgage deal that eventually imploded. He wasn’t influential, Goldman said. A more-nuanced picture of Mr. Paulson’s importance to Goldman, however, emerges in interviews with people familiar with the hedge fund and the bank, and emails released by a Senate subcommittee. These emails suggest that in 2007 some Goldman employees were eager for his business and eventually came to respect him as the lead housing bear. “He’s definitely the man in this space, up 2-3 bil on this trade,” said an email from Joshua Birnbaum, a top Goldman Sachs trader, in July 2007, about three months after the bank struck the deal now under SEC scrutiny. “We were giving him a run for his money for a while but now are definitely #2,” suggesting Paulson & Co.’s success on the trade was exceeding Goldman’s. Spokesmen for Goldman and Paulson declined to comment. Goldman efforts to craft the 2007 deal for Paulson & Co. has put into focus the relationship between the elite bank and one of the world’s most successful hedge funds, now managing $33 billion. Interviews with people familiar with the firms, emails and documents suggest that Goldman and Paulson & Co. became closer around the time of this trade. It wasn’t always that way. Neither Mr. Paulson nor his firm has been accused of wrongdoing in the SEC’s case against Goldman, which alleges that the bank and an employee failed to tell participants in a complex mortgage deal that the bearish hedge fund helped picked assets in the deal. Goldman has maintained it had no duty to make the disclosure; it has said the three parties to the deal were sophisticated investors and for the structure to work, one participant had to have bearish view of the mortgage market. A former Bear Stearns Cos. investment banker, Mr. Paulson launched his hedge fund in 1994 with $2 million of his own money. He tapped Bear Stearns as the fund’s “prime broker,” which can hold securities, lend the fund money for trades and help it find investors. Goldman sometimes traded stocks and bonds for Paulson & Co. But Goldman’s revenues from trading stocks with Mr. Paulson’s firm amounted to less than $200,000 as recently as 2004, according to a Goldman employee at the time. Other areas within Goldman did even less business with Mr. Paulson and his firm. He and his team approached Goldman’s investment unit at least five times between 2000 and 2006, asking if it would consider investing in his fund, according to another Goldman employee at the time. Each time the Fabrice answer was no. In those years, Mr. Paulson’s strategy focused on merger deals. Goldman preferred other merger specialists, the person said. In 2006, the relationship between Goldman and Paulson & Co. began to warm. Mr. Paulson tapped Paulo Pellegrini, an executive at his firm, to co-manage a new fund dedicated to wagering against subprime mortgages. Mr. Pellegrini viewed many at Bear Stearns as too bullish on housing, according to a person familiar with his views. Mr. Pellegrini enlisted Goldman as the sole prime broker for the new Paulson fund, a move Mr. Paulson supported as the firm had started expanding its prime-broker roster. The relationship yielded some dividends for Paulson. For months, some top investors rejected Mr. Paulson’s pitch for his new credit fund. But Goldman opened doors to investors, some of whom ended up writing checks for Paulson’s new fund, according to people familiar with the matter. Messrs. Paulson and Pellegrini in the spring of 2006 hosted several Goldman executives who picked hedge funds for Goldman Sachs clients to try to interest them in Paulson’s new “credit opportunity” fund. For more than an hour, Mr. Paulson patiently outlined the strategy that his new fund would embrace, according to a person at the meeting. The executives were polite, but not very impressed. The Goldman team didn’t regard Mr. Paulson as a specialist in housing, and they were concerned that he wasn’t aware of the risks of the trade. Several months later, as cracks began to form in the subprimehousing market, Mr. Paulson’s view gained more respect within Goldman. In late 2006, Paulson executives led by Mr. Pellegrini approached Goldman with the idea of identifying a pool of mortgage assets for a transaction that the Paulson team would bet against, according to the SEC complaint, Goldman documents and interviews. “We should prioritize Tourre the higher profit margin businesses with Paulson,” said an email from Fabrice Tourre in April of that year, the month the deal was struck. Mr. Tourre, who the SEC was “principally responsible” for the deal, was also sued by the SEC and is fighting the charges. Not long thereafter, confidence in Mr. Paulson turned into outright admiration. Paulson & Co. made $1 billion on the April 2007 deal with Goldman, part of a $15 billion gain that year betting against housing. Late that year, Mr. Paulson’s team again approached Goldman to ask if it would invest in the hedgefund firm for its clients. Worried Mr. Paulson was unlikely to score such big gains again, Goldman passed, according to a person familiar with the matter. In 2008, Mr. Paulson’s biggest fund rose about 30%, even as the stock market dropped about 38%. The criminal investigation into whether Goldman Sachs Group Inc. or its employees committed securities fraud is a potent reminder of the pressure on the U.S. Justice Department to land a big fish on Wall Street. But the agency also is under pressure to show it can win big cases without cutting corners. “We’re here not to win cases, but to do justice,” Attorney General Eric Holder said in an interview before The Wall Street Journal reported that the U.S. Attorney’s office in Manhattan has launched a criminal probe of Goldman in connection with the securities firm’s mortgage trading. “If we focus on that, we’ll win the cases that we need to win.” As the Justice Department digs in for what is likely to be a long, complicated and contentious investigation, federal prosecutors are being pushed by their bosses to avoid the overzealousness that has led judges to reprimand some of them and even throw out criminal charges. Earlier this year, Mr. Holder appointed a senior prosecutor and a team of more than two dozen people to make sure prosecutors are sharing with defense lawyers any evidence that could be favorable to their clients. The move followed a series of botched prosecutions that include the December dismissal of stockbackdating charges against Broadcom Corp. executives. A federal judge said prosecutors intimidated key witnesses and “compromised the integrity of the trial.” Goldman denies any wrongdoing and has shown no signs of backing down to either a separate Securities and Exchange Commission fraud lawsuit filed April 16 or the preliminary criminal inquiry by federal prosecutors. In a sign of how much is riding on the Goldman case, the company’s shares fell $15.04, or 9.4%, to $145.20 in 4 p.m. New York Stock Exchange composite trading Friday. At least two securities analysts cut their ratings on the stock, citing Goldman’s deepening legal morass. “Most such probes end inconclusively, with no charges filed,” wrote Guy Moszkowski, an analyst at Bank of America Merrill Lynch, who cut his rating to “neutral” from “buy” and lowered his price target for the shares to $160 from $220. “However, it is very difficult to see the shares making further progress until the matter has been resolved.” Standard & Poor’s Equity Research analyst Matthew Albrecht put a “sell” rating on Goldman and reduced his price target to $140 from $180. “Though traditionally difficult to prove, we think the risk of a formal securities fraud charge, on top of the SEC fraud charge and pending legislation to reshape the financial industry, further muddies Goldman’s outlook,” Mr. Albrecht wrote. So far, the Justice Department has little to show from its investigations of potentially illegal behavior on Wall Street related to the financial crisis. In November, jurors in Brooklyn, N.Y., acquitted two former Bear Stearns Cos. hedge-fund managers, expressing concern that the men were being made into scapegoats. At an April hearing before the Senate Judiciary Committee, Sen. John Cornyn (R., Texas) pressed Mr. Holder to explain the shortage of trials. “We simply haven’t had the people who were guilty of criminal conduct brought to justice and tried in public and punished for committing crimes that the American people are paying for,” Mr. Cornyn said. In the Journal interview, Mr. Holder said it is his job to “insulate people from feeling that kind of pressure.” “Even though we might want to focus on a particular priority, it doesn’t mean we want people to do anything but the right thing,” Mr. Holder said. About 5,300 prosecutors have undergone refresher courses on how to fight fairly. Justice Department officials are preparing guidelines on what types of evidence need to be shared with defense lawyers. Mr. Holder wiped clean the 2008 bribery conviction of former Alaska Sen. Ted Stevens because evidence was mishandled by prosecutors. Two senior prosecutors were reassigned and an independent investigation into the misconduct is continuing. As the Justice Department digs in for what is likely to be a long and contentious investigation, prosecutors are being pushed by their bosses to avoid overzealousness. In April 2009, a Miami federal judge reprimanded two prosecutors for acting in a “win at all cost” manner in the case of a doctor facing drug charges, including taping conversations between an informant and a defense lawyer. “There’s an enormous pressure on prosecutors to win,” said David Markus, the lawyer whose conversations were taped in the Miami case. Judge Reggie Walton of the U.S. District Court for the District of Columbia said more attention to how cases are handled might not be enough, pointing to a recent case in which prosecutors were outgunned by defense lawyers who enjoyed better technology and seemed to know the government’s evidence better than the government itself. The changes pushed by Mr. Holder also include improvements in evidence-handling, such as closing the technology gap with defense lawyers. The Justice Department’s evidence-related changes, led by Andrew Goldsmith, a senior prosecutor with two decades of experience, could be particularly important in complex financial cases such as the Goldman investigation, where volumes of evidence usually are stored electronically. U.S. District Court Judge Emmet Sullivan, whose ruling in the Stevens case prompted Mr. Holder to act, has called for nationwide rules that could set punishments for prosecutors who don’t share evidence properly. Judge Walton and other judges have expressed concern that the department could slip once Mr. Holder leaves or the spotlight fades. The Justice Department says such a rule is unnecessary. 22 THE WALL STREET JOURNAL. Monday, May 3, 2010 MARKETS Japan’s MUFG buys second failed bank Acquisition of Frontier Bank of Everett, Wash., underscores intentions to expand overseas retail business BY ATSUKO FUKASE TOKYO—A U.S. unit of Mitsubishi UFJ Financial Group Inc. has taken over failed Frontier Bank of Everett, Wash., which has $3.2 billion in total assets, in the Japanese bank’s latest move to expand in the U.S. The deal comes about two weeks after Japan’s largest bank by market capitalization bought failed Tamalpais Bank based in northern California under an agreement with the Federal Deposit Insurance Corp. MUFG’s two acquisitions within a month also underscores how the Tokyo lender seeks to expand retail business in the U.S., taking advantage of bargain deals for failed banks. At home, the bank is having a tougher time generating profits amid sluggish lending and a lower interest margin because of the nation’s near-zero interest rates. In the latest deal, San Franciscobased Union Bank—owned by Swire buys low, sells high Continued from page 17 Some investors and analysts say the company is attractive, but its shares are a bit on the pricey side. The range for the offering has been set at 20.75 to 22.90 Hong Kong dollars (US$2.67 to US$2.95) a share, which is a discount to its 2010 net asset value of 8.3% to 16%. Hongkong Land Holdings Ltd., to which some analysts compare Swire Properties, trades at discount of about 19%. The discount at other property companies is steeper. (Property investment companies often trade at a discount to what they say are their net asset values because the share prices reflect the costs of actually selling off real-estate assets and the difficulty of extracting their “true” market value.) David Fan, the Tokyo-based managing director of CBRE Investors, a real-estate investment management firm, says the shares will probably attract some dedicated property investors that couldn’t invest in Swire Pacific because of its other assets. Among other things, these include a controlling stake in Cathay Pacific Airlines Ltd. and the bottling and sale of Coca-Cola in much of greater China and 11 U.S. states. It will also come down to execution in mainland China, where Swire Properties has been late to the market. Choice sites in Beijing and Shanghai aren’t there for the taking anymore. So why go to market now? A note from Citi Global Research suggests Swire is opportunistically spinning off Swire Properties because mainland China will for the first time become an important part of the company’s property portfolio, making up 26% of its landbank. That “makes the company look like a more serious player in China,” Citi says—even if it isn’t, yet. Still, if it’s smart, the company could use the proceeds of the IPO to acquire sites that local bidders might struggle securing the funds to buy as China’s government, worried about overheating property prices, tightens back on credit. But mostly it’s a smart investment move on Swire’s part. Today, Swire Pacific’s property arm is potentially worth more than 30 times what it was when the parent took it private 26 years ago. Those looking to buy low and sell high in the property market would be hard pressed to best that return. LEGAL NOTICES PUBLIC NOTICES MUFG’s UnionBanCal Corp. unit—acquired Frontier Bank, which is covered under a loss-shares agreement with the FDIC. Terms weren’t disclosed. The deal would give Union Bank 50 branch offices in Washington and Oregon and about $2.5 billion in deposits. The bank will continue to look for opportunities, people familiar with the matter said. Buying a bank on the U.S. West Coast is more likely given the potential for syn- ergy with Union Bank, one person said. The deals over the past two weeks have helped Union Bank build a retail customer base on the West Coast, adding 57 branches to its 340 banking offices in California, Oregon, Washington and Texas and two international offices. Japan’s top three banks—MUFG, Sumitomo Mitsui Financial Group Inc. and Mizuho Financial Group Inc.—are looking to ramp up operations in Asia, where the local econo- mies are growing rapidly. But in terms of deals, the U.S. market offers fewer regulatory and governance hurdles, one bank executive said. SMFG is also looking to build its status in the U.S. and plans to list on the New York Stock Exchange in the autumn. People familiar with the matter said no deal is imminent, but SMFG is reviewing the FDIC list of U.S. regional banks for a possible acquisition. Debt yields may have room to rise Continued from page 17 ferred shares that their investment was backed by the U.S. government. That turned out not to be the case; those debtholders were wiped out. Over the weekend, the EU prepared a package of direct loans from the International Monetary Fund and euro-zone countries—the largest share will come from Germany. The deal is expected to total more than €100 billion ($133 billion) over three years. Before the deal started to come together last week, European bond yields had risen sharply—particularly on shorter-term debt—as the prospects for approval of a backstop program seemed to be in doubt. That was magnified by credit-rating downgrades of Portugal and Greece. Yields on Spanish two-year notes jumped to more than 2% from around 1.5% a week earlier. Yields on two-year notes issued by Italy, Belgium and the U.K. each rose roughly 0.2 percentage point. Investors accepted low yields from countries like Greece and Portugal in the belief that once they had adopted the euro, such countries would be less risky. Even Ireland, which is widely seen as having aggressively tackled its debt problems, saw two-year note yields spike by well over one percentage point. This move elicited complaints from European officials that the markets were behaving irrationally and sparked a flight out of riskier investments such as stocks and commodities. Contagion—rational or irrational? Some say European bond yields are too low. 10-year yields of U.S., Portugal and Germany: 6% Portugal 5 4 3 2 Germany U.S. 2005 ’06 ’07 ’08 ’09 ’10 Source: Tradeweb But the European markets were behaving exactly as they should, says Carmen Reinhart, an economics professor at the University of Maryland. “Once a country such as Greece comes to foreground…everybody in the financial community looks around and says, ‘Aha, these others have similar characteristics,’ ” Ms. Reinhart says. “You could call it contagion, but…the fact is that they have common fundamentals that are troublesome.” Mark Schofield, global head of interest-rate strategy at Citigroup in London, says investors trying to value government debt tend to put much greater weight on the impact of short-term changes in monetary policy and economic cycles, often leading them to underprice sovereign risk. But Mr. Schofield says there is a measurable relationship between bond yields and changes in the deficit, and historically, the lower the credit quality of a country, the stronger that relationship. In the case of a country rated triple-A, such as the U.S., an increase of a budget deficit by 1% of gross domestic product should increase 10-year note yields by about 0.07 percentage point, Mr. Schofield says. For a country rated triple-B, such as Greece, a similar change in deficits should move yields by roughly 0.2 percentage point. Mr. Schofield thinks the rise in Portuguese yields may have overshot a bit, but in the U.K., where the budget deficit has worsened to 12% of GDP, yields could rise further. Current U.K. 10-year gilts are yielding around 3.8%, which is about 0.8 percentage point over German bonds. Should the country be downgraded to double-A from triple-A, a 1.4-percentage-point spread would be warranted, he says. Pimco’s Mr. Mather says that at some point there’s a good chance the markets will overshoot, but that stage hasn’t been reached. In fact, “over the next several years you’re going to have a series of rolling debt crises,” he says. Against that backdrop, the markets are “undergoing a major regime shift in terms of people recognizing that sovereign risk is underpriced.” Korea watches won ahead of big IPO BY KANGA KONG SEOUL—South Korea’s foreignexchange authorities will take action against any sharp gains in the South Korean won as a result of Samsung Life Insurance Co.’s initial public offering, a senior official at the Ministry of Strategy and Finance said. “If any one-sided moves are spotted following Samsung Life Insurance’s initial public offering despite Samsung Group’s pledge to minimize any potential impact on the forex market, the authorities will take action to neutralize the impact for market stability,” the official said Friday. Samsung Life Insurance is planning to offer $4.4 billion worth of shares around May 12 in what will be South Korea’s biggest IPO to date and one of the top five offerings in the world in terms of size this year. Of the total Samsung Life Insurance plans to offer, about $1.8 billion worth of shares are allocated to foreign investors. The comment from the government official came a day after Samsung Group said it is mulling ways to minimize the impact that the coming IPO could have on the currency market. The won has risen steadily against the U.S. dollar as South Korean’s economy has bounced back significantly from the global economic slowdown on a sharp rise in its exports, sending capital flows into the country. A more valuable currency makes its exports more expensive in other markets and reduces the value of foreign-denominated corporate profits sent back home. Monday, May 3, 2010 23 THE WALL STREET JOURNAL. MARKETS Equity firms go farming in China Investors pour money into agriculture, industrializing the sector, as consumer habits shift BY JONATHAN SHIEBER BY AMY OR European Pressphoto Agency Food-safety concerns and a rising consumer class have China’s buyout and growth-capital investors heading out to the farm. From fertilizer, food logistics and shipping, to milk, meat and snack producers, to rice and potato farms, China’s staples and processed-food industries are attracting investors. It is a movement of capital that is a major change in a country where historical events have been tied to land reform. According to data provider Dealogic, private investment firms and corporate acquirers spent $932 million in 2009 on investments in the agribusiness and food and beverage industries in China, up from $189 million in 2008. Investment this year is on track to be even bigger, at $611 million through April. “A lot of investors became interested in this sector in late 2007, especially during the financial crisis,” said Kevin Xu, an investment director with Shanghai-based growth capital firm Prax Capital. Recently, a consortium of buyout firms, including Atlantis Investment Management Ltd., Blackstone Group LP,Capital Group Cos., Warburg Pincus LLC and Orchid Asia Group Management, invested $600 million in China Shouguang Agricultural Product Logistics Park, an agricultural products trading center; meanwhile, Hopu Investment Management Co. put about $150 million into hog butcher China Yurun Food Group Ltd. Deals such as these come on the heels of others, including a $791 million investment by Hopu and others in China Mengniu Dairy Co. Farmers on the outskirts of Shenyang, in northern China, harvest cabbages in October 2009. Ltd.; an investment in Ma Anshan Modern Farming Co. by Kohlberg Kravis Roberts & Co. to help the dairy company build large-scale farms in China; and investments by SAIF Partners in potato company Landun Xumei Foods Co., corn company Jilin Sky-Scenery Food Co. and an undisclosed rice company in China’s Heilongjiang province, on the border with Russia. China’s long-term consumption habits are shifting from local fruit and vegetable vendors to Westernstyle supermarkets, a trend that has accelerated after a rash of food-related scandals in the country, according to several deal makers. Additionally, foreign and local food companies are both seeking to find more of their ingredients locally. “The whole sector [is] being industrialized,” said Brady Sidwell, head of Rabobank International’s Northeast China research and advisory department for the food and agribusiness sector. Mr. Sidwell also pointed to a strong initial-public-offering market in this sector as luring investors. According to Rabobank research, in 2009, 15 food and agriculture companies had public offerings in Hong Kong and local Chinese markets, reaching a total market capitalization of more than $2 billion. Another factor is that the sector is less subject to upheavals associated with global imports and exports, thanks to the rising income of China’s citizens and its steady domestic demand for increasingly scarce resources, Prax’s Mr. Xu said. Historically, farming in China has been done on tiny, nontransferable plots maintained by a single family, which would consume most of the output. But in the past decade, restrictions have been eased, with the government allowing rural landowners to lease their land to other people for a longer period. These leasing laws are helping to pave the way for agricultural consolidation and greater productivity, investors said. Trio of offerings bet on better economy BY LYNN COWAN A trio of industrial firms that aim to go public this week are betting that improving economic conditions are going to drive their businesses out of the holes they sank into IPO FOCUS during the global recession. U.S. metal processor and distributor Ryerson Holding Corp., snowplow maker Douglas Dynamics Inc., and Chinese oil producer MIE Holdings Corp. have all suffered, but each sees a turnaround ahead. Ryerson, which experienced a 42% decline in revenue in 2009 and generated a loss compared to income in 2008, says the worst appears to be behind it. The company says customers are beginning to restock after bringing their inventory down to the lowest levels seen in decades, and it expects a significant and protracted restocking cycle as the economy recovers. Its initial public offering on the New York Stock Exchange could raise as much as $423 million, based on the proposed price range. Similarly, Douglas Dynamics, the largest provider of snowplows and sand and salt spreaders in North America, saw revenue fall 3% last year and net income slump 14% as customers opted to repair rather than replace plows despite heavy snows in 2008 and 2009. Those deferred purchases could result in an elevated multi-year replacement cycle as the economy recovers, executives believe. Its NYSE listing could total $160 million. In China, MIE increased the number of barrels of oil it sold in 2009, but lower average crude-oil prices dragged down revenue by 41% and profits by 82% from 2008 levels. Crude prices recovered in the second half of 2009 from steep declines seen during the global economic crisis, and the increase has helped lift earnings of major oil and gas companies in the first quarter, including those of Cnooc, China’s biggest offshore producer. MIE hasn’t released first-quarter results yet, but since oil prices are a major determining factor in its businesses, it is likely to see good gains too. The offering could raise $252 million on the NYSE. Two other deals are expected this week: Chinese television-advertising agency Charm Communications Inc. and American dental-support-services provider Smile Brands Group Inc. They didn’t get banged up badly during the recession, but only Charm appears to be showing significant revenue gains in the first quarter. Charm, which claims to be the country’s largest domestic television-advertising agency, saw revenue rise 8% in 2009 and net income decline 17% compared with 2009 as it added sales staff and took an impairment charge on investments. In the first quarter of this year, revenue rose 75% compared to the same time last year, and net income grew sixfold. The company could raise $85.8 million on the Nasdaq. Smile Brands’s revenue rose 3% in 2009 and it generated net income compared to a loss in 2008. In the first quarter, revenue rose 2% and net income declined 32% as it wrote off fees involved in refinancing its debt. Asian officials unveil fund to spur bond issuance BY KENNETH MCCALLUM TASHKENT, Uzbekistan—A group of Asian finance ministers have agreed to set up a $700 million fund to encourage the issuance of localcurrency-denominated bonds by giving guarantees. The 10 finance chiefs of the Association of Southeast Asian Nations and the finance ministers of Japan, ICBC invites bank proposals for $12 billion share issue China and South Korea, collectively known as Asean plus three, unveiled the plan after a meeting in this Central Asian city. The fund is aimed at increasing bond issuance by companies in the Asean-plus-three countries by raising the credit scores of companies that would otherwise have trouble floating bonds. It will also try to make small companies and infrastructure firms less vulnerable to credit crunches by reducing their reliance on banks for funds. To maintain economic growth in the Asean-plus-three area, “it’s becoming increasingly important for the region’s savings to be invested within the region,” the finance ministers said in a statement Sunday. The $700 million will be main- tained as a trust fund at the Asian Development Bank called the Credit Guarantee and Investment Facility, and the goal will be to begin its operations by the end of the year. Japan and China each plan to contribute $200 million to the fund, South Korea plans to pay $100 million, while the Asean countries will together put up $70 million and the ADB will contribute the rest. HONG KONG—Industrial & Commercial Bank of China Ltd. has asked investment banks to submit proposals for underwriting a planned issue of new shares that could raise US$12 billion at current share prices, people familiar with the situation said. China’s largest lender by market capitalization sent requests for proposals to investment banks on Friday, the people said. ICBC has asked banks to submit the relevant documents Tuesday and present their proposals Thursday. The document didn’t mention when the mandate will be given, but banks expect to be notified soon after the presentation. The request for proposals didn’t mention the expected size of the deal, nor the time frame for the offering. ICBC couldn’t be reached for comment. ICBC is the latest of China’s banks to announce major fund-raising plans after last year’s lending binge—the key platform of the country’s stimulus spending—caused capital levels to deteriorate. The credit expansion will continue this year, though at a slower pace, and analysts have said 2010 could be the biggest year for fund raising in China since the initial public offerings four years ago by the country’s largest banks. ICBC said in March that it plans to raise as much as US$3.66 billion via a convertible bond issue in the domestic market and will sell new shares totalling as much as 20% of its existing Hong Kong-listed shares. ICBC has 83 billion H-shares and they closed up 1.9% Friday at 5.77 Hong Kong dollars, or about 74 U.S. cents, each. Four major Chinese banks—ICBC, Bank of China Ltd., China Construction Bank Ltd. and Bank of Communications Ltd.—have announced recapitalization plans that would allow them to tap both the bond and equities markets to raise a total of US$46.5 billion this year. Bank of China and Bank of Communications have gone one step further and called for banks to underwrite their offerings. To maintain a capital-adequacy ratio of at least 11.5% between 2010 and 2012, Bank of China is planning to issue as much as 40 billion yuan (US$5.86 billion) worth of bonds convertible into its Shanghai-listed shares, and sell new shares equivalent to up to 20% of its existing Hong Kong-listed shares to raise around US$7 billion. Bank of Communications, meanwhile, gained approval from shareholders and the country’s banking regulator in April for a 42 billion yuan rights issue to shore up its capital. The proposed fund-raising will enable the bank to keep a capital-adequacy ratio of at least 12% in the coming four years. China requires its five biggest lenders to have a minimum capital adequacy ratio of 11%. Bankers said the recapitalization offerings will likely take place in the second half of the year, as China’s banking authorities seem determined to push ahead with Agricultural Bank of China Ltd.’s US$20 billion Shanghai and Hong Kong initial public offering first. 24 THE WALL STREET JOURNAL. Monday, May 3, 2010 INTERNATIONAL INVESTOR Boon to Treasurys: smaller deficit seen Greek bailout to aid the euro, but only briefly BY DEBORAH LYNN BLUMBERG BY BRADLEY DAVIS AND KAREN JOHNSON ther details about issuance and the outlook. It has already asked primary dealers—the 18 banks that underwrite Treasury auctions—for suggestions on how it should accomplish a reduction in auction sizes, citing improvements in the fiscal outlook. The strengthening economy has helped: Tax receipts have been edging up, with April expected to show the biggest inflows because of the April 15 annual tax deadline. Many banks and companies that received taxpayer bailouts repaid their debts early. General Motors, for example, paid $6.7 billion to the Treasury in April to cover a taxpayer loan, five years ahead of schedule. According to a member survey by the Securities Industry and Financial Markets Association, the Treasury is expected to announce the sale of a net $351 billion in notes, bonds and bills in the second quarter, down from $483 billion in the first quarter. The Treasury declined to comment ahead of this week’s announcements. The pace of reductions will pick up as the year progresses, many banks forecast: Credit Suisse, for example, expects the Treasury to sell just $900 billion in debt between now and September, when the 2010 fiscal year ends, a sharp slowdown from the $1.4 trillion in October to April. RBC is expecting a bit more, $975 billion. Several major banks have scaled back their forecasts for this year’s U.S. federal budget deficit as the improved economic outlook leads to higher tax receipts, and as many banks and companies that received taxpayer bailouts repay debts early. That is good news for the government and the Treasury market, where worries surU.S. CREDIT face regularly that MARKET demand for U.S. government debt could flag, which would drive yields higher and raise the cost of borrowing for consumers and companies. The improved fiscal outlook means the Treasury can start scaling back record-size auctions, perhaps as early as May. The U.S. raised a record $1.6 trillion in debt last year to cover its hefty budget deficit, caused in part by the sharp economic downturn after the housing bubble burst. For this year, the government is forecasting a deficit of close to $1.4 trillion. But some banks now expect a smaller shortfall: Jefferies & Co., for example, expects a $1.2 trillion deficit. Nomura is forecasting a $1.28 trillion shortfall and Deutsche Bank $1.3 trillion. On Monday, the Treasury will announce how much it plans to raise in debt in the second quarter, and on Wednesday it will provide fur- Advertisement FUND NAME Data as shown is for information purposes only. No offer is being made by Morningstar, Ltd. or this publication. Funds shown aren’t registered with the U.S. Securities and Exchange Commission and aren’t available for sale to United States citizens and/or residents except as noted. Prices are in local currencies. All performance figures are calculated using the most recent prices available. FUND NAME NAV GF AT LB DATE CR NAV —%RETURN— YTD 12-MO 2-YR n AHW CAPITAL MANAGEMENT Tel (+49) 1805 - 23 82 82 www.ahw-capital.com AHW Top-Div.Int. GL EQ LUX 04/29 EUR 53.93 -1.3 22.5 -23.0 38.5 37.1 36.9 37.7 35.5 36.2 38.0 23.2 23.1 23.1 23.1 23.1 22.2 22.2 22.2 22.2 22.2 22.6 22.6 23.9 29.2 27.8 28.7 30.1 35.3 35.2 35.3 34.1 33.9 34.0 34.8 34.6 36.0 57.7 56.1 56.9 58.9 32.3 32.3 31.0 31.0 31.8 33.3 -8.2 -9.1 -0.6 -0.1 -1.6 -1.0 0.2 7.4 7.4 7.4 7.4 7.4 6.5 6.6 6.6 6.7 6.7 6.8 6.9 8.0 -7.4 -8.4 -7.8 -6.7 10.3 10.4 10.4 9.3 9.3 9.3 9.8 9.9 10.9 -10.5 -11.4 -10.9 -9.8 -9.0 -9.0 -10.0 -10.0 -9.4 -8.3 n ALLIANCE BERNSTEIN www.alliancebernstein.com/investments Tel. +800 2263 8637 Am Eq Blend A Am Eq Blend B Am Growth A Am Growth AX Am Growth B Am Growth C Am Growth I Am Income A Am Income A2 Am Income A2 Am Income AT Am Income AT Am Income B Am Income B2 Am Income B2 Am Income BT Am Income BT Am Income C Am Income C2 Am Income I Am Value A Am Value B Am Value C Am Value I Emg Mkts Debt A Emg Mkts Debt A2 Emg Mkts Debt AT Emg Mkts Debt B Emg Mkts Debt B2 Emg Mkts Debt BT Emg Mkts Debt C Emg Mkts Debt C2 Emg Mkts Debt I Emg Mkts Growth A Emg Mkts Growth B Emg Mkts Growth C Emg Mkts Growth I Eur Growth A Eur Growth A Eur Growth B Eur Growth B Eur Growth C Eur Growth I OT US US US US US US US US OT OT US US US OT OT US US US US US US US US GL GL GL GL GL GL GL GL GL GL GL GL GL OT OT OT OT EU OT OT EQ EQ EQ EQ EQ EQ BD BD OT OT BD BD BD OT OT BD BD BD BD EQ EQ EQ EQ BD BD BD BD BD BD BD BD BD EQ EQ EQ EQ OT OT OT OT EQ OT LUX LUX LUX LUX LUX LUX LUX LUX LUX NA NA LUX LUX LUX NA NA 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 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 HKD 04/29 HKD 04/29 USD 04/29 USD 04/29 USD 04/29 HKD 04/29 HKD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 EUR 04/29 EUR 04/29 USD 04/29 EUR 04/29 USD 11.16 10.45 32.51 35.16 27.24 29.37 36.12 8.63 19.87 154.33 67.18 8.65 8.63 17.09 132.74 67.57 8.70 8.63 25.43 8.63 9.02 8.27 9.01 9.73 16.04 21.17 16.17 16.04 20.33 16.14 16.04 20.78 16.04 35.29 29.81 30.54 39.22 9.92 7.50 6.72 8.89 5.68 10.85 7.6 7.2 4.1 4.3 3.7 3.9 4.3 3.9 4.4 4.4 4.3 4.3 3.7 4.1 4.1 4.1 4.1 3.7 4.2 4.0 5.7 5.4 5.6 6.0 4.8 5.3 5.3 4.5 5.0 5.0 4.7 5.2 4.9 1.8 1.5 1.7 2.1 6.7 6.7 6.3 6.3 6.6 6.9 NAV GF AT LB DATE CR Eur Growth I Eur Income A Eur Income A Eur Income A2 Eur Income A2 Eur Income AT Eur Income B Eur Income B Eur Income B2 Eur Income B2 Eur Income BT Eur Income C Eur Income C Eur Income C2 Eur Income C2 Eur Income I Eur Income I Eur Strat Value A Eur Strat Value A Eur Strat Value I Eur Strat Value I Eur Value A Eur Value A Eur Value B Eur Value B Eur Value C Eur Value C Eur Value I Eur Value I Gl Balanced (Euro) A Gl Balanced (Euro) B Gl Balanced (Euro) C Gl Balanced (Euro) I Gl Balanced A Gl Balanced B Gl Balanced C Gl Balanced C OT OT OT OT OT EU OT OT OT OT EU OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT US US OT OT Advertisement FUND NAME OT OT OT OT OT BD OT OT OT OT BD OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT BA BA OT OT LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 NAV EUR EUR USD EUR USD EUR EUR USD EUR USD EUR EUR USD EUR USD EUR USD EUR USD EUR USD EUR USD USD EUR USD EUR USD EUR USD USD USD USD USD USD USD EUR 8.20 6.92 9.15 13.76 18.20 6.94 6.92 9.15 12.77 16.89 6.94 6.92 9.15 13.70 18.12 6.92 9.15 8.78 11.61 9.01 11.92 9.41 12.45 11.41 8.63 12.01 9.08 14.40 10.89 15.94 15.48 15.79 16.27 16.86 15.98 16.59 12.54 33.3 43.9 43.9 43.8 43.8 43.8 43.1 43.1 42.8 42.8 42.7 43.4 43.4 43.2 43.2 44.6 44.6 30.8 30.8 31.9 31.9 30.7 30.7 29.6 29.6 30.1 30.1 31.8 31.8 26.6 25.3 26.2 27.5 27.5 26.2 27.1 27.1 -8.3 7.9 7.9 8.0 8.0 8.0 7.2 7.2 7.2 7.2 7.2 7.5 7.5 7.5 7.5 8.5 8.5 -16.1 -16.1 -15.3 -15.3 -12.6 -12.6 -13.5 -13.5 -13.1 -13.1 -12.0 -12.0 -6.7 -7.6 -6.9 -6.0 -8.0 -8.9 -8.3 -8.3 NAV GF AT LB DATE CR AlexandraConvertibleBondFundI,Ltd.(ClassA) OT OT VGB 02/26 USD NAV —%RETURN— YTD 12-MO 2-YR 1828.22 8.1 78.9 NS n CREDIT PACIFIC ASSET MANAGMENT www.creditpacific.com NS 5 3 5 5 2 1 NS NS 2 FUND MGM'T CO. GL OT WSM 04/30 USD 110.78 10.8 31.2 22.6 OT OT OT OT OT OT CYM USA USA USA USA CYM 02/26 10/31 02/26 02/26 05/29 02/26 USD USD USD USD USD USD 97.94 129.92 110.05 94.61 35.02 63.90 YTD 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 tional Monetary Fund that is expected to total between €100 billion ($133 billion) and €120 billion. Trading in the euro and yen could be thin. Several European countries are on holiday Monday, and Japanese markets will be closed Monday, Tuesday and Wednesday for its Golden Week holidays. “This crisis is really likely to % Return in $US ** 1-YR 2-YR 5-YR 8.50 113.63 29.02 NS 2.41 77.81 8.78 NS 7.95 72.15 4.66 29.58 1.25 69.42 4.16 25.63 1.04 66.08 3.08 25.39 -0.81 63.98 NS NS -0.96 63.06 7.78 NS 2.75 60.98 1.41 NS 0.43 60.91 1.05 NS -0.72 59.53 -5.38 18.31 Source: Morningstar, Ltd 1 Oliver’s Yard, 55-71 City Road London EC1Y 1HQ United Kingdom www.morningstar.co.uk; Email: mediaservice@morningstar.com Phone: +44 (0)203 107 0038; Fax: +44 (0)203 107 0001 continue to haunt us for the rest of the year,” said Michael Woolfolk, senior currency strategist with Bank of New York Mellon in New York. The euro was at $1.3314 late Friday from $1.3246 late Thursday. The dollar was at 93.93 yen from 94.06 yen, while the euro was at 125.06 yen from 124.60 yen. The U.K. pound was at $1.5299 from $1.5324. NAV GF AT LB DATE CR Gl Balanced I Gl Bond A Gl Bond A2 Gl Bond A2 Gl Bond AT Gl Bond AT Gl Bond B Gl Bond B2 Gl Bond B2 Gl Bond BT Gl Bond BT Gl Bond C Gl Bond C2 Gl Bond I Gl Conservative A Gl Conservative A2 Gl Conservative B Gl Conservative B2 Gl Conservative C Gl Conservative C2 Gl Conservative I Gl Eq Blend A Gl Eq Blend B Gl Eq Blend C Gl Eq Blend I Gl Growth A Gl Growth B Gl Growth C Gl Growth I Gl High Yield A Gl High Yield A2 Gl High Yield A2 Gl High Yield AT Gl High Yield AT Gl High Yield B Gl High Yield B2 Gl High Yield B2 US US US OT OT US US US OT OT US US US US US US US US US US US GL GL GL GL GL GL GL GL US US OT OT US US US OT BA BD BD OT OT BD BD BD OT OT BD BD BD BD BA BA BA BA BA BA BA EQ EQ EQ EQ EQ EQ EQ EQ BD BD OT OT BD BD BD OT LUX LUX LUX NA LUX LUX LUX LUX NA LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX NA NA LUX LUX LUX NA 04/29 USD 04/29 USD 04/29 USD 04/29 HKD 04/29 HKD 04/29 USD 04/29 USD 04/29 USD 04/29 HKD 04/29 HKD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 HKD 04/29 HKD 04/29 USD 04/29 USD 04/29 USD 04/29 HKD NAV 17.53 9.44 16.58 128.78 73.40 9.45 9.44 14.47 112.39 73.71 9.49 9.44 14.37 9.44 15.14 17.31 15.11 16.40 15.12 16.91 15.22 11.82 11.06 11.60 12.50 42.63 35.47 40.84 47.45 4.56 10.02 77.83 35.34 4.55 4.56 16.06 124.74 —%RETURN— YTD 12-MO 2-YR 2.6 3.2 3.6 3.6 3.5 3.5 2.9 3.2 3.2 3.3 3.3 3.1 3.5 3.3 2.3 2.2 1.9 1.9 2.1 2.1 2.5 1.4 1.0 1.2 1.6 1.7 1.4 1.6 2.0 7.4 8.2 8.2 8.4 8.4 7.1 7.9 7.9 28.4 15.2 15.2 15.2 15.2 15.2 14.1 14.0 14.0 14.2 14.2 14.7 14.8 15.8 18.3 18.2 17.0 17.1 17.7 17.7 19.2 35.4 34.1 34.9 36.5 34.6 33.2 33.9 35.6 52.7 52.7 52.7 52.8 52.8 50.9 51.2 51.2 -7.4 6.1 6.1 6.1 6.0 6.0 5.0 5.0 5.0 5.1 5.1 5.6 5.6 6.7 -2.0 -2.0 -3.0 -3.0 -2.5 -2.4 -1.2 -17.9 -18.7 -18.3 -17.3 -18.0 -18.8 -18.4 -17.4 9.0 9.0 9.0 9.0 9.0 7.7 7.9 7.9 FUND NAME NAV GF AT LB DATE CR Platinm-Nordic Platinm-Premier Platinm-Turnberry OT OT CYM 02/26 SEK OT OT CYM 12/31 USD OT OT USA 02/26 USD NAV 607.63 21.20 61.99 —%RETURN— YTD 12-MO 2-YR -1.6 -55.9 3.2 13.9 -66.0 NS -14.2 -44.3 -22.1 n SUPERFUND ASSET MANAGEMENT GMBH For info about open funds, contact info@superfund.com and www.superfund.com *Closed for New Investments OT GL OT OT OT OT EQ OT OT OT CYM LUX CYM CYM AUT 04/27 04/27 04/27 04/27 04/27 USD USD USD USD EUR 46.00 2354.00 1070.55 1064.66 7146.00 12.8 7.3 11.0 13.8 7.9 -37.7 -28.4 0.5 -11.1 -13.4 -13.9 -12.4 -3.2 -9.1 -3.4 4.9 5.3 4.9 4.5 4.6 5.8 4.5 0.6 1.5 0.7 0.5 1.0 1.2 0.6 NS NS 1.7 4.4 5.1 2.9 4.1 FUND NAME NAV GF AT LB DATE CR NAV Gl High Yield BT Gl High Yield BT Gl High Yield C Gl High Yield C2 Gl High Yield I Gl Thematic Res. A Gl Thematic Res. B Gl Thematic Res. I Gl Value A Gl Value B Gl Value C Gl Value I Greater China A Greater China B Greater China C India Growth A India Growth AX India Growth B India Growth BX India Growth I Int'l Health Care A Int'l Health Care B Int'l Health Care C Int'l Health Care I Int'l Technology A Int'l Technology B Int'l Technology C Int'l Technology I Japan Eq Blend A Japan Eq Blend B Japan Eq Blend C Japan Growth A Japan Growth B Japan Growth C Japan Strat Value A Japan Strat Value B Japan Strat Value C Real Estate Sec. A Real Estate Sec. B Real Estate Sec. I Short Mat Dollar A Short Mat Dollar A2 Short Mat Dollar AT Short Mat Dollar B Short Mat Dollar B2 Short Mat Dollar BT Short Mat Dollar C Short Mat Dollar C2 Short Mat Dollar I OT US US US US OT OT OT GL GL GL GL AS AS AS OT OT OT OT EA OT OT OT OT OT OT OT OT JP JP JP JP JP JP JP JP JP OT OT OT US US US US US OT US US US 35.88 4.62 4.56 14.83 4.56 15.31 13.35 17.12 11.27 10.32 10.93 12.01 39.58 34.91 39.02 136.20 119.18 142.21 101.54 123.69 137.71 115.78 131.78 150.86 118.14 102.04 114.00 132.81 6409.00 6164.00 6297.00 6035.00 5805.00 5931.00 6720.00 6471.00 6597.00 15.32 13.96 16.50 7.36 10.02 7.37 7.36 9.96 7.38 7.36 14.08 7.36 OT BD BD BD BD OT OT OT EQ EQ EQ EQ EQ EQ EQ OT OT OT OT EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ BD BD BD BD BD OT BD BD BD NA LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX 04/29 HKD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 JPY 04/29 JPY 04/29 JPY 04/29 JPY 04/29 JPY 04/29 JPY 04/29 JPY 04/29 JPY 04/29 JPY 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD 04/29 USD —%RETURN— YTD 12-MO 2-YR 7.8 7.8 7.3 8.1 7.6 3.9 3.6 4.2 1.2 0.8 0.9 1.4 -1.1 -1.4 -1.3 7.3 7.4 7.0 7.1 7.6 0.2 -0.1 0.0 0.4 7.0 6.7 6.9 7.3 6.4 6.0 6.2 2.7 2.4 2.6 9.8 9.5 9.6 6.8 6.4 7.0 2.1 2.3 2.5 2.0 2.3 2.2 2.0 2.3 2.2 51.0 51.0 51.9 51.9 53.6 55.1 53.4 56.3 36.8 35.4 36.1 37.7 42.0 40.6 41.4 NS 83.3 NS 81.4 84.1 28.5 27.2 27.9 29.5 46.9 45.4 46.2 48.0 20.5 19.3 19.9 14.2 13.1 13.7 26.5 25.2 25.8 54.7 53.2 56.0 14.0 13.9 14.0 13.6 13.4 13.2 13.6 13.4 14.6 7.9 7.9 8.5 8.5 9.8 -1.9 -2.9 -1.1 -17.8 -18.6 -18.2 -17.2 -11.3 -12.2 -11.7 NS 1.5 NS 0.6 1.9 -2.5 -3.4 -2.9 -1.7 -3.3 -4.2 -3.7 -2.5 -16.6 -17.5 -17.0 -18.4 -19.2 -18.8 -15.3 -16.2 -15.7 -12.1 -13.0 -11.4 -0.5 -0.6 -0.5 -0.9 -1.0 -1.2 -0.9 -1.0 0.1 n ALLIANZ GLOBAL INVESTORS KAPITALANLAGEGESELLSCHAFT Concentra AE Industria AE InternRent AE EU EQ DEU 04/30 EUR EU EQ DEU 04/30 EUR EU BD DEU 04/30 EUR 53.67 71.88 38.16 3.6 1.6 8.3 33.4 24.9 12.0 -3.3 -11.2 14.3 n CHARTERED ASSET MANAGEMENT PTE LTD - TEL NO: 65-6835-8866 Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: cam@cam.com.sg CAM-GTF Limited AS EQ MUS 04/23 USD 349449.85 27.3 138.3 22.4 n WINTON CAPITAL MANAGEMENT LTD Tel: +44 (0)20 7610 5350 Fax: +44 (0)20 7610 5301 n PLATINUM CAPITAL MANAGEMENT Tel: +44 207 024 9840, www.platinumfunds.net OT OT OT OT OT OT LEGAL CURR. BASE GAM Star GAM Fund USDIreland China Equity - USD Acc Management Limited Landkreditt Landkreditt NOKNorway Kina Forvaltning AS Atlantis Atlantis USDIreland China Investment Management Limited First State First State USDHong Kong New Era PRC Investments (UK) Ltd First State First State USDIreland China Growth II Investments (Hong Kong) Ltd Jupiter Jupiter Unit Trust GBP United Kingdom China Acc Managers Ltd HSZ China Falcon Fund CHFSwitzrlnd CHF Management (Switzerland) Ltd First State First State USDIreland China Focus I Acc Investments (Hong Kong) Ltd Macquarie Macquarie Funds USDCayman Isl IPO China Gateway A1 Management HK Ltd. Neptune Neptune Investment GBP United Kingdom China A Management Limited FUND NAME Superfund Cayman* Superfund GCT USD* Superfund Green Gold A (SPC) Superfund Green Gold B (SPC) Superfund Q-AG* Platinm-All Star Platinm-All Weather Platinm-Dynasty Platinm-Emancipation Platinm-Equity Plus Platinm-Gbl Dividend FUND FUND RATING * NAME [ALTERNATIVE INVESTMENT FUNDS www.WSJ.com] Advertisement n ALEXANDRA INVESTMENT MANAGEMENT Tel: +1 212 301 1800 Fax: +1 212 301 1810 CPS-Master Priv Fund Funds that invest at least 75% of equity assets in Chinese companies, and less than 10% in Taiwan. At least 75% of total assets are invested in equities. Ranked on % total return (dividends reinvested) in U.S. dollars for one year ending April 30, 2010 [ Search by company, category or country at asia.WSJ.com/funds ] —%RETURN— YTD 12-MO 2-YR 6.9 6.4 6.4 6.9 6.9 7.0 6.2 6.2 6.7 6.7 6.7 6.2 6.2 6.8 6.8 6.5 6.5 2.9 2.9 3.1 3.1 2.3 2.3 2.0 2.0 2.1 2.1 2.5 2.5 5.1 4.7 4.9 5.3 2.3 2.0 2.2 2.2 China Equity Leading 10 Performers NEW YORK—The euro could rise next week as investors bask in relief over the expected approval of a bailout for Greece. But the rally will be short-lived as investors wait for individual euro-zone countries to CURRENCY approve their contriMARKETS butions to the package, expected to be made final next week. Other potential sovereign-debt crises wait on the euro zone’s periphery, notably in Portugal and Spain. Also, China’s effort to put an additional brake on its economic growth could harm investor sentiment in the Australian and Canadian dollars, which are closely tied to China’s strong growth prospects and voracious appetite for commodities. On Sunday, China’s central bank raised banks’ reserve requirements for the third time this year. “Expect [riskier currencies] to be affected by,” China’s moves, said Geoffrey Yu, currency strategist at UBS in London, “as fears of further and stronger tightening measures, not only in China, but across emerging markets, may offset some of the positive news which is sure to come from Greece.” Officials were hammering out last-minute details Sunday on a tjree-uear package of loans from the European Union and the Interna- INTERNATIONAL INVESTMENT FUNDS FUND SCORECARD 0.7 2.4 -5.1 1.6 -18.2 1.8 16.0 3.2 17.0 37.5 -63.7 54.2 -10.1 3.8 -24.1 -2.7 -45.6 -24.0 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 OT OT OT OT OT OT OT OT OT OT OT OT OT OT CYM CYM CYM VGB VGB VGB VGB 03/31 03/31 03/31 03/31 03/31 03/31 03/31 EUR 991.70 GBP 999.23 USD 1257.61 EUR 205.74 GBP 222.64 JPY 14697.79 USD 731.14 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 Arbitrage Op For information about listing your funds, please contact: Carson Wong tel: +852 2831-6481; email: carson.wong@dowjones.com OT OT VGB 04/23 USD 1331.67 7.1 29.5 -4.5 Monday, May 3, 2010 25 THE WALL STREET JOURNAL. INTERNATIONAL INVESTOR Brazil’s grain crops strain warehouses BY TONY DANBY AND IAN BERRY prices are discouraging farmers from dumping their grain, Mr. Cordonnier added. Silos in central Brazil are already full, and the new Minister of Agriculture, Wagner Rossi, is visiting the state of Mato Grosso to assess the storage situation. Problems are already surfacing. Otmar Hubner, a technical specialist at the state of Parana’s agricultural secretariat, or Seab, said farmers and cooperatives in Parana, the No. 2 soy-producing state after Mato Grosso, are already witnessing corn and soy being left out in the open. That doesn’t pose an immediate threat to the crop’s quality because dry weather typically persists until September, Mr. Cordonnier said. As long as the grain is placed on a concrete pad and under a tarp, it can last for months. Mr. Cordonnier said Brazil will likely produce 143 million tons of its key crops—corn, soybeans and rice—in the current harvest while storage capacity is around 128 million tons. Any strains in infrastructure will become more evident in July, when farmers start to harvest their second corn crop. One potential solution, Mr. Cordonnier said, are silo bags, giant plastic bags placed on the ground that can hold about 8,000 bushels of grain. They are relatively cheap and are already very popular in Argentina. SAO PAULO, Brazil—Bumper soy and corn crops, as well as this year’s slow sales, are testing Brazil’s creaking storage capacity. Brazil, the world’s No. 2 grain producer after the U.S., forecasts that its grain crop COMMODITY now being harMARKETS vested will be 8.3% bigger than last year’s, hitting an all-time record. This includes 67.3 million tons of soy and 54.1 million tons of corn. Warehouses across Brazil are bursting at the seams. As a result, giant mounds of grain are piling up in producers’ yards and truck beds. This lack of storage is a stark illustration of Brazil’s supply glut, which has depressed grain prices there. However, it also underscores the South American country’s logistics problems of overstretched ports and precarious roads that often hinder transportation of food to big Brazilian cities and global markets. “Brazil does not have enough storage capacity for last year’s corn, this year’s corn, and a record soybean crop,” said Michael Cordonnier, a Brazilian crop consultant with Soybean & Corn Advisor Inc. Government guarantees to buy the crop at a minimum price that is well above current physical market BY ANDREW MONAHAN BY SHRI NAVARATNAM AND V. PHANI KUMAR TOKYO—Japanese governmentbond yields were mixed Friday as equities firmed on expectations that details of the Greek bailout would soon be settled. A Greek rescue deal was later announced over the weekend. The benchmark 10-year yield edged up 0.005 percentage point to 1.285% following BOND Thursday’s holiday. MARKETS But the 30-year yield fell 0.015 percentage point to 2.125% on monthend buying by Japanese life-insurance firms and pension funds. The market will be closed Monday through Wednesday for the Golden Week holidays. Investors were encouraged to buy riskier assets Friday after eurozone officials continued to say that funds to help Greece will soon be on tap, leading to selling pressure on safe-haven assets like Japanese government bonds. The market had little reaction to the statement from the Bank of Japan monetary policy board that Gov. Masaaki Shirakawa had instructed its policy planners to come up with a new method to provide funds to financial institutions. Traders cited a lack of details. Additional monetary easing could spur more lending to companies or result in banks having more excess funds with which to buy more bonds. Asian markets ended mostly higher Friday as solid earnings reports lifted major Chinese banks in Hong Kong, while real-estate companies and exporters paced gains in Japan. Investment in riskier assets picked up as concerns over Greece eased somewhat ASIAN-PACIFIC after euro-zone STOCKS officials said a bailout package for the cash-strapped nation could be ready soon. Investors in Japan, returning from the Showa Day holiday Thursday, pushed the benchmark Nikkei Stock Average of 225 companies up 1.2% to 11057.40, although many investors were cautious ahead of Japan’s Golden Week holidays. Tokyo markets are closed until Thursday. For the week, the Nikkei added 1.3%, but it closed April with a loss of 0.3%. Year to date, stocks are up 4.8%. Mitsubishi Estate’s earnings sparked a sharp rally in real-estate shares, while heavy buying in Takeda Pharmaceutical and other drug stocks helped lift the broader market. Mitsubishi Estate climbed 5.4% and Mitsui Fudosan gained 3.9%. Takeda advanced 3.3% after the company said late Wednesday it had settled patent suits with several drug makers. [ Search by company, category or country at asia.WSJ.com/funds ] FUND NAME NAV GF AT LB DATE CR GAM Asia Eq Hdg JPY Op GAM Asia Equity Hedge US GAM Asia Equity USD GAM Asia-Pacific Eq USD GAM Com Glb Bal EUR Op GAM Com Glb Bal USD Op GAM Comp Glb Eq EUR Op GAM Comp Glb Eq USD Op GAM Comp Glb Gr EUR Op GAM Comp Glb Gr USD Op GAM CompAbsRT EUR Op GAM CompAbsRT SGD Op GAM CompAbsRT USD Op GAM Cptal Apprec Eq Inc GAM Cross Trading Inc GAM Diversity CHF Op GAM Diversity EUR Op GAM Diversity USD 2.5XL GAM Diversity USD Op GAM Dvrsty II CHF Op GAM Dvrsty II EUR Op GAM Dvrsty II USD Op GAM DvrstyIII EUR Op GAM DvrstyIII USD Op GAM Euro Eq Hdg EUR Op GAM Euro Eq Hdg USD Op GAM European Equity USD GAM GAMCO GAM Gb EmMkts Hdg EUROp GAM Gb EmMkts Hdg USDOp GAM Gbl Divers USD Inc. GAM Grtr China Eq Hdg Op GAM Intrst Trend II GAM Intrst Trend Inc GAM Japan Eq Hdg EUR Op GAM Japan Eq Hdg USD Op GAM Japan Eq Hdg YEN Open GAM Japan USD GAM Japan YEN GAM Money Mkt EuroOp GAM Money Mkt USD GAM Multi-Arb EUR Op GAM Multi-Arb USD Op GAM Multi-China EUR Op GAM Multi-China USD Op GAM Multi-Emer Mkts GBP 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 Multi-Nth Am EUR Special GAM Multi-Nth Am USD Special GAM Multi-Pac EUR Op GAM Multi-Pac USD Op GAM Portable Dvr/S&P500 GAM Selection Hdg GAM Sing/Malaysia GAM Sterling Spe Bd Inc GAM Trading EUR Inc GAM Trading USD Inc GAM Trdg II IncEUR Op GAM Trdg II IncUSD Op GAM Trdg IV IncEUR Op GAM Trdg IV IncUSD Op GAM Trdg V IncEUR Op GAM Trdg V IncUSD Op GAM TrdgIII IncEUR Op GAM TrdgIII IncUSD Op GAM USDSpecBondInc GAM Worldwide GAMut Investments GL OT OT OT US US GL GL US US OT OT OT US OT OT OT OT OT OT OT OT OT OT EU OT OT OT OT OT GL GL GL OT AS OT AS JP JP EU US OT OT OT OT OT OT OT OT OT OT OT OT GL OT OT US AS OT OT OT OT OT OT OT OT OT OT OT US GL OT n GAM Star Fund Plc GAMStar-AsEqCHF Ord Ac AS EQ OT OT OT BA BA EQ EQ BA BA OT OT OT EQ OT OT OT OT OT OT OT OT OT OT EQ OT OT EQ OT OT EQ EQ BD OT EQ OT EQ EQ EQ MM MM OT OT OT OT OT OT OT OT OT OT OT OT EQ OT OT EQ EQ OT OT OT OT OT OT OT OT OT OT OT BD EQ OT VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB VGB 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 04/26 04/26 04/29 04/27 04/26 04/26 04/26 04/26 04/26 04/26 09/30 09/30 09/30 04/23 04/26 04/26 04/26 04/19 04/26 04/26 04/26 04/26 04/19 04/19 04/26 04/26 04/29 04/27 04/26 04/26 04/26 04/26 04/26 04/26 04/26 04/26 04/26 04/29 04/29 04/29 04/29 04/26 04/19 04/19 04/19 04/19 04/26 04/19 04/26 04/26 04/19 04/26 04/26 04/19 04/26 08/24 04/23 04/29 04/26 04/26 04/26 04/26 04/26 04/26 04/26 04/19 04/19 04/26 04/26 04/26 04/29 04/21 NAV —%RETURN— YTD 12-MO 2-YR JPY USD USD USD EUR USD EUR USD EUR USD EUR SGD USD USD USD CHF EUR USD USD CHF EUR USD EUR USD EUR USD USD USD EUR USD USD USD USD USD EUR USD JPY USD JPY EUR USD EUR USD EUR USD GBP USD EUR EUR USD USD EUR USD EUR USD USD USD USD GBP EUR USD EUR USD EUR USD EUR USD EUR USD USD USD USD 15431.82 288.21 654.11 1420.29 102.29 133.84 108.83 136.35 93.97 133.16 141.71 102.21 845.66 274.96 468.34 94.90 653.56 79.17 686.82 99.86 139.41 211.27 115.95 122.53 227.28 210.79 283.99 899.57 101.74 107.30 279.59 286.52 117.67 313.25 138.48 142.65 9846.41 1258.29 10116.03 51.18 100.06 112.58 117.20 166.85 175.75 134.77 664.20 271.61 138.62 113.28 472.72 135.29 220.01 143.67 166.06 70.11 2921.38 2628.10 254.53 326.73 978.37 139.89 317.69 147.43 155.31 124.10 129.33 157.65 163.36 606.31 2221.52 7812.08 -0.7 -0.7 0.0 10.7 4.7 4.7 6.9 6.9 4.8 4.8 9.1 9.2 9.5 10.6 0.5 0.6 0.8 1.1 0.9 0.4 0.5 0.5 0.3 0.5 3.9 3.7 -4.8 11.0 4.0 4.0 11.9 -0.1 25.0 24.5 18.7 16.9 17.2 14.1 14.6 0.8 0.2 1.2 1.0 -0.7 -0.5 2.5 2.0 1.0 0.2 0.2 1.1 1.0 0.9 0.2 0.4 17.7 10.7 4.1 10.7 0.5 0.5 0.6 0.6 0.5 0.5 -0.3 -0.2 0.4 0.5 14.4 -1.3 3.0 55.7 56.6 54.1 37.7 24.2 24.2 38.1 38.1 27.1 27.1 0.1 -0.1 0.7 49.0 5.7 5.1 5.3 10.6 5.6 3.7 4.0 4.3 3.9 4.3 16.7 17.6 31.7 56.7 14.4 14.9 44.4 70.1 112.6 107.3 19.8 20.2 21.4 31.2 28.5 0.8 0.0 1.7 1.4 9.7 10.4 23.9 23.1 7.8 7.1 7.0 7.8 6.0 5.9 4.9 5.3 -27.7 66.1 67.2 62.7 5.4 5.7 5.4 5.7 5.1 5.5 4.1 4.6 5.1 5.5 95.3 35.2 5.7 7.5 8.8 -7.9 -8.3 -4.7 -4.7 -9.0 -9.0 -7.9 -7.9 -6.9 -8.3 -7.0 -1.2 3.0 -5.0 -3.7 -15.0 -3.8 -4.7 -3.8 -3.9 -3.9 -3.9 0.3 1.8 -13.3 -2.0 -13.3 -12.5 0.7 28.2 8.5 9.4 6.8 -8.2 -7.4 -9.9 -13.8 1.5 0.5 -6.3 -6.6 1.3 1.2 1.5 0.8 -3.1 -3.0 -3.7 -3.7 -1.7 -1.7 -0.1 0.0 -22.9 15.9 -4.0 10.6 3.6 3.1 3.6 3.1 3.3 2.9 2.9 2.5 3.3 2.9 15.6 -9.1 7.4 EQ IRL 04/29 CHF 11.50 5.1 47.3 -5.7 FUND NAME NAV GF AT LB DATE CR NAV GAMStar-AsEqEUR Ord Ac GAMStar-AsEqGBP Ord Ac GAMStar-AsEqUSD Ord Ac GAMStar-AsPacEqEUR Acc GAMStar-AsPacEqEUR Inc GAMStar-China EqUSD GAMStar-ContEurEqEUR Ac GAMStar-EurpEqEUR Acc GAMStar-EurpEqEUR Inc GAMStar-EurpEqUSD Acc GAMStar-EurpEqUSD Inc GAMStar-FrontierOppUSD Acc GAMStar-JpnEq EUR Acc GAMStar-JpnEq EUR Inc GAMStar-JpnEq JPY Acc GAMStar-JpnEq USD Acc GAMStar-US All CapEqUSD GAMStar-World EqUSD Acc AS AS AS AS AS OT EU EU EU EU EU GL JP JP JP JP OT GL 12.85 1.65 13.37 116.10 112.35 18.78 11.43 192.33 175.74 15.53 14.08 6.21 103.66 103.66 1050.88 12.60 8.97 2237.88 EQ EQ EQ EQ EQ OT EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ OT EQ IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/28 04/29 04/29 04/29 04/29 04/29 04/29 EUR GBP USD EUR EUR USD EUR EUR EUR USD USD USD EUR EUR JPY USD USD USD —%RETURN— YTD 12-MO 2-YR 8.9 6.8 0.3 15.2 15.2 8.5 2.3 5.0 5.0 -2.9 -2.9 13.2 18.0 18.0 14.1 13.4 7.0 -1.1 57.2 52.1 58.2 33.8 33.8 113.6 31.8 32.2 32.2 32.1 32.1 38.3 27.6 27.6 27.5 28.7 38.9 36.1 1.1 6.4 -6.9 -1.9 -1.9 29.0 -4.3 -5.3 -5.3 -12.2 -12.2 NS -1.5 -1.5 -13.8 -10.2 -0.6 -8.6 4.7 2.3 0.1 8.2 3.9 1.3 -0.9 6.5 NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS NS n HSBC TRINKAUS INVESTMENT MANAGERS SA E-Mail: funds@hsbctrinkaus.lu 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 Renaissance Hgh Grade Bd B Renaissance Hgh Grade Bd C Renaissance Hgh Grade Bd D JP EU EU EU JP EU EU EU BD BD BD BD BD BD BD BD LUX LUX LUX LUX LUX LUX LUX LUX 04/26 04/26 04/26 04/26 04/26 04/26 04/26 04/26 JPY JPY USD EUR JPY JPY USD EUR 10383.91 10111.89 96.55 105.66 10279.11 9984.32 94.71 103.66 AS AS AS AS EA EA AS AS GL GL GL GL GL GL GL EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 04/29 SGD USD SGD USD SGD USD SGD USD SGD USD SGD USD EUR SGD USD 12.72 45.03 13.47 24.78 15.04 24.85 14.98 29.77 14.37 29.46 14.46 12.49 17.60 21.95 16.55 NS -5.7 NS -2.6 NS 7.1 NS 6.7 NS 3.5 NS 4.3 16.0 NS 6.8 NS 38.3 NS 42.5 NS 74.3 NS 87.2 NS 59.2 NS 40.3 79.2 NS 78.9 n MANULIFE ASSET MANAGEMENT TEL:(852)2108 1110 Internet:http://www.manulife.com.hk 47/F Manulife Plaza, Causeway Bay, Hong Kong American Growth American Growth AA Asian Equity Asian Equity AA Asian Sm Cap Equity AA China Value A China Value AA Dragon Growth Dragon Growth AA US US AS AS AS AS AS AS OT EQ EQ EQ EQ EQ EQ EQ EQ OT LUX LUX LUX LUX LUX LUX LUX LUX LUX 04/30 USD 04/30 USD 04/30 USD 04/30 USD 04/30 USD 04/30 USD 04/30 USD 04/30 USD 04/30 HKD 16.19 0.93 2.48 0.80 1.26 7.05 2.21 1.61 7.82 6.0 5.9 1.0 0.9 9.0 -0.9 -0.9 -2.2 -2.1 36.6 36.3 44.4 43.9 83.0 46.9 46.5 42.3 42.2 FUND NAME NAV GF AT LB DATE CR Emg Eastrn Europe A Emg Eastrn Europe AA European Growth European Growth AA Global Contrarain AA Global Property AA Global Resources AA Healthcare AA India Equity AA International Growth International Growth AA Japanese Growth Japanese Growth AA Latin America Equity AA Manulife GF Strategic Income Fund AA MGF Asia Value Dividend Equity Fund Russia Equity AA Taiwan Equity AA Turkey Equity AA U.S. Bond AA U.S. Sm Cap Equity AA U.S. Special Opportunities U.S. Tsy Inf-ProtSec AA EU EQ LUX 04/30 USD EU EQ LUX 04/30 USD EU EQ LUX 04/30 USD EU EQ LUX 04/30 USD GL EQ LUX 04/30 USD OT EQ LUX 04/30 USD OT EQ LUX 04/30 USD OT EQ LUX 04/30 USD EA EQ LUX 04/30 USD GL EQ LUX 04/30 USD GL EQ LUX 04/30 USD JP EQ LUX 04/30 USD JP EQ LUX 04/30 USD GL EQ LUX 04/30 USD OT OT NA 04/30 USD OT OT Lux 04/30 USD EE EQ LUX 04/30 USD AS EQ LUX 04/30 USD EE EQ LUX 04/30 USD US BD LUX 04/30 USD US EQ LUX 04/30 USD OT OT LUX 04/30 USD OT BD LUX 04/30 USD Indonesian Grth Fund EA NAV —%RETURN— YTD 12-MO 2-YR 5.00 2.15 8.89 0.63 0.99 0.73 1.12 0.99 1.15 3.12 0.72 2.89 0.76 1.31 1.06 1.20 0.73 1.06 0.89 1.16 1.03 0.93 1.17 8.4 8.3 -2.9 -3.0 12.1 7.4 3.1 4.7 4.7 2.4 2.3 5.0 5.7 1.6 5.9 5.4 13.1 -1.7 15.1 4.4 25.5 14.8 2.5 80.0 79.7 34.5 34.1 72.6 57.9 43.9 30.4 66.2 28.1 27.8 25.6 26.2 71.7 NS NS 87.0 44.7 107.6 19.6 71.7 85.9 8.9 -10.5 -10.7 -17.3 -17.5 NS -9.5 -11.3 NS -5.4 -12.5 -12.7 -12.0 -12.0 -4.0 NS NS -14.7 -4.1 11.1 8.8 0.8 13.0 2.6 147.49 15.8 112.4 13.2 -8.2 -3.5 -6.0 -6.3 5.0 -2.2 -2.5 -6.0 -6.6 Advertisement FUND NAME NAV GF AT LB DATE CR Money Market EURO A Money Market USD A EU MM LUX 04/28 EUR US MM LUX 04/28 USD NAV 27.43 15.83 —%RETURN— YTD 12-MO 2-YR 0.1 0.0 0.5 0.2 2.0 1.1 -0.9 6.5 2.5 6.3 18.0 1.8 NS NS -33.1 n THE NATIONAL INVESTOR TNI Tower | Zayed 1st Street Khalidia| Web:www.tni.ae TNI Mena Real Estate Fund OT TNI MENA Special Sits Fund OT TNI UAE Blue Chip Fund OT OT BMU 04/22 USD OT BMU 03/31 USD OT ARE 04/22 AED 952.71 1149.89 5.47 n WEBSITE: WWW.VALUEPARTNERS.COM.HK, TEL: (852) 2880 9263, FAX: (852) 2564 8487 *formerly known as China ABH Shares Fund n PT CIPTADANA ASSET MANAGEMENT AS EQ CYM 04/15 USD 32.02 7.3 69.6 17.6 Tel: +62 21 25574 883 Fax: +62 21 25574 893 Website: www.ciptadana.com Intel-Chin Mainlnd Foc Asia Value Formula Fd-B NS -7.2 NS -4.9 NS -4.6 NS -4.8 NS -6.3 NS -10.4 -3.9 NS -11.5 Exporters also strengthened. Canon added 1.9% and auto maker Nissan Motor rose 2.4%. However, Honda Motor fell 2.1%, despite swinging back to a quarterly profit on Wednesday, as the results came in slightly below expectations and the company’s earnings forecast was seen as conservative. Japan Tobacco jumped 5.1% after saying late Wednesday it will raise prices of tobacco products sold in Japan beginning Oct. 1. The company also swung to a net profit for the quarter ended March 31 from losses a year earlier. In Hong Kong, the Hang Seng Index rose 1.6% to 21108.59. Over the week, and for the month, the benchmark index fell 0.6%. Stronger-than-expected firstquarter earnings reports drove shares of China’s two largest banks higher. Industrial & Commercial Bank of China climbed 1.9% and China Construction Bank rose 4.2%. In Shanghai, they advanced 1.1% and 1%, respectively. Container-terminal operator Cosco Pacific tumbled 7.6% after saying it plans to sell new shares, mainly to fund the acquisition of an additional stake in Shenzhen’s Yantian Terminals. The company said it will sell 449 million new shares at a discount of 9.9% to the stock’s closing price Thursday. South Korea’s Kospi advanced 0.8% to 1741.56, recouping losses to finish the week up 0.3% and giving it a gain of 2.9% for April. INTERNATIONAL INVESTMENT FUNDS EQ CYM 04/28 USD n SENSIBLE ASSET MANAGEMENT LIMITED www.samfund.com.hk Tel: (852) 2868 6848 Fax: (852) 2810 9948 n J.P. MORGAN ASSET MANAGEMENT For additional fund prices, please visit www.jpmorganam.com.sg Tel: +65 6882 1328 JF China (SGD)A(acc) JF China (USD)A(dist) JF Greater China (SGD)A(acc) JF Greater China (USD)A(dist) JF India (SGD)A(acc) JF India (USD)A(acc) JF Singapore (SGD)A(acc) JF Singapore (USD)A(dist) JPM Emerg Mkt Eq (SGD)A(acc) JPM Emerg Mkt Eq (USD)A(dist) JPM Glb Dyn (SGD)A(acc) JPM Glb Dyn (USD)A(dist) JPM Glb Nat Res (EUR)A(dist) JPM Glb Nat Res (SGD)A(acc) JPM Glb Nat Res (USD)A(acc) Japanese shares climb, led by real-estate firms Ten-year yield in Japan rises with stocks AS EQ CYM 04/29 USD 8.53 6.4 68.6 -0.8 Intel-China Converg* VP Classic - A VP CLassic - B VP High Dividend Stk YMR-N Growth Fund YMR-N Small Cap Fund Bonds Eur Hi Yld A Bonds EURO A Bonds EUROPE A Bonds US OppsCoreplus A Bonds World A Eq. AsiaPac Dual Strategies A Eq. China A Eq. Concentrated Euroland A Eq. ConcentratedEuropeA Eq. Emerging Europe A Eq. Euroland A Eq. Euroland Small Cap A Eq. EurolandCyclclsA Eq. EurolandFinancialA Eq. Glbl Emg Cty A Eq. Global A Eq. Global Energy A Eq. Global Resources A Eq. Gold Mines A Eq. India A Eq. Japan CoreAlpha A Eq. Latin America A Eq. US Lg Cap Gr A Eq. US Rel Val A Eq. US Sm Cap Val A OT OT OT OT OT OT AS OT EU OT EU OT EU OT GL GL OT OT OT OT OT OT US US US OT OT OT OT OT OT EQ OT EQ OT EQ OT EQ EQ EQ EQ EQ OT EQ OT OT OT 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 04/28 04/29 04/28 04/28 04/28 04/29 04/29 04/29 04/28 04/28 04/29 04/28 04/28 04/28 04/29 04/28 04/28 04/28 04/28 04/29 04/28 04/28 04/28 04/28 04/29 n Yuki 77 Series Yuki 77 General EUR EUR EUR USD USD USD USD EUR EUR EUR EUR EUR EUR EUR USD USD USD USD USD USD JPY USD USD USD USD 22.08 41.52 39.57 37.81 41.12 10.47 22.31 90.75 26.98 27.27 10.65 150.52 18.35 10.23 9.30 28.60 18.04 112.79 32.81 135.65 8210.71 112.96 15.97 22.27 18.79 7.3 1.2 1.2 2.5 -2.1 0.4 -7.5 -2.4 -0.1 15.8 -1.6 6.6 3.1 -9.5 -4.0 2.7 -0.5 3.3 8.3 3.8 13.2 -2.8 4.7 8.1 17.8 48.9 3.8 3.4 14.3 8.1 57.5 38.2 17.0 31.8 76.0 23.2 47.4 28.9 24.4 38.0 42.7 30.0 53.2 55.0 65.9 24.7 65.4 34.6 43.1 49.9 4.7 5.5 5.3 9.0 2.2 -7.3 -9.1 -12.8 -12.2 -13.7 -13.9 -5.9 -9.3 -21.2 -14.9 -10.1 -18.0 -11.2 7.7 -6.3 -6.9 -11.6 -10.2 -10.1 -8.9 EQ EQ EQ EQ CYM CYM CYM CYM 04/15 04/29 04/29 04/26 USD USD USD USD 121.64 196.71 91.53 50.39 6.7 5.5 5.3 10.9 68.0 70.7 69.8 71.2 17.6 5.2 4.7 11.0 n YUKI INTERNATIONAL LIMITED Tel +44-207-269 0203 www.yukifunds.com n YMR-N Series n SG ASSET MANAGEMENT (HK) LTD Hotline in Hong Kong 2166 5099 A company of Amundi Group www.sgam.com AS AS AS AS OT OT OT IRL 04/30 JPY OT IRL 04/30 JPY 9982.00 7418.00 5.5 5.8 24.1 30.6 -15.3 -13.7 JP EQ IRL 04/30 JPY 6382.00 3.8 10.1 -20.3 EQ IRL 04/30 JPY EQ IRL 04/30 JPY 7225.00 8827.00 5.8 17.1 19.1 16.4 -15.7 -12.3 4901.00 5713.00 5378.00 4.9 8.9 5.3 16.1 20.3 28.7 -20.8 -15.1 -14.2 JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY JPY 4652.00 4902.00 7197.00 9301.00 6566.00 8187.00 5481.00 13021.00 8157.00 7668.00 6088.00 2977.00 5.2 5.1 3.2 8.0 3.3 7.2 5.6 12.6 2.5 7.4 7.8 9.2 16.9 16.1 20.9 18.6 13.0 13.4 16.1 21.6 13.6 39.1 20.7 29.7 -22.9 -22.9 -18.3 -15.3 -18.2 -17.2 -17.3 -9.6 -20.9 -12.9 -14.2 -17.9 EQ IRL 04/30 JPY 5861.00 8.1 18.0 -16.3 n Yuki Chugoku Series Yuki Chugoku Jpn Gen Yuki Chugoku JpnLowP JP JP n Yuki Hokuyo Japan Series Yuki Hokuyo Jpn Gen Yuki Hokuyo Jpn Inc Yuki Hokuyo Jpn Sm Cap n Yuki Mizuho Series Yuki Mizuho Gen Jpn III Yuki Mizuho Jpn Dyn Gro Yuki Mizuho Jpn Exc 100 Yuki Mizuho Jpn Gen Yuki Mizuho Jpn Gro Yuki Mizuho Jpn Inc Yuki Mizuho Jpn Lg Cap Yuki Mizuho Jpn LowP Yuki Mizuho Jpn PGth Yuki Mizuho Jpn SmCp Yuki Mizuho Jpn Val Sel Yuki Mizuho Jpn YoungCo JP JP JP EQ IRL 04/30 JPY EQ IRL 04/30 JPY EQ IRL 04/30 JPY OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT OT n Yuki Shizuoka Japan Series Yuki Shizuoka General Japan JP For information about listing your funds, please contact: Carson Wong tel: +852 2831-6481; email: carson.wong@dowjones.com IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL IRL 04/30 04/30 04/30 04/30 04/30 04/30 04/30 04/30 04/30 04/30 04/30 04/30 26 THE WALL STREET JOURNAL. BLUE CHIPS $33.4 12.4% 0.81 9.4 7.5 0.71 4.1 0.63 3.3 32.9 Canada 0.06 3.3 0.53 2.9 -1.48 2.8 -0.47 1.7 -0.90 1.6 13.84 South Korea Iron Steel $34.1 499,000 Japan Industrial Suppliers 27.5 1,428 Taiwan Electrical Components Equipment 40.4 148.50 42.0 31.3 22.7 -41.3 3.32 15.7 -47.8 2.98 59.3 98.0 25.7 26.7 -2.53 29.2 -36.0 -2.30 78.6 -2.2 4.22 3.69 -3.11% Japan Automobiles 62.5 3,215 -2.13 12.6 -20.4 Japan Banks 45.2 3,120 -2.04 -10.6 -69.7 23.2 Switzerland 4,050 79.6 46.3 Germany 34.0 Exploration Production 56.0 Russia Pharmaceuticals Hong Kong 25.1 Singapore Japan -44.1% 32.6 South Korea 12.92 Three-year 41.6% Honda Motor 44.8 South Africa 6.42 27.8 52-week 5.14% Sumitomo Mitsui Finl 15.7 4.9 185.8 Mitsui 80.5 Banks Retail REITs Hon Hai Precision Ind 43.2% Hong Kong Australia CNOOC 52-week STOCK PERFORMANCE Previous session 327,000 POSCO Year-to-date -0.54 Tobacco Takeda Pharm 0.56 Netherlands Japan Previous close, in local currency China Constr Bk In U.S.-dollar terms. -0.57% Japan Industry Westfield Grp INDEX PERFORMANCE Turkey Country Japan Tobacco Dow Jones Country Titans Sweden Market value, in billions of US$ Company 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 Previous session BONDS Dow Jones Asia Titans: Friday's best and worst... Major players benchmarks Giants around the world Monday, May 3, 2010 26.3 1.4 U.K. -1.28 Australia 0.51 -0.2% 1.78 -2.2 Samsung Elec South Korea (Semiconductors) Nissan Motor Japan (Automobiles) Shin-Etsu Chml Japan (Specialty Chemicals) PetroChina Hong Kong (Integrated Oil Gas) Indl Comm Bk China Hong Kong (Banks) Canon Japan (Electronic Office Equipment) Commonwlth Bk of Aus Australia (Banks) Nintendo Japan (Toys) Tokio Marine Hldgs Japan (Property Casualty Insurance) Shinhan Financial Grp South Korea (Banks) Seven I Hldgs Japan (Broadline Retailers) Kansai Elec Power Japan (Conventional Electricity) Panasonic Japan (Consumer Electronics) KB Fncl Group South Korea (Banks) Toyota Motor Japan (Automobiles) East Japan Railway Japan (Travel Tourism) Westpac Bking Australia (Banks) Woolworths Australia (Food Retailers Wholesalers) China Life Insurance Co. Ltd. Hong Kong (Life Insurance) BHP Billiton Australia (General Mining) 29.8 France Brazil -0.53 Italy -0.65 Spain 0.76 20.4 -5.5 55.5 -6.6 14.6 -9.6 0.39 China 88 30.2 -3.7 -0.59 12.0 -16.5 10.7 Dow Jones Regional Sector Titans Travel Leisure Arab 50 14.8% -0.42% 38.3% 11.1 26.5 11.0 0.10 47.5 Ind Gds Svcs -1.41 Media -0.65 Retail -1.16 6.7 29.6 Auto Parts 0.01 6.0 33.9 9.0 5.5 42.7 48.0 Real Estate -0.37 Asian 50 0.89 Tiger 50* 1.35 -0.3% 41.1 Global 50 -0.79 -1.3 27.7 3.0 Market value, in billions (U.S) Company/Country (Industry) 27.3 Hong Kong ...And the rest of Asia's blue chips 32.9 *Asia excluding Japan Latest, in local currency 112.8 STOCK PERFORMANCE Latest 52-week Three-year 849,000 2.91% 43.4% Company/Country (Industry) 47.4% 35.7 823.00 2.36 61.4 5,450 2.25 11.7 -28.8 24.7 9.10 2.02 32.7 -10.4 61.7 5.77 1.94 29.4 34.5 57.2 4,355 1.87 39.1 China Mobile (HK) 197.8 Hong Kong (Mobile Telecommunications) KDDI 21.4 Japan (Mobile Telecommunications) NTT DoCoMo 65.0 Japan (Mobile Telecommunications) Sun Hung Kai Prop 36.2 Hong Kong (Real Estate Holding Development) Nippon T&T 53.8 Japan (Fixed Line Telecommunications) Taiwan Smcndtr Mfg 51.0 Taiwan (Semiconductors) Tokyo Elec Power 33.9 Japan (Conventional Electricity) Cheung Kong 29.0 Hong Kong (Real Estate Holding Development) Woodside Petroleum 32.8 Australia (Exploration Production) Aus NZ Bk 57.1 Australia (Banks) Mizuho Financial Grp 27.2 Japan (Banks) National Australia Bk 55.2 Australia (Banks) Hutchison Whampoa 29.7 Hong Kong (Diversified Industrials) JFE Hldgs 19.0 Japan (Iron Steel) Nippon Steel 22.5 Japan (Iron Steel) Sony 34.7 Japan (Consumer Electronics) QBE Ins Grp 20.1 Australia (Reinsurance) RioZim Ltd 40.7 Australia (General Mining) Mitsubishi 39.2 Japan (Industrial Suppliers) Mitsubishi UFJ Finl 73.1 Japan (Banks) -31.7 24.6 -36.1 83.6 58.51 1.63 66.9 7.8 43.1 31,700 1.44 19.0 -18.2 23.6 2,812 1.41 8.6 -37.0 20.3 47,550 1.17 50.0 -5.9 23.1 2,407 1.13 7.9 -30.2 20.1 2,091 1.06 3.8 -34.9 30.4 1,382 1.02 -2.1 -42.7 18.9 54,500 0.93 41.0 -32.8 122.8 3,665 0.83 -6.0 -49.3 26.5 6,300 0.80 11.3 -35.0 73.7 27.20 0.74 43.5 -0.3 31.0 27.10 0.71 2.6 -4.1 34.3 35.75 0.70 30.7 43.6 127.3 40.75 0.62 23.5 Market value, in billions (U.S) 33.2 Merger Arbitrage Event Driven Equity Long/Short 77.25 0.59% 14.8% 6.8% 455,500 0.55 1.5 -54.5 146,400 0.48 8.2 -29.6 109.70 0.46 35.9 14.0 3,825 0.39 4.2 -36.3 61.80 0.32 12.5 -9.2 2,357 0.17 1.4 -39.9 97.05 0.15 20.3 -11.4 45.40 0.11 18.2 8.7 24.20 ... 51.3 -21.3 182.00 ... -12.1 -75.1 28.00 -0.04 34.9 -36.5 54.05 -0.09 17.5 -30.4 3,385 -0.15 20.7 -50.9 336.00 -0.30 -3.5 -58.6 3,270 -0.46 26.7 -49.0 21.10 -0.47 -2.5 -32.5 72.10 -0.68 42.3 5.2 2,244 -0.80 40.3 -14.7 494.00 -1.00 -7.3 -60.8 Credit-default swaps: Asian companies Hedge funds Dow Jones Hedge Benchmark STOCK PERFORMANCE Latest 52-week Three-year Sources: Dow Jones Indexes; WSJ Market Data Group Source: Dow Jones Indexes Tracking credit markets dealmakers Latest, in local currency TOTAL RETURN for rolling periods, net of fees* One week One month One quarter Year to date One year 0.19% 0.19 0.82% 0.57 1.7% 3.0 7.6% 15.5 1.89 -0.34 1.7% 2.3 5.7 5.4 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. 11.7 *Estimates as of 04/29/10, after fees; Source: www.djhedgefundindexes.com Showing the biggest improvement... And the most deterioration CHANGE, in basis points CHANGE, in basis points Yesterday Yesterday Five-day 28-day Yesterday Yesterday Five-day 28-day –12 Singapore Telecom 39 4 –8 8 1 Tokyo Elec Pwr 42 2 122 –7 5 10 Marubeni Corp 129 Credit derivatives All statistics published in The Wall Street Journal Asia from markets outside the Asian-Pacific region reflect preliminary data. 251 166 Woori Bank — NOTICE TO READERS — Socialist Rep Vietnam Rep Philippines Rep Korea 89 –7 7 7 Japan Rep Indonesia 167 –7 10 3 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. Shin Han Bank 115 –7 7 9 71 –7 2 3 Index: series/version Mid-spread, in pct. pts. Mid-price Coupon 100.49% 0.01% 1.00 0.75 1.32 98.49 0.01 1.41 1.11 1.20 4.32 102.83 0.05 4.68 3.95 4.25 1.04 99.80 0.01 1.12 0.87 0.97 1.06 99.72 0.01 1.22 0.85 0.99 In percentage points Also, receive emails that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com/Email. Index roll Asia ex-Japan IG 2.00 1.50 t 1.00 0.50 t Follow the markets throughout the day, with updated stock quotes, news and commentary at WSJ.com. 2 8 6 1 Chubu Elec Pwr 37 1 2 Korea Dep Ins Corp 74 1 9 Tokyo Gas 30 1 2 9 Ptt Pub Co 122 –7 17 33 Wan Hai Lines 181 2 7 4 Korea Dev Bk 100 –6 9 7 Sanyo Shinpan Fin 444 2 27 –113 59 –6 3 9 China Constr Bk 124 3 14 13 Australia Source: Markit Group 0.82 Note: Data as of April 29 WSJ.com 16 71 SPREAD RANGE, in pct. pts. since most recent roll Maximum Minimum Average 0.90 Spreads Spreads on fiveyear swaps for corporate debt; based on Markit iTraxx indexes. 3 Hysan Dev Co Markit iTraxx Indexes Europe: 13/1 Eur. High Volatility: 13/1 Europe Crossover: 13/1 Asia ex-Japan IG: 13/1 Japan: 13/1 KT&G Co –5 0 Nov. Dec. Jan. Feb. Mar. April 2009 2010 Source: Markit Group Europe: Bank revenues from equity capital markets Behind every IPO, follow-on or convertible equity offering is one or more investment banks. At right, investment banks historical and yearto-date revenues from global equitycapital-market (ECM) deals n Equity capital markets n Debt capital markets (both in billions, left axis) 12 60% ECM as a percentage of total (right axis) t 8 40 4 20 0 0 2004 2005 2006 2007 2008 2009 2010 Source: Dealogic Monday, May 3, 2010 27 THE WALL STREET JOURNAL. GLOBAL MARKETS LINEUP Commodities Currencies Prices of futures contracts with the most open interest EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; NYBOT: New York Board of Trade; MDEX: Bursa Malaysia Derivatives Berhad; LIFFE: London International Financial Futures Exchange; LME: London Mercantile Exchange; NYMEX: New York Mercantile Exchange; ICE: IntercontinentalExchange ONE-DAY CHANGE Contract Commodity Exchange Last price Net Percentage high 375.25 999.00 503.00 94.225 3,239 135.30 15.15 84.13 2,558.00 2,403 1,335 CBOT CME ICE-US ICE-US ICE-US ICE-US MDEX LIFFE LIFFE COMEX Copper (cents/lb.) Gold ($/troy oz.) Silver (cents/troy oz.) Aluminum ($/ton) Tin ($/ton) Copper ($/ton) Lead ($/ton) Zinc ($/ton) Nickel ($/ton) COMEX COMEX LME LME LME LME LME LME NYMEX Crude oil ($/bbl.) Heating oil ($/gal.) RBOB gasoline ($/gal.) Natural gas ($/mmBtu) Brent crude ($/bbl.) Gas oil ($/ton) NYMEX NYMEX NYMEX ICE-EU ICE-EU 0.30 11.90 6.00 -13.50 -310.00 -34.50 -40.50 -62.50 125 86.15 2.3157 2.3994 3.920 87.44 734.50 CBOT 6.25 3.00 7.50 0.350 28 0.70 -0.14 0.83 27 7 13 335.35 1180.70 1863.90 2,209.50 18,140.00 7,394.50 2,207.50 2,280.00 25,895 CBOT Corn (cents/bu.) Soybeans (cents/bu.) Wheat (cents/bu.) Live cattle (cents/lb.) Cocoa ($/ton) Coffee (cents/lb.) Sugar (cents/lb.) Cotton (cents/lb.) Crude palm oil (ringgit/ton) Cocoa (pounds/ton) Robusta coffee ($/ton) 0.98 0.0375 0.0426 -0.060 0.54 3.00 720.50 1,550.00 1,113.50 96.300 3,515 180.00 25.03 100.00 3,050 2,404 1,618 1.69% 0.30 1.51 0.37 0.87 0.52 -0.92% 1.00 1.07 0.29 0.98 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 333.75 821.25 460.50 83.075 2,066 120.10 11.89 51.72 1,503 1,585 1,248 -0.61 -1.68 -0.46 -1.80 -2.67 0.49 142.00 3.6100 2.3961 10.681 147.38 1,268.00 1.15 1.65 1.81 -1.51 0.62 0.41 50.66 1.3825 1.5130 3.910 50.55 472.75 Source: Thomson Reuters; WSJ Market Data Group WSJ.com Price-to- earnings ratio* 34 Region/Country Index PREVIOUS SESSION Net change 129.22 21.79 CBN 600 25641.70 -78.16 Hong Kong Hang Seng 21108.59 329.67 India Sensex 17558.71 Percentage change 1.32 4807.37 55.24 Australia SPX/ASX 200 30 China 15 19 In U.S. dollars 5.1668 0.1935 2.3022 0.4344 1.3470 0.7424 1.3469 0.7425 1.3473 0.7422 1.3493 0.7411 686.69 0.001456 2594.39 0.0003854 1.3295 0.7522 16.2837 0.0614 3.7844 0.2642 25.593 0.0391 1.3295 0.7522 5.71 0.175139 3.8863 1.7316 1.0132 1.0131 1.0134 1.0149 516.50 1951.40 1 12.2480 2.8465 19.250 1 4.29 0.2573 0.5775 0.9870 0.9871 0.9868 0.9853 0.001936 0.0005125 1 0.0816 0.3513 0.0519 1 0.232848 1.4283 0.7001 9.0742 0.1102 10.3222 0.0969 58.7971 0.0170 11982 0.0000835 124.99 0.008000 124.96 0.008003 124.88 0.008008 124.73 0.008017 4.2351 0.2361 1.8192 0.5497 111.744 0.0089 59.196 0.0169 1.8220 0.5488 1473.75 0.0006785 41.667 0.02400 42.989 0.02326 1.0743 6.8253 7.7640 44.2250 9013 94.02 93.99 93.93 93.82 3.1855 1.3684 84.050 44.525 1.3705 1108.50 31.340 32.335 0.9308 0.1465 0.1288 0.0226 0.0001110 0.010637 0.010640 0.010646 0.010659 0.3139 0.7308 0.0119 0.0225 0.7297 0.0009021 0.03191 0.03093 PERFORMANCE Yr.-to-date 52-wk. Price-to- earnings ratio* ... 38.2% 27.5 13 -11.7 -0.30% 5.0% -1.3 1.03% 0.46 19.4 ... Region/Country Index Euro Zone Euro Stoxx Denmark 69.87 17.2 71.8 15 Germany DAX 23.2 12 Italy FTSE MIB ... Netherlands AEX 12.4 -0.73 3.2 43.7 RTSI 1572.84 -15.91 10.2 88.8 IBEX 35 10492.2 51.2 6616.82 -49.02 58959.10 256.28 5553.29 -64.55 35.9 ... Russia Spain Switzerland SMI -26.51 Philippines Manila Composite 3290.09 -6.91 -0.21 ... Singapore Straits Times 2974.61 15.60 44.8 15 56.4 ... Turkey ISE National 100 2.7 54.9 13 U.K. FTSE 100 3.5 27.2 20 AMERICAS DJ Americas 33.6 ... Brazil Bovespa Argentina Merval Mexico IPC 1741.56 13.14 8004.25 -49.80 SET 763.51 10.31 3.9 55.3 ... Stoxx Europe 600 259.91 -1.83 -0.70 2.7 29.8 17 Stoxx Europe 50 2541.22 -22.16 -0.86 -1.5 25.4 *P/E ratios use trailing 12-months, as-reported earnings European and Americas index data are as of 5:00 p.m. ET. 20 16 15 14 31 6 27 17 30 Last Net change Global TSM 2405.02 -14.98 Global DOW 1992.64 -16.42 Global Titans 50 171.35 -1.37 Asia/Pacific TSM 1278.96 12.96 Asia/Pacific ex-Japan TSM 3182.32 28.08 Europe TSM 2558.27 -5.90 Emerging Markets TSM 4240.54 20.82 Asian Titans 50 138.24 1.22 BRIC 50 600.64 0.81 CBN China 600 -c 25641.70 -78.16 China Offshore 50 3987.62 85.17 Shanghai -c 348.75 -1.40 0.76 -0.62 1.37 Daily PERFORMANCE YearThree-yr., to-date 52-wk. annualized -0.62% 3.8% 38.5% -0.82 0.4 31.3 -0.79 -1.3 27.7 1.02 5.1 41.2 0.89 3.5 56.7 -0.23 -4.4 31.2 0.49 4.6 62.2 0.89 3.0 32.9 0.13 0.5 54.6 -0.30 -11.7 19.4 2.18 -2.2 32.7 -0.40 -10.0 20.8 -7.3% -5.4 -10.2 -4.5 0.3 -13.1 0.8 -6.0 5.5 -3.5 6.1 -3.4 Price-toDividend earnings yield* ratio* Dows Jones Index 0.64% 42 1.74 22 4.54 14 5.15 15 3.71 14 4.04 15 1.72 16 1.93 16 2.49 17 1.37 12 3.33 17 Last Net change Shenzhen -c 380.71 -6.21 U.S. TSM 12279.27 -220.76 Global Select Div -d 201.10 0.61 Asia/Pacific Select Div -d 280.87 1.84 Hong Kong Select Div -d 194.31 1.84 U.S. Select Dividend -d 340.98 -3.18 Islamic Market 2030.34 -13.60 Islamic Market 100 2117.14 -14.74 Islamic China/HK Titans 30 1540.99 27.52 Sustainability Korea 1287.54 17.57 Brookfield Infrastructure 2040.89 -3.77 DJ-UBS Commodity -p 134.70 1.20 U.S. Australia Britain Canada China Euro Hong Kong India Indonesia Japan New Zealand South Korea Malaysia Philippines Singapore Switzerland Taiwan Thailand US$ 0.931 1.531 0.987 0.1465 1.330 0.129 0.0226 0.0001 0.011 0.731 0.0009 0.314 0.022 0.730 0.928 0.032 0.031 -5.02 -1.00 2396.27 11.6 86.3 2.6 0.44 30.9 -1.15 6.9 87.9 1.8 0.04 -0.530 42.8 3.3 -0.66 39.8 -1.5 -1.56 1.03 -173.68 16.1 26.6 -0.74 -448.32 32687.32 -12.1 1.1 0.49 49.3 PERFORMANCE YearThree-yr., to-date 52-wk. annualized Daily -1.61% -1.77 0.30 0.66 0.96 -0.92 -0.67 -0.69 1.82 1.38 -0.18 0.90 -8.6% 33.1% 7.9 37.7 -0.4 53.2 4.6 66.0 3.7 44.5 8.0 35.7 2.8 35.5 -0.2 26.7 3.7 39.6 6.8 51.9 0.7 35.1 -3.2 18.0 1.6% -6.3 -11.3 -11.1 0.1 -12.9 -3.1 -4.1 2.6 1.1 -5.5 -8.0 MSCI indexes Developed and emerging-market regional and country indexes from MSCI Barra as of April. 30, 2010 Price-toDividend earnings yield ratio Morgan Stanley Index LOCAL-CURRENCY PERFORMANCE Last Daily YTD 52-wk. 2.30% 21 ALL COUNTRY (AC) WORLD* 309.27 -1.12% 3.3% 53.1% 2.30 21 World (Developed Markets) 1,208.26 -1.16 3.4 50.1 79.0 1.60 82 World Small Cap 213.99 -1.56 12.5 2.40 18 Kokusai (World ex-Japan) 1,196.17 -1.31 3.1 52.1 2.90 23 EAFE 1,548.39 -0.98 -2.0 46.6 2.00 20 Emerging Markets (EM) 1,014.08 -0.87 2.5 77.9 2.40 23 AC ASIA PACIFIC EX-JAPAN 423.47 0.14 1.7 72.5 66.4 U.S.-dollar and euro foreign-exchange rates in global trading A$ 1.074 1.644 1.060 0.157 1.428 0.138 0.0243 0.0001 0.011 0.785 0.0010 0.337 0.024 0.784 0.997 0.034 0.033 £ 0.653 0.608 0.645 0.096 0.869 0.084 0.0148 0.0001 0.007 0.477 0.0006 0.205 0.015 0.477 0.606 0.021 0.020 C$ 1.013 0.943 1.551 0.148 1.347 0.130 0.0229 0.0001 0.011 0.740 0.0009 0.318 0.023 0.739 0.940 0.032 0.031 YUAN 6.825 6.353 10.446 6.737 9.074 0.879 0.1543 0.0008 0.073 4.988 0.0062 2.143 0.153 4.980 6.332 0.218 0.211 EURO 0.752 0.700 1.151 0.742 0.110 0.097 0.0170 0.0001 0.008 0.550 0.0007 0.236 0.017 0.549 0.698 0.024 0.023 HK$ 7.764 7.227 11.883 7.663 1.138 10.322 0.1756 0.0009 0.083 5.674 0.0070 2.437 0.174 5.665 7.203 0.248 0.240 RUPEE 44.225 41.165 67.686 43.651 6.480 58.797 5.696 0.0049 0.470 32.320 0.0399 13.883 0.993 32.270 41.031 1.411 1.368 RUPIAH 9012.26 8388.61 13793.26 8895.28 1320.43 11981.80 1160.77 203.78 95.86 6586.16 8.13 2829.15 202.41 6576.13 8361.33 287.56 278.72 YEN 94.015 87.509 143.890 92.795 13.775 124.993 12.109 2.1258 0.0104 68.706 0.0848 29.513 2.112 68.602 87.225 3.000 2.908 NZ$ 1.368 1.274 2.094 1.351 0.200 1.819 0.176 0.0309 0.0002 0.015 0.0012 0.430 0.031 0.998 1.270 0.044 0.042 WON 1108.50 1031.79 1696.56 1094.11 162.41 1473.75 142.77 25.07 0.12 11.79 810.09 347.98 24.90 808.86 1028.44 35.37 34.28 RINGGIT PH. PESO 3.186 44.525 2.965 41.444 4.875 68.146 3.144 43.947 0.467 6.524 4.235 59.196 0.410 5.735 0.0720 1.0068 0.0004 0.0049 0.034 0.474 2.328 32.539 0.0029 0.0402 13.977 0.072 2.324 32.489 2.955 41.309 0.102 1.421 0.099 1.377 S$ S FRANC 1.370 1.078 1.276 1.003 2.097 1.650 1.353 1.064 0.201 0.158 1.822 1.433 0.177 0.139 0.0310 0.0244 0.0002 0.0001 0.015 0.011 1.002 0.788 0.0012 0.0010 0.430 0.338 0.031 0.024 0.786 1.271 0.044 0.034 0.042 0.033 TW$ 31.340 29.171 47.966 30.933 4.592 41.667 4.037 0.7086 0.0035 0.333 22.903 0.0283 9.838 0.704 22.868 29.076 BAHT 32.335 30.097 49.489 31.915 4.738 42.989 4.165 0.7311 0.0036 0.344 23.630 0.0292 10.151 0.726 23.594 30.000 1.032 0.969 Source: Thomson Reuters via WSJ Market Data Group 23 AC Far East ex-Japan 455.63 0.24 1.3 -432 Japan 608.73 0.00 7.1 27.6 1.90 Source: DowJones Indexes 2.10 1.60 *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 316.91 67529.73 -0.15 Thomson Reuters is the primary data provider for several statistical tables in The Wall Street Journal, including foreign stock quotations, futures and futures options prices, and foreign exchange tables. Reuters real-time data feeds are used to calculate various Dow Jones Indexes. Sources: Thomson Reuters; WSJ Market Data Group Dow Jones Indexes 2.09% 1.79 2.33 2.13 2.37 2.63 1.74 2.28 5.46 0.85 2.12 0.86 0.53 20.8 7.8 -0.25 15 1.7 11.1 0.12 10 -2.2 3.856 10428.12 28.6 -2.55 5.8 3286.127 3.0 345.91 0.79 NZSX-50 24.8 20.8 -7.3 10.52 KSE 100 8.4 -3.0 1.01% -0.62 -0.61 1346.38 New Zealand 18.6 50.7 -9.21 Kuala Lumpur Composite Pakistan -5.0 21.9 -133.22 16.6 ... PERFORMANCE Yr.-to-date 52-wk. -2.0% 22.3% 6135.70 8.8 Price-toDividend earnings yield* ratio* Dows Jones Index 1.5111 21562.48 1.21 ... 0.6618 -0.40 -23.63 0.96 EUROPE 0.3770 2.6526 5.5590 0.1799 3.7170 0.2690 0.7085 1.4114 0.2887 3.4636 1501.00 0.0006662 3.7505 0.2666 7.3584 0.1359 3.6730 0.2723 Closed 3816.99 9.40 8 -0.26% 384.94 6997.54 987.04 1.52 Percentage change -11.26 OMX Helsinki Topix Thailand 1.1366 PREVIOUS SESSION Net change -0.70 CAC-40 4.8 ... 0.8798 Finland 132.61 10 SDR -f France 44.392 Kospi 1.9952 0.1353 0.2024 1.0616 2.6052 0.0005011 0.2005 0.1022 0.2048 17 2971.252 Weighted MIDDLE EAST/AFRICA Bahrain dinar 0.5012 Egypt pound-a 7.3907 Israel shekel 4.9418 Jordan dinar 0.9420 Kuwait dinar 0.3839 Lebanon pound 1995.58 Saudi Arabia riyal 4.9863 South Africa rand 9.7829 United Arab dirham 4.8833 15 11057.40 South Korea 1.3295 1.3296 1.3297 1.3297 0.0519 0.1786 0.004964 0.1693 0.3394 0.03422 0.1379 0.9278 0.9282 0.9289 0.9300 0.6734 1.5305 1.5303 1.5299 1.5293 36.0 Jakarta Composite Taiwan 0.7522 0.7521 0.7520 0.7520 19.255 5.5990 201.44 5.9071 2.9465 29.225 7.2496 1.0779 1.0774 1.0766 1.0752 1.4850 0.6534 0.6535 0.6536 0.6539 54.0 Nikkei Stock Average 11 1 1.0001 1.0002 1.0002 0.0391 0.1343 0.003734 0.1273 0.2553 0.02574 0.1038 0.6978 0.6981 0.6987 0.6995 0.5065 1.1512 1.1510 1.1508 1.1503 -3.5 Indonesia 19 In U.S. dollars 0.5 1.59 0.32 Japan Malaysia Per U.S. dollar 2816.86 OMX Copenhagen ... ... In euros Close 269.34 Euro Stoxx 50 ... ... Per euro EUROPE Euro zone euro 1 1-mo. forward 0.9999 3-mos. forward 0.9998 6-mos. forward 0.9998 Czech Rep. koruna-b 25.599 Denmark krone 7.4439 Hungary forint 267.81 Norway krone 7.8535 Poland zloty 3.9174 Russia ruble-d 38.855 Sweden krona 9.6383 Switzerland franc 1.4330 1-mo. forward 1.4324 3-mos. forward 1.4313 6-mos. forward 1.4295 Turkey lira 1.9742 U.K. pound 0.8687 1-mo. forward 0.8688 3-mos. forward 0.8690 6-mos. forward 0.8693 Stock indexes from around the world, grouped by region. Shown in local-currency terms. Close ASIA-PACIFIC DJ Asia-Pacific ... Per U.S. dollar Per euro 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 In euros 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 Contract low 369.10 151.00 1,230.00 532.00 2,154.00 760.00 2,481.50 1,399.50 19,175.00 12,320.00 7,970.00 4,322.00 2,615.00 1,349.00 2,659.00 1,443.00 27,590 11,625 0.09 1.02 0.32 London close on April 30 21 China 62.21 -0.87 -4.0 50.5 0.90 39 China A (China Domestic) 2,958.55 -1.44 -12.5 24.4 2.60 24 Hong Kong 10,089.25 -0.76 -0.9 55.4 0.90 21 India 714.68 0.73 1.1 89.0 1.30 17 Korea 492.51 -0.36 2.4 48.3 2.20 20 Malaysia 488.54 0.21 4.0 50.0 3.00 18 Singapore 1,635.70 1.01 0.7 71.3 2.60 136 Taiwan 287.00 -0.61 -3.0 47.9 2.90 21 Thailand 311.31 0.48 3.2 75.3 3.70 23 Australia 985.11 -0.80 -1.6 32.7 5.30 16 New Zealand 85.12 -0.04 -2.4 15.6 1.70 22 US BROAD MARKET 3.20 17 EUROPE 1,357.14 -1.36 9.7 55.8 90.77 1.31 2.8 47.2 *Twenty-three developed and 26 emerging markets Source: MSCI Barra 28 THE WALL STREET JOURNAL. Monday, May 3, 2010 SCANNING THE GLOBE Dow Jones Industrial Average Nasdaq Composite Index P/E: 16 t 158.71, or 1.42% LAST: 11008.61 YEAR TO DATE: OVER 52 WEEKS s 580.56, or 5.6% s 2,796.20, or 34.0% S&P 500 Index P/E: 15* t 50.73, or 2.02% LAST: 2461.19 YEAR TO DATE: OVER 52 WEEKS P/E: 21 t 20.09, or 1.66% LAST: 1186.69 YEAR TO DATE: OVER 52 WEEKS s 192.04, or 8.5% s 741.99, or 43.2% s 71.59, or 6.4% s 309.17, or 35.2% High 11500 2500 1200 11000 2400 1150 10500 2300 1100 10000 2200 1050 9500 2100 1000 Close Low t 50–day moving average 9000 29 5 Feb. 12 19 26 5 Mar. 12 19 *Price-to-earnings ratio for the Nasdaq 100 26 1 9 Apr. 16 23 2000 30 29 5 Feb. Stock Symbol 26 5 Mar. 12 19 26 1 9 Apr. 16 23 950 30 29 5 Feb. 12 19 26 5 Mar. 12 19 U.S. stocks: most active... Latest Stock 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 27.40 AA 27.50 AXP 12.70 BAC 206.20 BA 5.00 CAT 8.40 CVX 12.30 CSCO 36.80 KO 8.20 DIS 10.10 DD 7.90 XOM 39.10 GE 102.60 HPQ 13.90 HD 13.60 INTC 75.70 IBM 5.20 JPM 49.60 JNJ 11.70 KFT 10.70 MCD 6.00 MRK 13.70 MSFT 57.00 PFE 46.10 PG 13.50 MMM 4.70 TRV 4.40 UTX 4.20 VZ 19.70 $26.06 13.43 46.12 17.83 72.43 68.09 81.44 26.93 53.45 36.84 39.84 67.77 18.86 51.97 35.23 22.84 129.00 42.58 64.30 29.60 70.59 35.04 30.54 16.72 62.16 88.67 50.74 74.95 28.90 -0.08 -0.29 -1.48 -0.47 -1.36 -2.66 -0.85 -0.60 -0.29 -0.38 -0.73 -0.89 -0.63 -0.91 -0.33 -0.65 -1.46 -1.42 -0.71 -0.31 -0.93 -0.21 -0.47 -0.14 -0.04 -0.66 -0.68 -1.07 -0.32 -0.31% -2.11 -3.11 -2.57 -1.84 -3.76 -1.03 -2.18 -0.54 -1.02 -1.80 -1.30 -3.23 -1.72 -0.93 -2.77 -1.12 -3.23 -1.09 -1.04 -1.30 -0.60 -1.51 -0.83 -0.06 -0.74 -1.32 -1.41 -1.10 WalMart WMT 14.20 53.64 -0.06 -0.11 Volume, Symbol in millions Citigroup SPDR S&P 500 BankAm SPDR FnclSelSct FordMotor GenElec PwrShrs QQQ DrxFinancBear 3x iShrRu2000 SynovusFnl Popular Intel iShrMSCIEmrgMkt E Trade GoldmanSachs CHANGE Points Percentage 26 1 9 Apr. 16 23 30 Sources: WSJ Market Data Group; Birinyi Associates Note: Price-to-earnings ratios are for trailing 12 months DJIA component stocks Volume, in millions 12 19 C SPY BAC XLF F GE QQQQ FAZ IWM SNV BPOP INTC EEM ETFC GS ADRs of Asian companies* CHANGE Points Percentage Latest 800.6 269.2 231.1 167.3 146.2 112.0 110.9 92.1 88.3 86.1 82.8 81.8 77.5 74.9 73.0 $4.37 118.81 17.83 16.16 13.02 18.86 49.24 12.24 71.65 3.01 3.95 22.84 42.05 1.69 145.20 –$0.19 –2.05 –0.47 –0.40 –0.56 –0.63 –0.99 0.82 –2.16 –0.19 0.17 –0.65 –0.51 –0.05 –15.04 –4.17% –1.69 –2.57 –2.42 –4.12 –3.23 –1.98 7.19 –2.93 –5.94 4.50 –2.77 –1.20 –2.87 –9.39 OCLRD 716.4 PWER 15,358.5 HMPR 449.6 TRMA 7,892.4 APKT 4,419.6 $15.45 7.86 2.89 3.28 26.14 $12.64 2.10 0.64 0.65 5.07 449.82% 36.46 28.44 24.71 24.06 $2.04 1.95 3.57 2.53 8.06 -$0.69 -0.64 -1.03 -0.68 -2.13 52-WEEK High Low Oclaro Inc PowerOne HamptonRdsBksh TricoMarine AcmePacket -25.27% -24.71 -22.39 -21.18 -20.90 ...Biggest losers AtlSthrnFnlGp Macatawa FrontierFnl GramrcyCap FedSgnl ASFN MCBC FTBK GKK FSS 173.6 248.6 1,691.5 3,051.5 1,017.7 Taiwan Semi BHP Billiton KT Corp China Unicom Utd Microelectronics AU Optrncs SK Telecom China Mobile Alumina Infosys Tech Mitsu UFJ Fnl Siliconware Prec Ind Sony Nomura Hldgs Adv Semi Engrg China Life Ins Toyota Motor Yanzhou Coal Mining ChunghwaTel Aluminum Cp of China Telecom Corp of NZ Honda Motor Korea Elec Pwr PetroChina CNOOC China Petro & Chem Canon POSCO NTT ChinaTele $11.69 $8.55 83.20 45.84 22.81 13.13 15.95 10.34 4.24 2.28 13.30 8.68 18.64 14.82 59.22 42.96 7.74 2.00 63.73 29.55 6.84 4.89 8.19 5.77 40.45 23.60 9.50 5.79 5.23 2.53 81.00 51.42 91.97 71.00 28.72 8.91 20.49 17.36 34.27 18.25 9.82 7.41 37.23 25.00 18.20 10.18 135.92 86.19 182.13 110.00 94.00 70.00 47.54 29.46 150.50 72.46 24.09 18.18 56.41 40.28 Biggest gainers... Volume, Symbol in OOOs Stock CHANGE Latest Points Percentage TSM 14,584.7 $10.59 0.03 BHP 6,855.9 72.79 -2.81 KT 2,471.7 22.60 1.10 CHU 2,414.3 12.43 0.24 UMC 2,387.8 3.55 -0.15 AUO 2,207.9 11.59 -0.41 SKM 2,092.9 18.51 0.08 CHL 1,983.3 48.90 -0.39 AWC 1,554.9 5.61 -0.17 INFY 1,366.6 59.94 -1.07 MTU 1,270.4 5.17 -0.18 SPIL 1,114.5 6.15 -0.20 SNE 885.3 34.22 -1.12 NMR 835.0 6.89 -0.13 ASX 749.8 4.86 -0.11 LFC 631.0 67.59 -0.21 TM 588.6 77.09 -1.02 YZC 517.6 27.85 0.91 CHT 515.2 19.52 -0.01 ACH 490.1 24.26 -0.37 NZT 443.3 7.83 -0.08 HMC 421.5 33.79 -0.93 KEP 404.8 15.04 -0.02 PTR 355.1 115.13 -1.13 CEO 333.1 175.92 -0.33 SNP 257.2 80.26 -0.61 CAJ 251.2 45.68 -0.60 PKX 220.0 112.16 -3.71 NTT 217.1 20.29 -0.06 CHA 217.0 45.90 0.98 0.28% -3.72 5.12 1.97 -4.05 -3.42 0.43 -0.79 -2.94 -1.75 -3.36 -3.15 -3.17 -1.85 -2.21 -0.31 -1.31 3.38 -0.05 -1.50 -1.01 -2.68 -0.13 -0.97 -0.19 -0.75 -1.30 -3.20 -0.29 2.18 *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 4.940% 5.715 1.022 3.386 1.052 3.489 1.899 3.656 1.286 3.169 0.719 3.294 0.784 3.021 0.765 3.076 1.813 4.042 0.173 1.290 0.724 3.231 3.777 5.364 1.931 4.051 0.445 1.826 1.122 3.910 0.976 3.672 SPREAD OVER TREASURYS, in basis points Latest Previous Month ago Year ago 396.4 204.3 4.6 -28.6 7.6 -18.3 92.3 -1.6 31.0 -50.3 -25.7 -37.8 -19.2 -65.1 -21.1 -59.6 83.7 37.0 -80.3 -238.2 -25.2 -44.1 280.1 169.2 95.5 37.9 -53.1 -184.6 14.6 23.8 ... ... 393.2 197.6 8.0 -32.4 6.6 -18.6 93.8 -2.9 28.7 -56.1 -28.0 -44.1 -20.9 -76.2 -23.5 -67.0 84.7 27.5 -86.5 -247.7 -24.6 -48.9 305.6 166.0 90.5 33.7 -55.7 -192.7 18.9 22.9 ... ... 395.5 193.8 14.6 -36.5 -0.7 -28.2 66.8 -28.0 52.9 -45.2 -14.7 -41.0 -20.5 -74.8 -24.6 -100.0 29.4 3.6 -88.9 -246.4 -15.1 -50.0 67.2 42.7 7.2 -2.3 -53.0 -190.5 -7.0 12.3 ... ... 223.8 163.4 15.7 91.7 78.6 77.0 7.6 -2.7 94.5 37.0 49.8 49.7 43.9 6.8 -28.2 -88.1 89.9 115.4 -53.0 -169.6 59.5 58.3 101.3 125.7 86.6 84.2 -51.4 -94.8 13.9 38.7 ... ... Previous YIELD Month ago Year ago 4.960% 5.745 1.108 3.445 1.094 3.583 1.966 3.740 1.315 3.208 0.748 3.328 0.819 3.007 0.793 3.099 1.875 4.044 0.163 1.292 0.782 3.280 4.084 5.429 1.933 4.106 0.471 1.842 1.217 3.998 1.028 3.769 5.021% 5.801 1.212 3.498 1.059 3.581 1.734 3.583 1.595 3.411 0.919 3.453 0.861 3.115 0.820 2.863 1.360 3.899 0.177 1.399 0.915 3.363 1.738 4.290 1.138 3.840 0.536 1.958 0.996 3.986 1.066 3.863 3.148% 4.755 1.067 4.038 1.696 3.891 0.986 3.094 1.855 3.491 1.408 3.618 1.349 3.189 0.628 2.240 1.809 4.275 0.380 1.425 1.505 3.704 1.923 4.378 1.776 3.963 0.396 2.173 1.049 3.508 0.910 3.121 Source: Thomson Reuters 4 Friday 3 2 One year ago 1 0 1 3 6 month(s) 1 2 3 5 7 10 years maturity 30 Month to-date TOTAL RETURN 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 4.529% 3.663 3.115 2.420 2.697 1.490 0.968 0.386 0.244 0.234 0.162 16.05 8.12 6.24 4.68 6.66 2.87 1.98 0.94 0.50 0.44 0.25 3.45 % 1.75 1.38 0.94 1.38 0.51 0.24 0.10 0.03 0.04 0.01 3.45 % 1.75 1.38 0.94 1.38 0.51 0.24 0.10 0.03 0.04 0.01 3.21 % 2.71 3.29 2.43 2.39 1.61 0.91 0.32 0.08 0.12 0.04 One-month bill 5% s 5.750% Australia 2 4.500 10 5.000 Austria 2 3.900 10 2.000 Belgium 2 3.750 10 1.500 Canada 2 3.500 10 4.000 Denmark 2 4.000 10 3.750 France 2 3.500 10 1.000 Germany 2 3.000 10 0.640 Hong Kong 2 2.160 10 2.500 Italy 2 4.000 10 0.200 Japan 2 1.400 10 2.500 Netherlands 2 3.500 10 5.000 Portugal 2 4.800 10 2.750 Spain 2 4.000 10 2.750 Switzerland 2 2.250 10 5.000 U.K. 2 4.750 10 1.000 U.S. 2 3.625 10 Yield s Coupon Quarter to-date 0.142 0.07 0.01 0.01 0.03 a-Performance of a cash investment Year to-date 12-month –3.14 % –0.71 2.35 2.23 1.07 2.94 1.93 1.10 0.44 0.47 0.25 0.10 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 0.37563% 0.93750% 0.3800% 0.2800% 0.60750 1.36188 Three month 0.5000 0.3500 Six month 0.91313 1.56625 Six month 0.6200 0.4700 One year 1.21813 1.72875 One year 1.0500 0.7500 Latest 52 wks ago U.S. 3.25% 3.25% Canada 2.25 2.25 Japan 1.475 1.475 Britain 0.50 0.50 ECB 1.00 1.25 Switzerland 0.53 0.53 Hibor One month 0.08107 0.16357% Australia 4.25 3.00 Three month 0.13000 0.75929 U.S. discount 0.75% 0.50% Hong Kong 5.25 5.00 Six month 0.25000 1.05857 Fed-funds target 0.25 0.25 One year 0.57000 1.40071 Call money 2.00 2.00 Asian dollars One month Libor One month Three month 0.2825% 0.28000% 0.41438% Three month 0.34656 1.00688 Three month 0.3485 1.0263 Six month 0.53063 1.54938 Six month 0.5176 1.5650 U.K. (BBA) 0.493 0.520 One year 1.01563 1.86438 One year 0.9980 1.8775 Euro zone 0.28 0.61 0.42% Overnight repurchase rates U.S. 0.29% … Sources: WSJ Market Data Group; Reuters Monday, May 3, 2010 29 THE WALL STREET JOURNAL. MARKETS LINEUP Asian index movers… Moving the markets At right, Japan’s benchmark stock index and the biggest movers among the larger Asian stocks indexes and stocks Friday. Below each index are its most actively traded stocks. The charts show the percentage change in each index’s or stock’s value, rather than the point change, for purposes of comparison. The index level or stock price is indicated on each axis. All indexes and stocks are shown in local currency terms. Nikkei Stock Average Hang Seng Japan Hong Kong s 11057.40 1.21% or 132.61 For the week, the index added 1.3%, but closed April with a loss of 0.3%, its third monthly decline in the past four. Year-todate, stocks are up 4.8%. s Kospi 21108.59 1.59% or 329.67 Straits-Times South Korea s 1741.56 0.76% or 13.14 Singapore s 2974.61 0.53% or 15.60 Solid earnings reports lifted major Chinese banks. But for the week and for the month, the index fell 0.6%. It is down for three consecutive weeks and four of the past six. Major exporters gained as stocks recouped losses to finish the week up 0.3% and 2.9% for April. Year-to-date the index is up 3.5%. Samsung Electronics advanced 2.9%. Trading was confined to a tight band as traders awaited this week’s earnings reports. Genting Singapore dominated action for the second straight day, rising 2.1%. 15000 30000 2400 3600 12500 25000 2000 3000 10000 20000 1600 2400 7500 15000 1200 1800 5000 WSJ.com M J J A S ON D J F MA 2009 2010 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. Stock Mizuho Financial Volume in millions Close Change Net 136.20 182 unch 10000 M J J A S ON D J F MA 2009 2010 Stock % Volume in millions Close 800 M J J A S O N D J F MA 2009 2010 Change Net … Cosco Pacific 562.30 10.66 % –0.88 –7.63 Stock Volume in millions Kco Energy 21.59 Close Change Net % 175.00 –30.00 –14.63 1200 M J J A S O N D J F MA 2009 2010 Volume in millions Close 176.75 Stock 0.96 0.02 Genting Spore Change Net % 2.13 Hitachi 85.52 418 unch … Bank Of China 437.26 4.08 0.09 2.26 Samyang Optics 17.40 1,395.00 –90.00 –6.06 Golden Agri 88.59 0.59 unch … Mtshbsh Fin Grp 76.00 494 –5 –1.00 CCB 360.21 6.42 0.26 4.22 Samho F&G 12.76 4,180.00 –255.00 –5.75 Sing Telecom 33.61 3.05 0.01 0.33 Nomura Hldgs 64.67 655 –7 –1.06 Icbc 291.98 5.77 0.11 1.94 Mirae 10.18 320.00 10.00 3.23 CapitaLand 28.03 3.76 0.02 0.53 Toshiba 49.11 548 –1 –0.18 ChinaPetroChem 104.96 6.29 0.12 1.94 Chungho Elcom 9.64 130.00 15.00 13.04 Noble Grp 19.61 3.03 0.02 0.66 Asian stocks in the news China Unicom Hong Kong Japan Tobacco HK$9.82 s 5.1% or HK$0.48 The stock led the index amid expectations of strong third-generation subscriber growth. ¥327,000 s 5.1% or ¥16,000 The company swung to a profit and said last week it would raise prices beginning in October. 20 In Hong Kong dollars Japan Mitsubishi Estate 500000 In yen Japan Central Japan Railway ¥1,704 s 5.4% or ¥87 Quarterly profit almost doubled and the company forecast larger-than-expected earnings this year. ¥767,000 Hong Kong s 6.7% or ¥48,000 Nomura upgraded the stock to "buy" from "neutral," citing prospects for growth over the next year. 2500 In yen Japan Yanzhou Coal Mining 1250000 In yen HK$22.30 s 8.5% or HK$1.75 The company appears to be benefiting from rising prices because of its large exposure to spot coal. 30 In Hong Kong dollars 16 400000 2000 1000000 24 12 300000 1500 750000 18 8 200000 1000 500000 12 4 MJ J 2009 A S O N D J F MA 2010 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield 100000 M J J A S O N D J F MA 2009 2010 21 0.46 1.9 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Telecommunications China Unicom 1.1% -0.3% 5.1% 6.9% 14.1% 10.7% Tata Steel India 500 M J J A S O N D J F MA 2009 2010 25 13300.00 1.7 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Personal & Hshld Gds Japan Tobacco 1.1% 5.1% 1.2% 4.6% 35.7% 41.6% 618.80 rupee Sentiment weakened after the government raised the iron-ore export tax to temper local steel prices. 850 In rupee 38 45.30 0.7 Real Estate Mitsubishi Estate Taiwan 1.4% 7.0% 44.0% 28.9% MediaTek Taiwan 1.7% 5.4% TW$148.50 t 2.3% or TW$3.50 The electronic-products maker reported worse-than-expected first-quarter net profit on Thursday. 250 In Taiwan dollars 17 45116.30 1.2 TW$534.00 Shares fell ahead of first-quarter earnings on concerns the company's inventory levels are too high. 850 In Taiwan dollars Travel & Leisure Central Japan Railway 1.5% 6.7% ... 2.7% 26.8% 25.3% Australia Basic Resources Yanzhou Coal Mining A$4.58 Korea Rival Hanlong Mining said it intends to become the "fourth force" in Australia's ironore sector. 7.50 200 680 0.3% -1.5% 58.9% 8.5% 23.1% 204.2% 150 510 100 340 50 170 1.50 125000 In won 100000 3.00 170 The government asked steel companies to consider the impact of higher prices on smaller companies. 4.50 340 91,200 won t 5.1% or 4,900 won 6.00 510 M J J A S O N D J F MA 2009 2010 M J J A S O N D J F MA 2009 2010 None -111.87 2.6 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Basic Resources Tata Steel PERCENTAGE CHANGE Daily 1 wk. 52 wks t 3.2% or A$0.15 In Australian dollars 23 0.95 1.3 Hyundai Steel 680 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Fortescue Metals Grp t 2.9% or TW$16.00 6 M J J A S O N D J F MA 2009 2010 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Hon Hai Precision Ind t 2.2% or 14.15 rupee 250000 M J J A S O N D J F MA 2009 2010 0.3% -1.5% 58.9% -2.2% -4.6% 159.9% M J J A S O N D J F MA 2009 2010 17 8.94 0.6 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Indus Gds & Svcs Hon Hai Precision Ind 0.7% -2.3% 1.2% 2.8% 50.3% 78.6% M J J A S O N D J F MA 2009 2010 19 28.71 2.6 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Technology MediaTek 1.2% 0.5% -2.9% -5.2% 53.1% 55.3% None -0.16 None 75000 50000 25000 M J J A S O N D J F MA 2009 2010 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Basic Resources Fortescue Metals Grp 0.3% -1.5% -3.2% -8.6% 58.9% 95.7% 7 13721.33 0.5 PERCENTAGE CHANGE Daily 1 wk. 52 wks Basic Resources Hyundai Steel 0.3% -5.1% -1.5% 0.3% 58.9% 68.3% 30 THE WALL STREET JOURNAL. Monday, May 3, 2010 HEARD ON THE STREET FINA NCIA L A NA LYSIS & COMMENTARY Email: heard@wsj.com Investors in Goldman might outlast executives As Goldman Sachs Group faces legal challenges, watch the firm’s top ranks. Goldman shares fell 9.4% to $145.20 Friday on news that U.S. prosecutors have opened a criminal investigation into whether Goldman or its employees committed securities fraud. The probe isn’t surprising, given the allegations laid out days ago in the SEC’s lawsuit. Investors must mull what potential legal outcomes might mean for Goldman. The best and wholly plausible scenario for Goldman is that the Manhattan U.S. Attorney’s office doesn’t indict anyone. This could dent the Cruelest month Goldman Sachs share price $200 175 150 125 April Source: WSJ Market Data Group credibility of the SEC case. However, it could be awhile before prosecutors’ intentions are known. Investors may have to wait before they can completely discount the nuclear option: indicting the firm. Another outcome: Goldman employees, not the firm, get hit with criminal charges. Goldman might feel confident any charged employees will be vindicated. But if legal uncertainties keep pressure on Goldman stock, shareholders, who recently became vocal over compensation at the firm, might become restive. Investors may then look for a way to accelerate an end to the legal uncertainty and perhaps even push for trading to be de-emphasized. That could raise questions over the future of top-level executives, given that several have trading backgrounds and have tilted Goldman toward that business. Still, Goldman has been around for more than 140 years—and, as savvy traders will tell you, sometimes you have to ride the bumps for things to pay off over time. —Peter Eavis WSJ.com/Heard Good old days Average return on equity at Macquarie Group: 1 year 3 year 10% 14.5% 5 year 10 year 19.5% 21.4% Sources: the company; Reuters (photo) Macquarie Group Chief Executive Nicholas Moore A pay pinch at Macquarie Stuck in a rut, Macquarie Group is taking it out on its employees. The Australian investment bank’s profit for the year ended March was in line with expectations. Return on equity of 10% was unchanged from a year earlier. A cut in employee compensation gets the credit. Macquarie paid employees 40.9% of its earnings in the second half of the fiscal year. This mightn’t be great for employee rela- tions, but it will do wonders for investor relations, considering that when it paid out 45% of income to staff in the first half, shareholders weren’t pleased. The high payout level harkens back to the days preceding the global financial crisis, when Macquarie was generating ROE above 20%. Always self-assured, Macquarie’s management is vowing that its compensation ratio will rise back to historic levels of 45% to 48% as business improves. But ROE is a key determinant of employee pay. The bank says its cash balances are to blame for the damped ROE, but also says it will keep those balances high in the year ahead. So it is going to take an impressive rebound in earnings to improve that metric. Just where that will come from remains unclear. It has had some successes re- cently. On the investment-banking front, Macquarie’s role as an underwriter of the massive Hong Kong listing of Agricultural Bank of China was a surprise. Agricultural Bank is expected to raise more than $20 billion through a dual listing in Hong Kong and Shanghai. Eventually, Macquarie’s investments over the past year or so—$2 billion for a portfolio of airplanes from American International Group’s aircraft-leasing division in April, an energy-trading firm in Canada and a boutique investment bank and asset manager in the U.S.—will yield results. But this will take time and further investment. All the while, competition in each business is rising. In years past, Macquarie’s been known in Australia as the millionaires factory. It might be a while before it gets that designation again. —Cynthia Koons Google’s shares are searching for bottom as tech sector parties More Substance More Style With the paper, Friday, May 7 © 2010 Dow Jones & Company, Inc. All rights reserved. How did Google lose its invitation to Wall Street’s party? The search giant’s stock has dropped 15% since the start of the year, even as the Nasdaq has rallied 8.5%. The selloff continued even after Google reported solid first-quarter results. Many issues cloud Google’s outlook. Slowing growth—revenue increased 23% in the quarter, down from a full-year rate of 56% in 2007—is perhaps the biggest. But worries about competition from Microsoft in search, Google’s troubles in China and European antitrust issues don’t help, either. Nor does money managers’ stronger-than-usual momentum focus of chasing stocks which are rising and dumping those which aren’t, seemingly regardless of valuation. Indeed, Goldman Sachs said it was taking Google off its “conviction buy” list this week “due to recent underperformance” of the stock. Yet Goldman said in the same report that Google’s valuation was “compelling.” Among other things, Goldman noted that Google is now trading at the low end of the historical range for its next-12-months price/earnings multiple. Not that Google can yet be called Out of favor Year-to-date percentage change 20 % Nasdaq Composite 10 0 –10 Google –20 J F M A Source: WSJ Market Data Group cheap. Its multiple should come down with its growth rate. Google trades at a premium to faster-growing Apple, whose shares are at 20 times fiscal 2010 forecast earnings. Google trades at 21 times. So Google’s underperformance will likely continue, at least until the stock becomes truly cheap or the company demonstrates that a new business—perhaps display advertising—will rev up its growth. Anyone believing Google is more than a one-trick pony should see an opportunity here. Others may want to steer clear. —Martin Peers Monday, May 3, 2010 31 THE WALL STREET JOURNAL. MANAGEMENT Five must-ask interview questions Different phrasings may better prompt job candidates to reveal their strengths and weaknesses; red-flag answers BY WILLA PLANK As the global economy picks up, companies are starting to hire more. But managers often get funds for only a few key hires, so they have to select new employees wisely. That makes conducting a smart interview critical. Reporter Willa Plank checked in with Ben Dattner, founding principal of organizational consulting and research firm Dattner Consulting, to get his interview advice. Here are his five must-ask interview questions: 1. In what ways will this role help you stretch your professional capabilities? This is a reversal of the common question, “What are some of your greatest weaknesses?” Normally candidates dress up their weaknesses, or talk about “positive weaknesses” such as a tendency to work too hard. Phrased Mr. Dattner’s way, this question may better prompt the candidate to describe skills she wants to improve and goals she’d like to achieve. Watch out for candidates who say the prospective job would simply incrementally add to what they already know. 2. What have been your greatest areas of improvement in your career? This is another question that gets at weaknesses, but in a new way. It also allows interviewees to tell their career histories and ambitions. A red flag answer: “I’ve always been a natural. I don’t need to make any improvements.” 3. What’s the toughest feedback you’ve ever received and how did you learn from it? This shows a candidate’s ability to learn from mistakes. A good answer would involve the candidate recalling specific feedback and detailing how she learned from it and changed. Sometimes candidates say they can’t remem- ber tough feedback. That can be a red flag. It may indicate the interviewee hasn’t worked in a highrisk or creative environment, that she has never solicited advice, or that her co-workers viewed her as too fragile for feedback. 4. What are people likely to misunderstand about you? This question reveals social intelligence, or the ability to understand others. A candidate might say he asks a lot of questions, and that some people have misinterpreted this inquisitiveness as aggression or criticism. If the candidate says he once found himself in this situation and changed his managerial style, that would indicate he can sense other people’s perceptions and adapt. 5. If you were giving your new staff a “user’s manual” to you, to accelerate their “getting to know you” process, what would you include in it? This lets the candidate reveal his work style. A straight answer should indicate the interviewee is self-aware. For example, a candidate might reveal that she prefers to hold conversations in person rather than over the phone, that she likes to be kept in the loop or that she dislikes surprises. Those answers can help a hiring manager determine whether the candi- date’s style fits with the office culture. A bad answer, Mr. Dattner says, would be: “Just do your job and there won’t be any problem,” or “ They’ll figure it out soon enough.” WSJ.com ONLINE TODAY: Score management tips and advice at asia.WSJ.com/management The Power List The top business leaders in Asia making headlines last week in select global and regional media. Powered by Dow Jones Factiva and edited for relevance and clarity. SHELDON ADELSON MARTIN WINTERKORN GE LI CARLOS GHOSN KAZUO INAMORI Chairman Las Vegas Sands Chief Executive Volkwagen Chief Executive WuXi AppTec Chief Executive Nissan Motor Chairman Japan Airlines Mr. Adelson opened Marina Bay Sands in Singapore in a bet on the future of gambling in Asia. The German auto maker said it will boost its spending in China by $2.14 billion, which Mr. Winterkorn said reflects greater-than-expected growth in that market. Dr. Li will become corporate executive vice president of Charles River following its $1.6 billion purchase of WuXi. At the Auto China exhibition in Beijing, Mr. Ghosn said the auto maker will likely produce its all-electric Leaf in China if the government offers “substantial" purchase benefits. The carrier said it will discontinue flights on 45 routes during the current fiscal year as the carrier accelerates a cost-cutting program. Photos: Adelson and Li (Bloomberg News); Winterkorn (Agence France-Presse); Ghosn (Reuters); Inamori (Agence France-Presse/Getty Images) Compiled by Carlos Tejada/The Wall Street Journal THE WALL STREET JOURNAL. Monday, May 3, 2010 MANAGEMENT Samsung Engineering aims to stand out Amid the sprawl of the South Korea’s Samsung empire—60 companies, from a soccer team to the world’s biggest technology manufacturer—are two construction companies and a one that builds ships but also has a construction arm. MANAGING Among them is Samsung IN ASIA Engineering Co. which specializes in the tough stuff like power plants, refineries and fertilizer factories. The company stands out among other engineering specialists by also running construction projects itself. But like many companies in South Korea and other parts of Asia, Samsung Engineering is coping with the twin challenge of gaining the skills of older competitors in the U.S. and Western Europe and staying ahead of fast-rising challengers in China and India. Its new chief executive, Park Ki-seok, took charge at the start of this year with two big challenges: staying ahead of emerging rivals and finding more talent for the company. A career employee, Mr. Park is also under the gun to build on the track record of his predecessors. Samsung Engineering has been on a hiring spree since 2006. It attracted around 400 engineers annually and doubled its employees, to just over 5,000 now from 2,300 in 2006. And the company’s new orders shot up last year to $7.9 billion, from $5.3 billion the year before, despite the global downturn. This year’s target: $11 billion. Kyong-Ae Choi talked to Mr. Park in Seoul, where the 55-year-old chief executive elaborated on what it takes to tackle those challenges. WSJ: What is your strategy to hold Chinese and Indian engineering companies in check and to follow top-tier rivals in the U.S. and Europe? Mr. Park: On top of our mainstay business of building hydrocarbon facilities such as gas, refinery and petrochemical plants, we will further diversify into power, desalination, water treatment and steel mills with an aim to the ratio of non-hydrocarbon business versus sales to more than 30% by 2015 from the current 10%. And we will continue to strengthen our engineer pool by adding 500 engineers this year. Samsung Engineering [ Park Ki-seok ] Chief Executive Résumé Career: Joined Samsung Engineering in 1979, rose through the company as product manager, overseas business development general manager, chief operating officer, chief marketing officer. Named CEO in Dec. 21, 2009. Schooling: Master’s degree in chemical engineering from Kyung Hee University. Advanced management program at Yonsei University Business School. Extracurricular: Hiking On staff: ‘Teamwork and open communication are absolutely crucial in our business field. Employees need to be seeing eye to eye on things.’ WSJ: How can you stand out when there are so many competitors? Mr. Park: We are differentiating ourselves from others in terms of cost competitiveness, useful database and on-time delivery. We have an initiative we call glocalization, where we put some operations out of South Korea and closer to the local market. WSJ: How do you manage risks such as volatile prices of raw materials and currency fluctuations? Mr. Park: Our business is simply a constant cycle of risk, since we primarily do lumpsum turnkey or fixed-price contracts. This means our company assumes the majority of the risk for the client until the project is complete. In order to minimize risk, we have a good database through our IT systems. We record voice of customer. And we record and reference lessons learned and all the project knowledge from our experienced engineers. WSJ: What qualities do you think the CEO of an engineering company should have? And what kind of CEO do you think of yourself? Mr. Park: Once you take up a project, you should take full responsibility and do whatever it takes to execute it effectively. This is essential in the engineering, procurement and construction business. One person’s misstep will cause the whole operation to tumble. Also, you need to have the intuition to set your company in the right direction while seeking customer satisfaction. Engineering business is the B2B business, but the leader should have an insight not only into the macroeconomy but also into the microeconomy. WSJ: You have diversification plans in terms of business and markets in order to keep the status of Samsung Engineering. Do you have any particular new business and region on your mind? Mr. Park: To outpace traditionally experienced American and European contractors, we will use our know-how in the hydrocarbon field and advance into upstream businesses, such as gas and oil separation and floating production facilities. The top markets we are eyeing now include Kuwait, Qatar, Libya and Egypt. We aim to raise the number of markets we’re in to 31 countries this year from 23 last year. Published by Dow Jones Publishing Company (Asia). Printed in Hong Kong by Superflag Advertising and Communication Limited. 8 Chun Ying Street, NT. Printed in Indonesia by PT Gramedia Printing Group, Jalan Palmerah Selatan 22-28, Jakarta 10270. Printed in Japan by Yomiuri Shimbun, 1-7-1, Otemachi, Chiyoda-ku, Tokyo 100-8055. Printed in Korea by JoongAng Ilbo. 7, Soonwha-Dong, Chung-Ku, Seoul 100-130. 1997 June 04 Registration no.: SeoulKA00020 (Daily Newspaper), Publisher/Editor/Printer: Song, Pil-Ho. Printed in Malaysia by KHL Printing Co. Sdn. Bhd. (ROC No: 235060-A) Lot 10 & 12, Jalan Modal 23/2, Seksyen 23 Kawasan Miel Phase 8, 40000 Shah Alam, Selangor, Malaysia. Printed in Philippines by FEP Printing Corporation, 3817 Mascardo St., Corner Metropolitan Ave., Pasong Tamo, Makati City. Printed in Singapore by KHL Printing Co. Pte Ltd., 57 Loyang Drive, Singapore 508968. Printed and distributed in Taiwan by The China Post, 8 Fu Shun Street, Taipei 104. Printed in Thailand by Nation Multimedia Group Public Co., Ltd., 1854 Bangna-Trad Road, (K.M. 4.5), Prakanong, Bangkok 10260. Published and printed on behalf of the Wall Street Journal India Publishing Pvt Ltd, 517B World Trade Centre, Barakhamba Lane, New Delhi 110001 by Mr Suman Dubey at A-8 Sector 7, Gautam Budh Nagar, Noida -201301 and PLOT No.EL208, TTC Industrial Area, Mahape, Navi Mumbai - 400710 (Maharashtra), India, Editor: Suman Dubey, phone: +91-11-6462 0215. ACP no. F.2 (T/3) Press / 2009 FACSIMILE EDITION. 32 ...
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