WƁJ 04 - 11 - 2013

VOL. XXXVIII NO.
46
MONDAY, NOVEMBER 4, 2013
OPINION:
The U.N. Gets
A Peek at
North Korea
Page 9
Islamist Rebels Take Fight
To Syrian Capitals Suburbs
INDEPTH Pages 12-13
As of 4 p.m. ET DJIA 15615.55 0.45% FTSE 100 6734.74 0.05% Nikkei 225 14201.57 g 0.88% Shanghai Comp. 2149.56 0.37% Hang Seng 23249.79 0.19% S&P Sensex 21196.81 0.15% S&P/ASX200 5411.10 g 0.27%
WSJ.com
(India facsimile Vol. 5 No. 106) ASIA EDITION
A
u
s
t
r
a
lia
:
A
$
6
.0
0
(
In
c
l
G
S
T
)
,
B
r
u
n
e
i:
B
$
8
.0
0
,
C
h
in
a
:
R
M
B
2
8
.0
0
,
H
o
n
g
K
o
n
g
:
H
K
$
2
3
.0
0
(
In
c
l
M
a
c
a
u
)
,
In
d
ia
:
R
s
1
0
0
.0
0
,
In
d
o
n
e
s
ia
:
R
p
2
5
,0
0
0
(
In
c
l
P
P
N
)
,
J
a
p
a
n
:
Y
e
n
6
0
0
(
In
c
l
J
C
T
)
,
K
o
r
e
a
:
W
o
n
4
,0
0
0
,
M
a
la
y
s
ia
:
R
M
7
.5
0
,
P
a
k
is
t
a
n
:
R
s
1
4
0
.0
0
,
P
h
ilip
p
in
e
s
:
P
e
s
o
1
0
0
.0
0
,
S
in
g
a
p
o
r
e
:
S
$
5
.0
0
(
I
n
c
l
G
S
T
)
,
S
r
i
L
a
n
k
a
:
S
lr
s
5
0
0
(
I
n
c
l
V
A
T
)
,
T
a
iw
a
n
:
N
T
$
1
1
0
.0
0
,
T
h
a
ila
n
d
:
B
a
h
t
8
0
.0
0
,
V
ie
t
n
a
m
:
U
S
$
4
.5
0
K
D
N
P
P
9
3
1
5
/
1
0
/
2
0
1
2
(
0
3
1
2
7
5
)
M
C
I
(
P
)
N
O
.
0
5
3
/
1
0
/
2
0
1
3
S
K
.
M
E
N
P
E
N
R
.I
.
N
O
:
0
1
/
S
K
/
M
E
N
P
E
N
/
S
C
J
J
/
1
9
9
8
T
G
L
.
4
S
E
P
T
1
9
9
8
Kenyan Geoffrey Mutai crossed the finish line at 2 hours, 8 minutes and 24 seconds Sunday to win
the mens division of New Yorks marathon, the first since its cancellation after superstorm Sandy a
year ago. Priscah Jeptoo of Kenya won the womens division in 2 hours, 25 minutes and 5 seconds.
Marathon Returns to New York, Kenyans Win
Reuters
Emerging
Markets Hit
Pivot Point
Is the slowing growth in
emerging markets from China
to Turkey to Brazil a tempo-
rary blip or a harbinger of
worse to come?
For much of the past de-
cade, these emerging econo-
mies expanded swiftly as peo-
ple shifted
from farms to
more-produc-
tive urban
jobs. They bounced back
strongly after the global re-
cession as large monetary and
fiscal stimulus spending by
China and other developing
nations helped offset a drop in
U.S. demand. The Federal Re-
serve further bolstered their
growth story when it poured
cheap credit into these mar-
kets by printing money to
boost the U.S. economy.
But two years ago, the pic-
ture began to change. Growth
has fallen sharply in emerging
marketsby three percentage
points since 2010 to 5% on an
annualized quarterly basis, ac-
cording to the International
Monetary Fund.
Now, the question is what
caused this drop and whether
these lower rates of expansion
are the new normal or just a
rest stop on the developing
worlds march to catch up
with industrialized countries.
This is really the hot
question in policy circles right
now, said Stephen Schwartz,
chief Asia economist for
Spains Banco Bilbao Vizcaya
Argentaria SA.
The growth debate hinges
on whether the dip is due to
structural problems and thus
permanent or the result of a
temporary downturn in the
globes economic cycle.
Between 2000 and 2012,
emerging economies grew by
almost 6% a year on average,
while the U.S. grew at a 2%
annual pace on average. That
Please turn to page 14
BY TOM WRIGHT
Pakistani Militants Warn
Of Retaliation for Strike
ISLAMABAD The Paki-
stani Taliban vowed to take
revenge inside the country for
the U.S. drone attack that
killed the groups chief, put-
ting more pressure on al-
ready-strained ties between
Islamabad and Washington.
Security services across
Pakistan have been put on
high alert following Fridays
strike on Hakimullah Mehsud.
The danger of bloodshed is
heightened by the start of the
Islamic month of Muharram,
when minority Shiite Muslims
hold large street processions
that are often targets of mili-
tant attacks.
Azam Tariq, a spokesman
for Tehreek-e-Taliban Paki-
stan, as the militant organiza-
tion is known, said the group
would mark the memory of
Mr. Mehsud with retribution.
His blood will not be
wasted, he said.
Mr. Mehsuds death has
also created a potential crisis
of leadership for the TTP, an
umbrella organization for
more than three dozen mili-
tant groups that works closely
with al Qaeda.
Mr. Mehsud was killed just
as the Pakistani government
believed he was ready to en-
ter into peace negotiations
under a policy of reconcilia-
tion pursued by Prime Minis-
ter Nawaz Sharif. While Is-
lamabad has long opposed the
U.S. drone program, Pakistani
officials view the timing of
Fridays strike as particularly
damaging.
The government has ac-
cused the U.S. of sabotaging
its peace initiative and
warned that it would review
its ties with Washington. Pak-
istan Interior Minister
Chaudhry Nisar Ali Khan de-
scribed the death of Mr. Meh-
sud as the murder of all ef-
forts at peace, and the U.S.
ambassador was summoned
for an official protest. A U.S.
Embassy representative didnt
return calls seeking comment.
Zafar Jaspal, a professor
of international relations at
Islamabads Qaid-i-Azam Uni-
versity, said that the outrage
expressed by Mr. Sharifs gov-
ernment over the weekend
BY SAEED SHAH
Dhaka
Tribunal
Sentences
Two to Die
DHAKA, BangladeshA
Bangladeshi war crimes tribu-
nal sentenced a U.S. citizen
and a Briton to death Sunday,
after convicting them in ab-
sentia of crimes against hu-
manity committed during the
countrys 1971 war of inde-
pendence from Pakistan.
Prosecutors said the men,
Ashrafuzzaman Khan and
Chowdhury Mueen Uddin, led
an Islamist militia that helped
the Pakistani army battle Ben-
gali fighters. They were
charged with involvement in
the murders of 18 Bengali in-
tellectuals in the waning days
of the war.
Both men left Bangladesh
after the conflict, prosecutors
said, with Mr. Khan settling in
the U.S. and Mr. Uddin in the
U.K. Neither man answered a
court summons to appear be-
fore the tribunal, according to
prosecutors.
We hope the government
will intensify international ef-
forts to bring the two con-
victed criminals to Bangla-
desh to face justice, said
BY SYED ZAIN AL-MAHMOOD
India is set to launch a
spacecraft to Mars, a
mission that could put
it ahead of space rivals
China and Japan.
World News ............ 5
A website run by
Singapores largest
newspaper is hacked by
a purported member of
online hacking group
Anonymous.
Asia News .............. 3
Inside
Economic recoveries in Asia
lag behind Wests rebound.. 4
Some forecast reversals in
emerging stocks paths....... 15
Bleak Forecasts Are
Big Blowto Japan Inc.
TOKYOSurprise cuts in
profit forecasts from Nissan
Motor Co. and Sony Corp. are
giving pause to believers in
Japans corporate recovery
and highlight the risks still
facing the countrys biggest
brands.
Nissan on Friday cut its
full-year profit outlook by
15%, blaming weakness in
emerging markets and big re-
call costsand overhauled its
management.
Sony on Thursday slashed
its annual earnings forecast
by 40% following box-office
flops and weak sales of televi-
sions. The consumer-electron-
ics companys shares slid 11%
the next day.
The downbeat news from
two Japan Inc. heavyweights
has added a sober tone to the
latest quarters earnings re-
ports. It is a sharp contrast to
the upward revisions that
dominated earnings reports
six months ago amid opti-
mism sparked by government-
stimulus policies.
After more than two de-
cades of starts and stops,
there has been a renewed
confidence that Japans econ-
omy finally may be on the
mend. Helped by an ultra-easy
monetary policy and fiscal
spending, consumer prices
and industrial production
have risenand companies
are starting to increase corpo-
rate investment. The Nikkei is
BY MAYUMI NEGISHI
AND HIROYUKI KACHI
THE
OUTLOOK
Sony struggles to remain in
the game...................................... 15
28 | Monday, November 4, 2013 THE WALL STREET JOURNAL.
RBS Puts Too Much Stock
In Its Internal Bad Bank
In, out, shake it all about.
Royal Bank of Scotland Group
has decided to set up an internal
bad bank from which it can ac-
celerate disposal of about 38 bil-
lion (about $61 billion) of its
weakest assets, after months of
wrangling with its 81% owners, the
U.K. government. That should
prove less costly than a previously
discussed outright split of RBS
into a good bank and bad bank.
But RBSs shares plunged 7.5% in
London on Friday anyway.
Investors rightly suspect a
plan, even if it helps RBSs capital
position, may do little for its
value.
RBS already had been doing a
decent job of disposing of its non-
core assets, reducing them by
about 86% since 2008. So why
bother with an internal bad bank
so late in the day? One answer is
the U.K. regulators plans to force
banks to hold more capital to pro-
tect themselves against sudden
changes in economic conditions.
That will mean banks with riskier
assets having to hold more capital.
Hence RBSs renewed zeal to
dispose of its bad assets: It aims
to be rid of the internal bad bank
by the end of 2016. In the near
term, that means it will take a 4
billion to 4.5 billion hit to earn-
ings before the end of 2013. That,
though, will be offset by lower
capital charges for expected
losses, meaning little net effect on
its core Tier 1 equity ratio.
But the earnings hit wont end
there. RBS expects to earn 1.5 bil-
lion to 2 billion less when dispos-
ing of its assets as a result of its
accelerated program; it also could
take another 1 billion of impair-
ments on the bad-bank assets in
the next two years.
And RBS is bringing forward a
plan to spin off its U.S. subsidiary,
RBS Citizens Financial Group,
which contributes about 10% of its
operating profit. The bank says it
could earn a higher return on eq-
uity from 2017 onward. But with-
out further details, it is hard to
share RBSs view that the plan will
prove economically neutral over
the longer term.
Confidence might be more
forthcoming if the core RBS was
performing well. Instead, despite a
relatively strong performance
from its much reviled markets
business, it suffered a 828 million
loss in the third quarter. New
Chief Executive Ross McEwan also
proffered a searing self-criticism
of RBSs failings as a lender.
Setting up the internal bad
bank is supposed to free up his
time. He still has plenty to do.
Andrew Peaple
Work in Progress
Royal Bank of Scotlands
daily share price in London
Source: FactSet
The Wall Street Journal
Note: 1= $1.60
4.00
2.50
3.00
3.50
F J M A M J J A S O N
HEARDON THE STREET
Email: heard@wsj.com FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard
Cloud Over NSA May Give AT&T Cover
Out of adversity comes opportu-
nity. That may be something AT&T
should remember.
Outcry in Europe over spying by
the National Security Agency has
prompted officials in the region to
threaten intense scrutiny of any
AT&T deal to acquire a major wire-
less carrier there. That could frus-
trate AT&Ts apparent aim of bid-
ding for the remaining piece of
Vodafone Group after the deal to
sell its stake in Verizon Wireless to
Verizon Communications closes in
the first quarter of 2014.
If AT&T is forced to back away
because of a chill political wind,
that might not be such a bad thing.
A move to Europe carries significant
risks, in large part because of the
regions stifling regulatory climate
and fiercely competitive landscape.
Those factors could prevent AT&T
from generating a sufficient return
on investments in wireless networks
there, a likely component of its Eu-
ropean strategy.
Having another big deal scuttled
by regulators after the Justice De-
partment blocked its bid for T-Mo-
bile US in 2011 also could be disas-
trous for AT&T. Blaming the NSA
blowup could be a convenient way
to avoid even a chance of that.
Of course, it may already be too
late to turn back, particularly after
AT&T has spent so much effort pro-
moting the idea to investors. It ar-
guably needs to do a deal to help it
combat mounting competition in the
U.S. wireless market.
And AT&T already has publicly
ruled out a domestic merger, citing
the difficult U.S. regulatory climate.
The company may be counting on
the spying scandal quickly fading
from the headlines and on being
able to appease regulators by agree-
ing to wall off its European busi-
ness. Still, it might be better for in-
vestors if AT&T uses the
governments misstep to avoid one
of its own. Miriam Gottfried
Young-gun hedge-fund analysts
were awed Thursday by the long
view of economist and investor
Andrew Weiss.
He was one of a slate of promi-
nent investors who, for charity,
presented trading ideas at the
Sohn London Investment confer-
ence.
Before giving his pitch, the pro-
fessorial Mr. Weiss said he believed
it represented the greatest oppor-
tunity since the 2008 financial cri-
sis. He then corrected himself, say-
ing it reminds me of investing in
Japan in the 60s.
The crowd, which included
plenty of 20-somethings, broke
into slightly nervous laughter. Mr.
Weiss managed to get a few more
laughs during his presentation,
which centered on buying so-called
preference shares listed in South
Korea. A key risk, which he said
could be hedged with credit-default
swaps, was an attack from North
Korea.
Ever thorough, he also discussed
the potential of the North Korean
economy. He noted, though, that
its mainstay industries of forgery
and drug trafficking arent growth
businesses. So much for that
trade.
A
s
s
o
c
i
a
t
e
d
P
r
e
s
s
OVERHEARD
For AT&T, a move into Europe would carry significant risks. Here, an AT&T store in New York in July.
P
u
b
lis
h
e
d
b
y
D
o
w
J
o
n
e
s
P
u
b
lis
h
in
g
C
o
m
p
a
n
y
(
A
s
ia
)
.
P
r
in
t
e
d
in
H
o
n
g
K
o
n
g
b
y
S
u
p
e
r
f
la
g
P
r
in
t
in
g
a
n
d
C
o
m
m
u
n
ic
a
t
io
n
L
t
d
.,
1
/
F
,
8
C
h
u
n
Y
in
g
S
t
.,
T
s
e
u
n
g
K
w
a
n
O
In
d
.
E
s
t
.,
T
s
e
u
n
g
K
w
a
n
O
,
N
T
.
P
r
in
t
e
d
in
In
d
o
n
e
s
ia
b
y
P
T
G
ra
m
e
d
ia
P
r
in
t
in
g
G
r
o
u
p
,
J
a
la
n
P
a
lm
e
ra
h
S
e
la
t
a
n
2
2
-
2
8
,
J
a
k
a
r
t
a
1
0
2
7
0
.
P
r
in
t
e
d
in
J
a
p
a
n
b
y
Y
o
m
iu
r
i
S
h
im
b
u
n
,
1
-
7
-
1
,
O
t
e
m
a
c
h
i,
C
h
iy
o
d
a
-
k
u
,
T
o
k
y
o
1
0
0
-
8
0
5
5
.
P
r
in
t
e
d
in
K
o
r
e
a
b
y
J
o
o
n
g
A
n
g
Ilb
o
.
7
,
S
o
o
n
w
h
a
-
D
o
n
g
,
C
h
u
n
g
-
K
u
,
S
e
o
u
l
1
0
0
-
1
3
0
.
1
9
9
7
J
u
n
e
0
4
R
e
g
is
t
ra
t
io
n
n
o
.:
S
e
o
u
lK
A
0
0
0
2
0
(
D
a
ily
N
e
w
s
p
a
p
e
r
)
,
P
u
b
lis
h
e
r
/
E
d
it
o
r
/
P
r
in
t
e
r
:
S
o
n
g
,
P
il-
H
o
.
P
r
in
t
e
d
in
M
a
la
y
s
ia
b
y
K
H
L
P
r
in
t
in
g
C
o
.
S
d
n
.
B
h
d
.
(
R
O
C
N
o
:
2
3
5
0
6
0
-
A
)
L
o
t
1
0
&
1
2
,
J
a
la
n
M
o
d
a
l
2
3
/
2
,
S
e
k
s
y
e
n
2
3
K
a
w
a
s
a
n
M
ie
l
P
h
a
s
e
8
,
4
0
0
0
0
S
h
a
h
A
la
m
,
S
e
la
n
g
o
r,
M
a
la
y
s
ia
.
P
r
in
t
e
d
in
P
h
ilip
p
in
e
s
b
y
F
E
P
P
r
in
t
in
g
C
o
r
p
o
ra
t
io
n
,
3
8
1
7
M
a
s
c
a
r
d
o
S
t
.,
C
o
r
n
e
r
M
e
t
r
o
p
o
lit
a
n
A
v
e
.,
P
a
s
o
n
g
T
a
m
o
,
M
a
k
a
t
i
C
it
y
.
P
r
in
t
e
d
in
S
in
g
a
p
o
r
e
b
y
K
H
L
P
r
in
t
in
g
C
o
.
P
t
e
L
t
d
.,
5
7
L
o
y
a
n
g
D
r
iv
e
,
S
in
g
a
p
o
r
e
5
0
8
9
6
8
.
P
r
in
t
e
d
a
n
d
d
is
t
r
ib
u
t
e
d
in
T
a
iw
a
n
b
y
T
h
e
C
h
in
a
P
o
s
t
,
8
F
u
S
h
u
n
S
t
r
e
e
t
,
T
a
ip
e
i
1
0
4
.
P
r
in
t
e
d
in
T
h
a
ila
n
d
b
y
N
a
t
io
n
M
u
lt
im
e
d
ia
G
r
o
u
p
P
u
b
lic
C
o
.,
L
t
d
.,
1
8
5
4
B
a
n
g
n
a
-
T
ra
d
R
o
a
d
,
(
K
.M
.
4
.5
)
,
P
ra
k
a
n
o
n
g
,
B
a
n
g
k
o
k
1
0
2
6
0
.
P
u
b
lis
h
e
d
a
n
d
p
r
in
t
e
d
o
n
b
e
h
a
lf
o
f
t
h
e
W
a
ll
S
t
r
e
e
t
J
o
u
r
n
a
l
In
d
ia
P
u
b
lis
h
in
g
P
v
t
L
t
d
,
9
t
h
F
lr,
T
o
w
e
r
2
,
M
a
k
e
r
M
a
x
it
y
,
B
a
n
d
ra
K
u
r
la
C
o
m
p
le
x
,
B
a
n
d
ra
(
E
)
,
M
u
m
b
a
i
4
0
0
0
5
1
b
y
M
r
S
u
m
a
n
D
u
b
e
y
a
t
A
-
8
S
e
c
t
o
r
7
,
G
a
u
t
a
m
B
u
d
h
N
a
g
a
r,
N
o
id
a
-
2
0
1
3
0
1
a
n
d
P
L
O
T
N
o
.E
L
2
0
8
,
T
T
C
In
d
u
s
t
r
ia
l
A
r
e
a
,
M
a
h
a
p
e
,
N
a
v
i
M
u
m
b
a
i
-
4
0
0
7
1
0
(
M
a
h
a
ra
s
h
t
ra
)
,
In
d
ia
,
E
d
it
o
r
:
S
u
m
a
n
D
u
b
e
y
,
p
h
o
n
e
:
+
9
1
-
2
2
-
6
1
4
5
6
1
0
0
.
A
C
P
n
o
.
F
.2
(
T
/
3
)
P
r
e
s
s
/
2
0
0
9
F
A
C
S
IM
IL
E
E
D
IT
IO
N
.
M
B
A
EET THE WORLDS TOP
USINESS SCHOOLS
DMISSIONS DIRECTORS
Register Now at:
www.topmba.com/wsj
Participating schools include: Boston University, Cambridge - Judge, CEIBS, ESADE,
ESSEC, HEC Paris, HKUST, Hult, IE, IMD, London Business School, Michigan - Ross,
TRIUM EMBA (NYU, HEC, LSE) and many more! (schools will vary per city)
Tokyo Oct 29
Seoul Oct 31
Beijing Nov 2
Shanghai Nov 3
Chengdu Nov 5
Guangzhou Nov 7
Hong Kong Nov 10
Taipei Nov 12
Manila Nov 14
Singapore Nov 16
Jakarta Nov 18
Kuala Lumpur Nov 20
Ho Chi Minh Nov 22
Bangkok Nov 24
MBA FAIRS IN ASIA
Ofcial business newspaper:
Meet with top international business schools
GMAT & Admissions advice
Interactive panel discussions with MBA experts and alumni
2 | Monday, November 4, 2013
HK JP ID MU KO ML PH SI TL TW IN
THE WALL STREET JOURNAL.
PAGE TWO
ONLINE TODAY
Japan Real Time
wsj.com/japanrealtime
Tohoku Rakuten
Eagles ace pitcher
Masahiru Tanaka
gets the save as the
team beat the
Yomiuri Giants 3-0
to win the Japan
Series.
India Real Time
wsj.com/indiarealtime
The numbers are
certainly very
troublesome and a
matter of worry.
Anumita Roychowdhury, of the Center
for Science and Environment, speaking
about pollution in New Delhi
Photos of the Day
Images behind the stories
making news world-wide
wsj.com/photosoftheday
Malaysia
wsj.com/searealtime
Zombies help
Malaysian app
developer Tomato
Animation to find
fans across Asia.
i i i
Business & Finance
n Suntech Power agreed to sell
its core assets in China for $492
million to a smaller rival, attempt-
ing to pay back creditors after de-
faulting on debt. 18
n Indias tax office asked IBM to
pay $865 million in taxes, alleging
that the technology firms local
unit underreported its income. 18
n Glencore is selling its majority
stake in one of the Asian-Pacific
regions largest unmined copper
deposits, the Frieda River project
in Papua New Guinea. 19
n Shandong Shipping signed a
$500 million deal with Vale that
would allow the Chinese state-
owned firm to operate four of the
Brazilian miners fleet of iron-ore
freighters known as Valemaxes. 19
n An investigation of possible
currency-market rigging has led
some of worlds largest banks to
suspend a number of traders in
New York, London and Tokyo. 21
n A dozen governors in Indonesia
boosted the minimum wage in
their localities by an average 19%
in the wake of a two-day strike,
prompting concern that the step
may scare away investors. 4
n Prices for new houses in 100
Chinese cities rose by an average
of 10.7% in June, defying efforts to
control the market. 20
n Australian investment bank
Macquarie will spin off a $1.3 bil-
lion stake in Sydneys airport to
its shareholders. 20
n Aviation regulators in Asia will
consider matching a decision by
the U.S. to allow air travelers to
use tablets and other personal de-
vices during all phases of flight. 17
n A new vaccine from Merck ap-
peared to provide broader protec-
tion against a cancer-causing vi-
rus than the companys Gardasil
shot in clinical trials. 16
n Lululemon said it received new
complaints about the quality of
some yoga pants, after a recall
earlier this year when the fabric
was found to be too revealing. 16
i i i
World-Wide
n A tourist ferry sank near an is-
land off Thailands popular resort
of Pattaya, killing at least six peo-
ple and injuring 15. 3
n A boat carrying at least 70
Muslim Rohingya sank off Myan-
mars coast, an aid worker said.
Eight survivors had been found.
n Kosovars choose mayors and
local councilors in an election that
will test the countrys fragile rela-
tions with Serbia. WSJ.com/World
n Secretary of State Kerry met
with Egyptian leaders, assuring
them that the U.S. remains com-
mitted to strong ties.
A boy crawls under a cow during a religious ceremony in Katmandu. Hindus in Nepal celebrated the Tihar festival, also called Diwali, during which they worship
cows, which are considered a maternal figure, and other animals. Devotees also worship the goddess of wealth, Laxmi, by illuminating and decorating their homes.
Inside
World News: Nauru
rebuilds its bank
system from scratch. 5
Boss Talk Asia: Mall
giant is cautious on
Asian expansion. 8
Business & Finance:
Fortescue hastens
debt repayment. 15
Whats News
Reuters
THE WALL STREET JOURNAL
Dow Jones Publishing Company (Asia)
25/F, Central Plaza, 18 Harbour Road, Hong Kong
Tel 852-2573 7121 Fax 852-2834 5291
www.wsj-asia.com
SUBSCRIPTIONS and Address Changes, please
telephone our local customer service hotline, Hong
Kong/Taiwan: 852-2831 2555; Beijing: 86-10 6581 4090;
Shanghai: 86-21 5836 8228; Indonesia: 62-21 527 7592;
Japan: 0120 779 868; Korea: 82-2 3700 1925;
Malaysia: 60-3 2026 4061; Philippines: 63-2 848 5873;
Singapore: 65-6415 4000; Thailand: 66-2 690 4222 to 7;
India: 000 800 440 1938. 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
SUBSCRIBE TODAY
wsj-asia.com/fpf
or scan this code
THE WALL STREET JOURNAL. Monday, November 4, 2013 | 27
Asianstocks inthe news
Hero MotoCorpLtd.
India 2,101.35 rupee
s 1.2% or 24.25rupee
The maker of two-wheeled motor
vehicles posted anincrease invehicle
sales for October.
N D
2013
J F M A M J J A S O
750
1500
2250
3000
3750
In rupee
Price-to-earnings ratio 20
Earnings per share, past four quarters N.A.
Dividend yield 2.8
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Consumer Goods -0.2% 0.5% 24.9%
Hero MotoCorp Ltd. 1.2% 3.3% 10.3%
SoftBankCorp.
Japan 7,550
s 3.4% or 250
The company said its July-September
net profit rose 44%froma year earlier.
N D
2013
J F M A M J J A S O
1500
3000
4500
6000
7500
In yen
Dividend yield 0.5
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Telecommunications -0.8% 0.8% 20.7%
SoftBank Corp. 3.4% 2.0% 188.4%
Macquarie GroupLtd.
Australia A$53.10
s 4.2% or A$2.15
The firmplans to spinoff its stake in
Sydney Airport to its shareholders via a
share distribution.
N D
2013
J F M A M J J A S O
15.00
30.00
45.00
60.00
75.00
In Australian dollars
Dividend yield 4.7
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Financials -0.1% 0.5% 17.2%
Macquarie Group Ltd. 4.2% 3.7% 68.6%
Bankof Baroda
India 671.65 rupee
The bank rose further after its July-
September financial results showed a
slight improvement inasset quality.
N D
2013
J F M A M J J A S O
250
500
750
1000
1250
In rupee
Price-to-earnings ratio N.A.
Dividend yield 3.2
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Financials -0.1% 0.5% 17.2%
Bank of Baroda 4.4% 12.7% -8.4%
Mitsubishi Motors Corp.
Japan 1,153
s 5.0% or 55
The auto maker reported October sales
rose 19%froma year earlier.
N D
2013
J F M A M J J A S O
400
800
1200
1600
2000
In yen
Dividend yield N.A.
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Mitsubishi Motors Corp. 5.0% 11.3% 64.7%
KyushuElectric Power
Japan 1,320
t 4.3% or 59
The utility lost ground despite reporting
a narrower loss for the fiscal first half
late Thursday.
N D
2013
J F M A M J J A S O
300
600
900
1200
1500
In yen
Dividend yield 3.0
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Utilities 0.6% 0.6% 13.5%
Kyushu Electric Power -4.3% -2.3% 115.7%
NTTData Corp.
Japan 3,095
t 4.8% or 155
The shares dropped after first-half
operating profit came inwell below
analysts' expectations.
N D
2013
J F M A M J J A S O
1000
2000
3000
4000
5000
In yen
Dividend yield 193.9
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Technology -0.6% 0.2% 21.7%
NTT Data Corp. -4.8% -2.5% 28.7%
RicohCo. Ltd.
Japan 964
t 6.7% or 69
The company's second-quarter
operating profit fell short of guidance.
N D
2013
J F M A M J J A S O
300
600
900
1200
1500
In yen
Dividend yield 3.4
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Technology -0.6% 0.2% 21.7%
Ricoh Co. Ltd. -6.7% -8.7% 48.1%
Makita Corp.
Japan 4,600
t 7.1% or 350
The shares fell further after the company
cut its fiscal-year group net-profit
forecast onThursday.
N D
2013
J F M A M J J A S O
1500
3000
4500
6000
7500
In yen
Dividend yield 0.8
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Makita Corp. -7.1% -12.2% 46.3%
SonyCorp.
Japan 1,668
t 11.1% or 209
The company posted a wider loss for the
September quarter and cut its profit
forecast for the year.
N D
2013
J F M A M J J A S O
500
1000
1500
2000
2500
In yen
Dividend yield 1.5
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Sony Corp. -11.1% -9.9% 82.3%
Moving the
markets
At right, Japans benchmark stock index
and the biggest movers among the
larger Asianstocks indexes and stocks
Friday. Beloweachindex are its most
actively traded stocks. The charts show
the percentage change ineachindexs or
stocks value, rather thanthe point
change, for purposes of comparison. The
index level or stock price is indicated on
eachaxis. All indexes and stocks are
showninlocal currency terms.
Asianindexmovers
Nikkei StockAverage
Japan 14201.57
t 0.88% or 126.37
N D
2013
J F M A M J J A S O
5500
8250
11000
13750
16500
Volume Change
Stock in millions Close Net %
Sharp 134.24 292 3 1.04
Mizuho Fin 76.11 205 ...
Sony 69.97 1,668 -209 11.13
Tokyo Electric 59.36 535 12 2.29
Hitachi 55.85 683 -2 0.29
Kospi
South Korea 2039.42
s 0.46% or 9.33
N D
2013
J F M A M J J A S O
1000
1500
2000
2500
3000
Volume Change
WooridulPharm 26.69 503.00 10.00 2.03
WooridulLifeSci 26.66 520.00 6.00 1.17
STXPanOcean 18.86 1,095.00 35.00 3.10
Shinwoo 15.69 347.00 3.00 0.86
DongyangSteelPipe 12.33 1,715.00 215.00 11.14
Shanghai Composite
China 2149.56
s 0.37% or 7.95
N D
2013
J F M A M J J A S O
1000
1500
2000
2500
3000
Volume Change
SichuanChanghongA 209.58 2.64 0.12 4.35
ShangPudongDevBk 164.06 10.42 0.09 0.87
ChinaMinshengBkA 136.02 9.17 0.21 2.34
GDPowerDevelopment 121.79 2.57 0.04 1.53
HaitongSecsA 116.47 11.84 0.17 1.46
ASX200
Australia 5411.10
t 0.27% or 14.40
N D
2013
J F M A M J J A S O
2400
3600
4800
6000
7200
Volume Change
FortescueMetalsGrp 16.27 5.18 -0.03 0.58
SundanceResources 15.81 0.11 ...
DexusPropertyGroup 11.84 1.07 -0.02 1.66
Arrium 11.82 1.39 ... 0.36
SydneyAirportHldgs 10.97 4.04 -0.16 3.70
The benchmark fell on a weaker dollar
and disappointing earnings-related an-
nouncements from Sony and others.
The index rose 0.8% on the week.
Korean shares rose, with Samsung
Electronics up 2.4%, SK Telecom gaining
2.9% and Samsung SDI up 2.5%. The
market ended the week 0.2% higher.
The index finished higher on gains in
heavyweight financial stocks, as well as
upbeat manufacturing data. Shares rose
0.8% for the week.
Continuing demand for high-yield equi-
ties and the positive data from China
pared the markets losses. The index
gained 0.5% on the week.
MARKETS LINEUP
WSJ.com
>>
Follow the markets throughout the
day, with updated stock quotes, news
and commentary at WSJ.com.
Also, receive emails that summarize
the days trading in Europe and Asia.
To sign up, go to WSJ.com/Email.
WORLD NEWS: ASIA
Singapore Site Hacked
SINGAPOREA website run by
Singapores largest newspaper was
hacked Friday by a purported mem-
ber of online hacking group Anony-
mous, after the group appeared to
warn of potential cyberattacks
against the city-states government.
The hackerusing the name
The Messiahposted a message
on a blog run by the Straits Times
accusing a reporter and the paper of
deliberately misrepresenting Anony-
mouss intentions in the headline of
her article. The hacker demanded
that the reporter apologize or re-
sign within 48 hours, and said it
would take unspecified steps if
these requests werent met.
The articles headline read, You-
Tube video by Anonymous hacker
group threatens to attack Singa-
pore. Fridays message said the
headline can be very misleading as
it depicts a threat against the coun-
try, whereas the group was specifi-
cally threatening the government.
The YouTube video last week
was posted by someone claiming to
represent Anonymous, a loose and
decentralized collective of activist
hackers who have launched cyber-
assaults against U.S. government
and corporate targets. The video
carried a message purportedly from
Anonymous that threatened attacks
against Singapores state-owned cy-
berinfrastructure to protest the gov-
ernments tightening of Internet
regulations.
Singapore Press Holdings, pub-
lisher of the Straits Times, con-
firmed the hacking and said police
were investigating the incident. The
reporter of the article that The
Messiah objected to didnt respond
to requests to comment, but the
Straits Timesin an article pub-
lished on its websitesaid it stands
by its reports and reporters.
According to the video message,
Anonymous is planning a virtual
protest on Tuesday, Nov. 5the an-
niversary of a failed attempt by Guy
Fawkes to blow up the U.K. Parlia-
ment in 1605and is asking Singa-
poreans to show support by donning
black and red colors on that day.
The message didnt specify how
Anonymous would stage its protest.
In June, Singapore imposed new
licensing requirements on 10 news
websites run by U.S. Internet firm
Yahoo Inc. and two domestic media
companies, requiring them to apply
for individual licenses, furnish a
performance bond and comply
with government orders to remove
any objectionable content within 24
hours. The rules apply to news sites
that report regularly on Singapore
news and reach certain readership
thresholds, and they could cover
more websites in the future.
Government officials have de-
fended the revised regulations, say-
ing they wont curb free speech or
have a significant impact on busi-
ness, despite objections from citi-
zens and U.S. Internet firms, includ-
ing Google Inc., Facebook Inc. and
Yahoo. The government said the
rules would harmonize media laws.
Fridays hacking was the latest
purportedly launched by The Mes-
siah against websites run by Singa-
pore-based entities and personali-
ties this year.
BY CHUN HAN WONG
A person claiming to speak for Anonymous warns of attacks in a video.
A
g
e
n
c
e
F
r
a
n
c
e
-
P
r
e
s
s
e
/
G
e
t
t
y
I
m
a
g
e
s
Japan and Russia Agree
To Expand Security Ties
TOKYOJapan and Russia have
agreed to expand security coopera-
tion, in the latest in a series of con-
tacts between the nations in the face
of an increasingly assertive China.
At the first-ever meeting of the
two countries foreign and defense
ministers, Russian Foreign Minister
Sergei Lavrov and defense chief Ser-
gei Shoigu held talks Friday and Sat-
urday in Tokyo to launch what are
known as two-plus-two discus-
sions with their Japanese counter-
parts, Fumio Kishida and Itsunori
Onodera.
The ministers said the security
cooperation, in addition to continu-
ing economic and human exchange
programs, should help foster better
relations between the two countries,
which have had an often-chilly rela-
tionship owing to a territorial dis-
pute left over from World War II.
The new signs of friendship will
likely send a signal to China, which
is beefing up its military presence in
the region and is itself involved in
an increasingly testy dispute with
Japan over a small group of islands
in the East China Sea.
As a seafaring country, maritime
security is extremely important for
us and todays agreement was made
in a very timely fashion, Mr.
Kishida said Saturday.
Russia and Japan have conducted
joint naval exercises since 1998 but
only for the purpose of cooperation
in search-and-rescue operations.
Saturdays agreement added coun-
termeasures against terrorism and
piracy.
They also agreed to periodic mu-
tual visits of defense ministers,
along with the launch of a council on
cybersecurity.
Japan hopes the talks will
prompt China to reopen a window
for dialogue. Chinese and Japanese
leaders havent met formally since
Prime Minister Shinzo Abe took of-
fice in December, and Chinese patrol
vessels regularly enter what Japan
considers its territorial waters
around the disputed islands, known
as the Senkaku in Japan and the Di-
aoyu in China.
Japan sought Russian under-
standing of Japans security ap-
proach as a proactive contributor
to peace, which may include a revi-
sion to defense policies to include
the right of collective self-defense.
China and South Korea have criti-
cized any such moves by Japan,
which under present rules can re-
spond only to a direct attack.
I have explained the increas-
ingly severe security environment
around us and improvement in our
defense capabilities, Mr. Onodera
said. Mr. Lavrov responded by say-
ing that he understood Japans aim
to become a proactive contributor
to peace.
Russia and Japan have their own
territorial dispute over ownership of
four islands off the coast of Hok-
kaido, which has kept the countries
from signing a peace treaty that
would formally end World War II.
Mr. Abe and Russian President
Vladimir Putin, who have met four
times since December, agreed in
April to speed up a process toward
the peace treaty.
The foreign ministers held a sep-
arate meeting on Friday, at which
they agreed to proceed with peace-
treaty talks as soon as January.
BY TAKASHI MOCHIZUKI
Thai Tourist Ferry
Sinks, Killing Six
BANGKOKA tourist ferry sank
Sunday near an island off Thailands
popular resort of Pattaya, killing at
least six people and injuring 15, po-
lice said.
The double-decker vessel sank
about 1 kilometers from Lan island
as it was taking passengers, mostly
tourists, from the island back to
Pattaya, a well-known beach town
about 130 kilometers southeast of
Bangkok, police said.
At least six people were killed,
including three Thais, two Russians
and one Chinese national, said Po-
lice Col. Suwan Cheawnavinthavat,
Pattayas police chief.
At least 15 people were injured,
including a 9-year-old Russian boy
who was admitted to the emergency
unit at a local hospital, he said.
Police hadnt immediately deter-
mined the cause of the accident, but
initial reports suggested that the
boats water pump wasnt working
as seawater flooded the lower deck.
Tourists then rushed up to the top
deck, causing the boat to tip and
sink, Police Col. Suwan said.
The boat remained underwater,
police said.
About 200 people were rescued,
but it wasnt immediately known
how many people might be missing.
Police said the boat might have been
operating over its capacity. Navy
divers were dispatched to search for
any passengers who may have been
trapped or missing.
The Thai government and Pat-
taya tourism officials recently
launched a campaign to educate
tour-boat operators in an effort to
increase the level of maritime safety
following several accidents earlier
this year.
An Indian woman was killed in a
parasailing accident in Pattaya last
month when her parasail failed to
launch.
In August, two Chinese tourists
were killed when their speedboat
crashed.
In May, a ferry carrying about
120 people from Phi Phi island to
Phuket capsized after it was struck
by strong waves. All the passengers
were safely rescued.
Lan island, which is about 6 ki-
lometers, or 45 minutes by boat,
from Pattaya, is a popular tourist
spot for swimming and other water
activities.
Nopparat Chaichalearmmongkol
contributed to this article.
BY WARANGKANA CHOMCHUEN
AND WILAWAN WATCHARASAKWET
Thai officials recently
began a campaign to
educate tour-boat
operators in an effort to
increase maritime safety.
Julius Baer is present in over 40 locations worldwide. From Hong Kong, Shanghai, Singapore, Dubai, Moscow, Milan, Monaco,
Frankfurt, London, Guernsey, Nassau and Montevideo to Geneva, Lugano, St. Moritz and Zurich (head ofce).
The leading Swiss private banking group. Since1890.
www.juliusbaer.asia
My name: Edwin
My occupation: Plantation owner
My dream: Serve health to the
world in a cup of tea
My private bank: Julius Baer,
because they culti vate
relationships based
on trust
DowJones Industrial Average P/E: 18
LAST: 15615.55 s 69.80, or 0.45%
YEAR TO DATE: s 2,511.41, or 19.2%
OVER 52 WEEKS s 2,522.39, or 19.3%
*Price-to-earnings ratio for the Nasdaq 100 Note: Price-to-earnings ratios are for trailing 12 months Sources: WSJ Market Data Group; Birinyi Associates
15750
15500
15250
15000
14750
14500
2 9 16 23 30
Aug.
6 13 20 27
Sept.
4 11 18 25 1
Oct.
High
Close
Low
50day
moving average
t
Nasdaq Composite Index P/E: 21*
LAST: 3922.04 s 2.34, or 0.06%
YEAR TO DATE: s 902.53, or 29.9%
OVER 52 WEEKS s 939.91, or 31.5%
3950
3850
3750
3650
3550
3450
2 9 16 23 30
Aug.
6 13 20 27
Sept.
4 11 18 25 1
Oct.
S&P 500 Index P/E: 19
LAST: 1761.64 s 5.10, or 0.29%
OVER 52 WEEKS s 347.44, or 24.6%
1800
1750
1700
1650
1600
1550
2 9 16 23 30
Aug.
6 13 20 27
Sept.
4 11 18 25 1
Oct.
1
DJIAcomponent stocks
Volume,
CHANGE
Stock Symbol in millions Latest Points Percentage
AT&T T 41.3 $36.24 0.04 0.11%
AmExpress AXP 3.3 82.16 0.36 0.44
Boeing BA 4.6 133.03 2.53 1.94
Caterpillar CAT 5.8 83.59 0.23 0.28
Chevron CVX 9.3 118.01 1.95 1.63
CiscoSys CSCO 33.1 22.57 0.01 0.02
CocaCola KO 12.4 39.61 0.04 0.10
Disney DIS 5.0 69.01 0.42 0.61
DuPont DD 3.8 61.09 0.11 0.18
ExxonMobil XOM 19.0 89.82 0.20 0.22
GenElec GE 55.6 26.54 0.40 1.53
GoldmanSachs GS 2.7 162.05 1.19 0.74
HomeDpt HD 7.0 76.99 0.90 1.16
Intel INTC 27.9 24.32 0.14 0.59
IBM IBM 3.6 179.23 0.02 0.01
JPMorgChas JPM 25.5 52.51 0.97 1.88
JohnsJohns JNJ 6.8 93.37 0.76 0.82
McDonalds MCD 5.1 97.24 0.72 0.75
Merck MRK 20.8 45.23 0.14 0.31
Microsoft MSFT 39.9 35.52 0.12 0.34
Nike B NKE 2.1 76.06 0.30 0.40
Pfizer PFE 28.0 31.17 0.49 1.58
ProctGamb PG 6.7 81.15 0.40 0.50
3M MMM 1.7 125.90 0.05 0.04
TravelersCos TRV 1.4 86.40 0.10 0.12
UnitedTech UTX 2.5 107.51 1.26 1.19
UtdHlthGp UNH 4.4 68.63 0.37 0.54
Verizon VZ 11.3 50.49 0.02 0.04
VISAClA V 3.3 199.16 2.49 1.27
WalMart WMT 5.1 77.07 0.32 0.42
U.S. stocks: most active...
Volume, CHANGE
SPDRS&P500 SPY 118.7 $176.21 0.42 0.24%
iShRussell2000ETF IWM 106.5 108.72 0.47 0.44
FacebookClA FB 94.1 49.75 0.45 0.91
iShMSCIEmgMarkets EEM 79.1 42.48 0.02 0.05
BankAm BAC 75.3 14.02 0.05 0.36
BarckGld ABX 74.3 18.01 1.38 7.12
SiriusXM SIRI 61.9 3.79 0.02 0.66
MktVecGold GDX 57.5 24.08 1.02 4.06
PenneyJC JCP 56.7 8.14 0.64 8.53
GenElec GE 55.6 26.54 0.40 1.53
FordMotor F 52.3 16.89 0.22 1.29
AmIntlGp AIG 51.7 48.28 3.37 6.52
AT&T T 41.3 36.24 0.04 0.11
MicronTch MU 41.2 17.57 0.11 0.59
Microsoft MSFT 39.9 35.52 0.12 0.34
Biggest gainers...
ContainerStoreGrp TCS 14,641.2 $36.20 18.20 101.11%
QunarCaymanIslADS QUNR 12,054.1 28.40 13.40 89.33
IdenixPharm IDIX 9,166.6 4.61 1.32 40.12
OsirisThera OSIR 2,204.8 17.76 4.45 33.43
IRIDEX IRIX 420.3 7.44 1.47 24.62
...Biggest losers
BodyCentral BODY 3,132.9 $3.94 1.69 29.96%
RBSChinaTrendETN TCHI 2.3 28.36 7.01 19.82
Accuride ACW 3,461.8 3.64 0.86 19.11
HutchTch HTCH 1,083.5 3.03 0.69 18.55
ELLIEMAE ELLI 6,170.6 24.03 4.87 16.85
ADRs of Asiancompanies*
52-WEEK
Volume,
CHANGE
High Low Stock Symbol in OOOs Latest Points Percentage
$20.30 $15.70 TaiwanSemi TSM 6,394.3 $18.47 0.06 0.33%
23.38 9.57 SonyADS SNE 4,528.0 16.75 0.50 2.90
169.75 82.98 BaiduADS BIDU 2,929.5 160.06 0.74 0.46
61.09 16.90 CtripInt ADS CTRP 2,660.0 54.93 0.67 1.24
48.44 24.94 ICICI BkADS IBN 1,906.8 37.53 0.21 0.56
80.54 55.66 BHPBiltonADS BHP 1,738.6 70.96 0.27 0.38
2.44 1.75 UtdMicroADS UMC 1,673.9 2.03 0.02 0.98
1.99 0.30 SuntechPwr STP 1,604.9 1.32 0.06 4.35
4.64 1.94 SemiMfgInt ADS SMI 1,392.2 3.58 0.08 2.19
24.89 15.04 SKTele ADS SKM 1,277.3 24.78 0.30 1.23
55.70 38.91 InfosysADS INFY 1,122.9 52.57 0.49 0.92
32.44 21.75 TataMtrs ADS TTM 1,120.8 31.33 0.01 0.03
43.81 26.62 HDFCBnk HDB 842.4 35.95 0.30 0.83
7.31 4.24 MitsuUFJ ADS MTU 721.4 6.36 0.04 0.63
40.94 29.82 CanonADS CAJ 659.4 31.63 0.06 0.19
4.98 3.14 AUOptrncs AUO 656.4 3.19 0.03 0.95
6.50 1.81 PranaBiotech PRAN 632.3 4.27 0.24 5.32
59.73 47.74 ChinaMobile CHL 536.3 52.16 0.14 0.27
11.97 6.91 WiproADS WIT 504.0 11.23 0.13 1.17
5.05 3.68 AdSemEgADS ASX 461.1 4.87 0.06 1.22
77.48 37.00 Netease NTES 413.1 67.10 0.41 0.61
6.51 4.70 Slcnwr ADS SPIL 404.3 5.90 0.09 1.50
52.72 33.88 ChinaLfIns ADS LFC 335.6 40.36 0.93 2.36
18.31 14.83 KTCrpADS KT 318.7 16.64 0.06 0.36
16.39 10.67 KoreaElecPwr KEP 279.6 13.27 0.03 0.23
9.64 3.50 NmuraHldg NMR 277.8 7.32 0.04 0.54
5.60 1.17 pSivida PSDV 265.7 2.54 0.09 3.67
17.44 12.18 ChinaUnicomHK CHU 263.5 15.56 0.04 0.26
14.92 4.85 KongzhongADS KONG 260.5 8.19 0.06 0.73
33.74 30.12 ChunghwaTel CHT 242.8 31.42 0.42 1.32
*Most active American depositary receipts tracked by DowJones
Source: WSJ Market Data Group
Global government bonds
Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys onbenchmark two-year
and 10-year government bonds around the world. Data as of 12p.m. ET
Country/
SPREADOVERTREASURYS, in basis points YIELD
Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
3.800 Austria* 2 0.161 -16.0 -15.4 -9.7 -14.2 0.155 0.247 0.143
3.500 10 2.043 -58.0 -49.7 -72.6 23.1 2.062 1.929 1.957
3.750 Belgium 2 0.257 -6.4 -3.2 -6.3 -6.8 0.277 0.282 0.218
2.250 10 2.393 -23.0 -14.8 -8.1 69.9 2.411 2.573 2.425
4.250 Finland* 2 0.135 -18.6 -17.2 -16.2 -23.2 0.137 0.182 0.053
3.375 10 1.807 -81.6 -74.3 -68.8 1.6 1.816 1.967 1.742
0.250 France 2 0.278 -4.3 -1.7 3.2 -10.7 0.292 0.377 0.179
1.750 10 2.160 -46.3 -39.6 -32.7 39.1 2.163 2.328 2.117
0.250 Germany 2 0.110 -21.1 -18.9 -16.4 -25.4 0.120 0.180 0.031
2.000 10 1.689 -93.4 -87.9 -84.5 -26.9 1.680 1.810 1.458
n.a. Greece 2 n.a. ... ... ... ... ... ... ...
n.a. 10 n.a. ... ... ... ... ... ... ...
3.000 Italy 2 1.400 107.9 113.1 147.5 207.7 1.440 1.820 2.362
4.500 10 4.113 149.0 157.4 163.1 313.3 4.133 4.286 4.859
3.250 Netherlands 2 0.173 -14.8 -13.2 -12.9 -21.7 0.177 0.215 0.068
1.750 10 2.025 -59.8 -54.1 -47.6 -0.4 2.018 2.179 1.723
5.450 Portugal* 2 3.473 315.2 338.7 463.6 413.2 3.696 4.981 4.418
4.800 10 6.068 344.5 359.9 387.9 637.3 6.158 6.534 8.099
3.750 Spain 2 1.429 110.8 121.1 104.6 264.8 1.520 1.391 2.934
4.400 10 3.994 137.1 147.8 154.4 384.5 4.037 4.199 5.571
2.750 U.K. 2 0.406 8.5 9.1 6.6 -1.4 0.400 0.410 0.272
1.750 10 2.482 -14.1 -10.6 -11.8 14.3 2.453 2.536 1.869
0.250 U.S. 2 0.321 ... ... ... ... 0.309 0.344 0.285
2.500 10 2.623 ... ... ... ... 2.559 2.655 1.726
Keymoneyrates
Latest 52 wks ago
Prime rates
U.S. 3.25% 3.25%
Canada 3.00 3.00
Japan 1.475 1.475
Britain 0.50 0.50
ECB 0.50 0.75
Switzerland 0.50 0.53
Australia 2.50 3.25
Hong Kong 5.00 5.00
Libor
One month 0.16850% 0.20900%
Three month 0.23775 0.31275
Six month 0.35350 0.53800
One year 0.60160 0.87500
Latest 52 wks ago
EuroLibor
One month 0.09500% 0.05500%
Three month 0.17357 0.13071
Six month 0.27429 0.27179
One year 0.47143 0.54357
Euribor
One month 0.12900% 0.11000%
Three month 0.22600 0.19700
Six month 0.34100 0.38500
One year 0.53300 0.61100
Hibor
One month 0.22000% 0.28000%
Three month 0.38500 0.39643
Six month 0.54714 0.54571
One year 0.87429 0.85571
Offer Bid
Eurodollars
One month 0.2300% 0.1300%
Three month 0.2700 0.1700
Six month 0.3600 0.2600
One year 0.6600 0.5600
Latest 52 wks ago
U.S. discount 0.75% 0.75%
Fed-funds target 0.00 0.00
Call money 2.00 2.00
Overnight repurchase rates
U.S. 0.04% 0.27%
Euro zone 0.10 0.02
Sources: WSJ Market Data Group, SIXFinancial Information, ICAP
U.S. Treasuryyieldcurve
The curve shows the yield to maturity of current bills, notes and bonds; all data as of 3 p.m. ET.
maturity
1
month(s)
3 6 1
years
2 3 5 710 30
5%
4
3
2
1
0
s
One year ago
s
Friday
TOTAL RETURN
Yield to Modified Month Quarter Year
Ryan Index maturity duration to-date to-date to-date 12-month
30-year Treasury 3.694% 17.91 1.09 % 0.11 % 11.34 % 11.77 %
10-year Treasury 2.618 8.58 0.64 0.19 4.94 4.73
7 Year Treasury 2.024 6.55 0.47 0.27 2.64 2.30
Five-year Treasury 1.373 4.83 0.28 0.33 1.08 0.82
Ryan Index 1.768 7.13 0.43 0.21 3.21 3.10
3 Year Treasury 0.588 2.92 0.06 0.25 0.36 0.54
Two-year Treasury 0.313 1.99 0.01 0.08 0.40 0.52
1 Year Treasury 0.091 0.96 0.01 0.03 0.28 0.34
Six-month Treasury 0.081 0.50 ... 0.01 0.15 0.20
Ryan Cash Index-a 0.060 0.44 ... 0.01 0.14 0.18
Three-month bill 0.041 0.25 ... 0.01 0.07 0.10
One-month bill 0.025 0.08 ... 0.01 0.05 0.07
a-Performance of a cash investment
Source: Ryan ALM
SCANNING THE GLOBE
WORLD NEWS: ASIA
Asia Lagging Behind Rebound in West
Exports Fail to Benefit From Economic Growth in U.S. as They Did in the Past; Regional Loss of Competitiveness
Stronger demand from the indus-
trialized world helped Asian econo-
mies in October, but the region con-
tinued to lag behind firmer
recoveries in the U.S. and elsewhere.
Data from China, Taiwan and
South Korea released Friday showed
a broad recovery in manufacturing
activity.
Chinas official manufacturing
purchasing managers index rose to
an 18-month high in October, to 51.4
from Septembers 51.1, while a pri-
vate index from HSBC and Markit
Economics came in at 50.9, from
50.2. A reading above 50 indicates
expansion. But other data pointed to
a worrisome trend: Exports from
the region to the U.S., Europe and
Japan arent picking up as strongly
as economic recoveries in these de-
veloped economies would suggest.
Local demand is playing an in-
creasingly important role in Asia as
the middle class develops, but ex-
ports remain the regions major eco-
nomic driver.
The export performance of Asia
seems to be lagging the global in-
dustrial cycle, which is highly un-
usual, said Frederic Neumann, co-
head of Asian economic research at
HSBC. Theres mild improvement,
but its still puzzling that we havent
seen stronger numbers.
The growth in export orders in
Chinas PMI slowed, to 50.4 from
50.7. That came after Chinas exports
unexpectedly shrank by 0.3% on the
year in September.
In Taiwan, an important player
in the global electronics supply
chain, the official PMI fell to 51.6 in
October from 52.6 in September,
compounding fears that its recent
recovery is fragile. Meanwhile, the
HSBC PMI for Taiwan showed stron-
ger expansion, 53.0 in October, from
52.0 in September. Taiwans econ-
omy grew 1.6% in the third quarter,
below expectations due to weak ex-
ports, recent data showed.
While overall growth in the re-
gion is picking up, the latest data
reinforce doubts about whether Asia
is benefiting as much from growth
in the West as it has in the past.
That is due in part to the chang-
ing nature of the U.S. economy,
which is fueled less by consumer de-
mand and more by a domestic en-
ergy boom.
The U.S. is recovering without
sucking in as many Asian-made
goods as in the past, with consum-
ers reducing credit exposure and in-
creasing savings, said Shuang Ding,
a China economist with Citi Invest-
ment Research in Hong Kong. The
U.S.s narrowing trade deficit is evi-
dence of reduced consumer spend-
ing, he added.
China could also be suffering as
wage costs rise, pricing out some of
its manufactured wares in Western
markets. At the same time, its high-
end exports arent yet competitive
with those from industrialized coun-
tries. Mr. Ding said that is why
China is starting to export more of
these goods to other emerging mar-
kets.
The U.S. government shutdown
in October due to a congressional
fight over budget spending and the
debt ceiling also could have hurt ex-
ports from Asia, economists say.
Another factor is the strong
yuan, which is up 2.6% against the
U.S. dollar in the past 12 months,
making Chinas exports more expen-
sive overseas.
Other countries economies also
look shaky. In India, another large
emerging economy that helped Asia
power through the global recession,
manufacturing activity remained
weak and new orders continued to
fall. The HSBC PMI was at 49.6 in
October, unchanged from September
and in contraction for the third
straight month.
In Indonesia, HSBCs manufac-
turing PMI rose to a four-month
high at 50.9, from 50.2 in Septem-
ber, but the countrys trade balance
swung to a deficit of $657.2 million
in September, confounding econo-
mists expectations of a $96.6 mil-
lion surplus.
Asias economies still look stron-
ger than a few months ago. Many
nations manufacturing activity has
improved since the summer along
with growth in the developed world.
South Koreas HSBC index rose to
50.2 from 49.7 in September, and
the countrys exports gained 7.3%
from a year earlier after declining
1.5% in September.
Todays PMI data suggest the
Asia manufacturing recovery is be-
coming more entrenched, Krystal
Tan, an analyst with Capital Eco-
nomics, wrote in a note to clients.
Conditions are likely to pick up fur-
ther in the coming months, even if
only gradually.
Fridays official PMI for China
also underlined concerns about the
growth strategy in the worlds sec-
ond-largest economy, which remains
dominated by large state-owned
companies despite the governments
intent to rely more on domestic
consumption and services. The read-
ing for big companies in the index
rose to 52.3 while the one for small
ones fell to 48.5, a five-month low.
Although the PMI rose in Octo-
ber for the fourth consecutive
month, the momentum driving the
increase is unbalanced, said Zhao
Qinghe, a spokesman for the Na-
tional Bureau of Statistics.
Small businesses are facing sig-
nificant difficulties.
Zhang Zhiwei, chief China econo-
mist at Nomura, said he expects
Chinas GDP to grow by 7.5% in the
fourth quarter and 6.9% in 2014
from 7.8% in the third quarter of
this yearas authorities encourage
a switch away from state-led
growth.
HSBCs Mr. Neumann said the re-
gional figures suggest the deeper
problem is Asias loss of competi-
tiveness in recent years, as econo-
mies buoyed by easy money from
Western central banks have ne-
glected structural improvements
that could improve their long-term
outlooks.
The PMI data put to rest these
fears of a hard landing in Asia, and
does suggest were still picking up a
bit of momentum going into the
fourth quarter, but this is not robust
enough should there be another
shock to growth like another tussle
over the debt ceiling in the U.S. or
Europe slowing again. They dont
provide a big enough cushion for
Asia.
BY MICHAEL S. ARNOLD
AND RICHARD SILK
A view of containers at Nansha port
in Guangdong province. Guangzhou is
the fourth-largest port in China.
E
u
r
o
p
e
a
n
P
r
e
s
s
p
h
o
t
o
A
g
e
n
c
y
Indonesia Governors Raise MinimumWage in12 States
JAKARTA, IndonesiaA dozen
governors across Indonesia raised
the minimum wage in their locali-
ties by an average 19% in the wake
of a two-day strike, prompting con-
cern among business groups that
the step may scare investors away
from a country already losing some
of its appeal.
Gov. Joko Widodo of Jakarta was
the first to announce an increase in
the capital city on Friday. The 11%
boost would mean workers would
have to make at least 2.4 million ru-
piah [$215] a month starting on
Jan. 1. That follows a 42% increase
last year.
We decided that the wage will
be 2.4 million rupiah, which was the
amount recommended by the wage
panel, Mr. Widodo said.
Companies recommended 2.3
million rupiah. We hope there will
be no more protests.
Later Friday, 11 other governors
announced wage increases, which
ranged from 10% to 45%.
The biggest increase was
granted by the governor of Suma-
tras province of Bengkulu, which
would bring local minimum wages
to 1.4 million rupiah.
Some labor unions were un-
happy with the level of increases.
They had demanded 50% more and
threatened to continue the protests.
The 21 remaining governors are
expected to reveal their plans soon,
with all of them expected to raise
minimum wages. Governors are
more concerned about the potential
fallout of workers upset about ris-
ing fuel prices and inflation than
foreign investors deciding to move
their money elsewhere.
I think foreign investors will
see it as a bad development, as they
will find it difficult to predict the
wage increase in the future, said
Tio Nugroho, the owner of event-or-
ganizing company PT Taranggana
Nata Asia. Mr. Nugroho said his
companys income declined around
30% during the first nine months of
the year as many of his clients had
to cut promotional events to pay
higher wages.
Indonesias Investment Coordi-
nating Board reported last month
that foreign direct investment in In-
donesia fell to $6.9 billion in the
third quarter of the year from $7.2
billion the quarter before.
Fridays boost to wages was on
top of the average 30% increase in
the minimum wage that went into
effect at the beginning of this year.
Roni Febrianto, a spokesman for
a coalition of labor unions, said he
would keep pushing for higher
wages. The increase is way below
our demand, Mr. Febrianto said
while protesting outside Jakarta
City Hall with thousands of other
workers.
We will continue to put pres-
sure on the government until they
meet our demand," he said.
Mr. Febrianto said that around
1.5 million workers in 20 provinces
joined the second day of the strike,
but there was no independent con-
firmation.
While a business group said it
accepted the increase set in Ja-
karta, it was concerned with the
large increases in some other prov-
inces.
Jokowis decision shows his
quality as a good leader, who is not
bent by any pressures. But [I dont
see] such quality in other provincial
leaders, said Ade Sudrajat, the
chairman of the Indonesian Textile
Manufacturers Association. Textile
and footwear companies are typi-
cally hit hard by minimum wage in-
creases because they tend to em-
ploy many low-wage workers.
Foreign investors, especially
those in the labor-intensive indus-
tries, may move to neighboring
countriessuch as Cambodia and
Myanmarif local governments
again bow to demands for a sharp
pay increase, business groups
warned. Its not getting easier to
do business here, said Sofjan Wa-
nandi, chairman of the Indonesian
Employers Association, one of In-
donesias large business associa-
tions.
Joko Hariyanto
BY I MADE SENTANA
AND LINDA SILAEN
Sources: HSBC via Markit; Chinas National Bureau of Statistics via Thomson Reuters (Chinas ofcial index) The Wall Street Journal
Gaining Ground
Manufacturing activity in China, South Korea and Taiwan is strengthening, but growth in export orders showed
some worrying trends, including slower expansion in China, according to an ofcial barometer.
HSBCs reading Ofcial government
reading
SOUTH KOREA TAIWAN CHINA
E
X
P
A
N
D
I
N
G
C
O
N
T
R
A
C
T
I
N
G
13 2012
60
55
50
45
40
13 2012 13 2012 13 2012
Export orders PMI, or index of overall manufacturing activity
Some labor unions were unhappy with the level of
increases. They had demanded 50%more and
WSJ.com
>>
Follow the markets throughout the day with updated stock quotes, news and commentary at at
WSJ.com. Also, receive email alerts that summarize the days trading in Europe and Asia. To sign
up, go to WSJ.com/Email
Commodities Prices of futures contracts withthe most openinterest
EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; NYBOT: NewYork Board of Trade; MDEX: Bursa Malaysia
Derivatives Berhad; LIFFE: London International Financial Futures Exchange; LME: London Mercantile Exchange; NYMEX: NewYork Mercantile Exchange;
ICE: IntercontinentalExchange *Data as of October 31, 2013
ONE-DAY CHANGE Year Year
Commodity Exchange Last price Net Percentage high low
Corn (cents/bu.) CBOT 427.00 -1.25 -0.29% 605.00 425.75
Soybeans (cents/bu.) CBOT 1252.25 -14.00 -1.11 1,406.00 1,169.00
Wheat (cents/bu.) CBOT 667.50 unch. unch. 834.50 0.65
Live cattle (cents/lb.) CME 132.125 -0.600 -0.45 136.700 122.775
Cocoa ($/ton) ICE-US 2,651 -26 -0.97 2,780 2,071
Coffee (cents/lb.) ICE-US 105.95 0.55 0.52% 169.30 104.25
Sugar (cents/lb.) ICE-US 18.23 -0.09 -0.49 20.72 16.70
Cotton (cents/lb.) ICE-US 76.65 -0.53 -0.69 93.72 76.54
Rapeseed (euro/ton) LIFFE 375.75 0.25 0.07 441 357
Cocoa (pounds/ton) LIFFE 1,701 -3 -0.18 1,774 1,421
Robusta coffee ($/ton) LIFFE 1,490 8 0.54 2,185 1,453
Copper ($/lb.) COMEX 3.2985 -0.0020 -0.06 3.8305 3.0055
Gold ($/troy oz.) COMEX 1313.40 -10.30 -0.78 1,707.50 1,182.60
Silver ($/troy oz.) COMEX 21.825 -0.042 -0.19 32.670 18.215
Aluminum($/ton)* LME 1,876.00 -15.00 -0.79 2,165.50 1,764.50
Tin ($/ton)* LME 23,000.00 -275.00 -1.18 25,150.00 19,300.00
Copper ($/ton)* LME 7,241.00 -37.00 -0.51 8,286.00 6,676.00
Lead ($/ton)* LME 2,189.50 -18.00 -0.82 2,455.00 1,961.00
Zinc ($/ton)* LME 1,956.00 -17.50 -0.89 2,214.00 1,820.50
Nickel ($/ton)* LME 14,600 -10 -0.07 18,665 13,245
Crude oil ($/bbl.) NYMEX 94.52 -1.86 -1.93 109.69 85.48
Heating oil ($/gal.) NYMEX 2.8825 -0.0714 -2.42 3.2124 2.7650
RBOBgasoline ($/gal.) NYMEX 2.5421 -0.0449 -1.74 2.9032 2.4160
Natural gas ($/mmBtu) NYMEX 3.591 -0.072 -1.97 4.8270 3.5640
Brent crude ($/bbl.) ICE-EU 105.89 -2.95 -2.71 114.44 95.96
Gas oil ($/ton) ICE-EU 902.75 -21.25 -2.30 973.00 837.00
Sources: SIX Financial Information; WSJ Market Data Group
Currencies Londonclose onNov. 1
Per In
AMERICAS Per euro In euros U.S. dollar U.S. dollars
Argentina peso-a 7.9918 0.1251 5.9244 0.1688
Brazil real 3.0392 0.3290 2.2530 0.4439
Canada dollar 1.4084 0.7100 1.0441 0.9578
Chile peso 686.34 0.001457 508.80 0.001965
Colombia peso 2543.79 0.0003931 1885.75 0.0005303
Ecuador US dollar-f 1.3490 0.7413 1 1
Mexico peso-a 17.6268 0.0567 13.0670 0.0765
Peru sol 3.7433 0.2671 2.7750 0.3604
Uruguay peso-e 28.967 0.0345 21.474 0.0466
U.S. dollar 1.3490 0.7413 1 1
Venezuela bolivar 8.57 0.116742 6.35 0.157480
ASIA-PACIFIC
Australia dollar 1.4288 0.6999 1.0592 0.9441
1-mo. forward 1.4316 0.6985 1.0613 0.9423
3-mos. forward 1.4375 0.6956 1.0656 0.9384
6-mos. forward 1.4460 0.6916 1.0719 0.9329
China yuan 8.2273 0.1215 6.0990 0.1640
Hong Kong dollar 10.4575 0.0956 7.7523 0.1290
India rupee 84.0333 0.0119 62.2950 0.0161
Indonesia rupiah 15046 0.0000665 11154 0.0000897
Japan yen 133.24 0.007505 98.78 0.010124
1-mo. forward 133.22 0.007506 98.76 0.010125
3-mos. forward 133.16 0.007510 98.72 0.010130
6-mos. forward 133.08 0.007514 98.65 0.010137
Malaysia ringgit-c 4.2791 0.2337 3.1722 0.3152
NewZealand dollar 1.6390 0.6101 1.2150 0.8230
Pakistan rupee 144.190 0.0069 106.890 0.0094
Philippines peso 58.492 0.0171 43.361 0.0231
Singapore dollar 1.6772 0.5962 1.2433 0.8043
South Korea won 1431.85 0.0006984 1061.45 0.0009421
Taiwan dollar 39.713 0.02518 29.440 0.03397
Thailand baht 42.127 0.02374 31.229 0.03202
Per In
EUROPE Per euro In euros U.S. dollar U.S. dollars
Euro zone euro 1 1 0.7413 1.3490
1-mo. forward 0.9999 1.0001 0.7413 1.3490
3-mos. forward 0.9999 1.0001 0.7412 1.3491
6-mos. forward 0.9997 1.0003 0.7411 1.3494
Czech Rep. koruna-b 25.861 0.0387 19.171 0.0522
Denmark krone 7.4588 0.1341 5.5293 0.1809
Hungary forint 297.35 0.003363 220.43 0.004537
Norway krone 8.0562 0.1241 5.9722 0.1674
Poland zloty 4.1951 0.2384 3.1099 0.3216
Russia ruble-d 43.703 0.02288 32.397 0.03087
Sweden krona 8.8191 0.1134 6.5377 0.1530
Switzerland franc 1.2311 0.8123 0.9126 1.0958
1-mo. forward 1.2308 0.8125 0.9124 1.0960
3-mos. forward 1.2301 0.8129 0.9119 1.0966
6-mos. forward 1.2290 0.8137 0.9111 1.0976
Turkey lira 2.7217 0.3674 2.0176 0.4956
U.K. pound 0.8471 1.1805 0.6279 1.5925
1-mo. forward 0.8472 1.1803 0.6281 1.5922
3-mos. forward 0.8477 1.1797 0.6284 1.5914
6-mos. forward 0.8483 1.1789 0.6288 1.5902
MIDDLE EAST/AFRICA
Bahrain dinar 0.5085 1.9665 0.3770 2.6527
Egypt pound-a 9.2924 0.1076 6.8886 0.1452
Israel shekel 4.7692 0.2097 3.5355 0.2828
Jordan dinar 0.9557 1.0464 0.7085 1.4115
Kuwait dinar 0.3805 2.6278 0.2821 3.5448
Lebanon pound 2033.62 0.0004917 1507.55 0.0006633
Saudi Arabia riyal 5.0589 0.1977 3.7503 0.2666
South Africa rand 13.7292 0.0728 10.1776 0.0983
United Arab dirham 4.9547 0.2018 3.6730 0.2723
a-floating rate b-commercial rate c-government rate c-commercial rate d-Russian Central Bank rate.
Source: ICAPPlc.
Major stockmarket indexes Stock indexes fromaround the world, grouped by region. Showninlocal-currency terms.
PREVIOUS SESSION PERFORMANCE
Region/Country Index Close Net change Percentage change Yr.-to-date 52-wk.
ASIA-PACIFIC DJ Asia-Pacific 146.56 -1.15 -0.78% 10.0% 15.7%
Australia SPX/ASX200 5411.10 -14.40 -0.27 16.4 21.3
China Shanghai Composite 2149.56 7.95 0.37% -5.3 1.5
Hong Kong Hang Seng 23249.79 43.42 0.19 2.6 5.1
India S&P BSE Sensex 21196.81 32.29 0.15 9.1 13.0
Indonesia Jakarta Composite 4432.59 -78.042 -1.73 2.7 2.2
Japan Nikkei Stock Average 14201.57 -126.37 -0.88 36.6 56.9
Topix 1183.03 -11.23 -0.94 37.6 57.3
Malaysia Kuala Lumpur Composite 1810.41 3.56 0.20 7.2 9.3
NewZealand NZSX-50 4913.83 4.11 0.08 20.8 25.5
Pakistan KSE 100 23010.29 234.44 1.03 36.1 42.9
Philippines PSEi 6585.38 Closed 13.3 21.4
Singapore Straits Times 3201.20 -9.47 -0.29 1.1 5.3
South Korea Kospi 2039.42 9.33 0.46 2.1 6.3
Taiwan Weighted 8388.18 -61.88 -0.73 8.9 16.3
Thailand SET 1429.08 -13.80 -0.96 2.7 9.4
EUROPE Stoxx Europe 600 321.50 -0.87 -0.27 15.0 17.0
Stoxx Europe 50 2873.77 -4.65 -0.16 11.5 12.2
Euro Zone Euro Stoxx 307.19 -1.32 -0.43% 17.8% 21.8%
Euro Stoxx 50 3052.14 -15.81 -0.52 15.8 19.8
Denmark OMXCopenhagen 535.01 1.66 0.31% 18.2 19.7
Finland OMXHelsinki 7136.64 23.76 0.33 23.0 26.7
France CAC-40 4273.19 -26.70 -0.62 17.4 22.4
Germany DAX 9007.83 -26.09 -0.29 18.3 22.3
Italy FTSE MIB 19164.26 -187.26 -0.97 17.8 21.5
Netherlands AEX 391.20 -0.72 -0.18 14.1 15.9
Russia RTSI 1475.18 -5.24 -0.35 -3.4 2.1
Spain IBEX35 9838.3 -69.60 -0.70 20.5 23.5
Switzerland SMI 8221.80 -12.49 -0.15 20.5 22.7
Turkey BIST 100 76501.23 -1119.14 -1.44 -2.2 7.1
U.K. FTSE 100 6734.74 3.31 0.05 14.2 14.8
AMERICAS DJ Americas 447.20 0.64 0.14 20.5 22.0
Brazil Bovespa 54013.24 -242.96 -0.45 -11.4 -7.5
Argentina Merval 5094.67 -70.42 -1.36 78.5 112.7
Mexico IPC 41079.61 40.96 0.10 -6.0 -1.6
Europeanand Americas index data are as of 5:00p.m. ET. Sources: SIXFinancial Information; WSJ Market Data Group
Cross rates U.S.-dollar and euro foreign-exchange rates inglobal trading
US$ A$ C$ YUAN EURO HK$ RUPEE RUPIAH YEN NZ$ WON RINGGIT PH. PESO S$ SFRANC TW$ BAHT
U.S. 1.059 0.628 1.044 6.099 0.741 7.752 62.295 11153.95 98.776 1.215 1061.45 3.172 43.361 1.243 0.913 29.440 31.229
Australia 0.944 0.593 0.986 5.758 0.700 7.319 58.814 10530.61 93.256 1.147 1002.13 2.995 40.937 1.174 0.862 27.794 29.484
Britain 1.593 1.687 1.663 9.713 1.181 12.346 99.205 17762.74 157.301 1.935 1690.36 5.052 69.052 1.980 1.453 46.883 49.733
Canada 0.958 1.014 0.601 5.841 0.710 7.425 59.665 10682.99 94.605 1.164 1016.63 3.038 41.530 1.191 0.874 28.196 29.911
China 0.1640 0.174 0.103 0.171 0.122 1.271 10.214 1828.82 16.195 0.199 174.04 0.520 7.109 0.204 0.150 4.827 5.120
Euro 1.349 1.429 0.847 1.408 8.227 10.458 84.033 15046.21 133.245 1.639 1431.85 4.279 58.492 1.677 1.231 39.713 42.127
HongKong 0.129 0.137 0.081 0.135 0.787 0.096 8.036 1438.79 12.742 0.157 136.92 0.409 5.593 0.160 0.118 3.798 4.028
India 0.0161 0.0170 0.0101 0.0168 0.0979 0.0119 0.1244 179.05 1.5856 0.0195 17.04 0.0509 0.6961 0.0200 0.0146 0.4726 0.5013
Indonesia 0.0001 0.0001 0.0001 0.0001 0.0005 0.0001 0.0007 0.0056 0.0089 0.0001 0.10 0.0003 0.0039 0.0001 0.0001 0.0026 0.0028
Japan 0.010 0.011 0.006 0.011 0.062 0.008 0.078 0.631 112.92 0.012 10.75 0.032 0.439 0.013 0.009 0.298 0.316
NewZealand 0.823 0.872 0.517 0.859 5.020 0.610 6.380 51.271 9180.15 81.297 873.61 2.611 35.687 1.023 0.751 24.230 25.703
SouthKorea 0.0009 0.0010 0.0006 0.0010 0.0057 0.0007 0.0073 0.0587 10.51 0.0931 0.0011 0.0030 0.0409 0.0012 0.0009 0.0277 0.0294
Malaysia 0.315 0.334 0.198 0.329 1.923 0.234 2.444 19.638 3516.21 31.139 0.383 334.61 13.669 0.392 0.288 9.281 9.845
Philippines 0.023 0.024 0.014 0.024 0.141 0.017 0.179 1.437 257.24 2.278 0.028 24.48 0.073 0.029 0.021 0.679 0.720
Singapore 0.804 0.852 0.505 0.840 4.905 0.596 6.235 50.103 8970.98 79.444 0.977 853.71 2.551 34.874 0.734 23.678 25.117
Switzerland 1.096 1.161 0.688 1.144 6.683 0.812 8.495 68.261 12222.24 108.236 1.331 1163.11 3.476 47.513 1.362 32.259 34.220
Taiwan 0.034 0.036 0.021 0.035 0.207 0.025 0.263 2.116 378.88 3.355 0.041 36.06 0.108 1.473 0.042 0.031 1.061
Thailand 0.032 0.034 0.020 0.033 0.195 0.024 0.248 1.995 357.16 3.163 0.039 33.99 0.102 1.388 0.040 0.029 0.943
Source: ICAPPlc.
Price-to- PERFORMANCE
Dividend earnings Net Year- Three-yr.,
yield* ratio* Dows Jones Index Last change Daily to-date 52-wk. annualized
1.11%24.27 Shenzhen -c 322.58 -0.73 -0.23% 6.9% 9.8% -11.4%
1.90 20.46 U.S. TSM 18495.77 45.92 0.25 24.7 26.3 14.7
5.75 22.70 Global Select Div 249.27 -0.48 -0.19 13.6 15.0 5.1
5.50 16.18 Asia/Pacific Select Div 348.43 -1.05 -0.30 6.7 5.6 5.9
HongKongSelect Div -c 203.95 0.30 0.15 3.0 7.6 -1.9
U.S. Select Dividend -d 1208.15 6.19 0.51 25.9 26.6 18.1
2.17 19.07 Islamic Market 2636.98 -4.67 -0.18 14.7 16.8 7.9
2.48 17.00 Islamic Market 100 2869.60 -2.64 -0.09 16.4 17.5 10.2
2.17 11.30 Islamic China/HKTitans 30 1678.20 -1.75 -0.10 0.8 2.7 -0.3
Sustainability Korea -c 1490.15 8.63 0.58 2.1 5.9 0.1
3.92 24.28 BrookfieldInfrastructure 3132.65 -7.76 -0.25 13.4 14.1 11.2
DJ-UBSCommodity-p 124.27 -0.96 -0.77 -10.6 -11.5 -5.5
MSCI indexes
Developed and emerging-market regional and country indexes
fromMSCI as of November. 01, 2013
Price-to- LOCAL-CURRENCY
Dividend earnings PERFORMANCE
yield ratio MSCI Index Last Daily YTD 52-wk.
...% ... MSCI ACWI* 397.11 0.59% 16.9% 20.7%
... ... World(DevelopedMarkets) 1,602.86 0.56 19.8 23.2
... ... WorldSmall Cap 306.75 0.36 25.4 30.3
... ... Kokusai (Worldex-Japan) 1,608.81 0.54 19.5 22.4
... ... EAFE 1,878.39 0.81 17.1 23.4
... ... EmergingMarkets (EM) 1,034.42 0.81 -2.0 3.9
... ... ACASIAPACIFICEX-JAPAN 480.61 0.55 3.1 8.4
... ... ACFar East ex-Japan 532.47 0.69 2.4 8.6
... ... Japan 735.77 -0.86 38.7 61.6
... ... China 62.32 -0.11 -0.8 5.9
... ... China A(China Domestic) 2,324.69 -1.40 -3.1 7.1
... ... HongKong 13,241.20 -0.60 7.1 11.1
... ... India 813.92 0.61 6.5 13.2
... ... Korea 594.93 -1.70 2.6 8.7
... ... Malaysia 648.94 -0.63 8.6 9.7
... ... Singapore 1,723.50 -0.67 3.0 7.5
... ... Taiwan 298.69 -0.17 8.0 16.1
... ... Thailand 518.79 1.40 0.6 8.1
... ... Australia 1,110.33 -0.21 17.5 21.0
... ... NewZealand 110.93 1.65 12.4 15.8
... ... USBROADMARKET 2,001.10 0.35 24.5 26.3
... ... EUROPE 110.15 0.43 14.4 18.3
*Twenty-four developed and 21 emerging markets Source: MSCI
*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 11:30a.m. ET. Source: S&PDowJones Indices
DowJones Indexes
2.41%19.47 Global TSM 3131.53 -7.52 -0.24% 17.5% 21.0% 8.0%
2.98 19.01 Global DOW 2408.27 -4.09 -0.17 20.7 24.6 6.0
3.02 14.61 Global Titans 50 225.05 0.17 0.07 15.4 16.2 9.6
2.39 17.18 Asia/Pacific TSM 1445.70 -10.40 -0.71 10.0 15.7 2.7
2.32 18.63 S&PBMI Asia Pac EmgMkts 175.73 -1.49 -0.84 13.2 19.4 5.1
3.19 20.91 DevEurope TSM 3253.15 -22.23 -0.68 18.9 24.2 5.9
2.87 13.97 S&PBMI EmgMarkets 260.39 -1.72 -0.65 -1.8 2.8 -3.7
3.08 13.24 AsianTitans 50 153.78 -0.45 -0.29 9.8 18.1 4.2
3.42 9.31 BRIC50 516.09 -2.35 -0.45 -3.3 0.0 -7.7
2.77 11.15 S&PBMI China 440.21 0.98 0.22 5.0 9.7 -2.8
3.14 9.85 China Offshore 50 4140.05 6.63 0.16 3.5 6.5 -2.4
2.29 13.69 Shanghai -c 279.98 0.86 0.31 -1.6 6.5 -10.4
GLOBAL MARKETS LINEUP
WORLD NEWS
India Space Agency
To Launch Mars Mission
NEW DELHIOn Tuesday, Indias
space agency will launch a space-
craft designed to boldly go where no
Asian nation has gone before: Mars.
The mission, if successful, would
be a technological leap that would
propel India ahead of space rivals
China and Japan in the field of in-
terplanetary exploration.
It will take more than 10 months
for Indias Mars satellite, equipped
with instruments that can examine
the surface of the Red Planet from
above, to reach Martian orbit and
begin beaming information back to
Earth.
This is a major turning point in
our space programtowards explo-
ration, said Koppillil Radhakrish-
nan, chairman of the Indian Space
Research Organization, the coun-
trys civilian space agency. It will
bring technological advantage for
the country.
Decades after the U.S. and Soviet
Union battled for supremacy in
space during the Cold War, Asian
powers have embarked on their own
space racea contest with political,
military and technical ramifications
here on Earth.
In recent years, Japan, China and
Indiain cooperation with the U.S.
National Aeronautics and Space Ad-
ministrationhave put satellites
into lunar orbit. China has also put
astronauts into Earth orbit and con-
ducted spacewalks.
India spends 68 billion rupees
($1.1 billion) a year on its space pro-
gram and has 20 satellites in orbit
for communication and remote
sensing.
Critics argue that a country
where more than 350 million people
live on less than $1.25 a day and
where a third of the population
lacks access to electricity should be
focused more on terrestrial prob-
lems. The bread or gun argument
is real for India, said Rajeswari Pil-
lai Rajagopalan, a space-security ex-
pert at the Observer Research Foun-
dation, a New Delhi think tank. But
India doesnt live in a benign neigh-
borhood.
Ms. Rajagopalan said that while
India is focused on peaceful use of
outer space, this is the background
against which the Mars mission is
taking place. There is a sort of arms
race, especially since China in 2007
successfully tested an antisatellite
missile.
In August, India launched its
first dedicated military satellite for
naval intelligence gathering, amid
mounting concerns about the Chi-
nese naval presence in the Indian
Ocean.
Boosters also point to the civil-
ian benefits of the space program,
such as improved meteorological
forecasting, which prompted the
government to evacuate one million
people from areas along the south-
east coast before a major cyclone
last montha move credited with
saving thousands of lives.
Indias Mars satellite, dubbed
Mangalyaan, or Mars craft in Hindi,
is scheduled to reach Martian orbit
on Sept. 24 after a journey of 422
million miles.
If it makes it, it will join two rov-
ers and two orbiters belonging to
NASA and a European satellite al-
ready exploring Mars.
Chinas 2011 attempt with Russia
to send the Yinghuo-1 satellite to
Mars failed after the Russian rocket
carrying it was unable to leave
Earth orbit. A Japanese 2003 mis-
sion to Mars was unable to place a
satellite into Martian orbit.
Chinas National Space Science
Center has been quoted in Chinese
media as saying that it wont at-
tempt another voyage to Mars until
at least 2016.
Indias Mars mission, with a bud-
get of $73 million, is far cheaper
than comparable missions including
NASAs $671 million Maven satellite
that is expected to set off for Mars
later in November.
The program was approved by
the government in 2012.
Our previous experience has
helped a lot, said Deviprasad
Karnik, spokesman for the Indian
Space Research Organization. We
had an indigenous spacecraft bus al-
ready available from our moon mis-
sion and the design [for the satel-
lite] was already available so we
could do it quickly.
Ram Jakhu, a professor at the In-
stitute of Air and Space Law at
McGill University in Canada, said
the space contest among India,
China and Japan was different from
the U.S.-Soviet race, because to
some extent its about a rush for
natural resources. He said Indias
Mars mission is a signal to the
world about equality and efforts and
capabilities to look for resources.
If India were to land upon a ma-
jor deposit of titanium, for instance,
during future missions, it would be
a boost to the economy, he said.
India and China want to be ma-
jor world players and feed their
huge populations so they need natu-
ral resources.
BY JOANNA SUGDEN
Nation of Nauru Rebuilds
Bank System From Scratch
MELBOURNENauru, a South
Pacific atoll that is home to a con-
troversial refugee camp, is hoping to
shake its reputation as a money-
laundering haven and revive its
banking system years after the gov-
ernment shut it down.
The island nation of 10,000 peo-
ple is at the heart of the Australian
governments strategy to stem a ris-
ing tide of refugees from countries
such as Iran and Afghanistan by re-
settling them in Nauru and other
impoverished South Pacific nations
in exchange for increased aid.
That plan has brought an influx
of investment to Nauru, giving it a
much-needed economic boost. Hu-
man-rights advocates, including Am-
nesty International, say the camp is
unlawful and inhumane.
For Nauruans, saving cash has
been a thorny issue since the govern-
ment closed the Bank of Nauru in
2006. The country was placed on an
international blacklist in 2001 be-
cause of concerns it had become a
base for money laundering. The li-
censes of hundreds of Nauru-regis-
tered banks were revoked. Since
then, the island has operated as a
cash economy, with residents resort-
ing to tactics such as burying their
savings to protect them from thieves.
Naurus fortunes have changed
drastically over the years. Covering
just 21 square kilometers, it was one
of the wealthiest countries per cap-
ita during the 1980s thanks to an
extensive supply of phosphate,
which is used in fertilizer. By the
turn of the century, though, as
prices for the commodity tumbled
and the countrys easily mined sup-
ply came close to running out, the
government was left heavily in debt.
The islands two cash machines
are frequently drained by residents
attempting to get hold of cash held
in bank accounts offshore. The Aus-
tralian dollars used as local cur-
rency are worn to threadbare, said
John Short, an expatriate Australian
who works in Naurus phosphate
mines. The five- and 10-dollar bills
do laps of the island so they are al-
most see-through, he said.
Naurus unemployment is as high
as 90%, according to official esti-
mates, with few industries other
than fishing having taken root. The
average national income is about
US$6,746 a year, according to the
United Nations.
After nearly a decade without ac-
cess to savings accounts, debit and
credit cards, Nauruans are now
poised to rejoin the modern finan-
cial world.
The islands government, bol-
stered by Australian investments
tied to its refugee plan, is in talks
with Bendigo & Adelaide Bank Ltd.,
Australias fifth-largest lender, to
set up a Nauru community branch.
We really need it, said 28-year-
old Nauruan Zia Gruneler. Im not
spending a lot because Im trying to
saving money, so I hide it in a piggy
bank. But my piggy bank doesnt
have interest.
Nauru is looking to move to a
system in which its entire popula-
tion uses a bank in a very short
time, said Erik Aelbers, a financial-
services expert at Asian Develop-
ment Bank, which was hired by
Naurus government last year to
scout out a prospective commercial
bank willing to come to the island.
Bendigo was chosen because it al-
ready has a successful community
bank model in Australia, where hun-
dreds of locally owned franchises
operate in small towns with the
banks support, Mr. Aelbers said.
Australias government will
pump in US$27 million in aid this
yearequal to nearly 40% of
Naurus US$70 million gross domes-
tic product.
The Asian Development Bank es-
timates the asylum camp could
boost Naurus economic growth to
8% annually in the 2013 and 2014
fiscal years, from 4.9% in 2012. The
processing center has already
brought hundreds of foreign work-
ers to the country.
David Adeang, Naurus finance
minister, said he expects a bank to be
operating by January, offering the
same banking services, products
and deposit protectionas Bendigo &
Adelaide offers its Australian custom-
ers. Australia has agreed to extend its
financial-claims system, which guar-
antees the deposits of Australian
banks, to a Nauru branch.
Under the proposed community
bank model, customers would help
fund the startup of the Nauru branch,
which the government estimated
would need about 900,000 Australian
dollars (US$849,000) in capital. The
government will create a holding
company and underwrite the issue of
shares to citizens who become share-
holders of the bank, providing
A$500,000 in capital itself.
The government and state-
owned companies are expected to be
the new banks largest customers,
but landowners who receive royal-
ties for phosphate mining and shops
that pay suppliers in Australia also
would benefit, Mr. Aelbers said. The
government employs close to 2,000
people who are currently paid in
cash every two weeks.
Occasionally, big bags of cash
have to be flown in and out of
Nauru, Mr. Aelbers said.
BY ROBB M. STEWART
AND LUCY CRAYMER
Agence France-Presse/Getty Images
Scientists and engineers work on a Mars Orbiter vehicle at an Indian Space Research Organization facility in Bangalore.
The mission could propel
India ahead of rivals
China and Japan in the
field of interplanetary
exploration.
Source: Nauru Government The Wall Street Journal
Note: A$0.95= US$1
Shifing Fortunes
Naurus economy, which relies heavily on aid, is poised to benet from
investment linked to Australias refugee-resettlement program.
Nauru government revenue in the year ended June 30, 2012
In millions of Australian dollars
Donor and
aid money
State-mining-
company
dividends
Customs
duties
Fishing
licenses
Fuel
sales
Phosphate
royalties
Warehouse
sales
Civil-
aviation
revenue
Port
fees
Telecom
tax and
dividends
Other
A$38.0 6.4 6.0 5.3 2.3
A$1.8 1.5 0.9 0.6 0.6 1.7
Total:
A$65.2
million
Giants aroundthe world
DowJones CountryTitans
INDEXPERFORMANCE
Previous session Year-to-date 52-week
Japan -0.66% 37.8% 62.9%
Spain -0.68 25.2 29.7
Australia -0.12 23.5 29.7
Switzerland -0.30 22.6 26.8
Netherlands -0.27 21.6 25.3
France -0.63 17.7 23.4
Italy -0.89 17.4 21.0
Sweden -0.37 15.7 20.7
South Africa 0.04 15.4 15.3
Germany -0.24 14.5 18.7
U.K. 0.10 14.3 14.9
South Korea 0.58 8.0 12.5
Hong Kong 0.56 7.7 11.0
Canada -0.17 7.6 7.2
Singapore -0.19 2.7 8.3
Turkey -1.66 -3.7% 3.2
Brazil -0.38 -5.9 -2.7
China 88 0.46 -9.5 1.5
DowJones Regional Sector Titans
Fincl Svcs 0.68% 33.8% 40.6%
Media 0.39 33.8 37.7
Travel &Leisure -0.07 31.3 34.7
Insurance -0.68 27.7 31.6
Health Care 0.12 27.2 26.9
Auto &Parts -0.93 26.9 43.1
Global 50 0.04 15.4 15.3
Asian 50 -0.38 9.7 18.9
Arab 50 -0.19 6.7 5.6
Tiger 50* 0.19 2.2 8.3
*Asia excluding Japan
Source: SIXFinancial Information
Major players &
benchmarks
At right, a look at the Asia Titans, the biggest and best known
companies in Asia. Below, some of the Dow Jones Titans indexes
of biggest and most liquid stocks in individual countries and regions
DowJones Asia Titans: Friday's best andworst...
Previous
Volume close, in STOCKPERFORMANCE
Company Country Industry in millions local currency Previous session 52-week YTD
SoftBank Japan Mobile Telecommunications $19.11 7,550 3.42% 178.2% 140.4%
Samsung Electronics Korea Semiconductors 0.23 1,500,000 2.39 13.0 -1.4
China Life Insurance Hong Kong Life Insurance 32.74 20.95 1.70 -12.2 -17.4
AIAGroup Hong Kong Life Insurance 14.46 39.75 1.02 25.0 31.4
National Australia Bank Australia Banks 5.13 35.63 0.91 43.3 42.5
Fanuc Japan Industrial Machinery $1.41 15,270 -2.86% 14.4 -4.1
Nissan Motor Japan Automobiles 24.10 961.00 -2.14 40.1 18.5
East Japan Railway Japan Travel Tourism 0.96 8,340 -2.00 51.4 49.5
Tokio Marine Holdings Japan Property Casualty Insurance 1.89 3,150 -1.72 46.6 32.2
Itochu Japan Industrial Suppliers 4.69 1,158 -1.70 43.3 27.7
...Andthe rest of Asia's blue chips
Latest,
Volume in local STOCKPERFORMANCE
Company/Country (Industry) in millions currency Latest 52-week YTD
Westpac Banking 4.76 34.58 0.85% 38.2% 32.8%
Australia (Banks)
Japan Tobacco Inc 7.05 3,575 0.70 60.0 46.5
Japan (Tobacco)
Sun Hung Kai Properties 1.89 102.30 0.69 -7.1 -12.3
Hong Kong (Real Estate Holding Development)
China Construction Bank 187.80 6.05 0.50 2.0 -2.7
Hong Kong (Banks)
Hyundai Motor 0.42 254,000 0.40 18.1 16.2
Korea (Automobiles)
Honda Motor 5.82 3,930 0.38 59.3 25.0
Japan (Automobiles)
Takeda Pharmaceutical 2.36 4,680 0.32 26.1 21.4
Japan (Pharmaceuticals)
POSCO 0.11 317,000 0.16 -6.1 -9.2
Korea (Iron Steel)
Woodside Petroleum 0.89 38.85 0.08 14.2 14.7
Australia (Exploration Production)
KDDI 2.74 5,310 ... 69.4 74.4
Japan (Mobile Telecommunications)
Mizuho Financial Group 76.11 205.00 ... 62.7 30.6
Japan (Banks)
Taiwan Semiconductor Manufacturing 10.87 109.50 ... 21.8 12.9
Taiwan (Semiconductors)
Wesfarmers 1.06 42.95 -0.05 26.3 16.6
Australia (Home Improvement Retailers)
Woolworths 1.44 34.87 -0.09 22.6 18.9
Australia (Food Retailers Wholesalers)
Hon Hai Precision Industry 22.18 74.40 -0.13 67.9 67.4
Taiwan (Electrical Components Equipment)
Tencent Holdings 2.51 422.60 -0.14 51.9 70.1
Hong Kong (Internet)
Industrial Commercial Bank of China 180.25 5.42 -0.18 2.8 -1.5
Hong Kong (Banks)
Mitsubishi 5.33 1,977 -0.25 36.0 20.0
Japan (Industrial Suppliers)
Bank of China 226.50 3.62 -0.28 11.0 4.0
Hong Kong (Banks)
Hitachi 55.85 683.00 -0.29 60.0 35.5
Japan (Electronic Equipment)
Latest,
Canon 7.55 3,080 -0.32% 19.0% -7.8%
Japan (Electronic Office Equipment)
BHP Billiton 3.98 37.53 -0.35 9.0 1.2
Australia (General Mining)
Australia NewZeald Bkg 4.07 33.72 -0.35 34.1 34.6
Australia (Banks)
Commonwealth Bk Australia 1.78 75.80 -0.37 32.1 21.9
Australia (Banks)
Toyota Motor 7.21 6,330 -0.47 101.6 58.1
Japan (Automobiles)
Mitsubishi UFJ Financial Group 32.02 617.00 -0.48 70.4 33.8
Japan (Banks)
China Mobile 10.96 81.00 -0.49 -7.7 -10.2
Hong Kong (Mobile Telecommunications)
Shin-Etsu Chemical 1.62 5,500 -0.54 18.2 5.2
Japan (Specialty Chemicals)
Sumitomo Mitsui Financial Group 4.64 4,685 -0.64 89.3 50.4
Japan (Banks)
PetroChina 107.83 8.82 -0.68 -17.4 -19.4
Hong Kong (Integrated Oil Gas)
Rio Tinto 1.16 63.54 -0.70 10.7 -3.7
NTT DoCoMo 3.79 1,549 -0.71 33.2 24.9
Mitsui Co. 5.79 1,390 -0.71 22.3 8.3
Seven I Holdings 1.27 3,590 -0.83 45.3 47.3
Japan (Broadline Retailers)
CNOOC 47.72 15.78 -0.88 -3.4 -6.0
Hong Kong (Exploration Production)
Nippon Telegraph Telephone 2.11 5,030 -1.18 38.8 38.6
Japan (Fixed Line Telecommunications)
Nippon Steel Sumitomo Metal 45.95 319.00 -1.24 79.2 51.9
Japan (Iron Steel)
Komatsu 9.72 2,109 -1.45 18.1 -3.4
Japan (Commercial Vehicles Trucks)
Reliance Industries GDR 0.10 29.40 -1.57 -2.8 -3.8
United Kingdom(Exploration Production)
Nomura Holdings 33.93 711.00 -1.66 138.6 41.4
Japan (Investment Services)
Credit derivatives
Spreads oncredit derivatives are one way the market rates
creditworthiness. Regions that are treading inroughwaters
cansee spreads swing toward the maximumand vice versa.
Indexes beloware for five-year swaps.
Markit iTraxxIndexes SPREADRANGE, in pct. pts.
Mid-spread, since most recent roll
Index: series/version in pct. pts. Mid-price Coupon Maximum Minimum Average
Europe: 20/1 0.83 100.82% 0.01% 1.04 0.83 0.93
Eur. HighVolatility: 20/1 1.32 98.48 0.01 1.61 1.32 1.45
Europe Crossover: 20/1 3.41 107.03 0.05 4.08 3.37 3.73
Asia ex-JapanIG: 20/1 1.31 98.50 0.01 1.57 1.30 1.42
Japan: 20/1 0.92 100.41 0.01 0.97 0.85 0.90
Note: Data as of October 31
Spreads
Spreads on
ve-year swaps
for corporate
debt; based on
Markit iTraxx
indexes.
In percentage points
2.00
1.50
1.00
0.50
0
t
Europe
t Europe Senior Financials
2013
May June July Aug. Sept. Oct.
Index roll
Source: Markit Group
NOTICE TO READERS
All statistics published in
Asia from markets outside
the Asian-Pacific region
reflect preliminary data.
Tracking
credit
markets &
dealmakers
Credit-default swaps: Asian companies
At itsmost basic, thepricingof credit-default swapsmeasureshowmuchabuyer hastopaytopurchase-and
howmuch a seller demands to sell-protection fromdefault on an issuer's debt. The snapshot belowgives a
sense whichway the market was moving yesterday.
Showing the biggest improvement...
CHANGE, in basis points
Yesterday Yesterday Five-day 28-day
Ptt 94 7 8 31
IOI 106 4 7 29
Cr Saison 71 2 2 11
SKbroadband 119 3 3 15
Ebara 88 2 2 3
Nomura Hldgs 98 2 7 18
Kia Mtrs 75 2 4 16
Daiwa Secs Gp 127 3 3 7
AjinomotoCo 32 1 4 4
KyushuElec Pwr 112 2 2 2
Andthe most deterioration
ANAHLDGS 136 11 11 3
Kintetsu 107 6 7 2
NEC 124 7 10 15
JFEHldgs 99 5 9 8
JFEStl 91 5 7 8
Mitsui Chems 180 7 8 27
Sony 147 6 8 3
NipponYusenKabushiki
Kaisha
83 3 3 8
Mitsui OSKLines 146 5 5 18
NIPPONSTEEL SUMITOMO
METAL
69 2 4 2
BLUE CHIPS & BONDS
WSJ.com
>>
Follow the markets throughout the day, with updated
stock quotes, news and commentary at WSJ.com/Email.
Also, receive emails that summarize the days trading in
Europe and Asia. To sign up, go to WSJ.com.
BehindEurope's deals: Bank revenue rankings, France
Behind every IPO, bond offering, merger deal or syndicated loanis one or more investment banks. Here are
investment banks ranked by year-to-date revenues fromrecent deals.
PERCENTAGEOFTOTAL REVENUE
Revenue, Equity Debt Mergers &
in millions share capital markets capital markets acquisitions Loans
GoldmanSachs $147 8.1% 8% 23% 21% 48%
BNPParibas 144 8.0 9 47 25 19
SGCorporate Investment Banking 140 7.8 7 51 23 19
Credit Agricole CIB 130 7.2 8 44 22 26
Deutsche Bank 110 6.1 27 29 29 15
Natixis 109 6.1 7 59 8 25
MorganStanley 98 5.4 7 25 51 17
JPMorgan 90 5.0 14 23 28 36
Credit Suisse 85 4.7 2 38 21 39
Source: Dealogic
WORLD NEWS
China, Others Demand
Explanation on Spying
BEIJINGChina demanded an
explanation from the U.S., and other
nations summoned American and
Australian diplomats following me-
dia reports that Australia helped the
U.S. gather intelligence across Asia.
The Sydney Morning Herald re-
ported Thursday, citing documents
from Edward Snowden and a former
Australian intelligence officer, that
facilities within Australian embas-
sies in Asia are being used to inter-
cept phone calls and data in coordi-
nation with the U.S. The report said
the facilities inside the embassies
are operated by Australias Defense
Signals Directorate.
Chinas Foreign Ministry urged
other foreign governments not to
use their diplomatic facilities to
harm Chinas national security.
China is extremely concerned
about this report, has already made
representations to the U.S. side and
demanded that the United States of-
fers a clarification and explanation,
Hua Chunying, spokeswoman for the
foreign ministry, said at a daily me-
dia briefing Thursday, according to
a transcript posted on the ministrys
website. The transcript quoted Ms.
Hua as demanding that foreign em-
bassies in China abide by the Vienna
Convention and not get involved in
any activities which do not accord
with their status or post and harm
Chinas security and interests.
In Indonesia, the Australian Em-
bassy said Ambassador Greg Mori-
arty was called to the Foreign Min-
istry on Friday to discuss the
allegations of intelligence activity.
Mr. Moriarty took careful note of
the issues raised and will report
back to Canberra, it said.
Malaysia summoned U.S. and
Australian diplomats in Kuala Lum-
pur on Friday and handed over a
protest note, the Foreign Ministry
said. Meanwhile, Foreign Minister
Anifah Aman expressed concern to
his Australian counterpart, Julie
Bishop, at an Indian Ocean multilat-
eral meeting in Perth that the re-
ports had caused considerable an-
ger amongst the Malaysian public,
the ministry statement said.
He further stated that such ac-
tivities are not done amongst close
friends as it could severely damage
existing relations.
The report listed embassies in
Jakarta, Bangkok, Hanoi, Beijing and
Dili, East Timor, as well as the High
Commissions in Kuala Lumpur and
Port Moresby, Papua New Guinea, as
being among the diplomatic posts
taking part in the U.S.-led effort.
That effort involves the Five
eyesAustralia, Britain, Canada,
New Zealand and the U.S.and is
the same as the one identified in an
earlier report by Der Spiegel, the
Herald said. The Australian govern-
ment said that it doesnt comment
on intelligence matters.
Patrick McDowell in Jakarta
and Celine Fernandez in Kuala
Lumpur contributed to this article.
BY CHARLES HUTZLER
Aides Debated Obamas Insurance Coverage Promise
As President Barack Obama
pushed for a new federal health law
in 2009, he made a simple pledge: If
you like your insurance plan, you
can keep your plan. But behind the
scenes, White House officials dis-
cussed whether that was a promise
they could keep.
When the question arose, Mr.
Obamas advisers decided that the
assertion was fair, interviews with
more than a dozen people involved
in crafting and explaining the presi-
dents health-care plan show.
But at times, there was second-
guessing. At one point, aides dis-
cussed whether Mr. Obama might
use more in-depth discussions, such
as media interviews, to explain the
nuances of the succinct line in his
stump speeches, a former aide said.
Officials worried, though, that delv-
ing into details such as the number
of people who might lose insurance
could be confusing and would clut-
ter the presidents message.
You try to talk about health
care in broad, intelligible points that
cut through, and you inevitably lose
some accuracy when you do that,
the former official said. The former
official added that in the midst of a
hard-fought political debate if you
like your plan, you can probably
keep it isnt a salable point.
The breadth of Mr. Obamas
statement proved to be a miscalcu-
lation. Mr. Obama repeated the
claim, with only occasional caveats,
through last week, when a flurry of
cancellation notices from insurers to
customers around the country
prompted him to recalibrate. The re-
sulting furor has energized Republi-
can opposition to the plan, which
only a few weeks ago had fallen flat
as a result of the partys failed at-
tempt to link it to government
spending and debt deadlines.
With 20/20 hindsight, maybe
this should have been parsed more
carefully, said Jim Margolis, a me-
dia adviser to Mr. Obamas cam-
paigns in 2008 and 2012, said of Mr.
Obamas broad promise. But, he
added, The presidents statement
seems fair.
At the time the law was being
written, Mr. Obama was trying to
make the case for the health-care
overhaul in understandable terms,
and in an environment in which Re-
publicans were casting it as a big
government takeover of the health
system. Mr. Obamas aides were fo-
cused on telling people that disrup-
tion would be minimal and benefits
from the law substantial.
Aides said that because insurers
could continue offering plans, even
those deemed to be substandard, if
they were in existence at the time
the law passed, Mr. Obamas state-
ment that you can keep your plan
was solid.
We thought we could fulfill the
promise with this grandfathering
clause, said Ezekiel Emanuel, vice
provost at the University of Penn-
sylvania and a former White House
health-care adviser.
The health law aims to eliminate
certain low-premium policies that
the administration said provide
skimpy coverage and could leave
people with high out-of-pocket
costs. While it allows insurers to
continue covering longtime custom-
ers with policies that were in exis-
tence as of March 2010, many insur-
ers are canceling such plans because
they would die out, anyway, in the
absence of new customers.
About 5% of the U.S. population,
or about 15.4 million people, are
covered under individual health
plans, and many of themas many
as 10 millionare expected to have
their health plans terminated by
their insurers by year-end, industry
experts have said. These customers
account for many of those now re-
ceiving cancellation notices; Mr.
Obama says they will be able to buy
better coverage on the new federal
insurance exchange.
One former senior administra-
tion official said that as the law was
being crafted by the White House
and lawmakers, some White House
policy advisers objected to the
breadth of Mr. Obamas keep your
plan promise. They were overruled
by political aides, the former official
said. The White House said it was
unaware of the objections.
Mr. Obama began offering broad
assurances as he campaigned for
president in 2008, before the Af-
fordable Care Act was written or
many of the details decided. In a
presidential debate with Republican
nominee John McCain, Mr. Obama
said that if youve got health care
alreadyyou can keep your plan.
Before then, Hillary Clinton was
making similar promises about her
proposed health-care overhaul. As
she campaigned for president in
2007, Mrs. Clinton said, Heres how
my plan works: If you already have
private insurance, and youre happy
with it, nothing changes. You keep
that insurance.
Mr. Obama adopted similar lan-
guage during the campaign and con-
tinued to use it in the White House
as he pitched Congress and the
American people on his health-care
legislation.
Jon Favreau, who served as Mr.
Obamas top speech writer, said that
as they tried to promote the over-
haul plan and explain it to the pub-
lic, the aim was to make it as simple
as possible while still being true.
Simplification and ease of ex-
planation were a premium, and that
was true throughout the process,
Mr. Favreau said.
Richard Kirsch, the former na-
tional campaign manager of Health
Care for America Now, which
pushed for the 2010 health law, said
the words were reassuringand
truefor the vast majority of the
people, and so his group never
raised concerns about that claim.
Adding an asterisk to note that peo-
ple who had shoddy insurance
might need to change plans wasnt
practical, he said. The actual, accu-
rate statement is if you have good
insurance, and you like it, you can
keep it, said Mr. Kirsch, now a se-
nior fellow at the Roosevelt Insti-
tute, a liberal policy organization.
The fact that insurers are cancel-
ing policies covering some people
has become central to the Republi-
can argument against the Affordable
Care Act, adding to the Obama ad-
ministrations problems as it strug-
gles to fix a malfunctioning website.
Reince Priebus, chairman of the
Republican National Committee,
seized upon Mr. Obamas words,
writing in an email Friday to sup-
porters, Heres the truth: Barack
Obama knowingly and repeatedly
lied to Americans.
David Axelrod, a senior White
House adviser during the health-
care fight, said there was no inten-
tion to mislead. The great misfor-
tune here is that the website
debacle occurred at the same time
as this issue arising, he said. If the
website hadnt gone down, then lots
of these people would be going on-
line and figuring out, Hey Im get-
ting a better insurance policy, and
Ill have to pay less money for it.
But they cant, because the website
is down. Its a perfect storm that
has created an opportunity for those
who oppose the plan.
As it was, only six people were
able to enroll through the Health-
Care.gov website on its initial day,
according to notes from inside the
agency running the site.
The White House has empha-
sized that only a small fraction of
the population has had their plans
canceled, saying that the attention
given to this topic has been dispro-
portionate.
Some policy experts who advised
the administration as the law was
crafted and implemented said they
never warned officials to tweak the
presidents message. They also con-
tinued to defend the changes in-
duced by the law.
Jonathan Gruber, an economics
professor at the Massachusetts In-
stitute of Technology, said the laws
impact on existing insurance ar-
rangements was a social policy de-
cision the government made and
the presidents description of it was
pretty low on the totem pole of po-
litical overstatements.
Louise Radnofsky
By ColleenMcCainNelson,
Peter Nicholas
and Carol E. Lee
The breadth of Mr. Obamas assertion proved to be a political miscalculation.
R
e
u
t
e
r
s
Site Says Snowden
Isnt an Employee
MOSCOWA website that of-
fered National Security Agency
leaker Edward Snowden a job said
he isnt its employee, deepening the
mystery over Mr. Snowdens new
employer.
Mr. Snowdens lawyer Anatoly
Kucherena said last week that his
client would start working for a
major Russian website on Friday.
Mr. Kucherena declined to name
the site but many assumed it would
be Russias most popular social net-
work VKontakte, which had offered
Mr. Snowden a job in August.
But the sites chief executive,
Pavel Durov said in an interview
that Mr. Snowden isnt working for
VKontakte. The job offer stands, he
added.
Meanwhile, Mr. Snowdens work
appeared Sunday in German maga-
zine Der Spiegel, in which he wrote
that mass surveillance is a problem
that threatens to corrupt open soci-
eties and the freedom of opinion.
The existence of espionage
technology must not dictate poli-
tics, Mr. Snowden said. The piece,
A manifesto for the truth, was
transmitted to Der Spiegels edito-
rial office via an encrypted channel,
the magazine said.
Yandex NV and Mail.Ru Group,
which run two of Russias biggest
websites, have said Mr. Snowden
wont be working for them, either.
Mr. Kucherena couldnt be
reached to comment further Sun-
day.
In August, Russia granted Mr.
Snowden temporary asylum, which
allows him to live, work and travel
in the country. Prosecutors in the
U.S. have charged him under the
Espionage Act after he had leaked
details of classified U.S. surveil-
lance programs to several media
outlets.
His whereabouts within Russia
arent known.
Last week, Russian tabloid web-
site LifeNews published a photo of
a man it said was Mr. Snowden in
Moscow.
BY OLGA RAZUMOVSKAYA
AND NINA ADAM
For information about listing your funds, please email wsja.advertising@dowjones.com or call +852 2573-7121
Data as shown is for information purposes only. No offer is being made by
Morningstar, Ltd. or this publication. Funds shown arent registered with the
U.S. Securities and Exchange Commission and arent 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.
NAV %RETURN
FUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
NAV %RETURN
NAV %RETURN
NAV %RETURN
NAV %RETURN
NAV %RETURN
Advertisement
[ALTERNATIVE INVESTMENT FUNDS www.WSJ.com]
Advertisement
JapanEquityLarge-CapGrowth
Funds that are fairly representative of the Japanese large cap equity market. At least 75% of assets in
equities of fast-growing Japanese large-caps. Ranked on % total return (dividends reinvested) in U.S.
dollars for one year ending November 01, 2013
Leading 10Performers
FUND FUND LEGAL %Return in $US **
RATING* NAME FUNDMGM'T CO. CURR. BASE YTD 1-YR 2-YR 5-YR
NS JPMThe JPMorgan Asset JPYJPN 55.79 75.55 33.68 16.28
Japan D3M Management (Japan) Ltd.
NS Daiwa Nippon Daiwa Asset JPYJPN 48.05 58.35 21.22 NS
Support Fd 3 -Phoenix Japan Management Co.Ltd.
NS Daiwa Japan Daiwa Asset JPYJPN 42.87 54.58 22.22 11.20
Equity Open Management Co.Ltd.
NS Daiwa Growth Daiwa Asset JPYJPN 44.13 52.76 21.76 12.42
Stock Open Management Co.Ltd.
NS Daiwa Best Daiwa Asset JPYJPN 39.49 50.43 20.66 10.96
Party Japan Equity Management Co.Ltd.
NS Okasan Japan Okasan Asset JPYJPN 41.68 49.37 21.83 NS
NewTechnology Open Management Co., Ltd.
Open Management Co.Ltd.
Open DC Management Co.Ltd.
NS Daiwa Daiwa Daiwa Asset JPYJPN 40.63 48.39 19.77 10.85
Japan Stock Open Management Co.Ltd.
NS DIAMHybrid DIAMCo., Ltd. JPYJPN 37.46 48.17 18.15 11.50
Selection
NOTE: Changes in currency rates will affect performance and rankings. Source: Morningstar, Ltd
KEY: ** 2YRand 5YRperformance is annualized 1 Olivers Yard, 55-71 City Road
NA-not available due to incomplete data; London EC1Y 1HQUnited Kingdom
NS-fund not in existence for entire period www.morningstar.co.uk; Email: mediaservice@morningstar.com
Phone: +44 (0)203 107 0038; Fax: +44 (0)203 107 0001
INTERNATIONAL INVESTOR
Fears Boost Gold-Coin Sales
NEW YORKU.S. Mint gold-coin
sales are on track to exceed last
years totals as worries about the
stability of the federal government
have attracted buyers back to the
market.
The Mint has sold 752,500 troy
ounces of American Eagle gold coins
this year, just shy of last years total
sales of 753,000
ounces, according
to the Mints data.
The Mint sells
gold and silver coins to authorized
dealers, who in turn distribute the
coins to the public. Dealers buy
coins from the Mint to meet, or in
anticipation of, demand from indi-
vidual investors.
Coin sales got a boost in October,
when the federal government was
partly shut down for 16 days over a
budget standoff in Congress and the
U.S. neared the brink of a debt de-
fault. The Mint sold 48,500 ounces
of American Eagle gold coins last
month, more than triple the 13,000
ounces sold in September but less
than the 59,000 ounces sold in Octo-
ber 2012.
We saw our peak order volumes
right before the government shut-
down, and then again right before
the deadline for the debt-ceiling in-
crease, said Mike Getlin, executive
vice president at Merit Financial
Inc., a bullion dealer based in Santa
Monica, Calif. The debates in Wash-
ington spooked people about holding
dollars, and that drove up demand
for bullion coins.
Congress was able to resolve the
budget standoff and temporarily
raise the debt ceiling, but the debt
debate is expected to resume early
next year. Retail investors are also
worried about the Federal Reserves
continued stimulus efforts, and the
long-term risks the program holds
for the value of the dollar, he said.
But while demand for gold coins
is climbing, investors are cutting
back on their holdings of gold fu-
tures and other gold-linked financial
instruments as they seek higher-
yield investments, analysts said.
Gold prices are down 22% this
year. Comex futures for November
delivery closed at $1,313.10 an ounce
on Friday, down 2.9% for the week.
Coin buyers tend to have a more
long-term investment horizon, ana-
lysts said.
People are just still very uncom-
fortable about the financial situation
worldwide, said Terry Hanlon, pres-
ident of Addison, Texas-based Dillon
Gage Metals, an authorized dealer
for U.S. Mint gold, silver and plati-
num coins.
October is also the month when
many dealers restock their inven-
tory, as the summer lull typically
gives way to renewed interest, said
Michael Haynes, chief executive at
Oklahoma City-based Apmex Inc.,
one of 12 Mint-authorized purchas-
ers of American Eagle silver coins.
September sales picked up at
the retail counter, but not a lot was
bought from the Mint, Mr. Haynes
said, so dealers needed to buy more
coins in October to replace what
they sold.
Demand for silver coins has been
even higher than for gold, in part
because silver is less expensive. Sil-
ver for November delivery fell to
$21.804 an ounce on Friday, down
3.6% for the week.
The Mint has struggled to keep
up with silver-coin demand for much
of 2013. It ran out of the coins in
January and imposed limits on coin
sales to its authorized dealers.
Those limits remain in place.
BY TATYANA SHUMSKY
COMMODITY
MARKETS
Fund Scorecard
nALEXANDRAINVESTMENTMANAGEMENT
Tel: +1 212301 1800Fax: +1 212301 1810
Alexandra Convertible Bond Fund I, Ltd. (Class A) OT OT VGB 08/31 USD 2155.22 NS NS NS
nPLATINUMCAPITAL MANAGEMENT
Tel: +44207 0249840, www.platinumfunds.net
Platinm-All Star OT OT CYM 09/30 USD 107.57 NS NS NS
Platinm-All Weather OT OT USA 10/31 USD 129.92 2.4 3.2 3.8
Platinm-Dynasty OT OT CYM 09/30 USD 98.26 -8.0 1.5 -3.6
Platinm-Emancipation OT EQ CYM 05/31 USD 105.47 0.2 -8.5 5.7
Platinm-Equity Plus OT OT USA 05/29 USD 35.02 -18.2 -63.7 -45.6
Platinm-Gbl Dividend GL EQ CYM 09/30 USD 64.13 8.2 5.9 3.5
Platinm-Nordic OT OT CYM 09/30 SEK 528.84 1.8 3.4 4.0
Platinm-Premier OT OT CYM 12/31 USD NS -55.9 -66.0 -44.3
Platinm-Turnberry OT BD USA 02/28 USD 60.14 -1.2 -3.0 NS
nSUPERFUNDASSETMANAGEMENTGMBH
For info about openfunds, contact info@superfund.comandwww.superfund.com
*Closedfor NewInvestments
Superfund Cayman* GL OT CYM 10/29 USD 36.71 15.6 12.0 -16.4
Superfund GCT USD* GL OT LUX 10/29 USD 1646.33 9.2 5.0 -18.5
Superfund Green Gold A(SPC) GL OT CYM 10/29 USD 903.32 -16.3 -19.9 -21.8
Superfund Green Gold B(SPC) GL OT CYM 10/29 USD 788.38 -13.7 -18.0 -25.8
Superfund Q-AG* GL OT AUT 10/29 EUR 5970.00 4.7 2.5 -8.9
nWINTONCAPITAL MANAGEMENTLTD
Tel: +44(0)2076105350Fax: +44(0)2076105301
Winton Evolution EURCls H GL OT CYM 09/30 EUR 1082.75 4.8 1.8 -1.0
Winton Evolution GBP Cls G GL OT CYM 09/30 GBP 1095.54 5.5 2.4 -0.6
Winton Evolution USDCls F GL OT CYM 09/30 USD 1378.95 5.4 2.4 -0.8
Winton Futures EURCls C GL OT VGB 09/30 EUR 237.68 2.9 2.5 -0.4
Winton Futures GBP Cls D GL OT VGB 09/30 GBP 258.65 3.2 3.0 0.0
Winton Futures JPY Cls E GL OT VGB 09/30 JPY 16619.67 3.5 3.2 -0.5
Winton Futures USDCls B GL OT VGB 09/30 USD 848.12 3.4 3.1 -0.2
nAHWCAPITAL MANAGEMENT
Tel (+49) 1805- 23 8282
www.ahw-capital.com
AHWTop-Div.Int. GL EQ LUX 07/29 EUR 46.59 -8.9 -8.2 -2.7
nALLIANZGLOBAL INVESTORSKAPITALANLAGEGESELLSCHAFT
Concentra AE EU EQ DEU 10/31 EUR 85.09 17.1 24.2 21.9
Industria AE EU EQ DEU 10/31 EUR 88.36 12.9 15.9 15.3
InternRent AE EU BD DEU 10/31 EUR 41.17 -5.5 -8.3 2.1
nCHARTEREDASSETMANAGEMENTPTELTD- TEL NO: 65-6835-8866
Fax No: 65-68358865, Website: www.cam.com.sg, Email: cam@cam.com.sg
CAM-GTF Limited OT OT MUS 10/25 USD 325553.83 -19.1 -14.7 1.4
nCREDITPACIFICASSETMANAGMENT
www.creditpacific.com
CP Global Alpha Fund OT OT WSM 09/13 USD 94.37 -1.6 -5.6 NS
CP Multi-Strategy Currency Fund OT OT CYM 09/11 USD 93.87 -8.0 -5.9 -4.4
CPS-Master Priv Fund GL OT WSM 10/31 USD 124.23 9.9 10.5 NS
nHSBCTrinkaus Investment Managers SA
E-Mail: funds@hsbctrinkaus.lu
Telephone: 352- 47 18471
Prosperity Return Fund A JP BD LUX 10/30 JPY 8758.52 -7.4 -5.5 0.3
Prosperity Return Fund B EU BA LUX 10/30 JPY 9092.11 5.3 16.6 12.5
Prosperity Return Fund C EU BA LUX 10/30 USD 83.24 -7.5 -5.4 -0.5
Prosperity Return Fund D EU BA LUX 10/30 EUR 127.05 -4.7 -4.4 11.1
Renaissance Hgh Grade Bd A EU BA LUX 10/30 JPY 10727.47 2.7 5.9 9.3
Renaissance Hgh Grade Bd B EU BA LUX 10/30 JPY 10957.42 16.1 29.3 21.2
Renaissance Hgh Grade Bd C EU BA LUX 10/30 USD 99.72 1.9 4.9 7.1
Renaissance Hgh Grade Bd D EU BA LUX 10/30 EUR 105.17 -2.4 -1.4 7.2
nSENSIBLEASSETMANAGEMENTLIMITED
www.samfund.com.hk Tel: (852) 28686848 Fax: (852) 28109948
Asia Value Formula Fd-B OT OT CYM 10/31 USD 10.11 -1.8 5.5 3.4
nTHENATIONAL INVESTOR
TNI Tower | Zayed1st Street Khalidia| Web:www.tni.ae
TNI MENASpecial Sits Fund OT OT BMU 09/30 USD 1111.62 7.6 6.8 5.1
TNI MENAUCITS Fund OT OT IRL 10/24 USD 1228.71 18.9 19.1 14.4
TNI UAE Blue Chip Fund OT OT ARE 10/24 AED 8.31 62.8 60.9 36.9
nWEBSITE: WWW.VALUEPARTNERS.COM.HK, TEL: (852) 28809263, FAX: (852) 25648487
*formerly knownas China ABHShares Fund
Intel-Chin Mainlnd Foc AS EQ CYM 10/31 USD 35.96 6.0 13.9 4.8
Intel-China Converg* AS EQ CYM 10/31 USD 123.64 5.4 13.3 3.0
VP Classic - A AS EQ CYM 10/31 USD 223.44 5.6 14.0 5.9
VP CLassic - B AS EQ CYM 10/31 USD 102.17 5.2 13.5 5.4
VP High Dividend Stk OT OT CYM 10/31 USD 68.20 8.1 12.6 13.7
nYUKI MANAGEMENT&RESEARCH
nYMR-NSeries
YMR-NGrowth Fund JP EQ IRL 11/01 JPY 12506.00 44.1 62.8 25.3
nYuki 77 Series
Yuki 77 General JP EQ IRL 11/01 JPY 8312.00 58.8 81.5 30.4
nYuki Asia Umbrella Series
Yuki Rebounding Gro Fd JP EQ IRL 11/01 JPY 15140.00 65.3 87.0 33.1
nYuki ChugokuSeries
Yuki Chugoku Jpn Gen JP EQ IRL 11/01 JPY 8699.00 41.5 59.0 23.8
Yuki Chugoku JpnLowP JP EQ IRL 11/01 JPY 9503.00 50.1 64.5 21.0
nYuki MizuhoSeries
Yuki Mizuho Jpn Dyn Gro JP EQ IRL 11/01 JPY 5362.00 44.5 62.7 23.9
Yuki Mizuho Jpn Inc JP EQ IRL 11/01 JPY 9133.00 33.3 47.0 19.7
Yuki Mizuho Jpn Lg Cap JP EQ IRL 11/01 JPY 6026.00 38.1 57.9 21.1
Yuki Mizuho Jpn LowP JP EQ IRL 11/01 JPY 17070.00 70.0 81.7 33.5
Yuki Mizuho Jpn Val Sel AS EQ IRL 11/01 JPY 8634.00 72.4 90.8 38.4
nMANULIFEASSETMANAGEMENT TEL:(852)21081110
Internet:http://www.manulife.com.hk 47/FManulife Plaza, Causeway Bay, HongKong
American Growth A US EQ LUX 10/31 USD 25.36 25.1 27.3 20.4
American Growth AA US EQ LUX 10/31 USD 1.45 24.8 26.9 20.1
Asia Total Return AA AS BD LUX 10/31 USD 0.98 -2.5 -1.4 3.8
Asia Value Dividend Equity Fund AA OT OT LUX 10/31 USD 1.58 10.9 15.4 14.6
Asian Equity A OT OT LUX 10/31 USD 3.12 10.5 19.0 11.3
Asian Equity AA OT OT LUX 10/31 USD 1.00 10.3 18.7 11.0
Asian SmCap Equity AA OT OT LUX 10/31 USD 2.19 16.6 25.4 22.8
China Value A AS EQ LUX 10/31 USD 7.78 6.1 15.0 5.8
China Value AA AS EQ LUX 10/31 USD 2.43 5.8 14.7 5.6
Dragon Growth A AS EQ LUX 10/31 USD 1.81 12.7 20.7 12.8
Dragon Growth AA AS EQ LUX 10/31 HKD 8.77 12.5 20.4 12.5
Emg Eastrn Europe A EU EQ LUX 10/31 USD 5.13 8.7 15.6 8.2
Emg Eastrn Europe AA EU EQ LUX 10/31 USD 2.20 8.6 15.5 8.0
European Growth A EU EQ LUX 10/31 USD 11.33 20.9 28.1 15.9
European Growth AA EU EQ LUX 10/31 USD 0.81 20.6 27.7 15.6
Global Contrarain AA GL EQ LUX 10/31 USD 0.93 6.5 7.8 -1.1
Global Property AA OT EQ LUX 10/31 USD 0.97 5.7 10.9 14.8
Global Resources AA GL EQ LUX 10/31 USD 0.98 -3.0 -6.6 -9.0
Healthcare AA OT EQ LUX 10/31 USD 1.49 26.0 26.0 22.0
India Equity AA EA EQ LUX 10/31 USD 1.00 -3.8 0.7 -2.6
International Growth A GL EQ LUX 10/31 USD 4.25 24.0 25.7 16.7
International Growth AA GL EQ LUX 10/31 USD 0.98 23.7 25.4 16.4
Japanese Growth A JP EQ LUX 10/31 USD 3.26 22.2 32.5 11.3
Japanese Growth AA JP EQ LUX 10/31 USD 0.84 21.9 32.1 11.0
Latin America Equity AA GL EQ LUX 10/31 USD 1.14 -7.3 -2.9 -2.6
Russia Equity AA EE EQ LUX 10/31 USD 0.68 5.2 11.0 1.0
Strategic Income AA OT OT LUX 10/31 USD 1.14 0.2 1.1 4.3
Taiwan Equity AA AS EQ LUX 10/31 USD 1.45 6.3 12.1 10.9
Turkey Equity AA OT OT LUX 10/31 USD 0.99 -6.9 1.5 12.6
U.S. Bond AA US BD LUX 10/31 USD 1.26 -0.2 0.4 4.7
U.S. SmCap Equity AA US EQ LUX 10/31 USD 1.07 15.4 18.0 11.7
U.S. Special Opportunities AA US BD LUX 10/31 USD 1.02 9.2 13.1 16.2
U.S. Tsy Inf-ProtSec AA OT OT LUX 10/31 USD 1.29 -7.3 -7.2 -0.4
nPTCIPTADANAASSETMANAGEMENT
Tel: +6221 25574883 Fax: +6221 25574893 Website: www.ciptadana.com
Indonesian Grth Fund GL EQ BMU 10/30 USD 156.61 -12.6 -15.2 -8.2
Blanks for gold coins are displayed at the U.S. Mint at West Point, N.Y.
B
l
o
o
m
b
e
r
g
N
e
w
s
In print & online. Contact:
wsja.advertising@dowjones.com
LIST YOUR
FUNDS
WORLD NEWS: U.S.
Charges Filed in Airport Shooting
LOS ANGELESFederal officials
charged the 23-year-old suspect in
Fridays shooting rampage at Los
Angeles International Airport with
two felony counts, including a mur-
der charge that could carry the
death penalty if he is convicted.
A Transportation Security Ad-
ministration officer, 39-year-old Ge-
rardo I. Hernandez, died from gun-
shot wounds in the attack. At least
two other TSA officers and one civil-
ian sustained gunshot wounds.
The suspected shooter, identified
as Paul Anthony Ciancia, was
charged with killing a federal em-
ployee. He was also charged with
committing a violent act at an air-
port, which could carry a penalty of
life in prison. The shooters motive
was not known but investigators
said he intended to kill TSA officers.
Mr. Ciancia was wounded in the
ensuing shootout with police and re-
mains hospitalized and unrespon-
sive, federal investigators said.
According to an affidavit in sup-
port of the complaint filed Saturday,
Mr. Ciancia pulled a Smith & Wes-
son .223 caliber M&P-15 assault ri-
fle out of a bag and fired multiple
rounds at point-blank range at Mr.
Hernandez, who was stationed at a
security checkpoint.
Mr. Ciancia then moved up an es-
calator toward the screening area
but looked back at the wounded of-
ficerwho appeared to move and re-
turned to shoot the wounded officer
again, the complaint says.
Mr. Ciancia continued shooting
his way past security and through
the terminal, investigators said,
sending passengers diving to the
ground for covering or fleeing the
terminal. Airport police subdued the
gunman after a shootout in the food
court deep inside the terminal, offi-
cials said.
Airport officials said 1,550 flights
and 167,050 passengers were af-
fected by Fridays incident, which
plunged the nations sixth busiest
airport into chaos as passengers fled
for their lives when the shooting be-
gan.
The airport returned to normal
operations by Saturday evening. Air-
port officials said the facility would
maintain high profile security in-
definitely, with more officers visible
in terminals and at curbside.
The airports famous multicol-
ored pylons were illuminated blue to
honor Mr. Hernandez, the slain TSA
officer.
Mr. Ciancia made a conscious
decision to kill TSA officers, said
David Bowditch, special agent in
charge of the Federal Bureau of In-
vestigation in Los Angeles, which is
leading the investigation.
According to the complaint, Mr.
Ciancia carried a signed, handwrit-
ten note saying he wanted to kill
TSA officers, that addressed TSA of-
ficers directly, saying, in part, that
he wanted to instill fear into your
traitorous minds.
The U.S. Attorney General will
review the case and decide whether
the death penalty will be pursued.
The same legal protocol was fol-
lowed in the case against Jared
Loughner, who shot former U.S. Rep-
resentative Gabrielle Giffords, and
murdered a federal judge. Mr.
Loughner, however, struck a deal
with prosecutors to avoid the death
penalty in exchange for life in
prison.
Federal investigators said they
have videotape of some of the inci-
dent, but its unclear where Mr.
Ciancia entered the airport. He was
dropped off at the airport, but fed-
eral officials declined to say whether
they know who dropped him off.
In Mr. Ciancias hometown of
Pennsville, N.J., outside Philadel-
phia, Police Chief Allen Cummings
said he learned of an alarming text
Mr. Ciancia sent to family members
at 1 p.m. Friday, when Mr. Ciancias
father called.
Pennsville police contacted Los
Angeles police, who agreed to check
Mr. Ciancias apartment.
The police chief said he learned
from the father that Mr. Ciancia had
attended a technical school in Flor-
ida, then moved to Los Angeles in
2012 to look for work as a motorcy-
cle mechanic, but had been having
trouble finding a job, according to
the Associated Press.
Most of the properties on the
road where the Ciancias live are rel-
atively small suburban homes on
close-packed plots. The Ciancia
property is quite large and heavily
wooded, with the house invisible
from the road.
Mr. Cummings said that Mr.
Ciancias father and brother were at
the family home, and told investiga-
tors they had no indication Mr.
Ciancia was planning anything like
this.
Everybodys just as shocked as
we are, Mr. Cummings said. Obvi-
ously theyre upset. Its a shock to
them, its a shock to our commu-
nity. Mr. Cummings said the Penns-
ville Police Department is assisting
the federal investigation.
BY TAMARA AUDI
AND NICK PINTO
Paul Anthony Ciancia, 23, was charged
in the shooting rampage and could
face the death penalty.
A
s
s
o
c
i
a
t
e
d
P
r
e
s
s
The shooter left a note
saying he wanted to kill
U.S. security officers.
How the world advances
Condence to grow
Thats what agricultural producers can achieve when theyre
smart about managing risk. And smart managers work with
CME Group, the worlds leading derivatives marketplace.
Farmers and ranchers around the world partner with us to
help them manage every kind of risk. Crop prices, weather
uctuations, interest rate movements, changing currency
valuations whatever the risk, we help the world advance
beyond it. Learn more at cmegroup.com/advance.
CME Group is a trademark of CME Group Inc. The Globe logo is a trademark of Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners. Copyright 2013 CME Group. All rights reserved.
MARKETS
China Appetite Fuels Market for Metals
Investors seeking exposure to
good news about Chinas economy
are striking where its hotin iron-
ore and copper markets.
Prices of these industrial com-
modities, long considered to be one
of the most direct ways to bet on
Chinese economic growth, have
risen in recent months amid a flurry
of positive signals out of the worlds
second-biggest economy.
These indicators have dovetailed
with a ramp-up of Chinese demand
for the commodities.
Chinas imports of iron ore
soared to a record 74.6 million met-
ric tons in September, according to
the latest available data from
Chinas General Administration of
Customs. That has pushed prices up
nearly 20% since May, to about $131
a ton, according to data provider the
Steel Index.
China also has been importing
more copper, helping fuel a 10%
runup in prices of the metal from
nearly a three-year low hit in June.
The rally in these corners of the
metals market underscores money
managers renewed optimism about
China, which turbocharged global
growth for much of the past decade.
Doubts about Chinas growth
prospects sent shudders through fi-
nancial markets earlier this year and
contributed to weak performance of
many commodities.
But stronger-than-expected
third-quarter growth and an expan-
sion in factory activity have eased
worries about a slowdown in
Chinaand about the potential rip-
ple effects beyond its borders.
Many investors wager on metal
prices by buying shares of mining
companies. While copper futures are
actively traded, iron-ore prices are
set mostly on cash markets based on
prices producers strike with end us-
ers. Investor interest in iron ore is
spurring the development of a finan-
cial market for the key component in
steel. Chinas Dalian Commodity Ex-
change launched yuan-denominated
iron-ore futures in mid-October,
aimed at helping the country gain
some pricing power over the re-
source.
Everyone has been surprised by
the extent of the strength in iron-ore
prices, says Matt Riordan, a money
manager at Paradice Investment
Management Pty Ltd., which over-
sees about $8 billion. The longer
they stay up here, the more confi-
dent people are that we wont see a
big drop anytime soon.
Mr. Riordan, based in Sydney, re-
cently lifted his exposure to iron ore
by scooping up shares of mining
companies.
Shares of Australia-based Fortes-
cue Metals Group Ltd. have nearly
doubled in value since their lows set
in June, rising to a 17-month high in
October. Fortescue ships most of its
iron ore to China, providing supplies
for about 50 steel makers there.
Government spending on large-
scale infrastructure projects is driv-
ing Chinas growth, according to an-
alysts. Workers are breaking ground
on subways, power grids and oil re-
fineriestypes of construction that
require large amounts of steel and
copper.
Many investors believe that
China will be able to maintain cur-
rent growth rates, stoking metal de-
mand.
We expect the Chinese economy
to continue growing in the 7% to 8%
range, says Malcolm Gissen, presi-
dent of advisory firm Malcolm H.
Gissen & Associates in San Fran-
cisco. Demand for copper should
grow over the next couple of years.
Moreover, the metals market is
likely to become more dependent on
Chinese demand. Commodity consul-
tancy Wood Mackenzie Ltd. expects
China to account for 52% of indus-
trial-metal demand by 2017, up from
46% currently.
To be sure, recent robust Chinese
demand isnt enough to ensure that
prices of industrial commodities will
continue rising.
Chinese government officials
have voiced concerns about the
amount of debt owed on the local
level.
That could prompt a rollback of
infrastructure spending, which could
hurt commodity demand, says
Ephrem Ravi, a Barclays Capital ana-
lyst in Hong Kong.
Meanwhile, a bevy of new Aus-
tralian iron mines is slated to begin
production in the coming months,
which will add to global supplies.
Some investors also are wary that
India could expand global supplies
by easing restrictions on its export
industry, which has shrunk drasti-
cally on production bans in key min-
ing regions and increased export
taxes.
Goldman Sachs forecasts that
seaborne iron-ore supplies will out-
strip demand by 67 million tons next
year. That compares with a deficit of
11 million tons this year.
Carlos Salas, an associate at U.K.
wealth-management firm London &
Capital Asset Management Ltd.,
which manages about $4 billion in
assets, said he thinks the response
to recent upbeat Chinese economic
data will be short-lived. Rising sup-
plies of copper, like iron ore, are
widely expected to cap prices for
that market, too.
The money manager is keeping
its copper exposure relatively low, at
3% of the firms portfolios. London &
Capital has no bets tied to iron-ore
prices.
Large money managers had 17%
more bullish bets on copper futures
than bearish ones in the week to
Oct. 15, according to the U.S. Com-
modity Futures Trading Commis-
sions latest available data, which
have been delayed by the govern-
ment shutdown.
BY RHIANNON HOYLE
Sources: Goldman Sachs (demand); SIX Financial Information The Wall Street Journal
Bouncing Back
Copper and iron prices are rebounding from summer lows on strong
Chinese demand.
1.5 billion metric tons
0
0.3
0.6
0.9
1.2
09 2008 10 11 12 13 14
estimates
15 16 17
Chinese iron-ore demand Change in futures prices
10
30
20
10
0
%
F M A M J J J A S O
Copper
Iron ore
Some See Fragility in Developing Markets
demand to fuel their growth, Mr.
Pradhan and other concerned ana-
lysts say. Now, the global economy
has cooled and the boom is over. Fu-
ture growth requires a shift toward
more spending by their own citi-
zens, a painful transition.
On top of that, soaring stock and
bond markets and heavy business
investment in the developing world
relied on massive inflows of foreign
money. Those foreign flows arent
likely to keep growing as before and
few countries are ready to shift to
more homegrown financing.
A third problem is interest rates.
Extraordinary stimulus by the U.S.
Federal Reserve and other central
banks has held down interest rates
around the world, keeping financing
cheap and helping cover some of the
weakness in the developing worlds
financial systems. But the Fed in-
tends to reduce its stimulus in
months to come. At least some
other central banks could follow.
That will push up interest rates
around the world. So unless U.S. and
global growth prove much weaker
than economists expect, which
would delay Fed action but create
other problems for emerging mar-
kets, the interest-rate backdrop is
about to get worse.
Every countrys situation is dif-
ferent. Brazil is a big commodity ex-
porter, India exports services and
China imports commodities and ex-
ports manufactured goods.
Some countries have handled the
transition better than others. Mr.
Pradhan likes South Korea, Taiwan,
Poland, the Philippines, Mexico, Co-
lombia and Peru. That is his entire
list.
He advises staying away, in par-
ticular, from a group Morgan Stan-
ley has dubbed the Fragile Five: In-
dia, Brazil, Turkey, Indonesia and
South Africa.
Continued from page 15
Neil Shearing, chief emerging-
markets economist at Capital Eco-
nomics in London, is worried about
all four of the big economies that
got the most investor attention:
Brazil, Russia, India and China, a
group that was dubbed the BRICs.
Growth there will be slower
than in the previous decade, he
says.
Russia is too tied to energy ex-
ports. China still relies too heavily
on cheap credit and investment in
heavy industry and real estate. Bra-
zil and India, as well as Turkey, In-
donesia and South Africa, are too
dependent on foreign money.
This was all right when export
demand was rising fast and foreign-
ers were racing to invest. We are
getting to the end of that era, Mr.
Shearing says.
He likes emerging markets in
Eastern Europe but not much else.
As long as the Fed keeps longer-
term bond yields low, many emerg-
ing markets may not face a crunch.
The U.S. central bank holds yields
down by buying $85 billion a month
of U.S. Treasury bonds and mort-
gage-backed securities. The cash in-
jections keep markets humming.
The Fed initially planned to scale
back, or taper, those monthly pur-
chases in the latter part of this year.
Uncertain U.S. growth and the finan-
cial mess caused by Washingtons
squabbles have put a hold on Fed
action. But some economists think
recent signs of U.S. strength, nota-
bly in the manufacturing economy,
could push the Fed to taper its
spending in December or the first
months of next year.
Next year, once the Fed starts
tapering and yields rise, we are go-
ing to see pressures in the emerging
markets, says Alberto Ades, head of
fixed-income and foreign-exchange
strategy for emerging markets at
Bank of America Merrill Lynch.
More-bullish investment strate-
gists point out that growth is likely
to be faster in the developing world
than in the U.S. and Europe. If the
world economy continues to be
more resilient than the doomsayers
think, the developing world will
benefit, these analysts say.
But those banking on emerging-
market gains could be in for a
bumpy ride.
The fundamental backdrop that
led us to be so concerned about
emerging markets in the first place
hasnt changed a lick, says Richard
Bernstein, founder of Richard Bern-
stein Advisors, which oversees $1.8
billion in New York. He points to in-
flation and negative surprises on
corporate earnings.
Based on forecasts for the next
five years, he adds, U.S. small
stocks are a better growth story
than emerging markets.
Note: All data as of Oct. 31 Sources: J.P. Morgan; MSCI; EPFR Global (mutual funds) The Wall Street Journal
Emerging Hazard
The bonds, shares and currencies of poorer nations have rebounded since a midyear selloff, but some investors and
analysts warn that the risks of purchasing emerging-market assets havent abated.
Net investor cash into emerging-markets stock and bond mutual funds Performance this year
$8 billion
8
4
0
4
$8 billion
8
4
0
4
10
20
15
10
5
0
5
%
J M M J S J M M J S J M M J S
Currencies
Bonds Stocks
Stocks
Bonds
UMW Oil
Jumps 11%
In Its Debut
KUALA LUMPURShares of
UMW Oil & Gas Corp. rose as much
as 14% on their first day of trading
Friday as investors bet on strong or-
der prospects from energy compa-
nies in vibrant Southeast Asia to
buoy its earnings.
UMW Oil & Gas, a unit of Malay-
sian state-run conglomerate UMW
Holdings Bhd., raised about $740
million in the countrys biggest ini-
tial public offering this year.
Shares in UMW Oil & Gas, an off-
shore drilling service provider,
opened up 7.1% from their IPO price
and moved higher from there, clos-
ing up 11% at 3.10 ringgit (98 U.S.
cents) each. More than 221 million
shares changed hands.
Oil and gas services players are
likely to gain on orders from Petro-
nas, said Danny Wong, chief execu-
tive of Kuala Lumpur-based Areca
Capital, which has around 600 mil-
lion ringgit in assets under manage-
ment.
State oil-and-gas firm Petroliam
Nasional Bhd., commonly known as
Petronas, is in the middle of a bud-
geted $106 billion capital-spending
spree for the 2011-2015 period. Pet-
ronas has said it would replace for-
eign-owned rigs with those that are
locally owned when contracts ex-
pire, as part of push to help Malay-
sian businesses.
The Malaysian stock market has
recovered in the past two months
after global investors sold emerg-
ing-market assets during the sum-
mer.
The benchmark FTSE Bursa Ma-
laysia KLCI index is hovering near
its all-time high.
BY ABHRAJIT GANGOPADHYAY
Mall Giant Cautious
On Asian Expansion
Westfield Joint Chief Executive Peter Lowy Discusses
Strategy on New Markets and the Mall of the Future
Westfield Group, one of the worlds
largest shopping mall operators by revenue,
is all about attracting big spenders. From
Prada and Gucci to high-end restaurants, its
malls cater to customers who are willing to
pay for prized goods.
So it may be surprising
that Peter Lowy, the com-
panys joint chief executive,
takes a cautious approach
to investment. Despite a
balance sheet bolstered by
more than $6 billion from
asset sales since the start of 2012, West-
field has resisted risky expansions into
emerging markets such as China. For now,
it has no plans to join the rush of luxury
brands and main-street retailers vying for
the favor of Asias increasingly affluent
middle classes.
Instead, the Australian company is focus-
ing on traditional markets like the U.S.
where it is building the retail section of the
new World Trade Center development in
New Yorkand limiting any new-market
forays to Brazil and Italy.
Westfields caution is understandable. In
April, it suffered a major setback in its at-
tempt to break out of Australia, the U.S.
and the U.K. when it ended a less than two-
year-old Brazilian joint venture with
Almeida Junior Shopping Centers SA over
differences in strategy. Westfield has kept
some capital in the South American country
and hopes to start building malls there on
its own.
Meanwhile, challenges remain closer to
home. Online retailing threatens traditional
stores, while consumer confidence in Aus-
tralia, the U.S. and other developed coun-
tries remains vulnerable to shocks as their
economies undergo fragile recoveries.
Mr. Lowy spoke to The Wall Street Jour-
nal about how Westfield is addressing
structural and economic challenges, and
what the mall of the future will look like.
Edited excerpts:
WSJ: How is the World Trade Center devel-
opment progressing?
Mr. Lowy: We are on time [for 2015] and on
budget, until Im told were not on time.
But we have a fixed-price deal with the Port
Authority, so were definitely on time and
budget. The buildings are just spectacular.
The Oculus, which is the transport hub, will
just be an incredible space. And theyve
done a fantastic job on the way theyve
built the memorial. Its just a unique space
in the world and for us to be able to have
retail there is just a special, special thing.
Im not going to give the features away.
But Ill tell you the building itself creates
the space, because were actually integrat-
ing the retail right through the building.
We are going to lease it with world-class
retail as well as take care of the local in-
habitants. Originally, we bought the lease
six weeks before 9/11 and the amount of
people who live down in lower Manhattan
now has doubled since that time.
WSJ: How are conditions in the U. S.?
Mr. Lowy: The U.S. is growing slowly. Unem-
ployment is coming down, house prices are
moving up and the overall economy has
been moving forward.
But you do see some slowing of that
growth, especially in the first half of the
year. Taxes went up, especially payroll tax,
and growth was a bit slower than everyone
had projected. The teen retailers are hurt-
ing especially, although Gap has done quite
well. It just looks like theres quite a bit of
unemployment in that teen market and
thats probably the soft bit. But the econ-
omy itself is moving ahead.
WSJ: Are you considering expanding into
new markets?
Mr. Lowy: Before you run to other markets
all the time you need to bed yourself down
where you are. And when you look at the
size of the business we have, when you look
at some of the developments that were do-
ing, were not exactly in a position to be
running to new markets. We have to get
ourselves set in Brazil. We have the capital
there, but we dont have any assets since
weve sold out. We are looking at a number
of sites in the marketplace that are up for
public bids to see if we can get ourselves
set with a development there.
WSJ: How about expanding into Asian coun-
tries like China?
Mr. Lowy: The issue about China is there are
lots of developers and there are lots of op-
portunities. As a company, were pretty full
at the moment with our development book.
Were doing the World Trade Center, the
development in Milanwhere construction
should start in the next two years or so
the West London expansion, Croydon in
South London and Century City in Los An-
geles among others.
WSJ: How are you dealing with the threat
of online retailing?
Mr. Lowy: We actually look at it as an op-
portunity. Every threat is an opportunity at
the same time. We set up a division of the
company called Westfield Labs in San Fran-
cisco and we are committed to creating a
digital platform for our customers to be
able to access both our assets and our re-
tailers for their mobile devices.
WSJ: What will the future mall look like?
Mr. Lowy: The malls in the U.S. have sub-
stantially changed since the recession. In
Australia and Europe, you have much more
food integrated into the mall. You have
much more discounters integrated into the
mall. Historically in the U.S., the malls were
fashion and they were department-store
fashion-based.
Now, in our portfolio, we have nine su-
permarkets, were putting in gyms and
spas, we are expanding the way theaters
are used. Were putting in much more food,
both fresh food and restaurants, and we
dont build food courts any more, we build
dining terraces. If the food offerings are
good and theyre fresh, people come to the
mall more often. So if we can create more
shopping trips and longer shopping trips
we can increase the sales revenues for our
retailers. In London weve created an area
called The Village, which is totally high-end
retailthe same as you would get on Bond
Street or parts of Chelsea.
WSJ: Are malls killing the high street?
Mr. Lowy: I dont think malls kill the high
street. Take our malls in London, where
weve put down 3.4 million square feet of
retail space since 2008 in the heart of the
city thats doing 2 billion ($3.2 billion)
worth of business.
The center of LondonOxford Street,
Bond Street, Regent Streetwasnt servic-
ing customers. It was hard to get to, hard
to park, the shops they wanted werent
there. I would argue that weve enhanced
the shopping experience of London. You
didnt have 2 billion of negative sales. And
now youre starting to see suggestions in
England about how to regenerate Oxford
Street and rebuild Regent and Bond Street.
Thats all about competition, which is good
for the customer and good for the city.
W
e
s
t
f
i
e
l
d
G
r
o
u
p
Rsum
Education: Bachelor of Commerce, University
of New South Wales
Career: Co-chief executive of Westfield since
2011 and a managing director since 1997.
Before joining Westfield in 1983, worked at
Rothschild, CS First Boston and Furman Selz
in various investment banking roles.
Extracurricular: Surfing, snowboarding and
basketball.
BY ROSS KELLY
MANAGING
Executive Assistant: Thankless but Influential Job
If DAndra Galarza were to come
face to face with death, she knows
whose life would flash before her
eyes: the life of her boss, a presi-
dent at NBCUniversal Inc.
After 10 years as Edward Swin-
dlers executive assistant, waking up
at 4 a.m. to ensure he makes an
early morning flight and keeping
the office stocked with his favorite
snacks, Ms. Galarza says shes under
no illusions about whose needs
come first. You work very, very
hardso that they can shine and
they can do their best, she says.
Youre kind of the stage mom.
The schedulers, gatekeepers and
caretakers of the corporate world
are rarely seen, but they have a pro-
found effect on the daily lives of the
executives they serve. They do ev-
erything from booking business
trips, ordering anniversary gifts and
arranging pet care to attending
high-level meetings and deciding
who can and cant meet with their
boss. The work can be thankless and
often comes at a cost to their own
personal lives, but these workers
wield subtle influence at a com-
panys highest levelsand no small
amount of power.
The career path can be uncer-
tain, however, and assistants for-
tunes often hinge on their bosss
trajectory. If the boss is fired, the
assistant can end up in limbo or
working for a less senior profes-
sional. Yet as automation claims
many administrative jobs, the assis-
tants are prized for their business
savvy and treated as the bosss not-
quite-equal partner.
Now, a new networking group
aims to emphasize the executive
in executive assistant, pampering
and pumping up these right-hand
workers with nightclub parties, spa
sessions and Behind Every Leader, a
conference series scheduled this
week in Newark, N.J.
Victoria Rabin, the 28-year-old
founder of the Executive Assistants
Organization and a former assistant
at a London hedge fund, says the
job deserves some cachet because
assisting is an incredible career
that only a certain breed can do.
Founded in 2012, the San Fran-
cisco-based networking group has
some 1,000 members, the majority
of whom pay $500 to $1,500 a year
in dues to gain access to events and
online webinars, and, for the high-
est-paying, a personal mentor.
Assistants need to bond with one
another, Ms. Rabin says, because
few others can understand the de-
mands of the job, from tracking
down car services in a far-flung city
to dealing with a bosss infidelity.
Meanwhile, the executives who
share everything from email ac-
counts to bank-account data to
home-security codes with their as-
sistants say the partnership works
best when theres trust and constant
communication. Harry Kraemer, a
former CEO of Baxter International
Inc. and now a professor at North-
westerns Kellogg School of Manage-
ment, says his assistant of 12 years
kept him informed about what was
happening at the health-care com-
pany and encouraged him to com-
municate more with employees.
Assistants gain status from their
bosss high profile. NBCs Ms.
Galarza says another executive once
tried to wheedle information from
her about a private meeting her
boss was attending. People know I
know everything, she says.
BY RACHEL FEINTZEIG
MARKETS
Banks Suspend Traders
Amid Currency Probe
An escalating probe into possible
rigging of foreign-exchange markets
has prompted some of the worlds
biggest banks to suspend a number
of high-profile currency traders in
New York, London and Tokyo, in the
latest market-manipulation investi-
gation to rock the industry.
More than a dozen traders at
five banks are now either suspended
or on leaves of absence in connec-
tion with global currency-rigging in-
vestigations, according to people fa-
miliar with the probes.
The investigations, which are fo-
cusing in part on electronic chat
rooms with names such as The
Cartel, have uncovered messages in
which traders appeared to inappro-
priately share market-sensitive in-
formation with competitors and
joked about their ability to influence
exchange rates, according to people
familiar with chat-room transcripts
that have been handed over to regu-
lators.
In a sign of the escalating nature
of the investigation, at least two
banksBarclays PLC and UBS AG
have hired criminal-defense lawyers
to represent some of their employ-
ees who have been put on leave, ac-
cording to people familiar with the
probes.
The suspended traders either de-
clined to comment, didnt respond
to requests for comment or couldnt
be reached.
The swath of departures leaves
big gaps on banks currency-trading
desks and people in the industry
said it could cause disruption to the
vast foreign-exchange business. In
London, the worlds biggest foreign-
exchange hub, three of the senior
traders who are on leave are past or
present members of a Bank of Eng-
land committee that oversees the
currency market.
The foreign-exchange probe is
the latest in a list of investigations
into how lightly regulated financial
markets are susceptible to potential
manipulation.
A five-year investigation into
manipulation of the London inter-
bank offered rate, or Libor, and
other benchmark interest rates has
so far yielded settlements with five
financial institutions, which have
admitted wrongdoing and paid a to-
tal of more than $3.5 billion in pen-
alties. European authorities also
have said they are investigating pos-
sible rigging of oil-market bench-
marks.
The swift pace of the currency
probe, in which senior figures in the
foreign-exchange market have al-
ready been sidelined, is one major
difference between that and the Li-
bor investigation.
The currency investigation
started in April when the U.K.s Fi-
nancial Conduct Authority began
looking into activity in London,
which accounts for 41% of global
foreign-exchange activity, according
to the Bank for International Settle-
ments. Recently, the probe has gath-
ered pace, with authorities from the
U.S., Switzerland and Hong Kong
launching investigations. Eight
banks have handed over materials to
British authorities, according to a
person familiar with the probe.
The electronic chat rooms that
are a focus of the probe take place
through widely used Bloomberg ter-
minals and are populated by top
currency traders, according to peo-
ple briefed on the investigation.
People familiar with the chat tran-
scripts said they contained repeated
references to drug use and sexual
acts.
Investigators and bank officials
have been scouring chat transcripts
for alleged evidence of the traders
improperly working together to in-
fluence exchange rates, these people
said.
One chat roomdubbed The
Cartel and The Bandits Club,
among other nameshas attracted
particular regulatory scrutiny, al-
though several chat rooms involving
different traders and different cur-
rencies are also under investigation,
these people said.
Membership of these chat rooms
has shifted as bankers and traders
have moved from one employer to
another.
A central issue in the probe is
the currency fixesthe daily
snapshots of trading used by money
managers and others for valuing
portfolios and other purposes. The
fix is assessed from market activity
in a brief window. The most popular
is at 4 p.m. London time.
The close ties between traders at
different banksand the possibility
they colluded in an effort to manip-
ulate the fixis a key focus of the
FCA investigation, according to peo-
ple familiar with the probe.
On Friday, Barclays put six trad-
ers on leave after the U.K. bank
handed over a trove of what it re-
garded as troubling chat transcripts
and other evidence to the FCA, ac-
Barclays investigation.
Those traders include Chris Ash-
ton and Mark Clark in London and
Jack Murray in Tokyo, as well as
multiple traders in New York, these
people said.
PLC suspended two London curren-
cies traders, Julian Munson and
Paul Nash, according to people fa-
miliar with the matter.
Some traders not involved in the
chat rooms also have been sus-
pended. UBS recently put on leave
Niall ORiordan, a senior currencies
trader in Zurich, a person familiar
with the matter said. Mr. ORiordan
managed a trading desk that used to
employ a trader who participated in
The Cartel chat sessions, accord-
ing to people familiar with the situ-
ation.
That trader, Matt Gardiner, in
September joined Standard Char-
tered PLC, which recently placed
him on leave, a person familiar with
the matter said.
Citigroups head of European
spot foreign-exchange trading, Ro-
han Ramchandani, has been placed
on leave, as has Richard Usher, J.P.
Morgan Chase & Co.s head of spot
trading for Group of 10 currencies in
the European region, according to
people familiar with the matter.
Messrs. ORiordan, Ramchandani
and Usher were all members of the
Bank of Englands London Foreign
Exchange Joint Standing Committee
chief dealers subgroup at least as
recently as December, according to
minutes of the groups meetings.
The committee of a dozen senior
traders from different banks meets
every three or four months to dis-
cuss issues such as foreign-currency
regulation and high-frequency trad-
ing. In 2011, the group warned that
banks should prohibit the deliber-
ate exploitation of electronic dealing
systems to generate artificial price
behavior.
Clare Connaghan
and Chiara Albanese contributed
to this article.
BY DAVID ENRICH
AND KATIE MARTIN
Barclays, whose headquarters is in London, put six traders on leave Friday.
A
s
s
o
c
i
a
t
e
d
P
r
e
s
s
DBS, OCBC Report
Solid Profit Figures
DBS Group Holdings Ltd. and
Oversea-Chinese Banking Corp.,
the two biggest lenders in South-
east Asia by assets, reported sta-
ble earnings Friday, with in-
creased loans offsetting decreased
margins.
Low interest rates in Singapore
have put pressure on margins, and
both banks said they had set aside
increased amounts to guard
against bad loans, which held
steady in the July-to-September
quarter.
OCBCs net profit and core net
profit were 759 million Singapore
dollars (US$611 million), it said in
a filing with the Singapore Ex-
change. Core net profit, which ex-
cludes any one-time gains, rose 5%
from a year earlier, it said, citing
strong asset growth and improved
fee income as offsetting a lower
net interest margin and trading
revenue. OCBC booked a divest-
ment gain of S$1.13 billion from
the sale of stakes in Singaporean
conglomerate Fraser & Neave Ltd.
and Asia Pacific Breweries Ltd. in
July 2012 to groups linked to Thai
billionaire Charoen Sirivadhanab-
hakdi. This took its headline net
profit in last years third quarter
to S$1.85 billion, more than double
the latest quarters figure.
OCBC said net interest income
rose 4% to S$978 million from
S$944 million while noninterest
income, which includes trading
and insurance investment, rose 3%
to S$779 million from S$754 mil-
lion. The banks net interest mar-
gin declined to 1.63% in the third
quarter from 1.75% in the same pe-
riod last year.
DBS Groups net profit in the
July-to-September quarter rose 1%
on year to S$862 million com-
pared with S$856 million in the
same period last year, it said.
DBS Groups net interest mar-
gin narrowed to 1.60%, compared
with 1.67% a year earlier, it said,
citing lower loan spreads and
lower yields on investment securi-
ties. Still, Southeast Asias biggest
lender by assets said its net inter-
est income rose 6% on year to
S$1.41 billion.
The banks ratio of nonper-
forming assets was steady at 1.2%,
while customer loans rose 19% on
year to S$242 billion as trade
loans, corporate borrowing and
secured consumer loans increased.
DBS Group set aside S$151 million
in allowances for credit and other
losses in the third quarter com-
pared with S$55 million a year
earlier.
We are well placed to navigate
the market uncertainties ahead
and will be prudent and vigilant as
we continue to grow our franchise
across the region, DBS Group
Chief Executive Piyush Gupta said
in a statement.
BY GAURAV RAGHUVANSHI
AND CHUN HAN WONG
THE BANKING ACADEMY
Continuing Education for Practising Financial Services Professionals
James R. Devine
Faculty at Stonier Graduate
School of Banking
Former VP, Seattle
First National Bank
Robert J. Hogan
Faculty Chair California
Bankers Association
Commercial Lending School
Former VP, Seattle
First National Bank
World-class faculty and
subject matter experts
as trainers
Making Small Businesses
a Cornerstone of the
Banking Industry
www. t h e a s i a n b a n k e r. c o m
Only 10 seats left.
Register now!
For register, call +65 6236 6529 or
email gamorin@theasianbanker.com
14-15 November 2013, Singapore
Small Business Banking
Executive Programme 2013
A comprehensi ve trai ni ng programme
desi gned to sharpen the ski l l s and
i nsti ncts of seni or executi ves on the
SME Banki ng busi ness
Latest thi nki ng and gl obal devel opments
on credi t, deposi ts, marketi ng and al l
tacti cal areas of the busi ness
An overvi ew of how suppl y chai ns are
evol vi ng at the l evel of di fferent
busi ness i ndustri es

Media Partner:
OPINION: REVIEW & OUTLOOK
A
merica has had the weakest eco-
nomic recovery in decades,
Chinas growth is slowing
sharply, and Japan is trying to break out
of a two-decade stagnation. But Ger-
many is the greatest threat to the world
economy?
Thats the impression you get from
the U.S. Treasurys semiannual report on
currencies and international economic
policy, which dings Germany for its
large and persistent current-account
surpluses and its lack of action to boost
domestic demand. Germanys GDP
growth has kept the euro-zone average
from sinking more than it has in the last
four years, yet in Treasurys eyes the
countrys robust exports are preventing
its neighbors from exporting their way to
recovery. If only the Germans were less
productive, the rest of the euro zone
might be able to catch up.
This complaint is familiar among Eu-
ropes Keynesians. But that doesnt make
it less perverse as a policy
prescription, for the euro
zone or for anywhere else.
Its true by definition
that one countrys exports
are anothers imports. But
it doesnt follow that a
country running a trade surplus is some-
how forcing other countries to run defi-
cits, or that its preventing those countries
from exporting as well. Within a free-
trade area with a single currency, firms
compete on the basis of price and quality.
Hence the main way for governments
in Europes crisis rim to reduce their
national trade deficits is to help their
exporters do better in the international
marketplace. That means lower taxes,
less regulation and more labor flexibil-
ity. Lisbon can create demand for Por-
tuguese exports much better than Ber-
lin can. Europes real
problem is that crisis-hit
countries exporters are
too weak, small or few to
competenot that Ger-
manys are too strong
and too many.
This landscape is starting to change
as a result of the crisis. Spains recovery,
such as it is, has been led by rebounding
exports, much of it to non-euro-zone
markets in Latin America and Africa.
Portugal is running a small trade sur-
plus, and Italy a larger one. Falling
wages in Greece are making its goods
more attractive abroad.
But the adjustment has a long way to
go, and sluggish economic reforms and
still-high levels of government and pri-
vate debt arent helping. The bigger story
behind the euro zones competitiveness
gap has to do with globalization. Eu-
ropes awful demographicsGermanys
not exceptedhave for many years made
it a dubious bet for future growth.
The big German companies recognized
this earlier than their Continental peers
and started looking outward, to China
and elsewhere. A decade ago, Gerhard
Schrders government helped firms ex-
pand by making it easier to hire and fire.
Germany is reaping the rewards of
those reforms today, and by encouraging
its neighbors to undertake similar policy
changes it is focusing the crisis-fighting
on the right European malaise. The U.S.
Treasury is undermining Americas eco-
nomic reputation by scolding Germanys
success.
A
United Nations commission is fi-
nally investigating human rights
in North Korea, and last week it
opened a window on the gruesome facts
it is discovering.
The commission has traveled to sev-
eral countries to hear the testimony of
North Korean exiles and experts who fol-
low the Hermit Kingdom. On Monday in
New York, Michael Kirby, the retired Aus-
tralian judge who is leading the probe,
said the evidence points to large-scale
patterns of systematic and gross human-
rights violations in North Korea.
One first-person account was deliv-
ered in Washington on Wednesday by Jo
Jin-hye. The young woman described
how most of her family had died of star-
vation in North Korea, including an in-
fant brother who succumbed in her arms.
An elder sister went to China, where the
family believed she was sold as a bride to
a man in another part of the country.
Ms. Jo fled with her mother and a
younger sister to China, where they were
arrested by Chinese police and repatri-
ated to North Korea. She was taken to a
detention center, where guards wearing
boots stomped on my bare feet. She
testified that she observed guards place
a plastic bag over the head of another de-
tainee: They did this several times until
he confessed. His crime? Like Ms. Jo, he
had left North Korea without permission.
As her testimony was ending, Ms. Jo
asked to make a final point. When people
hear about food shortages and other de-
privations in North Korea, she said, they
want to find a way to help. This is a
normal way to respond, she said. But
North Korea is not a normal country.
Sending humanitarian aid is a mistake:
By doing this you are just lining the
pockets of those who rule North Korea,
not the North Korean people them-
selves.
Several humanitarian organizations
dont operate in North Korea for that rea-
son. But the U.N. continues to send hu-
manitarian aid, such as $200 million in
food authorized in June. Mr. Kirbys reply
to Ms. Jo offers hope that the commission
might accept her wise advice. You can be
sure that we are considering the matter
you just raised, he told her. The commis-
sion will report its findings in March.
P
erhaps only a fellow member of
the former presidents club can ap-
preciate Mikheil Saakashvilis pain.
Georgias president is leaving power in
Tbilisi unpopular and unappreciated, but
we think history will be a kinder judge.
In 10 years running the Caucasus re-
public, Mr. Saakashvili made many mis-
takes but got the big things right. At 36
years of age, the Columbia Law grad led
the peaceful and democratic Rose Revolu-
tion in 2003. He brought energy and ideas
to a small war-ravaged nation struggling
to survive under Russias heavy paw.
He fired the traffic police and rooted
out a culture of petty corruption. He
made it easier to start a business and
make an honest buck than in any place
within several time zones. Georgias
economy grew 6% on average during his
tenure. He said Georgia belonged in
NATO and the EU. Democracy means
constantly outperforming yourself or you
are out on your backside, he told us in
2007. Thats as it should be.
As a charismatic leader of a nation
with shallow democratic traditions, Mr.
Saakashvili could be heavy-handed. He
overreacted to antigovernment protests
in 2007, shutting down a national televi-
sion channel. He survived a war with
Vladimir Putins Russia in 2008, but the
fight probably cost Georgia any chance of
reclaiming two breakaway regions.
After a decade in power, he wore out
his welcome. A billionaire foe, Bidzina
Ivanishvili, built the opposition Georgias
Dream movement, which routed Mr.
Saakashvilis ruling party in last years
parliamentary elections. Mr. Ivanishvili
has proven to be a sore winner, calling
on the president to resign and jailing
several of Mr. Saakashvilis allies on cor-
ruption charges.
Mr. Saakashvili has now served out his
second and last constitutionally allowable
five-year term. Last month, Georgians
elected a new president who is an Ivan-
ishvili ally. Mikheil Saakashvili will leave
office as Georgias George Washington,
having nurtured a transition to democ-
racy in a region where elected leaders too
often turn into dictators. Mr. Ivanishvili
can start to honor this achievement and
keep Georgia as a regional model by
dropping his political vendetta.
America Blames Germany
North Korean Horror Show
Georgias Washington
The U.S. Treasurys
Keynesians find
a growth scapegoat.
P
resident Obama traveled to Boston
on Wednesday to qualify his prom-
ise that Americans can keep their
health plans, but as usual he had to do
more. Forced to concede (implicitly) that
his famous claim is false, he accused
ObamaCares opponents of spreading a
lot of confusion and misinformation and
being grossly misleading, to say the
least.
And in Massachusetts Mr. Obama
tweaked his former unqualified promise
to say that his guarantee applied only to
the vast majority of people, adding
that the terminations were a central
premise of the Affordable Care Act from
the very beginning.
Mr. Obama went on to tell those who
are losing their choice of
coverage that the under-
insuredhis termget
a better deal under
ObamaCare, and anyone
who says otherwise is
defending the remnants of the old, bro-
ken system as if it was working for peo-
ple.
By the way, Mr. Obama spoke at Fa-
neuil Hall because thats where Mitt
Romney signed an ObamaCare prototype
into law in 2006. His political advisers
must have thought it was crafty for the
President to invoke the
former Governor as politi-
cal cover. On Wednesday
Mr. Obama cited Mr. Rom-
ney as a political model
who did the right thing
on health care and built this template
of proven, bipartisan success.
The Boston trip is a classic example of
the Obama political method and why his
Presidency is floundering only a year
into his second term. Amid a crisis of
government execution and policy design,
Mr. Obama doesnt address the flaws or
take responsibility.
Instead he hits the campaign trail to
blame Republicans once again for a fail-
ure they had nothing to do withand to
spin new political fables to replace the
old ones that even he can no longer utter
with a straight face. On his current be-
havior, the only time Mr. Obama is going
to act as if hes President is when he no
longer is.
A President Manqu
Suddenly, Obama
loves Mitt Romney.
MARKETS
New-Home Prices Rise
Octobers Acceleration in China Was Concentrated in Large Cities
SHANGHAINew-home prices in
China climbed in October, driven by
strong demand in major cities, defy-
ing property controls and highlight-
ing the challenges that policy mak-
ers face in keeping the market from
racing ahead.
Prices in 100 cities were up
10.7%, on average, year over year,
the highest rate since June 2011,
when private data tracker China
Real Estate Index System began
keeping records. In September,
prices rose 9.5% from a year earlier.
Month on month, prices acceler-
ated for the fourth time in a row
up 1.2% from September, when they
rose 1.1% from August, China Real
Estate Index System said on Friday.
The higher prices came despite
curbs on multiple home purchases
and higher down-payment require-
ments, but they are unlikely to trig-
ger any immediate government in-
tervention, analysts said.
Analysts said Chinese President
Xi Jinpings call last week for a
boost in housing supplywhile
avoiding any mention of rising
pricessuggests that the govern-
ment is willing to tolerate higher
prices and that further price con-
trols are unlikely in the near future.
Mr. Xi was quoted by the official
Xinhua News Agency at a meeting
with senior officials and property-
market experts.
This shows that central-govern-
ment officials are a little more in
tune with the market, trying to un-
derstand and steer the market
rather than build a dam against
housing demand, said James Mac-
donald, head of research at Savills
China, a property consultancy.
The acceleration in home prices
isnt taking place across the country.
Instead, it has been concentrated in
major cities, where there is a short-
age of housing, analysts and prop-
erty developers said.
Although land purchases by de-
velopers and construction starts
have picked up nationwide recently,
there is typically a nine-month lag
before those translate into sales.
Mr. Xi said the government must
focus on ensuring that needy people
have adequate housing, while a
tiered market should satisfy demand
in the rest of the housing sector.
China must boost the housing sup-
ply at all costs and make the hous-
ing needs of the masses a priority,
he said.
Government researchers and an-
alysts also said that policy makers
are focusing their efforts on long-
term measures. One is to increase
the supply of smaller and more-af-
fordable private housing, which
would take care of Chinas most vul-
nerable people at the bottom of the
economic scalea key political con-
sideration. Another would be to ex-
pand an annual tax on property
that, if kept at a low rate and rolled
out gradually, would send a signal
to the market without choking off
demand.
According to the China Real Es-
tate Index System survey, 75 cities
registered higher month-on-month
prices in October, compared with 79
in September.
Prices in Changshu, a city in
coastal Jiangsu province, grew the
fastest, by 3.9% over the previous
month. In Beijing, new-home prices
were 2.6% higher, moderating from
Septembers 3.8% rise.
Plans by the local housing bu-
reau in Beijing to ramp up supply of
cheaper homes changed expecta-
tions in the local property market,
China Real Estate Index System
said. In Shanghai, prices rose 2.4%,
up from Septembers 1.1% gain.
Property developers welcome the
more market-based approach in
tackling rapid price gains, noting
that administrative measures such
as curbs on multiple-home owner-
ship would slam the brakes on mar-
ket demand.
They also maintain that market
conditions in the bigger cities are
different from those in smaller ur-
ban areas, and policies should re-
flect this.
There is no need for the central
government to implement national
curbs. Rather, the local governments
should carry out their own property
policies, Zhang Yuliang, chairman
of Shanghai-based developer Green-
land Holding Group, said in an inter-
view last week.
BY ESTHER FUNG
Macquarie Holders to Get
Shares in Sydney Airport
MELBOURNE, AustraliaFlush
with excess capital, Macquarie
Group Ltd. will spin off a 1.4 billion
Australian dollar (US$1.32 billion)
stake in the countrys busiest air-
port to its shareholders.
Australias largest investment
banks roughly 17% stake in ASX-
listed Sydney Airport Holdings Ltd.
is by far the biggest investment on
its books. It has been looking to exit
the holding since it gave up man-
agement of what was then known as
Macquarie Airport in 2009.
The Sydney-based company con-
tinues to seek ways to recycle its
money, selling and buying assets
regularly, but isnt considering dis-
tributing any further assets to its
investors, Chief Executive Nicholas
Moore said Friday.
Theres no piece of fine timing
going on. There is nothing else so
big on the book, Mr. Moore said in
an interview, adding Macquarie de-
cided to hand about 340 million
shares in Sydney Airport to its
shareholders after considering the
health of the banks balance sheet.
Macquaries shares rose to a
four-year high on Friday, at A$53.10,
up 4.2% on the day against a modest
decline in the Australian market.
David Ellis, an analyst at Morn-
ingstar in Sydney, said the decision
to distribute one Sydney Airport se-
curity for each Macquarie share was
a smart way to pay a special divi-
dend to shareholders. It came on
top of what he said was an impres-
sive dividend of A$1 a share for the
six months through September, up
33% from last year.
Macquarie said Friday that its
net profit in the six months ending
Sept. 30 increased 39% to A$501
million, from A$361 million a year
earlier, as a strong performance of
its asset-management activities and
a pickup in initial public offerings
offset sluggishness in investment
banking. It expects a stronger result
for the full year, the bank said.
Mr. Moore said shareholders will
vote on whether to accept the
shares in Sydney Airport in Decem-
ber, and the bank wont know until
January the value of the airports
shares or whether it has made a
profit on the transaction. Sydney
Airport shares have been steadily
rising, climbing almost 20% in the
last 12 months.
A strengthened balance sheet
has allowed Macquarie to increase
its mortgage lending in Australia, a
highly competitive market.
Patrick Upfold, Macquaries chief
financial officer, told investors the
company would maintain diversified
funding sources and expand its de-
posits. He also said it had A$3.1 bil-
lion in excess of the industry regula-
tors minimum capital requirement.
BY ROBB M. STEWART
Macquarie has been looking to exit its 17% stake in Sydney Airport since 2009.
B
l
o
o
m
b
e
r
g
N
e
w
s
Asia Debt Issuance Gains Steam
A flurry of Asian companies sold
debt last week, taking advantage of
cheap borrowing costs and upbeat
investor sentiment after the U.S.
Federal Reserve said it would keep
up its aggressive monetary stimulus
for now.
Debt issuance in Asia has re-
bounded since early September, fol-
lowing a summer slowdown caused
by expectations that the Fed would
soon begin winding down the stimu-
lus that has kept global interest
rates low.
Issuers last week ranged from
Chinas biggest developer, China
Vanke Co., to Hong Kong lender
China Citic Bank International
Ltd., which sold bonds on Thursday.
Market sentiment has turned
more constructive as interest-rate-
hike concerns have subsided, while
the [U.S.] debt-ceiling woes last
month have further pushed back the
Feds pace of tapering in its mone-
tary stimulus, said Clifford Lee,
head of fixed income at DBS Group
Holdings Ltd.
Total bond issuance in Asia out-
side Japan, denominated in dollars,
euros and yen, reached US$16.5 bil-
lion in Octoberthe highest
monthly amount since May, when
the Fed first indicated that it might
soon start winding down its stimu-
lus program, according to data pro-
vider Dealogic.
sold US$300 million of subordinated
bonds that comply with tough new
global capital rules known as Basel
III. It was the second dollar-denomi-
nated, Basel III-compliant issue in
Asia. The bond, with a maturity of
10.5 years, was priced with a yield
of 6%. Subordinated bonds rank be-
low senior debt in repayment prior-
ity should an issuer default.
China Vanke became the first in-
vestment-grade Chinese issuer to
tap the Singapore-dollar bond mar-
ket. It raised 140 million Singapore
dollars (US$113 million), offering a
yield of 3.275% on a four-year bond.
The Canadian province of British
Columbia on Friday became the first
non-Chinese sovereign issuer of off-
shore yuan bonds, raising 2.5 billion
yuan ($410 million) from a bond
that offered a yield of 2.25%.
BY FIONA LAW
OPINION
Only three weeks have passed
since the end of the tea party-in-
spired government shutdown in
the U.S., yet already the groups
citizen activists find themselves in
the eye of another political storm.
Republican-oriented business
groups like the Chamber of Com-
merce and the National Retail
Federation are now threatening to
challenge tea party-favored pri-
mary candidates, especially if they
appear to be in the Ted Cruz
scorched-earth political mold.
These business interests and a
growing number of GOP insiders
are fed up with tea party tactics
that they believe have become a
negative political force for a Re-
publican Party that is now suffer-
ing record-low approval ratings.
One business leader recently com-
pared its influence to the Occupy
Wall Street crowd taking control
of the Democratic Party.
The tea partys answer to the
GOP establishment threats: Bring
it onwe arent backing down.
Thats the message I gleaned from
recent interviews with three of
the movements most prominent
leaders: Matt Kibbe of Freedom-
Works, Amy Kremer of Tea Party
Express and Jenny Beth Martin of
Tea Party Patriots.
After 20 years working behind
the scenes in Washington, Mr.
Kibbe is well-seasoned in political
warfare. Ms. Martin, a former
computer programmer and Home
Depot manager, and Ms. Kremer, a
former Delta flight attendant, are
relatively new to such conflict.
The two women are both mothers
living in Georgiaone of the
states where the tea party first
took root four years agoand they
reflect the groups typical profile:
white, middle class, well educated,
sick of politics as usual and driven
by a conviction that America must
be rescued from impending ruin
caused by Washingtons profligacy.
These three dont always agree
on tactics, and they often compete
for money and media attention.
But they share an overall assess-
ment of what is wrong with Wash-
ington and what needs to be done.
Like many local tea party activists
I have spoken with, they generally
view the government shutdown
not as a tactical blunder but as an
example of weak-kneed Republi-
cans muffing an opportunity to
roll back ObamaCare.
I dont have any regrets, says
Ms. Kremer, who attended the
original meeting in August when
Sen. Mike Lee of Utah unveiled
the plan to defund ObamaCare.
Mr. Kibbe is similarly unrepen-
tant. Asked what went wrong, he
replies: We just didnt anticipate
the Republican circular firing
squad in the Senate or the vicious
attacks directed at Mike Lee and
Ted Cruz. He still thinks the GOP
could have won.
Ms. Martin expresses sheer
frustration with the final outcome:
What would you expect? This
was the ruling eliteSenate Ma-
jority Leader Harry Reidnegoti-
ating with the ruling eliteSen-
ate Minority Leader Mitch
McConnell. Neither she nor Mr.
Kibbe nor Ms. Martin acknowl-
edges even the possibility that the
government shutdown was a
doomed strategy from the start.
Were their members demoral-
ized by the GOP cave-in? No, Mr.
Kibbe says, theyre energized. He
says FreedomWorks fundraising
has soared in recent weeks, and he
expects that the group will raise
up to $20 million this year. Other
tea party organizations report
similar surges in contributions.
Ms. Martin says her troops are
also fired up. I have never seen
our members so angry at the
elected Republicansespecially
Sens. McConnell and [John] Mc-
Cain. There is more than a hint
in these interviews that tea party
groups will redouble their efforts
to unseat Republicans who they
think waved a white flag during
the shutdown. Taking on incum-
bent Republicans is part of our
job, Ms. Martin says.
Critics say the tea party seems
to think that the other part of its
job is replacing incumbents with
candidates who are hapless neo-
phytesnot-ready-for-primetime
candidates like Sharron Angle in
Nevada, Todd Akin in Missouri
and Richard Mourdock in Indiana.
Republicans blame their defeats
for preventing a GOP takeover of
the Senate in 2010 and 2012.
Dont tell that to the tea party. Its
members are adamant that they
arent an appendage of the Repub-
lican Party. How do these critics
think Republicans won their land-
slide election in 2010? Mr. Kibbe
says. It was because of us.
He believes it is a false choice
to say that Republicans cant win
a governing majority by picking
principled free-market candi-
dates. And he shows me an elec-
tion spread sheet purporting to
show that in 2012, tea party can-
didates fared better than those
handpicked by the Republican es-
tablishment. Almost all our tea
party candidates won in 2010, he
says, while the big losers in 2012
were uninspiring moderate Repub-
licans in states like North Dakota,
Montana and New Mexico.
But Mr. Kibbe does admit: OK,
Indiana and Richard Mourdock
who defeated longtime GOP in-
cumbent Richard Lugar and then
lost in the general electionyou
can blame on us.
Ms. Kremer says, It doesnt do
us any good to have more Repub-
licans if they dont stand for our
principles. Our goal isnt to just
elect more, but better Republi-
cans.
She points to the election to
the Senate in recent years of Rand
Paul, Pat Toomey, Ron Johnson,
Marco Rubio and Mike Lee, all of
whom were aided by tea party
backing. She adds that when
George W. Bush was president and
Republicans controlled Congress,
Washingtons big-spending ways
never changed. Just electing poli-
ticians with an R next to their
name, she says, wont bring the
kind of seismic change thats
needed.
But it wasnt until the Obama
administration took over, with an
unprecedented spending spree
including the $830 billion stimu-
lus and plans for a fantastically
expensive health-care overhaul
that millions of Americans were
galvanized to take political action.
Many on the left and right
hoped that the tea party move-
ment would fizzle, but its influ-
ence, especially inside the GOP,
seems to have increased. Texas
Sen. Ted Cruz acknowledges that
the defund ObamaCare and gov-
ernment-shutdown power play
simply wouldnt have happened
without the organizing efforts of
activists across the country. Tea
Party Express, Tea Party Patriots
and FreedomWorks led this mobi-
lization. They have combined an-
nual budgets of more than $30
million and claim between six mil-
lion and 12 million active mem-
bers.
Whats next on their agenda?
Beyond still vowing to roll back
ObamaCarehow, precisely, isnt
clearMs. Kreme says one of our
immediate priorities is to enforce
the budget caps and sequester.
Even the defense cuts, which
many military hawks think could
endanger national defense? With
a $17 trillion debt, she says, ev-
erything has to be cut.
Unlike Reagan-era conserva-
tives, who supported rising bud-
gets for the Pentagon to ensure
military superiority in the Cold
War, the tea party sees the federal
debt itself as the main threat to
national security.
Mr. Kibbe identifies balancing
the budget as the paramount goal
for his members. Are they so ob-
sessed with eliminating deficits
that they would accept tax in-
creases to get there? No way:
Theres a definite supply-side
strain within the tea party, he
says, smiling. They want reve-
nues, yes, but through growth and
tax reform.
Its a mistake, though, to as-
sume that the tea party is a sin-
gle-issue movement. The focus on
federal spending reflects a general
distrust of almost everything that
happens in Washington. A theme
that emerges in talking with tea
party leaders and activists is that
under President Obama the fed-
eral government has increasingly
intruded on basic constitutional
rights. Its easy to discount this as
black-helicopter paranoia, but Ms.
Martin pointedly notes that Tea
Party Patriots and allied groups
were the subject of IRS targeting
and audits.
One typical and unfair criticism
of the tea party, as expressed once
by Nancy Pelosi, is that this is an
astro-turf, manufactured move-
ment, not a genuine localized
grass roots uprising. Nonsense. All
one has to do is attend a tea party
rally to see that the activists are
bus drivers, construction workers,
home makers, small business own-
ers and grandparents who have a
patriotic concern about the conse-
quences of trillion-dollar deficits
and bailout nation. As one activist
told me, All we want from our
government is less of it.
Now that the activists are fac-
ing friendly fire from mainstream
Republicans, the temptation to
start a third party might seem
tempting, but Mr. Kibbe quickly
dismisses the idea. Third parties
are a political disaster, he says,
citing the Bull Moose Party a cen-
tury ago, which split the GOP and
helped put the liberal Democrat
Woodrow Wilson in the White
House. More recently, Ross Perot
took votes from George H.W. Bush
and helped to elect Bill Clinton.
Mr. Kibbe says the tea partys
goal is to move the center of
gravity of the Republican party to-
ward an agenda of freedom and
limited government. He cites as a
model the modern-day progressive
lefts takeover of the Democratic
Party, gaining enough liberal influ-
ence to make Nancy Pelosi the
House Speaker and using a grass-
roots strategy to nominate Barack
Obama over the establishment fa-
vorite, Hillary Clinton.
The animus from the business
wing of the GOP doesnt scare the
tea party leaders. Ms. Martin
scoffs: Were not surprised big
businesses are opposing us. These
are mostly crony capitalists who
want something from govern-
ment.
Mr. Kibbe is similarly disdain-
ful: I used to work at the Cham-
ber of Commerce. The chamber
supported the original version of
HillaryCare back in 1993 and the
precursor to ObamaCare. They
supported the bank bailouts and
the Obama stimulus. We are not
for any of that. As for the pros-
pect of business backing candi-
dates specifically to challenge tea
party choices, Ms. Kremer says:
If its business money versus tea
party grass-roots activists, I like
our chances.
i i i
This us-against-the-world men-
tality turns off many people re-
garding the tea party and may
prevent it from gaining enough
traction with a big tent of voters
to realize its goals. Conservative
pollster Whit Ayres says of the tea
party, I wish they would remem-
ber the Reagan rule, if someone is
with me 70% of the time in poli-
tics, they are my friend.
Not the tea party. If youre 30%
not with them, that can be a deal
breaker. I would hope the busi-
ness groups would understand
that money alone doesnt buy
elections, Ms. Martin says. The
business groups need to work
with the tea party, not against it.
If these three activists are any
guide, and I think they are, then
the GOP is headed for an internal
brawl in 2014, and perhaps be-
yond. In the recent debt-ceiling
wrangle, the tea party seems not
to have realized where that fight
would lead. Before letting the clash
with establishment Republicans es-
calate into all-out war, the tea
party should step back and con-
sider an uncomfortable fact. In the
end, only one person will win that
war. Her name is Hillary Clinton.
Mr. Moore is a member of the
Journals editorial board.
[ Journal Interview]
with Matt Kibbe,
Amy Kramer and
Jenny Beth Martin
BY STEPHEN MOORE
The Tea Party Battles to Come
E
P
A
Three unrepentant veterans
of the shutdown brawl say
theyre eager for primary
election fights with a goal
of remaking the GOP.
Paul Beckett, Asia Editor
Dean Napolitano, Senior Editor
Miguel Gonzalez Jr., Senior News Editor
Hugo Restall, Editorial Page Editor
Wendy DeCruz, Institutional Sales
Charlotte Lee, Circulation Sales
Mark Pope, Advertising Sales
Anjali Kapoor, Marketing
Simon Wan, IT
Published since 1889 by
Dow Jones and Company
2013 Dow Jones & Company. All Rights Reserved
CORPORATE NEWS
Iron-Ore Tycoon Puts Next Bet on Nickel
PERTH, AustraliaTake an un-
loved commodity, land shunned by
global mining companies, a large
dollop of debt, and an optimistic
view of Chinese demand.
This recipe helped turn Andrew
Forrest into one of Australias rich-
est people and transformed his com-
panyFortescue Metals Group
Ltd.from a tiny iron-ore explorer
into the worlds fourth-largest pro-
ducer of the steelmaking material.
Now, Mr. Forrest is betting the
same strategy will work for another
out-of-favor commodity: nickel.
The industrial metal used to
make stainless steel has borne the
brunt of a steep decline in metal
prices this year, as demand fails to
keep pace with the amount of mate-
rial being produced by mines in
countries such as Australia, Russia
and Canada. Chinas retooling of de-
funct steel kilns to churn out a low-
grade version of the metal, known
as nickel pig iron, has also weighed
on prices.
Nickel prices fell as low as
US$13,205 a metric ton in July, half
of what the metal fetched two years
earlier and the lowest price since
May 2009. At US$14,600 a ton now,
it is down 14% this year, compared
with a 9% fall in both industrial
bellwether copper and iron ore.
Mr. Forrest, a 51-year-old whose
personal wealth is estimated by
Forbes at US$5.7 billion, has built a
32% stake in a small Australian de-
velopment company, Poseidon
Nickel Ltd. that aims to restart pro-
duction from a nickel deposit closely
linked to one of the worlds most fa-
mous commodity booms and busts.
In late 1969, a small-time pros-
pector, Ken Shirley, discovered a de-
posit of nickel at Mount Windarra,
northeast of the Western Australia
mining town of Kalgoorlie. Shares in
Mr. Shirleys company, known as
Poseidon NL, rocketed as high as
280 Australian dollars (US$264 at
current exchange rates), from just
$1.
But the stock plunged as quickly
as it rose. The price of nickel weak-
ened so much by the time that
Poseidon NL started mining that it
was eventually delisted from the
stock exchange and the mine was
taken over by Western Mining Corp.
Production was halted in 1991 and
the mine was mothballed.
Mr. Forrest has some unhappy
history with nickel as a commodity.
An early Australian venture, known
as Anaconda Nickel Ltd., raised
more than US$1 billion to pursue a
strategy of turning low-grade nickel
into something useful through pro-
cessing techniques used in Cuba. A
massive facility was built to process
minerals under extreme tempera-
tures and pressures.
But the plan unraveled when the
project ran into big technical snags,
which analysts later attributed to
design and construction flaws. Re-
peated shutdowns sent costs soar-
ing and the project never came close
to operating at full capacity. Share-
holders eventually forced Mr. For-
rest out in 2002, and the mine was
sold.
But Mr. Forrest says Poseidon
Nickel is a bet worth taking. Much
of the land around the Windarra de-
posits is untapped and he predicts
the price of nickel will rebound in
the long term.
Poseidon Nickel aims to restart a
mine at the Windarra site capable of
mining the commodity for at least a
decade. The companyvalued at ap-
proximately A$40 million, or
roughly US$37.8 millionis working
to secure more debt to restart pro-
duction, estimating as much as
80,200 tons of nickel metal remains
to be dug up.
Even as prices remain in the dol-
drums, nickel continues to turn up
success stories for risk-hungry in-
vestors. Sirius Resources Ltd., a
company that owes its success in
large part to one mans hunt for
wreckage from a National Aeronau-
tics and Space Administration space
station that crashed to Earth in the
Australian Outback in 1979, was
worth just A$8 million when it an-
nounced a major discovery of nickel
at its Nova prospect in Western
Australia state in July last year.
Now, it is valued at A$600 million.
The technical capability of the
metal is profound, Mr. Forrest said
in an interview. The number of
things it can do from turning iron to
stainless steel, to its capability of al-
most being able to heal itself, to its
ability to store energy, makes it an
exceptional metal.
Mr. Forrest took a similar view
on iron ore at a time when many in-
vestors showed little interest. When
he founded Fortescue in 2003, the
price of the steelmaking material
was just US$27 a ton. It now trades
at about $131 a ton, and peaked
above $190 in early 2011.
Still, many analysts disagree
with his outlook.
Along with aluminum, nickel has
the worst prospects of any metal as
output from new mines swamps the
market, according Deutsche Bank
analyst Michael Lewis. Consulting
firm Wood Mackenzie Ltd. has esti-
mated that about 40% of global
nickel output is unprofitable around
current prices.
Mr. Forrest said a recent deci-
sion to stand down as Poseidon
Nickel chairmanso he could con-
centrate on Fortescue and philan-
thropy, which included a A$65 mil-
lion donation to the University of
Western Australiashouldnt be
taken as a signal that his belief in
the companys prospects is waver-
ing. He isnt ruling out buying more
shares, currently valued at A$12.8
million.
Windarra has been part of the
historical Australian resources
psyche, and it would be wonderful
to get it back into production, said
Mr. Forrest, known widely by his
nickname Twiggy. I see myself as
a person whos just out there having
a crack.
BY RHIANNON HOYLE
Andrew Forrest of Fortescue Metals has built a 32% stake in Poseidon Nickel, an Australian development company.
A
g
e
n
c
e
F
r
a
n
c
e
-
P
r
e
s
s
e
/
G
e
t
t
y
I
m
a
g
e
s
Glencore to Sell Copper Stake
SYDNEYGlencore Xstrata PLC
is selling its majority stake in one of
the Asian-Pacific regions biggest
unmined copper deposits, the latest
in a flurry of asset sales across the
mining industry that suggests deal-
making might be picking up as some
commodities rebound.
Australian copper- and gold-min-
ing company PanAust Ltd. said Fri-
day it would buy the Frieda River
deposit in Papua New Guinea from
Switzerland-based Glencore for as
much as US$125 million, including
an initial payment of US$75 million
and a royalty of as much as US$50
million once a mine is operating.
A series of asset sales in recent
months has followed a notable lull
in deal-making over the past year as
mining companies struggled with
falling commodity prices and rising
costs.
Last month, Glencore and Sumi-
tomo Corp. of Japan agreed to buy
Rio Tintos stake in the Clermont
coal mine in eastern Australia for
about US$1 billion.
South African mining company
Gold Fields Ltd. recently agreed to
buy three mines in Australia from
Canadian peer Barrick Gold Corp.
for about US$300 million, while Rio
Tinto agreed to sell its controlling
stake in the Northparkes copper-
and-gold mine in Australia to a Chi-
nese company for US$820 million.
Also on Friday, BHP Billiton said
it had signed an agreement to sell a
coal mine in New Mexico to the Na-
vajo Nation, a Native American com-
munity, for roughly US$85 million,
part of the mining companys effort
to drive down costs and exit smaller
operations around the world.
According to a midyear report by
Ernst & Young, there were only 350
merger-and-acquisition deals across
the global mining sector in the first
half of 2013, down 30% from a year
earlier. At the time, the consultancy
said a sustained improvement in
commodity prices was needed to
trigger increased buying interest
during a period when some of the
worlds biggest mining companies
were starting to shop around for un-
wanted assets.
Since then, the values of many
commodities, such as iron ore and
copper, have rebounded as Chinese
imports climbed and fears of a
sharp slowdown in the worlds No. 2
economy abated. Copper is up 10%
since its year-to-date low in June.
Gold is about 7% higher.
PanAust said it would take an
80% interest in the Frieda River
project. The remaining 20% is con-
trolled by joint-venture partner
Highlands Pacific Ltd. PanAust has
also agreed to take a 7.5% stake in
Highlands for A$5 million (US$4.7
million). The Wall Street Journal re-
ported in August that the company
was in talks with Glencore to pur-
chase its stake.
PanAust is no stranger to operat-
ing mines in impoverished South-
east Asian nations lacking infra-
structure and skilled workers. It has
two active pits in Laos that produce
copper and gold, and the Brisbane-
based company accounts for about
30% of that countrys exports.
From a strategic point of view,
Frieda River provides us with the
basis for growing production be-
yond our current mine life in Laos,
PanAust Managing Director Gary
Stafford said in an interview.
Glencore inherited the Frieda
River project through its multibil-
lion-dollar takeover of Xstrata PLC
earlier this year, but has signaled a
preference for owning active mines
that produce commodities it can sell
through its trading arm. It has been
reviewing its assets since its acqui-
sition of Xstrata.
Xstrata had estimated a mine at
the Frieda River site, in northwest
Papua New Guinea, would cost more
than US$5 billion to build and could
produce 204,000 metric tons of cop-
per and 305,000 troy ounces of gold
annually in an operation lasting
about two decades.
PanAust said it was targeting a
smaller operation there, however.
The company said it intended to
spend as much as US$1.8 billion to
produce closer to 100,000 tons of
copper and 160,000 ounces of gold a
year, over at least 18 years.
BY RHIANNON HOYLE
Chinese Firm to Operate
4 Ore Freighters for Vale
BEIJINGState-owned Shan-
dong Shipping Corp. has signed a
$500 million deal with Vale SA that
would allow the Chinese company to
operate four of the Brazilian miners
fleet of giant iron-ore freighters,
known as Valemaxes.
The agreement, announced Fri-
day by Chinas official Xinhua news
agency, appears to signal a break-
through in the fortunes of a class of
ships designed to serve the Chinese
market but still legally blocked from
docking at the countrys ports.
The deal allows Shandong Ship-
ping to take over the operations of
four Valemax vessels weighing in at
400,000 deadweight tons each.
It wasnt immediately clear if
Shandong would own the vessels
outright or lease them from Vale.
A spokesman for Shandong Ship-
ping wasnt available for comment
Friday, but an official at the com-
pany confirmed the Xinhua report.
The ships, the worlds largest
freighters, were developed by the
Brazilian mining giant as a means of
reducing shipping costs which are
higher than those of Australian ri-
vals BHP Billiton and Rio Tinto be-
cause of Vales longer distance from
China.
Use of Valemax vessels, first
launched in July 2011, was almost
immediately scuttled as Chinas
transport ministry, responding to
concerns about competition from
some of the countrys largest ship-
owners, including state-owned
China Ocean Shipping (Group) Co.,
barred them from local berths. The
ministry cited safety worries.
Chinese ports are limited to al-
low ships as big as 300,000 dead-
weight tons, though some ports have
moved to build facilities that could
handle vessels as large as a Valemax.
Ore customers, including Chinas
steel industry, have argued the ships
ultimately might mean more abun-
dant, and therefore less expensive,
iron ore. That lead authorities in Au-
gust to float a draft of amendments
to the law banning Valemax vessels.
Its been more than two years
now of this kerfuffle going on, said
Macquarie Securities analyst Bonnie
Chan. This is a further sign of re-
laxation in the restriction, of a pos-
sible shift [in policy] coming in.
On Friday, a ministry official in
the department handling the amend-
ments said a first round collating
government and industry feedback
on the proposed changes had been
completed and a second round is be-
ing prepared. A final decision on the
revisions is likely by year-end.
A spokesman for Vale in China
declined on Friday to comment on
the news.
BY CHUIN-WEI YAP
OPINION
Nearly a quarter of a century
ago, the nuclear-policy strategist
Albert Wohlstetter wrote in these
pages a fine essay titled The Fax
Will Make You Free. In the 1980s,
as he noted, the CIA, working with
the AFL-CIO and restive Eastern
European labor unions, put fax
machines to excellent use under-
mining Soviet rule. That particular
technology is now ancient, but
Wohlstetters bigger point remains
valid: Technological innovations
that vastly expand the amount of
information we can transfer to
one another are fundamentally
revolutionary, for good or ill.
Smartphones are the new faxes
and, for many all over the globe,
especially the young, their phone
is their source of news, their gro-
cery store, their means of talking
with absent friends and family,
their bank, their movie theater. It
is at the core of their lives and
their sense of personal freedom. If
the United States government
wanted to collect intelligence on
Germanys leadership, it could not
have picked a method more likely
to stir wide outrage than tapping
the personal phone of a politically
popular democratic leader.
And in targeting Chancellor
Angela Merkel, the U.S. picked
someone who grew up dodging
East Germanys Stasi secret police
in order to talk honestly to
friends. The U.S. has not denied
that the monitoring occurred in
the past and some media reports
say it went on for a decade. If so,
we have been sitting on a powder
keg for years.
Some Europeans are now being
candid about their own espionage,
including against the U.S. Bernard
Squarcini, the head of French in-
telligence until last year, recently
told Le Figaro that the French In-
telligence Services know full well
that all countries, whether or not
they are allies in the fight against
terrorism, spy on each other all
the time.
Many of the recent blasts of al-
lied indignation thus ring quite
false, especially since it appears
that much of the National Security
Agencys collection involved basic
information called metadata, such
as the date sent and the sender
and receiver addresses, not the
message content itself. Chancellor
Merkels Germany, however, has
not to the best of my knowledge
perpetrated the kind or degree of
intelligence collection against
America that some other U.S. allies
inside and outside Europe have.
The intelligence business is not
a competition to avoid collecting
intelligence. In particular, we
should be getting the lowdown on
hostile regimes and the govern-
ments that deal with them. Keep-
ing an eye on allies has always
been part of the effort as well. Yet
there is no doubt that the U.S. has
taken a heavy blow regarding our
part in this wild dance of spies
especially from the monitoring of
Chancellor Merkels phone.
The episode poses its greatest
danger if it seriously damages
Americas ability to obtain badly
needed allied intelligence and al-
lied help in dealing with terrorism
and terrorist-backing states. We
are doubly at risk of losing that
sort of cooperation because our
allies are already wary of the U.S.,
having seen less American leader-
ship in recent years on a number
of important issues.
Syria is probably the most dra-
matic case of the U.S. not even
leading from behind but rather
stumbling along behind. Wavering
American leadership has also led
the Europeans to fear that their
tough economic sanctions on Iran
may be subjected to a pre-emptive
weakening, now that the Obama
administration is avidly pursuing
talks with Tehran over its nuclear
program. The Europeans also have
not forgotten that in 2009 the
Obama administration abandoned
plans to install antiballistic-missile
sites in the Czech Republic and Po-
land, to the deep concern of both
nations and to Moscows delight.
In addition to Frances being a
far better leader than the U.S. on
Syriathey were ready to punish
Bashar Assad for his chemical-
weapons use, no need for a parlia-
mentary vote of approvalthe
French also took charge in Mali
earlier this year to combat Isla-
mist rebels. Germany has long
stood beside us in Afghanistan. In
short, our allies over the past sev-
eral years, almost always includ-
ing Britain, have taken action that
is in Americas interest on more
than one occasion.
But they have also rather fre-
quently seen the U.S. make unilat-
eral concessions to enemies and
refuse to lead. At our worst, we
have suggested by our behavior
that it is better to be an enemy of
the United States (Assad) than a
friend (Hosni Mubarak).
Because of this history, the U.S.
must take steps to bolster a spirit
of trust and cooperation with its
allies. A restoration of American
leadership would do much to help
on that front, as it did during the
Cold War, when the U.S. would
show initiative and assumed,
rightly, that its allies would fol-
low. With America and its allies
battling the global terror threat,
no less sense of direction from
Washington is needed.
But even in the absence of such
leadership, the U.S. can take an-
other step to build necessary
bridges with its allies. America al-
ready is part of the decades-old
Five Eyes pact with Britain, Aus-
tralia, Canada and New Zealand,
agreeing to share intelligence and
not to spy on each other. The U.S.
should accede to recent requests
from Germany and France to join
the group.
Taking such a step would not
be popular in some corners of the
intelligence community. But if the
U.S. is already going to stand
down on intelligence efforts and
military capability because of the
costs imposed by sequestration,
world-weariness, or other reasons,
then we must stop and take stock
of where intelligence now fits in
the nations interests. If President
Obama is not going to lead in the
way that successful leaders always
have, the U.S. must figure out
other means of enhancing the
support of major allies. For these
seven nations to agree not to spy
on one another is, in these cir-
cumstances, a reasonable direc-
tion to take.
Chancellor Merkel should be
able to use her phone with the con-
fidence that at least the Americans
are not among those listening in.
Amb. Woolsey is the chairman of
the Foundation for Defense of
Democracies and a venture part-
ner with Lux Capital. He is a for-
mer director of Central Intelli-
gence.
Why Spying on Merkel Is So Damaging
BY R. JAMES WOOLSEY
Sochi, Russia
Last time Russia prepared to
host the Olympics, Leonid Brezh-
nev briefly considered canceling
the whole thing. Besides the enor-
mous cost, he wrote to party offi-
cials in 1975, according to archives
since declassified and published in
the Russian press, there may be
all sorts of scandals that could tar-
nish the Soviet Union. In the end
Brezhnev neednt have worried. A
U.S.-led boycott of the Moscow
1980 Summer Games kept away
most prying Western eyes.
Russia these days is much
richer, somewhat freer and led by
a man whod apparently rather
spend the sum of a small war than
cancel a single event of the Sochi
2014 Winter Games, which begin
in February. But after six years
and the most extreme cost over-
runs in Olympic history, Vladimir
Putin is still waiting for contrac-
tors to finish the main stadium
and other key infrastructure.
Money has been no object: Alto-
gether, Russias public and private
Olympic spending is currently
projected at 1.5 trillion rubles
($47 billion), from an initial bid
estimate of 313.9 billion rubles.
I visited the Black Sea resort in
mid-October to see where the time
and money had gone. Sochi re-
mained an Olympic-sized hard-hat
zone, but Russian organizers who
escorted me through the venues
explained that journalists are miss-
ing the point when we ask about
the most expensive, the most
wasteful or even the most corrupt
Olympics ever. Better, they sug-
gested, to think of Sochi 2014 as
the most successful large-scale
construction program in living
Russian memory.
My tour began at the Guest
House Villa Dj Vu, about 10 kilo-
meters outside the main Olympic
Park, where an Organizing Com-
mittee official collected me in a
Sochi2014-branded Volkswagen.
Do you understand that seven
years ago there was nothing
here? she asked as the car weaved
through traffic on half-paved
roads, surrounded by cranes and
earth movers.
The doe-eyed brunette declined
to be quoted by nameonly by or-
ganization, she instructed, along
with most of the other officials on
the tour. Hundreds of erstwhile
residents would no doubt quibble
with her, having been forcibly relo-
cated to make way for beach-side
ice rinks.
But her point is clear. Along
with 30 new venues directly re-
lated to the Games and scores
more hotels, transport hubs and
medical facilities, the city of fewer
than 400,000 people also needed
about 1,500 new kilometers of util-
ity networks and communication
lines to accommodate the sporting
extravaganza. To pull it off without
blackouts, the city is more than
doubling its grid capacity.
Inside the park we drove by the
main stadium, still draped in scaf-
folding. The stadium is in the final
stages of construction and will be
ready in plenty of time to host the
Opening Ceremonies in February,
the Organizing Committee official
said. However, she added that
safety concerns precluded my get-
ting within a 100 meters of it or in-
terviewing the laborers.
Our tour was joined by a repre-
sentative from Olympstroy, the
state company created in 2007 to
handle most of the venue work.
Since then Olympstroy has gone
through three presidents and
spawned more than 200 contractors
and sub-contractors. In March the
Russian Audit Committee flagged
that Olympstroy officials had cre-
ated the conditions for an unjusti-
fied increase in the estimated cost
of the sport facilities to the tune of
a half-billion U.S. dollars.
Leading me around the circle of
dirt that had yet to be transformed
into a medals plaza, the Olymp-
stroy official explained that any
suggestions of graft are bogus be-
cause at Olympstroy there is a
multi-layered anti-corruption sys-
tem. And what of the organiza-
tions multiple presidents? The
state chose the best people for
each phase of the work.
Entering the Iceberg Skating
Palace, a 12,000-seat arena un-
veiled last year, the Olympstroy of-
ficial turned to me with an exas-
perated smile. This is the first
time in history there will be a team
event in figure-skating, he said.
Thats much more interesting
than criminal things. Is it? He
continued: While ice rinks usually
have only one area for kiss-and-
crythe spangled histrionics that
help make figure skating such
great televisionthe Iceberg will
have 10 kiss-and-cry zones, one
for each finalist team.
Asked how these features af-
fected the price tag, the Olymp-
stroy official replied I dont know
how much it cost. I dont even
know my own budget. Olymp-
stroys media team did not address
emailed follow-up questions about
the latest cost estimates for its
venues. But they did send a press
kit noting that the Iceberg, billed
elsewhere as a moveable venue,
contains twice as much steel ton-
nage as the Eiffel Tower.
We moved on to the Bolshoi Ice
Dome, another new state-of-the-art
arena thats been open all year.
There we met venue sports man-
ager Natalya Cherepanova, the only
Olympic-related official who agreed
to be named for this article. After
the Games are over and the crowds
have left, Ms. Cherepanova en-
thused, the arenas specially de-
signed maroon-and-grey seating
will give journalists the impression
of a full arena, even if its not full.
A new 264 billion ruble ($8.2
billion), 48-kilometer motor-and-
rail road will link the coastal are-
nas to the Alpine venues in the
West Caucasus. For the same price,
Russian Esquire worked out, the
road could have been paved 4.7
centimeters thick with mink fur.
But it will cut travel time between
the beach and the slopes to under
an hour from 90 minutes.
A press official for Russian Rail-
ways, the state monopoly oversee-
ing the project, clarified in an
email that the road is being con-
structed in an area without any en-
gineering infrastructure, meaning
theyve had to build 35 kilometers
of temporary road to get it done.
As for the delays, the rail official
compared the Sochi 2014 timeline
to 1967, when the Brezhnev Krem-
lin set out to build 29 kilometers
of new rail tunnels between south-
eastern Siberia and the Tartar
Strait. The project was meant to be
finished in 1984. In 2003, it was.
The tour ended and the Volks-
wagen Olympic-mobile dropped me
back off at the Dj Vu. Staffers
and drinkers at the guest house
pressed for details on the Olympic
Parks progress. Amid the racket of
nearby street crews, we agreed
that even if $47 billion cant finish
the job on time, Mr. Putin will.
Miss Jolis is an editorial page
writer for The Wall Street Journal
Europe.
At the Bolshoi Ice Dome, seats will
appear full even when theyre not.
A
n
n
e
J
o
l
i
s
BY ANNE JOLIS
The Putin Olympics
The White House leadership
vacuum has made
Europeans wary.
The surveillance scandal
strengthens their doubts.
What has $47 billion bought
for the 2014 Winter Games?
CORPORATE NEWS
India Presents IBM
With a Big Tax Bill
NEW DELHIIndia has asked In-
ternational Business Machines
Corp. to pay 53.57 billion rupees
($865 million) in taxes, a senior in-
come-tax official said Friday, making
it the latest global company to be
targeted by Indian tax authorities.
The tax bill, sent to IBMs India
unit last Monday, alleges that the
company underreported income for
the financial year ended March
2009, said the official.
He said tax authorities estimate
IBM India reported only 20% to 30%
of its actual income in India for that
year.
IBM is in the process of appeal-
ing the tax bill, an IBM India spokes-
woman said Friday. The U.S.-based
company doesnt break out its re-
sults by country.
The case is the latest in a series
of disputes between Indian tax au-
thorities and many of the multina-
tional corporations that have made
large investments in the South Asian
nation.
Phone maker Nokia Corp., British
telecommunications company Voda-
fone Group PLC, brewer SABMiller
PLC, Royal Dutch Shell PLC, Monde-
lez International Inc.s Cadbury busi-
ness and BMW AG have been served
notices for unpaid taxes in recent
years. The companies are all disput-
ing the tax claims.
India isnt the only country to
pursue multinational corporations
for allegedly avoiding taxes. Star-
bucks Corp. this year paid corporate
taxes in the U.K. for the first time
since 2008, under pressure from the
British government amid concerns
that the U.S.-based cafe chain was
using tax loopholes and its interna-
tional operations to lighten its tax
bill in Britain.
Governments across the globe
are looking at ways to shore up rev-
enue, said Jayesh Sanghvi, Ernst &
Youngs head of international tax
services in India.
India needs to reduce its fiscal
deficit and one way it is doing that
is by scrutinizing deductions, he
said. The evolving interpretation of
how taxes are calculated is making it
tough for some companies to do
business.
Tax is a cost of business, Mr.
Sanghavi said. When the cost is un-
certain it is difficult to budget it.
Indian tax authorities and Voda-
fone have been stuck in one of the
countrys highest-profile tax battles
for years.
Vodafone was issued a more
than $2 billion tax bill after it pur-
chased the Indian cellular operations
of Hong Kong conglomerate Hutchi-
son Whampoa in 2007.
Mukesh Jagota
BY R. JAI KRISHNA
AND SEAN MCLAIN
Suntech Agrees to Sell
Unit for $492 Million
BEIJINGSuntech Power Hold-
ings Co. agreed to sell its core as-
sets in China for three billion yuan
($492 million) to a smaller rival, at-
tempting to pay back creditors after
defaulting on billions of dollars in
debt.
Shunfeng Photovoltaic Interna-
tional Ltd. said Sunday that it won
a bid to acquire the main Chinese
unit of Suntech, once the worlds
largest solar-panel supplier.
The unit, Wuxi Suntech Power
Co., owns intellectual property,
more than two gigawatts of solar-
panel manufacturing capacity and a
research-and-development opera-
tion, according to people familiar
with the company.
Suntech, which has struggled
amid a global overcapacity of solar
panels and falling prices, defaulted
on $541 million in U.S. convertible
bonds in March. That triggered de-
faults on its Chinese debt and put
Wuxi Suntech into bankruptcy pro-
ceedings in China. Including the
bonds, Suntech holds more than
$2.3 billion in mostly Chinese debt.
Shunfeng said that it paid a 500
million yuan deposit to acquire
Wuxi Suntech. The deal is subject to
the approval of Shunfengs share-
holders and the local court super-
vising Wuxi Suntechs restructuring.
Shunfeng said it would pay the bal-
ance of the purchase price within a
month of getting approval for the
deal.
The company said it also would
pay $25 million to a government-
controlled investment company,
Wuxi Guolian Development Group
Co., which is based in Suntechs
hometown of Wuxi. The payment
would come from Wuxi Suntech
within three months after the acqui-
sition. Guolian has been helping to
oversee Suntechs restructuring and
last week pledged to invest $150
million in Suntech. Suntechs latest
chief executive, who assumed the
role in September, is a former Guo-
lian executive.
As part of the deal announced
Sunday, Shunfeng said it would ab-
sorb Wuxi Suntech losses of up to
20 million yuan a month between
March 20 and Oct. 31. It also would
provide funds for upgrading Wuxi
Suntechs facilities within two years.
Suntech declined to comment.
Shunfeng last year shipped 206
megawatts of solar equipment,
while Suntech shipped 1.8 gigawatts,
according to their annual reports.
It wasnt clear whether U.S.
bondholders would see any proceeds
from the Shunfeng deal. Chinese
creditors, who are owed at least
$1.75 billion, likely would be first in
line to recover their investments.
U.S. bondholders with about $1.5
million in Suntech bonds last month
petitioned a court in New York to
put Suntech into bankruptcy pro-
ceedings in the U.S.
Suntech said last week that it
would contest the move.
BY WAYNE MA
Smaller rival Shunfeng Photovoltaic agreed to buy Suntechs China assets. Above, a Suntech line in Wuxi, China.
R
e
u
t
e
r
s
Japan Inc. Gets a Reality Check
up 37% in the year, as investors bet
that this time, Japan will shake off
its doldrums.
But Nissan and Sony are supply-
ing a reality check for some short-
term investors.
There are still so many uncer-
tainties ahead: the health of the
economies in the U.S. and in China,
the impact of the sales tax hike next
year, and then there are the individ-
ual risks each company faces, said
Yoshihiro Okumura, general man-
ager at Chibagin Asset Management.
Mr. Okumura said Sony and Nis-
san alone wont dent interest in Ja-
pan from long-term overseas inves-
tors. Its just that the winners and
losers will become very clear, he
said.
Sony and Nissan are two of the
big standouts in an earnings season
that is still relatively upbeat. Based
on results logged by the 532 compa-
nies listed on the first section of the
Tokyo Stock Exchange that reported
second-quarter earnings results as
Continued from first page of Thursday, net profit at nonfinan-
cial firms nearly quadrupled in the
April-September period from a year
earlier, helped by a yen that at the
end of September was 26% weaker
than a year ago, according to SMBC
Nikko Securities Inc. The weak yen
has been a crucial driver in higher
earnings and stock prices for the ex-
port-led economy, as the cheaper
currency makes Japanese goods
more competitive in global markets.
Led by electronics- and auto-sec-
tor companies, almost 30% of the
firms raised their annual forecasts.
But even when they did make up-
ward revisions, Japanese firms were
ultraconservative, considering the
strength of first-half earnings. For
the full business year, the surveyed
companies on average revised
higher their net-profit outlook by
2.4%.
And, like Nissan and Sony, 15% of
companies reporting so far have cut
their forecasts, despite all the opti-
mistic news.
Machinery makers have led the
downward revisions so far, but a
clear line divided the winners and
losers in the sector. Excavator-
maker Komatsu Ltd. cut its outlook
last Monday, after logging a profit
drop on weak demand for its mining
equipment. That was in contrast to
rival Hitachi Construction Machin-
ery Co., which posted a rise in profit
and kept its outlook unchanged.
Prime Minister Shinzo Abes re-
flation policies and a weaker yen
help investors differentiate the ex-
porters that worked hard and whose
growth strategies are right from the
ones who got their strategies
wrong, Daiwa Securities Senior
Strategist Eiji Kinouchi said.
Companies cant use the strong
yen as an excuse anymore, he said.
I think this will put pressure on un-
derperforming companies to actu-
ally do something.
Fortescue Aims to Speed Repayment of Debt
the company has opened talks with
lenders to renegotiate a US$5 billion
credit facility that is due to mature
in four years, aiming to cut the
amount it has to pay on interest.
Fortescue Chief Financial Officer
Stephen Pearce said last month that
more than US$1 billion in debt could
be repaid by early next year, build-
ing to several billion dollars by the
end of the year.
I think they will probably do it
quicker than they are saying, Mr.
Forrest said from Fortescues offices
in Perth, Western Australias capital
and a gateway to the states mining
hubs. Certainly that risk, if you
like, on the balance sheet is behind
us.
Mr. Forrest plans to keep buying
company shares, he said.
Despite taking on the part-time
chairmans role, he remains closely
involved in the companys opera-
tions, with a goal to visit the Pilbara
mines twice a month.
A small partition separates his
desk from that of Chief Executive
Nev Power in the center of an open-
Continued from page 15 plan office. A screen with live feeds
to parts of Fortescues sites and
port facilities adorns the nearest
wall.
Investors said Fortescues deci-
sion in August to back away from a
potential multibillion-dollar sale of
a stake in its port and rail assets
was a sign of confidence about its
ability to repay its debt, even as
many banks forecast that Chinese
demand would soften. Fortescues
reintroduction of its annual divi-
dend, after suspending payouts in
the wake of last years slump in
iron-ore prices, also boosted senti-
ment.
I suspect Mr. Forrest has been
through too many times when the
stock has been crushed under the
debt load, so I think theyll carry on
with that reduction as quickly as
they can, said J.P. Morgan Asset
Management fund manager Neil
Gregson, who oversees about US$3.5
billion in natural resources invest-
ments and owns shares in Fortes-
cue.
Still, Fortescue isnt out of the
woods yet, he said, especially as
many analysts expect iron-ore
prices to fall over the next two
years.
Goldman Sachs forecast prices
would decline from above US$130 a
ton now to just US$108 a ton next
year as new supply becomes avail-
able, such as ore from Fortescues
Kings and Firetail mines. By 2015,
prices could fall as low as US$80 a
ton, the bank said.
If you were to see a US$20-
US$30 drop in the iron-ore price,
then you can be sure everyone whos
recently turned positive on Fortes-
cue would start talking about how
big the debt levels are once again,
Mr. Gregson said.
Japan Inc.s Outlook
How Japanese companies that have
so far reported earnings for the
Sept. 30 quarter have changed their
forecast for the current scal year
ending March 31.
Source: SMBC Nikko Securities Inc.
Maintained
56%
Increased
29%
Decreased
15%
Total rms
532
Mr. Forrest has been
through too many times
when the stock has been
crushed under the debt.
Neil Gregson, J.P. Morgan
IN DEPTH
To Suburbs of Syrian Capital
Their Growing Strength Further Transforms a High-Stakes Battle for Control of Damascus
I
slamist rebels, including some with links to
al Qaeda, are fast gaining strength in sub-
urbs encircling the Syrian capital, despite
a chemical-weapons attack two months ago
on one of their strongholds.
Since early September these groups have
claimed responsibility for several suicide-
bomb attacks against regime targets in and
around Damascus. They have dramatically in-
creased mortar and rocket attacks on regime-
held residential neighborhoods within the
capital and have raided nearby towns and vil-
lages inhabited by minorities, including
Christians.
In late October, these rebels blew up a gas
pipeline feeding a power plant on the out-
skirts of Damascus, causing a complete black-
out in the capital and most of Syria for sev-
eral hours before the damage was repaired,
according to government officials and resi-
dents.
While riven by leadership rivalries and
competing agendas, the Islamist rebels share
the goal of toppling President Bashar al-As-
sad and establishing Islamic rule. Their
strengthening around Damascus further
transforms a high-stakes battle for control of
the capital and illustrates how Islamist
groups have again extended their influence at
the expense of the more-moderate groups
that led the early stirrings of rebellion
against the regime.
The rise of Islamist groups around Damas-
cus has also helped give the Syrian regime
and its battlefield allies, including the Iran-
backed Lebanese group Hezbollah, more do-
mestic political cover to forge ahead with
military operations aimed at rooting out what
they regard as terrorists at the doorsteps of
the capital.
During a meeting with United Nations-
Arab League envoy to Syria Lakhdar Brahimi
in Damascus on Wednesday, Mr. Assad said a
proposed peace conference in Geneva this
month will achieve little unless Western and
Arab states stop funding rebels whom he
called terrorists.
Many Damascenes living in regime-held
areas, where the government has worked
hard to maintain aspects of normal life,
would agree. In interviews, many say they
support all measures to keep Islamist rebels
at bay, and view Mr. Assad as a savior from
extremists.
The thing that will give us peace and se-
curity is if they are all exterminated, said a
Christian resident of a neighborhood on the
eastern side of Damascus. State media and lo-
cal residents say rebel mortars killed eight
people in the neighborhood in early October.
Residents in rebel-controlled communities
around Damascus, meanwhile, increasingly
see Islamists as their only protectors from re-
gime forces laying siege to their enclaves.
The situation is so dire now in some of
those areas that some clerics there have is-
sued fatwas, or religious edicts, permitting
the eating of cats and dogs to fend off starva-
tion.
In September, pro-regime forces touted
what they described as the cleansing of two
rebel-held towns south of Damascus, with op-
position activists accusing them of executing
more than 100 people, mostly rebel fighters.
The regime says it killed terrorists there and
showed graphic images of disfigured bodies
on state television.
Last week, regime forces recaptured the
predominantly Christian town of Sadad,
about 100 kilometers northeast of Damascus,
after it was overrun by Islamist rebels two
weeks ago, according to residents, opposition
activists and state media.
Islamists including al Qaeda-linked fac-
tions long ago gained ground in northern and
eastern Syria. But Damascus is more impor-
tant strategically to the regime, since it is the
governments seat of power and the symbol
of its authority.
Many opposition activists who describe
themselves as moderates and secular say the
situation in Damascus is a culmination of a
regime strategy adopted at the start of pro-
tests against Mr. Assad in March 2011 de-
signed to kill and imprison peaceful activists
or force them to flee. These activists say
those tactics ultimately empowered radical
Islamists, allowing them to fill the vacuum
when moderate figures disappeared.
These same activists say Western nations,
particularly the U.S., are also to blame for not
intervening more forcefully or arming moder-
ate factions early in the conflict. They say
Washingtons decision not to strike the re-
gime for its suspected use of chemical weap-
ons in the Damascus area and to opt instead
for a deal with Mr. Assad to dismantle Syrias
chemical-weapons arsenal has emboldened
both the regime and the Islamists.
Mr. Assads government has denied using
chemical weapons. U.S. officials have insisted
they have done everything they could to
unite and bolster moderate opposition forces.
The largest Islamist rebel group in the Da-
mascus area is the Army of Islam, which
claims over 10,000 fighters in the suburbs
alone.
The Army is headed by Zahran Alloush, a
religious preacher previously imprisoned by
the regime. In September he was anointed
commander in an elaborate ceremony dating
back 14 centuries to the time of the Prophet
Muhammad, that was held in an indoor soc-
cer field in an eastern suburb and broadcast
on pro-rebel television.
He has since worked to consolidate his
grip on the area east of Damascus through a
local administration adhering to Shariah, or
Islamic law.
Mr. Alloush has openly declared his goal
of establishing an Islamic state in Syria in
which the countrys minorities must submit
to the rule of the Sunni Muslim majority. He
has described secularism as a falsehood
that can never coexist with Islam and some
secular-minded rebels as bandits.
In late October, the Army of Islam was
BY SAM DAGHER
Damascus, Syria
A residential building in Jobar used by rebel snipers to target government soldiers was heavily damaged by regime bombardment. The largest Islamist rebel group in the Damascus area is the Army of Islam.
C
a
r
o
l
e
A
l
f
a
r
a
h
f
o
r
T
h
e
W
a
l
l
S
t
r
e
e
t
J
o
u
r
n
a
l
BUSINESS & FINANCE
BlackBerry Suitors Mull Joining Forces
The auction for BlackBerry Ltd.
heated up Friday, as three potential
suitors discussed joining forces for a
bid ahead of a Monday deadline for
offers.
After one of BlackBerrys largest
shareholders struck a preliminary
buyout deal with the beleaguered
smartphone maker in September,
BlackBerrys advisers set about
shopping it to a wider group of pos-
sible buyers in an accelerated sales
process designed to arrest Black-
Berrys downward spiral.
In the latest development, Mike
Lazaridis and Doug Fregin, who co-
founded the company in 1984 but no
longer work there, have been in
talks to mount a joint bid with mo-
bile-phone chip maker Qualcomm
Inc. and Cerberus Capital Manage-
ment LP, according to people famil-
iar with the matter.
But in a sign that the sales pro-
cess is far from a frenzied auction,
Fairfax Financial Holdings Ltd.,
which struck the preliminary deal
with Waterloo, Ontario-based Black-
Berry, still hasnt lined up financing
for its bid, another person said.
Fairfax has been seen as the bid-
der to beat, given its tentative deal
and the fact that the firm, led by
former BlackBerry director Prem
Watsa, already owns 10% of the
company. The preliminary Fairfax
deal values BlackBerry at $9 a share,
or $4.7 billion. Fairfax said then that
it was seeking financing for the deal.
BlackBerrys stock price suggests
investors are skeptical that a deal
will be reached at $9 a share, either
with Fairfax or someone else. The
stock has been trading well below
that level, and Friday closed at $7.77
on the Nasdaq Stock Market.
BlackBerry and its advisers put a
for-sale sign on the company after
years of devastating market-share
losses to competitors including Ap-
ple Inc. and Samsung Electronics
Co. According to market researcher
IDC, BlackBerry, which once con-
trolled more than half of the U.S.
smartphone market, recently had
just over 2%.
The trio considering a joint bid
which might not materializeeach
come to it from very different van-
tage points.
Qualcomm, with a market capi-
talization of about $120 billion, is
the largest maker of chips that man-
age cellular communications in
smartphones, and supplies proces-
sors that run software on mobile de-
vices.
Qualcomm had $11.5 billion in
cash, liquid investments and short-
term securities as of June 30. One
motivation for investing in Black-
Berry could be to keep a customer
afloat. Another could be access to
patents; besides its own intellectual
property, Qualcomm licenses rights
to other companies patents under
some circumstances.
Cerberus has made its name in-
vesting in distressed companies. A
BlackBerry bid wouldnt be the first
foray into Canada for the New York-
based firm. In 2004, the firm in-
vested in troubled airline Air Can-
ada.
At the time, the airline was re-
structuring under bankruptcy-court
protection. Two years later, Air Can-
adas parent company launched an
initial public offering and Cerberus
exited its stake by 2009.
Messrs. Lazaridis and Fregin,
who publicly declared their explora-
tion of a potential BlackBerry deal
last month, together own about 8%
of the company. As Cerberus and
Qualcomm could lend them financial
firepower, their stock could lend a
big existing equity stake as a plat-
form for a possible offer.
Other parties that have been con-
sidering a bid for BlackBerry include
Chinas Lenovo Ltd., people familiar
with the matter have said.
Lenovo was still in the hunt for
BlackBerry, a person familiar with
the matter said Friday. BlackBerry
executives recently met with Face-
book Inc. officials to discuss a possi-
ble bid by the social-networking
company for the smartphone maker,
according to people familiar with
the matter. It isnt clear what, if any-
thing, came of the meeting.
Don Clark
By Dana Cimilluca,
Dana Mattioli
and Will Connors
Asia May Allow In-Flight Gadget Use
SINGAPOREAviation regulators
in the Asia-Pacific will consider
matching a decision by the U.S. Fed-
eral Aviation Administration to al-
low air travelers to use tablets and
other personal devices during all
phases of flight.
The FAAs move comes after
years of debate over whether elec-
tronic emissions from devices can
interfere with cockpit instruments.
The regulator had been restricting
the use of electronic devices for de-
cades and the change, announced
Thursday, reflects a view that the
risk of interference from devices has
been reduced due to new technology
and more resilient cockpit systems.
Regulators from around the
world have largely followed the FAA
restrictions on electronic devices,
and thus most of the worlds airlines
ban the use of devices during certain
portions of flight, such as takeoffs
and landings.
At least one Asian country, South
Korea, said it has decided to adopt
the FAA changes, with regulators at
several other jurisdictions saying
that they will review the FAA find-
ings.
After revising relevant regula-
tions, we plan to implement (the
changes) before the end of this
year, said Lee Sung-yong, director
of South Koreas Ministry of Land,
Infrastructure and Transport on Fri-
day, noting that the agency was
very positive on the revised rules.
South Koreas two main interna-
tional carriers, Korean Air Lines Co.
and Asiana Airlines Inc., both said
they would follow the governments
decision on the issue.
Elsewhere in the region, the Civil
Aviation Department in Hong Kong
said it may consider similar actions
if applicable and appropriate,
while the Civil Aviation Authority in
New Zealand has said it would re-
view any findings made by the FAA.
Flag carrier Air New Zealand Ltd.
said as the FAA recommendations
could be adopted in the nation, the
airline is in the process of consider-
ing the processes we would need to
implement to accommodate this.
In Australia, the Civil Aviation
Safety Authority said it doesnt have
specific regulations governing the
use of electronic devices.
Australias biggest airline Qantas
Airways Ltd. said it would be taking
a close look at the FAAs decision
and the reasons behind it, noting it
has no immediate plans to change
its policies on the use of devices.
Still, analysts said they expect
the regions regulators to quickly
follow the FAA rule changes for
competitive reasons.
Local airlines willpressure reg-
ulators to make the changes. Passen-
gers, of course, would want these
changes to occur, said Ron Bartsch,
the chairman of AvLaw International
Pty. Ltd., a Sydney-based aviation le-
gal and consulting firm.
When it comes to air safety, the
FAA is generally seen as being very
conservative, notes Mr. Bartsch, who
previously worked as group general
manager for safety, compliance and
operational risk at Qantas.
However, theyve realized now
that these electronic devices dont
pose any in-flight risk, he said.
Previous rules in the U.S. re-
quired passengers to turn off all
electronic devices on aircraft below
10,000 feet.
Sony Tries to Stay in Game
console in seven years. Sony plans
to sell five million PS4 units by the
end of March.
One of Sonys most competitive
operations is supplying camera sen-
sors used in smartphones, including
Apple Inc.s iPhone. But strong de-
mand for smartphone camera sen-
sors is being canceled out by shrink-
ing demand for traditional cameras
that also use Sony sensors.
We think Sony has a revenue
problem, rather than a cost prob-
lem, wrote Macquarie Securities
analyst Damien Thong in a research
note Friday. The firm has stepped
up its ability to deliver desirable
premium products, but the reality is
that apart from smartphones, Sony
has yet to ignite top-line growth,
Mr. Thong said.
Sony has so far focused on the
European market for its smart-
phones and its presence is small in
the U.S. and China. If Sony were to
ramp up its marketing in those mar-
kets, the increase in costs may pres-
sure the earnings from the mobile
business, analysts say.
A Sony spokeswoman said that
Continued from page 15 the company will focus on cost effi-
ciency and make sure that its smart-
phone business stays profitable,
even though it wont compromise on
necessary marketing. Sony is now
expanding its mobile business in
China and other emerging markets,
in addition to Europe and Japan,
she said.
Organizational integration and
streamlining at Sony, with its broad-
ranging product divisions, hasnt
kept up with the tide of hardware
concentration on smartphones and
tablets, and we see a risk of the firm
being forced into restructuring in-
volving major outlays, Deutsche Se-
curities analyst Yasuo Nakane wrote
in a research note.
Sony already faces shareholders
calling for further restructuring of
its sprawling operations. Hedge-
fund investor Daniel Loeb, whose
firm holds Sony shares, has pro-
posed a spinoff of the companys en-
tertainment division through an ini-
tial public offering, saying that
movie and music businesses are be-
ing poorly managed.
Mr. Loebs Third Point LLC de-
clined to comment.
brei tl i ngf or bentl ey. com
THE ESSENCE OF BRITAIN
Made in Switzerland by BREITLING
BENTLEY B06
IN DEPTH
among several Islamist factions that an-
nounced their rejection of any dialogue with
Mr. Assad and his regime at the tentative Ge-
neva talks that are strongly backed by the U.S.
and its European allies.
Also gaining prominence in the Damascus
suburbs is the al-Qaeda-affiliated Islamic State
of Iraq and Sham, or ISIS, which already con-
trols several areas in northern and eastern
Syria. The group established a training camp
for men and teenage boys in the eastern sub-
urbs this summer, according to residents and
video released by ISIS.
It announced its first martyrdom opera-
tion in the Damascus area on Sept. 22, when
a non-Syrian Arab jihadist detonated a vehicle
packed with four tons of explosives in front of
a government building in a town north of the
capital. Activists and the ISIS say the attack
killed 50 people.
ISIS has also claimed responsibility for
some of the mortar attacks on regime-held
sections of Damascus. More than 50 people,
mostly civilians, have been killed since the
start of October in these mortar attacks, ac-
cording to residents and state media.
The Nusra Front, another al Qaeda-linked
group, is also raising its profile in the Damas-
cus area. It claimed responsibility for a suicide
car-bomb attack in mid-October that targeted
the headquarters of Syrian state television in
the heart of Damascus. A few days later, the
group led a major assault on a pharmaceutical
plant southeast of Damascus that was being
used as a base for regime troops.
In early September, a Jordanian jihadist
with the Nusra Front blew up a pickup truck
laden with explosives concealed under crates
of vegetables at a regime checkpoint at the
entrance of the predominantly Christian town
of Maaloula north of Damascus, according to
a Nusra Front video.
That attack paved the way for Islamist rebels
to enter the ancient town and triggered the
flight of hundreds of Christians to Damascus.
The presence of Islamists in the country
benefits the regime because it confirms the
theory it was promoting from the first minute,
says Caroline Ayoub, a Christian Damascus ac-
tivist who collaborated with Muslim female op-
position figures in the eastern suburbs until her
arrest by the regime in April 2012. She was im-
prisoned for 26 days and then left the country
upon her release. She now lives in France.
With every death and arrest in the suburbs,
many residents became convinced that getting
armed was the only solution, she says.
Many Damascus residents say that like
other underprivileged and conservative rural
areas, the eastern suburbs in particular were
fertile ground for militancy as the civil war
spread. Many believed Mr. Assads Alawite-
dominated regime and its Shiite allies were
butchering Syrias Sunni majority and that it
was time for Sunnis to rule Syria. This reso-
nated with Sunnis across the region, particu-
larly in Gulf Arab states.
A turning point came in June 2011. That is
when the Army of Islam commander Mr. Al-
loush, a native of the eastern suburbs main
town Douma and a former honey merchant
jailed in 2009 for his Islamic preaching, was re-
leased. He told a Yemeni magazine that he im-
mediately formed an armed faction because he
knew Alawites would only be defeated through
combat based on their dark history.
In the first half of 2012 Mr. Alloushs faction,
called the Islam Brigade at the time, was among
those that fought battles to repulse regime mili-
tary incursions into the eastern suburbs.
In July 2012, after the assassination of sev-
eral regime officials in Damascus, rebels from
the suburbs and sleeper cells within the city
tried to close in on the regime from multiple di-
rections, triggering street clashes.
Some of the bloodiest battles took place in
Al-Midan, a district considered the southern
gate of Damascus, according to people who
witnessed the fighting. The poorly armed and
disorganized rebels from the suburbs were no
match for government troops, who forced
them to retreat, said a secular activist who
worked in the area at the time. She said many
unarmed Midan activists were either killed or
imprisoned by regime forces.
After that the regime started isolating sub-
urban rebel enclaves and bombarding them al-
most daily.
In February 2013, rebels from the eastern
suburbs led mainly by Islamist factions in-
cluding Mr. Alloushs group responded by run-
ning down regime defenses in Jobar, a district
at the entrance of Damascus, and vowed to
liberate the capital.
In late July a prominent regime com-
mander, Col. Mohammad al-Ali, was shot dead
in a rebel ambush in a suburban area known
as the Ghouta, according to a pro-regime
paramilitary leader. It isnt known who killed
the commander, who had been leading opera-
tions in conjunction with Hezbollah, and who
went by the nickname The Lion of Ghouta.
In early August, Mr. Alloush taunted Mr. As-
sad and the Alawite scoundrels on pro-rebel
Arab television, claiming responsibility for a
barrage of mortars and Soviet-era rockets that
hit the Damascus neighborhood where the pres-
ident and senior regime officials reside.
Many opposition activists say the regime was
determined after that to reclaim the suburbs.
They said shortly before 2 a.m. on Aug. 21,
units of the regimes Republican Guard and
Fourth Armored Division fired surface-to-sur-
face rockets containing the nerve agent sarin
onto what they described as the rear lines
of rebels facing off with regime forces east
and southwest of the city.
Although they deny using chemical weap-
ons, regime officials acknowledge launching a
pre-emptive strike on Aug. 19 to foil what
they say was a rebel plan to assault Damascus
from four directions corresponding to the
citys ancient gates.
The chemical attack, which was confirmed
in a U.N. report in September that didnt as-
sign blame, has only served to radicalize reb-
els and their supporters more, residents and
opposition leaders say.
Meanwhile, the mayhem in and around Da-
mascus continues. On the east side of the city,
a road that once led to Douma in the eastern
suburbs via the district of Jobar is now a no
mans land littered with debris.
Nearby, units from the regimes Republican
Guard and Fourth Division are hunkered down
in a sports stadium and other public facilities,
including a bus terminal and the offices of the
main utility company in Damascus, which still
bears the signs of a rebel assault in July.
Pro-government soldiers dash from corner
to corner to avoid rebel snipers. They said in
interviews that their job is to keep the rebels
to the east at bay with the help of artillery
and aerial bombardment.
The Damascus neighborhood where these
soldiers are based is known as Abaseen. It has
become a frequent target of mortar attacks
from the suburbs. Many of the residents that
remain are Christians.
On a recent Sunday worshipers gathered
for Mass at St. George, one of several
churches in the area. The sound of explosions
reverberated in the distance as solemn hymns
were sung inside.
DAMASCUS
INTERNATIONAL
AIRPORT
3 miles
3 km
D A M A S C U S
ACity Divided
A long-running battle between regime forces and
rebels in Damascus and the suburbs has polarized
and segregated communities & fueled the rise of
Islamists.
1
6
m
ile
s
Opposition contested Opposition
Daraya
Regime stormed this
strategic town near
presidential palace and
Mezze military airport in
Aug. 2012. Scene of erce
clashes since Nov. 2012.
Moadhamiya
Some 8,000 civilians
and rebels besieged
since start of 2013.
One of the areas hit in
August chemical
attack.
Qudsaya
Tens of thousands of
displaced families live in
this mostly anti-regime
neighborhood close to
major military
installations.
Mt. Qasioun
Peak overlooking
capital has been
used by regime to
bombard rebel
enclaves.
Adra
Rebels stepped up
attacks here, home to
major industrial
complex and gas
plant.
Maaloula
Mostly pro-regime
Christian village
attacked by Islamist
rebels on Sept. 4 as
part of new front in
Qalamoun
mountains.
Douma
Epicenter of rebel
stronghold, eastern
Ghouta. Nearby towns
among worst hit in
August chemical attack.
Otaiba
Regime declared
major coup in April
when it captured
this crossroads of
rebel supply routes.
Jobar
Overran by rebels
in February. Now a
major front in
battle for the
capital.
Al-Midan
Southern gate of
Damascus scene of
clashes in summer 2012
when rebels launched
rst push to liberate
capital.
A butcher shop in Al-Midan, where street battles raged last year when rebels attempted to storm Damascus. The poorly armed and disorganized rebels from the suburbs were no match for government troops.
C
a
r
o
l
e
A
l
f
a
r
a
h
f
o
r
T
h
e
W
a
l
l
S
t
r
e
e
t
J
o
u
r
n
a
l
INDEX TO BUSINESSES AND PEOPLE
Almeida Junior Shopping
Centers.........................8
Apmex...........................23
Apple.............................17
Asia Pacific Breweries.21
AT&T..............................28
Bank of America...........22
Bank of Nauru................ 5
Barclays.........................21
Barrick Gold.................. 19
Baxter International.......8
Bendigo & Adelaide
Bank.............................5
BHP Billiton.............15,19
BlackBerry.....................17
Cerberus Capital
Management..............17
China Citic Bank
International..............20
China Ocean Shipping
(Group).......................19
China Vanke A..............20
Chinas General
Administration of
Customs.....................22
Citigroup....................... 21
DBS Group Holdings.....21
Design Within Reach... 16
Dillon Gage Metals.......23
Facebook.................... 3,17
Fairfax Financial
Holdings.....................17
Fortescue Metals Group
Ltd.........................15,19
Fraser & Neave.............21
Glencore Xstrata.......... 19
Gold Fields....................19
Google............................. 3
Highlands Pacific..........19
International Business
Machines....................18
Lululemon..................... 16
Macquarie Group.......... 20
Marusan Securities......15
Merck............................ 16
Merit Financial ............. 23
Mondelez International18
Morgan Stanley............15
NBC................................. 8
NBCUniversal..................8
Nissan Motor..................1
Nokia............................. 18
NQ Mobile.....................16
Oversea-Chinese
Banking......................21
Panasonic......................15
Panaust......................... 19
Petroliam Nasional
Berhad........................22
Poseidon Nickel ............ 19
Qualcomm.....................17
Rio Tinto.................. 15,19
Royal Bank of Scotland
Group.....................21,28
Royal Dutch Shell.........18
SABMiller......................18
Samsung Electronics....17
Shandong Shipping.......19
Shunfeng Photovoltaic
Singapore Exchange..... 21
Singapore Press
Holdings.......................3
Sony........................... 1,15
Standard Chartered......21
Sumitomo..................... 19
Suntech Power
Holdings.....................18
Sydney Airport
Holdings.....................20
Taranggana Nata Asia....4
Third Point....................17
Transportation Security
Administration............ 7
UBS............................... 21
UMW Holdings Bhd......22
UMW Oil & Gas Bhd.... 22
U.S. Federal Aviation
Administration.......... 17
Vale.......................... 15,19
Verizon
Communications........28
Vodafone..................18,28
Westfield Group............. 8
Wood Mackenzie.......... 22
Wuxi Guolian
Development Group.. 18
Yahoo...............................3
Businesses
This index of businesses
mentioned in todays
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.
People
This index lists the
names of business-
people and government
regulators who receive
significant mention in
Todays Journal.
Adeang, David.................5
Aelbers, Erik................... 5
Ashton, Chris................21
Charoen
Sirivadhanabhakdi.....21
Ciancia, Paul Anthony....7
Clark, Mark................... 21
Cummings, Allen............ 7
Emanuel, Ezekiel ............ 6
Febrianto, Roni...............4
Forrest, Andrew.......15,19
Fregin, Doug..................17
Galarza, DAndra.............8
Gardiner, Matt..............21
Getlin, Mike..................23
Gissen, Malcolm........... 22
Gupta, Piyush............... 21
Hanlon, Terry................23
Haynes, Michael........... 23
Hirai, Kazuo.................. 15
Jakhu, Ram.....................5
Kraemer, Harry............... 8
Lazaridis, Mike............. 17
Lowy, Peter.....................8
Luxembourg, Alain....... 16
McEwan, Ross.............. 28
Miyahara, Hidekazu......15
Moore, Nicholas............20
Munson, Julian............. 21
Murray, Jack................. 21
Nash, Paul.....................21
Nugroho, Tio................... 4
Obama, Barack................6
Pearce, Stephen............18
Power, Nev....................18
Rabin, Victoria................8
Rajagopalan, Rajeswari
Pillai ............................. 5
Ramchandani, Rohan....21
Ravi, Ephrem................ 22
Riordan, Matt............... 22
Salas, Carlos.................22
Shearing, Neil...............22
Short, John..................... 5
Stafford, Gary...............19
Sudrajat, Ade..................4
Swindler, Edward............8
Upfold, Patrick..............20
Wanandi, Sofjan.............4
Watsa, Prem.................17
Weiss, Andrew............. 28
Wong, Danny................ 22
BUSINESS & FINANCE
Corrections Amplifications
NQ Mobile Inc.s shares trade on the
New York Stock Exchange. A front-page
article on Thursday about Chinese com-
panies initial public offerings in the U.S.
incorrectly said the shares trade on the
Nasdaq Stock Market.
Lululemon Complaints
Stretch a Little Further
Lululemon Athletica Inc. said it
received new complaints about the
quality of some of its yoga pants,
following a recall this year when the
fabric was found to be too revealing.
The statement came after some
customer reviews on Lululemons
website and comments on the com-
panys Facebook page complained of
pilling and fabric that was scratchy,
thin and see-through on some pants
that had been part of the recall and
now are being stocked again.
A Lululemon spokeswoman said
Friday the problems were experi-
enced only by a very small number
of customers and that the company
determined after an internal evalua-
tion that it didnt have a broader
problem.
The complaints focused on two
styles of pants on Lululemons web-
site. The $98 Groove pant, one of
the retailers most popular styles,
gets an average customer rating of
just three out of a possible five stars
on the site. The $82 Wunder Under
Full-On Luon gets 3 stars.
The middling ratings are unusual
for a brand that long had enjoyed a
cultlike following of aficionados and
are lower than the four stars
awarded to the $98 Astro pants,
which also had been part of the re-
call. Other pants on the site have
five star ratings, including the Ebb
to Street Pant and the Still Pant.
Lululemon will resolve any qual-
ity complaints from customers, the
spokeswoman said.
The customer complaints were
reported earlier by the Associated
Press.
The Vancouver, British Columbia,
company has sought to assure in-
vestors that the bulk of the earlier
problem with see-through pants is
over.
The glitches cost the company
millions of dollars, damaged its rep-
utation and depressed its share
price. The recall continues to weigh
on the companys performance, re-
sulting in late deliveries.
Lululemon in September lowered
its outlook for the year, saying it ex-
pected the effects of the late prod-
uct deliveries to continue through
the end of the fiscal year in early
February. The company posted earn-
ings $56.5 million for the quarter
ended Aug. 4, down slightly from
$57.2 million a year earlier.
Lululemons shares have re-
bounded after hitting a low of
$61.33 in June. They closed Friday
at $67.85, down $1.24, or 1.8%.
Lululemon last week also named
Tara Poseley, a former Kmart execu-
tive, as its chief product officer. She
succeeds Sheree Waterson, who left
her post soon after the March recall.
Ms. Poseleys previous retail ex-
perience included a short stint as
chief executive of Design Within
Reach Inc., a San Francisco seller of
modern furnishings and accessories
that went public in 2004. She left in
September 2006, 11 months after
being promoted to CEO.
Lululemon is still seeking a suc-
cessor to CEO Christine Day, who in
June announced that she planned to
step down. Ms. Day intends to leave
once her successor arrives.
The CEO search wont be com-
pleted by late fall, as previously
hoped, a person familiar with the
situation said last week. Several
outside prospects remain in the mix,
but they include currently employed
retail executives unwilling to quit
their jobs before the holidays, the
person said. Others arent a good
cultural fit or dont want to relocate
to Canada, the person said.
A Lululemon spokeswoman de-
clined to comment on how soon di-
rectors might find a new CEO.
We have contingency plans in
place if this goes longer than year-
end, Ms. Day said last week. I am
committed that I will be there
through January.
Joann S. Lublin
BY SUZANNE KAPNER
Lululemon has sought to assure investors that the bulk of the earlier problem
with see-through pants is over. Above, a store in Pasadena, Calif.
G
e
t
t
y
I
m
a
g
e
s
MerckSees Promise
InNewHPVVaccine
An experimental Merck & Co. vac-
cine appeared to provide broader
protection against a cancer-causing
virus than the companys Gardasil
shot in clinical trials.
Merck said the study results sup-
port its plan to submit the new vac-
cine, code-named V503, for U.S. regu-
latory approval by year-end, which
could lead to market launch next year
at the soonest. Merck expects health-
care providers to eventually switch to
V503 if the product receives market-
ing approval. Some analysts expect
its annual sales could exceed $1 bil-
lion.
The case for using V503 is even
stronger than the case for using Gar-
dasil, which was already strong, said
Roger Perlmutter, head of Mercks re-
search-and-development unit. Dr.
Perlmutter has singled out V503 as a
program Merck will focus on as it
overhauls its R&D unit in a bid to re-
cover from setbacks.
Gardasil, launched in 2006, was
the first vaccine to protect against
human papillomavirus, or HPV, a sex-
ually transmitted virus that can cause
cervical cancer in women and other
less-common types of cancer in males
and females. The U.S. Centers for Dis-
ease Control and Prevention recom-
mends HPV vaccination of boys and
girls ages 11 and 12, though it is ap-
proved to be given to people ages 9
to 26. GlaxoSmithKline also sells an
HPV vaccine called Cervarix.
Gardasil is designed to protect
against four strains of HPV, two of
which are believed to be responsible
for about 70% of all cervical-cancer
cases. The other two strains are the
primary culprits in causing genital
warts. But Gardasil doesnt protect
against many other strains of HPV,
some of which can also cause cervical
and other cancers.
To close the gap, Merck designed
V503 to protect against nine HPV
strains, adding five cancer-causing
HPV types to the four included in
Gardasil. This wider set is believed to
account for nearly 90% of all cases of
cervical cancer globally, said Alain
Luxembourg, director of clinical re-
search for adult vaccines in Mercks
R&D unit.
Merck ran clinical trials to test the
new vaccines safety and efficacy, and
results are being presented at an
HPV-focused medical meeting in Flor-
ence, Italy, this week. One study en-
rolled more than 14,000 women ages
16 to 26, who received either Gardasil
or V503 in three doses over six
months. The goal was to show V503
was comparable to Gardasil in pro-
tecting women against the four HPV
strains common to both vaccines, and
superior to Gardasil in protecting
against the five additional strains in
V503.
For the four HPV strains common
to both vaccines, the study compared
immune responses as measured in
blood tests, and found V503 to be
comparable to Gardasil. The research-
ers used immune response as the cru-
cial measure because the rates of dis-
ease caused by these four HPV strains
were too low in both groups to pro-
vide a meaningful comparison.
For the five HPV strains not cov-
ered by Gardasil, researchers com-
pared the rates of precancerous le-
sions caused by those five strains.
The study found that V503 reduced
the incidence of these lesions by
about 97% compared with Gardasil.
Merck said it couldnt test the ef-
ficacy of V503 in virginal adolescents
because they generally havent yet
been exposed to HPV. So researchers
measured immune responses in boys
and girls ages 9 to 15 and compared
them to the immune responses seen
in women ages 16 to 26. The study
concluded the responses were com-
parable across the nine HPV types
targeted by V503, which Merck hopes
will demonstrate to health authorities
the vaccine is effective in adolescents.
The rates of adverse events
among V503 recipients were gener-
ally similar to those for Gardasil,
though V503 subjects had a higher
incidence of injection-site problems
such as pain and redness than Garda-
sil subjects, 90.8% versus 85.1%.
Safety concerns have occasionally
dogged Gardasil, particularly reports
of fainting after receiving the shot.
But the CDC has concluded the vac-
cine is safe and effective.
Analysts from Leerink Swann esti-
mate V503 sales could reach $1.9 bil-
lion by 2018, though it would canni-
balize sales of Gardasil. Merck
reported $1.6 billion in Gardasil sales
last year.
BY PETER LOFTUS
Merck designed the new
V503 vaccine to protect
against nine HPVstrains.
FROMPAGE ONE
Bangladesh Issues Death Sentences to Two
Shahidur Rahman, a prosecutor at
the tribunal.
The tribunal was set up by the
government of Prime Minister
Sheikh Hasina, the daughter of lead-
ing Bengali independence cam-
paigner Sheikh Mujibur Rahman
who served as independent Bangla-
deshs first president.
By investigating atrocities and
bringing those responsible to jus-
tice, the premier and her backers
said, the tribunal could help heal a
deep national wound that has fes-
tered since the bitter nine-month
war.
Ten people have now been found
guilty by the tribunal. Eight have
Continued from first page been sentenced to death.
Opposition groups say Ms. Ha-
sina is using the tribunal to target
political enemies. Eleven of the 13
people indicted on war-crimes
charges are opposition politicians,
nine of them from the Islamist Ja-
maat-e-Islami and two from the
main opposition Bangladesh Nation-
alist Party. The government denies
the allegations.
The trials have polarized the
country ahead of national elections
due in January. The opposition has
enforced a series of general strikes
in recent weeks in an effort to force
the government to reinstate a sys-
tem under which a neutral caretaker
administration oversees elections.
More than a dozen people were
killed in clashes involving police and
opposition supporters last week.
Salma Hai, a lawyer appointed by
the state to defend Mr. Khan and
Mr. Uddin before the tribunal, said
her clients would have the right to
appeal should they return to the
country.
I have my limitations since I
have no contact with my clients,
she said. But I am not happy with
this verdict.
No plea was entered on Mr.
Khans and Mr. Uddins behalf and
Ms. Hai didnt call any witnesses on
their behalf. During the trial, the
prosecution presented as evidence
pages from a diary, said to belong to
Mr. Khan, containing a list of Ben-
gali professionals to be targeted.
Mr. Khan and Mr. Uddin couldnt
be reached to comment. Britains
Press Association news agency said
it contacted Mr. Uddin by phone. Mr.
Uddin hung up after saying Im not
taking any calls, the Press Associa-
tion said.
Toby Cadman, a British lawyer
representing both men, said that his
clients are innocent and that the
Bangladesh government staged a
political show trial.
He said no evidence had been
presented at trial on behalf of Mr.
Khan and Mr. Uddin, adding, My
clients have consistently maintained
that they are prepared to stand trial
and establish their innocence before
an internationally supervised court
of law that is fully independent and
impartial.
A Bangladeshi Foreign Ministry
official said the government would
seek to bring both men to Bangla-
desh but declined to say whether
extradition requests had already
been made.
Mr. Khan is now a U.S. citizen
living in New York, according to
statements made in court by the
prosecution.
A spokeswoman for the U.S. Em-
bassy in Dhaka said: We are not is-
suing a statement.
A spokesman for the British High
Commission in Dhaka said: The
U.K. has made clear its support for
Bangladeshs efforts to bring to jus-
tice those accused of atrocities com-
mitted in 1971. Along with our EU
partners, we are however opposed
to the application of the death pen-
alty in all circumstances. People try to douse a burning bus that was attacked, allegedly by opposition activists, in Dhaka on Sunday.
Emerging Markets Reach Pivot Point
fast growth spawned the idea of
convergence, as poor countries
started closing the gap with their
richer neighbors. Emerging markets
already account for half of global
gross domestic product and the IMF
expects this to rise to a two-thirds
share within a decade.
The optimists emphasize tempo-
rary factors such as stimulus efforts
that have waned in developing coun-
tries, causing global export demand
and commodity prices to decline.
Mr. Schwartz contends that growth
in countries like India will recover,
driven by urbanization. Just the
catch-up from productivity
gainscan restore these high growth
rates, he said.
The pessimists argue the devel-
oping world already has harvested
the easy gains from industrialization
and many emerging countries are
now facing capacity constraints.
Their populations in many cases are
aging and education levels remain
low. Adding to the somber mood: the
eventual rollback of the U.S.s easy-
money policiesfear of which led to
a rush of capital out of emerging
markets this summerand the
winding down of a decadeslong com-
modity supercycle.
Put Anders Aslund, a senior fel-
low at the Peterson Institute for In-
ternational Economics and a profes-
sor at Georgetown University who
specializes in economic transition, in
the pessimist camp. He believes the
industrialization process is now over
and most nationsrich and poor
will return to growth levels of
around 3.5%, as they did between
1980 and 2000.
To be sure, the Feds decision last
Continued from first page
week not to begin winding down a
key pillar of its easy-money policy
its $85 billion-a-month bond-buying
programhas given emerging mar-
kets some breathing room.
But these nations, many econo-
mists say, need this breathing space
to push through changes to make
their economies more resilient for
when the Fed does move, later this
year or sometime next year.
Mr. Aslund argues nations like
Russia and Brazil now are saddled
with high wages, pricing them out of
global markets for many goods.
Chinas investment-led growth
model has run out of steam as facto-
ries lie idle and productivity de-
clines. Whats more, many develop-
ing countries remain mired in
corruption and trade protectionism
is on the rise.
Were likely to see a decade of
little or no convergence, Mr. Aslund
said.
The IMF, however, sees a blurry
but still potentially bright growth
picture. In its latest World Economic
Outlook, the fund says most of the
drop in growth since 2010 can be ex-
plained by cyclical factors, such as
the end of emerging markets stimu-
lus packages.
The fund does single out China
and Russia as facing persistently
lower rates of growth in the years
ahead. The IMF expects China to
grow 7% in 2018, versus a 9.6% aver-
age over the past 15 years, as the
gains from urbanization and massive
state investment peter out.
But Kalpana Kochhar, a deputy
director at the fund, said in a recent
presentation that a slowdown is wel-
come if it means emerging markets
can grow without building up asset
bubbles. Many Asian countries, for
instance, have built up large debt
levels that threaten their economic
stability.
Economists do agree on the need
for emerging markets to undertake
overhauls of their economieslike
improving infrastructure and boost-
ing investment in research and de-
velopmentto unleash the next
wave of growth.
Some countriesPeru and the
Philippines, for instancehave won
credit upgrades recently for changes
that have attracted foreign investors
and kept growth stronger than their
peers. For China, the key is to pro-
mote domestic spending, rather than
relying on unproductive state com-
panies for expansion.
Ultimately, the cause of the
growth slowdown remains open for
debate. But it seems clear that the
countries that fail to reform aggres-
sively will be guaranteed to enter a
prolonged period of slower growth,
leaving their people mired in pov-
erty and their economies trailing the
West.
Growing Pains
Economic growth has slowed in many emerging
markets and isnt expected to return to earlier
highs any time soon. Economic growth forecasts
for the BRICS countries.
The Wall Street Journal Note: India forecast is on a scal-year basis. Source: International Monetary Fund
China
India
Russia
South Africa
Brazil
9.6%
6.9
4.4
3.2
2.9
7.0
6.7
3.5
3.5
3.5
Average annual growth 1998-2013
Forecast growth for 2018
Taliban Vows
To Avenge
Drone Attack
In Pakistan
only fuels anti-Americanism.
If criminals are being elimi-
nated by drones, we should not turn
them into heroes, said Mr. Jaspal.
The government is giving the im-
pression that a disaster has hap-
pened.
Since 2003, militants have killed
17,867 civilians in Pakistan, along
with 5,418 security personnel, ac-
cording to a tally kept by South Asia
Terrorism Portal, an independent
website based in Delhi.
The U.S. Central Intelligence
Agency has hunted Mr. Mehsud
since 2009, blaming him for a
bombing that year that killed seven
Central Intelligence Agency employ-
ees at a base in eastern Afghanistan.
Mr. Mehsud was also linked to the
2010 attempted car bombing in New
Yorks Times Square.
Militants blame Islamabad for al-
lying with Washington in the anti-
terror fight and say that Pakistans
government allows the drone at-
tacks despite publicly condemning
them.
Jandullah, a faction of the TTP
that took responsibility for Septem-
bers twin suicide bombing of a
church in Peshawar, said Sunday
that more such attacks would now
follow. We will take revenge, said
Jandullahs spokesman, Ahmed Mar-
wat. We will target the Pakistan
army, and Pakistan.
The competition within the TTP
to succeed Mr. Mehsud, meanwhile,
is causing serious tension within the
movement, according to security of-
ficials.
In the TTPs stronghold of North
Waziristan, in Pakistans tribal ar-
eas, its commanders met Sunday in
an apparent attempt to soothe dis-
sent over a decision made at a com-
manders gathering on Saturday to
appoint Khan Said, the head of the
groups South Waziristan wing, as
Mr. Mehsuds successor.
Mr. Saids elevation hasnt been
publicly announced by the organiza-
tion, and rival contenders are
backed by some factions.
After the meeting, Mr. Tariq, the
TTP spokesman, said that another
senior militant, Asmatullah Shaheen
Bhittani, would take temporary
charge, and that a permanent new
chief would be announced within
days.
We are in mourning, so we are
not in a position to announce a new
leader, said Mr. Tariq.
Mr. Said, also known as Sajna, is
credited with masterminding the
2012 attack on a jail in Bannu, a
town on the edge of North Waziri-
stan, in which some 400 prisoners
were freed, including many mili-
tants. He is also closely linked to or-
ganizing the supply of TTPs suicide
bombers. Some TTP commanders
said they were confident that Mr.
Said would be confirmed as their
leader.
Militants say that
Pakistans government
allows the drone attacks
despite publicly
condemning them.
A
s
s
o
c
i
a
t
e
d
P
r
e
s
s
Monday, November 4, 2013
As of 4 p.m. ET Euro 1.3490 g 0.76% Yen/US$ 98.78 0.54% Yen/A$ 93.26 0.36% Oil 94.61 g 1.84% Gold 1313.10 g 0.79% 10-year Treasury g 21/32 yield 2.618% 3-month Libor 0.23775
THE WALL STREET JOURNAL. asia.WSJ.com
Lululemons Pant-Quality Issues
Appear to Be Stretching Further
BUSINESS &FINANCE 16
Cloud Over NSAMay
Give Cover to AT&T
HEARDONTHE STREET 28
Sony Struggles to Remain in the Game
In just three months, Sony Corp.
went from a company on the mend
to one whose recovery is now in se-
rious doubt.
Hidekazu Miyahara, an analyst at
Marusan Securities, recalls the cel-
ebratory mood at Sonys earnings
briefing in Tokyo in late July. The
Japanese electronics giant had just
reported a net profit for the three
months ended June 30 and analysts
saw signs of a recovery in Sonys
core electronics operations follow-
ing restructuring that involved
10,000 layoffs. During the question-
and-answer session, another analyst
told the executives how excited he
was to see the television business fi-
nally turn profitable.
On Thursday, Mr. Miyahara was
shocked to see Sony issue a profit
warning while reporting a loss for
the three months ended Sept. 30.
The outlook is particularly dis-
appointing because Sony has al-
ready done a lot of cost cuts, said
Mr. Miyahara. There may be little
room left for more drastic cuts in
fixed costs, he said, noting that he
is reviewing his Buy rating on the
stock.
Meanwhile, Moodys Investors
Service said Friday it would review
Sonys debt rating for a possible
downgrade, citing slow progress
being made in improving overall
profitability.
Investors sent the Japanese elec-
tronics makers shares tumbling in
Tokyo trading Friday after the com-
pany slashed its profit outlook by
40% Thursday. The stock fell 11% to
close at 1,668 (about $16.96) wip-
ing more than $2 billion off Sonys
market value.
Sonys quarterly loss was mainly
due to its movie business, but what
is worrying analysts and investors is
the bleak outlook for its consumer
electronics. TVs became un-
profitable again, and Sony
cut its sales forecasts for
TVs, PCs and cameras. The
biggest concern is that the
profit warning isnt just a
temporary outcome of a
harsher economic climate,
but an indication that the
turnaround scenario as a
whole may not be working.
Movies are in many
ways a hit-and-miss, but
its the structurally trou-
bling electronics division thats dis-
appointing, said Takuya Yamada, a
senior fund manager at Astmax As-
set Management, which has around
$1.2 billion in assets under manage-
ment.
Under Kazuo Hirai, who became
chief executive last year, Sony has
designed a three-year road map for
a turnaround. After
squeezing a group net
profit in the last fiscal year
thanks in part to asset
sales, this years promise
from Mr. Hirai was to turn
its electronics operations
profitable, including the TV
business that has been un-
profitable on an annual ba-
sis for nearly a decade.
This isnt the first time
Sony has disappointed in-
vestors with its earnings
outlook. Howard Stringer, Mr. Hi-
rais predecessor, also promised a
turnaround that never panned out.
Sonys next bets are its Xperia
smartphones and the PlayStation 4
videogame console, but analysts say
the prospects for those businesses
are far from guaranteed, given in-
tensifying competition and changing
consumer preferences.
Sony needs to make harsh deci-
sions about what its product portfo-
lio is going to be, said Steve Du-
rose, senior director at Fitch
Ratings. He said that Sony should
consider moving away from con-
sumer electronics to focus more on
industrial products for corporate
customers, like its Japanese peer
Panasonic Corp., which raised its
profit outlook Thursday.
Sony Senior Vice President Shiro
Kambe said he expects sales to pick
up significantly after the Nov. 15 re-
lease of PlayStation 4, the com-
panys first reboot of its popular
BY JURO OSAWA
Kazuo Hirai
FortescueAims toSpeedDebt Repayment
PERTH, AustraliaFortescue
Metals Group Ltd. survived several
brushes with lenders in Andrew For-
rests decadelong campaign to build
a small explorer into the worlds
fourth-largest iron-ore producer.
Now, Mr. Forrest wants Fortes-
cue to think big and bold again
this time to reduce its US$9.3 billion
pile of debt.
Mr. Forrest said the resilience of
iron-ore prices amid a slowdown in
Chinas economic growth has
opened the door to faster repay-
ments of debt than recently envi-
sioned by Fortescue management.
Also, cash flow from the companys
mines in Australias remote Pilbara
region should increase as Fortescue
completes a program to expand an-
nual production to 155 million tons
of iron ore.
Getting the gearing right down
will have a great return to share-
holders, Mr. Forrest, the companys
chairman, said in an interview. It
will increase our market capitaliza-
tion very substantially, so that will
be our primary goal.
For investorsincluding Mr. For-
rest, who owns 33% of Fortescues
stockprospects of a reduced debt
burden are fueling hope that the
Perth-based company is headed for
a period of stability.
In its decadelong quest to break
the dominance of Vale SA, Rio
Tinto and BHP Billiton in iron-ore
output, Fortescue used loans to
build a network of land holdings,
power and water infrastructure, as
well as railway and port facilities in
Pilbara.
The bold bets enabled Fortes-
cues value to grow quickly as China
sharply increased imports of Austra-
lian iron ore to make steel for in-
dustries such as construction and
auto manufacturing. But it also
meant the company was vulnerable
to global shocks.
During the global financial crisis
in 2009, Fortescue staved off a
funding crunch by selling a 16.5%
stake to Chinese steelmaker Hunan
Valin Iron & Steel Group Co. for 1.2
billion Australian dollars (US$1.13
billion). Valin has since sold some of
that holding.
In September of last year, a rapid
decline in iron-ore prices stretched
Fortescues balance sheet and
sparked emergency talks with lend-
ers to renegotiate billions of dollars
of debt.
Mr. Forrest steered the company
through the financial crisis as chief
executive, before moving up to be-
come chairman in August 2011.
When the sharp slide in iron-ore
prices last year dragged down the
value of Fortescues stock, Mr. For-
rest spent millions of dollars to in-
crease his stake in the company and
shore up investor confidence.
That investment is now valued at
much more. Although Fortescues
stock neared its lowest level in four
years in June, it has since re-
bounded 80%, outperforming BHP
and Rio Tinto as strong Chinese
steel production supported iron-ore
prices and credit-rating firms in-
cluding Fitch upgraded their outlook
on Fortescue.
Investors also took heart from
Fortescues repayment of A$140 mil-
lion of preference shares in a move
to bring down its debt. Since then,
BY RHIANNON HOYLE
Cash flow from Fortescues operations in Australias remote Pilbara region, above in 2011, is expected to increase.
B
l
o
o
m
b
e
r
g
N
e
w
s
Hot Iron
Fortescue Metals share price
vs. price of iron ore
Source: SIX Financial; The Steel Index (iron-ore)
A$8
2
4
6
12 13 2011
$200
IRON ORE
US$ a metric ton
FORTESCUE
Share price
50
100
150
Some See
Reversals in
Emerging
Stocks Path
Investors have rediscovered de-
veloping countries, sending their
stocks up 16% as a group since late
June.
A growing number of analysts
who follow these countries, known
in the trade as emerging markets,
find that troubling. Their message:
Proceed at your own risk.
Emerging markets are exciting to
investors because for much of the
past decade, EM stocks and bonds
delivered the big gains. Many inves-
tors still are nervous about U.S.
stocks, even though many major U.S.
indexes are in or near record terri-
tory.
In the early 2000s, many inves-
tors developed a reflex. When they
want to take a risk and add some
pop to their portfolios, they put a
little money in emerging markets
like India, Brazil, Turkey or China.
These analysts are warning that
things have changed.
It is certainly going to be a
much more volatile ride than most
people expect, says Manoj Pradhan,
global emerging-markets economist
at Morgan Stanley.
Mr. Pradhan recently wrote a re-
port titled EMIs the Worst Be-
hind Us Now? His conclusion: The
worst is not behind us: In fact,
things likely have to get worse so
they can then get better.
Nimble speculators may profit
with targeted bets, Mr. Pradhan
says. But longer-term investors
could feel some pain.
In the past, developing econo-
mies benefited from booming export
BY E.S. BROWNING
Australian iron-ore tycoons next
bet is nickel............................................... 19
Chinas Shandong Shipping to
operate Vale freighters....................... 19
FROMPAGE ONE
Bangladesh Issues Death Sentences to Two
Shahidur Rahman, a prosecutor at
the tribunal.
The tribunal was set up by the
government of Prime Minister
Sheikh Hasina, the daughter of lead-
ing Bengali independence cam-
paigner Sheikh Mujibur Rahman
who served as independent Bangla-
deshs first president.
By investigating atrocities and
bringing those responsible to jus-
tice, the premier and her backers
said, the tribunal could help heal a
deep national wound that has fes-
tered since the bitter nine-month
war.
Ten people have now been found
guilty by the tribunal. Eight have
Continued from first page been sentenced to death.
Opposition groups say Ms. Ha-
sina is using the tribunal to target
political enemies. Eleven of the 13
people indicted on war-crimes
charges are opposition politicians,
nine of them from the Islamist Ja-
maat-e-Islami and two from the
main opposition Bangladesh Nation-
alist Party. The government denies
the allegations.
The trials have polarized the
country ahead of national elections
due in January. The opposition has
enforced a series of general strikes
in recent weeks in an effort to force
the government to reinstate a sys-
tem under which a neutral caretaker
administration oversees elections.
More than a dozen people were
killed in clashes involving police and
opposition supporters last week.
Salma Hai, a lawyer appointed by
the state to defend Mr. Khan and
Mr. Uddin before the tribunal, said
her clients would have the right to
appeal should they return to the
country.
I have my limitations since I
have no contact with my clients,
she said. But I am not happy with
this verdict.
No plea was entered on Mr.
Khans and Mr. Uddins behalf and
Ms. Hai didnt call any witnesses on
their behalf. During the trial, the
prosecution presented as evidence
pages from a diary, said to belong to
Mr. Khan, containing a list of Ben-
gali professionals to be targeted.
Mr. Khan and Mr. Uddin couldnt
be reached to comment. Britains
Press Association news agency said
it contacted Mr. Uddin by phone. Mr.
Uddin hung up after saying Im not
taking any calls, the Press Associa-
tion said.
Toby Cadman, a British lawyer
representing both men, said that his
clients are innocent and that the
Bangladesh government staged a
political show trial.
He said no evidence had been
presented at trial on behalf of Mr.
Khan and Mr. Uddin, adding, My
clients have consistently maintained
that they are prepared to stand trial
and establish their innocence before
an internationally supervised court
of law that is fully independent and
impartial.
A Bangladeshi Foreign Ministry
official said the government would
seek to bring both men to Bangla-
desh but declined to say whether
extradition requests had already
been made.
Mr. Khan is now a U.S. citizen
living in New York, according to
statements made in court by the
prosecution.
A spokeswoman for the U.S. Em-
bassy in Dhaka said: We are not is-
suing a statement.
A spokesman for the British High
Commission in Dhaka said: The
U.K. has made clear its support for
Bangladeshs efforts to bring to jus-
tice those accused of atrocities com-
mitted in 1971. Along with our EU
partners, we are however opposed
to the application of the death pen-
alty in all circumstances. People try to douse a burning bus that was attacked, allegedly by opposition activists, in Dhaka on Sunday.
Emerging Markets Reach Pivot Point
fast growth spawned the idea of
convergence, as poor countries
started closing the gap with their
richer neighbors. Emerging markets
already account for half of global
gross domestic product and the IMF
expects this to rise to a two-thirds
share within a decade.
The optimists emphasize tempo-
rary factors such as stimulus efforts
that have waned in developing coun-
tries, causing global export demand
and commodity prices to decline.
Mr. Schwartz contends that growth
in countries like India will recover,
driven by urbanization. Just the
catch-up from productivity
gainscan restore these high growth
rates, he said.
The pessimists argue the devel-
oping world already has harvested
the easy gains from industrialization
and many emerging countries are
now facing capacity constraints.
Their populations in many cases are
aging and education levels remain
low. Adding to the somber mood: the
eventual rollback of the U.S.s easy-
money policiesfear of which led to
a rush of capital out of emerging
markets this summerand the
winding down of a decadeslong com-
modity supercycle.
Put Anders Aslund, a senior fel-
low at the Peterson Institute for In-
ternational Economics and a profes-
sor at Georgetown University who
specializes in economic transition, in
the pessimist camp. He believes the
industrialization process is now over
and most nationsrich and poor
will return to growth levels of
around 3.5%, as they did between
1980 and 2000.
To be sure, the Feds decision last
week not to begin winding down a
key pillar of its easy-money policy
its $85 billion-a-month bond-buying
programhas given emerging mar-
kets some breathing room.
But these nations, many econo-
mists say, need this breathing space
to push through changes to make
their economies more resilient for
when the Fed does move, later this
year or sometime next year.
Mr. Aslund argues nations like
Russia and Brazil now are saddled
with high wages, pricing them out of
global markets for many goods.
Chinas investment-led growth
model has run out of steam as facto-
ries lie idle and productivity de-
clines. Whats more, many develop-
ing countries remain mired in
corruption and trade protectionism
is on the rise.
Were likely to see a decade of
little or no convergence, Mr. Aslund
said.
The IMF, however, sees a blurry
but still potentially bright growth
picture. In its latest World Economic
Outlook, the fund says most of the
drop in growth since 2010 can be ex-
plained by cyclical factors, such as
the end of emerging markets stimu-
lus packages.
The fund does single out China
and Russia as facing persistently
lower rates of growth in the years
ahead. The IMF expects China to
grow 7% in 2018, versus a 9.6% aver-
age over the past 15 years, as the
gains from urbanization and massive
state investment peter out.
But Kalpana Kochhar, a deputy
director at the fund, said in a recent
presentation that a slowdown is wel-
come if it means emerging markets
can grow without building up asset
bubbles. Many Asian countries, for
instance, have built up large debt
levels that threaten their economic
stability.
Economists do agree on the need
for emerging markets to undertake
overhauls of their economieslike
improving infrastructure and boost-
ing investment in research and de-
velopmentto unleash the next
wave of growth.
Some countriesPeru and the
Philippines, for instancehave won
credit upgrades recently for changes
that have attracted foreign investors
and kept growth stronger than their
peers. For China, the key is to pro-
mote domestic spending, rather than
relying on unproductive state com-
panies for expansion.
Ultimately, the cause of the
growth slowdown remains open for
debate. But it seems clear that the
countries that fail to reform aggres-
sively will be guaranteed to enter a
prolonged period of slower growth,
leaving their people mired in pov-
erty and their economies trailing the
West.
Growing Pains
Economic growth has slowed in many emerging
markets and isnt expected to return to earlier
highs any time soon. Economic growth forecasts
for the BRICS countries.
The Wall Street Journal Note: India forecast is on a scal-year basis. Source: International Monetary Fund
China
India
Russia
South Africa
Brazil
9.6%
6.9
4.4
3.2
2.9
7.0
6.7
3.5
3.5
3.5
Average annual growth 1998-2013
Forecast growth for 2018
Taliban Vows
To Avenge
Drone Attack
In Pakistan
only fuels anti-Americanism.
If criminals are being elimi-
nated by drones, we should not turn
them into heroes, said Mr. Jaspal.
The government is giving the im-
pression that a disaster has hap-
pened.
Since 2003, militants have killed
17,867 civilians in Pakistan, along
with 5,418 security personnel, ac-
cording to a tally kept by South Asia
Terrorism Portal, an independent
website based in Delhi.
The U.S. Central Intelligence
Agency has hunted Mr. Mehsud
since 2009, blaming him for a
bombing that year that killed seven
Central Intelligence Agency employ-
ees at a base in eastern Afghanistan.
Mr. Mehsud was also linked to the
2010 attempted car bombing in New
Yorks Times Square.
Militants blame Islamabad for al-
lying with Washington in the anti-
terror fight and say that Pakistans
government allows the drone at-
tacks despite publicly condemning
them.
Jandullah, a faction of the TTP
that took responsibility for Septem-
bers twin suicide bombing of a
church in Peshawar, said Sunday
that more such attacks would now
follow. We will take revenge, said
Jandullahs spokesman, Ahmed Mar-
wat. We will target the Pakistan
army, and Pakistan.
The competition within the TTP
to succeed Mr. Mehsud, meanwhile,
is causing serious tension within the
movement, according to security of-
ficials.
In the TTPs stronghold of North
Waziristan, in Pakistans tribal ar-
eas, its commanders met Sunday in
an apparent attempt to soothe dis-
sent over a decision made at a com-
manders gathering on Saturday to
appoint Khan Said, the head of the
groups South Waziristan wing, as
Mr. Mehsuds successor.
Mr. Saids elevation hasnt been
publicly announced by the organiza-
tion, and rival contenders are
backed by some factions.
After the meeting, Mr. Tariq, the
TTP spokesman, said that another
senior militant, Asmatullah Shaheen
Bhittani, would take temporary
charge, and that a permanent new
chief would be announced within
days.
We are in mourning, so we are
not in a position to announce a new
leader, said Mr. Tariq.
Mr. Said, also known as Sajna, is
credited with masterminding the
2012 attack on a jail in Bannu, a
town on the edge of North Waziri-
stan, in which some 400 prisoners
were freed, including many mili-
tants. He is also closely linked to or-
ganizing the supply of TTPs suicide
bombers. Some TTP commanders
said they were confident that Mr.
Said would be confirmed as their
leader.
Militants say that
Pakistans government
allows the drone attacks
despite publicly
condemning them.
A
s
s
o
c
i
a
t
e
d
P
r
e
s
s
Monday, November 4, 2013
As of 4 p.m. ET Euro 1.3490 g 0.76% Yen/US$ 98.78 0.54% Yen/A$ 93.26 0.36% Oil 94.61 g 1.84% Gold 1313.10 g 0.79% 10-year Treasury g 21/32 yield 2.618% 3-month Libor 0.23775
THE WALL STREET JOURNAL. asia.WSJ.com
Lululemons Pant-Quality Issues
Appear to Be Stretching Further
BUSINESS &FINANCE 16
Cloud Over NSAMay
Give Cover to AT&T
HEARDONTHE STREET 28
Sony Struggles to Remain in the Game
In just three months, Sony Corp.
went from a company on the mend
to one whose recovery is now in se-
rious doubt.
Hidekazu Miyahara, an analyst at
Marusan Securities, recalls the cel-
ebratory mood at Sonys earnings
briefing in Tokyo in late July. The
Japanese electronics giant had just
reported a net profit for the three
months ended June 30 and analysts
saw signs of a recovery in Sonys
core electronics operations follow-
ing restructuring that involved
10,000 layoffs. During the question-
and-answer session, another analyst
told the executives how excited he
was to see the television business fi-
nally turn profitable.
On Thursday, Mr. Miyahara was
shocked to see Sony issue a profit
warning while reporting a loss for
the three months ended Sept. 30.
The outlook is particularly dis-
appointing because Sony has al-
ready done a lot of cost cuts, said
Mr. Miyahara. There may be little
room left for more drastic cuts in
fixed costs, he said, noting that he
is reviewing his Buy rating on the
stock.
Meanwhile, Moodys Investors
Service said Friday it would review
Sonys debt rating for a possible
downgrade, citing slow progress
being made in improving overall
profitability.
Investors sent the Japanese elec-
tronics makers shares tumbling in
Tokyo trading Friday after the com-
pany slashed its profit outlook by
40% Thursday. The stock fell 11% to
close at 1,668 (about $16.96) wip-
ing more than $2 billion off Sonys
market value.
Sonys quarterly loss was mainly
due to its movie business, but what
is worrying analysts and investors is
the bleak outlook for its consumer
electronics. TVs became un-
profitable again, and Sony
cut its sales forecasts for
TVs, PCs and cameras. The
biggest concern is that the
profit warning isnt just a
temporary outcome of a
harsher economic climate,
but an indication that the
turnaround scenario as a
whole may not be working.
Movies are in many
ways a hit-and-miss, but
its the structurally trou-
bling electronics division thats dis-
appointing, said Takuya Yamada, a
senior fund manager at Astmax As-
set Management, which has around
$1.2 billion in assets under manage-
ment.
Under Kazuo Hirai, who became
chief executive last year, Sony has
designed a three-year road map for
a turnaround. After
squeezing a group net
profit in the last fiscal year
thanks in part to asset
sales, this years promise
from Mr. Hirai was to turn
its electronics operations
profitable, including the TV
business that has been un-
profitable on an annual ba-
sis for nearly a decade.
This isnt the first time
Sony has disappointed in-
vestors with its earnings
outlook. Howard Stringer, Mr. Hi-
rais predecessor, also promised a
turnaround that never panned out.
Sonys next bets are its Xperia
smartphones and the PlayStation 4
videogame console, but analysts say
the prospects for those businesses
are far from guaranteed, given in-
tensifying competition and changing
consumer preferences.
Sony needs to make harsh deci-
sions about what its product portfo-
lio is going to be, said Steve Du-
rose, senior director at Fitch
Ratings. He said that Sony should
consider moving away from con-
sumer electronics to focus more on
industrial products for corporate
customers, like its Japanese peer
Panasonic Corp., which raised its
profit outlook Thursday.
Sony Senior Vice President Shiro
Kambe said he expects sales to pick
up significantly after the Nov. 15 re-
lease of PlayStation 4, the com-
panys first reboot of its popular
BY JURO OSAWA
Kazuo Hirai
FortescueAims toSpeedDebt Repayment
PERTH, AustraliaFortescue
Metals Group Ltd. survived several
brushes with lenders in Andrew For-
rests decadelong campaign to build
a small explorer into the worlds
fourth-largest iron-ore producer.
Now, Mr. Forrest wants Fortes-
cue to think big and bold again
this time to reduce its US$9.3 billion
pile of debt.
Mr. Forrest said the resilience of
iron-ore prices amid a slowdown in
Chinas economic growth has
opened the door to faster repay-
ments of debt than recently envi-
sioned by Fortescue management.
Also, cash flow from the companys
mines in Australias remote Pilbara
region should increase as Fortescue
completes a program to expand an-
nual production to 155 million tons
of iron ore.
Getting the gearing right down
will have a great return to share-
holders, Mr. Forrest, the companys
chairman, said in an interview. It
will increase our market capitaliza-
tion very substantially, so that will
be our primary goal.
For investorsincluding Mr. For-
rest, who owns 33% of Fortescues
stockprospects of a reduced debt
burden are fueling hope that the
Perth-based company is headed for
a period of stability.
In its decadelong quest to break
the dominance of Vale SA, Rio
Tinto and BHP Billiton in iron-ore
output, Fortescue used loans to
build a network of land holdings,
power and water infrastructure, as
well as railway and port facilities in
Pilbara.
The bold bets enabled Fortes-
cues value to grow quickly as China
sharply increased imports of Austra-
lian iron ore to make steel for in-
dustries such as construction and
auto manufacturing. But it also
meant the company was vulnerable
to global shocks.
During the global financial crisis
in 2009, Fortescue staved off a
funding crunch by selling a 16.5%
stake to Chinese steelmaker Hunan
Valin Iron & Steel Group Co. for 1.2
billion Australian dollars (US$1.13
billion). Valin has since sold some of
that holding.
In September of last year, a rapid
decline in iron-ore prices stretched
Fortescues balance sheet and
sparked emergency talks with lend-
ers to renegotiate billions of dollars
of debt.
Mr. Forrest steered the company
through the financial crisis as chief
executive, before moving up to be-
come chairman in August 2011.
When the sharp slide in iron-ore
prices last year dragged down the
value of Fortescues stock, Mr. For-
rest spent millions of dollars to in-
crease his stake in the company and
shore up investor confidence.
That investment is now valued at
much more. Although Fortescues
stock neared its lowest level in four
years in June, it has since re-
bounded 80%, outperforming BHP
and Rio Tinto as strong Chinese
steel production supported iron-ore
prices and credit-rating firms in-
cluding Fitch upgraded their outlook
on Fortescue.
Investors also took heart from
Fortescues repayment of A$140 mil-
lion of preference shares in a move
to bring down its debt. Since then,
BY RHIANNON HOYLE
Cash flow from Fortescues operations in Australias remote Pilbara region, above in 2011, is expected to increase.
B
l
o
o
m
b
e
r
g
N
e
w
s
Hot Iron
Fortescue Metals share price
vs. price of iron ore
Source: SIX Financial; The Steel Index (iron-ore)
A$8
2
4
6
12 13 2011
$200
IRON ORE
US$ a metric ton
FORTESCUE
Share price
50
100
150
Some See
Reversals in
Emerging
Stocks Path
Investors have rediscovered de-
veloping countries, sending their
stocks up 16% as a group since late
June.
A growing number of analysts
who follow these countries, known
in the trade as emerging markets,
find that troubling. Their message:
Proceed at your own risk.
Emerging markets are exciting to
investors because for much of the
past decade, EM stocks and bonds
delivered the big gains. Many inves-
tors still are nervous about U.S.
stocks, even though many major U.S.
indexes are in or near record terri-
tory.
In the early 2000s, many inves-
tors developed a reflex. When they
want to take a risk and add some
pop to their portfolios, they put a
little money in emerging markets
like India, Brazil, Turkey or China.
These analysts are warning that
things have changed.
It is certainly going to be a
much more volatile ride than most
people expect, says Manoj Pradhan,
global emerging-markets economist
at Morgan Stanley.
Mr. Pradhan recently wrote a re-
port titled EMIs the Worst Be-
hind Us Now? His conclusion: The
worst is not behind us: In fact,
things likely have to get worse so
they can then get better.
Nimble speculators may profit
with targeted bets, Mr. Pradhan
says. But longer-term investors
could feel some pain.
In the past, developing econo-
mies benefited from booming export
BY E.S. BROWNING
Australian iron-ore tycoons next
bet is nickel............................................... 19
Chinas Shandong Shipping to
operate Vale freighters....................... 19
IN DEPTH
among several Islamist factions that an-
nounced their rejection of any dialogue with
Mr. Assad and his regime at the tentative Ge-
neva talks that are strongly backed by the U.S.
and its European allies.
Also gaining prominence in the Damascus
suburbs is the al-Qaeda-affiliated Islamic State
of Iraq and Sham, or ISIS, which already con-
trols several areas in northern and eastern
Syria. The group established a training camp
for men and teenage boys in the eastern sub-
urbs this summer, according to residents and
video released by ISIS.
It announced its first martyrdom opera-
tion in the Damascus area on Sept. 22, when
a non-Syrian Arab jihadist detonated a vehicle
packed with four tons of explosives in front of
a government building in a town north of the
capital. Activists and the ISIS say the attack
killed 50 people.
ISIS has also claimed responsibility for
some of the mortar attacks on regime-held
sections of Damascus. More than 50 people,
mostly civilians, have been killed since the
start of October in these mortar attacks, ac-
cording to residents and state media.
The Nusra Front, another al Qaeda-linked
group, is also raising its profile in the Damas-
cus area. It claimed responsibility for a suicide
car-bomb attack in mid-October that targeted
the headquarters of Syrian state television in
the heart of Damascus. A few days later, the
group led a major assault on a pharmaceutical
plant southeast of Damascus that was being
used as a base for regime troops.
In early September, a Jordanian jihadist
with the Nusra Front blew up a pickup truck
laden with explosives concealed under crates
of vegetables at a regime checkpoint at the
entrance of the predominantly Christian town
of Maaloula north of Damascus, according to
a Nusra Front video.
That attack paved the way for Islamist rebels
to enter the ancient town and triggered the
flight of hundreds of Christians to Damascus.
The presence of Islamists in the country
benefits the regime because it confirms the
theory it was promoting from the first minute,
says Caroline Ayoub, a Christian Damascus ac-
tivist who collaborated with Muslim female op-
position figures in the eastern suburbs until her
arrest by the regime in April 2012. She was im-
prisoned for 26 days and then left the country
upon her release. She now lives in France.
With every death and arrest in the suburbs,
many residents became convinced that getting
armed was the only solution, she says.
Many Damascus residents say that like
other underprivileged and conservative rural
areas, the eastern suburbs in particular were
fertile ground for militancy as the civil war
spread. Many believed Mr. Assads Alawite-
dominated regime and its Shiite allies were
butchering Syrias Sunni majority and that it
was time for Sunnis to rule Syria. This reso-
nated with Sunnis across the region, particu-
larly in Gulf Arab states.
A turning point came in June 2011. That is
when the Army of Islam commander Mr. Al-
loush, a native of the eastern suburbs main
town Douma and a former honey merchant
jailed in 2009 for his Islamic preaching, was re-
leased. He told a Yemeni magazine that he im-
mediately formed an armed faction because he
knew Alawites would only be defeated through
combat based on their dark history.
In the first half of 2012 Mr. Alloushs faction,
called the Islam Brigade at the time, was among
those that fought battles to repulse regime mili-
tary incursions into the eastern suburbs.
In July 2012, after the assassination of sev-
eral regime officials in Damascus, rebels from
the suburbs and sleeper cells within the city
tried to close in on the regime from multiple di-
rections, triggering street clashes.
Some of the bloodiest battles took place in
Al-Midan, a district considered the southern
gate of Damascus, according to people who
witnessed the fighting. The poorly armed and
disorganized rebels from the suburbs were no
match for government troops, who forced
them to retreat, said a secular activist who
worked in the area at the time. She said many
unarmed Midan activists were either killed or
imprisoned by regime forces.
After that the regime started isolating sub-
urban rebel enclaves and bombarding them al-
most daily.
In February 2013, rebels from the eastern
suburbs led mainly by Islamist factions in-
cluding Mr. Alloushs group responded by run-
ning down regime defenses in Jobar, a district
at the entrance of Damascus, and vowed to
liberate the capital.
In late July a prominent regime com-
mander, Col. Mohammad al-Ali, was shot dead
in a rebel ambush in a suburban area known
as the Ghouta, according to a pro-regime
paramilitary leader. It isnt known who killed
the commander, who had been leading opera-
tions in conjunction with Hezbollah, and who
went by the nickname The Lion of Ghouta.
In early August, Mr. Alloush taunted Mr. As-
sad and the Alawite scoundrels on pro-rebel
Arab television, claiming responsibility for a
barrage of mortars and Soviet-era rockets that
hit the Damascus neighborhood where the pres-
ident and senior regime officials reside.
Many opposition activists say the regime was
determined after that to reclaim the suburbs.
They said shortly before 2 a.m. on Aug. 21,
units of the regimes Republican Guard and
Fourth Armored Division fired surface-to-sur-
face rockets containing the nerve agent sarin
onto what they described as the rear lines
of rebels facing off with regime forces east
and southwest of the city.
Although they deny using chemical weap-
ons, regime officials acknowledge launching a
pre-emptive strike on Aug. 19 to foil what
they say was a rebel plan to assault Damascus
from four directions corresponding to the
citys ancient gates.
The chemical attack, which was confirmed
in a U.N. report in September that didnt as-
sign blame, has only served to radicalize reb-
els and their supporters more, residents and
opposition leaders say.
Meanwhile, the mayhem in and around Da-
mascus continues. On the east side of the city,
a road that once led to Douma in the eastern
suburbs via the district of Jobar is now a no
mans land littered with debris.
Nearby, units from the regimes Republican
Guard and Fourth Division are hunkered down
in a sports stadium and other public facilities,
including a bus terminal and the offices of the
main utility company in Damascus, which still
bears the signs of a rebel assault in July.
Pro-government soldiers dash from corner
to corner to avoid rebel snipers. They said in
interviews that their job is to keep the rebels
to the east at bay with the help of artillery
and aerial bombardment.
The Damascus neighborhood where these
soldiers are based is known as Abaseen. It has
become a frequent target of mortar attacks
from the suburbs. Many of the residents that
remain are Christians.
On a recent Sunday worshipers gathered
for Mass at St. George, one of several
churches in the area. The sound of explosions
reverberated in the distance as solemn hymns
were sung inside.
DAMASCUS
INTERNATIONAL
AIRPORT
3 miles
3 km
D A M A S C U S
ACity Divided
A long-running battle between regime forces and
rebels in Damascus and the suburbs has polarized
and segregated communities & fueled the rise of
Islamists.
1
6
m
ile
s
Opposition contested Opposition
Daraya
Regime stormed this
strategic town near
presidential palace and
Mezze military airport in
Aug. 2012. Scene of erce
clashes since Nov. 2012.
Moadhamiya
Some 8,000 civilians
and rebels besieged
since start of 2013.
One of the areas hit in
August chemical
attack.
Qudsaya
Tens of thousands of
displaced families live in
this mostly anti-regime
neighborhood close to
major military
installations.
Mt. Qasioun
Peak overlooking
capital has been
used by regime to
bombard rebel
enclaves.
Adra
Rebels stepped up
attacks here, home to
major industrial
complex and gas
plant.
Maaloula
Mostly pro-regime
Christian village
attacked by Islamist
rebels on Sept. 4 as
part of new front in
Qalamoun
mountains.
Douma
Epicenter of rebel
stronghold, eastern
Ghouta. Nearby towns
among worst hit in
August chemical attack.
Otaiba
Regime declared
major coup in April
when it captured
this crossroads of
rebel supply routes.
Jobar
Overran by rebels
in February. Now a
major front in
battle for the
capital.
Al-Midan
Southern gate of
Damascus scene of
clashes in summer 2012
when rebels launched
rst push to liberate
capital.
A butcher shop in Al-Midan, where street battles raged last year when rebels attempted to storm Damascus. The poorly armed and disorganized rebels from the suburbs were no match for government troops.
C
a
r
o
l
e
A
l
f
a
r
a
h
f
o
r
T
h
e
W
a
l
l
S
t
r
e
e
t
J
o
u
r
n
a
l
INDEX TO BUSINESSES AND PEOPLE
Almeida Junior Shopping
Centers.........................8
Apmex...........................23
Apple.............................17
Asia Pacific Breweries.21
AT&T..............................28
Bank of America...........22
Bank of Nauru................ 5
Barclays.........................21
Barrick Gold.................. 19
Baxter International.......8
Bendigo & Adelaide
Bank.............................5
BHP Billiton.............15,19
BlackBerry.....................17
Cerberus Capital
Management..............17
China Citic Bank
China Ocean Shipping
(Group).......................19
China Vanke A..............20
Chinas General
Administration of
Customs.....................22
Citigroup....................... 21
DBS Group Holdings.....21
Design Within Reach... 16
Dillon Gage Metals.......23
Facebook.................... 3,17
Fairfax Financial
Holdings.....................17
Fortescue Metals Group
Ltd.........................15,19
Fraser & Neave.............21
Glencore Xstrata.......... 19
Gold Fields....................19
Google............................. 3
Highlands Pacific..........19
International Business
Machines....................18
Lululemon..................... 16
Macquarie Group.......... 20
Marusan Securities......15
Merck............................ 16
Merit Financial ............. 23
Mondelez International18
Morgan Stanley............15
NBC................................. 8
NBCUniversal..................8
Nissan Motor..................1
Nokia............................. 18
NQ Mobile.....................16
Oversea-Chinese
Banking......................21
Panasonic......................15
Panaust......................... 19
Petroliam Nasional
Berhad........................22
Poseidon Nickel ............ 19
Qualcomm.....................17
Rio Tinto.................. 15,19
Royal Bank of Scotland
Group.....................21,28
Royal Dutch Shell.........18
SABMiller......................18
Samsung Electronics....17
Shandong Shipping.......19
Shunfeng Photovoltaic
Singapore Exchange..... 21
Singapore Press
Holdings.......................3
Sony........................... 1,15
Standard Chartered......21
Sumitomo..................... 19
Suntech Power
Holdings.....................18
Sydney Airport
Holdings.....................20
Taranggana Nata Asia....4
Third Point....................17
Transportation Security
Administration............ 7
UBS............................... 21
UMW Holdings Bhd......22
UMW Oil & Gas Bhd.... 22
U.S. Federal Aviation
Administration.......... 17
Vale.......................... 15,19
Verizon
Communications........28
Vodafone..................18,28
Westfield Group............. 8
Wood Mackenzie.......... 22
Wuxi Guolian
Development Group.. 18
Yahoo...............................3
Businesses
This index of businesses
mentioned in todays
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.
People
This index lists the
names of business-
people and government
regulators who receive
significant mention in
Todays Journal.
Adeang, David.................5
Aelbers, Erik................... 5
Ashton, Chris................21
Charoen
Sirivadhanabhakdi.....21
Ciancia, Paul Anthony....7
Clark, Mark................... 21
Cummings, Allen............ 7
Emanuel, Ezekiel ............ 6
Febrianto, Roni...............4
Forrest, Andrew.......15,19
Fregin, Doug..................17
Galarza, DAndra.............8
Gardiner, Matt..............21
Getlin, Mike..................23
Gissen, Malcolm........... 22
Gupta, Piyush............... 21
Hanlon, Terry................23
Haynes, Michael........... 23
Hirai, Kazuo.................. 15
Jakhu, Ram.....................5
Kraemer, Harry............... 8
Lazaridis, Mike............. 17
Lowy, Peter.....................8
Luxembourg, Alain....... 16
McEwan, Ross.............. 28
Miyahara, Hidekazu......15
Moore, Nicholas............20
Munson, Julian............. 21
Murray, Jack................. 21
Nash, Paul.....................21
Nugroho, Tio................... 4
Obama, Barack................6
Pearce, Stephen............18
Power, Nev....................18
Rabin, Victoria................8
Rajagopalan, Rajeswari
Pillai ............................. 5
Ramchandani, Rohan....21
Ravi, Ephrem................ 22
Riordan, Matt............... 22
Salas, Carlos.................22
Shearing, Neil...............22
Short, John..................... 5
Stafford, Gary...............19
Sudrajat, Ade..................4
Swindler, Edward............8
Upfold, Patrick..............20
Wanandi, Sofjan.............4
Watsa, Prem.................17
Weiss, Andrew............. 28
Wong, Danny................ 22
BUSINESS & FINANCE
Corrections Amplifications
NQ Mobile Inc.s shares trade on the
New York Stock Exchange. A front-page
article on Thursday about Chinese com-
panies initial public offerings in the U.S.
incorrectly said the shares trade on the
Nasdaq Stock Market.
Lululemon Complaints
Stretch a Little Further
Lululemon Athletica Inc. said it
received new complaints about the
quality of some of its yoga pants,
following a recall this year when the
fabric was found to be too revealing.
The statement came after some
customer reviews on Lululemons
website and comments on the com-
panys Facebook page complained of
pilling and fabric that was scratchy,
thin and see-through on some pants
that had been part of the recall and
now are being stocked again.
A Lululemon spokeswoman said
Friday the problems were experi-
enced only by a very small number
of customers and that the company
determined after an internal evalua-
tion that it didnt have a broader
problem.
The complaints focused on two
styles of pants on Lululemons web-
site. The $98 Groove pant, one of
the retailers most popular styles,
gets an average customer rating of
just three out of a possible five stars
on the site. The $82 Wunder Under
Full-On Luon gets 3 stars.
The middling ratings are unusual
for a brand that long had enjoyed a
cultlike following of aficionados and
are lower than the four stars
awarded to the $98 Astro pants,
which also had been part of the re-
call. Other pants on the site have
five star ratings, including the Ebb
to Street Pant and the Still Pant.
Lululemon will resolve any qual-
ity complaints from customers, the
spokeswoman said.
The customer complaints were
reported earlier by the Associated
Press.
The Vancouver, British Columbia,
company has sought to assure in-
vestors that the bulk of the earlier
problem with see-through pants is
over.
The glitches cost the company
millions of dollars, damaged its rep-
utation and depressed its share
price. The recall continues to weigh
on the companys performance, re-
sulting in late deliveries.
Lululemon in September lowered
its outlook for the year, saying it ex-
pected the effects of the late prod-
uct deliveries to continue through
the end of the fiscal year in early
February. The company posted earn-
ings $56.5 million for the quarter
ended Aug. 4, down slightly from
$57.2 million a year earlier.
Lululemons shares have re-
bounded after hitting a low of
$61.33 in June. They closed Friday
at $67.85, down $1.24, or 1.8%.
Lululemon last week also named
Tara Poseley, a former Kmart execu-
tive, as its chief product officer. She
succeeds Sheree Waterson, who left
her post soon after the March recall.
Ms. Poseleys previous retail ex-
perience included a short stint as
chief executive of Design Within
Reach Inc., a San Francisco seller of
modern furnishings and accessories
that went public in 2004. She left in
September 2006, 11 months after
being promoted to CEO.
Lululemon is still seeking a suc-
cessor to CEO Christine Day, who in
June announced that she planned to
step down. Ms. Day intends to leave
once her successor arrives.
The CEO search wont be com-
pleted by late fall, as previously
hoped, a person familiar with the
situation said last week. Several
outside prospects remain in the mix,
but they include currently employed
retail executives unwilling to quit
their jobs before the holidays, the
person said. Others arent a good
cultural fit or dont want to relocate
to Canada, the person said.
A Lululemon spokeswoman de-
clined to comment on how soon di-
rectors might find a new CEO.
We have contingency plans in
place if this goes longer than year-
end, Ms. Day said last week. I am
committed that I will be there
through January.
Joann S. Lublin
BY SUZANNE KAPNER
Lululemon has sought to assure investors that the bulk of the earlier problem
with see-through pants is over. Above, a store in Pasadena, Calif.
G
e
t
t
y
I
m
a
g
e
s
MerckSees Promise
InNewHPVVaccine
An experimental Merck & Co. vac-
cine appeared to provide broader
protection against a cancer-causing
virus than the companys Gardasil
shot in clinical trials.
Merck said the study results sup-
port its plan to submit the new vac-
cine, code-named V503, for U.S. regu-
latory approval by year-end, which
could lead to market launch next year
at the soonest. Merck expects health-
care providers to eventually switch to
V503 if the product receives market-
ing approval. Some analysts expect
its annual sales could exceed $1 bil-
lion.
The case for using V503 is even
stronger than the case for using Gar-
dasil, which was already strong, said
Roger Perlmutter, head of Mercks re-
search-and-development unit. Dr.
Perlmutter has singled out V503 as a
program Merck will focus on as it
overhauls its R&D unit in a bid to re-
cover from setbacks.
Gardasil, launched in 2006, was
the first vaccine to protect against
human papillomavirus, or HPV, a sex-
ually transmitted virus that can cause
cervical cancer in women and other
less-common types of cancer in males
and females. The U.S. Centers for Dis-
ease Control and Prevention recom-
mends HPV vaccination of boys and
girls ages 11 and 12, though it is ap-
proved to be given to people ages 9
to 26. GlaxoSmithKline also sells an
HPV vaccine called Cervarix.
Gardasil is designed to protect
against four strains of HPV, two of
which are believed to be responsible
for about 70% of all cervical-cancer
cases. The other two strains are the
primary culprits in causing genital
warts. But Gardasil doesnt protect
against many other strains of HPV,
some of which can also cause cervical
and other cancers.
To close the gap, Merck designed
V503 to protect against nine HPV
strains, adding five cancer-causing
HPV types to the four included in
Gardasil. This wider set is believed to
account for nearly 90% of all cases of
cervical cancer globally, said Alain
Luxembourg, director of clinical re-
search for adult vaccines in Mercks
R&D unit.
Merck ran clinical trials to test the
new vaccines safety and efficacy, and
results are being presented at an
HPV-focused medical meeting in Flor-
ence, Italy, this week. One study en-
rolled more than 14,000 women ages
16 to 26, who received either Gardasil
or V503 in three doses over six
months. The goal was to show V503
was comparable to Gardasil in pro-
tecting women against the four HPV
strains common to both vaccines, and
superior to Gardasil in protecting
against the five additional strains in
V503.
For the four HPV strains common
to both vaccines, the study compared
immune responses as measured in
blood tests, and found V503 to be
comparable to Gardasil. The research-
ers used immune response as the cru-
cial measure because the rates of dis-
ease caused by these four HPV strains
were too low in both groups to pro-
vide a meaningful comparison.
For the five HPV strains not cov-
ered by Gardasil, researchers com-
pared the rates of precancerous le-
sions caused by those five strains.
The study found that V503 reduced
the incidence of these lesions by
about 97% compared with Gardasil.
Merck said it couldnt test the ef-
ficacy of V503 in virginal adolescents
because they generally havent yet
been exposed to HPV. So researchers
measured immune responses in boys
and girls ages 9 to 15 and compared
them to the immune responses seen
in women ages 16 to 26. The study
concluded the responses were com-
parable across the nine HPV types
targeted by V503, which Merck hopes
will demonstrate to health authorities
the vaccine is effective in adolescents.
The rates of adverse events
among V503 recipients were gener-
ally similar to those for Gardasil,
though V503 subjects had a higher
incidence of injection-site problems
such as pain and redness than Garda-
sil subjects, 90.8% versus 85.1%.
Safety concerns have occasionally
dogged Gardasil, particularly reports
of fainting after receiving the shot.
But the CDC has concluded the vac-
cine is safe and effective.
Analysts from Leerink Swann esti-
mate V503 sales could reach $1.9 bil-
lion by 2018, though it would canni-
balize sales of Gardasil. Merck
reported $1.6 billion in Gardasil sales
last year.
BY PETER LOFTUS
Merck designed the new
V503 vaccine to protect
against nine HPVstrains.
IN DEPTH
To Suburbs of Syrian Capital
Their Growing Strength Further Transforms a High-Stakes Battle for Control of Damascus
I
slamist rebels, including some with links to
al Qaeda, are fast gaining strength in sub-
urbs encircling the Syrian capital, despite
a chemical-weapons attack two months ago
on one of their strongholds.
Since early September these groups have
claimed responsibility for several suicide-
bomb attacks against regime targets in and
around Damascus. They have dramatically in-
creased mortar and rocket attacks on regime-
held residential neighborhoods within the
capital and have raided nearby towns and vil-
lages inhabited by minorities, including
Christians.
In late October, these rebels blew up a gas
pipeline feeding a power plant on the out-
skirts of Damascus, causing a complete black-
out in the capital and most of Syria for sev-
eral hours before the damage was repaired,
according to government officials and resi-
dents.
While riven by leadership rivalries and
competing agendas, the Islamist rebels share
the goal of toppling President Bashar al-As-
sad and establishing Islamic rule. Their
strengthening around Damascus further
transforms a high-stakes battle for control of
the capital and illustrates how Islamist
groups have again extended their influence at
the expense of the more-moderate groups
that led the early stirrings of rebellion
against the regime.
The rise of Islamist groups around Damas-
cus has also helped give the Syrian regime
and its battlefield allies, including the Iran-
backed Lebanese group Hezbollah, more do-
mestic political cover to forge ahead with
military operations aimed at rooting out what
they regard as terrorists at the doorsteps of
the capital.
During a meeting with United Nations-
Arab League envoy to Syria Lakhdar Brahimi
in Damascus on Wednesday, Mr. Assad said a
proposed peace conference in Geneva this
month will achieve little unless Western and
Arab states stop funding rebels whom he
called terrorists.
Many Damascenes living in regime-held
areas, where the government has worked
hard to maintain aspects of normal life,
would agree. In interviews, many say they
support all measures to keep Islamist rebels
at bay, and view Mr. Assad as a savior from
extremists.
The thing that will give us peace and se-
curity is if they are all exterminated, said a
Christian resident of a neighborhood on the
eastern side of Damascus. State media and lo-
cal residents say rebel mortars killed eight
people in the neighborhood in early October.
Residents in rebel-controlled communities
around Damascus, meanwhile, increasingly
see Islamists as their only protectors from re-
gime forces laying siege to their enclaves.
The situation is so dire now in some of
those areas that some clerics there have is-
sued fatwas, or religious edicts, permitting
the eating of cats and dogs to fend off starva-
tion.
In September, pro-regime forces touted
what they described as the cleansing of two
rebel-held towns south of Damascus, with op-
position activists accusing them of executing
more than 100 people, mostly rebel fighters.
The regime says it killed terrorists there and
showed graphic images of disfigured bodies
on state television.
Last week, regime forces recaptured the
predominantly Christian town of Sadad,
about 100 kilometers northeast of Damascus,
after it was overrun by Islamist rebels two
weeks ago, according to residents, opposition
activists and state media.
Islamists including al Qaeda-linked fac-
tions long ago gained ground in northern and
eastern Syria. But Damascus is more impor-
tant strategically to the regime, since it is the
governments seat of power and the symbol
of its authority.
Many opposition activists who describe
themselves as moderates and secular say the
situation in Damascus is a culmination of a
regime strategy adopted at the start of pro-
tests against Mr. Assad in March 2011 de-
signed to kill and imprison peaceful activists
or force them to flee. These activists say
those tactics ultimately empowered radical
Islamists, allowing them to fill the vacuum
when moderate figures disappeared.
These same activists say Western nations,
particularly the U.S., are also to blame for not
intervening more forcefully or arming moder-
ate factions early in the conflict. They say
Washingtons decision not to strike the re-
gime for its suspected use of chemical weap-
ons in the Damascus area and to opt instead
for a deal with Mr. Assad to dismantle Syrias
chemical-weapons arsenal has emboldened
both the regime and the Islamists.
Mr. Assads government has denied using
chemical weapons. U.S. officials have insisted
they have done everything they could to
unite and bolster moderate opposition forces.
The largest Islamist rebel group in the Da-
mascus area is the Army of Islam, which
claims over 10,000 fighters in the suburbs
alone.
The Army is headed by Zahran Alloush, a
religious preacher previously imprisoned by
the regime. In September he was anointed
commander in an elaborate ceremony dating
back 14 centuries to the time of the Prophet
Muhammad, that was held in an indoor soc-
cer field in an eastern suburb and broadcast
on pro-rebel television.
He has since worked to consolidate his
grip on the area east of Damascus through a
local administration adhering to Shariah, or
Islamic law.
Mr. Alloush has openly declared his goal
of establishing an Islamic state in Syria in
which the countrys minorities must submit
to the rule of the Sunni Muslim majority. He
has described secularism as a falsehood
that can never coexist with Islam and some
secular-minded rebels as bandits.
In late October, the Army of Islam was
BY SAM DAGHER
Damascus, Syria
A residential building in Jobar used by rebel snipers to target government soldiers was heavily damaged by regime bombardment. The largest Islamist rebel group in the Damascus area is the Army of Islam.
C
a
r
o
l
e
A
l
f
a
r
a
h
f
o
r
T
h
e
W
a
l
l
S
t
r
e
e
t
J
o
u
r
n
a
l
BUSINESS & FINANCE
BlackBerry Suitors Mull Joining Forces
The auction for BlackBerry Ltd.
heated up Friday, as three potential
suitors discussed joining forces for a
bid ahead of a Monday deadline for
offers.
After one of BlackBerrys largest
shareholders struck a preliminary
buyout deal with the beleaguered
smartphone maker in September,
BlackBerrys advisers set about
shopping it to a wider group of pos-
sible buyers in an accelerated sales
process designed to arrest Black-
Berrys downward spiral.
In the latest development, Mike
Lazaridis and Doug Fregin, who co-
founded the company in 1984 but no
longer work there, have been in
talks to mount a joint bid with mo-
bile-phone chip maker Qualcomm
Inc. and Cerberus Capital Manage-
ment LP, according to people famil-
iar with the matter.
But in a sign that the sales pro-
cess is far from a frenzied auction,
Fairfax Financial Holdings Ltd.,
which struck the preliminary deal
with Waterloo, Ontario-based Black-
Berry, still hasnt lined up financing
for its bid, another person said.
Fairfax has been seen as the bid-
der to beat, given its tentative deal
and the fact that the firm, led by
former BlackBerry director Prem
Watsa, already owns 10% of the
company. The preliminary Fairfax
deal values BlackBerry at $9 a share,
or $4.7 billion. Fairfax said then that
it was seeking financing for the deal.
BlackBerrys stock price suggests
investors are skeptical that a deal
will be reached at $9 a share, either
with Fairfax or someone else. The
stock has been trading well below
that level, and Friday closed at $7.77
on the Nasdaq Stock Market.
BlackBerry and its advisers put a
for-sale sign on the company after
years of devastating market-share
losses to competitors including Ap-
ple Inc. and Samsung Electronics
Co. According to market researcher
IDC, BlackBerry, which once con-
trolled more than half of the U.S.
smartphone market, recently had
just over 2%.
The trio considering a joint bid
which might not materializeeach
come to it from very different van-
tage points.
Qualcomm, with a market capi-
talization of about $120 billion, is
the largest maker of chips that man-
age cellular communications in
smartphones, and supplies proces-
sors that run software on mobile de-
vices.
Qualcomm had $11.5 billion in
cash, liquid investments and short-
term securities as of June 30. One
motivation for investing in Black-
Berry could be to keep a customer
afloat. Another could be access to
patents; besides its own intellectual
property, Qualcomm licenses rights
to other companies patents under
some circumstances.
Cerberus has made its name in-
vesting in distressed companies. A
BlackBerry bid wouldnt be the first
foray into Canada for the New York-
based firm. In 2004, the firm in-
vested in troubled airline Air Can-
ada.
At the time, the airline was re-
structuring under bankruptcy-court
protection. Two years later, Air Can-
adas parent company launched an
initial public offering and Cerberus
exited its stake by 2009.
Messrs. Lazaridis and Fregin,
who publicly declared their explora-
tion of a potential BlackBerry deal
last month, together own about 8%
of the company. As Cerberus and
Qualcomm could lend them financial
firepower, their stock could lend a
big existing equity stake as a plat-
form for a possible offer.
Other parties that have been con-
sidering a bid for BlackBerry include
Chinas Lenovo Ltd., people familiar
with the matter have said.
Lenovo was still in the hunt for
BlackBerry, a person familiar with
the matter said Friday. BlackBerry
executives recently met with Face-
book Inc. officials to discuss a possi-
ble bid by the social-networking
company for the smartphone maker,
according to people familiar with
the matter. It isnt clear what, if any-
thing, came of the meeting.
Don Clark
By Dana Cimilluca,
Dana Mattioli
and Will Connors
Asia May Allow In-Flight Gadget Use
SINGAPOREAviation regulators
in the Asia-Pacific will consider
matching a decision by the U.S. Fed-
eral Aviation Administration to al-
low air travelers to use tablets and
other personal devices during all
phases of flight.
The FAAs move comes after
years of debate over whether elec-
tronic emissions from devices can
interfere with cockpit instruments.
The regulator had been restricting
the use of electronic devices for de-
cades and the change, announced
Thursday, reflects a view that the
risk of interference from devices has
been reduced due to new technology
and more resilient cockpit systems.
Regulators from around the
world have largely followed the FAA
restrictions on electronic devices,
and thus most of the worlds airlines
ban the use of devices during certain
portions of flight, such as takeoffs
and landings.
At least one Asian country, South
Korea, said it has decided to adopt
the FAA changes, with regulators at
several other jurisdictions saying
that they will review the FAA find-
ings.
After revising relevant regula-
tions, we plan to implement (the
changes) before the end of this
year, said Lee Sung-yong, director
of South Koreas Ministry of Land,
Infrastructure and Transport on Fri-
day, noting that the agency was
very positive on the revised rules.
South Koreas two main interna-
tional carriers, Korean Air Lines Co.
and Asiana Airlines Inc., both said
they would follow the governments
decision on the issue.
Elsewhere in the region, the Civil
Aviation Department in Hong Kong
said it may consider similar actions
if applicable and appropriate,
while the Civil Aviation Authority in
New Zealand has said it would re-
view any findings made by the FAA.
Flag carrier Air New Zealand Ltd.
said as the FAA recommendations
could be adopted in the nation, the
airline is in the process of consider-
ing the processes we would need to
implement to accommodate this.
In Australia, the Civil Aviation
Safety Authority said it doesnt have
specific regulations governing the
use of electronic devices.
Australias biggest airline Qantas
Airways Ltd. said it would be taking
a close look at the FAAs decision
and the reasons behind it, noting it
has no immediate plans to change
its policies on the use of devices.
Still, analysts said they expect
the regions regulators to quickly
follow the FAA rule changes for
competitive reasons.
Local airlines willpressure reg-
ulators to make the changes. Passen-
gers, of course, would want these
changes to occur, said Ron Bartsch,
the chairman of AvLaw International
Pty. Ltd., a Sydney-based aviation le-
gal and consulting firm.
When it comes to air safety, the
FAA is generally seen as being very
conservative, notes Mr. Bartsch, who
previously worked as group general
manager for safety, compliance and
operational risk at Qantas.
However, theyve realized now
that these electronic devices dont
pose any in-flight risk, he said.
Previous rules in the U.S. re-
quired passengers to turn off all
electronic devices on aircraft below
10,000 feet.
Sony Tries to Stay in Game
console in seven years. Sony plans
to sell five million PS4 units by the
end of March.
One of Sonys most competitive
operations is supplying camera sen-
sors used in smartphones, including
Apple Inc.s iPhone. But strong de-
mand for smartphone camera sen-
sors is being canceled out by shrink-
ing demand for traditional cameras
that also use Sony sensors.
We think Sony has a revenue
problem, rather than a cost prob-
lem, wrote Macquarie Securities
analyst Damien Thong in a research
note Friday. The firm has stepped
up its ability to deliver desirable
premium products, but the reality is
that apart from smartphones, Sony
has yet to ignite top-line growth,
Mr. Thong said.
Sony has so far focused on the
European market for its smart-
phones and its presence is small in
the U.S. and China. If Sony were to
ramp up its marketing in those mar-
kets, the increase in costs may pres-
sure the earnings from the mobile
business, analysts say.
A Sony spokeswoman said that
Continued from page 15 the company will focus on cost effi-
ciency and make sure that its smart-
phone business stays profitable,
even though it wont compromise on
necessary marketing. Sony is now
expanding its mobile business in
China and other emerging markets,
in addition to Europe and Japan,
she said.
Organizational integration and
streamlining at Sony, with its broad-
ranging product divisions, hasnt
kept up with the tide of hardware
concentration on smartphones and
tablets, and we see a risk of the firm
being forced into restructuring in-
volving major outlays, Deutsche Se-
curities analyst Yasuo Nakane wrote
in a research note.
Sony already faces shareholders
calling for further restructuring of
its sprawling operations. Hedge-
fund investor Daniel Loeb, whose
firm holds Sony shares, has pro-
posed a spinoff of the companys en-
tertainment division through an ini-
tial public offering, saying that
movie and music businesses are be-
ing poorly managed.
Mr. Loebs Third Point LLC de-
clined to comment.
brei tl i ngf or bentl ey. com
THE ESSENCE OF BRITAIN
Made in Switzerland by BREITLING
BENTLEY B06
OPINION
Nearly a quarter of a century
ago, the nuclear-policy strategist
Albert Wohlstetter wrote in these
pages a fine essay titled The Fax
Will Make You Free. In the 1980s,
as he noted, the CIA, working with
the AFL-CIO and restive Eastern
European labor unions, put fax
machines to excellent use under-
mining Soviet rule. That particular
technology is now ancient, but
Wohlstetters bigger point remains
valid: Technological innovations
that vastly expand the amount of
information we can transfer to
one another are fundamentally
revolutionary, for good or ill.
Smartphones are the new faxes
and, for many all over the globe,
especially the young, their phone
is their source of news, their gro-
cery store, their means of talking
with absent friends and family,
their bank, their movie theater. It
is at the core of their lives and
their sense of personal freedom. If
the United States government
wanted to collect intelligence on
Germanys leadership, it could not
have picked a method more likely
to stir wide outrage than tapping
the personal phone of a politically
popular democratic leader.
And in targeting Chancellor
Angela Merkel, the U.S. picked
someone who grew up dodging
East Germanys Stasi secret police
in order to talk honestly to
friends. The U.S. has not denied
that the monitoring occurred in
the past and some media reports
say it went on for a decade. If so,
we have been sitting on a powder
keg for years.
Some Europeans are now being
candid about their own espionage,
including against the U.S. Bernard
Squarcini, the head of French in-
telligence until last year, recently
told Le Figaro that the French In-
telligence Services know full well
that all countries, whether or not
they are allies in the fight against
terrorism, spy on each other all
the time.
Many of the recent blasts of al-
lied indignation thus ring quite
false, especially since it appears
that much of the National Security
Agencys collection involved basic
information called metadata, such
as the date sent and the sender
and receiver addresses, not the
message content itself. Chancellor
Merkels Germany, however, has
not to the best of my knowledge
perpetrated the kind or degree of
intelligence collection against
America that some other U.S. allies
inside and outside Europe have.
The intelligence business is not
a competition to avoid collecting
intelligence. In particular, we
should be getting the lowdown on
hostile regimes and the govern-
ments that deal with them. Keep-
ing an eye on allies has always
been part of the effort as well. Yet
there is no doubt that the U.S. has
taken a heavy blow regarding our
part in this wild dance of spies
especially from the monitoring of
Chancellor Merkels phone.
The episode poses its greatest
danger if it seriously damages
Americas ability to obtain badly
needed allied intelligence and al-
lied help in dealing with terrorism
and terrorist-backing states. We
are doubly at risk of losing that
sort of cooperation because our
allies are already wary of the U.S.,
having seen less American leader-
ship in recent years on a number
of important issues.
Syria is probably the most dra-
matic case of the U.S. not even
leading from behind but rather
stumbling along behind. Wavering
American leadership has also led
the Europeans to fear that their
tough economic sanctions on Iran
may be subjected to a pre-emptive
weakening, now that the Obama
administration is avidly pursuing
talks with Tehran over its nuclear
program. The Europeans also have
not forgotten that in 2009 the
Obama administration abandoned
plans to install antiballistic-missile
sites in the Czech Republic and Po-
land, to the deep concern of both
nations and to Moscows delight.
In addition to Frances being a
far better leader than the U.S. on
Syriathey were ready to punish
Bashar Assad for his chemical-
weapons use, no need for a parlia-
mentary vote of approvalthe
French also took charge in Mali
earlier this year to combat Isla-
mist rebels. Germany has long
stood beside us in Afghanistan. In
short, our allies over the past sev-
eral years, almost always includ-
ing Britain, have taken action that
is in Americas interest on more
than one occasion.
But they have also rather fre-
quently seen the U.S. make unilat-
eral concessions to enemies and
refuse to lead. At our worst, we
have suggested by our behavior
that it is better to be an enemy of
the United States (Assad) than a
friend (Hosni Mubarak).
Because of this history, the U.S.
must take steps to bolster a spirit
of trust and cooperation with its
allies. A restoration of American
leadership would do much to help
on that front, as it did during the
Cold War, when the U.S. would
show initiative and assumed,
rightly, that its allies would fol-
low. With America and its allies
battling the global terror threat,
no less sense of direction from
Washington is needed.
But even in the absence of such
leadership, the U.S. can take an-
other step to build necessary
bridges with its allies. America al-
ready is part of the decades-old
Five Eyes pact with Britain, Aus-
tralia, Canada and New Zealand,
agreeing to share intelligence and
not to spy on each other. The U.S.
should accede to recent requests
from Germany and France to join
the group.
Taking such a step would not
be popular in some corners of the
intelligence community. But if the
U.S. is already going to stand
down on intelligence efforts and
military capability because of the
costs imposed by sequestration,
world-weariness, or other reasons,
then we must stop and take stock
of where intelligence now fits in
the nations interests. If President
Obama is not going to lead in the
way that successful leaders always
have, the U.S. must figure out
other means of enhancing the
support of major allies. For these
seven nations to agree not to spy
on one another is, in these cir-
cumstances, a reasonable direc-
tion to take.
Chancellor Merkel should be
able to use her phone with the con-
fidence that at least the Americans
are not among those listening in.
Amb. Woolsey is the chairman of
the Foundation for Defense of
Democracies and a venture part-
ner with Lux Capital. He is a for-
mer director of Central Intelli-
gence.
Why Spying on Merkel Is So Damaging
BY R. JAMES WOOLSEY
Sochi, Russia
Last time Russia prepared to
host the Olympics, Leonid Brezh-
nev briefly considered canceling
the whole thing. Besides the enor-
mous cost, he wrote to party offi-
cials in 1975, according to archives
since declassified and published in
the Russian press, there may be
all sorts of scandals that could tar-
nish the Soviet Union. In the end
Brezhnev neednt have worried. A
U.S.-led boycott of the Moscow
1980 Summer Games kept away
most prying Western eyes.
Russia these days is much
richer, somewhat freer and led by
a man whod apparently rather
spend the sum of a small war than
cancel a single event of the Sochi
2014 Winter Games, which begin
in February. But after six years
and the most extreme cost over-
runs in Olympic history, Vladimir
Putin is still waiting for contrac-
tors to finish the main stadium
and other key infrastructure.
Money has been no object: Alto-
gether, Russias public and private
Olympic spending is currently
projected at 1.5 trillion rubles
($47 billion), from an initial bid
estimate of 313.9 billion rubles.
I visited the Black Sea resort in
mid-October to see where the time
and money had gone. Sochi re-
mained an Olympic-sized hard-hat
zone, but Russian organizers who
escorted me through the venues
explained that journalists are miss-
ing the point when we ask about
the most expensive, the most
wasteful or even the most corrupt
Olympics ever. Better, they sug-
gested, to think of Sochi 2014 as
the most successful large-scale
construction program in living
Russian memory.
My tour began at the Guest
House Villa Dj Vu, about 10 kilo-
meters outside the main Olympic
Park, where an Organizing Com-
mittee official collected me in a
Sochi2014-branded Volkswagen.
Do you understand that seven
years ago there was nothing
here? she asked as the car weaved
through traffic on half-paved
roads, surrounded by cranes and
earth movers.
The doe-eyed brunette declined
to be quoted by nameonly by or-
ganization, she instructed, along
with most of the other officials on
the tour. Hundreds of erstwhile
residents would no doubt quibble
with her, having been forcibly relo-
cated to make way for beach-side
ice rinks.
But her point is clear. Along
with 30 new venues directly re-
lated to the Games and scores
more hotels, transport hubs and
medical facilities, the city of fewer
than 400,000 people also needed
about 1,500 new kilometers of util-
ity networks and communication
lines to accommodate the sporting
extravaganza. To pull it off without
blackouts, the city is more than
doubling its grid capacity.
Inside the park we drove by the
main stadium, still draped in scaf-
folding. The stadium is in the final
stages of construction and will be
ready in plenty of time to host the
Opening Ceremonies in February,
the Organizing Committee official
said. However, she added that
safety concerns precluded my get-
ting within a 100 meters of it or in-
terviewing the laborers.
Our tour was joined by a repre-
sentative from Olympstroy, the
state company created in 2007 to
handle most of the venue work.
Since then Olympstroy has gone
through three presidents and
spawned more than 200 contractors
and sub-contractors. In March the
Russian Audit Committee flagged
that Olympstroy officials had cre-
ated the conditions for an unjusti-
fied increase in the estimated cost
of the sport facilities to the tune of
a half-billion U.S. dollars.
Leading me around the circle of
dirt that had yet to be transformed
into a medals plaza, the Olymp-
stroy official explained that any
suggestions of graft are bogus be-
cause at Olympstroy there is a
multi-layered anti-corruption sys-
tem. And what of the organiza-
tions multiple presidents? The
state chose the best people for
each phase of the work.
Entering the Iceberg Skating
Palace, a 12,000-seat arena un-
veiled last year, the Olympstroy of-
ficial turned to me with an exas-
perated smile. This is the first
time in history there will be a team
event in figure-skating, he said.
Thats much more interesting
than criminal things. Is it? He
continued: While ice rinks usually
have only one area for kiss-and-
crythe spangled histrionics that
help make figure skating such
great televisionthe Iceberg will
have 10 kiss-and-cry zones, one
for each finalist team.
Asked how these features af-
fected the price tag, the Olymp-
stroy official replied I dont know
how much it cost. I dont even
know my own budget. Olymp-
stroys media team did not address
emailed follow-up questions about
the latest cost estimates for its
venues. But they did send a press
kit noting that the Iceberg, billed
elsewhere as a moveable venue,
contains twice as much steel ton-
nage as the Eiffel Tower.
We moved on to the Bolshoi Ice
Dome, another new state-of-the-art
arena thats been open all year.
There we met venue sports man-
ager Natalya Cherepanova, the only
Olympic-related official who agreed
to be named for this article. After
the Games are over and the crowds
have left, Ms. Cherepanova en-
thused, the arenas specially de-
signed maroon-and-grey seating
will give journalists the impression
of a full arena, even if its not full.
A new 264 billion ruble ($8.2
billion), 48-kilometer motor-and-
rail road will link the coastal are-
nas to the Alpine venues in the
West Caucasus. For the same price,
Russian Esquire worked out, the
road could have been paved 4.7
centimeters thick with mink fur.
But it will cut travel time between
the beach and the slopes to under
an hour from 90 minutes.
A press official for Russian Rail-
ways, the state monopoly oversee-
ing the project, clarified in an
email that the road is being con-
structed in an area without any en-
gineering infrastructure, meaning
theyve had to build 35 kilometers
of temporary road to get it done.
As for the delays, the rail official
compared the Sochi 2014 timeline
to 1967, when the Brezhnev Krem-
lin set out to build 29 kilometers
of new rail tunnels between south-
eastern Siberia and the Tartar
Strait. The project was meant to be
finished in 1984. In 2003, it was.
The tour ended and the Volks-
wagen Olympic-mobile dropped me
back off at the Dj Vu. Staffers
and drinkers at the guest house
pressed for details on the Olympic
Parks progress. Amid the racket of
nearby street crews, we agreed
that even if $47 billion cant finish
the job on time, Mr. Putin will.
Miss Jolis is an editorial page
writer for The Wall Street Journal
Europe.
At the Bolshoi Ice Dome, seats will
appear full even when theyre not.
A
n
n
e
J
o
l
i
s
BY ANNE JOLIS
The Putin Olympics
The White House leadership
vacuum has made
Europeans wary.
The surveillance scandal
strengthens their doubts.
What has $47 billion bought
for the 2014 Winter Games?
CORPORATE NEWS
India Presents IBM
With a Big Tax Bill
NEW DELHIIndia has asked In-
ternational Business Machines
Corp. to pay 53.57 billion rupees
($865 million) in taxes, a senior in-
come-tax official said Friday, making
it the latest global company to be
targeted by Indian tax authorities.
The tax bill, sent to IBMs India
unit last Monday, alleges that the
company underreported income for
the financial year ended March
2009, said the official.
He said tax authorities estimate
IBM India reported only 20% to 30%
of its actual income in India for that
year.
IBM is in the process of appeal-
ing the tax bill, an IBM India spokes-
woman said Friday. The U.S.-based
company doesnt break out its re-
sults by country.
The case is the latest in a series
of disputes between Indian tax au-
thorities and many of the multina-
tional corporations that have made
large investments in the South Asian
nation.
Phone maker Nokia Corp., British
telecommunications company Voda-
fone Group PLC, brewer SABMiller
PLC, Royal Dutch Shell PLC, Monde-
lez International Inc.s Cadbury busi-
ness and BMW AG have been served
notices for unpaid taxes in recent
years. The companies are all disput-
ing the tax claims.
India isnt the only country to
pursue multinational corporations
for allegedly avoiding taxes. Star-
bucks Corp. this year paid corporate
taxes in the U.K. for the first time
since 2008, under pressure from the
British government amid concerns
that the U.S.-based cafe chain was
using tax loopholes and its interna-
tional operations to lighten its tax
bill in Britain.
Governments across the globe
are looking at ways to shore up rev-
enue, said Jayesh Sanghvi, Ernst &
Youngs head of international tax
services in India.
India needs to reduce its fiscal
deficit and one way it is doing that
is by scrutinizing deductions, he
said. The evolving interpretation of
how taxes are calculated is making it
tough for some companies to do
business.
Tax is a cost of business, Mr.
Sanghavi said. When the cost is un-
certain it is difficult to budget it.
Indian tax authorities and Voda-
fone have been stuck in one of the
countrys highest-profile tax battles
for years.
Vodafone was issued a more
than $2 billion tax bill after it pur-
chased the Indian cellular operations
of Hong Kong conglomerate Hutchi-
son Whampoa in 2007.
Mukesh Jagota
BY R. JAI KRISHNA
AND SEAN MCLAIN
Suntech Agrees to Sell
Unit for $492 Million
BEIJINGSuntech Power Hold-
ings Co. agreed to sell its core as-
sets in China for three billion yuan
($492 million) to a smaller rival, at-
tempting to pay back creditors after
defaulting on billions of dollars in
debt.
Shunfeng Photovoltaic Interna-
tional Ltd. said Sunday that it won
a bid to acquire the main Chinese
unit of Suntech, once the worlds
largest solar-panel supplier.
The unit, Wuxi Suntech Power
Co., owns intellectual property,
more than two gigawatts of solar-
panel manufacturing capacity and a
research-and-development opera-
tion, according to people familiar
with the company.
Suntech, which has struggled
amid a global overcapacity of solar
panels and falling prices, defaulted
on $541 million in U.S. convertible
bonds in March. That triggered de-
faults on its Chinese debt and put
Wuxi Suntech into bankruptcy pro-
ceedings in China. Including the
bonds, Suntech holds more than
$2.3 billion in mostly Chinese debt.
Shunfeng said that it paid a 500
million yuan deposit to acquire
Wuxi Suntech. The deal is subject to
the approval of Shunfengs share-
holders and the local court super-
vising Wuxi Suntechs restructuring.
Shunfeng said it would pay the bal-
ance of the purchase price within a
month of getting approval for the
deal.
The company said it also would
pay $25 million to a government-
controlled investment company,
Wuxi Guolian Development Group
Co., which is based in Suntechs
hometown of Wuxi. The payment
would come from Wuxi Suntech
within three months after the acqui-
sition. Guolian has been helping to
oversee Suntechs restructuring and
last week pledged to invest $150
million in Suntech. Suntechs latest
chief executive, who assumed the
role in September, is a former Guo-
lian executive.
As part of the deal announced
Sunday, Shunfeng said it would ab-
sorb Wuxi Suntech losses of up to
20 million yuan a month between
March 20 and Oct. 31. It also would
provide funds for upgrading Wuxi
Suntechs facilities within two years.
Suntech declined to comment.
Shunfeng last year shipped 206
megawatts of solar equipment,
while Suntech shipped 1.8 gigawatts,
according to their annual reports.
It wasnt clear whether U.S.
bondholders would see any proceeds
from the Shunfeng deal. Chinese
creditors, who are owed at least
$1.75 billion, likely would be first in
line to recover their investments.
U.S. bondholders with about $1.5
million in Suntech bonds last month
petitioned a court in New York to
put Suntech into bankruptcy pro-
ceedings in the U.S.
Suntech said last week that it
would contest the move.
BY WAYNE MA
Smaller rival Shunfeng Photovoltaic agreed to buy Suntechs China assets. Above, a Suntech line in Wuxi, China.
R
e
u
t
e
r
s
Japan Inc. Gets a Reality Check
up 37% in the year, as investors bet
that this time, Japan will shake off
its doldrums.
But Nissan and Sony are supply-
ing a reality check for some short-
term investors.
There are still so many uncer-
tainties ahead: the health of the
economies in the U.S. and in China,
the impact of the sales tax hike next
year, and then there are the individ-
ual risks each company faces, said
Yoshihiro Okumura, general man-
ager at Chibagin Asset Management.
Mr. Okumura said Sony and Nis-
san alone wont dent interest in Ja-
pan from long-term overseas inves-
tors. Its just that the winners and
losers will become very clear, he
said.
Sony and Nissan are two of the
big standouts in an earnings season
that is still relatively upbeat. Based
on results logged by the 532 compa-
nies listed on the first section of the
Tokyo Stock Exchange that reported
second-quarter earnings results as
Continued from first page of Thursday, net profit at nonfinan-
cial firms nearly quadrupled in the
April-September period from a year
earlier, helped by a yen that at the
end of September was 26% weaker
than a year ago, according to SMBC
Nikko Securities Inc. The weak yen
has been a crucial driver in higher
earnings and stock prices for the ex-
port-led economy, as the cheaper
currency makes Japanese goods
more competitive in global markets.
Led by electronics- and auto-sec-
tor companies, almost 30% of the
firms raised their annual forecasts.
But even when they did make up-
ward revisions, Japanese firms were
ultraconservative, considering the
strength of first-half earnings. For
the full business year, the surveyed
companies on average revised
higher their net-profit outlook by
2.4%.
And, like Nissan and Sony, 15% of
companies reporting so far have cut
their forecasts, despite all the opti-
mistic news.
Machinery makers have led the
downward revisions so far, but a
clear line divided the winners and
losers in the sector. Excavator-
maker Komatsu Ltd. cut its outlook
last Monday, after logging a profit
drop on weak demand for its mining
equipment. That was in contrast to
rival Hitachi Construction Machin-
ery Co., which posted a rise in profit
and kept its outlook unchanged.
Prime Minister Shinzo Abes re-
flation policies and a weaker yen
help investors differentiate the ex-
porters that worked hard and whose
growth strategies are right from the
ones who got their strategies
wrong, Daiwa Securities Senior
Strategist Eiji Kinouchi said.
Companies cant use the strong
yen as an excuse anymore, he said.
I think this will put pressure on un-
derperforming companies to actu-
ally do something.
Fortescue Aims to Speed Repayment of Debt
the company has opened talks with
lenders to renegotiate a US$5 billion
credit facility that is due to mature
in four years, aiming to cut the
amount it has to pay on interest.
Fortescue Chief Financial Officer
Stephen Pearce said last month that
more than US$1 billion in debt could
be repaid by early next year, build-
ing to several billion dollars by the
end of the year.
I think they will probably do it
quicker than they are saying, Mr.
Forrest said from Fortescues offices
in Perth, Western Australias capital
and a gateway to the states mining
hubs. Certainly that risk, if you
like, on the balance sheet is behind
us.
Mr. Forrest plans to keep buying
company shares, he said.
Despite taking on the part-time
chairmans role, he remains closely
involved in the companys opera-
tions, with a goal to visit the Pilbara
mines twice a month.
A small partition separates his
desk from that of Chief Executive
Nev Power in the center of an open-
Continued from page 15 plan office. A screen with live feeds
to parts of Fortescues sites and
port facilities adorns the nearest
wall.
Investors said Fortescues deci-
sion in August to back away from a
potential multibillion-dollar sale of
a stake in its port and rail assets
was a sign of confidence about its
ability to repay its debt, even as
many banks forecast that Chinese
demand would soften. Fortescues
reintroduction of its annual divi-
dend, after suspending payouts in
the wake of last years slump in
iron-ore prices, also boosted senti-
ment.
I suspect Mr. Forrest has been
through too many times when the
stock has been crushed under the
debt load, so I think theyll carry on
with that reduction as quickly as
they can, said J.P. Morgan Asset
Management fund manager Neil
Gregson, who oversees about US$3.5
billion in natural resources invest-
ments and owns shares in Fortes-
cue.
Still, Fortescue isnt out of the
woods yet, he said, especially as
many analysts expect iron-ore
prices to fall over the next two
years.
Goldman Sachs forecast prices
would decline from above US$130 a
ton now to just US$108 a ton next
year as new supply becomes avail-
able, such as ore from Fortescues
Kings and Firetail mines. By 2015,
prices could fall as low as US$80 a
ton, the bank said.
If you were to see a US$20-
US$30 drop in the iron-ore price,
then you can be sure everyone whos
recently turned positive on Fortes-
cue would start talking about how
big the debt levels are once again,
Mr. Gregson said.
Japan Inc.s Outlook
How Japanese companies that have
so far reported earnings for the
Sept. 30 quarter have changed their
forecast for the current scal year
ending March 31.
Source: SMBC Nikko Securities Inc.
Maintained
56%
Increased
29%
Decreased
15%
Total rms
532
Mr. Forrest has been
through too many times
when the stock has been
crushed under the debt.
Neil Gregson, J.P. Morgan
OPINION
Only three weeks have passed
since the end of the tea party-in-
spired government shutdown in
the U.S., yet already the groups
citizen activists find themselves in
the eye of another political storm.
Republican-oriented business
groups like the Chamber of Com-
merce and the National Retail
Federation are now threatening to
challenge tea party-favored pri-
mary candidates, especially if they
appear to be in the Ted Cruz
scorched-earth political mold.
These business interests and a
growing number of GOP insiders
are fed up with tea party tactics
that they believe have become a
negative political force for a Re-
publican Party that is now suffer-
ing record-low approval ratings.
One business leader recently com-
pared its influence to the Occupy
Wall Street crowd taking control
of the Democratic Party.
The tea partys answer to the
GOP establishment threats: Bring
it onwe arent backing down.
Thats the message I gleaned from
recent interviews with three of
the movements most prominent
leaders: Matt Kibbe of Freedom-
Works, Amy Kremer of Tea Party
Express and Jenny Beth Martin of
Tea Party Patriots.
After 20 years working behind
the scenes in Washington, Mr.
Kibbe is well-seasoned in political
warfare. Ms. Martin, a former
computer programmer and Home
Depot manager, and Ms. Kremer, a
former Delta flight attendant, are
relatively new to such conflict.
The two women are both mothers
living in Georgiaone of the
states where the tea party first
took root four years agoand they
reflect the groups typical profile:
white, middle class, well educated,
sick of politics as usual and driven
by a conviction that America must
be rescued from impending ruin
caused by Washingtons profligacy.
These three dont always agree
on tactics, and they often compete
for money and media attention.
But they share an overall assess-
ment of what is wrong with Wash-
ington and what needs to be done.
Like many local tea party activists
I have spoken with, they generally
view the government shutdown
not as a tactical blunder but as an
example of weak-kneed Republi-
cans muffing an opportunity to
roll back ObamaCare.
I dont have any regrets, says
Ms. Kremer, who attended the
original meeting in August when
Sen. Mike Lee of Utah unveiled
the plan to defund ObamaCare.
Mr. Kibbe is similarly unrepen-
tant. Asked what went wrong, he
replies: We just didnt anticipate
the Republican circular firing
squad in the Senate or the vicious
attacks directed at Mike Lee and
Ted Cruz. He still thinks the GOP
could have won.
Ms. Martin expresses sheer
frustration with the final outcome:
What would you expect? This
was the ruling eliteSenate Ma-
jority Leader Harry Reidnegoti-
ating with the ruling eliteSen-
ate Minority Leader Mitch
McConnell. Neither she nor Mr.
Kibbe nor Ms. Martin acknowl-
edges even the possibility that the
government shutdown was a
doomed strategy from the start.
Were their members demoral-
ized by the GOP cave-in? No, Mr.
Kibbe says, theyre energized. He
says FreedomWorks fundraising
has soared in recent weeks, and he
expects that the group will raise
up to $20 million this year. Other
tea party organizations report
similar surges in contributions.
Ms. Martin says her troops are
also fired up. I have never seen
our members so angry at the
elected Republicansespecially
Sens. McConnell and [John] Mc-
Cain. There is more than a hint
in these interviews that tea party
groups will redouble their efforts
to unseat Republicans who they
think waved a white flag during
the shutdown. Taking on incum-
bent Republicans is part of our
job, Ms. Martin says.
Critics say the tea party seems
to think that the other part of its
job is replacing incumbents with
candidates who are hapless neo-
phytesnot-ready-for-primetime
candidates like Sharron Angle in
Nevada, Todd Akin in Missouri
and Richard Mourdock in Indiana.
Republicans blame their defeats
for preventing a GOP takeover of
the Senate in 2010 and 2012.
Dont tell that to the tea party. Its
members are adamant that they
arent an appendage of the Repub-
lican Party. How do these critics
think Republicans won their land-
slide election in 2010? Mr. Kibbe
says. It was because of us.
He believes it is a false choice
to say that Republicans cant win
a governing majority by picking
principled free-market candi-
dates. And he shows me an elec-
tion spread sheet purporting to
show that in 2012, tea party can-
didates fared better than those
handpicked by the Republican es-
tablishment. Almost all our tea
party candidates won in 2010, he
says, while the big losers in 2012
were uninspiring moderate Repub-
licans in states like North Dakota,
Montana and New Mexico.
But Mr. Kibbe does admit: OK,
Indiana and Richard Mourdock
who defeated longtime GOP in-
cumbent Richard Lugar and then
lost in the general electionyou
can blame on us.
Ms. Kremer says, It doesnt do
us any good to have more Repub-
licans if they dont stand for our
principles. Our goal isnt to just
elect more, but better Republi-
cans.
She points to the election to
the Senate in recent years of Rand
Paul, Pat Toomey, Ron Johnson,
Marco Rubio and Mike Lee, all of
whom were aided by tea party
backing. She adds that when
George W. Bush was president and
Republicans controlled Congress,
Washingtons big-spending ways
never changed. Just electing poli-
ticians with an R next to their
name, she says, wont bring the
kind of seismic change thats
needed.
But it wasnt until the Obama
administration took over, with an
unprecedented spending spree
including the $830 billion stimu-
lus and plans for a fantastically
expensive health-care overhaul
that millions of Americans were
galvanized to take political action.
Many on the left and right
hoped that the tea party move-
ment would fizzle, but its influ-
ence, especially inside the GOP,
seems to have increased. Texas
Sen. Ted Cruz acknowledges that
the defund ObamaCare and gov-
ernment-shutdown power play
simply wouldnt have happened
without the organizing efforts of
activists across the country. Tea
Party Express, Tea Party Patriots
and FreedomWorks led this mobi-
lization. They have combined an-
nual budgets of more than $30
million and claim between six mil-
lion and 12 million active mem-
bers.
Whats next on their agenda?
Beyond still vowing to roll back
ObamaCarehow, precisely, isnt
clearMs. Kreme says one of our
immediate priorities is to enforce
the budget caps and sequester.
Even the defense cuts, which
many military hawks think could
endanger national defense? With
a $17 trillion debt, she says, ev-
erything has to be cut.
Unlike Reagan-era conserva-
tives, who supported rising bud-
gets for the Pentagon to ensure
military superiority in the Cold
War, the tea party sees the federal
debt itself as the main threat to
national security.
Mr. Kibbe identifies balancing
the budget as the paramount goal
for his members. Are they so ob-
sessed with eliminating deficits
that they would accept tax in-
creases to get there? No way:
Theres a definite supply-side
strain within the tea party, he
says, smiling. They want reve-
nues, yes, but through growth and
tax reform.
Its a mistake, though, to as-
sume that the tea party is a sin-
gle-issue movement. The focus on
federal spending reflects a general
distrust of almost everything that
happens in Washington. A theme
that emerges in talking with tea
party leaders and activists is that
under President Obama the fed-
eral government has increasingly
intruded on basic constitutional
rights. Its easy to discount this as
black-helicopter paranoia, but Ms.
Martin pointedly notes that Tea
Party Patriots and allied groups
were the subject of IRS targeting
and audits.
One typical and unfair criticism
of the tea party, as expressed once
by Nancy Pelosi, is that this is an
astro-turf, manufactured move-
ment, not a genuine localized
grass roots uprising. Nonsense. All
one has to do is attend a tea party
rally to see that the activists are
bus drivers, construction workers,
home makers, small business own-
ers and grandparents who have a
patriotic concern about the conse-
quences of trillion-dollar deficits
and bailout nation. As one activist
told me, All we want from our
government is less of it.
Now that the activists are fac-
ing friendly fire from mainstream
Republicans, the temptation to
start a third party might seem
tempting, but Mr. Kibbe quickly
dismisses the idea. Third parties
are a political disaster, he says,
citing the Bull Moose Party a cen-
tury ago, which split the GOP and
helped put the liberal Democrat
Woodrow Wilson in the White
House. More recently, Ross Perot
took votes from George H.W. Bush
and helped to elect Bill Clinton.
Mr. Kibbe says the tea partys
goal is to move the center of
gravity of the Republican party to-
ward an agenda of freedom and
limited government. He cites as a
model the modern-day progressive
lefts takeover of the Democratic
Party, gaining enough liberal influ-
ence to make Nancy Pelosi the
House Speaker and using a grass-
roots strategy to nominate Barack
Obama over the establishment fa-
vorite, Hillary Clinton.
The animus from the business
wing of the GOP doesnt scare the
tea party leaders. Ms. Martin
scoffs: Were not surprised big
businesses are opposing us. These
are mostly crony capitalists who
want something from govern-
ment.
Mr. Kibbe is similarly disdain-
ful: I used to work at the Cham-
ber of Commerce. The chamber
supported the original version of
HillaryCare back in 1993 and the
precursor to ObamaCare. They
supported the bank bailouts and
the Obama stimulus. We are not
for any of that. As for the pros-
pect of business backing candi-
dates specifically to challenge tea
party choices, Ms. Kremer says:
If its business money versus tea
party grass-roots activists, I like
our chances.
i i i
This us-against-the-world men-
tality turns off many people re-
garding the tea party and may
prevent it from gaining enough
traction with a big tent of voters
to realize its goals. Conservative
pollster Whit Ayres says of the tea
party, I wish they would remem-
ber the Reagan rule, if someone is
with me 70% of the time in poli-
tics, they are my friend.
Not the tea party. If youre 30%
not with them, that can be a deal
breaker. I would hope the busi-
ness groups would understand
that money alone doesnt buy
elections, Ms. Martin says. The
business groups need to work
with the tea party, not against it.
If these three activists are any
guide, and I think they are, then
the GOP is headed for an internal
brawl in 2014, and perhaps be-
yond. In the recent debt-ceiling
wrangle, the tea party seems not
to have realized where that fight
would lead. Before letting the clash
with establishment Republicans es-
calate into all-out war, the tea
party should step back and con-
sider an uncomfortable fact. In the
end, only one person will win that
war. Her name is Hillary Clinton.
Mr. Moore is a member of the
Journals editorial board.
[ Journal Interview]
with Matt Kibbe,
Amy Kramer and
Jenny Beth Martin
BY STEPHEN MOORE
The Tea Party Battles to Come
E
P
A
Three unrepentant veterans
of the shutdown brawl say
theyre eager for primary
election fights with a goal
of remaking the GOP.
Paul Beckett, Asia Editor
Dean Napolitano, Senior Editor
Miguel Gonzalez Jr., Senior News Editor
Hugo Restall, Editorial Page Editor
Wendy DeCruz, Institutional Sales
Charlotte Lee, Circulation Sales
Mark Pope, Advertising Sales
Anjali Kapoor, Marketing
Simon Wan, IT
Published since 1889 by
Dow Jones and Company
2013 Dow Jones & Company. All Rights Reserved
CORPORATE NEWS
Iron-Ore Tycoon Puts Next Bet on Nickel
PERTH, AustraliaTake an un-
loved commodity, land shunned by
global mining companies, a large
dollop of debt, and an optimistic
view of Chinese demand.
This recipe helped turn Andrew
Forrest into one of Australias rich-
est people and transformed his com-
panyFortescue Metals Group
Ltd.from a tiny iron-ore explorer
into the worlds fourth-largest pro-
ducer of the steelmaking material.
Now, Mr. Forrest is betting the
same strategy will work for another
out-of-favor commodity: nickel.
The industrial metal used to
make stainless steel has borne the
brunt of a steep decline in metal
prices this year, as demand fails to
keep pace with the amount of mate-
rial being produced by mines in
countries such as Australia, Russia
and Canada. Chinas retooling of de-
funct steel kilns to churn out a low-
grade version of the metal, known
as nickel pig iron, has also weighed
on prices.
Nickel prices fell as low as
US$13,205 a metric ton in July, half
of what the metal fetched two years
earlier and the lowest price since
May 2009. At US$14,600 a ton now,
it is down 14% this year, compared
with a 9% fall in both industrial
bellwether copper and iron ore.
Mr. Forrest, a 51-year-old whose
personal wealth is estimated by
Forbes at US$5.7 billion, has built a
32% stake in a small Australian de-
velopment company, Poseidon
Nickel Ltd. that aims to restart pro-
duction from a nickel deposit closely
linked to one of the worlds most fa-
mous commodity booms and busts.
In late 1969, a small-time pros-
pector, Ken Shirley, discovered a de-
posit of nickel at Mount Windarra,
northeast of the Western Australia
mining town of Kalgoorlie. Shares in
Mr. Shirleys company, known as
Poseidon NL, rocketed as high as
280 Australian dollars (US$264 at
current exchange rates), from just
$1.
But the stock plunged as quickly
as it rose. The price of nickel weak-
ened so much by the time that
Poseidon NL started mining that it
was eventually delisted from the
stock exchange and the mine was
taken over by Western Mining Corp.
Production was halted in 1991 and
the mine was mothballed.
Mr. Forrest has some unhappy
history with nickel as a commodity.
An early Australian venture, known
as Anaconda Nickel Ltd., raised
more than US$1 billion to pursue a
strategy of turning low-grade nickel
into something useful through pro-
cessing techniques used in Cuba. A
massive facility was built to process
minerals under extreme tempera-
tures and pressures.
But the plan unraveled when the
project ran into big technical snags,
which analysts later attributed to
design and construction flaws. Re-
peated shutdowns sent costs soar-
ing and the project never came close
to operating at full capacity. Share-
holders eventually forced Mr. For-
rest out in 2002, and the mine was
sold.
But Mr. Forrest says Poseidon
Nickel is a bet worth taking. Much
of the land around the Windarra de-
posits is untapped and he predicts
the price of nickel will rebound in
the long term.
Poseidon Nickel aims to restart a
mine at the Windarra site capable of
mining the commodity for at least a
decade. The companyvalued at ap-
proximately A$40 million, or
roughly US$37.8 millionis working
to secure more debt to restart pro-
duction, estimating as much as
80,200 tons of nickel metal remains
to be dug up.
Even as prices remain in the dol-
drums, nickel continues to turn up
success stories for risk-hungry in-
vestors. Sirius Resources Ltd., a
company that owes its success in
large part to one mans hunt for
wreckage from a National Aeronau-
tics and Space Administration space
station that crashed to Earth in the
Australian Outback in 1979, was
worth just A$8 million when it an-
nounced a major discovery of nickel
at its Nova prospect in Western
Australia state in July last year.
Now, it is valued at A$600 million.
The technical capability of the
metal is profound, Mr. Forrest said
in an interview. The number of
things it can do from turning iron to
stainless steel, to its capability of al-
most being able to heal itself, to its
ability to store energy, makes it an
exceptional metal.
Mr. Forrest took a similar view
on iron ore at a time when many in-
vestors showed little interest. When
he founded Fortescue in 2003, the
price of the steelmaking material
was just US$27 a ton. It now trades
at about $131 a ton, and peaked
above $190 in early 2011.
Still, many analysts disagree
with his outlook.
Along with aluminum, nickel has
the worst prospects of any metal as
output from new mines swamps the
market, according Deutsche Bank
analyst Michael Lewis. Consulting
firm Wood Mackenzie Ltd. has esti-
mated that about 40% of global
nickel output is unprofitable around
current prices.
Mr. Forrest said a recent deci-
sion to stand down as Poseidon
Nickel chairmanso he could con-
centrate on Fortescue and philan-
thropy, which included a A$65 mil-
lion donation to the University of
Western Australiashouldnt be
taken as a signal that his belief in
the companys prospects is waver-
ing. He isnt ruling out buying more
shares, currently valued at A$12.8
million.
Windarra has been part of the
historical Australian resources
psyche, and it would be wonderful
to get it back into production, said
Mr. Forrest, known widely by his
nickname Twiggy. I see myself as
a person whos just out there having
a crack.
BY RHIANNON HOYLE
Andrew Forrest of Fortescue Metals has built a 32% stake in Poseidon Nickel, an Australian development company.
A
g
e
n
c
e
F
r
a
n
c
e
-
P
r
e
s
s
e
/
G
e
t
t
y
I
m
a
g
e
s
Glencore to Sell Copper Stake
SYDNEYGlencore Xstrata PLC
is selling its majority stake in one of
the Asian-Pacific regions biggest
unmined copper deposits, the latest
in a flurry of asset sales across the
mining industry that suggests deal-
making might be picking up as some
commodities rebound.
Australian copper- and gold-min-
ing company PanAust Ltd. said Fri-
day it would buy the Frieda River
deposit in Papua New Guinea from
Switzerland-based Glencore for as
much as US$125 million, including
an initial payment of US$75 million
and a royalty of as much as US$50
million once a mine is operating.
A series of asset sales in recent
months has followed a notable lull
in deal-making over the past year as
mining companies struggled with
falling commodity prices and rising
costs.
Last month, Glencore and Sumi-
tomo Corp. of Japan agreed to buy
Rio Tintos stake in the Clermont
coal mine in eastern Australia for
about US$1 billion.
South African mining company
Gold Fields Ltd. recently agreed to
buy three mines in Australia from
Canadian peer Barrick Gold Corp.
for about US$300 million, while Rio
Tinto agreed to sell its controlling
stake in the Northparkes copper-
and-gold mine in Australia to a Chi-
nese company for US$820 million.
Also on Friday, BHP Billiton said
it had signed an agreement to sell a
coal mine in New Mexico to the Na-
vajo Nation, a Native American com-
munity, for roughly US$85 million,
part of the mining companys effort
to drive down costs and exit smaller
operations around the world.
According to a midyear report by
Ernst & Young, there were only 350
merger-and-acquisition deals across
the global mining sector in the first
half of 2013, down 30% from a year
earlier. At the time, the consultancy
said a sustained improvement in
commodity prices was needed to
trigger increased buying interest
during a period when some of the
worlds biggest mining companies
were starting to shop around for un-
wanted assets.
Since then, the values of many
commodities, such as iron ore and
copper, have rebounded as Chinese
imports climbed and fears of a
sharp slowdown in the worlds No. 2
economy abated. Copper is up 10%
since its year-to-date low in June.
Gold is about 7% higher.
PanAust said it would take an
80% interest in the Frieda River
project. The remaining 20% is con-
trolled by joint-venture partner
Highlands Pacific Ltd. PanAust has
also agreed to take a 7.5% stake in
Highlands for A$5 million (US$4.7
million). The Wall Street Journal re-
ported in August that the company
was in talks with Glencore to pur-
chase its stake.
PanAust is no stranger to operat-
ing mines in impoverished South-
east Asian nations lacking infra-
structure and skilled workers. It has
two active pits in Laos that produce
copper and gold, and the Brisbane-
based company accounts for about
30% of that countrys exports.
From a strategic point of view,
Frieda River provides us with the
basis for growing production be-
yond our current mine life in Laos,
PanAust Managing Director Gary
Stafford said in an interview.
Glencore inherited the Frieda
River project through its multibil-
lion-dollar takeover of Xstrata PLC
earlier this year, but has signaled a
preference for owning active mines
that produce commodities it can sell
through its trading arm. It has been
reviewing its assets since its acqui-
sition of Xstrata.
Xstrata had estimated a mine at
the Frieda River site, in northwest
Papua New Guinea, would cost more
than US$5 billion to build and could
produce 204,000 metric tons of cop-
per and 305,000 troy ounces of gold
annually in an operation lasting
about two decades.
PanAust said it was targeting a
smaller operation there, however.
The company said it intended to
spend as much as US$1.8 billion to
produce closer to 100,000 tons of
copper and 160,000 ounces of gold a
year, over at least 18 years.
BY RHIANNON HOYLE
Chinese Firm to Operate
4 Ore Freighters for Vale
BEIJINGState-owned Shan-
dong Shipping Corp. has signed a
$500 million deal with Vale SA that
would allow the Chinese company to
operate four of the Brazilian miners
fleet of giant iron-ore freighters,
known as Valemaxes.
The agreement, announced Fri-
day by Chinas official Xinhua news
agency, appears to signal a break-
through in the fortunes of a class of
ships designed to serve the Chinese
market but still legally blocked from
docking at the countrys ports.
The deal allows Shandong Ship-
ping to take over the operations of
four Valemax vessels weighing in at
400,000 deadweight tons each.
It wasnt immediately clear if
Shandong would own the vessels
outright or lease them from Vale.
A spokesman for Shandong Ship-
ping wasnt available for comment
Friday, but an official at the com-
pany confirmed the Xinhua report.
The ships, the worlds largest
freighters, were developed by the
Brazilian mining giant as a means of
reducing shipping costs which are
higher than those of Australian ri-
vals BHP Billiton and Rio Tinto be-
cause of Vales longer distance from
China.
Use of Valemax vessels, first
launched in July 2011, was almost
immediately scuttled as Chinas
transport ministry, responding to
concerns about competition from
some of the countrys largest ship-
owners, including state-owned
China Ocean Shipping (Group) Co.,
barred them from local berths. The
ministry cited safety worries.
Chinese ports are limited to al-
low ships as big as 300,000 dead-
weight tons, though some ports have
moved to build facilities that could
handle vessels as large as a Valemax.
Ore customers, including Chinas
steel industry, have argued the ships
ultimately might mean more abun-
dant, and therefore less expensive,
iron ore. That lead authorities in Au-
gust to float a draft of amendments
to the law banning Valemax vessels.
Its been more than two years
now of this kerfuffle going on, said
Macquarie Securities analyst Bonnie
Chan. This is a further sign of re-
laxation in the restriction, of a pos-
sible shift [in policy] coming in.
On Friday, a ministry official in
the department handling the amend-
ments said a first round collating
government and industry feedback
on the proposed changes had been
completed and a second round is be-
ing prepared. A final decision on the
revisions is likely by year-end.
A spokesman for Vale in China
declined on Friday to comment on
the news.
BY CHUIN-WEI YAP
OPINION: REVIEW & OUTLOOK
A
merica has had the weakest eco-
nomic recovery in decades,
Chinas growth is slowing
sharply, and Japan is trying to break out
of a two-decade stagnation. But Ger-
many is the greatest threat to the world
economy?
Thats the impression you get from
the U.S. Treasurys semiannual report on
currencies and international economic
policy, which dings Germany for its
large and persistent current-account
surpluses and its lack of action to boost
domestic demand. Germanys GDP
growth has kept the euro-zone average
from sinking more than it has in the last
four years, yet in Treasurys eyes the
countrys robust exports are preventing
its neighbors from exporting their way to
recovery. If only the Germans were less
productive, the rest of the euro zone
might be able to catch up.
This complaint is familiar among Eu-
ropes Keynesians. But that doesnt make
it less perverse as a policy
prescription, for the euro
zone or for anywhere else.
Its true by definition
that one countrys exports
are anothers imports. But
it doesnt follow that a
country running a trade surplus is some-
how forcing other countries to run defi-
cits, or that its preventing those countries
from exporting as well. Within a free-
trade area with a single currency, firms
compete on the basis of price and quality.
Hence the main way for governments
in Europes crisis rim to reduce their
national trade deficits is to help their
exporters do better in the international
marketplace. That means lower taxes,
less regulation and more labor flexibil-
ity. Lisbon can create demand for Por-
tuguese exports much better than Ber-
lin can. Europes real
problem is that crisis-hit
countries exporters are
too weak, small or few to
competenot that Ger-
manys are too strong
and too many.
This landscape is starting to change
as a result of the crisis. Spains recovery,
such as it is, has been led by rebounding
exports, much of it to non-euro-zone
markets in Latin America and Africa.
Portugal is running a small trade sur-
plus, and Italy a larger one. Falling
wages in Greece are making its goods
more attractive abroad.
But the adjustment has a long way to
go, and sluggish economic reforms and
still-high levels of government and pri-
vate debt arent helping. The bigger story
behind the euro zones competitiveness
gap has to do with globalization. Eu-
ropes awful demographicsGermanys
not exceptedhave for many years made
it a dubious bet for future growth.
The big German companies recognized
this earlier than their Continental peers
and started looking outward, to China
and elsewhere. A decade ago, Gerhard
Schrders government helped firms ex-
pand by making it easier to hire and fire.
Germany is reaping the rewards of
those reforms today, and by encouraging
its neighbors to undertake similar policy
changes it is focusing the crisis-fighting
on the right European malaise. The U.S.
Treasury is undermining Americas eco-
nomic reputation by scolding Germanys
success.
A
United Nations commission is fi-
nally investigating human rights
in North Korea, and last week it
opened a window on the gruesome facts
it is discovering.
The commission has traveled to sev-
eral countries to hear the testimony of
North Korean exiles and experts who fol-
low the Hermit Kingdom. On Monday in
New York, Michael Kirby, the retired Aus-
tralian judge who is leading the probe,
said the evidence points to large-scale
patterns of systematic and gross human-
rights violations in North Korea.
One first-person account was deliv-
ered in Washington on Wednesday by Jo
Jin-hye. The young woman described
how most of her family had died of star-
vation in North Korea, including an in-
fant brother who succumbed in her arms.
An elder sister went to China, where the
family believed she was sold as a bride to
a man in another part of the country.
Ms. Jo fled with her mother and a
younger sister to China, where they were
arrested by Chinese police and repatri-
ated to North Korea. She was taken to a
detention center, where guards wearing
boots stomped on my bare feet. She
testified that she observed guards place
a plastic bag over the head of another de-
tainee: They did this several times until
he confessed. His crime? Like Ms. Jo, he
had left North Korea without permission.
As her testimony was ending, Ms. Jo
asked to make a final point. When people
hear about food shortages and other de-
privations in North Korea, she said, they
want to find a way to help. This is a
normal way to respond, she said. But
North Korea is not a normal country.
Sending humanitarian aid is a mistake:
By doing this you are just lining the
pockets of those who rule North Korea,
not the North Korean people them-
selves.
Several humanitarian organizations
dont operate in North Korea for that rea-
son. But the U.N. continues to send hu-
manitarian aid, such as $200 million in
food authorized in June. Mr. Kirbys reply
to Ms. Jo offers hope that the commission
might accept her wise advice. You can be
sure that we are considering the matter
you just raised, he told her. The commis-
sion will report its findings in March.
P
erhaps only a fellow member of
the former presidents club can ap-
preciate Mikheil Saakashvilis pain.
Georgias president is leaving power in
Tbilisi unpopular and unappreciated, but
we think history will be a kinder judge.
In 10 years running the Caucasus re-
public, Mr. Saakashvili made many mis-
takes but got the big things right. At 36
years of age, the Columbia Law grad led
the peaceful and democratic Rose Revolu-
tion in 2003. He brought energy and ideas
to a small war-ravaged nation struggling
to survive under Russias heavy paw.
He fired the traffic police and rooted
out a culture of petty corruption. He
made it easier to start a business and
make an honest buck than in any place
within several time zones. Georgias
economy grew 6% on average during his
tenure. He said Georgia belonged in
NATO and the EU. Democracy means
constantly outperforming yourself or you
are out on your backside, he told us in
2007. Thats as it should be.
As a charismatic leader of a nation
with shallow democratic traditions, Mr.
Saakashvili could be heavy-handed. He
overreacted to antigovernment protests
in 2007, shutting down a national televi-
sion channel. He survived a war with
Vladimir Putins Russia in 2008, but the
fight probably cost Georgia any chance of
reclaiming two breakaway regions.
After a decade in power, he wore out
his welcome. A billionaire foe, Bidzina
Ivanishvili, built the opposition Georgias
Dream movement, which routed Mr.
Saakashvilis ruling party in last years
parliamentary elections. Mr. Ivanishvili
has proven to be a sore winner, calling
on the president to resign and jailing
several of Mr. Saakashvilis allies on cor-
ruption charges.
Mr. Saakashvili has now served out his
second and last constitutionally allowable
five-year term. Last month, Georgians
elected a new president who is an Ivan-
ishvili ally. Mikheil Saakashvili will leave
office as Georgias George Washington,
having nurtured a transition to democ-
racy in a region where elected leaders too
often turn into dictators. Mr. Ivanishvili
can start to honor this achievement and
keep Georgia as a regional model by
dropping his political vendetta.
America Blames Germany
North Korean Horror Show
Georgias Washington
The U.S. Treasurys
Keynesians find
a growth scapegoat.
P
resident Obama traveled to Boston
on Wednesday to qualify his prom-
ise that Americans can keep their
health plans, but as usual he had to do
more. Forced to concede (implicitly) that
his famous claim is false, he accused
ObamaCares opponents of spreading a
lot of confusion and misinformation and
being grossly misleading, to say the
least.
And in Massachusetts Mr. Obama
tweaked his former unqualified promise
to say that his guarantee applied only to
the vast majority of people, adding
that the terminations were a central
premise of the Affordable Care Act from
the very beginning.
Mr. Obama went on to tell those who
are losing their choice of
coverage that the under-
insuredhis termget
a better deal under
ObamaCare, and anyone
who says otherwise is
defending the remnants of the old, bro-
ken system as if it was working for peo-
ple.
By the way, Mr. Obama spoke at Fa-
neuil Hall because thats where Mitt
Romney signed an ObamaCare prototype
into law in 2006. His political advisers
must have thought it was crafty for the
President to invoke the
former Governor as politi-
cal cover. On Wednesday
Mr. Obama cited Mr. Rom-
ney as a political model
who did the right thing
on health care and built this template
of proven, bipartisan success.
The Boston trip is a classic example of
the Obama political method and why his
Presidency is floundering only a year
into his second term. Amid a crisis of
government execution and policy design,
Mr. Obama doesnt address the flaws or
take responsibility.
Instead he hits the campaign trail to
blame Republicans once again for a fail-
ure they had nothing to do withand to
spin new political fables to replace the
old ones that even he can no longer utter
with a straight face. On his current be-
havior, the only time Mr. Obama is going
to act as if hes President is when he no
longer is.
A President Manqu
Suddenly, Obama
loves Mitt Romney.
MARKETS
New-Home Prices Rise
Octobers Acceleration in China Was Concentrated in Large Cities
SHANGHAINew-home prices in
China climbed in October, driven by
strong demand in major cities, defy-
ing property controls and highlight-
ing the challenges that policy mak-
ers face in keeping the market from
racing ahead.
Prices in 100 cities were up
10.7%, on average, year over year,
the highest rate since June 2011,
when private data tracker China
Real Estate Index System began
keeping records. In September,
prices rose 9.5% from a year earlier.
Month on month, prices acceler-
ated for the fourth time in a row
up 1.2% from September, when they
rose 1.1% from August, China Real
Estate Index System said on Friday.
The higher prices came despite
curbs on multiple home purchases
and higher down-payment require-
ments, but they are unlikely to trig-
ger any immediate government in-
tervention, analysts said.
Analysts said Chinese President
Xi Jinpings call last week for a
boost in housing supplywhile
avoiding any mention of rising
pricessuggests that the govern-
ment is willing to tolerate higher
prices and that further price con-
trols are unlikely in the near future.
Mr. Xi was quoted by the official
Xinhua News Agency at a meeting
with senior officials and property-
market experts.
This shows that central-govern-
ment officials are a little more in
tune with the market, trying to un-
derstand and steer the market
rather than build a dam against
housing demand, said James Mac-
donald, head of research at Savills
China, a property consultancy.
The acceleration in home prices
isnt taking place across the country.
Instead, it has been concentrated in
major cities, where there is a short-
age of housing, analysts and prop-
erty developers said.
Although land purchases by de-
velopers and construction starts
have picked up nationwide recently,
there is typically a nine-month lag
before those translate into sales.
Mr. Xi said the government must
focus on ensuring that needy people
have adequate housing, while a
tiered market should satisfy demand
in the rest of the housing sector.
China must boost the housing sup-
ply at all costs and make the hous-
ing needs of the masses a priority,
he said.
Government researchers and an-
alysts also said that policy makers
are focusing their efforts on long-
term measures. One is to increase
the supply of smaller and more-af-
fordable private housing, which
would take care of Chinas most vul-
nerable people at the bottom of the
economic scalea key political con-
sideration. Another would be to ex-
pand an annual tax on property
that, if kept at a low rate and rolled
out gradually, would send a signal
to the market without choking off
demand.
According to the China Real Es-
tate Index System survey, 75 cities
registered higher month-on-month
prices in October, compared with 79
in September.
Prices in Changshu, a city in
coastal Jiangsu province, grew the
fastest, by 3.9% over the previous
month. In Beijing, new-home prices
were 2.6% higher, moderating from
Septembers 3.8% rise.
Plans by the local housing bu-
reau in Beijing to ramp up supply of
cheaper homes changed expecta-
tions in the local property market,
China Real Estate Index System
said. In Shanghai, prices rose 2.4%,
up from Septembers 1.1% gain.
Property developers welcome the
more market-based approach in
tackling rapid price gains, noting
that administrative measures such
as curbs on multiple-home owner-
ship would slam the brakes on mar-
ket demand.
They also maintain that market
conditions in the bigger cities are
different from those in smaller ur-
ban areas, and policies should re-
flect this.
There is no need for the central
government to implement national
curbs. Rather, the local governments
should carry out their own property
policies, Zhang Yuliang, chairman
of Shanghai-based developer Green-
land Holding Group, said in an inter-
view last week.
BY ESTHER FUNG
Macquarie Holders to Get
Shares in Sydney Airport
MELBOURNE, AustraliaFlush
with excess capital, Macquarie
Group Ltd. will spin off a 1.4 billion
Australian dollar (US$1.32 billion)
stake in the countrys busiest air-
port to its shareholders.
Australias largest investment
banks roughly 17% stake in ASX-
listed Sydney Airport Holdings Ltd.
is by far the biggest investment on
its books. It has been looking to exit
the holding since it gave up man-
agement of what was then known as
Macquarie Airport in 2009.
The Sydney-based company con-
tinues to seek ways to recycle its
money, selling and buying assets
regularly, but isnt considering dis-
tributing any further assets to its
investors, Chief Executive Nicholas
Moore said Friday.
Theres no piece of fine timing
going on. There is nothing else so
big on the book, Mr. Moore said in
an interview, adding Macquarie de-
cided to hand about 340 million
shares in Sydney Airport to its
shareholders after considering the
health of the banks balance sheet.
Macquaries shares rose to a
four-year high on Friday, at A$53.10,
up 4.2% on the day against a modest
decline in the Australian market.
David Ellis, an analyst at Morn-
ingstar in Sydney, said the decision
to distribute one Sydney Airport se-
curity for each Macquarie share was
a smart way to pay a special divi-
dend to shareholders. It came on
top of what he said was an impres-
sive dividend of A$1 a share for the
six months through September, up
33% from last year.
Macquarie said Friday that its
net profit in the six months ending
Sept. 30 increased 39% to A$501
million, from A$361 million a year
earlier, as a strong performance of
its asset-management activities and
a pickup in initial public offerings
offset sluggishness in investment
banking. It expects a stronger result
for the full year, the bank said.
Mr. Moore said shareholders will
vote on whether to accept the
shares in Sydney Airport in Decem-
ber, and the bank wont know until
January the value of the airports
shares or whether it has made a
profit on the transaction. Sydney
Airport shares have been steadily
rising, climbing almost 20% in the
last 12 months.
A strengthened balance sheet
has allowed Macquarie to increase
its mortgage lending in Australia, a
highly competitive market.
Patrick Upfold, Macquaries chief
financial officer, told investors the
company would maintain diversified
funding sources and expand its de-
posits. He also said it had A$3.1 bil-
lion in excess of the industry regula-
tors minimum capital requirement.
BY ROBB M. STEWART
Macquarie has been looking to exit its 17% stake in Sydney Airport since 2009.
B
l
o
o
m
b
e
r
g
N
e
w
s
Asia Debt Issuance Gains Steam
A flurry of Asian companies sold
debt last week, taking advantage of
cheap borrowing costs and upbeat
investor sentiment after the U.S.
Federal Reserve said it would keep
up its aggressive monetary stimulus
for now.
Debt issuance in Asia has re-
bounded since early September, fol-
lowing a summer slowdown caused
by expectations that the Fed would
soon begin winding down the stimu-
lus that has kept global interest
rates low.
Issuers last week ranged from
Chinas biggest developer, China
Vanke Co., to Hong Kong lender
Ltd., which sold bonds on Thursday.
Market sentiment has turned
more constructive as interest-rate-
hike concerns have subsided, while
the [U.S.] debt-ceiling woes last
month have further pushed back the
Feds pace of tapering in its mone-
tary stimulus, said Clifford Lee,
head of fixed income at DBS Group
Holdings Ltd.
Total bond issuance in Asia out-
side Japan, denominated in dollars,
euros and yen, reached US$16.5 bil-
lion in Octoberthe highest
monthly amount since May, when
the Fed first indicated that it might
soon start winding down its stimu-
lus program, according to data pro-
vider Dealogic.
sold US$300 million of subordinated
bonds that comply with tough new
global capital rules known as Basel
III. It was the second dollar-denomi-
nated, Basel III-compliant issue in
Asia. The bond, with a maturity of
10.5 years, was priced with a yield
of 6%. Subordinated bonds rank be-
low senior debt in repayment prior-
ity should an issuer default.
China Vanke became the first in-
vestment-grade Chinese issuer to
tap the Singapore-dollar bond mar-
ket. It raised 140 million Singapore
dollars (US$113 million), offering a
yield of 3.275% on a four-year bond.
The Canadian province of British
Columbia on Friday became the first
non-Chinese sovereign issuer of off-
shore yuan bonds, raising 2.5 billion
yuan ($410 million) from a bond
that offered a yield of 2.25%.
BY FIONA LAW
Mall Giant Cautious
On Asian Expansion
Westfield Joint Chief Executive Peter Lowy Discusses
Strategy on New Markets and the Mall of the Future
Westfield Group, one of the worlds
largest shopping mall operators by revenue,
is all about attracting big spenders. From
Prada and Gucci to high-end restaurants, its
malls cater to customers who are willing to
pay for prized goods.
So it may be surprising
that Peter Lowy, the com-
panys joint chief executive,
takes a cautious approach
to investment. Despite a
balance sheet bolstered by
more than $6 billion from
asset sales since the start of 2012, West-
field has resisted risky expansions into
emerging markets such as China. For now,
it has no plans to join the rush of luxury
brands and main-street retailers vying for
the favor of Asias increasingly affluent
middle classes.
Instead, the Australian company is focus-
ing on traditional markets like the U.S.
where it is building the retail section of the
new World Trade Center development in
New Yorkand limiting any new-market
forays to Brazil and Italy.
Westfields caution is understandable. In
April, it suffered a major setback in its at-
tempt to break out of Australia, the U.S.
and the U.K. when it ended a less than two-
year-old Brazilian joint venture with
Almeida Junior Shopping Centers SA over
differences in strategy. Westfield has kept
some capital in the South American country
and hopes to start building malls there on
its own.
Meanwhile, challenges remain closer to
home. Online retailing threatens traditional
stores, while consumer confidence in Aus-
tralia, the U.S. and other developed coun-
tries remains vulnerable to shocks as their
economies undergo fragile recoveries.
Mr. Lowy spoke to The Wall Street Jour-
nal about how Westfield is addressing
structural and economic challenges, and
what the mall of the future will look like.
Edited excerpts:
WSJ: How is the World Trade Center devel-
opment progressing?
Mr. Lowy: We are on time [for 2015] and on
budget, until Im told were not on time.
But we have a fixed-price deal with the Port
Authority, so were definitely on time and
budget. The buildings are just spectacular.
The Oculus, which is the transport hub, will
just be an incredible space. And theyve
done a fantastic job on the way theyve
built the memorial. Its just a unique space
in the world and for us to be able to have
retail there is just a special, special thing.
Im not going to give the features away.
But Ill tell you the building itself creates
the space, because were actually integrat-
ing the retail right through the building.
We are going to lease it with world-class
retail as well as take care of the local in-
habitants. Originally, we bought the lease
six weeks before 9/11 and the amount of
people who live down in lower Manhattan
now has doubled since that time.
WSJ: How are conditions in the U. S.?
Mr. Lowy: The U.S. is growing slowly. Unem-
ployment is coming down, house prices are
moving up and the overall economy has
been moving forward.
But you do see some slowing of that
growth, especially in the first half of the
year. Taxes went up, especially payroll tax,
and growth was a bit slower than everyone
had projected. The teen retailers are hurt-
ing especially, although Gap has done quite
well. It just looks like theres quite a bit of
unemployment in that teen market and
thats probably the soft bit. But the econ-
omy itself is moving ahead.
WSJ: Are you considering expanding into
new markets?
Mr. Lowy: Before you run to other markets
all the time you need to bed yourself down
where you are. And when you look at the
size of the business we have, when you look
at some of the developments that were do-
ing, were not exactly in a position to be
running to new markets. We have to get
ourselves set in Brazil. We have the capital
there, but we dont have any assets since
weve sold out. We are looking at a number
of sites in the marketplace that are up for
public bids to see if we can get ourselves
set with a development there.
WSJ: How about expanding into Asian coun-
tries like China?
Mr. Lowy: The issue about China is there are
lots of developers and there are lots of op-
portunities. As a company, were pretty full
at the moment with our development book.
Were doing the World Trade Center, the
development in Milanwhere construction
should start in the next two years or so
the West London expansion, Croydon in
South London and Century City in Los An-
geles among others.
WSJ: How are you dealing with the threat
of online retailing?
Mr. Lowy: We actually look at it as an op-
portunity. Every threat is an opportunity at
the same time. We set up a division of the
company called Westfield Labs in San Fran-
cisco and we are committed to creating a
digital platform for our customers to be
able to access both our assets and our re-
tailers for their mobile devices.
WSJ: What will the future mall look like?
Mr. Lowy: The malls in the U.S. have sub-
stantially changed since the recession. In
Australia and Europe, you have much more
food integrated into the mall. You have
much more discounters integrated into the
mall. Historically in the U.S., the malls were
fashion and they were department-store
fashion-based.
Now, in our portfolio, we have nine su-
permarkets, were putting in gyms and
spas, we are expanding the way theaters
are used. Were putting in much more food,
both fresh food and restaurants, and we
dont build food courts any more, we build
dining terraces. If the food offerings are
good and theyre fresh, people come to the
mall more often. So if we can create more
shopping trips and longer shopping trips
we can increase the sales revenues for our
retailers. In London weve created an area
called The Village, which is totally high-end
retailthe same as you would get on Bond
Street or parts of Chelsea.
WSJ: Are malls killing the high street?
Mr. Lowy: I dont think malls kill the high
street. Take our malls in London, where
weve put down 3.4 million square feet of
retail space since 2008 in the heart of the
city thats doing 2 billion ($3.2 billion)
worth of business.
The center of LondonOxford Street,
Bond Street, Regent Streetwasnt servic-
ing customers. It was hard to get to, hard
to park, the shops they wanted werent
there. I would argue that weve enhanced
the shopping experience of London. You
didnt have 2 billion of negative sales. And
now youre starting to see suggestions in
England about how to regenerate Oxford
Street and rebuild Regent and Bond Street.
Thats all about competition, which is good
for the customer and good for the city.
W
e
s
t
f
i
e
l
d
G
r
o
u
p
Rsum
Education: Bachelor of Commerce, University
of New South Wales
Career: Co-chief executive of Westfield since
2011 and a managing director since 1997.
Before joining Westfield in 1983, worked at
Rothschild, CS First Boston and Furman Selz
in various investment banking roles.
Extracurricular: Surfing, snowboarding and
basketball.
BY ROSS KELLY
MANAGING
Executive Assistant: Thankless but Influential Job
If DAndra Galarza were to come
face to face with death, she knows
whose life would flash before her
eyes: the life of her boss, a presi-
dent at NBCUniversal Inc.
After 10 years as Edward Swin-
dlers executive assistant, waking up
at 4 a.m. to ensure he makes an
early morning flight and keeping
the office stocked with his favorite
snacks, Ms. Galarza says shes under
no illusions about whose needs
come first. You work very, very
hardso that they can shine and
they can do their best, she says.
Youre kind of the stage mom.
The schedulers, gatekeepers and
caretakers of the corporate world
are rarely seen, but they have a pro-
found effect on the daily lives of the
executives they serve. They do ev-
erything from booking business
trips, ordering anniversary gifts and
arranging pet care to attending
high-level meetings and deciding
who can and cant meet with their
boss. The work can be thankless and
often comes at a cost to their own
personal lives, but these workers
wield subtle influence at a com-
panys highest levelsand no small
amount of power.
The career path can be uncer-
tain, however, and assistants for-
tunes often hinge on their bosss
trajectory. If the boss is fired, the
assistant can end up in limbo or
working for a less senior profes-
sional. Yet as automation claims
many administrative jobs, the assis-
tants are prized for their business
savvy and treated as the bosss not-
quite-equal partner.
Now, a new networking group
aims to emphasize the executive
in executive assistant, pampering
and pumping up these right-hand
workers with nightclub parties, spa
sessions and Behind Every Leader, a
conference series scheduled this
week in Newark, N.J.
Victoria Rabin, the 28-year-old
founder of the Executive Assistants
Organization and a former assistant
at a London hedge fund, says the
job deserves some cachet because
assisting is an incredible career
that only a certain breed can do.
Founded in 2012, the San Fran-
cisco-based networking group has
some 1,000 members, the majority
of whom pay $500 to $1,500 a year
in dues to gain access to events and
online webinars, and, for the high-
est-paying, a personal mentor.
Assistants need to bond with one
another, Ms. Rabin says, because
few others can understand the de-
mands of the job, from tracking
down car services in a far-flung city
to dealing with a bosss infidelity.
Meanwhile, the executives who
share everything from email ac-
counts to bank-account data to
home-security codes with their as-
sistants say the partnership works
best when theres trust and constant
communication. Harry Kraemer, a
former CEO of Baxter International
Inc. and now a professor at North-
westerns Kellogg School of Manage-
ment, says his assistant of 12 years
kept him informed about what was
happening at the health-care com-
pany and encouraged him to com-
municate more with employees.
Assistants gain status from their
bosss high profile. NBCs Ms.
Galarza says another executive once
tried to wheedle information from
her about a private meeting her
boss was attending. People know I
know everything, she says.
BY RACHEL FEINTZEIG
MARKETS
Banks Suspend Traders
Amid Currency Probe
An escalating probe into possible
rigging of foreign-exchange markets
has prompted some of the worlds
biggest banks to suspend a number
of high-profile currency traders in
New York, London and Tokyo, in the
latest market-manipulation investi-
gation to rock the industry.
More than a dozen traders at
five banks are now either suspended
or on leaves of absence in connec-
tion with global currency-rigging in-
vestigations, according to people fa-
miliar with the probes.
The investigations, which are fo-
cusing in part on electronic chat
rooms with names such as The
Cartel, have uncovered messages in
which traders appeared to inappro-
priately share market-sensitive in-
formation with competitors and
joked about their ability to influence
exchange rates, according to people
familiar with chat-room transcripts
that have been handed over to regu-
lators.
In a sign of the escalating nature
of the investigation, at least two
banksBarclays PLC and UBS AG
have hired criminal-defense lawyers
to represent some of their employ-
ees who have been put on leave, ac-
probes.
The suspended traders either de-
clined to comment, didnt respond
to requests for comment or couldnt
be reached.
The swath of departures leaves
big gaps on banks currency-trading
desks and people in the industry
said it could cause disruption to the
vast foreign-exchange business. In
London, the worlds biggest foreign-
exchange hub, three of the senior
traders who are on leave are past or
present members of a Bank of Eng-
land committee that oversees the
currency market.
The foreign-exchange probe is
the latest in a list of investigations
into how lightly regulated financial
markets are susceptible to potential
manipulation.
A five-year investigation into
manipulation of the London inter-
bank offered rate, or Libor, and
other benchmark interest rates has
so far yielded settlements with five
financial institutions, which have
admitted wrongdoing and paid a to-
tal of more than $3.5 billion in pen-
alties. European authorities also
have said they are investigating pos-
sible rigging of oil-market bench-
marks.
The swift pace of the currency
probe, in which senior figures in the
foreign-exchange market have al-
ready been sidelined, is one major
difference between that and the Li-
bor investigation.
The currency investigation
started in April when the U.K.s Fi-
nancial Conduct Authority began
looking into activity in London,
which accounts for 41% of global
foreign-exchange activity, according
to the Bank for International Settle-
ments. Recently, the probe has gath-
ered pace, with authorities from the
U.S., Switzerland and Hong Kong
launching investigations. Eight
banks have handed over materials to
British authorities, according to a
person familiar with the probe.
The electronic chat rooms that
are a focus of the probe take place
through widely used Bloomberg ter-
minals and are populated by top
currency traders, according to peo-
ple briefed on the investigation.
People familiar with the chat tran-
scripts said they contained repeated
references to drug use and sexual
acts.
Investigators and bank officials
have been scouring chat transcripts
for alleged evidence of the traders
improperly working together to in-
fluence exchange rates, these people
said.
One chat roomdubbed The
Cartel and The Bandits Club,
among other nameshas attracted
particular regulatory scrutiny, al-
though several chat rooms involving
different traders and different cur-
rencies are also under investigation,
these people said.
Membership of these chat rooms
has shifted as bankers and traders
have moved from one employer to
another.
A central issue in the probe is
the currency fixesthe daily
snapshots of trading used by money
managers and others for valuing
portfolios and other purposes. The
fix is assessed from market activity
in a brief window. The most popular
is at 4 p.m. London time.
The close ties between traders at
different banksand the possibility
they colluded in an effort to manip-
ulate the fixis a key focus of the
FCA investigation, according to peo-
ple familiar with the probe.
On Friday, Barclays put six trad-
ers on leave after the U.K. bank
handed over a trove of what it re-
garded as troubling chat transcripts
and other evidence to the FCA, ac-
Barclays investigation.
Those traders include Chris Ash-
ton and Mark Clark in London and
Jack Murray in Tokyo, as well as
multiple traders in New York, these
people said.
PLC suspended two London curren-
cies traders, Julian Munson and
Paul Nash, according to people fa-
miliar with the matter.
Some traders not involved in the
chat rooms also have been sus-
pended. UBS recently put on leave
Niall ORiordan, a senior currencies
trader in Zurich, a person familiar
with the matter said. Mr. ORiordan
managed a trading desk that used to
employ a trader who participated in
The Cartel chat sessions, accord-
ing to people familiar with the situ-
ation.
That trader, Matt Gardiner, in
September joined Standard Char-
tered PLC, which recently placed
him on leave, a person familiar with
the matter said.
Citigroups head of European
spot foreign-exchange trading, Ro-
han Ramchandani, has been placed
on leave, as has Richard Usher, J.P.
Morgan Chase & Co.s head of spot
trading for Group of 10 currencies in
the European region, according to
people familiar with the matter.
Messrs. ORiordan, Ramchandani
and Usher were all members of the
Bank of Englands London Foreign
Exchange Joint Standing Committee
chief dealers subgroup at least as
recently as December, according to
minutes of the groups meetings.
The committee of a dozen senior
traders from different banks meets
every three or four months to dis-
cuss issues such as foreign-currency
regulation and high-frequency trad-
ing. In 2011, the group warned that
banks should prohibit the deliber-
ate exploitation of electronic dealing
systems to generate artificial price
behavior.
Clare Connaghan
and Chiara Albanese contributed
to this article.
BY DAVID ENRICH
AND KATIE MARTIN
Barclays, whose headquarters is in London, put six traders on leave Friday.
A
s
s
o
c
i
a
t
e
d
P
r
e
s
s
DBS, OCBC Report
Solid Profit Figures
DBS Group Holdings Ltd. and
Oversea-Chinese Banking Corp.,
the two biggest lenders in South-
east Asia by assets, reported sta-
ble earnings Friday, with in-
creased loans offsetting decreased
margins.
Low interest rates in Singapore
have put pressure on margins, and
both banks said they had set aside
increased amounts to guard
against bad loans, which held
steady in the July-to-September
quarter.
OCBCs net profit and core net
profit were 759 million Singapore
dollars (US$611 million), it said in
a filing with the Singapore Ex-
change. Core net profit, which ex-
cludes any one-time gains, rose 5%
from a year earlier, it said, citing
strong asset growth and improved
fee income as offsetting a lower
net interest margin and trading
revenue. OCBC booked a divest-
ment gain of S$1.13 billion from
the sale of stakes in Singaporean
conglomerate Fraser & Neave Ltd.
and Asia Pacific Breweries Ltd. in
July 2012 to groups linked to Thai
billionaire Charoen Sirivadhanab-
hakdi. This took its headline net
profit in last years third quarter
to S$1.85 billion, more than double
the latest quarters figure.
OCBC said net interest income
rose 4% to S$978 million from
S$944 million while noninterest
income, which includes trading
and insurance investment, rose 3%
to S$779 million from S$754 mil-
lion. The banks net interest mar-
gin declined to 1.63% in the third
quarter from 1.75% in the same pe-
riod last year.
DBS Groups net profit in the
July-to-September quarter rose 1%
on year to S$862 million com-
pared with S$856 million in the
same period last year, it said.
DBS Groups net interest mar-
gin narrowed to 1.60%, compared
with 1.67% a year earlier, it said,
citing lower loan spreads and
lower yields on investment securi-
ties. Still, Southeast Asias biggest
lender by assets said its net inter-
est income rose 6% on year to
S$1.41 billion.
The banks ratio of nonper-
forming assets was steady at 1.2%,
while customer loans rose 19% on
year to S$242 billion as trade
loans, corporate borrowing and
secured consumer loans increased.
DBS Group set aside S$151 million
in allowances for credit and other
losses in the third quarter com-
pared with S$55 million a year
earlier.
We are well placed to navigate
the market uncertainties ahead
and will be prudent and vigilant as
we continue to grow our franchise
across the region, DBS Group
Chief Executive Piyush Gupta said
in a statement.
AND CHUN HAN WONG
THE BANKING ACADEMY
Continuing Education for Practising Financial Services Professionals
James R. Devine
Faculty at Stonier Graduate
School of Banking
Former VP, Seattle
First National Bank
Robert J. Hogan
Faculty Chair California
Bankers Association
Commercial Lending School
Former VP, Seattle
First National Bank
World-class faculty and
subject matter experts
as trainers
Making Small Businesses
a Cornerstone of the
Banking Industry
www. t h e a s i a n b a n k e r. c o m
Only 10 seats left.
Register now!
For register, call +65 6236 6529 or
email gamorin@theasianbanker.com
Small Business Banking
A comprehensi ve trai ni ng programme
desi gned to sharpen the ski l l s and
i nsti ncts of seni or executi ves on the
SME Banki ng busi ness
Latest thi nki ng and gl obal devel opments
on credi t, deposi ts, marketi ng and al l
tacti cal areas of the busi ness
An overvi ew of how suppl y chai ns are
evol vi ng at the l evel of di fferent
busi ness i ndustri es

Media Partner:
WORLD NEWS: U.S.
Charges Filed in Airport Shooting
LOS ANGELESFederal officials
charged the 23-year-old suspect in
Fridays shooting rampage at Los
Angeles International Airport with
two felony counts, including a mur-
der charge that could carry the
death penalty if he is convicted.
A Transportation Security Ad-
ministration officer, 39-year-old Ge-
rardo I. Hernandez, died from gun-
shot wounds in the attack. At least
two other TSA officers and one civil-
ian sustained gunshot wounds.
The suspected shooter, identified
as Paul Anthony Ciancia, was
charged with killing a federal em-
ployee. He was also charged with
committing a violent act at an air-
port, which could carry a penalty of
life in prison. The shooters motive
was not known but investigators
said he intended to kill TSA officers.
Mr. Ciancia was wounded in the
ensuing shootout with police and re-
mains hospitalized and unrespon-
sive, federal investigators said.
According to an affidavit in sup-
port of the complaint filed Saturday,
Mr. Ciancia pulled a Smith & Wes-
son .223 caliber M&P-15 assault ri-
fle out of a bag and fired multiple
rounds at point-blank range at Mr.
Hernandez, who was stationed at a
security checkpoint.
Mr. Ciancia then moved up an es-
calator toward the screening area
but looked back at the wounded of-
ficerwho appeared to move and re-
turned to shoot the wounded officer
again, the complaint says.
Mr. Ciancia continued shooting
his way past security and through
the terminal, investigators said,
sending passengers diving to the
ground for covering or fleeing the
terminal. Airport police subdued the
gunman after a shootout in the food
court deep inside the terminal, offi-
cials said.
Airport officials said 1,550 flights
and 167,050 passengers were af-
fected by Fridays incident, which
plunged the nations sixth busiest
airport into chaos as passengers fled
for their lives when the shooting be-
gan.
The airport returned to normal
operations by Saturday evening. Air-
port officials said the facility would
maintain high profile security in-
definitely, with more officers visible
in terminals and at curbside.
The airports famous multicol-
ored pylons were illuminated blue to
honor Mr. Hernandez, the slain TSA
officer.
Mr. Ciancia made a conscious
decision to kill TSA officers, said
David Bowditch, special agent in
charge of the Federal Bureau of In-
vestigation in Los Angeles, which is
leading the investigation.
According to the complaint, Mr.
Ciancia carried a signed, handwrit-
ten note saying he wanted to kill
TSA officers, that addressed TSA of-
ficers directly, saying, in part, that
he wanted to instill fear into your
traitorous minds.
The U.S. Attorney General will
review the case and decide whether
the death penalty will be pursued.
The same legal protocol was fol-
lowed in the case against Jared
Loughner, who shot former U.S. Rep-
resentative Gabrielle Giffords, and
murdered a federal judge. Mr.
Loughner, however, struck a deal
with prosecutors to avoid the death
penalty in exchange for life in
prison.
Federal investigators said they
have videotape of some of the inci-
dent, but its unclear where Mr.
Ciancia entered the airport. He was
dropped off at the airport, but fed-
eral officials declined to say whether
they know who dropped him off.
In Mr. Ciancias hometown of
Pennsville, N.J., outside Philadel-
phia, Police Chief Allen Cummings
said he learned of an alarming text
Mr. Ciancia sent to family members
at 1 p.m. Friday, when Mr. Ciancias
father called.
Pennsville police contacted Los
Angeles police, who agreed to check
Mr. Ciancias apartment.
The police chief said he learned
from the father that Mr. Ciancia had
attended a technical school in Flor-
ida, then moved to Los Angeles in
2012 to look for work as a motorcy-
cle mechanic, but had been having
trouble finding a job, according to
the Associated Press.
Most of the properties on the
road where the Ciancias live are rel-
atively small suburban homes on
close-packed plots. The Ciancia
property is quite large and heavily
wooded, with the house invisible
from the road.
Mr. Cummings said that Mr.
Ciancias father and brother were at
the family home, and told investiga-
tors they had no indication Mr.
Ciancia was planning anything like
this.
Everybodys just as shocked as
we are, Mr. Cummings said. Obvi-
ously theyre upset. Its a shock to
them, its a shock to our commu-
nity. Mr. Cummings said the Penns-
ville Police Department is assisting
the federal investigation.
BY TAMARA AUDI
AND NICK PINTO
Paul Anthony Ciancia, 23, was charged
in the shooting rampage and could
face the death penalty.
A
s
s
o
c
i
a
t
e
d
P
r
e
s
s
The shooter left a note
saying he wanted to kill
U.S. security officers.
How the world advances
Condence to grow
Thats what agricultural producers can achieve when theyre
smart about managing risk. And smart managers work with
CME Group, the worlds leading derivatives marketplace.
Farmers and ranchers around the world partner with us to
help them manage every kind of risk. Crop prices, weather
uctuations, interest rate movements, changing currency
valuations whatever the risk, we help the world advance
beyond it. Learn more at cmegroup.com/advance.
CME Group is a trademark of CME Group Inc. The Globe logo is a trademark of Chicago Mercantile Exchange Inc. All other trademarks are the property of their respective owners. Copyright 2013 CME Group. All rights reserved.
MARKETS
China Appetite Fuels Market for Metals
Investors seeking exposure to
good news about Chinas economy
are striking where its hotin iron-
ore and copper markets.
Prices of these industrial com-
modities, long considered to be one
of the most direct ways to bet on
Chinese economic growth, have
risen in recent months amid a flurry
of positive signals out of the worlds
second-biggest economy.
These indicators have dovetailed
with a ramp-up of Chinese demand
for the commodities.
Chinas imports of iron ore
soared to a record 74.6 million met-
ric tons in September, according to
the latest available data from
Chinas General Administration of
Customs. That has pushed prices up
nearly 20% since May, to about $131
a ton, according to data provider the
Steel Index.
China also has been importing
more copper, helping fuel a 10%
runup in prices of the metal from
nearly a three-year low hit in June.
The rally in these corners of the
metals market underscores money
managers renewed optimism about
China, which turbocharged global
growth for much of the past decade.
Doubts about Chinas growth
prospects sent shudders through fi-
nancial markets earlier this year and
contributed to weak performance of
many commodities.
But stronger-than-expected
third-quarter growth and an expan-
sion in factory activity have eased
worries about a slowdown in
Chinaand about the potential rip-
ple effects beyond its borders.
Many investors wager on metal
prices by buying shares of mining
companies. While copper futures are
actively traded, iron-ore prices are
set mostly on cash markets based on
prices producers strike with end us-
ers. Investor interest in iron ore is
spurring the development of a finan-
cial market for the key component in
steel. Chinas Dalian Commodity Ex-
change launched yuan-denominated
iron-ore futures in mid-October,
aimed at helping the country gain
some pricing power over the re-
source.
Everyone has been surprised by
the extent of the strength in iron-ore
prices, says Matt Riordan, a money
manager at Paradice Investment
Management Pty Ltd., which over-
sees about $8 billion. The longer
they stay up here, the more confi-
dent people are that we wont see a
big drop anytime soon.
Mr. Riordan, based in Sydney, re-
cently lifted his exposure to iron ore
by scooping up shares of mining
companies.
Shares of Australia-based Fortes-
cue Metals Group Ltd. have nearly
doubled in value since their lows set
in June, rising to a 17-month high in
October. Fortescue ships most of its
iron ore to China, providing supplies
for about 50 steel makers there.
Government spending on large-
scale infrastructure projects is driv-
ing Chinas growth, according to an-
alysts. Workers are breaking ground
on subways, power grids and oil re-
fineriestypes of construction that
require large amounts of steel and
copper.
Many investors believe that
China will be able to maintain cur-
rent growth rates, stoking metal de-
mand.
We expect the Chinese economy
to continue growing in the 7% to 8%
range, says Malcolm Gissen, presi-
dent of advisory firm Malcolm H.
Gissen & Associates in San Fran-
cisco. Demand for copper should
grow over the next couple of years.
Moreover, the metals market is
likely to become more dependent on
Chinese demand. Commodity consul-
tancy Wood Mackenzie Ltd. expects
China to account for 52% of indus-
trial-metal demand by 2017, up from
46% currently.
To be sure, recent robust Chinese
demand isnt enough to ensure that
prices of industrial commodities will
continue rising.
Chinese government officials
have voiced concerns about the
amount of debt owed on the local
level.
That could prompt a rollback of
infrastructure spending, which could
hurt commodity demand, says
Ephrem Ravi, a Barclays Capital ana-
lyst in Hong Kong.
Meanwhile, a bevy of new Aus-
tralian iron mines is slated to begin
production in the coming months,
which will add to global supplies.
Some investors also are wary that
India could expand global supplies
by easing restrictions on its export
industry, which has shrunk drasti-
cally on production bans in key min-
ing regions and increased export
taxes.
Goldman Sachs forecasts that
seaborne iron-ore supplies will out-
strip demand by 67 million tons next
year. That compares with a deficit of
11 million tons this year.
Carlos Salas, an associate at U.K.
wealth-management firm London &
Capital Asset Management Ltd.,
which manages about $4 billion in
assets, said he thinks the response
to recent upbeat Chinese economic
data will be short-lived. Rising sup-
plies of copper, like iron ore, are
widely expected to cap prices for
that market, too.
The money manager is keeping
its copper exposure relatively low, at
3% of the firms portfolios. London &
Capital has no bets tied to iron-ore
prices.
Large money managers had 17%
more bullish bets on copper futures
than bearish ones in the week to
Oct. 15, according to the U.S. Com-
modity Futures Trading Commis-
sions latest available data, which
have been delayed by the govern-
ment shutdown.
BY RHIANNON HOYLE
Sources: Goldman Sachs (demand); SIX Financial Information The Wall Street Journal
Bouncing Back
Copper and iron prices are rebounding from summer lows on strong
Chinese demand.
1.5 billion metric tons
0
0.3
0.6
0.9
1.2
09 2008 10 11 12 13 14
estimates
15 16 17
Chinese iron-ore demand Change in futures prices
10
30
20
10
0
%
F M A M J J J A S O
Copper
Iron ore
Some See Fragility in Developing Markets
demand to fuel their growth, Mr.
Pradhan and other concerned ana-
lysts say. Now, the global economy
has cooled and the boom is over. Fu-
ture growth requires a shift toward
more spending by their own citi-
zens, a painful transition.
On top of that, soaring stock and
bond markets and heavy business
investment in the developing world
relied on massive inflows of foreign
money. Those foreign flows arent
likely to keep growing as before and
few countries are ready to shift to
more homegrown financing.
A third problem is interest rates.
Extraordinary stimulus by the U.S.
Federal Reserve and other central
banks has held down interest rates
around the world, keeping financing
cheap and helping cover some of the
weakness in the developing worlds
financial systems. But the Fed in-
tends to reduce its stimulus in
months to come. At least some
other central banks could follow.
That will push up interest rates
around the world. So unless U.S. and
global growth prove much weaker
than economists expect, which
would delay Fed action but create
other problems for emerging mar-
kets, the interest-rate backdrop is
about to get worse.
Every countrys situation is dif-
ferent. Brazil is a big commodity ex-
porter, India exports services and
China imports commodities and ex-
ports manufactured goods.
Some countries have handled the
transition better than others. Mr.
Pradhan likes South Korea, Taiwan,
Poland, the Philippines, Mexico, Co-
lombia and Peru. That is his entire
list.
He advises staying away, in par-
ticular, from a group Morgan Stan-
ley has dubbed the Fragile Five: In-
dia, Brazil, Turkey, Indonesia and
South Africa.
Continued from page 15
Neil Shearing, chief emerging-
markets economist at Capital Eco-
nomics in London, is worried about
all four of the big economies that
got the most investor attention:
Brazil, Russia, India and China, a
group that was dubbed the BRICs.
Growth there will be slower
than in the previous decade, he
says.
Russia is too tied to energy ex-
ports. China still relies too heavily
on cheap credit and investment in
heavy industry and real estate. Bra-
zil and India, as well as Turkey, In-
donesia and South Africa, are too
dependent on foreign money.
This was all right when export
demand was rising fast and foreign-
ers were racing to invest. We are
getting to the end of that era, Mr.
Shearing says.
He likes emerging markets in
Eastern Europe but not much else.
As long as the Fed keeps longer-
term bond yields low, many emerg-
ing markets may not face a crunch.
The U.S. central bank holds yields
down by buying $85 billion a month
of U.S. Treasury bonds and mort-
gage-backed securities. The cash in-
jections keep markets humming.
The Fed initially planned to scale
back, or taper, those monthly pur-
chases in the latter part of this year.
Uncertain U.S. growth and the finan-
cial mess caused by Washingtons
squabbles have put a hold on Fed
action. But some economists think
recent signs of U.S. strength, nota-
bly in the manufacturing economy,
could push the Fed to taper its
spending in December or the first
months of next year.
Next year, once the Fed starts
tapering and yields rise, we are go-
ing to see pressures in the emerging
markets, says Alberto Ades, head of
fixed-income and foreign-exchange
strategy for emerging markets at
Bank of America Merrill Lynch.
More-bullish investment strate-
gists point out that growth is likely
to be faster in the developing world
than in the U.S. and Europe. If the
world economy continues to be
more resilient than the doomsayers
think, the developing world will
benefit, these analysts say.
But those banking on emerging-
market gains could be in for a
bumpy ride.
The fundamental backdrop that
led us to be so concerned about
emerging markets in the first place
hasnt changed a lick, says Richard
Bernstein, founder of Richard Bern-
stein Advisors, which oversees $1.8
billion in New York. He points to in-
flation and negative surprises on
corporate earnings.
Based on forecasts for the next
five years, he adds, U.S. small
stocks are a better growth story
than emerging markets.
Note: All data as of Oct. 31 Sources: J.P. Morgan; MSCI; EPFR Global (mutual funds) The Wall Street Journal
Emerging Hazard
The bonds, shares and currencies of poorer nations have rebounded since a midyear selloff, but some investors and
analysts warn that the risks of purchasing emerging-market assets havent abated.
Net investor cash into emerging-markets stock and bond mutual funds Performance this year
$8 billion
8
4
0
4
$8 billion
8
4
0
4
10
20
15
10
5
0
5
%
J M M J S J M M J S J M M J S
Currencies
Bonds Stocks
Stocks
Bonds
UMW Oil
Jumps 11%
In Its Debut
KUALA LUMPURShares of
UMW Oil & Gas Corp. rose as much
as 14% on their first day of trading
Friday as investors bet on strong or-
der prospects from energy compa-
nies in vibrant Southeast Asia to
buoy its earnings.
UMW Oil & Gas, a unit of Malay-
sian state-run conglomerate UMW
Holdings Bhd., raised about $740
million in the countrys biggest ini-
tial public offering this year.
Shares in UMW Oil & Gas, an off-
shore drilling service provider,
opened up 7.1% from their IPO price
and moved higher from there, clos-
ing up 11% at 3.10 ringgit (98 U.S.
cents) each. More than 221 million
shares changed hands.
Oil and gas services players are
likely to gain on orders from Petro-
nas, said Danny Wong, chief execu-
tive of Kuala Lumpur-based Areca
Capital, which has around 600 mil-
lion ringgit in assets under manage-
ment.
State oil-and-gas firm Petroliam
Nasional Bhd., commonly known as
Petronas, is in the middle of a bud-
geted $106 billion capital-spending
spree for the 2011-2015 period. Pet-
ronas has said it would replace for-
eign-owned rigs with those that are
locally owned when contracts ex-
pire, as part of push to help Malay-
sian businesses.
The Malaysian stock market has
recovered in the past two months
after global investors sold emerg-
ing-market assets during the sum-
mer.
The benchmark FTSE Bursa Ma-
laysia KLCI index is hovering near
its all-time high.
BY ABHRAJIT GANGOPADHYAY
WORLD NEWS
China, Others Demand
Explanation on Spying
BEIJINGChina demanded an
explanation from the U.S., and other
nations summoned American and
Australian diplomats following me-
dia reports that Australia helped the
U.S. gather intelligence across Asia.
The Sydney Morning Herald re-
ported Thursday, citing documents
from Edward Snowden and a former
Australian intelligence officer, that
facilities within Australian embas-
sies in Asia are being used to inter-
cept phone calls and data in coordi-
nation with the U.S. The report said
the facilities inside the embassies
are operated by Australias Defense
Signals Directorate.
Chinas Foreign Ministry urged
other foreign governments not to
use their diplomatic facilities to
harm Chinas national security.
China is extremely concerned
about this report, has already made
representations to the U.S. side and
demanded that the United States of-
fers a clarification and explanation,
Hua Chunying, spokeswoman for the
foreign ministry, said at a daily me-
dia briefing Thursday, according to
a transcript posted on the ministrys
website. The transcript quoted Ms.
Hua as demanding that foreign em-
bassies in China abide by the Vienna
Convention and not get involved in
any activities which do not accord
with their status or post and harm
Chinas security and interests.
In Indonesia, the Australian Em-
bassy said Ambassador Greg Mori-
arty was called to the Foreign Min-
istry on Friday to discuss the
allegations of intelligence activity.
Mr. Moriarty took careful note of
the issues raised and will report
back to Canberra, it said.
Malaysia summoned U.S. and
Australian diplomats in Kuala Lum-
pur on Friday and handed over a
protest note, the Foreign Ministry
said. Meanwhile, Foreign Minister
Anifah Aman expressed concern to
his Australian counterpart, Julie
Bishop, at an Indian Ocean multilat-
eral meeting in Perth that the re-
ports had caused considerable an-
ger amongst the Malaysian public,
the ministry statement said.
He further stated that such ac-
tivities are not done amongst close
friends as it could severely damage
existing relations.
The report listed embassies in
Jakarta, Bangkok, Hanoi, Beijing and
Dili, East Timor, as well as the High
Commissions in Kuala Lumpur and
Port Moresby, Papua New Guinea, as
being among the diplomatic posts
taking part in the U.S.-led effort.
That effort involves the Five
eyesAustralia, Britain, Canada,
New Zealand and the U.S.and is
the same as the one identified in an
earlier report by Der Spiegel, the
Herald said. The Australian govern-
ment said that it doesnt comment
on intelligence matters.
Patrick McDowell in Jakarta
and Celine Fernandez in Kuala
Lumpur contributed to this article.
BY CHARLES HUTZLER
Aides Debated Obamas Insurance Coverage Promise
As President Barack Obama
pushed for a new federal health law
in 2009, he made a simple pledge: If
you like your insurance plan, you
can keep your plan. But behind the
scenes, White House officials dis-
cussed whether that was a promise
they could keep.
When the question arose, Mr.
Obamas advisers decided that the
assertion was fair, interviews with
more than a dozen people involved
in crafting and explaining the presi-
dents health-care plan show.
But at times, there was second-
guessing. At one point, aides dis-
cussed whether Mr. Obama might
use more in-depth discussions, such
as media interviews, to explain the
nuances of the succinct line in his
stump speeches, a former aide said.
Officials worried, though, that delv-
ing into details such as the number
of people who might lose insurance
could be confusing and would clut-
ter the presidents message.
You try to talk about health
care in broad, intelligible points that
cut through, and you inevitably lose
some accuracy when you do that,
the former official said. The former
official added that in the midst of a
hard-fought political debate if you
like your plan, you can probably
keep it isnt a salable point.
The breadth of Mr. Obamas
statement proved to be a miscalcu-
lation. Mr. Obama repeated the
claim, with only occasional caveats,
through last week, when a flurry of
cancellation notices from insurers to
customers around the country
prompted him to recalibrate. The re-
sulting furor has energized Republi-
can opposition to the plan, which
only a few weeks ago had fallen flat
as a result of the partys failed at-
tempt to link it to government
spending and debt deadlines.
With 20/20 hindsight, maybe
this should have been parsed more
carefully, said Jim Margolis, a me-
dia adviser to Mr. Obamas cam-
paigns in 2008 and 2012, said of Mr.
Obamas broad promise. But, he
added, The presidents statement
seems fair.
At the time the law was being
written, Mr. Obama was trying to
make the case for the health-care
overhaul in understandable terms,
and in an environment in which Re-
publicans were casting it as a big
government takeover of the health
system. Mr. Obamas aides were fo-
cused on telling people that disrup-
tion would be minimal and benefits
from the law substantial.
Aides said that because insurers
could continue offering plans, even
those deemed to be substandard, if
they were in existence at the time
the law passed, Mr. Obamas state-
ment that you can keep your plan
was solid.
We thought we could fulfill the
promise with this grandfathering
clause, said Ezekiel Emanuel, vice
provost at the University of Penn-
sylvania and a former White House
health-care adviser.
The health law aims to eliminate
certain low-premium policies that
the administration said provide
skimpy coverage and could leave
people with high out-of-pocket
costs. While it allows insurers to
continue covering longtime custom-
ers with policies that were in exis-
tence as of March 2010, many insur-
ers are canceling such plans because
they would die out, anyway, in the
absence of new customers.
About 5% of the U.S. population,
or about 15.4 million people, are
covered under individual health
plans, and many of themas many
as 10 millionare expected to have
their health plans terminated by
their insurers by year-end, industry
experts have said. These customers
account for many of those now re-
ceiving cancellation notices; Mr.
Obama says they will be able to buy
better coverage on the new federal
insurance exchange.
One former senior administra-
tion official said that as the law was
being crafted by the White House
and lawmakers, some White House
policy advisers objected to the
breadth of Mr. Obamas keep your
plan promise. They were overruled
by political aides, the former official
said. The White House said it was
unaware of the objections.
Mr. Obama began offering broad
assurances as he campaigned for
president in 2008, before the Af-
fordable Care Act was written or
many of the details decided. In a
presidential debate with Republican
nominee John McCain, Mr. Obama
said that if youve got health care
alreadyyou can keep your plan.
Before then, Hillary Clinton was
making similar promises about her
proposed health-care overhaul. As
she campaigned for president in
2007, Mrs. Clinton said, Heres how
my plan works: If you already have
private insurance, and youre happy
with it, nothing changes. You keep
that insurance.
Mr. Obama adopted similar lan-
guage during the campaign and con-
tinued to use it in the White House
as he pitched Congress and the
American people on his health-care
legislation.
Jon Favreau, who served as Mr.
Obamas top speech writer, said that
as they tried to promote the over-
haul plan and explain it to the pub-
lic, the aim was to make it as simple
as possible while still being true.
Simplification and ease of ex-
planation were a premium, and that
was true throughout the process,
Mr. Favreau said.
Richard Kirsch, the former na-
tional campaign manager of Health
Care for America Now, which
pushed for the 2010 health law, said
the words were reassuringand
truefor the vast majority of the
people, and so his group never
raised concerns about that claim.
Adding an asterisk to note that peo-
ple who had shoddy insurance
might need to change plans wasnt
practical, he said. The actual, accu-
rate statement is if you have good
insurance, and you like it, you can
keep it, said Mr. Kirsch, now a se-
nior fellow at the Roosevelt Insti-
tute, a liberal policy organization.
The fact that insurers are cancel-
ing policies covering some people
has become central to the Republi-
can argument against the Affordable
Care Act, adding to the Obama ad-
ministrations problems as it strug-
gles to fix a malfunctioning website.
Reince Priebus, chairman of the
Republican National Committee,
seized upon Mr. Obamas words,
writing in an email Friday to sup-
porters, Heres the truth: Barack
Obama knowingly and repeatedly
lied to Americans.
David Axelrod, a senior White
House adviser during the health-
care fight, said there was no inten-
tion to mislead. The great misfor-
tune here is that the website
debacle occurred at the same time
as this issue arising, he said. If the
website hadnt gone down, then lots
of these people would be going on-
line and figuring out, Hey Im get-
ting a better insurance policy, and
Ill have to pay less money for it.
But they cant, because the website
is down. Its a perfect storm that
has created an opportunity for those
who oppose the plan.
As it was, only six people were
able to enroll through the Health-
Care.gov website on its initial day,
according to notes from inside the
agency running the site.
The White House has empha-
sized that only a small fraction of
the population has had their plans
canceled, saying that the attention
given to this topic has been dispro-
portionate.
Some policy experts who advised
the administration as the law was
crafted and implemented said they
never warned officials to tweak the
presidents message. They also con-
tinued to defend the changes in-
duced by the law.
Jonathan Gruber, an economics
professor at the Massachusetts In-
stitute of Technology, said the laws
impact on existing insurance ar-
rangements was a social policy de-
cision the government made and
the presidents description of it was
pretty low on the totem pole of po-
litical overstatements.
Louise Radnofsky
By ColleenMcCainNelson,
Peter Nicholas
and Carol E. Lee
The breadth of Mr. Obamas assertion proved to be a political miscalculation.
R
e
u
t
e
r
s
Site Says Snowden
Isnt an Employee
MOSCOWA website that of-
fered National Security Agency
leaker Edward Snowden a job said
he isnt its employee, deepening the
mystery over Mr. Snowdens new
employer.
Mr. Snowdens lawyer Anatoly
Kucherena said last week that his
client would start working for a
major Russian website on Friday.
Mr. Kucherena declined to name
the site but many assumed it would
be Russias most popular social net-
work VKontakte, which had offered
Mr. Snowden a job in August.
But the sites chief executive,
Pavel Durov said in an interview
that Mr. Snowden isnt working for
VKontakte. The job offer stands, he
added.
Meanwhile, Mr. Snowdens work
appeared Sunday in German maga-
zine Der Spiegel, in which he wrote
that mass surveillance is a problem
that threatens to corrupt open soci-
eties and the freedom of opinion.
The existence of espionage
technology must not dictate poli-
tics, Mr. Snowden said. The piece,
A manifesto for the truth, was
transmitted to Der Spiegels edito-
rial office via an encrypted channel,
the magazine said.
Yandex NV and Mail.Ru Group,
which run two of Russias biggest
websites, have said Mr. Snowden
wont be working for them, either.
Mr. Kucherena couldnt be
reached to comment further Sun-
day.
In August, Russia granted Mr.
Snowden temporary asylum, which
allows him to live, work and travel
in the country. Prosecutors in the
U.S. have charged him under the
Espionage Act after he had leaked
details of classified U.S. surveil-
lance programs to several media
outlets.
His whereabouts within Russia
arent known.
Last week, Russian tabloid web-
site LifeNews published a photo of
a man it said was Mr. Snowden in
Moscow.
BY OLGA RAZUMOVSKAYA
AND NINA ADAM
For information about listing your funds, please email wsja.advertising@dowjones.com or call +852 2573-7121
Data as shown is for information purposes only. No offer is being made by
Morningstar, Ltd. or this publication. Funds shown arent registered with the
U.S. Securities and Exchange Commission and arent 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.
NAV %RETURN
NAV %RETURN
NAV %RETURN
NAV %RETURN
NAV %RETURN
NAV %RETURN
Advertisement
[ALTERNATIVE INVESTMENT FUNDS www.WSJ.com]
Advertisement
JapanEquityLarge-CapGrowth
Funds that are fairly representative of the Japanese large cap equity market. At least 75% of assets in
equities of fast-growing Japanese large-caps. Ranked on % total return (dividends reinvested) in U.S.
dollars for one year ending November 01, 2013
Leading 10Performers
FUND FUND LEGAL %Return in $US **
RATING* NAME FUNDMGM'T CO. CURR. BASE YTD 1-YR 2-YR 5-YR
NS JPMThe JPMorgan Asset JPYJPN 55.79 75.55 33.68 16.28
Japan D3M Management (Japan) Ltd.
NS Daiwa Nippon Daiwa Asset JPYJPN 48.05 58.35 21.22 NS
Support Fd 3 -Phoenix Japan Management Co.Ltd.
Equity Open Management Co.Ltd.
NS Daiwa Growth Daiwa Asset JPYJPN 44.13 52.76 21.76 12.42
Stock Open Management Co.Ltd.
NS Daiwa Best Daiwa Asset JPYJPN 39.49 50.43 20.66 10.96
Party Japan Equity Management Co.Ltd.
NS Okasan Japan Okasan Asset JPYJPN 41.68 49.37 21.83 NS
NewTechnology Open Management Co., Ltd.
Open Management Co.Ltd.
Open DC Management Co.Ltd.
NS Daiwa Daiwa Daiwa Asset JPYJPN 40.63 48.39 19.77 10.85
Japan Stock Open Management Co.Ltd.
NS DIAMHybrid DIAMCo., Ltd. JPYJPN 37.46 48.17 18.15 11.50
Selection
NOTE: Changes in currency rates will affect performance and rankings. Source: Morningstar, Ltd
KEY: ** 2YRand 5YRperformance is annualized 1 Olivers Yard, 55-71 City Road
NA-not available due to incomplete data; London EC1Y 1HQUnited Kingdom
NS-fund not in existence for entire period www.morningstar.co.uk; Email: mediaservice@morningstar.com
Phone: +44 (0)203 107 0038; Fax: +44 (0)203 107 0001
INTERNATIONAL INVESTOR
Fears Boost Gold-Coin Sales
NEW YORKU.S. Mint gold-coin
sales are on track to exceed last
years totals as worries about the
stability of the federal government
have attracted buyers back to the
market.
The Mint has sold 752,500 troy
ounces of American Eagle gold coins
this year, just shy of last years total
sales of 753,000
ounces, according
to the Mints data.
The Mint sells
gold and silver coins to authorized
dealers, who in turn distribute the
coins to the public. Dealers buy
coins from the Mint to meet, or in
anticipation of, demand from indi-
vidual investors.
Coin sales got a boost in October,
when the federal government was
partly shut down for 16 days over a
budget standoff in Congress and the
U.S. neared the brink of a debt de-
fault. The Mint sold 48,500 ounces
of American Eagle gold coins last
month, more than triple the 13,000
ounces sold in September but less
than the 59,000 ounces sold in Octo-
ber 2012.
We saw our peak order volumes
right before the government shut-
down, and then again right before
the deadline for the debt-ceiling in-
crease, said Mike Getlin, executive
vice president at Merit Financial
Inc., a bullion dealer based in Santa
Monica, Calif. The debates in Wash-
ington spooked people about holding
dollars, and that drove up demand
for bullion coins.
Congress was able to resolve the
budget standoff and temporarily
raise the debt ceiling, but the debt
debate is expected to resume early
next year. Retail investors are also
worried about the Federal Reserves
continued stimulus efforts, and the
long-term risks the program holds
for the value of the dollar, he said.
But while demand for gold coins
is climbing, investors are cutting
back on their holdings of gold fu-
tures and other gold-linked financial
instruments as they seek higher-
yield investments, analysts said.
Gold prices are down 22% this
year. Comex futures for November
delivery closed at $1,313.10 an ounce
on Friday, down 2.9% for the week.
Coin buyers tend to have a more
long-term investment horizon, ana-
lysts said.
People are just still very uncom-
fortable about the financial situation
worldwide, said Terry Hanlon, pres-
ident of Addison, Texas-based Dillon
Gage Metals, an authorized dealer
for U.S. Mint gold, silver and plati-
num coins.
October is also the month when
many dealers restock their inven-
tory, as the summer lull typically
gives way to renewed interest, said
Michael Haynes, chief executive at
Oklahoma City-based Apmex Inc.,
one of 12 Mint-authorized purchas-
ers of American Eagle silver coins.
September sales picked up at
the retail counter, but not a lot was
bought from the Mint, Mr. Haynes
said, so dealers needed to buy more
coins in October to replace what
they sold.
Demand for silver coins has been
even higher than for gold, in part
because silver is less expensive. Sil-
ver for November delivery fell to
$21.804 an ounce on Friday, down
3.6% for the week.
The Mint has struggled to keep
up with silver-coin demand for much
of 2013. It ran out of the coins in
January and imposed limits on coin
sales to its authorized dealers.
Those limits remain in place.
BY TATYANA SHUMSKY
COMMODITY
MARKETS
Fund Scorecard
nALEXANDRAINVESTMENTMANAGEMENT
Tel: +1 212301 1800Fax: +1 212301 1810
Alexandra Convertible Bond Fund I, Ltd. (Class A) OT OT VGB 08/31 USD 2155.22 NS NS NS
nPLATINUMCAPITAL MANAGEMENT
Tel: +44207 0249840, www.platinumfunds.net
Platinm-All Star OT OT CYM 09/30 USD 107.57 NS NS NS
Platinm-All Weather OT OT USA 10/31 USD 129.92 2.4 3.2 3.8
Platinm-Dynasty OT OT CYM 09/30 USD 98.26 -8.0 1.5 -3.6
Platinm-Emancipation OT EQ CYM 05/31 USD 105.47 0.2 -8.5 5.7
Platinm-Equity Plus OT OT USA 05/29 USD 35.02 -18.2 -63.7 -45.6
Platinm-Gbl Dividend GL EQ CYM 09/30 USD 64.13 8.2 5.9 3.5
Platinm-Nordic OT OT CYM 09/30 SEK 528.84 1.8 3.4 4.0
Platinm-Premier OT OT CYM 12/31 USD NS -55.9 -66.0 -44.3
Platinm-Turnberry OT BD USA 02/28 USD 60.14 -1.2 -3.0 NS
nSUPERFUNDASSETMANAGEMENTGMBH
For info about openfunds, contact info@superfund.comandwww.superfund.com
*Closedfor NewInvestments
Superfund Cayman* GL OT CYM 10/29 USD 36.71 15.6 12.0 -16.4
Superfund GCT USD* GL OT LUX 10/29 USD 1646.33 9.2 5.0 -18.5
Superfund Green Gold A(SPC) GL OT CYM 10/29 USD 903.32 -16.3 -19.9 -21.8
Superfund Green Gold B(SPC) GL OT CYM 10/29 USD 788.38 -13.7 -18.0 -25.8
Superfund Q-AG* GL OT AUT 10/29 EUR 5970.00 4.7 2.5 -8.9
nWINTONCAPITAL MANAGEMENTLTD
Tel: +44(0)2076105350Fax: +44(0)2076105301
Winton Evolution EURCls H GL OT CYM 09/30 EUR 1082.75 4.8 1.8 -1.0
Winton Evolution GBP Cls G GL OT CYM 09/30 GBP 1095.54 5.5 2.4 -0.6
Winton Evolution USDCls F GL OT CYM 09/30 USD 1378.95 5.4 2.4 -0.8
Winton Futures EURCls C GL OT VGB 09/30 EUR 237.68 2.9 2.5 -0.4
Winton Futures GBP Cls D GL OT VGB 09/30 GBP 258.65 3.2 3.0 0.0
Winton Futures JPY Cls E GL OT VGB 09/30 JPY 16619.67 3.5 3.2 -0.5
Winton Futures USDCls B GL OT VGB 09/30 USD 848.12 3.4 3.1 -0.2
nAHWCAPITAL MANAGEMENT
Tel (+49) 1805- 23 8282
www.ahw-capital.com
AHWTop-Div.Int. GL EQ LUX 07/29 EUR 46.59 -8.9 -8.2 -2.7
nALLIANZGLOBAL INVESTORSKAPITALANLAGEGESELLSCHAFT
Concentra AE EU EQ DEU 10/31 EUR 85.09 17.1 24.2 21.9
Industria AE EU EQ DEU 10/31 EUR 88.36 12.9 15.9 15.3
InternRent AE EU BD DEU 10/31 EUR 41.17 -5.5 -8.3 2.1
nCHARTEREDASSETMANAGEMENTPTELTD- TEL NO: 65-6835-8866
Fax No: 65-68358865, Website: www.cam.com.sg, Email: cam@cam.com.sg
CAM-GTF Limited OT OT MUS 10/25 USD 325553.83 -19.1 -14.7 1.4
nCREDITPACIFICASSETMANAGMENT
www.creditpacific.com
CP Global Alpha Fund OT OT WSM 09/13 USD 94.37 -1.6 -5.6 NS
CP Multi-Strategy Currency Fund OT OT CYM 09/11 USD 93.87 -8.0 -5.9 -4.4
CPS-Master Priv Fund GL OT WSM 10/31 USD 124.23 9.9 10.5 NS
nHSBCTrinkaus Investment Managers SA
E-Mail: funds@hsbctrinkaus.lu
Telephone: 352- 47 18471
Prosperity Return Fund A JP BD LUX 10/30 JPY 8758.52 -7.4 -5.5 0.3
Prosperity Return Fund B EU BA LUX 10/30 JPY 9092.11 5.3 16.6 12.5
Prosperity Return Fund C EU BA LUX 10/30 USD 83.24 -7.5 -5.4 -0.5
Prosperity Return Fund D EU BA LUX 10/30 EUR 127.05 -4.7 -4.4 11.1
Renaissance Hgh Grade Bd A EU BA LUX 10/30 JPY 10727.47 2.7 5.9 9.3
Renaissance Hgh Grade Bd B EU BA LUX 10/30 JPY 10957.42 16.1 29.3 21.2
Renaissance Hgh Grade Bd C EU BA LUX 10/30 USD 99.72 1.9 4.9 7.1
Renaissance Hgh Grade Bd D EU BA LUX 10/30 EUR 105.17 -2.4 -1.4 7.2
nSENSIBLEASSETMANAGEMENTLIMITED
www.samfund.com.hk Tel: (852) 28686848 Fax: (852) 28109948
Asia Value Formula Fd-B OT OT CYM 10/31 USD 10.11 -1.8 5.5 3.4
nTHENATIONAL INVESTOR
TNI Tower | Zayed1st Street Khalidia| Web:www.tni.ae
TNI MENASpecial Sits Fund OT OT BMU 09/30 USD 1111.62 7.6 6.8 5.1
TNI MENAUCITS Fund OT OT IRL 10/24 USD 1228.71 18.9 19.1 14.4
TNI UAE Blue Chip Fund OT OT ARE 10/24 AED 8.31 62.8 60.9 36.9
nWEBSITE: WWW.VALUEPARTNERS.COM.HK, TEL: (852) 28809263, FAX: (852) 25648487
*formerly knownas China ABHShares Fund
Intel-Chin Mainlnd Foc AS EQ CYM 10/31 USD 35.96 6.0 13.9 4.8
Intel-China Converg* AS EQ CYM 10/31 USD 123.64 5.4 13.3 3.0
VP Classic - A AS EQ CYM 10/31 USD 223.44 5.6 14.0 5.9
VP CLassic - B AS EQ CYM 10/31 USD 102.17 5.2 13.5 5.4
VP High Dividend Stk OT OT CYM 10/31 USD 68.20 8.1 12.6 13.7
nYUKI MANAGEMENT&RESEARCH
nYMR-NSeries
YMR-NGrowth Fund JP EQ IRL 11/01 JPY 12506.00 44.1 62.8 25.3
nYuki 77 Series
Yuki 77 General JP EQ IRL 11/01 JPY 8312.00 58.8 81.5 30.4
nYuki Asia Umbrella Series
Yuki Rebounding Gro Fd JP EQ IRL 11/01 JPY 15140.00 65.3 87.0 33.1
nYuki ChugokuSeries
Yuki Chugoku Jpn Gen JP EQ IRL 11/01 JPY 8699.00 41.5 59.0 23.8
Yuki Chugoku JpnLowP JP EQ IRL 11/01 JPY 9503.00 50.1 64.5 21.0
nYuki MizuhoSeries
Yuki Mizuho Jpn Dyn Gro JP EQ IRL 11/01 JPY 5362.00 44.5 62.7 23.9
Yuki Mizuho Jpn Inc JP EQ IRL 11/01 JPY 9133.00 33.3 47.0 19.7
Yuki Mizuho Jpn Lg Cap JP EQ IRL 11/01 JPY 6026.00 38.1 57.9 21.1
Yuki Mizuho Jpn LowP JP EQ IRL 11/01 JPY 17070.00 70.0 81.7 33.5
Yuki Mizuho Jpn Val Sel AS EQ IRL 11/01 JPY 8634.00 72.4 90.8 38.4
nMANULIFEASSETMANAGEMENT TEL:(852)21081110
Internet:http://www.manulife.com.hk 47/FManulife Plaza, Causeway Bay, HongKong
American Growth A US EQ LUX 10/31 USD 25.36 25.1 27.3 20.4
American Growth AA US EQ LUX 10/31 USD 1.45 24.8 26.9 20.1
Asia Total Return AA AS BD LUX 10/31 USD 0.98 -2.5 -1.4 3.8
Asia Value Dividend Equity Fund AA OT OT LUX 10/31 USD 1.58 10.9 15.4 14.6
Asian Equity A OT OT LUX 10/31 USD 3.12 10.5 19.0 11.3
Asian Equity AA OT OT LUX 10/31 USD 1.00 10.3 18.7 11.0
Asian SmCap Equity AA OT OT LUX 10/31 USD 2.19 16.6 25.4 22.8
China Value A AS EQ LUX 10/31 USD 7.78 6.1 15.0 5.8
China Value AA AS EQ LUX 10/31 USD 2.43 5.8 14.7 5.6
Dragon Growth A AS EQ LUX 10/31 USD 1.81 12.7 20.7 12.8
Dragon Growth AA AS EQ LUX 10/31 HKD 8.77 12.5 20.4 12.5
Emg Eastrn Europe A EU EQ LUX 10/31 USD 5.13 8.7 15.6 8.2
Emg Eastrn Europe AA EU EQ LUX 10/31 USD 2.20 8.6 15.5 8.0
European Growth A EU EQ LUX 10/31 USD 11.33 20.9 28.1 15.9
European Growth AA EU EQ LUX 10/31 USD 0.81 20.6 27.7 15.6
Global Contrarain AA GL EQ LUX 10/31 USD 0.93 6.5 7.8 -1.1
Global Property AA OT EQ LUX 10/31 USD 0.97 5.7 10.9 14.8
Global Resources AA GL EQ LUX 10/31 USD 0.98 -3.0 -6.6 -9.0
Healthcare AA OT EQ LUX 10/31 USD 1.49 26.0 26.0 22.0
India Equity AA EA EQ LUX 10/31 USD 1.00 -3.8 0.7 -2.6
International Growth A GL EQ LUX 10/31 USD 4.25 24.0 25.7 16.7
International Growth AA GL EQ LUX 10/31 USD 0.98 23.7 25.4 16.4
Japanese Growth A JP EQ LUX 10/31 USD 3.26 22.2 32.5 11.3
Japanese Growth AA JP EQ LUX 10/31 USD 0.84 21.9 32.1 11.0
Latin America Equity AA GL EQ LUX 10/31 USD 1.14 -7.3 -2.9 -2.6
Russia Equity AA EE EQ LUX 10/31 USD 0.68 5.2 11.0 1.0
Strategic Income AA OT OT LUX 10/31 USD 1.14 0.2 1.1 4.3
Taiwan Equity AA AS EQ LUX 10/31 USD 1.45 6.3 12.1 10.9
Turkey Equity AA OT OT LUX 10/31 USD 0.99 -6.9 1.5 12.6
U.S. Bond AA US BD LUX 10/31 USD 1.26 -0.2 0.4 4.7
U.S. SmCap Equity AA US EQ LUX 10/31 USD 1.07 15.4 18.0 11.7
U.S. Special Opportunities AA US BD LUX 10/31 USD 1.02 9.2 13.1 16.2
U.S. Tsy Inf-ProtSec AA OT OT LUX 10/31 USD 1.29 -7.3 -7.2 -0.4
nPTCIPTADANAASSETMANAGEMENT
Tel: +6221 25574883 Fax: +6221 25574893 Website: www.ciptadana.com
Indonesian Grth Fund GL EQ BMU 10/30 USD 156.61 -12.6 -15.2 -8.2
Blanks for gold coins are displayed at the U.S. Mint at West Point, N.Y.
B
l
o
o
m
b
e
r
g
N
e
w
s
In print & online. Contact:
wsja.advertising@dowjones.com
LIST YOUR
FUNDS
WORLD NEWS
India Space Agency
To Launch Mars Mission
NEW DELHIOn Tuesday, Indias
space agency will launch a space-
craft designed to boldly go where no
Asian nation has gone before: Mars.
The mission, if successful, would
be a technological leap that would
propel India ahead of space rivals
China and Japan in the field of in-
terplanetary exploration.
It will take more than 10 months
for Indias Mars satellite, equipped
with instruments that can examine
the surface of the Red Planet from
above, to reach Martian orbit and
begin beaming information back to
Earth.
This is a major turning point in
our space programtowards explo-
ration, said Koppillil Radhakrish-
nan, chairman of the Indian Space
Research Organization, the coun-
trys civilian space agency. It will
bring technological advantage for
the country.
Decades after the U.S. and Soviet
Union battled for supremacy in
space during the Cold War, Asian
powers have embarked on their own
space racea contest with political,
military and technical ramifications
here on Earth.
In recent years, Japan, China and
Indiain cooperation with the U.S.
National Aeronautics and Space Ad-
ministrationhave put satellites
into lunar orbit. China has also put
astronauts into Earth orbit and con-
ducted spacewalks.
India spends 68 billion rupees
($1.1 billion) a year on its space pro-
gram and has 20 satellites in orbit
for communication and remote
sensing.
Critics argue that a country
where more than 350 million people
live on less than $1.25 a day and
where a third of the population
lacks access to electricity should be
focused more on terrestrial prob-
lems. The bread or gun argument
is real for India, said Rajeswari Pil-
lai Rajagopalan, a space-security ex-
pert at the Observer Research Foun-
dation, a New Delhi think tank. But
India doesnt live in a benign neigh-
borhood.
Ms. Rajagopalan said that while
India is focused on peaceful use of
outer space, this is the background
against which the Mars mission is
taking place. There is a sort of arms
race, especially since China in 2007
successfully tested an antisatellite
missile.
In August, India launched its
first dedicated military satellite for
naval intelligence gathering, amid
mounting concerns about the Chi-
nese naval presence in the Indian
Ocean.
Boosters also point to the civil-
ian benefits of the space program,
such as improved meteorological
forecasting, which prompted the
government to evacuate one million
people from areas along the south-
east coast before a major cyclone
last montha move credited with
saving thousands of lives.
Indias Mars satellite, dubbed
Mangalyaan, or Mars craft in Hindi,
is scheduled to reach Martian orbit
on Sept. 24 after a journey of 422
million miles.
If it makes it, it will join two rov-
ers and two orbiters belonging to
NASA and a European satellite al-
ready exploring Mars.
Chinas 2011 attempt with Russia
to send the Yinghuo-1 satellite to
Mars failed after the Russian rocket
carrying it was unable to leave
Earth orbit. A Japanese 2003 mis-
sion to Mars was unable to place a
satellite into Martian orbit.
Chinas National Space Science
Center has been quoted in Chinese
media as saying that it wont at-
tempt another voyage to Mars until
at least 2016.
Indias Mars mission, with a bud-
get of $73 million, is far cheaper
than comparable missions including
NASAs $671 million Maven satellite
that is expected to set off for Mars
later in November.
The program was approved by
the government in 2012.
Our previous experience has
helped a lot, said Deviprasad
Karnik, spokesman for the Indian
Space Research Organization. We
had an indigenous spacecraft bus al-
ready available from our moon mis-
sion and the design [for the satel-
lite] was already available so we
could do it quickly.
Ram Jakhu, a professor at the In-
stitute of Air and Space Law at
McGill University in Canada, said
the space contest among India,
China and Japan was different from
the U.S.-Soviet race, because to
some extent its about a rush for
natural resources. He said Indias
Mars mission is a signal to the
world about equality and efforts and
capabilities to look for resources.
If India were to land upon a ma-
jor deposit of titanium, for instance,
during future missions, it would be
a boost to the economy, he said.
India and China want to be ma-
jor world players and feed their
huge populations so they need natu-
ral resources.
BY JOANNA SUGDEN
Nation of Nauru Rebuilds
Bank System From Scratch
MELBOURNENauru, a South
Pacific atoll that is home to a con-
troversial refugee camp, is hoping to
shake its reputation as a money-
laundering haven and revive its
banking system years after the gov-
ernment shut it down.
The island nation of 10,000 peo-
ple is at the heart of the Australian
governments strategy to stem a ris-
ing tide of refugees from countries
such as Iran and Afghanistan by re-
settling them in Nauru and other
impoverished South Pacific nations
in exchange for increased aid.
That plan has brought an influx
of investment to Nauru, giving it a
much-needed economic boost. Hu-
man-rights advocates, including Am-
nesty International, say the camp is
unlawful and inhumane.
For Nauruans, saving cash has
been a thorny issue since the govern-
ment closed the Bank of Nauru in
2006. The country was placed on an
international blacklist in 2001 be-
cause of concerns it had become a
base for money laundering. The li-
censes of hundreds of Nauru-regis-
tered banks were revoked. Since
then, the island has operated as a
cash economy, with residents resort-
ing to tactics such as burying their
savings to protect them from thieves.
Naurus fortunes have changed
drastically over the years. Covering
just 21 square kilometers, it was one
of the wealthiest countries per cap-
ita during the 1980s thanks to an
extensive supply of phosphate,
which is used in fertilizer. By the
turn of the century, though, as
prices for the commodity tumbled
and the countrys easily mined sup-
ply came close to running out, the
government was left heavily in debt.
The islands two cash machines
are frequently drained by residents
attempting to get hold of cash held
in bank accounts offshore. The Aus-
tralian dollars used as local cur-
rency are worn to threadbare, said
John Short, an expatriate Australian
who works in Naurus phosphate
mines. The five- and 10-dollar bills
do laps of the island so they are al-
most see-through, he said.
Naurus unemployment is as high
as 90%, according to official esti-
mates, with few industries other
than fishing having taken root. The
average national income is about
US$6,746 a year, according to the
United Nations.
After nearly a decade without ac-
cess to savings accounts, debit and
credit cards, Nauruans are now
poised to rejoin the modern finan-
cial world.
The islands government, bol-
stered by Australian investments
tied to its refugee plan, is in talks
with Bendigo & Adelaide Bank Ltd.,
Australias fifth-largest lender, to
set up a Nauru community branch.
We really need it, said 28-year-
old Nauruan Zia Gruneler. Im not
spending a lot because Im trying to
saving money, so I hide it in a piggy
bank. But my piggy bank doesnt
have interest.
Nauru is looking to move to a
system in which its entire popula-
tion uses a bank in a very short
time, said Erik Aelbers, a financial-
services expert at Asian Develop-
ment Bank, which was hired by
Naurus government last year to
scout out a prospective commercial
bank willing to come to the island.
Bendigo was chosen because it al-
ready has a successful community
bank model in Australia, where hun-
dreds of locally owned franchises
operate in small towns with the
banks support, Mr. Aelbers said.
Australias government will
pump in US$27 million in aid this
yearequal to nearly 40% of
Naurus US$70 million gross domes-
tic product.
The Asian Development Bank es-
timates the asylum camp could
boost Naurus economic growth to
8% annually in the 2013 and 2014
fiscal years, from 4.9% in 2012. The
processing center has already
brought hundreds of foreign work-
ers to the country.
David Adeang, Naurus finance
minister, said he expects a bank to be
operating by January, offering the
same banking services, products
and deposit protectionas Bendigo &
Adelaide offers its Australian custom-
ers. Australia has agreed to extend its
financial-claims system, which guar-
antees the deposits of Australian
banks, to a Nauru branch.
Under the proposed community
bank model, customers would help
fund the startup of the Nauru branch,
which the government estimated
would need about 900,000 Australian
dollars (US$849,000) in capital. The
government will create a holding
company and underwrite the issue of
shares to citizens who become share-
holders of the bank, providing
A$500,000 in capital itself.
The government and state-
owned companies are expected to be
the new banks largest customers,
but landowners who receive royal-
ties for phosphate mining and shops
that pay suppliers in Australia also
would benefit, Mr. Aelbers said. The
government employs close to 2,000
people who are currently paid in
cash every two weeks.
Occasionally, big bags of cash
have to be flown in and out of
Nauru, Mr. Aelbers said.
BY ROBB M. STEWART
AND LUCY CRAYMER
Agence France-Presse/Getty Images
Scientists and engineers work on a Mars Orbiter vehicle at an Indian Space Research Organization facility in Bangalore.
The mission could propel
India ahead of rivals
China and Japan in the
field of interplanetary
exploration.
Source: Nauru Government The Wall Street Journal
Note: A$0.95= US$1
Shifing Fortunes
Naurus economy, which relies heavily on aid, is poised to benet from
investment linked to Australias refugee-resettlement program.
Nauru government revenue in the year ended June 30, 2012
In millions of Australian dollars
Donor and
aid money
State-mining-
company
dividends
Customs
duties
Fishing
licenses
Fuel
sales
Phosphate
royalties
Warehouse
sales
Civil-
aviation
revenue
Port
fees
Telecom
tax and
dividends
Other
A$38.0 6.4 6.0 5.3 2.3
A$1.8 1.5 0.9 0.6 0.6 1.7
Total:
A$65.2
million
Giants aroundthe world
DowJones CountryTitans
INDEXPERFORMANCE
Previous session Year-to-date 52-week
Japan -0.66% 37.8% 62.9%
Spain -0.68 25.2 29.7
Australia -0.12 23.5 29.7
Switzerland -0.30 22.6 26.8
Netherlands -0.27 21.6 25.3
France -0.63 17.7 23.4
Italy -0.89 17.4 21.0
Sweden -0.37 15.7 20.7
South Africa 0.04 15.4 15.3
Germany -0.24 14.5 18.7
U.K. 0.10 14.3 14.9
South Korea 0.58 8.0 12.5
Hong Kong 0.56 7.7 11.0
Canada -0.17 7.6 7.2
Singapore -0.19 2.7 8.3
Turkey -1.66 -3.7% 3.2
Brazil -0.38 -5.9 -2.7
China 88 0.46 -9.5 1.5
DowJones Regional Sector Titans
Fincl Svcs 0.68% 33.8% 40.6%
Media 0.39 33.8 37.7
Travel &Leisure -0.07 31.3 34.7
Insurance -0.68 27.7 31.6
Health Care 0.12 27.2 26.9
Auto &Parts -0.93 26.9 43.1
Global 50 0.04 15.4 15.3
Asian 50 -0.38 9.7 18.9
Arab 50 -0.19 6.7 5.6
Tiger 50* 0.19 2.2 8.3
*Asia excluding Japan
Source: SIXFinancial Information
Major players &
benchmarks
At right, a look at the Asia Titans, the biggest and best known
companies in Asia. Below, some of the Dow Jones Titans indexes
of biggest and most liquid stocks in individual countries and regions
DowJones Asia Titans: Friday's best andworst...
Previous
Volume close, in STOCKPERFORMANCE
Company Country Industry in millions local currency Previous session 52-week YTD
SoftBank Japan Mobile Telecommunications $19.11 7,550 3.42% 178.2% 140.4%
Samsung Electronics Korea Semiconductors 0.23 1,500,000 2.39 13.0 -1.4
China Life Insurance Hong Kong Life Insurance 32.74 20.95 1.70 -12.2 -17.4
AIAGroup Hong Kong Life Insurance 14.46 39.75 1.02 25.0 31.4
National Australia Bank Australia Banks 5.13 35.63 0.91 43.3 42.5
Fanuc Japan Industrial Machinery $1.41 15,270 -2.86% 14.4 -4.1
Nissan Motor Japan Automobiles 24.10 961.00 -2.14 40.1 18.5
East Japan Railway Japan Travel Tourism 0.96 8,340 -2.00 51.4 49.5
Tokio Marine Holdings Japan Property Casualty Insurance 1.89 3,150 -1.72 46.6 32.2
Itochu Japan Industrial Suppliers 4.69 1,158 -1.70 43.3 27.7
...Andthe rest of Asia's blue chips
Latest,
Westpac Banking 4.76 34.58 0.85% 38.2% 32.8%
Australia (Banks)
Japan Tobacco Inc 7.05 3,575 0.70 60.0 46.5
Japan (Tobacco)
Sun Hung Kai Properties 1.89 102.30 0.69 -7.1 -12.3
Hong Kong (Real Estate Holding Development)
China Construction Bank 187.80 6.05 0.50 2.0 -2.7
Hong Kong (Banks)
Hyundai Motor 0.42 254,000 0.40 18.1 16.2
Korea (Automobiles)
Honda Motor 5.82 3,930 0.38 59.3 25.0
Japan (Automobiles)
Takeda Pharmaceutical 2.36 4,680 0.32 26.1 21.4
Japan (Pharmaceuticals)
POSCO 0.11 317,000 0.16 -6.1 -9.2
Korea (Iron Steel)
Woodside Petroleum 0.89 38.85 0.08 14.2 14.7
Australia (Exploration Production)
KDDI 2.74 5,310 ... 69.4 74.4
Mizuho Financial Group 76.11 205.00 ... 62.7 30.6
Japan (Banks)
Taiwan Semiconductor Manufacturing 10.87 109.50 ... 21.8 12.9
Taiwan (Semiconductors)
Wesfarmers 1.06 42.95 -0.05 26.3 16.6
Australia (Home Improvement Retailers)
Woolworths 1.44 34.87 -0.09 22.6 18.9
Australia (Food Retailers Wholesalers)
Hon Hai Precision Industry 22.18 74.40 -0.13 67.9 67.4
Taiwan (Electrical Components Equipment)
Tencent Holdings 2.51 422.60 -0.14 51.9 70.1
Hong Kong (Internet)
Industrial Commercial Bank of China 180.25 5.42 -0.18 2.8 -1.5
Hong Kong (Banks)
Mitsubishi 5.33 1,977 -0.25 36.0 20.0
Bank of China 226.50 3.62 -0.28 11.0 4.0
Hong Kong (Banks)
Hitachi 55.85 683.00 -0.29 60.0 35.5
Japan (Electronic Equipment)
Latest,
Canon 7.55 3,080 -0.32% 19.0% -7.8%
Japan (Electronic Office Equipment)
BHP Billiton 3.98 37.53 -0.35 9.0 1.2
Australia NewZeald Bkg 4.07 33.72 -0.35 34.1 34.6
Australia (Banks)
Commonwealth Bk Australia 1.78 75.80 -0.37 32.1 21.9
Australia (Banks)
Toyota Motor 7.21 6,330 -0.47 101.6 58.1
Japan (Automobiles)
Mitsubishi UFJ Financial Group 32.02 617.00 -0.48 70.4 33.8
Japan (Banks)
China Mobile 10.96 81.00 -0.49 -7.7 -10.2
Hong Kong (Mobile Telecommunications)
Shin-Etsu Chemical 1.62 5,500 -0.54 18.2 5.2
Japan (Specialty Chemicals)
Sumitomo Mitsui Financial Group 4.64 4,685 -0.64 89.3 50.4
Japan (Banks)
PetroChina 107.83 8.82 -0.68 -17.4 -19.4
Hong Kong (Integrated Oil Gas)
Rio Tinto 1.16 63.54 -0.70 10.7 -3.7
NTT DoCoMo 3.79 1,549 -0.71 33.2 24.9
Mitsui Co. 5.79 1,390 -0.71 22.3 8.3
Seven I Holdings 1.27 3,590 -0.83 45.3 47.3
Japan (Broadline Retailers)
CNOOC 47.72 15.78 -0.88 -3.4 -6.0
Hong Kong (Exploration Production)
Nippon Telegraph Telephone 2.11 5,030 -1.18 38.8 38.6
Japan (Fixed Line Telecommunications)
Nippon Steel Sumitomo Metal 45.95 319.00 -1.24 79.2 51.9
Japan (Iron Steel)
Komatsu 9.72 2,109 -1.45 18.1 -3.4
Japan (Commercial Vehicles Trucks)
Reliance Industries GDR 0.10 29.40 -1.57 -2.8 -3.8
United Kingdom(Exploration Production)
Nomura Holdings 33.93 711.00 -1.66 138.6 41.4
Japan (Investment Services)
Credit derivatives
Spreads oncredit derivatives are one way the market rates
creditworthiness. Regions that are treading inroughwaters
cansee spreads swing toward the maximumand vice versa.
Indexes beloware for five-year swaps.
Markit iTraxxIndexes SPREADRANGE, in pct. pts.
Mid-spread, since most recent roll
Index: series/version in pct. pts. Mid-price Coupon Maximum Minimum Average
Europe: 20/1 0.83 100.82% 0.01% 1.04 0.83 0.93
Eur. HighVolatility: 20/1 1.32 98.48 0.01 1.61 1.32 1.45
Europe Crossover: 20/1 3.41 107.03 0.05 4.08 3.37 3.73
Asia ex-JapanIG: 20/1 1.31 98.50 0.01 1.57 1.30 1.42
Japan: 20/1 0.92 100.41 0.01 0.97 0.85 0.90
Note: Data as of October 31
Spreads
Spreads on
ve-year swaps
for corporate
debt; based on
Markit iTraxx
indexes.
In percentage points
2.00
1.50
1.00
0.50
0
t
Europe
t Europe Senior Financials
2013
May June July Aug. Sept. Oct.
Index roll
NOTICE TO READERS
All statistics published in
Asia from markets outside
the Asian-Pacific region
reflect preliminary data.
Tracking
credit
markets &
dealmakers
Credit-default swaps: Asian companies
At itsmost basic, thepricingof credit-default swapsmeasureshowmuchabuyer hastopaytopurchase-and
howmuch a seller demands to sell-protection fromdefault on an issuer's debt. The snapshot belowgives a
sense whichway the market was moving yesterday.
Showing the biggest improvement...
Ptt 94 7 8 31
IOI 106 4 7 29
Cr Saison 71 2 2 11
SKbroadband 119 3 3 15
Ebara 88 2 2 3
Nomura Hldgs 98 2 7 18
Kia Mtrs 75 2 4 16
Daiwa Secs Gp 127 3 3 7
AjinomotoCo 32 1 4 4
KyushuElec Pwr 112 2 2 2
Andthe most deterioration
ANAHLDGS 136 11 11 3
Kintetsu 107 6 7 2
NEC 124 7 10 15
JFEHldgs 99 5 9 8
JFEStl 91 5 7 8
Mitsui Chems 180 7 8 27
Sony 147 6 8 3
NipponYusenKabushiki
Kaisha
83 3 3 8
Mitsui OSKLines 146 5 5 18
NIPPONSTEEL SUMITOMO
METAL
69 2 4 2
BLUE CHIPS & BONDS
WSJ.com
>>
Follow the markets throughout the day, with updated
stock quotes, news and commentary at WSJ.com/Email.
Also, receive emails that summarize the days trading in
Europe and Asia. To sign up, go to WSJ.com.
BehindEurope's deals: Bank revenue rankings, France
Behind every IPO, bond offering, merger deal or syndicated loanis one or more investment banks. Here are
investment banks ranked by year-to-date revenues fromrecent deals.
PERCENTAGEOFTOTAL REVENUE
Revenue, Equity Debt Mergers &
in millions share capital markets capital markets acquisitions Loans
GoldmanSachs $147 8.1% 8% 23% 21% 48%
BNPParibas 144 8.0 9 47 25 19
SGCorporate Investment Banking 140 7.8 7 51 23 19
Credit Agricole CIB 130 7.2 8 44 22 26
Deutsche Bank 110 6.1 27 29 29 15
Natixis 109 6.1 7 59 8 25
MorganStanley 98 5.4 7 25 51 17
JPMorgan 90 5.0 14 23 28 36
Credit Suisse 85 4.7 2 38 21 39
Source: Dealogic
WORLD NEWS: ASIA
Asia Lagging Behind Rebound in West
Exports Fail to Benefit From Economic Growth in U.S. as They Did in the Past; Regional Loss of Competitiveness
Stronger demand from the indus-
trialized world helped Asian econo-
mies in October, but the region con-
tinued to lag behind firmer
recoveries in the U.S. and elsewhere.
Data from China, Taiwan and
South Korea released Friday showed
a broad recovery in manufacturing
activity.
Chinas official manufacturing
purchasing managers index rose to
an 18-month high in October, to 51.4
from Septembers 51.1, while a pri-
vate index from HSBC and Markit
Economics came in at 50.9, from
50.2. A reading above 50 indicates
expansion. But other data pointed to
a worrisome trend: Exports from
the region to the U.S., Europe and
Japan arent picking up as strongly
as economic recoveries in these de-
veloped economies would suggest.
Local demand is playing an in-
creasingly important role in Asia as
the middle class develops, but ex-
ports remain the regions major eco-
nomic driver.
The export performance of Asia
seems to be lagging the global in-
dustrial cycle, which is highly un-
usual, said Frederic Neumann, co-
head of Asian economic research at
HSBC. Theres mild improvement,
but its still puzzling that we havent
seen stronger numbers.
The growth in export orders in
Chinas PMI slowed, to 50.4 from
50.7. That came after Chinas exports
unexpectedly shrank by 0.3% on the
year in September.
In Taiwan, an important player
in the global electronics supply
chain, the official PMI fell to 51.6 in
October from 52.6 in September,
compounding fears that its recent
recovery is fragile. Meanwhile, the
HSBC PMI for Taiwan showed stron-
ger expansion, 53.0 in October, from
52.0 in September. Taiwans econ-
omy grew 1.6% in the third quarter,
below expectations due to weak ex-
ports, recent data showed.
While overall growth in the re-
gion is picking up, the latest data
reinforce doubts about whether Asia
is benefiting as much from growth
in the West as it has in the past.
That is due in part to the chang-
ing nature of the U.S. economy,
which is fueled less by consumer de-
mand and more by a domestic en-
ergy boom.
The U.S. is recovering without
sucking in as many Asian-made
goods as in the past, with consum-
ers reducing credit exposure and in-
creasing savings, said Shuang Ding,
a China economist with Citi Invest-
ment Research in Hong Kong. The
U.S.s narrowing trade deficit is evi-
dence of reduced consumer spend-
ing, he added.
China could also be suffering as
wage costs rise, pricing out some of
its manufactured wares in Western
markets. At the same time, its high-
end exports arent yet competitive
with those from industrialized coun-
tries. Mr. Ding said that is why
China is starting to export more of
these goods to other emerging mar-
kets.
The U.S. government shutdown
in October due to a congressional
fight over budget spending and the
debt ceiling also could have hurt ex-
ports from Asia, economists say.
Another factor is the strong
yuan, which is up 2.6% against the
U.S. dollar in the past 12 months,
making Chinas exports more expen-
sive overseas.
Other countries economies also
look shaky. In India, another large
emerging economy that helped Asia
power through the global recession,
manufacturing activity remained
weak and new orders continued to
fall. The HSBC PMI was at 49.6 in
October, unchanged from September
and in contraction for the third
straight month.
In Indonesia, HSBCs manufac-
turing PMI rose to a four-month
high at 50.9, from 50.2 in Septem-
ber, but the countrys trade balance
swung to a deficit of $657.2 million
in September, confounding econo-
mists expectations of a $96.6 mil-
lion surplus.
Asias economies still look stron-
ger than a few months ago. Many
nations manufacturing activity has
improved since the summer along
with growth in the developed world.
South Koreas HSBC index rose to
50.2 from 49.7 in September, and
the countrys exports gained 7.3%
from a year earlier after declining
1.5% in September.
Todays PMI data suggest the
Asia manufacturing recovery is be-
coming more entrenched, Krystal
Tan, an analyst with Capital Eco-
nomics, wrote in a note to clients.
Conditions are likely to pick up fur-
ther in the coming months, even if
only gradually.
Fridays official PMI for China
also underlined concerns about the
growth strategy in the worlds sec-
ond-largest economy, which remains
dominated by large state-owned
companies despite the governments
intent to rely more on domestic
consumption and services. The read-
ing for big companies in the index
rose to 52.3 while the one for small
ones fell to 48.5, a five-month low.
Although the PMI rose in Octo-
ber for the fourth consecutive
month, the momentum driving the
increase is unbalanced, said Zhao
Qinghe, a spokesman for the Na-
tional Bureau of Statistics.
Small businesses are facing sig-
nificant difficulties.
Zhang Zhiwei, chief China econo-
mist at Nomura, said he expects
Chinas GDP to grow by 7.5% in the
fourth quarter and 6.9% in 2014
from 7.8% in the third quarter of
this yearas authorities encourage
a switch away from state-led
growth.
HSBCs Mr. Neumann said the re-
gional figures suggest the deeper
problem is Asias loss of competi-
tiveness in recent years, as econo-
mies buoyed by easy money from
Western central banks have ne-
glected structural improvements
that could improve their long-term
outlooks.
The PMI data put to rest these
fears of a hard landing in Asia, and
does suggest were still picking up a
bit of momentum going into the
fourth quarter, but this is not robust
enough should there be another
shock to growth like another tussle
over the debt ceiling in the U.S. or
Europe slowing again. They dont
provide a big enough cushion for
Asia.
BY MICHAEL S. ARNOLD
AND RICHARD SILK
A view of containers at Nansha port
in Guangdong province. Guangzhou is
the fourth-largest port in China.
E
u
r
o
p
e
a
n
P
r
e
s
s
p
h
o
t
o
A
g
e
n
c
y
Indonesia Governors Raise MinimumWage in12 States
JAKARTA, IndonesiaA dozen
governors across Indonesia raised
the minimum wage in their locali-
ties by an average 19% in the wake
of a two-day strike, prompting con-
cern among business groups that
the step may scare investors away
from a country already losing some
of its appeal.
Gov. Joko Widodo of Jakarta was
the first to announce an increase in
the capital city on Friday. The 11%
boost would mean workers would
have to make at least 2.4 million ru-
piah [$215] a month starting on
Jan. 1. That follows a 42% increase
last year.
We decided that the wage will
be 2.4 million rupiah, which was the
amount recommended by the wage
panel, Mr. Widodo said.
Companies recommended 2.3
million rupiah. We hope there will
be no more protests.
Later Friday, 11 other governors
announced wage increases, which
ranged from 10% to 45%.
The biggest increase was
granted by the governor of Suma-
tras province of Bengkulu, which
would bring local minimum wages
to 1.4 million rupiah.
Some labor unions were un-
happy with the level of increases.
They had demanded 50% more and
The 21 remaining governors are
expected to reveal their plans soon,
with all of them expected to raise
minimum wages. Governors are
more concerned about the potential
fallout of workers upset about ris-
ing fuel prices and inflation than
foreign investors deciding to move
their money elsewhere.
I think foreign investors will
see it as a bad development, as they
will find it difficult to predict the
wage increase in the future, said
Tio Nugroho, the owner of event-or-
ganizing company PT Taranggana
Nata Asia. Mr. Nugroho said his
companys income declined around
30% during the first nine months of
the year as many of his clients had
to cut promotional events to pay
higher wages.
Indonesias Investment Coordi-
nating Board reported last month
that foreign direct investment in In-
donesia fell to $6.9 billion in the
third quarter of the year from $7.2
billion the quarter before.
Fridays boost to wages was on
top of the average 30% increase in
the minimum wage that went into
effect at the beginning of this year.
Roni Febrianto, a spokesman for
a coalition of labor unions, said he
would keep pushing for higher
wages. The increase is way below
our demand, Mr. Febrianto said
while protesting outside Jakarta
City Hall with thousands of other
workers.
We will continue to put pres-
sure on the government until they
meet our demand," he said.
Mr. Febrianto said that around
1.5 million workers in 20 provinces
joined the second day of the strike,
but there was no independent con-
firmation.
While a business group said it
accepted the increase set in Ja-
karta, it was concerned with the
large increases in some other prov-
inces.
Jokowis decision shows his
quality as a good leader, who is not
bent by any pressures. But [I dont
see] such quality in other provincial
leaders, said Ade Sudrajat, the
chairman of the Indonesian Textile
Manufacturers Association. Textile
and footwear companies are typi-
cally hit hard by minimum wage in-
creases because they tend to em-
ploy many low-wage workers.
Foreign investors, especially
those in the labor-intensive indus-
tries, may move to neighboring
countriessuch as Cambodia and
Myanmarif local governments
again bow to demands for a sharp
pay increase, business groups
warned. Its not getting easier to
do business here, said Sofjan Wa-
nandi, chairman of the Indonesian
Employers Association, one of In-
donesias large business associa-
tions.
Joko Hariyanto
BY I MADE SENTANA
AND LINDA SILAEN
Sources: HSBC via Markit; Chinas National Bureau of Statistics via Thomson Reuters (Chinas ofcial index) The Wall Street Journal
Gaining Ground
Manufacturing activity in China, South Korea and Taiwan is strengthening, but growth in export orders showed
some worrying trends, including slower expansion in China, according to an ofcial barometer.
HSBCs reading Ofcial government
reading
SOUTH KOREA TAIWAN CHINA
E
X
P
A
N
D
I
N
G
C
O
N
T
R
A
C
T
I
N
G
13 2012
60
55
50
45
40
13 2012 13 2012 13 2012
Export orders PMI, or index of overall manufacturing activity
Some labor unions were unhappy with the level of
increases. They had demanded 50%more and
WSJ.com
>>
Follow the markets throughout the day with updated stock quotes, news and commentary at at
WSJ.com. Also, receive email alerts that summarize the days trading in Europe and Asia. To sign
up, go to WSJ.com/Email
Commodities Prices of futures contracts withthe most openinterest
EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; NYBOT: NewYork Board of Trade; MDEX: Bursa Malaysia
Derivatives Berhad; LIFFE: London International Financial Futures Exchange; LME: London Mercantile Exchange; NYMEX: NewYork Mercantile Exchange;
ICE: IntercontinentalExchange *Data as of October 31, 2013
ONE-DAY CHANGE Year Year
Commodity Exchange Last price Net Percentage high low
Corn (cents/bu.) CBOT 427.00 -1.25 -0.29% 605.00 425.75
Soybeans (cents/bu.) CBOT 1252.25 -14.00 -1.11 1,406.00 1,169.00
Wheat (cents/bu.) CBOT 667.50 unch. unch. 834.50 0.65
Live cattle (cents/lb.) CME 132.125 -0.600 -0.45 136.700 122.775
Cocoa ($/ton) ICE-US 2,651 -26 -0.97 2,780 2,071
Coffee (cents/lb.) ICE-US 105.95 0.55 0.52% 169.30 104.25
Sugar (cents/lb.) ICE-US 18.23 -0.09 -0.49 20.72 16.70
Cotton (cents/lb.) ICE-US 76.65 -0.53 -0.69 93.72 76.54
Rapeseed (euro/ton) LIFFE 375.75 0.25 0.07 441 357
Cocoa (pounds/ton) LIFFE 1,701 -3 -0.18 1,774 1,421
Robusta coffee ($/ton) LIFFE 1,490 8 0.54 2,185 1,453
Copper ($/lb.) COMEX 3.2985 -0.0020 -0.06 3.8305 3.0055
Gold ($/troy oz.) COMEX 1313.40 -10.30 -0.78 1,707.50 1,182.60
Silver ($/troy oz.) COMEX 21.825 -0.042 -0.19 32.670 18.215
Aluminum($/ton)* LME 1,876.00 -15.00 -0.79 2,165.50 1,764.50
Tin ($/ton)* LME 23,000.00 -275.00 -1.18 25,150.00 19,300.00
Copper ($/ton)* LME 7,241.00 -37.00 -0.51 8,286.00 6,676.00
Lead ($/ton)* LME 2,189.50 -18.00 -0.82 2,455.00 1,961.00
Zinc ($/ton)* LME 1,956.00 -17.50 -0.89 2,214.00 1,820.50
Nickel ($/ton)* LME 14,600 -10 -0.07 18,665 13,245
Crude oil ($/bbl.) NYMEX 94.52 -1.86 -1.93 109.69 85.48
Heating oil ($/gal.) NYMEX 2.8825 -0.0714 -2.42 3.2124 2.7650
RBOBgasoline ($/gal.) NYMEX 2.5421 -0.0449 -1.74 2.9032 2.4160
Natural gas ($/mmBtu) NYMEX 3.591 -0.072 -1.97 4.8270 3.5640
Brent crude ($/bbl.) ICE-EU 105.89 -2.95 -2.71 114.44 95.96
Gas oil ($/ton) ICE-EU 902.75 -21.25 -2.30 973.00 837.00
Currencies Londonclose onNov. 1
Per In
AMERICAS Per euro In euros U.S. dollar U.S. dollars
Argentina peso-a 7.9918 0.1251 5.9244 0.1688
Brazil real 3.0392 0.3290 2.2530 0.4439
Canada dollar 1.4084 0.7100 1.0441 0.9578
Chile peso 686.34 0.001457 508.80 0.001965
Colombia peso 2543.79 0.0003931 1885.75 0.0005303
Ecuador US dollar-f 1.3490 0.7413 1 1
Mexico peso-a 17.6268 0.0567 13.0670 0.0765
Peru sol 3.7433 0.2671 2.7750 0.3604
Uruguay peso-e 28.967 0.0345 21.474 0.0466
U.S. dollar 1.3490 0.7413 1 1
Venezuela bolivar 8.57 0.116742 6.35 0.157480
ASIA-PACIFIC
Australia dollar 1.4288 0.6999 1.0592 0.9441
1-mo. forward 1.4316 0.6985 1.0613 0.9423
3-mos. forward 1.4375 0.6956 1.0656 0.9384
6-mos. forward 1.4460 0.6916 1.0719 0.9329
China yuan 8.2273 0.1215 6.0990 0.1640
Hong Kong dollar 10.4575 0.0956 7.7523 0.1290
India rupee 84.0333 0.0119 62.2950 0.0161
Indonesia rupiah 15046 0.0000665 11154 0.0000897
Japan yen 133.24 0.007505 98.78 0.010124
1-mo. forward 133.22 0.007506 98.76 0.010125
3-mos. forward 133.16 0.007510 98.72 0.010130
6-mos. forward 133.08 0.007514 98.65 0.010137
Malaysia ringgit-c 4.2791 0.2337 3.1722 0.3152
NewZealand dollar 1.6390 0.6101 1.2150 0.8230
Pakistan rupee 144.190 0.0069 106.890 0.0094
Philippines peso 58.492 0.0171 43.361 0.0231
Singapore dollar 1.6772 0.5962 1.2433 0.8043
South Korea won 1431.85 0.0006984 1061.45 0.0009421
Taiwan dollar 39.713 0.02518 29.440 0.03397
Thailand baht 42.127 0.02374 31.229 0.03202
Per In
EUROPE Per euro In euros U.S. dollar U.S. dollars
Euro zone euro 1 1 0.7413 1.3490
1-mo. forward 0.9999 1.0001 0.7413 1.3490
3-mos. forward 0.9999 1.0001 0.7412 1.3491
6-mos. forward 0.9997 1.0003 0.7411 1.3494
Czech Rep. koruna-b 25.861 0.0387 19.171 0.0522
Denmark krone 7.4588 0.1341 5.5293 0.1809
Hungary forint 297.35 0.003363 220.43 0.004537
Norway krone 8.0562 0.1241 5.9722 0.1674
Poland zloty 4.1951 0.2384 3.1099 0.3216
Russia ruble-d 43.703 0.02288 32.397 0.03087
Sweden krona 8.8191 0.1134 6.5377 0.1530
Switzerland franc 1.2311 0.8123 0.9126 1.0958
1-mo. forward 1.2308 0.8125 0.9124 1.0960
3-mos. forward 1.2301 0.8129 0.9119 1.0966
6-mos. forward 1.2290 0.8137 0.9111 1.0976
Turkey lira 2.7217 0.3674 2.0176 0.4956
U.K. pound 0.8471 1.1805 0.6279 1.5925
1-mo. forward 0.8472 1.1803 0.6281 1.5922
3-mos. forward 0.8477 1.1797 0.6284 1.5914
6-mos. forward 0.8483 1.1789 0.6288 1.5902
MIDDLE EAST/AFRICA
Bahrain dinar 0.5085 1.9665 0.3770 2.6527
Egypt pound-a 9.2924 0.1076 6.8886 0.1452
Israel shekel 4.7692 0.2097 3.5355 0.2828
Jordan dinar 0.9557 1.0464 0.7085 1.4115
Kuwait dinar 0.3805 2.6278 0.2821 3.5448
Lebanon pound 2033.62 0.0004917 1507.55 0.0006633
Saudi Arabia riyal 5.0589 0.1977 3.7503 0.2666
South Africa rand 13.7292 0.0728 10.1776 0.0983
United Arab dirham 4.9547 0.2018 3.6730 0.2723
a-floating rate b-commercial rate c-government rate c-commercial rate d-Russian Central Bank rate.
Source: ICAPPlc.
Major stockmarket indexes Stock indexes fromaround the world, grouped by region. Showninlocal-currency terms.
ASIA-PACIFIC DJ Asia-Pacific 146.56 -1.15 -0.78% 10.0% 15.7%
Australia SPX/ASX200 5411.10 -14.40 -0.27 16.4 21.3
China Shanghai Composite 2149.56 7.95 0.37% -5.3 1.5
Hong Kong Hang Seng 23249.79 43.42 0.19 2.6 5.1
India S&P BSE Sensex 21196.81 32.29 0.15 9.1 13.0
Indonesia Jakarta Composite 4432.59 -78.042 -1.73 2.7 2.2
Japan Nikkei Stock Average 14201.57 -126.37 -0.88 36.6 56.9
Topix 1183.03 -11.23 -0.94 37.6 57.3
Malaysia Kuala Lumpur Composite 1810.41 3.56 0.20 7.2 9.3
NewZealand NZSX-50 4913.83 4.11 0.08 20.8 25.5
Pakistan KSE 100 23010.29 234.44 1.03 36.1 42.9
Philippines PSEi 6585.38 Closed 13.3 21.4
Singapore Straits Times 3201.20 -9.47 -0.29 1.1 5.3
South Korea Kospi 2039.42 9.33 0.46 2.1 6.3
Taiwan Weighted 8388.18 -61.88 -0.73 8.9 16.3
Thailand SET 1429.08 -13.80 -0.96 2.7 9.4
EUROPE Stoxx Europe 600 321.50 -0.87 -0.27 15.0 17.0
Stoxx Europe 50 2873.77 -4.65 -0.16 11.5 12.2
Euro Zone Euro Stoxx 307.19 -1.32 -0.43% 17.8% 21.8%
Euro Stoxx 50 3052.14 -15.81 -0.52 15.8 19.8
Denmark OMXCopenhagen 535.01 1.66 0.31% 18.2 19.7
Finland OMXHelsinki 7136.64 23.76 0.33 23.0 26.7
France CAC-40 4273.19 -26.70 -0.62 17.4 22.4
Germany DAX 9007.83 -26.09 -0.29 18.3 22.3
Italy FTSE MIB 19164.26 -187.26 -0.97 17.8 21.5
Netherlands AEX 391.20 -0.72 -0.18 14.1 15.9
Russia RTSI 1475.18 -5.24 -0.35 -3.4 2.1
Spain IBEX35 9838.3 -69.60 -0.70 20.5 23.5
Switzerland SMI 8221.80 -12.49 -0.15 20.5 22.7
Turkey BIST 100 76501.23 -1119.14 -1.44 -2.2 7.1
U.K. FTSE 100 6734.74 3.31 0.05 14.2 14.8
AMERICAS DJ Americas 447.20 0.64 0.14 20.5 22.0
Brazil Bovespa 54013.24 -242.96 -0.45 -11.4 -7.5
Argentina Merval 5094.67 -70.42 -1.36 78.5 112.7
Mexico IPC 41079.61 40.96 0.10 -6.0 -1.6
Europeanand Americas index data are as of 5:00p.m. ET. Sources: SIXFinancial Information; WSJ Market Data Group
Cross rates U.S.-dollar and euro foreign-exchange rates inglobal trading
US$ A$ C$ YUAN EURO HK$ RUPEE RUPIAH YEN NZ$ WON RINGGIT PH. PESO S$ SFRANC TW$ BAHT
U.S. 1.059 0.628 1.044 6.099 0.741 7.752 62.295 11153.95 98.776 1.215 1061.45 3.172 43.361 1.243 0.913 29.440 31.229
Australia 0.944 0.593 0.986 5.758 0.700 7.319 58.814 10530.61 93.256 1.147 1002.13 2.995 40.937 1.174 0.862 27.794 29.484
Britain 1.593 1.687 1.663 9.713 1.181 12.346 99.205 17762.74 157.301 1.935 1690.36 5.052 69.052 1.980 1.453 46.883 49.733
Canada 0.958 1.014 0.601 5.841 0.710 7.425 59.665 10682.99 94.605 1.164 1016.63 3.038 41.530 1.191 0.874 28.196 29.911
China 0.1640 0.174 0.103 0.171 0.122 1.271 10.214 1828.82 16.195 0.199 174.04 0.520 7.109 0.204 0.150 4.827 5.120
Euro 1.349 1.429 0.847 1.408 8.227 10.458 84.033 15046.21 133.245 1.639 1431.85 4.279 58.492 1.677 1.231 39.713 42.127
HongKong 0.129 0.137 0.081 0.135 0.787 0.096 8.036 1438.79 12.742 0.157 136.92 0.409 5.593 0.160 0.118 3.798 4.028
India 0.0161 0.0170 0.0101 0.0168 0.0979 0.0119 0.1244 179.05 1.5856 0.0195 17.04 0.0509 0.6961 0.0200 0.0146 0.4726 0.5013
Indonesia 0.0001 0.0001 0.0001 0.0001 0.0005 0.0001 0.0007 0.0056 0.0089 0.0001 0.10 0.0003 0.0039 0.0001 0.0001 0.0026 0.0028
Japan 0.010 0.011 0.006 0.011 0.062 0.008 0.078 0.631 112.92 0.012 10.75 0.032 0.439 0.013 0.009 0.298 0.316
NewZealand 0.823 0.872 0.517 0.859 5.020 0.610 6.380 51.271 9180.15 81.297 873.61 2.611 35.687 1.023 0.751 24.230 25.703
SouthKorea 0.0009 0.0010 0.0006 0.0010 0.0057 0.0007 0.0073 0.0587 10.51 0.0931 0.0011 0.0030 0.0409 0.0012 0.0009 0.0277 0.0294
Malaysia 0.315 0.334 0.198 0.329 1.923 0.234 2.444 19.638 3516.21 31.139 0.383 334.61 13.669 0.392 0.288 9.281 9.845
Philippines 0.023 0.024 0.014 0.024 0.141 0.017 0.179 1.437 257.24 2.278 0.028 24.48 0.073 0.029 0.021 0.679 0.720
Singapore 0.804 0.852 0.505 0.840 4.905 0.596 6.235 50.103 8970.98 79.444 0.977 853.71 2.551 34.874 0.734 23.678 25.117
Switzerland 1.096 1.161 0.688 1.144 6.683 0.812 8.495 68.261 12222.24 108.236 1.331 1163.11 3.476 47.513 1.362 32.259 34.220
Taiwan 0.034 0.036 0.021 0.035 0.207 0.025 0.263 2.116 378.88 3.355 0.041 36.06 0.108 1.473 0.042 0.031 1.061
Thailand 0.032 0.034 0.020 0.033 0.195 0.024 0.248 1.995 357.16 3.163 0.039 33.99 0.102 1.388 0.040 0.029 0.943
Source: ICAPPlc.
1.11%24.27 Shenzhen -c 322.58 -0.73 -0.23% 6.9% 9.8% -11.4%
1.90 20.46 U.S. TSM 18495.77 45.92 0.25 24.7 26.3 14.7
5.75 22.70 Global Select Div 249.27 -0.48 -0.19 13.6 15.0 5.1
5.50 16.18 Asia/Pacific Select Div 348.43 -1.05 -0.30 6.7 5.6 5.9
HongKongSelect Div -c 203.95 0.30 0.15 3.0 7.6 -1.9
U.S. Select Dividend -d 1208.15 6.19 0.51 25.9 26.6 18.1
2.17 19.07 Islamic Market 2636.98 -4.67 -0.18 14.7 16.8 7.9
2.48 17.00 Islamic Market 100 2869.60 -2.64 -0.09 16.4 17.5 10.2
2.17 11.30 Islamic China/HKTitans 30 1678.20 -1.75 -0.10 0.8 2.7 -0.3
Sustainability Korea -c 1490.15 8.63 0.58 2.1 5.9 0.1
3.92 24.28 BrookfieldInfrastructure 3132.65 -7.76 -0.25 13.4 14.1 11.2
DJ-UBSCommodity-p 124.27 -0.96 -0.77 -10.6 -11.5 -5.5
MSCI indexes
Developed and emerging-market regional and country indexes
fromMSCI as of November. 01, 2013
Price-to- LOCAL-CURRENCY
Dividend earnings PERFORMANCE
yield ratio MSCI Index Last Daily YTD 52-wk.
...% ... MSCI ACWI* 397.11 0.59% 16.9% 20.7%
... ... World(DevelopedMarkets) 1,602.86 0.56 19.8 23.2
... ... WorldSmall Cap 306.75 0.36 25.4 30.3
... ... Kokusai (Worldex-Japan) 1,608.81 0.54 19.5 22.4
... ... EAFE 1,878.39 0.81 17.1 23.4
... ... EmergingMarkets (EM) 1,034.42 0.81 -2.0 3.9
... ... ACASIAPACIFICEX-JAPAN 480.61 0.55 3.1 8.4
... ... ACFar East ex-Japan 532.47 0.69 2.4 8.6
... ... Japan 735.77 -0.86 38.7 61.6
... ... China 62.32 -0.11 -0.8 5.9
... ... China A(China Domestic) 2,324.69 -1.40 -3.1 7.1
... ... HongKong 13,241.20 -0.60 7.1 11.1
... ... India 813.92 0.61 6.5 13.2
... ... Korea 594.93 -1.70 2.6 8.7
... ... Malaysia 648.94 -0.63 8.6 9.7
... ... Singapore 1,723.50 -0.67 3.0 7.5
... ... Taiwan 298.69 -0.17 8.0 16.1
... ... Thailand 518.79 1.40 0.6 8.1
... ... Australia 1,110.33 -0.21 17.5 21.0
... ... NewZealand 110.93 1.65 12.4 15.8
... ... USBROADMARKET 2,001.10 0.35 24.5 26.3
... ... EUROPE 110.15 0.43 14.4 18.3
*Twenty-four developed and 21 emerging markets Source: MSCI
*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 11:30a.m. ET. Source: S&PDowJones Indices
DowJones Indexes
2.41%19.47 Global TSM 3131.53 -7.52 -0.24% 17.5% 21.0% 8.0%
2.98 19.01 Global DOW 2408.27 -4.09 -0.17 20.7 24.6 6.0
3.02 14.61 Global Titans 50 225.05 0.17 0.07 15.4 16.2 9.6
2.39 17.18 Asia/Pacific TSM 1445.70 -10.40 -0.71 10.0 15.7 2.7
2.32 18.63 S&PBMI Asia Pac EmgMkts 175.73 -1.49 -0.84 13.2 19.4 5.1
3.19 20.91 DevEurope TSM 3253.15 -22.23 -0.68 18.9 24.2 5.9
2.87 13.97 S&PBMI EmgMarkets 260.39 -1.72 -0.65 -1.8 2.8 -3.7
3.08 13.24 AsianTitans 50 153.78 -0.45 -0.29 9.8 18.1 4.2
3.42 9.31 BRIC50 516.09 -2.35 -0.45 -3.3 0.0 -7.7
2.77 11.15 S&PBMI China 440.21 0.98 0.22 5.0 9.7 -2.8
3.14 9.85 China Offshore 50 4140.05 6.63 0.16 3.5 6.5 -2.4
2.29 13.69 Shanghai -c 279.98 0.86 0.31 -1.6 6.5 -10.4
GLOBAL MARKETS LINEUP
WORLD NEWS: ASIA
Singapore Site Hacked
SINGAPOREA website run by
Singapores largest newspaper was
hacked Friday by a purported mem-
ber of online hacking group Anony-
mous, after the group appeared to
warn of potential cyberattacks
against the city-states government.
The hackerusing the name
The Messiahposted a message
on a blog run by the Straits Times
accusing a reporter and the paper of
deliberately misrepresenting Anony-
mouss intentions in the headline of
her article. The hacker demanded
that the reporter apologize or re-
sign within 48 hours, and said it
would take unspecified steps if
these requests werent met.
The articles headline read, You-
Tube video by Anonymous hacker
group threatens to attack Singa-
pore. Fridays message said the
headline can be very misleading as
it depicts a threat against the coun-
try, whereas the group was specifi-
cally threatening the government.
The YouTube video last week
was posted by someone claiming to
represent Anonymous, a loose and
decentralized collective of activist
hackers who have launched cyber-
assaults against U.S. government
and corporate targets. The video
carried a message purportedly from
Anonymous that threatened attacks
against Singapores state-owned cy-
berinfrastructure to protest the gov-
ernments tightening of Internet
regulations.
Singapore Press Holdings, pub-
lisher of the Straits Times, con-
firmed the hacking and said police
were investigating the incident. The
reporter of the article that The
Messiah objected to didnt respond
to requests to comment, but the
Straits Timesin an article pub-
lished on its websitesaid it stands
by its reports and reporters.
According to the video message,
Anonymous is planning a virtual
protest on Tuesday, Nov. 5the an-
niversary of a failed attempt by Guy
Fawkes to blow up the U.K. Parlia-
ment in 1605and is asking Singa-
poreans to show support by donning
black and red colors on that day.
The message didnt specify how
Anonymous would stage its protest.
In June, Singapore imposed new
licensing requirements on 10 news
websites run by U.S. Internet firm
Yahoo Inc. and two domestic media
companies, requiring them to apply
for individual licenses, furnish a
performance bond and comply
with government orders to remove
any objectionable content within 24
hours. The rules apply to news sites
that report regularly on Singapore
news and reach certain readership
thresholds, and they could cover
more websites in the future.
Government officials have de-
fended the revised regulations, say-
ing they wont curb free speech or
have a significant impact on busi-
ness, despite objections from citi-
zens and U.S. Internet firms, includ-
ing Google Inc., Facebook Inc. and
Yahoo. The government said the
rules would harmonize media laws.
Fridays hacking was the latest
purportedly launched by The Mes-
siah against websites run by Singa-
pore-based entities and personali-
ties this year.
BY CHUN HAN WONG
A person claiming to speak for Anonymous warns of attacks in a video.
A
g
e
n
c
e
F
r
a
n
c
e
-
P
r
e
s
s
e
/
G
e
t
t
y
I
m
a
g
e
s
Japan and Russia Agree
To Expand Security Ties
TOKYOJapan and Russia have
agreed to expand security coopera-
tion, in the latest in a series of con-
tacts between the nations in the face
of an increasingly assertive China.
At the first-ever meeting of the
two countries foreign and defense
ministers, Russian Foreign Minister
Sergei Lavrov and defense chief Ser-
gei Shoigu held talks Friday and Sat-
urday in Tokyo to launch what are
known as two-plus-two discus-
sions with their Japanese counter-
parts, Fumio Kishida and Itsunori
Onodera.
The ministers said the security
cooperation, in addition to continu-
ing economic and human exchange
programs, should help foster better
relations between the two countries,
which have had an often-chilly rela-
tionship owing to a territorial dis-
pute left over from World War II.
The new signs of friendship will
likely send a signal to China, which
is beefing up its military presence in
the region and is itself involved in
an increasingly testy dispute with
Japan over a small group of islands
in the East China Sea.
As a seafaring country, maritime
security is extremely important for
us and todays agreement was made
in a very timely fashion, Mr.
Kishida said Saturday.
Russia and Japan have conducted
joint naval exercises since 1998 but
only for the purpose of cooperation
in search-and-rescue operations.
Saturdays agreement added coun-
termeasures against terrorism and
piracy.
They also agreed to periodic mu-
tual visits of defense ministers,
along with the launch of a council on
cybersecurity.
Japan hopes the talks will
prompt China to reopen a window
for dialogue. Chinese and Japanese
leaders havent met formally since
Prime Minister Shinzo Abe took of-
fice in December, and Chinese patrol
vessels regularly enter what Japan
considers its territorial waters
around the disputed islands, known
as the Senkaku in Japan and the Di-
aoyu in China.
Japan sought Russian under-
standing of Japans security ap-
proach as a proactive contributor
to peace, which may include a revi-
sion to defense policies to include
the right of collective self-defense.
China and South Korea have criti-
cized any such moves by Japan,
which under present rules can re-
spond only to a direct attack.
I have explained the increas-
ingly severe security environment
around us and improvement in our
defense capabilities, Mr. Onodera
said. Mr. Lavrov responded by say-
ing that he understood Japans aim
to become a proactive contributor
to peace.
Russia and Japan have their own
territorial dispute over ownership of
four islands off the coast of Hok-
kaido, which has kept the countries
from signing a peace treaty that
would formally end World War II.
Mr. Abe and Russian President
Vladimir Putin, who have met four
times since December, agreed in
April to speed up a process toward
the peace treaty.
The foreign ministers held a sep-
arate meeting on Friday, at which
they agreed to proceed with peace-
treaty talks as soon as January.
BY TAKASHI MOCHIZUKI
Thai Tourist Ferry
Sinks, Killing Six
BANGKOKA tourist ferry sank
Sunday near an island off Thailands
popular resort of Pattaya, killing at
least six people and injuring 15, po-
lice said.
The double-decker vessel sank
about 1 kilometers from Lan island
as it was taking passengers, mostly
tourists, from the island back to
Pattaya, a well-known beach town
about 130 kilometers southeast of
Bangkok, police said.
At least six people were killed,
including three Thais, two Russians
and one Chinese national, said Po-
lice Col. Suwan Cheawnavinthavat,
Pattayas police chief.
At least 15 people were injured,
including a 9-year-old Russian boy
who was admitted to the emergency
unit at a local hospital, he said.
Police hadnt immediately deter-
mined the cause of the accident, but
initial reports suggested that the
boats water pump wasnt working
as seawater flooded the lower deck.
Tourists then rushed up to the top
deck, causing the boat to tip and
sink, Police Col. Suwan said.
The boat remained underwater,
police said.
About 200 people were rescued,
but it wasnt immediately known
how many people might be missing.
Police said the boat might have been
operating over its capacity. Navy
divers were dispatched to search for
any passengers who may have been
trapped or missing.
The Thai government and Pat-
taya tourism officials recently
launched a campaign to educate
tour-boat operators in an effort to
increase the level of maritime safety
following several accidents earlier
this year.
An Indian woman was killed in a
parasailing accident in Pattaya last
month when her parasail failed to
launch.
In August, two Chinese tourists
were killed when their speedboat
crashed.
In May, a ferry carrying about
120 people from Phi Phi island to
Phuket capsized after it was struck
by strong waves. All the passengers
were safely rescued.
Lan island, which is about 6 ki-
lometers, or 45 minutes by boat,
from Pattaya, is a popular tourist
spot for swimming and other water
activities.
Nopparat Chaichalearmmongkol
BY WARANGKANA CHOMCHUEN
AND WILAWAN WATCHARASAKWET
Thai officials recently
began a campaign to
educate tour-boat
operators in an effort to
increase maritime safety.
Julius Baer is present in over 40 locations worldwide. From Hong Kong, Shanghai, Singapore, Dubai, Moscow, Milan, Monaco,
Frankfurt, London, Guernsey, Nassau and Montevideo to Geneva, Lugano, St. Moritz and Zurich (head ofce).
The leading Swiss private banking group. Since1890.
www.juliusbaer.asia
My name: Edwin
My occupation: Plantation owner
My dream: Serve health to the
world in a cup of tea
My private bank: Julius Baer,
because they culti vate
relationships based
on trust
DowJones Industrial Average P/E: 18
LAST: 15615.55 s 69.80, or 0.45%
YEAR TO DATE: s 2,511.41, or 19.2%
OVER 52 WEEKS s 2,522.39, or 19.3%
*Price-to-earnings ratio for the Nasdaq 100 Note: Price-to-earnings ratios are for trailing 12 months Sources: WSJ Market Data Group; Birinyi Associates
15750
15500
15250
15000
14750
14500
2 9 16 23 30
Aug.
6 13 20 27
Sept.
4 11 18 25 1
Oct.
High
Close
Low
50day
moving average
t
Nasdaq Composite Index P/E: 21*
LAST: 3922.04 s 2.34, or 0.06%
OVER 52 WEEKS s 939.91, or 31.5%
3950
3850
3750
3650
3550
3450
2 9 16 23 30
Aug.
6 13 20 27
Sept.
4 11 18 25 1
Oct.
S&P 500 Index P/E: 19
LAST: 1761.64 s 5.10, or 0.29%
OVER 52 WEEKS s 347.44, or 24.6%
1800
1750
1700
1650
1600
1550
2 9 16 23 30
Aug.
6 13 20 27
Sept.
4 11 18 25 1
Oct.
1
DJIAcomponent stocks
Volume,
CHANGE
AT&T T 41.3 $36.24 0.04 0.11%
AmExpress AXP 3.3 82.16 0.36 0.44
Boeing BA 4.6 133.03 2.53 1.94
Caterpillar CAT 5.8 83.59 0.23 0.28
Chevron CVX 9.3 118.01 1.95 1.63
CiscoSys CSCO 33.1 22.57 0.01 0.02
CocaCola KO 12.4 39.61 0.04 0.10
Disney DIS 5.0 69.01 0.42 0.61
DuPont DD 3.8 61.09 0.11 0.18
ExxonMobil XOM 19.0 89.82 0.20 0.22
GenElec GE 55.6 26.54 0.40 1.53
GoldmanSachs GS 2.7 162.05 1.19 0.74
HomeDpt HD 7.0 76.99 0.90 1.16
Intel INTC 27.9 24.32 0.14 0.59
IBM IBM 3.6 179.23 0.02 0.01
JPMorgChas JPM 25.5 52.51 0.97 1.88
JohnsJohns JNJ 6.8 93.37 0.76 0.82
McDonalds MCD 5.1 97.24 0.72 0.75
Merck MRK 20.8 45.23 0.14 0.31
Microsoft MSFT 39.9 35.52 0.12 0.34
Nike B NKE 2.1 76.06 0.30 0.40
Pfizer PFE 28.0 31.17 0.49 1.58
ProctGamb PG 6.7 81.15 0.40 0.50
3M MMM 1.7 125.90 0.05 0.04
TravelersCos TRV 1.4 86.40 0.10 0.12
UnitedTech UTX 2.5 107.51 1.26 1.19
UtdHlthGp UNH 4.4 68.63 0.37 0.54
Verizon VZ 11.3 50.49 0.02 0.04
VISAClA V 3.3 199.16 2.49 1.27
WalMart WMT 5.1 77.07 0.32 0.42
U.S. stocks: most active...
Volume, CHANGE
SPDRS&P500 SPY 118.7 $176.21 0.42 0.24%
iShRussell2000ETF IWM 106.5 108.72 0.47 0.44
FacebookClA FB 94.1 49.75 0.45 0.91
iShMSCIEmgMarkets EEM 79.1 42.48 0.02 0.05
BankAm BAC 75.3 14.02 0.05 0.36
BarckGld ABX 74.3 18.01 1.38 7.12
SiriusXM SIRI 61.9 3.79 0.02 0.66
MktVecGold GDX 57.5 24.08 1.02 4.06
PenneyJC JCP 56.7 8.14 0.64 8.53
GenElec GE 55.6 26.54 0.40 1.53
FordMotor F 52.3 16.89 0.22 1.29
AmIntlGp AIG 51.7 48.28 3.37 6.52
AT&T T 41.3 36.24 0.04 0.11
MicronTch MU 41.2 17.57 0.11 0.59
Microsoft MSFT 39.9 35.52 0.12 0.34
Biggest gainers...
ContainerStoreGrp TCS 14,641.2 $36.20 18.20 101.11%
QunarCaymanIslADS QUNR 12,054.1 28.40 13.40 89.33
IdenixPharm IDIX 9,166.6 4.61 1.32 40.12
OsirisThera OSIR 2,204.8 17.76 4.45 33.43
IRIDEX IRIX 420.3 7.44 1.47 24.62
...Biggest losers
BodyCentral BODY 3,132.9 $3.94 1.69 29.96%
RBSChinaTrendETN TCHI 2.3 28.36 7.01 19.82
Accuride ACW 3,461.8 3.64 0.86 19.11
HutchTch HTCH 1,083.5 3.03 0.69 18.55
ELLIEMAE ELLI 6,170.6 24.03 4.87 16.85
ADRs of Asiancompanies*
52-WEEK
Volume,
CHANGE
High Low Stock Symbol in OOOs Latest Points Percentage
$20.30 $15.70 TaiwanSemi TSM 6,394.3 $18.47 0.06 0.33%
23.38 9.57 SonyADS SNE 4,528.0 16.75 0.50 2.90
169.75 82.98 BaiduADS BIDU 2,929.5 160.06 0.74 0.46
61.09 16.90 CtripInt ADS CTRP 2,660.0 54.93 0.67 1.24
48.44 24.94 ICICI BkADS IBN 1,906.8 37.53 0.21 0.56
80.54 55.66 BHPBiltonADS BHP 1,738.6 70.96 0.27 0.38
2.44 1.75 UtdMicroADS UMC 1,673.9 2.03 0.02 0.98
1.99 0.30 SuntechPwr STP 1,604.9 1.32 0.06 4.35
4.64 1.94 SemiMfgInt ADS SMI 1,392.2 3.58 0.08 2.19
24.89 15.04 SKTele ADS SKM 1,277.3 24.78 0.30 1.23
55.70 38.91 InfosysADS INFY 1,122.9 52.57 0.49 0.92
32.44 21.75 TataMtrs ADS TTM 1,120.8 31.33 0.01 0.03
43.81 26.62 HDFCBnk HDB 842.4 35.95 0.30 0.83
7.31 4.24 MitsuUFJ ADS MTU 721.4 6.36 0.04 0.63
40.94 29.82 CanonADS CAJ 659.4 31.63 0.06 0.19
4.98 3.14 AUOptrncs AUO 656.4 3.19 0.03 0.95
6.50 1.81 PranaBiotech PRAN 632.3 4.27 0.24 5.32
59.73 47.74 ChinaMobile CHL 536.3 52.16 0.14 0.27
11.97 6.91 WiproADS WIT 504.0 11.23 0.13 1.17
5.05 3.68 AdSemEgADS ASX 461.1 4.87 0.06 1.22
77.48 37.00 Netease NTES 413.1 67.10 0.41 0.61
6.51 4.70 Slcnwr ADS SPIL 404.3 5.90 0.09 1.50
52.72 33.88 ChinaLfIns ADS LFC 335.6 40.36 0.93 2.36
18.31 14.83 KTCrpADS KT 318.7 16.64 0.06 0.36
16.39 10.67 KoreaElecPwr KEP 279.6 13.27 0.03 0.23
9.64 3.50 NmuraHldg NMR 277.8 7.32 0.04 0.54
5.60 1.17 pSivida PSDV 265.7 2.54 0.09 3.67
17.44 12.18 ChinaUnicomHK CHU 263.5 15.56 0.04 0.26
14.92 4.85 KongzhongADS KONG 260.5 8.19 0.06 0.73
33.74 30.12 ChunghwaTel CHT 242.8 31.42 0.42 1.32
*Most active American depositary receipts tracked by DowJones
Source: WSJ Market Data Group
Global government bonds
Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys onbenchmark two-year
and 10-year government bonds around the world. Data as of 12p.m. ET
Country/
SPREADOVERTREASURYS, in basis points YIELD
Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
3.800 Austria* 2 0.161 -16.0 -15.4 -9.7 -14.2 0.155 0.247 0.143
3.500 10 2.043 -58.0 -49.7 -72.6 23.1 2.062 1.929 1.957
3.750 Belgium 2 0.257 -6.4 -3.2 -6.3 -6.8 0.277 0.282 0.218
2.250 10 2.393 -23.0 -14.8 -8.1 69.9 2.411 2.573 2.425
4.250 Finland* 2 0.135 -18.6 -17.2 -16.2 -23.2 0.137 0.182 0.053
3.375 10 1.807 -81.6 -74.3 -68.8 1.6 1.816 1.967 1.742
0.250 France 2 0.278 -4.3 -1.7 3.2 -10.7 0.292 0.377 0.179
1.750 10 2.160 -46.3 -39.6 -32.7 39.1 2.163 2.328 2.117
0.250 Germany 2 0.110 -21.1 -18.9 -16.4 -25.4 0.120 0.180 0.031
2.000 10 1.689 -93.4 -87.9 -84.5 -26.9 1.680 1.810 1.458
n.a. Greece 2 n.a. ... ... ... ... ... ... ...
n.a. 10 n.a. ... ... ... ... ... ... ...
3.000 Italy 2 1.400 107.9 113.1 147.5 207.7 1.440 1.820 2.362
4.500 10 4.113 149.0 157.4 163.1 313.3 4.133 4.286 4.859
3.250 Netherlands 2 0.173 -14.8 -13.2 -12.9 -21.7 0.177 0.215 0.068
1.750 10 2.025 -59.8 -54.1 -47.6 -0.4 2.018 2.179 1.723
5.450 Portugal* 2 3.473 315.2 338.7 463.6 413.2 3.696 4.981 4.418
4.800 10 6.068 344.5 359.9 387.9 637.3 6.158 6.534 8.099
3.750 Spain 2 1.429 110.8 121.1 104.6 264.8 1.520 1.391 2.934
4.400 10 3.994 137.1 147.8 154.4 384.5 4.037 4.199 5.571
2.750 U.K. 2 0.406 8.5 9.1 6.6 -1.4 0.400 0.410 0.272
1.750 10 2.482 -14.1 -10.6 -11.8 14.3 2.453 2.536 1.869
0.250 U.S. 2 0.321 ... ... ... ... 0.309 0.344 0.285
2.500 10 2.623 ... ... ... ... 2.559 2.655 1.726
Keymoneyrates
Latest 52 wks ago
Prime rates
U.S. 3.25% 3.25%
Canada 3.00 3.00
Japan 1.475 1.475
Britain 0.50 0.50
ECB 0.50 0.75
Switzerland 0.50 0.53
Australia 2.50 3.25
Hong Kong 5.00 5.00
Libor
One month 0.16850% 0.20900%
Three month 0.23775 0.31275
Six month 0.35350 0.53800
One year 0.60160 0.87500
Latest 52 wks ago
EuroLibor
One month 0.09500% 0.05500%
Three month 0.17357 0.13071
Six month 0.27429 0.27179
One year 0.47143 0.54357
Euribor
One month 0.12900% 0.11000%
Three month 0.22600 0.19700
Six month 0.34100 0.38500
One year 0.53300 0.61100
Hibor
One month 0.22000% 0.28000%
Three month 0.38500 0.39643
Six month 0.54714 0.54571
One year 0.87429 0.85571
Offer Bid
Eurodollars
One month 0.2300% 0.1300%
Three month 0.2700 0.1700
Six month 0.3600 0.2600
One year 0.6600 0.5600
Latest 52 wks ago
U.S. discount 0.75% 0.75%
Fed-funds target 0.00 0.00
Call money 2.00 2.00
Overnight repurchase rates
U.S. 0.04% 0.27%
Euro zone 0.10 0.02
Sources: WSJ Market Data Group, SIXFinancial Information, ICAP
U.S. Treasuryyieldcurve
The curve shows the yield to maturity of current bills, notes and bonds; all data as of 3 p.m. ET.
maturity
1
month(s)
3 6 1
years
2 3 5 710 30
5%
4
3
2
1
0
s
One year ago
s
Friday
TOTAL RETURN
Yield to Modified Month Quarter Year
Ryan Index maturity duration to-date to-date to-date 12-month
30-year Treasury 3.694% 17.91 1.09 % 0.11 % 11.34 % 11.77 %
10-year Treasury 2.618 8.58 0.64 0.19 4.94 4.73
7 Year Treasury 2.024 6.55 0.47 0.27 2.64 2.30
Five-year Treasury 1.373 4.83 0.28 0.33 1.08 0.82
Ryan Index 1.768 7.13 0.43 0.21 3.21 3.10
3 Year Treasury 0.588 2.92 0.06 0.25 0.36 0.54
Two-year Treasury 0.313 1.99 0.01 0.08 0.40 0.52
1 Year Treasury 0.091 0.96 0.01 0.03 0.28 0.34
Six-month Treasury 0.081 0.50 ... 0.01 0.15 0.20
Ryan Cash Index-a 0.060 0.44 ... 0.01 0.14 0.18
Three-month bill 0.041 0.25 ... 0.01 0.07 0.10
One-month bill 0.025 0.08 ... 0.01 0.05 0.07
a-Performance of a cash investment
Source: Ryan ALM
SCANNING THE GLOBE
2 | Monday, November 4, 2013
HK JP ID MU KO ML PH SI TL TW IN
THE WALL STREET JOURNAL.
PAGE TWO
ONLINE TODAY
Japan Real Time
wsj.com/japanrealtime
Tohoku Rakuten
Eagles ace pitcher
Masahiru Tanaka
gets the save as the
team beat the
Yomiuri Giants 3-0
to win the Japan
Series.
India Real Time
wsj.com/indiarealtime
The numbers are
certainly very
troublesome and a
matter of worry.
Anumita Roychowdhury, of the Center
for Science and Environment, speaking
about pollution in New Delhi
Photos of the Day
Images behind the stories
making news world-wide
wsj.com/photosoftheday
Malaysia
wsj.com/searealtime
Zombies help
Malaysian app
developer Tomato
Animation to find
fans across Asia.
i i i
Business & Finance
n Suntech Power agreed to sell
its core assets in China for $492
million to a smaller rival, attempt-
ing to pay back creditors after de-
faulting on debt. 18
n Indias tax office asked IBM to
pay $865 million in taxes, alleging
that the technology firms local
unit underreported its income. 18
n Glencore is selling its majority
stake in one of the Asian-Pacific
regions largest unmined copper
deposits, the Frieda River project
in Papua New Guinea. 19
n Shandong Shipping signed a
$500 million deal with Vale that
would allow the Chinese state-
owned firm to operate four of the
Brazilian miners fleet of iron-ore
freighters known as Valemaxes. 19
n An investigation of possible
currency-market rigging has led
some of worlds largest banks to
suspend a number of traders in
New York, London and Tokyo. 21
n A dozen governors in Indonesia
boosted the minimum wage in
their localities by an average 19%
in the wake of a two-day strike,
prompting concern that the step
may scare away investors. 4
n Prices for new houses in 100
Chinese cities rose by an average
of 10.7% in June, defying efforts to
control the market. 20
n Australian investment bank
Macquarie will spin off a $1.3 bil-
lion stake in Sydneys airport to
its shareholders. 20
n Aviation regulators in Asia will
consider matching a decision by
the U.S. to allow air travelers to
use tablets and other personal de-
vices during all phases of flight. 17
n A new vaccine from Merck ap-
peared to provide broader protec-
tion against a cancer-causing vi-
rus than the companys Gardasil
shot in clinical trials. 16
n Lululemon said it received new
complaints about the quality of
some yoga pants, after a recall
earlier this year when the fabric
was found to be too revealing. 16
i i i
World-Wide
n A tourist ferry sank near an is-
land off Thailands popular resort
of Pattaya, killing at least six peo-
ple and injuring 15. 3
n A boat carrying at least 70
Muslim Rohingya sank off Myan-
mars coast, an aid worker said.
Eight survivors had been found.
n Kosovars choose mayors and
local councilors in an election that
will test the countrys fragile rela-
tions with Serbia. WSJ.com/World
n Secretary of State Kerry met
with Egyptian leaders, assuring
them that the U.S. remains com-
mitted to strong ties.
A boy crawls under a cow during a religious ceremony in Katmandu. Hindus in Nepal celebrated the Tihar festival, also called Diwali, during which they worship
cows, which are considered a maternal figure, and other animals. Devotees also worship the goddess of wealth, Laxmi, by illuminating and decorating their homes.
Inside
World News: Nauru
rebuilds its bank
system from scratch. 5
Boss Talk Asia: Mall
giant is cautious on
Asian expansion. 8
Business & Finance:
Fortescue hastens
debt repayment. 15
Whats News
Reuters
THE WALL STREET JOURNAL
Dow Jones Publishing Company (Asia)
25/F, Central Plaza, 18 Harbour Road, Hong Kong
Tel 852-2573 7121 Fax 852-2834 5291
www.wsj-asia.com
SUBSCRIPTIONS and Address Changes, please
telephone our local customer service hotline, Hong
Kong/Taiwan: 852-2831 2555; Beijing: 86-10 6581 4090;
Shanghai: 86-21 5836 8228; Indonesia: 62-21 527 7592;
Japan: 0120 779 868; Korea: 82-2 3700 1925;
Malaysia: 60-3 2026 4061; Philippines: 63-2 848 5873;
Singapore: 65-6415 4000; Thailand: 66-2 690 4222 to 7;
India: 000 800 440 1938. 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
SUBSCRIBE TODAY
wsj-asia.com/fpf
or scan this code
Asianstocks inthe news
Hero MotoCorpLtd.
India 2,101.35 rupee
The maker of two-wheeled motor
vehicles posted anincrease invehicle
sales for October.
N D
2013
J F M A M J J A S O
750
1500
2250
3000
3750
In rupee
Dividend yield 2.8
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Hero MotoCorp Ltd. 1.2% 3.3% 10.3%
SoftBankCorp.
Japan 7,550
s 3.4% or 250
The company said its July-September
net profit rose 44%froma year earlier.
N D
2013
J F M A M J J A S O
1500
3000
4500
6000
7500
In yen
Dividend yield 0.5
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Telecommunications -0.8% 0.8% 20.7%
SoftBank Corp. 3.4% 2.0% 188.4%
Macquarie GroupLtd.
Australia A$53.10
s 4.2% or A$2.15
The firmplans to spinoff its stake in
Sydney Airport to its shareholders via a
share distribution.
N D
2013
J F M A M J J A S O
15.00
30.00
45.00
60.00
75.00
In Australian dollars
Dividend yield 4.7
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Financials -0.1% 0.5% 17.2%
Macquarie Group Ltd. 4.2% 3.7% 68.6%
Bankof Baroda
India 671.65 rupee
The bank rose further after its July-
September financial results showed a
slight improvement inasset quality.
N D
2013
J F M A M J J A S O
250
500
750
1000
1250
In rupee
Dividend yield 3.2
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Financials -0.1% 0.5% 17.2%
Bank of Baroda 4.4% 12.7% -8.4%
Mitsubishi Motors Corp.
Japan 1,153
s 5.0% or 55
The auto maker reported October sales
rose 19%froma year earlier.
N D
2013
J F M A M J J A S O
400
800
1200
1600
2000
In yen
Dividend yield N.A.
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Mitsubishi Motors Corp. 5.0% 11.3% 64.7%
KyushuElectric Power
Japan 1,320
t 4.3% or 59
The utility lost ground despite reporting
a narrower loss for the fiscal first half
late Thursday.
N D
2013
J F M A M J J A S O
300
600
900
1200
1500
In yen
Dividend yield 3.0
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Utilities 0.6% 0.6% 13.5%
Kyushu Electric Power -4.3% -2.3% 115.7%
NTTData Corp.
Japan 3,095
t 4.8% or 155
The shares dropped after first-half
operating profit came inwell below
analysts' expectations.
N D
2013
J F M A M J J A S O
1000
2000
3000
4000
5000
In yen
Dividend yield 193.9
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Technology -0.6% 0.2% 21.7%
NTT Data Corp. -4.8% -2.5% 28.7%
RicohCo. Ltd.
Japan 964
t 6.7% or 69
The company's second-quarter
operating profit fell short of guidance.
N D
2013
J F M A M J J A S O
300
600
900
1200
1500
In yen
Dividend yield 3.4
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Technology -0.6% 0.2% 21.7%
Ricoh Co. Ltd. -6.7% -8.7% 48.1%
Makita Corp.
Japan 4,600
t 7.1% or 350
The shares fell further after the company
cut its fiscal-year group net-profit
forecast onThursday.
N D
2013
J F M A M J J A S O
1500
3000
4500
6000
7500
In yen
Dividend yield 0.8
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Makita Corp. -7.1% -12.2% 46.3%
SonyCorp.
Japan 1,668
t 11.1% or 209
The company posted a wider loss for the
September quarter and cut its profit
forecast for the year.
N D
2013
J F M A M J J A S O
500
1000
1500
2000
2500
In yen
Dividend yield 1.5
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Sony Corp. -11.1% -9.9% 82.3%
Moving the
markets
At right, Japans benchmark stock index
and the biggest movers among the
larger Asianstocks indexes and stocks
Friday. Beloweachindex are its most
actively traded stocks. The charts show
the percentage change ineachindexs or
stocks value, rather thanthe point
change, for purposes of comparison. The
index level or stock price is indicated on
eachaxis. All indexes and stocks are
showninlocal currency terms.
Asianindexmovers
Nikkei StockAverage
Japan 14201.57
t 0.88% or 126.37
N D
2013
J F M A M J J A S O
5500
8250
11000
13750
16500
Volume Change
Sharp 134.24 292 3 1.04
Mizuho Fin 76.11 205 ...
Sony 69.97 1,668 -209 11.13
Tokyo Electric 59.36 535 12 2.29
Hitachi 55.85 683 -2 0.29
Kospi
South Korea 2039.42
s 0.46% or 9.33
N D
2013
J F M A M J J A S O
1000
1500
2000
2500
3000
Volume Change
WooridulPharm 26.69 503.00 10.00 2.03
WooridulLifeSci 26.66 520.00 6.00 1.17
STXPanOcean 18.86 1,095.00 35.00 3.10
Shinwoo 15.69 347.00 3.00 0.86
DongyangSteelPipe 12.33 1,715.00 215.00 11.14
Shanghai Composite
China 2149.56
s 0.37% or 7.95
N D
2013
J F M A M J J A S O
1000
1500
2000
2500
3000
Volume Change
SichuanChanghongA 209.58 2.64 0.12 4.35
ShangPudongDevBk 164.06 10.42 0.09 0.87
ChinaMinshengBkA 136.02 9.17 0.21 2.34
GDPowerDevelopment 121.79 2.57 0.04 1.53
HaitongSecsA 116.47 11.84 0.17 1.46
ASX200
Australia 5411.10
t 0.27% or 14.40
N D
2013
J F M A M J J A S O
2400
3600
4800
6000
7200
Volume Change
FortescueMetalsGrp 16.27 5.18 -0.03 0.58
SundanceResources 15.81 0.11 ...
DexusPropertyGroup 11.84 1.07 -0.02 1.66
Arrium 11.82 1.39 ... 0.36
SydneyAirportHldgs 10.97 4.04 -0.16 3.70
The benchmark fell on a weaker dollar
and disappointing earnings-related an-
nouncements from Sony and others.
The index rose 0.8% on the week.
Korean shares rose, with Samsung
Electronics up 2.4%, SK Telecom gaining
2.9% and Samsung SDI up 2.5%. The
market ended the week 0.2% higher.
The index finished higher on gains in
heavyweight financial stocks, as well as
upbeat manufacturing data. Shares rose
0.8% for the week.
Continuing demand for high-yield equi-
ties and the positive data from China
pared the markets losses. The index
gained 0.5% on the week.
MARKETS LINEUP
WSJ.com
>>
Follow the markets throughout the
day, with updated stock quotes, news
and commentary at WSJ.com.
Also, receive emails that summarize
the days trading in Europe and Asia.
To sign up, go to WSJ.com/Email.
VOL. XXXVIII NO. 46
MONDAY, NOVEMBER 4, 2013
OPINION:
The U.N. Gets
A Peek at
North Korea
Page 9
INDEPTH Pages 12-13
4 p.m. ET DJIA 15615.55 0.45% FTSE 100 6734.74 0.05% Nikkei 225 14201.57 g 0.88% Shanghai Comp. 2149.56 0.37% Hang Seng 23249.79 0.19% S&P Sensex 21196.81 0.15% S&P/ASX200 5411.10 g 0.27%
WSJ.com
(India facsimile Vol. 5 No. 106) ASIA EDITION
A
u
s
t
r
a
lia
:
A
$
6
.0
0
(
In
c
l
G
S
T
)
,
B
r
u
n
e
i:
B
$
8
.0
0
,
C
h
in
a
:
R
M
B
2
8
.0
0
,
H
o
n
g
K
o
n
g
:
H
K
$
2
3
.0
0
(
In
c
l
M
a
c
a
u
)
,
In
d
ia
:
R
s
1
0
0
.0
0
,
In
d
o
n
e
s
ia
:
R
p
2
5
,0
0
0
(
In
c
l
P
P
N
)
,
J
a
p
a
n
:
Y
e
n
6
0
0
(
In
c
l
J
C
T
)
,
K
o
r
e
a
:
W
o
n
4
,0
0
0
,
M
a
la
y
s
ia
:
R
M
7
.5
0
,
P
a
k
is
t
a
n
:
R
s
1
4
0
.0
0
,
P
h
ilip
p
in
e
s
:
P
e
s
o
1
0
0
.0
0
,
S
in
g
a
p
o
r
e
:
S
$
5
.0
0
(
I
n
c
l
G
S
T
)
,
S
r
i
L
a
n
k
a
:
S
lr
s
5
0
0
(
I
n
c
l
V
A
T
)
,
T
a
iw
a
n
:
N
T
$
1
1
0
.0
0
,
T
h
a
ila
n
d
:
B
a
h
t
8
0
.0
0
,
V
ie
t
n
a
m
:
U
S
$
4
.5
0
K
D
N
P
P
9
3
1
5
/
1
0
/
2
0
1
2
(
0
3
1
2
7
5
)
M
C
I
(
P
)
N
O
.
0
5
3
/
1
0
/
2
0
1
3
S
K
.
M
E
N
P
E
N
R
.I
.
N
O
:
0
1
/
S
K
/
M
E
N
P
E
N
/
S
C
J
J
/
1
9
9
8
T
G
L
.
4
S
E
P
T
1
9
9
8
Kenyan Geoffrey Mutai crossed the finish line at 2 hours, 8 minutes and 24 seconds Sunday to win
the mens division of New Yorks marathon, the first since its cancellation after superstorm Sandy a
year ago. Priscah Jeptoo of Kenya won the womens division in 2 hours, 25 minutes and 5 seconds.
Marathon Returns to New York, Kenyans Win
Reuters
Emerging
Markets Hit
Pivot Point
Is the slowing growth in
emerging markets from China
to Turkey to Brazil a tempo-
rary blip or a harbinger of
worse to come?
For much of the past de-
cade, these emerging econo-
mies expanded swiftly as peo-
ple shifted
from farms to
more-produc-
tive urban
jobs. They bounced back
strongly after the global re-
cession as large monetary and
fiscal stimulus spending by
China and other developing
nations helped offset a drop in
U.S. demand. The Federal Re-
serve further bolstered their
growth story when it poured
cheap credit into these mar-
kets by printing money to
boost the U.S. economy.
But two years ago, the pic-
ture began to change. Growth
has fallen sharply in emerging
marketsby three percentage
points since 2010 to 5% on an
annualized quarterly basis, ac-
cording to the International
Monetary Fund.
Now, the question is what
caused this drop and whether
these lower rates of expansion
are the new normal or just a
rest stop on the developing
worlds march to catch up
with industrialized countries.
This is really the hot
question in policy circles right
now, said Stephen Schwartz,
chief Asia economist for
Spains Banco Bilbao Vizcaya
Argentaria SA.
The growth debate hinges
on whether the dip is due to
structural problems and thus
permanent or the result of a
temporary downturn in the
globes economic cycle.
Between 2000 and 2012,
emerging economies grew by
almost 6% a year on average,
while the U.S. grew at a 2%
annual pace on average. That
BY TOM WRIGHT
Pakistani Militants Warn
Of Retaliation for Strike
ISLAMABAD The Paki-
stani Taliban vowed to take
revenge inside the country for
the U.S. drone attack that
killed the groups chief, put-
ting more pressure on al-
ready-strained ties between
Islamabad and Washington.
Security services across
Pakistan have been put on
high alert following Fridays
strike on Hakimullah Mehsud.
The danger of bloodshed is
heightened by the start of the
Islamic month of Muharram,
when minority Shiite Muslims
hold large street processions
that are often targets of mili-
tant attacks.
Azam Tariq, a spokesman
for Tehreek-e-Taliban Paki-
stan, as the militant organiza-
tion is known, said the group
would mark the memory of
Mr. Mehsud with retribution.
His blood will not be
wasted, he said.
Mr. Mehsuds death has
also created a potential crisis
of leadership for the TTP, an
umbrella organization for
more than three dozen mili-
tant groups that works closely
with al Qaeda.
Mr. Mehsud was killed just
as the Pakistani government
believed he was ready to en-
ter into peace negotiations
under a policy of reconcilia-
tion pursued by Prime Minis-
ter Nawaz Sharif. While Is-
lamabad has long opposed the
U.S. drone program, Pakistani
officials view the timing of
Fridays strike as particularly
damaging.
The government has ac-
cused the U.S. of sabotaging
its peace initiative and
warned that it would review
its ties with Washington. Pak-
istan Interior Minister
Chaudhry Nisar Ali Khan de-
scribed the death of Mr. Meh-
sud as the murder of all ef-
forts at peace, and the U.S.
ambassador was summoned
for an official protest. A U.S.
Embassy representative didnt
return calls seeking comment.
Zafar Jaspal, a professor
of international relations at
Islamabads Qaid-i-Azam Uni-
versity, said that the outrage
expressed by Mr. Sharifs gov-
ernment over the weekend
BY SAEED SHAH
Dhaka
Tribunal
Sentences
Two to Die
DHAKA, BangladeshA
Bangladeshi war crimes tribu-
nal sentenced a U.S. citizen
and a Briton to death Sunday,
after convicting them in ab-
sentia of crimes against hu-
manity committed during the
countrys 1971 war of inde-
pendence from Pakistan.
Prosecutors said the men,
Ashrafuzzaman Khan and
Chowdhury Mueen Uddin, led
an Islamist militia that helped
the Pakistani army battle Ben-
gali fighters. They were
charged with involvement in
the murders of 18 Bengali in-
tellectuals in the waning days
of the war.
Both men left Bangladesh
after the conflict, prosecutors
said, with Mr. Khan settling in
the U.S. and Mr. Uddin in the
U.K. Neither man answered a
court summons to appear be-
fore the tribunal, according to
prosecutors.
We hope the government
will intensify international ef-
forts to bring the two con-
victed criminals to Bangla-
desh to face justice, said
BY SYED ZAIN AL-MAHMOOD
India is set to launch a
spacecraft to Mars, a
mission that could put
it ahead of space rivals
China and Japan.
World News ............ 5
A website run by
Singapores largest
newspaper is hacked by
a purported member of
online hacking group
Anonymous.
Asia News .............. 3
Inside
Economic recoveries in Asia
lag behind Wests rebound.. 4
Some forecast reversals in
emerging stocks paths....... 15
Bleak Forecasts Are
Big Blowto Japan Inc.
TOKYOSurprise cuts in
profit forecasts from Nissan
Motor Co. and Sony Corp. are
giving pause to believers in
Japans corporate recovery
and highlight the risks still
facing the countrys biggest
brands.
Nissan on Friday cut its
full-year profit outlook by
15%, blaming weakness in
emerging markets and big re-
call costsand overhauled its
management.
Sony on Thursday slashed
its annual earnings forecast
by 40% following box-office
flops and weak sales of televi-
sions. The consumer-electron-
ics companys shares slid 11%
the next day.
The downbeat news from
two Japan Inc. heavyweights
has added a sober tone to the
latest quarters earnings re-
ports. It is a sharp contrast to
the upward revisions that
dominated earnings reports
six months ago amid opti-
mism sparked by government-
stimulus policies.
After more than two de-
cades of starts and stops,
there has been a renewed
confidence that Japans econ-
omy finally may be on the
mend. Helped by an ultra-easy
monetary policy and fiscal
spending, consumer prices
and industrial production
have risenand companies
are starting to increase corpo-
rate investment. The Nikkei is
BY MAYUMI NEGISHI
AND HIROYUKI KACHI
THE
OUTLOOK
Sony struggles to remain in
the game...................................... 15
RBS Puts Too Much Stock
In Its Internal Bad Bank
In, out, shake it all about.
has decided to set up an internal
bad bank from which it can ac-
celerate disposal of about 38 bil-
lion (about $61 billion) of its
weakest assets, after months of
wrangling with its 81% owners, the
U.K. government. That should
prove less costly than a previously
discussed outright split of RBS
into a good bank and bad bank.
But RBSs shares plunged 7.5% in
London on Friday anyway.
Investors rightly suspect a
plan, even if it helps RBSs capital
position, may do little for its
value.
RBS already had been doing a
decent job of disposing of its non-
core assets, reducing them by
about 86% since 2008. So why
bother with an internal bad bank
so late in the day? One answer is
the U.K. regulators plans to force
banks to hold more capital to pro-
tect themselves against sudden
changes in economic conditions.
That will mean banks with riskier
assets having to hold more capital.
Hence RBSs renewed zeal to
dispose of its bad assets: It aims
to be rid of the internal bad bank
by the end of 2016. In the near
term, that means it will take a 4
billion to 4.5 billion hit to earn-
ings before the end of 2013. That,
though, will be offset by lower
capital charges for expected
losses, meaning little net effect on
its core Tier 1 equity ratio.
But the earnings hit wont end
there. RBS expects to earn 1.5 bil-
lion to 2 billion less when dispos-
ing of its assets as a result of its
accelerated program; it also could
take another 1 billion of impair-
ments on the bad-bank assets in
the next two years.
And RBS is bringing forward a
plan to spin off its U.S. subsidiary,
RBS Citizens Financial Group,
which contributes about 10% of its
operating profit. The bank says it
could earn a higher return on eq-
uity from 2017 onward. But with-
out further details, it is hard to
share RBSs view that the plan will
prove economically neutral over
the longer term.
Confidence might be more
forthcoming if the core RBS was
performing well. Instead, despite a
relatively strong performance
from its much reviled markets
business, it suffered a 828 million
loss in the third quarter. New
Chief Executive Ross McEwan also
proffered a searing self-criticism
of RBSs failings as a lender.
Setting up the internal bad
bank is supposed to free up his
time. He still has plenty to do.
Andrew Peaple
Work in Progress
Royal Bank of Scotlands
daily share price in London
Source: FactSet
Note: 1= $1.60
4.00
2.50
3.00
3.50
F J M A M J J A S O N
HEARDON THE STREET
Email: heard@wsj.com FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard
Cloud Over NSA May Give AT&T Cover
Out of adversity comes opportu-
nity. That may be something AT&T
should remember.
Outcry in Europe over spying by
the National Security Agency has
prompted officials in the region to
threaten intense scrutiny of any
AT&T deal to acquire a major wire-
less carrier there. That could frus-
trate AT&Ts apparent aim of bid-
ding for the remaining piece of
Vodafone Group after the deal to
sell its stake in Verizon Wireless to
Verizon Communications closes in
the first quarter of 2014.
If AT&T is forced to back away
because of a chill political wind,
that might not be such a bad thing.
A move to Europe carries significant
risks, in large part because of the
regions stifling regulatory climate
and fiercely competitive landscape.
Those factors could prevent AT&T
from generating a sufficient return
on investments in wireless networks
there, a likely component of its Eu-
ropean strategy.
Having another big deal scuttled
by regulators after the Justice De-
partment blocked its bid for T-Mo-
bile US in 2011 also could be disas-
trous for AT&T. Blaming the NSA
blowup could be a convenient way
to avoid even a chance of that.
Of course, it may already be too
late to turn back, particularly after
AT&T has spent so much effort pro-
moting the idea to investors. It ar-
guably needs to do a deal to help it
combat mounting competition in the
U.S. wireless market.
And AT&T already has publicly
ruled out a domestic merger, citing
the difficult U.S. regulatory climate.
The company may be counting on
the spying scandal quickly fading
from the headlines and on being
able to appease regulators by agree-
ing to wall off its European busi-
ness. Still, it might be better for in-
vestors if AT&T uses the
governments misstep to avoid one
of its own. Miriam Gottfried
Young-gun hedge-fund analysts
were awed Thursday by the long
view of economist and investor
Andrew Weiss.
He was one of a slate of promi-
nent investors who, for charity,
presented trading ideas at the
Sohn London Investment confer-
ence.
Before giving his pitch, the pro-
fessorial Mr. Weiss said he believed
it represented the greatest oppor-
tunity since the 2008 financial cri-
sis. He then corrected himself, say-
ing it reminds me of investing in
Japan in the 60s.
The crowd, which included
plenty of 20-somethings, broke
into slightly nervous laughter. Mr.
Weiss managed to get a few more
laughs during his presentation,
which centered on buying so-called
preference shares listed in South
Korea. A key risk, which he said
could be hedged with credit-default
swaps, was an attack from North
Korea.
Ever thorough, he also discussed
the potential of the North Korean
economy. He noted, though, that
its mainstay industries of forgery
and drug trafficking arent growth
businesses. So much for that
trade.
A
s
s
o
c
i
a
t
e
d
P
r
e
s
s
OVERHEARD
For AT&T, a move into Europe would carry significant risks. Here, an AT&T store in New York in July.
P
u
b
lis
h
e
d
b
y
D
o
w
J
o
n
e
s
P
u
b
lis
h
in
g
C
o
m
p
a
n
y
(
A
s
ia
)
.
P
r
in
t
e
d
in
H
o
n
g
K
o
n
g
b
y
S
u
p
e
r
f
la
g
P
r
in
t
in
g
a
n
d
C
o
m
m
u
n
ic
a
t
io
n
L
t
d
.,
1
/
F
,
8
C
h
u
n
Y
in
g
S
t
.,
T
s
e
u
n
g
K
w
a
n
O
In
d
.
E
s
t
.,
T
s
e
u
n
g
K
w
a
n
O
,
N
T
.
P
r
in
t
e
d
in
In
d
o
n
e
s
ia
b
y
P
T
G
ra
m
e
d
ia
P
r
in
t
in
g
G
r
o
u
p
,
J
a
la
n
P
a
lm
e
ra
h
S
e
la
t
a
n
2
2
-
2
8
,
J
a
k
a
r
t
a
1
0
2
7
0
.
P
r
in
t
e
d
in
J
a
p
a
n
b
y
Y
o
m
iu
r
i
S
h
im
b
u
n
,
1
-
7
-
1
,
O
t
e
m
a
c
h
i,
C
h
iy
o
d
a
-
k
u
,
T
o
k
y
o
1
0
0
-
8
0
5
5
.
P
r
in
t
e
d
in
K
o
r
e
a
b
y
J
o
o
n
g
A
n
g
Ilb
o
.
7
,
S
o
o
n
w
h
a
-
D
o
n
g
,
C
h
u
n
g
-
K
u
,
S
e
o
u
l
1
0
0
-
1
3
0
.
1
9
9
7
J
u
n
e
0
4
R
e
g
is
t
ra
t
io
n
n
o
.:
S
e
o
u
lK
A
0
0
0
2
0
(
D
a
ily
N
e
w
s
p
a
p
e
r
)
,
P
u
b
lis
h
e
r
/
E
d
it
o
r
/
P
r
in
t
e
r
:
S
o
n
g
,
P
il-
H
o
.
P
r
in
t
e
d
in
M
a
la
y
s
ia
b
y
K
H
L
P
r
in
t
in
g
C
o
.
S
d
n
.
B
h
d
.
(
R
O
C
N
o
:
2
3
5
0
6
0
-
A
)
L
o
t
1
0
&
1
2
,
J
a
la
n
M
o
d
a
l
2
3
/
2
,
S
e
k
s
y
e
n
2
3
K
a
w
a
s
a
n
M
ie
l
P
h
a
s
e
8
,
4
0
0
0
0
S
h
a
h
A
la
m
,
S
e
la
n
g
o
r,
M
a
la
y
s
ia
.
P
r
in
t
e
d
in
P
h
ilip
p
in
e
s
b
y
F
E
P
P
r
in
t
in
g
C
o
r
p
o
ra
t
io
n
,
3
8
1
7
M
a
s
c
a
r
d
o
S
t
.,
C
o
r
n
e
r
M
e
t
r
o
p
o
lit
a
n
A
v
e
.,
P
a
s
o
n
g
T
a
m
o
,
M
a
k
a
t
i
C
it
y
.
P
r
in
t
e
d
in
S
in
g
a
p
o
r
e
b
y
K
H
L
P
r
in
t
in
g
C
o
.
P
t
e
L
t
d
.,
5
7
L
o
y
a
n
g
D
r
iv
e
,
S
in
g
a
p
o
r
e
5
0
8
9
6
8
.
P
r
in
t
e
d
a
n
d
d
is
t
r
ib
u
t
e
d
in
T
a
iw
a
n
b
y
T
h
e
C
h
in
a
P
o
s
t
,
8
F
u
S
h
u
n
S
t
r
e
e
t
,
T
a
ip
e
i
1
0
4
.
P
r
in
t
e
d
in
T
h
a
ila
n
d
b
y
N
a
t
io
n
M
u
lt
im
e
d
ia
G
r
o
u
p
P
u
b
lic
C
o
.,
L
t
d
.,
1
8
5
4
B
a
n
g
n
a
-
T
ra
d
R
o
a
d
,
(
K
.M
.
4
.5
)
,
P
ra
k
a
n
o
n
g
,
B
a
n
g
k
o
k
1
0
2
6
0
.
P
u
b
lis
h
e
d
a
n
d
p
r
in
t
e
d
o
n
b
e
h
a
lf
o
f
t
h
e
W
a
ll
S
t
r
e
e
t
J
o
u
r
n
a
l
In
d
ia
P
u
b
lis
h
in
g
P
v
t
L
t
d
,
9
t
h
F
lr,
T
o
w
e
r
2
,
M
a
k
e
r
M
a
x
it
y
,
B
a
n
d
ra
K
u
r
la
C
o
m
p
le
x
,
B
a
n
d
ra
(
E
)
,
M
u
m
b
a
i
4
0
0
0
5
1
b
y
M
r
S
u
m
a
n
D
u
b
e
y
a
t
A
-
8
S
e
c
t
o
r
7
,
G
a
u
t
a
m
B
u
d
h
N
a
g
a
r,
N
o
id
a
-
2
0
1
3
0
1
a
n
d
P
L
O
T
N
o
.E
L
2
0
8
,
T
T
C
In
d
u
s
t
r
ia
l
A
r
e
a
,
M
a
h
a
p
e
,
N
a
v
i
M
u
m
b
a
i
-
4
0
0
7
1
0
(
M
a
h
a
ra
s
h
t
ra
)
,
In
d
ia
,
E
d
it
o
r
:
S
u
m
a
n
D
u
b
e
y
,
p
h
o
n
e
:
+
9
1
-
2
2
-
6
1
4
5
6
1
0
0
.
A
C
P
n
o
.
F
.2
(
T
/
3
)
P
r
e
s
s
/
2
0
0
9
F
A
C
S
IM
IL
E
E
D
IT
IO
N
.
M
B
A
EET THE WORLDS TOP
USINESS SCHOOLS
DMISSIONS DIRECTORS
Register Now at:
www.topmba.com/wsj
Participating schools include: Boston University, Cambridge - Judge, CEIBS, ESADE,
ESSEC, HEC Paris, HKUST, Hult, IE, IMD, London Business School, Michigan - Ross,
TRIUM EMBA (NYU, HEC, LSE) and many more! (schools will vary per city)
Tokyo Oct 29
Seoul Oct 31
Beijing Nov 2
Shanghai Nov 3
Chengdu Nov 5
Guangzhou Nov 7
Hong Kong Nov 10
Taipei Nov 12
Manila Nov 14
Singapore Nov 16
Jakarta Nov 18
Kuala Lumpur Nov 20
Ho Chi Minh Nov 22
Bangkok Nov 24
MBA FAIRS IN ASIA
Ofcial business newspaper:
Meet with top international business schools
GMAT & Admissions advice
Interactive panel discussions with MBA experts and alumni

WƁJ 04 - 11 - 2013

Загружено:

Сведения о документе

Оригинальное название

Авторское право

Доступные форматы

Поделиться этим документом

Поделиться или встроить документ

Параметры публикации

Этот документ был вам полезен?

Это неприемлемый материал?

Авторское право:

Доступные форматы

WƁJ 04 - 11 - 2013

Загружено:

Авторское право:

Доступные форматы

VOL. XXXVIII NO.

14-15 November 2013, Singapore

14-15 November 2013, Singapore

Вам также может понравиться