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VOL. XXXVIII NO. 117
MONDAY, FEBRUARY 17, 2014
OPINION:
Auto Workers
In the U.S.
Shun a Union
Page 9
Regional Jets Reign
At Singapore Show
BUSINESS &FINANCE Page 15
Regional Jets Reign
At Singapore Show
BUSINESS &FINANCE Page 15
As of 4 p.m. ET DJIA 16154.39 0.79% FTSE 100 6663.62 0.06% Nikkei 225 14313.03 g 1.53% Shanghai Comp. 2115.85 0.83% Hang Seng 22298.41 0.60% S&P Sensex 20366.82 0.86% S&P/ASX200 5356.30 0.91%
WSJ.com
(India facsimile Vol. 5 No. 177) ASIA EDITION
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A bus carrying tourists in the Egyptian resort of Taba exploded Sunday, killing at least three South Korean tourists and the driver. The
cause of the blast in the South Sinai town near the Israeli border was unclear, but authorities labeled it a terrorist attack. Page 6
Egypt Bus Explosion Kills Driver, Three South Korean Tourists
Agence France-Presse/Getty Images
Indonesia
Shines Amid
Global Rally
Global stock markets are
rallying after a selloff early in
the year, as investors shrug
off concerns about growth in
the U.S. and China and eco-
nomic vulnerabilities in
emerging markets.
U.S. stocks posted broad
gains Friday despite mixed
data, pushing the market to
its biggest weekly rise since
just before Christmas. The
Hong Kong market, which is
stuffed with Chinese stocks,
rose 3.1% last week, its best
week since September.
Most surprising is the re-
bound in Indonesia, one of the
countries hit hardest by the
beginning of the end of U.S.
monetary stimulus. The ru-
piah gained 3.4% against the
dollar on Friday, the biggest
one-day gain in four months,
according to data provider
CQG. For the week, the rupiah
advanced 5%, making it Asias
top-performing currency this
year.
The countrys stocks,
meanwhile, have jumped 5.5%
this year, making them the re-
gions second-best performer
after Vietnam.
The sudden turnaround in
Indonesia follows data in re-
cent weeks showing the coun-
trys wide trade deficit im-
proving, inflation falling and
foreign-exchange reserves
swelling. Those three ele-
ments topped investors lists
of worries when Indonesia
was one of he worlds worst
casualties in a global selloff
last summer.
Indonesia went through a
bumpy ride, but now its at-
tractive, said Cecilia Chan,
chief investment officer for
fixed income at HSBC Global
Asset Management, which
manages $419 billion. Inves-
tors are looking for higher
yield. You look around in Asia
for yieldtheres Indonesia
and India, and in Indonesia
its easier for foreigners to get
into the market.
The yield on the bench-
mark 10-year Indonesian gov-
ernment bond is at 8.710%,
more than three times that on
equivalent U.S. Treasurys and
beaten in Asia only by the
Please turn to page 20
BY ANJANI TRIVEDI
AND TOMI KILGORE
TalibanTakeHeavyToll onKarachi
KARACHI, PakistanThe
Pakistani Taliban have tight-
ened their grip over the coun-
trys commercial hub, officials
and residents said, despite a
five-month government crack-
down here.
Last week, tentative peace
talks with the government
were thrown into disarray
when the militants claimed re-
sponsibility for a roadside
bombing that killed at least 12
police officers when the bus
taking them to duty was de-
stroyed near the citys south-
eastern Landhi neighborhood,
an area the Taliban dominate.
Karachi is likely to pay a
steeper price if efforts by
Prime Minister Nawaz Sharifs
government to forge a peace
deal with the al Qaeda affili-
ates leadership in tribal areas
collapse and a military opera-
tion is launched there.
If the peace talks fail, we
fear that a big terrorism wave
will hit Karachi, said Raja
Umar Khattab, a senior officer
in the counterterrorism Crime
Investigation Department of
the Karachi police.
The Pakistani Taliban are a
national threat, with Karachi
providing the group a vital fi-
nancial lifeline. Money raised
in Karachi from extortion,
land-grabbing, kidnapping and
robberies is sent to the
Please turn to page 14
India Antigraft Politician Resigns
NEW DELHIActivist pol-
itician Arvind Kejriwal, who
was voted into office last
year after pledging to root
out graft in the Indian capi-
tal, lasted less than two
months as the states chief
minister.
Mr. Kejriwal, leader of the
Aam Aadmi, or Common Man,
party on Friday night submit-
ted his resignation after his
political rivals in the state as-
sembly blocked a tough new
anticorruption law he wanted
to pass.
Mr. Kejriwals resignation
plunged the government of
the Indian capital into uncer-
tainty and introduced a wild
card into the coming general
elections, Mr. Kejriwals next
focus.
We didnt come here for
power. We came here to
change the country, Mr. Ke-
jriwal told supporters at his
partys headquarters. They
say we dont understand gov-
ernance, but I say going after
corrupt politicians is gover-
nance.
Behind the collapse of Mr.
Kejriwals government was a
clash over federalismwith
Mr. Kejriwal pushing for
greater self-rule in the capi-
tal, a move resisted by the
central government and his
political opponents.
Mr. Kejriwal had refused
to adhere to a rule that re-
quires Delhis government to
receive federal approval for
proposed laws in pushing for
his counter-corruption mea-
sure.
Party activists said they
would now turn their atten-
tion to scoring gains in na-
tional parliamentary elections
due by the end of May.
Many Aam Aadmi sup-
porters gathered at the
partys headquarters chanted
slogans about taking on Nar-
endra Modi, the Bharatiya Ja-
nata Partys prime ministerial
candidate and the front-run-
ner to be Indias next leader.
It is unclear how a na-
tional foray by Aam Aadmi
will affect the prospects of
the BJP and Congress, the
countrys current governing
party, which is suffering from
Please turn to page 5
BY NIHARIKA MANDHANA
BY SAEED SHAH
AND SYED SHOAIB HASAN
Delisted Chinese firm
switches locales...................... 20
Asia-based hedge-fund
openings surge........................ 20
Obesity rates are
soaring in wealthy Gulf
states, leading to a
boom in bariatric
surgery on children.
In Depth..............12-13
South Korea suspends
issuance rights of three
credit-card companies.
Business..................15
Inside
Pssst! Heres the Skinny on
NBCs Olympic Latte Secret
i i i
Networks Private Coffee Bar Stirs Envy
Inside Restricted Java Zone
SOCHI, RussiaAfter 10
days in Russias sparse Olym-
pic frontier, Sonari
Glinton glimpsed a
beautiful green siren:
the Starbucks mer-
maid on a crisp white
coffee cup.
Was she a mirage?
Starbucks isnt an
Olympic sponsor and is there-
fore forbidden to have an offi-
cial presence here. The nearest
Starbucks is about 560 kilome-
ters away by car in a little-
known city called Rostov-on-
Don. The only branded coffee
player is supposed to be
McDonalds Corp.,
which has been gaining
grounds globally with
its McCaf outlets.
Olympic sponsors such
as McDonalds usually
defend their turf more
fiercely than a Team
Canada goalie.
But after Mr. Glinton, a
Please turn to page 14
BY PAUL SONNE
AND ANTON TROIANOVSKI
OPINION:
Auto Workers
In the U.S.
Shun a Union
20366.82 0.86% S&P/ASX200 5356.30
T
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.
2 | Monday, February 17, 2014
HK JP ID MU KO ML PH SI TL TW IN
THE WALL STREET JOURNAL.
PAGE TWO
ONLINE TODAY
Video: Travel
live.wsj.com
If you have $1.5
million lying
around and arent
sure what to spend
it on, try a vacation
on board a private
plane.
India Real Time
wsj.com/indiarealtime
A court rules that
farmers who burn
crops in the largely
agrarian states
surrounding Delhi
are compounding
the capitals air-
pollution problem.
Photos of the Day
Images behind the stories
making news world-wide
wsj.com/photosoftheday
Southeast Asia
wsj.com/searealtime
See images of
Rohingya Muslims
captured by
photographer Greg
Constantine, who
has spent the past
eight years on the
project.
i i i
Business & Finance
n Crowdfunding site Kickstarter
said over the weekend that some
of its customers data had been
accessed, though no credit-card
information was hacked. 16
n Bitstamp, manager of the
worlds largest bitcoin exchange,
restored automated customer
withdrawals after a hacking attack
that crippled platforms for ex-
changing the digital currency. 16
n Japans biggest online retailer,
Rakuten, will pay $900 million for
Viber Media to expand its messag-
ing and calling portfolio. 19
n Chinese bank lending posted a
larger-than-expected jump in Jan-
uary, as Beijing tries to strike a
balance between worries over ris-
ing debt and the need for credit to
support economic growth. 4
n The French government took
steps to stop Dongfeng Motor
from taking control of Peugeot. 17
n Indian financier Sudhir
Choudhrie was questioned by U.K.
authorities in connection with
corruption allegations at engine
maker Rolls-Royce. 17
n Gold and silver prices
climbed to their highest levels
in three months, as worries
about the U.S. economy contin-
ued to weigh on the dollar. 22
n Net profit at Singapores top
two banks, DBS Group and Over-
sea-Chinese Banking, rose in the
fourth quarter, underpinned by
strong loan growth. 23
n Targets computer security
staff raised concerns about vul-
nerabilities in the retailers pay-
ment-card system at least two
months before hackers stole 40
million credit and debit card num-
bers from its servers. 19
n VW labor officials in Germany
began a new drive to create a
works council at the firms Ten-
nessee factory, despite a defeat
for the United Auto Workers. 17
i i i
World-Wide
n A Nepal Airlines plane flying
in bad weather with 18 people on
board was missing and feared to
have crashed in Nepals moun-
tainous west, officials said.
n Rescuers were searching for
seven Japanese women reported
missing while diving at a site near
Bali known for strong currents. 5
n Air travel was largely back to
normal after ash from an eruption
on Indonesias main island
grounded hundreds of flights. At
least four people died in Mount
Keluds eruption Thursday. 5
n U.S. Vice President Joe Biden
defended a proposed Pacific trade
agreement as an important coun-
terweight to China. 4
Vehicles are stranded by snow Sunday in Karuizawa, Japan. Heavy snow hit Tokyo and other parts of eastern Japan over
the weekend, leaving 12 people dead, many households without electricity and causing major travel disruptions.
Inside
World News: Kerry
urges action on
climate change. 4
Boss Talk Asia:
Samsung looks to
software, services. 8
Business: Apple
supplier prepares $4
billion IPO. 15
Whats News
THE WALL STREET JOURNAL
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THE WALL STREET JOURNAL. Monday, February 17, 2014 | 3
WORLD NEWS
China,U.S.TalkTensions
Kerry Gets Support Over North Korea; Beijing Warns on Philippines
BEIJINGU.S. Secretary of State
John Kerry said Friday he received
firm commitments from Chinese
leaders to take additional steps to
pressure North Korea over its nu-
clear program.
Mr. Kerry met in Beijing with Chi-
nese President Xi Jinping and Foreign
Minister Wang Yi, seeking to tamp
down regional tensions over North
Koreas nuclear ambitions and Chinas
more assertive military posture.
A Chinese Foreign Ministry
spokeswoman, Hua Chunying, said
earlier Friday, before Mr. Kerrys
statement, that Beijing recognized its
responsibility to address North Ko-
reas nuclear program and is playing
its part in trying to find a settlement.
Mr. Kerry said he cautioned the
Chinese against taking unilateral
steps that could further provoke al-
ready anxious neighbors, warning of
the dangers of a military miscalcula-
tion. The U.S. has challenged Bei-
jings territorial claims in the dis-
puted South China Sea and has
cautioned Beijing against unilater-
ally declaring a new air-defense
zone there, messages delivered by
Mr. Kerry Friday. The top U.S. diplo-
mat offered no details about what he
described as the specific measures
that Chinese leaders told him they
were prepared to take to move
Pyongyang toward denuclearization
and international talks.
China urged the U.S. to stay out
of Beijings territorial spat with the
Philippines, hitting back at an Amer-
ican admirals pledge of U.S. assis-
tance to Manila in the event of Chi-
nese military aggression.
The festering dispute between
China and the Philippines over parts
of the South China Sea is increas-
ingly becoming an issue between
Beijing and Washington, which has a
treaty alliance with Manila.
I would like to point out that the
U.S. is not a party concerned in the
dispute in the South China Sea, Chi-
nese foreign ministry spokeswoman
Hua Chunying said at a regular press
briefing on Friday. It should honor
its commitment of taking no sides on
the territorial-sovereignty issue in
the South China Sea, be discreet in
words and action and do more for
the peace and stability in the region
rather than the opposite.
Visiting the National Defense
College in Manila on Thursday, Adm.
Jonathan Greenert, the U.S. Navys
chief of operations, was asked
whether the U.S. would fight along-
side the Philippines in the event of a
Chinese attack. Of course, we would
help you, he said.
Also in the region, volatile ties be-
tween the Koreas appeared to improve
slightly Friday after they issued a joint
statement calling for better relations
and North Korea dropped its objec-
tions to the timing of a cross-border
meeting of divided families.
BY ADAM ENTOUS
Chinese Foreign Minister Wang Yi arrives for a meeting with U.S. Secretary of State John Kerry in Beijing on Friday.
A
s
s
o
c
i
a
t
e
d
P
r
e
s
s
Kerry appeals for Asia to take
action on climate change.................... 4
Taiwan Says China
Rejects APEC Talk
TAIPEITaiwan said China re-
jected its suggestion of a meeting
between their presidents at this
years Asia-Pacific Economic Coop-
eration summit, with Beijing saying
it wont be a suitable time for
such high-level talks.
Wang Yu-chi, head of Taiwans
Mainland Affairs Council, made the
remarks in Taipei on Friday after re-
turning from a four-day trip to
China. On Tuesday, high-level gov-
ernment officials from both sides
held formal talks in Chinas eastern
city of Nanjing, the first such meet-
ing since they split in a civil war 65
years ago. Political observers be-
lieve the meeting, which ended in a
cordial tone, has set the stage for a
future political dialogue for which
Beijing has been pushing.
Mr. Wang told reporters that his
Chinese counterpart, Zhang Zhijun,
head of Taiwan Affairs Office, had
brought up the possibility of a
meeting between China President Xi
Jinping and Taiwan President Ma
Ying-jeou.
When Director Zhang men-
tioned a possible meeting, I immedi-
ately said our hope is to hold the
meeting between the leaders of both
sides of the Taiwan Strait at [this
years] APEC. He promptly ex-
pressed his stance that they do not
think APEC is a suitable time for
such meeting, Mr. Wang said.
Due to Chinas vehement objec-
tion, no Taiwan president has ever
been invited to attend the APEC
meeting. Many political analysts
suggest that by allowing Taiwans
president to attend the meeting,
Beijing could use the opportunity to
extend an olive branch and show
good faith.
Although Beijing dashed Taipeis
hope for the presidents to meet at
APEC, analysts still believe the pres-
idents will meet in the future after
both sides exchanged goodwill at
the Nanjing meeting.
Since Taiwan and China split in
the civil strife, the Taiwan Strait has
been a perennial flashpoint in the
region as Beijing has vowed to re-
claim the self-ruled island, by force
if necessary.
Although the election of Mr. Ma
in 2008 has helped thaw ties and
both sides have signed more than a
dozen trade agreements, many in
Taiwan still fear Beijing may flex its
economic muscles to strong-arm
Taiwan into submission, and the is-
lands democracy would be threat-
ened.
In October, Mr. Xi told Taiwans
envoy to APEC that both sides must
not put off a political talk indefi-
nitely, signaling Beijings growing
impatience with Taiwan.
However, a month later, Mr. Ma
said any major political moves with
Beijing, such as a political talk, must
first gain the support of the people
and should be decided via a referen-
dum.
BY JENNY W. HSU
Taiwans Wang Yu-chi, center, visits a Taiwanese school in Shanghai on Friday.
A
g
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-
P
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e
s
s
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/
G
e
t
t
y
I
m
a
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e
s
Cell Is Accused in Xinjiang
BEIJINGPolice in Chinas west-
ern region of Xinjiang accused a
radical militant cell of staging an at-
tack on police last week, in which
officers shot dead eight attackers,
the regional governments news
website reported Sunday.
Investigators said that planning
for Fridays attack began in Septem-
ber when the 13-member group be-
gan watching violent terrorist vid-
eos and started training, according
to the brief report.
At least 11 were killed by the po-
lice Friday, and it wasnt clear
whether any had been captured.
The attackers drove vehicles
laden with explosives into a line of
police cars near the Kazakhstan bor-
der. Three of the attackers blew
themselves up, and police killed
eight others, according to a previous
report on the government site.
Two police officers and two civil-
ians were wounded.
Xinjiang, a strategic frontier ter-
ritory with deposits of oil, gas and
other minerals, has experienced an
uptick in violence in recent years.
Some Uighursa Turkic, tradition-
ally Muslim ethnic grouphave
mounted a separatist movement
against Chinese rule over the past
two decades.
Experts say more-radical Uighurs
influenced by militant strains of Is-
lam have emerged over the past few
years.
Uighur groups, however, say
more intrusive policing and moni-
toring of religious activities is incit-
ing a backlash.
The government report de-
scribed the attackers as religious ex-
tremists but didnt specify their eth-
nic group or specify a religion.
The government report said in-
vestigators recovered dozens of ex-
plosives and machetes from the
scene of Fridays attack.
BY CHARLES HUTZLER
ObamaNamesEconomicEnvoys
WASHINGTONThe Obama ad-
ministration is pushing two career
officials with sharply different
styles to the front lines of its eco-
nomic diplomacy as it tries to calm
global tensions over U.S. policies.
Nathan Sheets, a former top Fed-
eral Reserve official with a central
bankers soft touch, is set to become
the Treasury undersecretary for in-
ternational affairs, as major econo-
mies clash over the effects of easy-
money policies.
At the same time, the U.S. is in-
stalling Mark Sobel on the Interna-
tional Monetary Funds board, send-
ing a longtime Treasury official
known for his tough and often stub-
born negotiating style at interna-
tional summits.
The administrations interna-
tional diplomacy has been short-
handed at a time of widespread tur-
moil abroad. Treasurys top
diplomatic posts have been vacant
for months, as have the State De-
partments senior economic posi-
tions.
Both nominations, which need
congressional approval, come at a
tender time for U.S. economic diplo-
macy.
Relations with the euro zone
have been buffeted by U.S. spying
allegations and criticism of the cur-
rency unions economic policies. Of-
ficials from Brasilia to New Delhi
are pointing fingers at U.S. mone-
tary and budget policy as a key
source of instability in emerging
markets. Washingtons fiscal fights
have drawn criticism from financial
leaders worried about an already
weak global economic recovery. And
economic relations with China re-
main strained over Beijings cur-
rency policies and barriers to U.S.
investment.
The U.S. also has been broadly
chastised for not ratifying a 2010
agreement that would have given
emerging markets greater say at the
IMF in closer proportion to their
economic heft. Approval by Con-
gress is the remaining hurdle to
completing the deal among the
IMFs 188-member countries. De-
spite Treasurys efforts, Republicans
have so far rejected the proposal.
A U.S. delegation, which is ex-
pected to include both Messrs. Sobel
and Sheets, likely will get an earful
on those issues late next week from
other members of the Group of 20
leading economic powers when min-
isters and central bankers convene
in Sydney, Australia.
Mr. Sheets would likely act as
the consensus-builder for the ad-
ministrations strategy.
Hes universally well-liked,
says Ted Truman, a senior fellow at
the Peterson Institute for Interna-
tional Economics and a former se-
nior Treasury and Federal Reserve
official.
Donald Kohn, a former Fed gov-
ernor who worked and traveled with
Mr. Sheets for regular central-
banker meetings in Basel, Switzer-
land, called him a calm and col-
lected personality.
Hes a very even-centered kind
of person, but he also doesnt hold
back his views. Once hes reasoned
things to their logical conclusion,
said Mr. Kohn, who is now a senior
fellow at the Brookings Institution.
Mr. Sobel would play a watchdog
role at the IMF, guarding U.S. inter-
ests at an institution increasingly
under pressure by its membership
to pivot away from Washington as
the center of political gravity and
toward burgeoning emerging-mar-
ket economies.
He will drive the institution
somewhat crazy because hes more
demanding, Mr. Truman said.
Butbecause hes been so inti-
mately involved in these issues for
so long, he will speak with great
weight.
BY IAN TALLEY
4 | Monday, February 17, 2014 THE WALL STREET JOURNAL.
WORLD NEWS
BidenDefendsPacificTradePact
CAMBRIDGE, Md.U.S. Vice
President Joe Biden on Friday ac-
knowledged congressional Demo-
crats opposition to the Obama ad-
ministrations trade agenda, but he
defended a proposed Pacific pact as
an important counterweight to
China.
At a retreat of Democratic law-
makers, Mr. Biden said trade negoti-
ations among 12 Pacific countries
would bring economic and strategic
value, according to attendees. This
comes as the White House tries to
rebuild the case for trade agree-
ments with Congress and the public
and is hoping lawmakers will grant
the administration fast track au-
thority, in which Congress approves
trade deals on an up-or-down vote
without amending them.
The authority would apply most
immediately to the Trans-Pacific
Partnership, a pending trade pact
that would include the U.S., Japan,
Canada, Mexico and eight other
countries.
Many lawmakers have accused
the White House of trying to wrap
up the negotiations without their in-
put and with little transparency.
Grass-roots organizations have
warned that the deals would pose
risks to U.S. jobs and the environ-
ment.
A senior administration official
said Friday the administration is
continuing to push for the Pacific
trade pact. We very much want to
get that done, the official said.
Weve communicated that to Con-
gress.
President Barack Obama has said
the trade agreements are a way to
boost economic growth, lure high-
paying jobs and boost exports. The
Pacific pact is also seen as a way to
put pressure on China to adopt
fairer trade and investment rules or
face isolation in the region.
Senate Majority Leader Harry
Reid (D., Nev.) last month said he
opposes the fast-track bill and that
everyone would be well-advised
just not to push this right now.
This past week, House Democratic
Leader Nancy Pelosi of California
said no to the current version of
the legislation.
Unions and environmental
groups have criticized the TPP talks,
saying an agreement could pave the
way for some U.S. job losses to Viet-
nam and other low-wage economies
in the talks.
In a recent interview, Sen. Ron
Wyden (D., Ore.), the new chairman
of the Senate Finance Committee,
criticized the administration for a
lack of transparency in the TPP
talks.
Mr. Wyden supports fast-track
authority in some form and says
trade agreements are a way to capi-
talize on Americas strengths, in-
cluding in new data-intensive tech-
nologies.
He declined to say how he would
alter legislation introduced by his
predecessor on the committee, say-
ing he wanted to speak with col-
leagues first.
Janet Hook
and Colleen McCain Nelson
contributed to this article.
BY MICHAEL R. CRITTENDEN
AND WILLIAM MAULDIN
Vice President Joe Biden said trade negotiations among 12 Pacific countries would bring economic and strategic value.
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China Banks
Accelerate
Lending
BEIJINGChinese bank lending
posted a bigger-than-expected jump
in January, as Beijing tries to strike
a balance between worries over
mounting debt and the need for
credit to support economic growth.
Banks in China usually front-load
their lending at the beginning of the
year, so large increases are common.
Still, the larger-than-expected rise
released Saturday by the Peoples
Bank of China suggests government
concerns about credit expansion
arent tamping down borrowing.
Chinese financial institutions is-
sued 1.32 trillion yuan ($217.6 bil-
lion) worth of new yuan loans in
January, up sharply from 482.5 bil-
lion yuan in December and also big-
ger than the 1.07 billion yuan new
loans recorded in January last year,
according to the central bank.
Newly extended loans in January
were higher than the 1.1 trillion
yuan forecast by 11 economists
polled by The Wall Street Journal.
Total social financing, a broader
measurement of credit in the econ-
omy, rose to 2.58 trillion yuan in
January from 1.23 trillion yuan in
December. That was also higher
than 2.54 trillion yuan recorded in
January 2013.
Bank of China Ltd. said the fig-
ures indicate strength in the coun-
trys economy despite signs of
weakness.
The higher-than-expected new
loans showed the traditional pattern
by Chinese banks to make more
loans at the beginning of the year,
said HSBC economist Ma Xiaoping.
But the data also indicated that the
real demand from the economy is
still robust, though manufacturing
PMI pointed to another direction.
Economists are trying to sort out
mixed signals about the worlds No.
2 economy. China reported a higher-
than-expected 10.6% rise in exports
in January, despite signs from other
major exporting Asian nations that
demand growth remains modest.
The early part of the year is sub-
ject to distortions because of
Chinas Lunar New Year holiday,
which begins at different times in
January and February depending on
the year. Ms. Ma said the trade data
reflected that external and internal
demand were strong, which spurred
demand for credit in January.
Beijing has been trying to strike
a balance between reining in credit
expansion, which poses increasing
financial risks, and supporting eco-
nomic growth.
Analysts predicted that mone-
tary policy for 2014 may be tighter
than a year earlier as the country
tries to curb expansion of its
shadow banking sectoran array
of lenders such as so-called trust
firms, leasing companies and insur-
erswhich they say poses risks as
economic growth slows.
We expect monetary conditions
to remain tight given that the cen-
tral bank has made clear that it is
still not comfortable with the pace
of credit growth, said Mark Wil-
liams, chief Asia economist for Capi-
tal Economics, in a report.
Chinas broadest measure of
money supply, M2, was up 13.2% at
the end of January compared with a
year earlier, lower than the 13.6%
rise at the end of December, official
data showed.
Grace Zhu
Heard: China prices are a
smoothed version of reality ......... 28
Kerry Urges Action on Climate Change
JAKARTAU.S. Secretary of
State John Kerry made a personal
appeal to developing nations in Asia
to take more seriously the threat
posed by climate change, seeking to
build support for limits on green-
house-gas emissions from fast-
growing states that have so far been
reluctant to commit.
Mr. Kerrys appeal, in a speech in
Indonesia on Sunday, represented
the latest attempt by the top Ameri-
can diplomat to try to coax China
and other emerging economies in
the region to ease their resistance
to accepting targets to reduce emis-
sions. China and other developing
nations have long resisted pressure
in global climate negotiations to ac-
cept such targets, in a dispute with
rich nations.
I wanted to start right here in
Jakarta because this city, this coun-
try, this region is really on the front
lines of climate change, he said in
Jakarta.
It is not an exaggeration to say
to you that the entire way of life
that you live and love is at risk, Mr.
Kerry said.
Mr. Kerry said he was encour-
aged by an agreement announced
after his visit to Beijing on Friday
for the U.S. and China to share in-
formation on their respective
post-2020 plans to limit green-
house-gas emissions.
He said he hoped increased coor-
dination with Beijing on addressing
climate change can help set an ex-
ample for other nations.
U.S. officials acknowledged, how-
ever, that getting agreement from
Beijing and other emerging econo-
mies on new targets was a struggle.
Developing countries now ac-
count for about 55% of global emis-
sions. That percentage is expected
to grow to about 65% or more by
2030, underlining the importance of
persuading fast-growing economies
to adhere to any international cli-
mate pact, U.S. officials said.
Developing countries cite con-
cerns that their growth rates will
suffer under the weight of the cuts,
an argument Mr. Kerry sought to
counter Sunday by warning of cli-
mate changes economic costs.
Mr. Kerry said Indonesia was
one of the most vulnerable coun-
tries on earth to the effects of cli-
mate change.
He said rising sea levels could
put half of Jakarta underwater, and
cited studies that say Indonesias
fisheries could lose up to 40% of
what they currently bring in.
Indonesia is one of the worlds
top 10 greenhouse-gas emitters. The
biggest part of those emissions in
Indonesia comes from deforestation.
U.S. officials say China has been
taking its own steps to address air
pollution but has balked at commit-
ting to internationally set targets.
Mr. Kerry said air pollution al-
ready costs China as much as 8% of
its gross domestic product because
health-care spending goes up and
agricultural output goes down.
We do not have time to have a
debate about whose responsibility
this is, Mr. Kerry said. He said no
country should have a free pass,
adding that the U.S. cant foot the
bill alone.
Mr. Kerry had one of the most
reliably pro-environment records in
nearly three decades as a U.S. sena-
tor, and he has frequently warned
about the dangers of climate change
in speeches as secretary of state.
Mr. Kerry has argued that the
U.S. needs to take a lead role in the
global climate-change debate to in-
fluence the behavior of other coun-
tries. Mr. Kerry, however, faces his
own fossil-fuel dilemma at home:
whether to approve the Keystone XL
pipeline project, which has become
a vivid symbol in a domestic debate
over oils place in the U.S. economy.
As a senator, Mr. Kerry voted in
2012 against an amendment that
would have approved the pipeline.
Now Mr. Kerrys State Department
is overseeing a permit review be-
cause the pipeline crosses the Cana-
dian border.
Officials said he has yet to make
up his mind.
BY ADAM ENTOUS
Secretary of State John Kerry on Sunday said Indonesia was one of the most
vulnerable countries to the effects of climate change.
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THE WALL STREET JOURNAL. Monday, February 17, 2014 | 5
WORLD NEWS: ASIA
Indonesia Air
Travel Resumes
After Eruption
JAKARTA, IndonesiaAir travel
was largely back to normal on Sun-
day after ash from an eruption on
Indonesias main island closed air-
ports and grounded hundreds of
flights across the region late last
week.
Authorities have reopened most
of the seven airports that were
closed on the island of Java follow-
ing the eruption of Mount Kelud late
Thursday, including the two larg-
estin Surabaya, Indonesias sec-
ond-largest city, and in Bandung,
more than 500 kilometers from the
volcano.
Authorities said the other air-
ports were likely to reopen Monday
and Tuesday after workers finish
cleaning several centimeters of ash
from runways and jets.
Mount Kelud, which had been
largely dormant since 2007, ejected
80 million cubic meters of ash into
the sky in a sudden eruption late
Thursday night, the countrys disas-
ter mitigation agency said.
At least four people were killed
in the eruption. As of Saturday eve-
ning, more than 56,000 people were
being housed in shelters, the agency
said.
Western winds carried the ash
across the densely populated island
of Java, covering many cities in gray
ash before eventually sweeping it
out to sea south and west of the is-
land of Sumatra.
On Sunday, I Gede Suantika, the
government volcanologist leading
the monitoring of Kelud, said activ-
ity at Kelud had sharply de-
creased.
In Indonesia, flag-carrier Garuda
Indonesia said most flight routes
had resumed, except for those to
and from airports in Solo and Yog-
yakarta, both more than 150 kilome-
ters west of the volcano.
Australian airlines have largely
recovered after many flights to In-
donesia and Thailand were delayed
or canceled in the wake of the vol-
canic eruption.
Virgin Australia Ltd. returned to
its normal flight schedule Sunday
and said it would assess Monday
whether to resume flights to the
Cook Islands in the Pacific Ocean
and to Christmas Island in the In-
dian Ocean.
Virgin resumed flights to Bali
and Thailand on Saturday.
Qantas Airways Ltd. has re-
routed flights to Singapore to avoid
flying near the area affected by the
volcano, but is otherwise operating
normally, a spokesman said.
The airline on Friday delayed
two flights on its Sydney to Jakarta
route until Saturday.
Tens of thousands of villagers
near Kelud remain in temporary
shelters, and the disaster agency
said evacuations continue for all
residents living within 10 kilometers
of the volcano.
BY BEN OTTO
A resident cleans up ash that damaged houses and farms in Malang, East Java, following the eruption of Mount Kelud.
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Bali Rescuers
Search for
Missing Divers
JAKARTA, IndonesiaRescuers
continued on Sunday to search for
seven Japanese women reported
missing while diving at a site near
Bali known for its fierce currents.
We have deployed boats, heli-
copters and also asked local fisher-
men to help us, but theres no result
yet, said Dewa Made Supartha of
the Bali Search and Rescue Agency.
Bali, increasingly popular among
foreign divers, has a vibrant diving
industry and community. Some local
dive operators said they fear news
of the missing divers could frighten
away some foreign divers. Mr. Su-
partha corrected a police statement
on Saturday that one dead body had
been found that was believed to be
one of the missing divers.
The women were diving in wa-
ters near the small island of Nusa
Lembongan on Friday afternoon
during heavy rain and strong wind,
police said. The divers were Miyata
Ritsuka, Yamamoto Emy, Tomita Na-
homi, Marizona Aya, Yahinongde At-
sumi, Takahashi Shoko and Furu-
kawa Saori, according to Bali Police
spokesman Hariadi, who, like many
Indonesians, uses only one name.
Mr. Hariadi said Ms. Takahashi
and Ms. Furukawa are dive instruc-
tors at Balis Yellow Scuba, which
organized the dive. Dive instructors
in Bali considered the women to be
seasoned dive instructors.
Attempts to contact Yellow
Scuba werent successful.
Nusa Lembongan is one of the
three islets southeast of Indonesias
famous resort island of Bali. It is
known for gorgeous coral reefs and
good water visibility, but also fierce
currents requiring advanced diving
skills. Police urged diving operators
to stop taking divers to the site in
2012 after a Japanese diver and a
Danish diver were killed there.
BY I MADE SENTANA
India Antigraft Politician Kejriwal Resigns
widespread anti-incumbent senti-
ments in the run-up to the elections.
AAP could contribute to a fractured
mandate with many parties in Par-
liament, none of which have enough
seats to form a stable government.
AAP, Indias newest political
party, was born in 2012 out of a
mass anticorruption movement that
sought the creation of a strong om-
budsmans office to inquire into al-
legations of official graft against
government officials and politicians.
The party shook up the national
capital with a strong showing in
Delhis state elections in December.
Despite limited resources, inex-
perienced candidates and a fledgling
organization, AAP won 28 seats in
Delhis 70 member assembly by po-
sitioning itself as a clean alternative
to what Mr. Kejriwal denounced as a
corrupt, arrogant and unresponsive
Continued from first page political system. Its message won
support among both Delhis urban
middle classes as well the national
capitals poorest communities.
Since AAP didnt have a legisla-
tive majority, it formed government
after Congress, which won eight
seats, pledged to support it during
key electoral votes.
Propelled by this unexpected vic-
tory and scenting a political open-
ing, the party has in the last two
months expanded ambitiously from
its stronghold in the national capital
to different parts of the country,
gearing up for national polls. The
party has said it would contest 350
of 545 seats in the national parlia-
ment. Tens of thousands of Indians
have signed up to become members
of the party, including a number of
high-profile business executives,
journalists and artists.
But Mr. Kejriwals unconven-
tional approach to governance has
polarized public opinion. Last
month, Mr. Kejriwal staged an over-
night sit-in on the streets to de-
mand greater accountability for
Delhis police force, bringing central
Delhi to a standstill.
Critics accuse Mr. Kejriwal of
failing to transition from being an
agitator to an administrator and of
spreading anarchy in the garb of
empowering the common man; sup-
porters see him as an audacious
hero.
Mr. Kejriwals opponents and
some political commentators say he
has been angling to quit, hoping to
cultivate an image as a victim of a
corrupt and collusive political sys-
tem, something Mr. Kejriwal has de-
nied.
He has been attempting to be
dismissed, said Ashok Malik, a
Delhi-based political analyst. He
has clearly planned this so that he
can be seen as a martyr and get a
boost in the [general] election.
According to a recent opinion
poll by the national daily Times of
India and research agency Ipsos
across Indias eight major cities,
44% respondents said they would
vote for AAP.
Mr. Modi remains the popular
choice for prime minister with 58%
of the vote, but Mr. Kejriwal came in
second place with 25%. In a tele-
vised interview Saturday, Mr. Kejri-
wal said he hadnt decided if he
would run for office in the coming
election.
Populist measures pushed by
AAP in Delhi have given the party
an antibusiness image. Some ana-
lysts say while his popularity among
some urban Indians may have de-
clined, his appeal among poor Indi-
ans has grown.
Delhis Chief Minister Arvind Kejriwal waves his resignation letter as he addresses his supporters at Aam Aadmi party headquarters on Friday.
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6 | Monday, February 17, 2014 * * THE WALL STREET JOURNAL.
WORLD NEWS
Explosion on Bus in Sinai Kills Tourists
Egyptian Authorities Blame Terrorism for Blast That Left Driver and at Least Three South Koreans Dead
CAIROAn explosion on a bus
full of tourists near Egypts border
with Israel killed at least four peo-
ple on Sunday and the government
said it was a terrorist attack.
Three South Korean tourists and
an Egyptian driver died in the bor-
der town of Taba in the restive Sinai
Peninsula and 14 people were
wounded, the government said.
If confirmed as a terrorist attack,
it would be the first aimed at civil-
ians or tourists since the military
ousted Egypts first freely elected
president on July 3. The coup
sparked a low-level Islamist insur-
gency in Sinai by militants opposed
to a return to authoritarian rule.
It wasnt immediately clear what
caused the explosion on the bus
filled with tourists from various
countries. Pictures and video
showed extensive damage to the
front of the bus and lighter damage
in the rear. The blast was about 250
yards from the border crossing ter-
minal between Israel and Egypt and
was heard clearly inside Israel, said
Ofer Leitner, a spokesman for the Is-
raeli border authority.
Taba was once a popular tourist
destination, especially for Israelis.
But a terrorist attack in 2004 killed
34 people and sparked a massive
police crackdown on the regions
Bedouin population after some from
the community were implicated.
That was followed by other deadly
attacks on Sinai tourist sites in
2005 and 2006.
The government has attempted
to revive the nations reeling tour-
ism industry, suffering from politi-
cal instability since the 2011 popular
revolt that forced longtime authori-
tarian President Hosni Mubarak
from power. Despite political vio-
lence that has killed nearly 2,000
since July, Egypts interim authori-
ties have lobbied foreign govern-
ments to lift travel bans, maintain-
ing the country is on a democratic
path to stability.
A shadowy al Qaeda-inspired
group, Ansar Beit Al Maqdis, has
taken responsibility for some at-
tacks in protest against the July
coup. But the military-backed in-
terim government has blamed Mr.
Morsis Muslim Brotherhood, the Is-
lamist group that dominated Egyp-
tian politics after the Mubarak re-
gime.
The Brotherhood has condemned
the attacks and denied responsibil-
ity. Without offering public evidence
of the groups complicity, authori-
ties on Dec. 25 designated the
BrotherhoodEgypts oldest and
largest organized political forcea
terrorist organization. They out-
lawed its activities, exposing mem-
bers and supporters to harsh prison
sentences under antiterrorism laws.
Human Rights Watch and local
rights groups have criticized the
governments move as politically
motivated and an effort to silence
dissent while the military appears
to be asserting its dominance over
the nations politics.
A Brotherhood spokesman in
London condemned Sundays attack
and blamed the military-backed au-
thorities for failing to uphold their
duty of protection and care toward
visitors and Egyptian citizens alike.
Egypts interim prime minister,
Hazem el Beblawy, offered condo-
lences to the victims families and
said security would be increased in
the region. He vowed to bring the
perpetrators to justice.
Matt Bradley and Joshua
Mitnick contributed to this article.
BY TAMER EL-GHOBASHY
Smoke rises from an explosion Sunday on a bus filled with tourists in the Egyptian town of Taba near Israels border.
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Saudi Will Give Syria Rebels Antiaircraft Missiles
AMMAN, JordanWashingtons
Arab allies, disappointed with Syria
peace talks, have agreed to provide
rebels there with more sophisticated
weaponry, including shoulder-fired
missiles that can take down jets, ac-
cording to Western and Arab diplo-
mats and opposition figures.
Saudi Arabia has offered to give
the opposition for the first time
Chinese man-portable air defense
systems, or Manpads, and antitank
guided missiles from Russia, accord-
ing to an Arab diplomat and several
opposition figures with knowledge
of the efforts. Saudi officials
couldnt be reached to comment.
The U.S. has long opposed arm-
ing rebels with antiaircraft missiles
for fear they could fall into the
hands of extremists who might use
them against the West or commer-
cial airlines.
The Saudis have held off supply-
ing them in the past because of U.S.
opposition. A senior official from
the Obama administration said on
Friday that the U.S. objection re-
mains the same. There hasnt been
a change internally on our view,
the official said.
The U.S. for its part has stepped
up financial support, handing over
millions of dollars in new aid to pay
fighters salaries, said rebel com-
manders who received some of the
money. The U.S. wouldnt comment
on any payments.
The focus of the new rebel mili-
tary push is to retake the southern
suburbs of Damascus in hopes of
forcing the regime to accept a polit-
ical resolution to the war by agree-
ing to a transitional government
without President Bashar al-Assad.
But if the Manpads are supplied
in the quantities needed, rebels said
it could tip the balance in the stale-
mated war in favor of the opposi-
tion. The antiaircraft and Russian
Konkurs antitank weapons would
help them chip away at the regimes
two big advantages on the battle-
fieldair power and heavy armor.
New stuff is arriving immi-
nently, said a Western diplomat
with knowledge of the weapons de-
liveries.
Rebel commanders and leaders
of the Syrian political opposition
said they dont know yet how many
of the Manpads and antiaircraft
missiles they will get. But they have
been told it is a significant amount.
The weapons are already waiting in
warehouses in Jordan and Turkey.
Earlier in the conflict, rebels
managed to seize a limited number
of Manpads from regime forces. But
they quickly ran out of the missiles
to arm them, the Western diplomat
said. Rebel leaders say they met
with U.S. and Saudi intelligence
agents, among others, in Jordan on
Jan. 30 as the first round of Syrian
peace talks in Geneva came to a
close. That is when wealthy Gulf
States offered the more sophisti-
cated weapons.
At the meeting, U.S. and Gulf of-
ficials said they were disappointed
with the Syrian governments re-
fusal to discuss Mr. Assads ouster
at the talks and suggested a military
push was needed to force a political
solution to the three-year war.
President Barack Obama last
week acknowledged that diplomatic
efforts to resolve the Syrian conflict
are far from achieving their goals.
But the situation is fluid and we
are continuing to explore every pos-
sible avenue, Mr. Obama said.
U.S. Secretary of State John
Kerry on Sunday condemned the
Syrian regimes intransigence in
stalled peace talks in Geneva and
said a recess in the negotiations
would be used by the U.S. and inter-
national community to plot the next
steps toward finding a diplomatic
solution.
In a thinly veiled reference to
Russia, Mr. Kerry said: We call on
the regimes supporters to press the
regime. In the end, they will bear
responsibility if the regime contin-
ues with its intransigence in the
talks and its brutal tactics on the
ground.
The weapons will flow across the
border into southern Syria from the
warehouses in Jordan and across
the northern border from Turkey,
the Western diplomat said. Rebel
leaders said the shipments to south-
ern Syria are expected to be more
substantial because opposition
fighters are more unified in that
area and there is a lower risk the
weapons will fall into the hands of
al Qaeda-inspired groupsa big
concern for the U.S.
With the rebels still deeply di-
vided and infighting growing, the
new aid is aimed squarely at the
more moderate and secular rebels of
the Free Syrian Army (FSA) that the
U.S. has always favored.
The plan coincides with the reor-
ganization of rebel forces in the
south, where 10,000 fighters have
formed the Southern Front. The new
front aims to break the govern-
ments siege of the southern sub-
urbs of Damascus.
Last month, rebels in the north
unified into the Syrian Revolution-
aries Front, turning their weapons
on the Islamic State of Iraq and al-
Sham (ISIS), the most deadly al
Qaeda-inspired rebel faction.
The SRF, along with other
groups, forced ISIS to retreat from
key territories across the north.
Both the northern and southern
forces are technically under the
FSAs umbrella.
Western and Arab support for
the new groups won't go to the Is-
lamic Front, an alliance of conserva-
tive, religious rebel factions that is
helping the northern front rebels
fight the more radical ISIS.
The Southern Front is under the
leadership of Bashar al-Zoubi, who
has a direct line to Western and
Arab intelligence agencies in a mili-
tary operations room in Amman,
rebels say.
The operations room hosts offi-
cials from the 11 countries that form
the Friends of Syria group, including
the U.S., Saudi Arabia, France and
the U.K. Mr. al-Zoubi was also
among a select group of rebel com-
manders who joined the political
opposition in Geneva for the latest
round of peace talks.
The Southern Front has captured
a string of government-held areas
and military bases since it launched
its first offensive in late January.
But any push toward the capital
from the south faces formidable
challenges. An arc south of the capi-
tal is the domain of the armys
Fourth Division, elite troops led by
Maher al-Assad, the presidents
brother.
Closer to the capital, Syrian
forces are fortified by elements of
the Iranian-backed Hezbollah militia
from Lebanon.
The regime has been ruthless in
snuffing out any hint of escalation
by rebels in the south.
The Saudis and Emiratis at the
same meeting said that their prior-
ity is to lift the siege on the entire
southern area of Damascus, said an
aide to a rebel leader who attended
the meeting in Amman on Jan 30.
Once we reach this stage, it will be-
come political pressure and Assad
will have to listen to the interna-
tional demands, the aide said.
At the meeting between leaders
of the Southern Front and Western
and Arab intelligence agencies last
month, rebel leaders said they were
given salaries for their fighters and
equipment such as military rations
and tents.
Rebels said the U.S. spent $3
million on salaries of fighters in the
Southern Front, delivering the pay-
ments in cash over two meetings in
Jordanone on Jan. 30 and the
other late last year. The opposition
will also ask Congress this week for
weapons to help rebels fight al
Qaeda. That mandate would give the
opposition a better shot at securing
arms than previous requests for
support to topple the regime.
Sam Dagher
and Suha Maayeh
contributed to this article.
BY MARIA ABI-HABIB
AND STACY MEICHTRY
Rebels say supplies of
man-portable air defense
systems could tip the
balance in the war in
favor of the opposition.
THE WALL STREET JOURNAL. Monday, February 17, 2014 | 7
THE WINTER OLYMPICS
RussianWriter
HoldingBack
HisApplause
Like most Russians, Mikhail
Shishkin has no memory of the
1980 Olympic hockey game known
in America as The Miracle on Ice.
That isnt because the Soviets
lost that game to America, how-
ever. The game took
place shortly after the
Soviet invasion of Af-
ghanistan. Following that offen-
sive, Shishkin, who was 19 at the
time, says he stopped supporting
the Soviet sports regime.
Thirty-four years later, his love
of Russia and its people is palpable
in the novels and short stories that
have made him one of that nations
most revered modern writers. But
he is a critic of Russian President
Vladimir Putin. In an essay written
for The Wall Street Journal, Shish-
kin expresses an ongoing disincli-
nation to support the Olympic en-
deavors of his homeland.
My grandmother went blind in
old age. In her final years she lived
with my father, spending whole days
sitting alone in the apartment, so I
tried to call her more often. In the
middle of a conversation she would
start asking, Who is this?
Grandma, its me! Misha.
Misha? Misha, is that you?
Where are they taking you? Let him
go!
Every time I called she got stuck
in the day they arrested her hus-
band, my grandfather, in whose
honor I was named. He died in a la-
bor camp in Siberia. My grand-
mother would cry
into the receiver,
What are you do-
ing? Where are you taking him?
Misha! Misha! There was nothing I
could do.
I cannot help feeling that we all,
the entire country, have been con-
demned to that wasted era. Every
time Russia wakes, it wakes not to
the next day, but to the previous one.
It is a characteristic of every Russian
to have been born into an empire:
Russian orthodox, communist, post-
communist, whatever.
One could attach the label Dj
vu to everything that is going on in
contemporary Russia. Once again we
have an autocracy. Once again the
courts serve the authorities instead
of the law. Once again, the censors,
the spirit of enslavement. Once
again, the lie, the showing off, and
the life principle: It is better to
stoop too low than not low enough.
In the new Russian empire, even the
old Soviet anthem, personally se-
lected by Stalin, has been restored.
The current Olympics painfully
resemble the Moscow Olympics.
Once again, state propaganda, as it
did then, assures us that sports are
outside politics. But under a regime
that has political prisoners, every-
thing is politics, including sports.
As a child, I rooted for the Rus-
sians against the Czechs. But in my
mid teens, I came to realize that this
wasnt simply hockeyfor the
Czechs, this was battle. Youve got
your tanksweve got our pucks.
Sport was a weapon of the Cold
War. Hockey victories prolonged the
regimes life, and losses shortened it.
Along with eternal questions like
Who is to blame?, there is another
dilemma that occupies Russian
minds: Should we wish victory or de-
feat for our state? If you love your
fatherland, then should you wish vic-
tory or defeat for it? In the minds of
the people, it remains unclear where
the Fatherland ends and the regime
begins.
My school friend died in Afghani-
stan. They told him that he was de-
fending the homeland over there. We
would go to see his parents. Every
time his mother would start crying:
What homeland? What homeland?
We would say nothing.
I remember a news report when
the war in Chechnya began. A Rus-
sian soldier, still just a boy, said, I
am here defending my homeland.
A regime, no matter the ideology,
Orthodoxy, communism, Orthodoxy
once more, always manipulated its
people by means of patriotismthe
trick worked flawlessly. And it con-
tinues to work. Now television pro-
paganda is preparing Russians to de-
fend the homeland in Crimea and
eastern Ukraine. From what, Ukrai-
nian occupiers?
The regime controls the popula-
tion through television. For the ma-
jority of Russians the state television
channels are their only source of in-
formation. As the fictional but great
19th-century writer Kozma Pruktov
put it: Many people are like sau-
sages: what you stuff them with is
what they will carry in themselves.
Through the zombie box the
state power is controlling and ma-
nipulating people, driving into their
heads that holy
Rus is surrounded
by enemies and
only the Father of the Nation over in
the Kremlin can save us from ene-
mies, foreign and domestic.
Patriotism is a sacred Russian
cow masticating human rights like
cud. The new Russian empire, reborn
before our eyes, has declared patrio-
tism and the military victories of the
past to be their ideology. In Russia,
thats a sure wager. These words
were spoken over a century and a
half ago: They have started to em-
phasize patriotism. Apparently, they
have been embezzling.
But those words sound as though
they were spoken about our own
thieving officials, who above all are
concerned with love of country.
Its especially vile how every re-
gime hides behind great writers.
Pushkin and Tolstoy raised the in-
trinsic value of Russia to fundamen-
tally new heights for Russians. It is
one thing to feel that you belong to a
country whose history consists of
wars and an endless bloody battle
for power. It is quite another to feel
that you belong to the country that
produced Eugene Onegin and War
and Peace. That country is worth
defending in endless wars.
Thus every regime hides behind
the great poets. And so the opening
ceremony of the Sochi Olympics was
not without Natasha Rostovas first
ball.
My country is a bad student. We
dont want to learn the lessons of
history. The Germans got over the
idea of patriotism long ago, and
Germany has made great strides in
its social and economic progress.
In Russia, scoundrels and idiots
have profiteered in love for their fa-
therland for too long. How many
sons must parents send to the
slaughterhouse so that the borders
of our country might creep this way
and that?
To be sure, taking a stand against
power, force, your own government,
against patriotism, is not easy. Es-
pecially if you are responsible for a
family, your children. It is precisely
on this care for loved ones that re-
gimes have always caught people, as
on a hook. It is how they catch peo-
ple now, and it is how they will catch
people in the future. It is easy to sac-
rifice ones self for a good cause. It is
very difficult when sacrificing ones
self would entail the sacrifice of
ones loved ones.
The discussion neednt be about
the risk of going to jail. Suppose it
were merely the risk of losing ones
job. We are always hostage to the
people we love. True slavery is al-
ways a little bit voluntary.
Arrests and internments will be-
gin in this country again after we
have crossed the Olympic finish line.
And at that point all we will be able
to do is hope that a next batch of po-
litical prisoners will be pardoned
before the World Cup, which will
take place in Russia in 2018.
Or will Russia finally wake up
from the Middle Ages?
I want my country to be victori-
ous in sport. But I do not want the
anthem of dictators to be performed
for the whole world upon that vic-
tory.
Translated from Russian by Cory
Merrill.
BY MIKHAIL SHISHKIN
To Mikhail Shishkin, Russia today, under President Vladimir Putin, resembles too closely the Russia of old.
Z
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8 | Monday, February 17, 2014 THE WALL STREET JOURNAL.
Samsung Looks to Software and Services
Executive Vice President David Eun Discusses Working With Developers and Future Innovation in Hardware
Samsung Electronics Co. attained its
dominance in technology by mastering
hardware and creating a full slate of smart-
phones and televisions that now outsell all
global competitors.
But to stay on top and differentiate its
products from those of increasingly aggres-
sive Chinese competitors,
Samsung will have to rely
more on software and serv-
ices to drive sales and prof-
its. Part of that effort is
taking place in Silicon Val-
ley, where Samsung is de-
veloping its own software
and partnering with third-party developers.
Two years ago, the company brought in
David Eun, a Harvard graduate and veteran
of Google Inc. and Time Warner Inc., to
help ramp up the companys focus on start-
ups through venture investments, partner-
ships, acquisitions and a software startup
accelerator.
The Wall Street Journal recently spoke
with Mr. Eun, executive vice president for
Samsung Electronics and head of the com-
panys Open Innovation Center.
Edited excerpts:
WSJ: What can Samsung bring in terms of
software that other companies in Silicon
Valley cant?
Mr. Eun: What we have is an amazing net-
work of partners and consumers globally,
so theres a lot of intelligence and a lot of
scale at work here. I think sometimes peo-
ple forget that.
The last mobile flagship device that we
sold, we sold in over 200 countries with
350 carriers. Were really working closely
with them to understand how are consumer
behaviors evolving, how are the market-
places evolving, what are other top compa-
nies doing out there, not just in the soft-
ware space but in the hardware space and
in technology more generally.
Software is a two-way relationship, so as
your consumers use your services and use
your devices, you gain intelligence about
their usage, about what they like and dont
like, and that helps you become smarter
about how to evolve the product.
That scale, if used correctly, helps you
become smarter and gather more informa-
tion, which helps you accelerate the evolu-
tion of the products.
WSJ: Have you found Samsungs scale to be
an effective pitch when convincing software
developers to work with the company?
Mr. Eun: They get it. People, I think, appre-
ciate the pure scale. I think they appreciate
our intent to be a good partner.
It doesnt matter how grand your vision
is, if your products dont back up what
youre talking about, then its harder to exe-
cute on a vision. When I tell them that we
sell two TVs per second, that resonates
with them because they have Samsung TVs
in their living room. The scale and our
products speak to them.
WSJ: What are Samsungs longer-term plans
with software, in terms of making money
and developing services?
Mr. Eun: Naturally, its going to be about en-
hancing and boosting hardware sales. I
dont think thats such a great mystery.
If you have a truly smart TV and a com-
petitor doesnt have a smart TV, thats a
huge point of differentiation when a con-
sumer is about to purchase a TV. Thats
very basic. So at the core, we want to make
sure that our software and services support
our core hardware business and we con-
tinue to be No. 1. We sell more screens ar-
guably than any company in the world, and
as you understand that more and more of
the screens around the world are getting
connected to the Internet, theres a huge
opportunity for us to connect more and
more of these screens to each other. And
when we do that, we will have one of the
worlds largest platforms for distributing
content and servicesthis is everything
from apps to advertising.
So what happens is, you create great and
thoughtful integration of hardware and
software to enhance your historical core
business of hardware and continue to sell
the best products in the market. And, as
you connect more and more of these de-
vices together, you create one of the largest
distribution platforms for software and
services.
But you have to understand the right se-
quence and the right timing, and thats
where I think were taking a pretty sophisti-
cated, nuanced approach, because there is a
gravitational pull to just throw yourself into
the mix and be in there with everyone else.
Right now, we are having interesting,
open discussions with every top software
and services company in the world, and
were not talking just about the big estab-
lishments, but startups that you havent
heard of.
WSJ: How does the Open Innovation Center
fit into this effort?
Mr. Eun: My group is exclusively focused on
working with startups because, especially in
consumer software and services, histori-
cally the innovation has tended to come
from smaller companies and smaller groups
of people. In that way, we can cover every-
thing from the $11 billion that we spend on
R&D to having three guys in a corner work-
ing on a breakthrough thing. Were just try-
ing to cover all that.
WSJ: What do you think when people say
that Samsung doesnt know software?
Mr. Eun: I dont think a lot of people get it.
Theyre very focused on a narrow field of
questions, a narrow scope of time, a narrow
set of things. As we continue to evolve the
experience for our consumers and under-
stand that its hardware plus software,
were actually laying this foundation for
this huge distribution platform Im talking
about. But people cant see that.
If you take a step back and look at the
mobile industry, seven years ago there was
no iPhone or Galaxy. It was all Nokia and
Motorola and BlackBerry. And less than a
decade ago, in TVs, it was Sony, Sony, Sony.
Those are great companies and great
brands, so those spaces have evolved super
quickly. Its still the first inning of the base-
ball game. Its still early days and so we
cannot be too quick to pronounce conclu-
sive observations about how this game is
going to end up when its so early.
WSJ: People look at innovations like curved
phones and TVs and wonder if weve
reached the end of where hardware can
push forward, in terms of innovation and
profits. Do you agree?
Mr. Eun: I dont know that Id agree with
that statement. Were a company that in-
vests over 5% in R&D and were going to
continue to push the possibilities of what
you can get and do with the hardware.
I get your point: theres seemingly a lot
more opportunity to innovate in software
than there is in hardware. Thats an obser-
vation I dont totally agree with, but I will
agree that theres a lot of opportunity to in-
novate in software.
B
l
o
o
m
b
e
r
g
N
e
w
s
Rsum
Education: Bachelors Degree in Government,
Harvard University, 1989; Juris Doctor,
Harvard Law School, 1993.
Career: Joined Samsung in December 2011
and launched the companys Open Innovation
Center in January 2013. Before Samsung, he
served as president of AOL Media and
Studios and before that, headed Googles
content partnerships. Before Google, he
worked at Time Warner and NBC
Entertainment, focusing on business
development and digital distribution.
Extracurricular: Enjoys playing squash and
spending time with his family.
BY JONATHAN CHENG
MANAGING
Bosses Ride Out Economic Troubles by Staying Put
Is your boss a little grayer than
you expected? Blame the recession.
New research from the Univer-
sity of Pennsylvanias Wharton
School and Madrids IE Business
School has found that the age of ex-
ecutives is on the rise, as is the time
spent in their roleslingering ef-
fects of a financial crisis that eroded
career growth at the highest levels
of the corporate ladder.
For decades, executives bounced
around from company to company,
taking ever less time to climb to the
top. But that was before the reces-
sion hit. In recent years, even top
corporate leaders saw their paths
stalled, says Peter Cappelli, one of
the studys authors and a Wharton
management professor.
One problem is that the oldest
generation of executives delayed
their retirement post-2008, prohib-
iting the next employees in line
from taking their seats. When com-
panies did have vacancies, they
found it difficult to lure fresh talent
from the outside: workers were
afraid to make changes amid the
economic uncertainty.
Mr. Cappelli and the IEs Rocio
Bonet and Monika Hamori analyzed
biographies of the top ten leaders of
all Fortune 100 companies dating
back to 1980. The first stage of their
study analyzed executives through
2001, and a recent update brought
the research up to 2011.
Mr. Cappelli predicts executives
will start to move around more by
2015, even if the economy isnt
booming by then.
People wear out their welcome,
he said, and even the people who
are welcome dont want to stay any
longer.
Once a few executives start play-
ing musical chairs, change will be
swift and widespread, he added,
with the trajectory once again
pointing toward sharply declining
tenure at organizations.
The study, published in the Har-
vard Business Review, also found
that the corner office has gotten
more diverse over the last decade
and that there are more female and
foreign-born leaders.
For example, 18% of the execu-
tives studied in 2011 were female,
as compared to 11% in 2001 and 0%
in 1980. The rate of foreign execu-
tives rose from 2% in 1980 to 11% in
2011.
But those trends come with ca-
veats. Companies with foreign exec-
utives in their top ranks are dispro-
portionately based on the East and
West Coasts, according to the study.
Women rise to top jobs fast, accord-
ing to Mr. Cappelli, but they seem to
be on a different track than men,
most often moving up in the mar-
keting or human resources divisions
of their companies rather than the
operational side.
The data also highlight sharp
disparities between career trajecto-
ries at firms. At some businesses,
like Chevron Corp. and United Par-
cel Service of North America Inc.,
leaders stick around; 90% of the top
leaders at those companies have
been there their entire career. Other
firms see more of a revolving door
in the executive suite; Sears Roe-
buck & Co.s average 2011 executive
had only three years there.
BY RACHEL FEINTZEIG
THE WALL STREET JOURNAL. Monday, February 17, 2014 | 9
OPINION: REVIEW & OUTLOOK
T
he decision by workers at the
Volkswagen plant in Chattanooga,
Tennessee to reject the United
Auto Workers is the best news so far this
year for the American economy. Even
with Volkswagen management on its side,
the union that combined with CEOs to
nearly ruin U.S. car makers couldnt per-
suade a majority voting in a secret ballot
to let it become their agent to bargain
with the foreign-owned company.
This wasnt merely one more failed
union organizing attempt. The UAW and
its chief Bob King spent years working
toward this vote as part of its strategy to
organize plants in the American South,
and all the stars were aligned in its favor.
Mr. King colluded with IG Metall,
Volkswagens German union, to neutral-
ize Volkswagen management. It pitched
the collaborative vision of a labor-man-
agement works council at the plant
that makes the VW Passat, and it claimed
to have learned its lesson from the con-
frontation and strikes that hurt Detroits
auto makers. Volkswagen management
gave the union the run of the plant to
lobby workers while denying similar
privileges to union opponents.
So its nothing short of remarkable
that the union couldnt make the sale.
The failure reflects how well the plants
workers are doing without a union, to
the tune of $27 an hour including bene-
fits. The defeat also speaks to the harm
the UAW has done to itself by driving GM
and Chrysler to bank-
ruptcy and pushing com-
panies like Caterpillar to
move new production
from union plants.
These columns have
long argued that a com-
pany organized by a union usually de-
serves what it gets, but most workers un-
derstand that the modern union offer is
often a Faustian bargain. The UAW may
be able to negotiate a near-term increase
in pay and job security for current work-
ers. But the pricein addition to the
steep coerced duesis usually a less
competitive company that means less se-
curity and fewer jobs in the long run.
The best proof is the UAW itself: It has
lost 75% of its members in 35 years as its
demands and work rules made their em-
ployers less competitive.
That long run might have come soon
for Volkswagens Chattanooga workers.
They know the company may decide as
early as this month where to build a new
SUV for the American market, and the
Tennessee plant is competing with Mex-
ico for the job. Mexico already benefits
from a low-tariff, free-trade pact with the
European Union that the U.S. is only now
negotiating, and a UAW
victory would have been
an additional incentive to
go south of the Rio
Grande.
The union is blaming
Tennessee politicians for
raising this possibility, especially Repub-
lican Senator Bob Corker, a former mayor
of Chattanooga who helped bring Volks-
wagen to the city and who said last week
that he felt assured (he didnt say by
whom) that the Tennessee plant would
get the second production line if it re-
jected the union. The company dis-
avowed that claim, but the union may
use it as an excuse for defeat and to file
an unfair labor practice complaint under
the Wagner Act with the National Labor
Relations Board (NLRB).
This isnt likely to fly on the merits.
Mr. Corker may have been impolitic. But
he didnt give up his right to free speech
when he joined the Senate, and every
public action by Volkswagen had favored
the union. State legislators had said they
might withhold future tax incentives if
the UAW organized the plant, and Ten-
nessee had reason to believe that a UAW
success would hurt its ability to recruit
other companies that would fear the
union precedent.
Dont believe those who say this means
the end of the UAW. It has too many
friends in high political places, as the
2009 auto bailouts proved. Federal law is
also stacked in favor of unions, and Presi-
dent Obamas NLRB is routinely stretch-
ing and breaking the law to make it even
more so.
But the fact that unions must rely on
brute government force shows how out
of touch they are with modern economic
reality. American manufacturing is mak-
ing a modest comeback with the help of
rising labor costs in China and the Amer-
ican energy revolution. But it could stage
an even bigger revival without the threat
that unions could once again make Amer-
ican production uncompetitive. The last
thing the U.S. economy needs is to im-
port European labor practices. In Chatta-
nooga, and not for the first time, the
workers are smarter than management.
I
ts getting ugly in Venezuela. Three
people were killed in anti-govern-
ment protests on the streets of Cara-
cas on Wednesday. The killers havent
been identified, but Venezuelan strong-
man Nicolas Maduro is using the deaths
to justify a government crackdown on
growing civic unrest directed at his lead-
ership and a deteriorating economy.
Mr. Maduro was Hugo Chvezs hand-
picked successor, and one of Chvezs
Cuban-influenced legacies was politiciz-
ing the armed forces and the police and
developing an informal militia that still
roams cities and towns on motorcycles
to intimidate political opponents. Today,
Caracas is one of the most dangerous cit-
ies in the world.
Chvez also strangled independent
television and radio outlets. On Wednes-
day the government blocked the signal of
NTN television based in Bogota, Colom-
bia. The only independent
media left are newspa-
pers, but the central bank
wont sell them the dol-
lars they need to import
newsprint and they too
are trying to survive.
The Venezuelan econ-
omy is in a downward spi-
ral. The central bank admits an annual
inflation rate of 56%, though its proba-
bly much higher, and there is a shortage
of foreign exchange. The banks scarcity
index reports that 28% of basic food
stuffs are unavailable. Hospitals are run-
ning out of medicines and supplies and
cant get dollars to import more. Earlier
this month Toyota and General Motors
announced they would
shutter assembly plants
indefinitely, because with-
out dollars they cant im-
port manufacturing com-
ponents. An estimated
12,000 jobs are affected.
In November, using a
simple majority in the na-
tional assembly, Mr. Maduro won the
power to rule by decree for a year. Now
his hand is getting heavier. On Wednes-
day he blasted the organizers of anti-
government protests as coup-plotters.
He also announced a prohibition on
street demonstrations, closing down the
last public space for dissent.
The opposition has vowed it wont
surrender its right to gather in public
spaces. The police used tear gas against
opposition protesters over the weekend.
The big question now is whether all the
armed forces would follow a Maduro or-
der to move against a big anti-govern-
ment protest. Some likely would. Vene-
zuela is also thick with Cuban
intelligence operatives who trained the
armed and dangerous militia. They are
now calling the shots in Caracas as much
as Mr. Maduro is, and the latest unrest is
becoming another excuse to increase re-
pression.
N
ew York City is worth watching
these days as Mayor Bill de Blasio
begins his new progressive gov-
ernment. His first priority seems to be a
political and economic assault on charter
schools.
The number of charters in New York
City grew by over 900% under former
Mayor Michael Bloomberg and they now
teach some 70,000 kids out of 1.1 million.
Stanford Universitys Center for Re-
search on Education Outcomes has twice
found that the citys charter students do
better in reading and math than their
counterparts at district schools.
Mr. de Blasio plans to redress this in-
equity by handicapping charters. His De-
partment of Education has already ze-
roed out $210 million in funding from its
2015-2019 capital budget for charter
construction. The new mayor has also
announced a moratorium on co-loca-
tions, a policy that allows charters to
share facilities with district schools and
provides for a more efficient use of
space. Twenty-five co-locations approved
last year under Mr.
Bloomberg may be in
jeopardy.
Mr. de Blasio explains
that kids in district
schools may feel like
theyre getting an inferior
education if a charter moves in next
door and renovates.
Mr. de Blasio also intends to punish
well-endowed co-located charters like
Eva Moskowitzs Success Academy
schools by charging rent, which the
citys Independent Budget Office says
could raise $92 million. Manhattan Insti-
tute senior fellow Stephen Eide in a new
study finds that a flat rent of $2,400 per
student, as recommended by the Inde-
pendent Budget Office, would have re-
sulted in 71% of charters running deficits
and potentially 577 teacher layoffs in
2011.
Even more destructive is the mayors
proposal to base rents on
ability to pay. A progres-
sive rent would be a de
facto tax on success.
High-performing charters
raising the most private
donations would have to
pay the most, which would discourage
philanthropy and mean less money for
teaching. This is from the same crowd
that claims we spend too little on educa-
tion.
In related news, Mr. de Blasio last
week said he wants to return 1,200
teachers in the Absent Teacher Reserve
to classrooms. Teachers who lose their
positions due to school closures are
placed in the reserve to serve as substi-
tutes with full pay and benefits until
hired by another school. The reserves
turnover is high and about 60% land a
job within four months.
But most of the residual pool consists
of teachers that principals dont want
but cant be fired due to the union con-
tract. More than a quarter of the reserve
in spring 2013 had received a disciplin-
ary infraction, including for drug busts
and sexual misconduct, and a third were
rated unsatisfactory at least once in the
last five years. Forcing these teachers
back into classrooms could save $100
million annually, which Mr. de Blasio can
spend on other things. Mr. Bloomberg
proposed a better idea last year: dis-
missing teachers in the pool after four
months.
Once upon a time progressives be-
lieved in reform and education opportu-
nity. Now their agenda is reimposing
failed teachers on poor students, while
punishing the charter schools that are
their only avenue of escape.
Volkswagens Union Defeat
Venezuela Turns Ugly
A Progressive Education
As shortages
and protests grow,
Maduro follows
the Cuban model.
Workers prove to be
smarter than their
bosses in Tennessee.
New Yorks new mayor
unleashes an assault
on charter schools.
10 | Monday, February 17, 2014 THE WALL STREET JOURNAL.
OPINION
When Yugoslavia collapsed in
1991, the EU proclaimed that the
hour of Europe had arrived. Un-
fortunately, the lofty proclamation
was followed not by decisive ac-
tion, but by policy paralysis and
political bickering, with tragic hu-
man consequences.
Today, Ukraine offers the EU a
rare second chance to redeem it-
self. The Ukrainian crisis is the
greatest challenge to European se-
curity since the wars of the former
Yugoslavia a generation ago. There
is no time to lose: Once the Sochi
Olympics end, Moscow will have
no reason to restrain itself any
further in applying overwhelming
pressure to secure Kievs political
alignment.
This pressure has already be-
gun. Since last year, Russia has
waged what amounts to quiet but
effective trade wars against
Ukraine, Moldova and Armenia to
dissuade them from Western alli-
ances. Russias moves indicate a
contempt for the rules of the
World Trade Organization, into
which it was accepted only re-
cently as a member.
Moscow has consistently re-
jected and challenged Ukrainian
sovereignty. Back in 2008, Russian
President Vladimir Putin told U.S.
President George W. Bush that,
from his standpoint, Ukraine and
Russia are one people and that
Ukraine is not a state. It also is an
article of faith among Russian
elites that a truly independent
Ukraine never was and never will
be.
Contempt for Ukraines sover-
eignty and integrity is part of a
larger whole. Russia believes that
none of the post-Soviet republics
or Eastern European states are
truly sovereign, nor that their ter-
ritorial integrity is inviolate. Mr.
Putin has even admitted publicly
that Russia started planning its
war with neighboring Georgia and
training separatist militiamen as
early as 2006, two years before
the outbreak of hostilities.
Today, Moscow is poised to re-
peat this scenario if it deems nec-
essary. Behind its coercive diplo-
macy in Ukraine is the threat of
force, either incited by Russia or
carried out by it. Recent reports of
pro-government militant groups
forming in eastern Ukraine, calls
in the Crimean legislature for Rus-
sia to rescue them from
Ukraines anti-government upris-
ing, and repeated discussions in
the Russian media about partition-
ing Ukraine, all point to a pattern
of escalating pressure from Mos-
cowa pattern that paves the way
for the use of force.
Russia has already granted
thousands of passports to resi-
dents of Crimea and could, for in-
stance, claim that it must rescue
its people, as it did when it in-
vaded Georgia in 2008. Indeed,
Moscow has already rehearsed
similar scenarios. In both 2009
and 2013, it conducted military ex-
ercises from the Arctic to the
Black Sea, in which its forces prac-
ticed coming to the defense of Be-
larus, a Russian ally, in response
to intervention from Eastern Euro-
pean states. Apart from the fact
that these exercises were clearly
rehearsals for a general European
war, they also laid the intellectual
foundation that Russia can and
will defend Russian citizens
abroad.
This could well happen in
Ukraine. As part of its November
2013 agreement to bail out
Ukraines government with cheap
loans and gas, Moscow induced
Kiev to agree to build a bridge
over the disputed land around the
Kerch Strait in the Sea of Azova
bridge that could serve as an ex-
cellent highway for an invading
army.
Once the Olympics end, Mos-
cow will be free to indulge its im-
perial fantasies if the EU and
Washington cannot act together in
Ukraine. If Europe remains inac-
tive, Russia may well feel safe to
use force to secure Ukraine on its
ownor to incite like-minded
forces to do so on its behalf.
But if Europe acts decisively
and quickly to sanction the cur-
rent Ukrainian government and
formulate an economic and politi-
cal package to stabilize the coun-
try, it can yet help to blunt Rus-
sias expansionist impulses and
secure Ukraines Westward trajec-
tory.
Mr. Blank is the senior fellow for
Russia at the American Foreign
Policy Council in Washington, D.C.
BY STEPHEN BLANK
Last Chance for Europe in Ukraine
Once the Olympics end,
Moscow will be free to
indulge its imperial fantasies.
Paul Beckett, Asia Editor
Dean Napolitano, Senior Editor
Miguel Gonzalez Jr., Senior News Editor
Hugo Restall, Editorial Page Editor
Tomasz Rustowski, Institutional Sales
Charlotte Lee, Circulation Sales
Mark Pope, Advertising Sales
Anjali Kapoor, Marketing
Simon Wan, IT
Published since 1889 by
Dow Jones and Company
2014 Dow Jones & Company. All Rights Reserved
Takeover wars seem to have
lost their sizzle. What happened
to the battles of corporate goli-
aths? Where have they gone,
those swaggering deal makers?
Harriman vs. Hill is a corporate
dust-up that takes us back to the
beginning of the 20th century,
when tycoons who traveled by
private rail merrily raided each
others empires while the world
around them cringed.
The title charactersEdward
Harriman and James J. Hill
though today strangely forgotten,
were among the most powerful
railroad barons in the country.
Their respective bankersJacob
Schiff and J.P. Morgan Sr.were
the very captains of Wall Street.
At the time, railroads were
Americas most important indus-
try, and moguls dreamed of con-
trolling a westward route connect-
ing Chicago to the Pacific
Northwest. Yet few suspected that
the mother of all battles was to
commence when, in the spring of
1901, the stock of Northern Pa-
cific, a down-at-heel road connect-
ing St. Paul, Minn., to Portland,
Ore., mysteriously began to rise.
Among those who didnt pay
sufficient heed was Morgan, who
was off buying art in Europe. It
was evening in Provence when the
banker learned, via coded tele-
gram, that Harriman, backed by
Schiff, was on the verge of acquir-
ing the Northern Pacific. Thanks
to its partial control of another
line, the Northern Pacific was the
key to railroad supremacy.
Now alarmed, Morgan gave or-
ders to buy at any price. Then
all hell broke loose. Over two
days, the stock of the Northern
Pacific soared to 143, a gain of
30%. Naturally, this steep rise
commanded the attention of short
sellers, who had borrowed stock
and sold it, betting on a decline.
Unhappily for them, over the next
two days the stock climbed to
1,000. Good horror movies have
been made of less.
The shorts, desperate for cash,
sold whatever else they owned,
precipitating a crash. The overall
market plunged 20% in four days;
fortunes were lost in minutes. A
woman in New York, escorted by
her butler, exited a horse-drawn
hansom and asked the price of
U.S. Steel preferred. Hearing the
reply, she gasped: I am utterly
and completely ruined, I havent a
dollar to my name.
Mr. Haeg conveys a vivid pic-
ture of the Gilded Age in splen-
dor and in turmoil. Champagne
still flowed in Peacock Alley in
the Waldorf-Astoria, but fist-
fights erupted on the floor of the
exchange, and a young trader
named Bernard Baruch skirted di-
saster with the help of an inside
tip, then perfectly legal. There
were scant rules governing stock
trading, the author reminds us
no taxes, either. If you won in
the market, you kept it all.
In that era, moguls were left to
clean up their own mess. The
principals in the fight put aside
their rivalry and, over the next
few months, combined three rail-
roads into a jointly owned holding
company known as Northern
Securities. It would be billed as an
investment firm to avoid looking
like a monopoly. President William
McKinley was a friend to such
business combinations, known as
trusts, but in September of that
year McKinley was assassinated.
Enter his successor, Theodore
Roosevelt, whose weakness for a
good crusade gave the principals
palpitations. T.R. promptly
brought suit against Morgan and
others for violating the Sherman
Anti-Trust Act. Morgans response
was a classic: Send your man to
see my man and tell him to fix it
up. But such chummy
arrangements were no longer pos-
sible. The Gilded Age was over;
Progressivism was on the march.
The Sherman Act had been law for
a dozen years, but no one knew
what it meant. T.R. intended to
find out.
Mr. Haeg isnt much a fan of
government lawsuits, or govern-
ment anything, but his story re-
minds us that antitrust was in-
vented for a reason. Businessmen
of a century ago didnt place
competition on the revered ped-
estal where, supposedly, they put
it today. Merger and monopoly
were considered preferable to the
chaos of competition. Railroads
agreed to stay out of one an-
others way to avoid rate wars,
honoring what the tycoons called
a community of interest. When
the Supreme Court had its say, its
5-4 ruling broke up Northern Se-
curities, paving the way for more
antitrust prosecutions.
One pleasure of Harriman vs.
Hill is the sense of how little has
changed. Stock speculators still
chase rumors as though their life
depended on it, and the world re-
mains censorious of Wall Streets
outsize profits. But the
protagonists back then make to-
days takeover artists seem tame
indeed. Hill in particular was a
business genius equally at home
with engine boilers and Shake-
speare. And Morgan wielded con-
trol, through a series of trusts, of
no less than a sixth of the rail-
road track in America. To Mr.
Haegs credit he also depicts the
banker as affectingly devout,
singing hymns at home on Sun-
day evenings.
Though hardly a cheerleader,
Mr. Haeg is admiring of his cast,
nostalgic for the laissez-faire
world they inhabited. Observing
that the economy wasnt upset by
the stock markets mayhem, he
concludes that, in a perverse
way, the market had worked. It
didnt seem so to people at the
time.
Mr. Haegs epilogue rambles
on about how Congress, the In-
terstate Commerce Commission
and other government entities
doomed the railroads to oblivion.
Except, of course, that they made
a comeback. The three lines
owned by Northern Securities
were recombined, in 1970, under
the mantle of Burlington North-
ern. As the author recounts with
satisfaction, business got the last
word. Today the Burlington is
controlled by a modern tycoon,
Warren Buffett.
Mr. Lowenstein is the author of
The End of Wall Street and
Buffett: The Making of an Amer-
ican Capitalist.
[ Bookshelf ]
BY ROGER LOWENSTEIN
When Titans Tie the Knot
Harriman vs. Hill
By Larry Haeg
(Minnesota, 375 pages, $29.95)
Businessmen a century ago
didnt place competition
on a pedestal. Merger and
monopoly were preferable.
If Brussels remains inactive, Putin may feel safe to use force in Ukraine.
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Comments? The Journal
welcomes readers responses to
all articles and editorials. It is
important to include your full
name, address and telephone
number. Please send letters to
the editor to: Letters@WSJ.com
THE WALL STREET JOURNAL. Monday, February 17, 2014 | 11
The $1.1 trillion spending bill
signed into law by President
Obama last month did not include
a crucial change in the U.S. finan-
cial contribution to the Interna-
tional Monetary Fund. By refusing
to accommodate the White
Houses strenuous pleas to in-
crease the IMFs discretionary
loan budget, Congress effectively
rejected an international agree-
ment brokered at the 2010 G-20
meetingand set off cries in some
Washington quarters of a new iso-
lationism.
Critics were right that this was
a big deal, but wrong in the way
they and the administration have
portrayed it. At a meeting of the
Council on Foreign Relations,
Treasury Secretary Jacob Lew said
changing the IMF funding was
critical but that the administra-
tion didnt get it done. He was
obviously embarrassed by what
the White House considered a
broken promise to the other G-20
countries, all of which approved
the agreement. But the real broken
promise was by the IMF, thanks to
an abrupt decision it made that
increases risks to the world finan-
cial system.
The 2010 agreement sensibly
shifts IMF voting power toward
those emerging market countries
such as Brazil, China and India
whose economies have grown rap-
idly in recent years and away from
the slow-growing European
economies. But the agreement also
doubled the funds that the IMF is
free to loan to any country it
wishes, from Greece to Grenada.
Thats where the trouble lies.
While the G-20 was reaching
agreement on the funding boost,
the IMF was quietly breaking an
earlier, far-reaching agreement on
how such funds were to be used.
That agreement, called the excep-
tional access framework, set cri-
teria for countries seeking access
to huge IMF loans. The framework
was put in place in 2003 as a re-
sponse to the recurrent emerging-
market financial crises raging
since the 1990s. It barred the IMF
from making new loans to coun-
tries with unsustainable debts.
Such loans effectively bailed out
creditors, raised the debt burden
on a countrys citizens, encour-
aged irresponsible fiscal policy, in-
creased risk-taking, and thereby
created a crisis atmosphere.
Since 2003, countries and their
creditors had to restructure and
write down debt to a sustainable
level before the IMF would grant
them any new loans. The point
was to reduce the bailout mental-
ity, and it helped improve the poli-
cies and economic performance of
emerging markets. While this ex-
ceptional access framework was in
force, few large crises originated
in emerging-market countries, and
these countries weathered the
2008 financial crisis far better
than most expected.
Then the Greek sovereign-debt
crisis emerged in 2010. Rather
than sticking to its ruleno loans
to a country with unsustainable
debtthe IMF simply changed the
rule, perhaps under pressure from
euro-zone countries and their
banks, which held a large fraction
of Greek debt. The IMF declared
that it could make new loans if
there was also a high risk of in-
ternational systemic spillover,
then claimed, with very little evi-
dence, that such a spillover risk
was high and approved a 30 bil-
lion loan to Greece without any
debt restructuring.
The change in policy came at
the same time the Greek loan was
approved, which was strong evi-
dence that the rule was broken
solely to allow for the loan. Some
argue that the change was made
surreptitiously: According to min-
utes of the May 9, 2010, Executive
Board meeting on the Greek bail-
out decision, the Swiss representa-
tive to the IMF noted that the IMF
staff had silently changed . . . i.e.
without a prior approval by the
board . . . the exceptional access
policy.
The Greek economy deterio-
rated sharply under its heavy debt
burden after the loan, and by Feb-
ruary 2012 all parties admitted
that a restructuring was essential.
Greek debt was written down by
about 60%, with some arguing
more may be required. An earlier
and larger restructuring could
have prevented much of this pain.
Because of the disappointing
results of this too little too late
approach, there are now new pro-
posals by IMF staff and others to
fix and clarify the exceptional ac-
cess framework and insist on ear-
lier restructurings. One of the pro-
posals is to create a new
sovereign debt restructuring
mechanismessentially a central-
ized global bankruptcy institution
for countrieswhich could further
politicize and thereby destabilize
the world financial system.
This unwieldy proposal was re-
jected a decade ago when the
framework agreement was first
adopted in favor of decentralized
collective action clauses. Such
clausesincorporated in each sov-
ereign bond contractallow a
supermajority of creditors to
agree to a restructuring of debt
that is binding on all creditors. By
providing for a more orderly
workout process than sudden
damaging defaults, such clauses
lower the risk of international
spillovers.
Instead of creating a new
global mechanism for restructur-
ing sovereign debt, the IMF should
simply reinstate and recommit to
its exceptional access rules. To
make this commitment more cred-
ible, sovereign-debt collective ac-
tion clauses could be strength-
ened-to allow, for example, the
orderly adjustment of the terms of
all outstanding bonds together,
rather than one bond issue at a
time.
Congress can insist that the
IMFs rules and limits on lending
be reinstated and adhered to be-
fore increasing the amount of U.S.
funds available for such lending.
While some will continue to com-
plain about a new isolationism,
the global financial system will
benefit if Congress stands firm.
Mr. Taylor, a professor of eco-
nomics at Stanford University and
a senior fellow at the Hoover In-
stitution, served as Treasury un-
dersecretary for international af-
fairs from 2001 to 2005.
International Monetary Fund Managing Director Christine Lagarde.
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The IMF Is Unhappy With Congress? Good
BY JOHN B. TAYLOR
As the Syrian civil war ap-
proaches its fourth year, pros-
pects for peace seem dim. The ne-
gotiations last week in Geneva
showed as little progress as those
late last month, for two clear rea-
sons: First, U.S. Secretary of State
John Kerrys hope that a resur-
gent Assad regime would offer
concessions is a fantasy. Second,
there is little correlation between
the moderate opposition groups
who have Mr. Kerrys diplomatic
blessing and the extremists who
hold increasing sway inside Syria.
In one overlooked corner of
Syria, however, moderates have
successfully pushed back the re-
gime and defeated al Qaeda. As
diplomats convened in Geneva in
January, Syrian Kurds, Arabs and
Christians met in Amuda, a small
town in northeastern Syria dotted
with mosques and churches. After
debating a new charter, civil soci-
ety leaders from across Hasakah
province swore in a transitional
council to govern until elections,
which will be held in May.
Syrian Kurds have suffered
many of the same deprivations
and atrocities that their Iraqi
counterparts did under Saddam
Hussein. A park in Amuda com-
memorates a 1960 cinema fire
that killed 150 local childrena
tragedy locals blame on the Syr-
ian government, which had spon-
sored the screening and chained
the doors. Even as Hasakah prov-
ince, which is home to the major-
ity of Syrian Kurds, became a
source of Syrias modest oil
wealth in the last decade, the re-
gime kept it underdeveloped.
In 2004, Bashar Assads regime
killed more than 30 in Qamishli,
the regions largest town, after
Kurds publicly demanded an end
to Baathist rule. And the Assad
regime stripped many Kurds of
Syrian citizenshipa necessity to
own land, get an education and
hold government jobs.
The placidity of the province
was hard-won. The Popular Pro-
tection Units (known by their
Kurdish acronym YPG) have been
the most effective militia in Syria
against al Qaeda. Provincial lead-
ers, both Kurdish and Arab, have
also shown that they are compe-
tent administrators: Municipal
garbage trucks make their weekly
pickups; cars fill up at gas sta-
tions; children walk to schools
alone; and both veiled and
unveiled women shop without
fear.
The local administration has
also established community cen-
ters to resolve conflict on a neigh-
borhood level, and courts are
there when consensus is not pos-
sible. I spent an afternoon late
last month watching families at a
Qamishli small-claims court argue
their cases in both Arabic and
Kurdish.
Not all is well, though. Elec-
tricity is scarce. Blockaded by the
Syrian government, Turkey and
Iraqi Kurdistan, some foodstuffs
are running short, as is medicine
for diabetes and other chronic ill-
nesses. Just as the United Nations
once deferred to Saddam Hussein
vis--vis the Iraqi Kurds, so too
does it now defer to Assad by re-
fusing to work with Kurdish au-
thorities. The Syrian Red Crescent
supplies only those pockets of the
region that remain under Assads
control. Nevertheless, the prov-
ince has opened its doors to tens
of thousands of displaced Arabs
from Aleppo, Homs and else-
where.
After decades of ignoring Iraqi
Kurds, Washington came to em-
brace them as their best allies in
Iraq. Mr. Kerry, however, refuses
to learn from past mistakes. The
leaders of Hasakah province re-
ceive no invitations to the Geneva
peace talks, and the State
Department refuses to talk to
them for three reasons.
First is Turkey. The Democratic
Union Party (PYD), which enjoys
about 90% local support, has links
to the Kurdistan Workers Party
(PKK) that once fought an insur-
gency inside Turkey. The two
sides, however, signed a cease-fire
last March, and no Syrian Kurd
ever attacked Turkey. That Turkey
has labeled the PYD a terrorist
group is ironic, given that Turkey
both supplies and allows jihadists
transit into Syria. Yet, when given
a choice between al Qaeda and
secular Kurds, Ankara has chosen
the former. Washington should
pick the latter. Mr. Kerry should
not insist on being more Turkish
than the Turks if it means em-
powering Islamic radicals.
Second, American diplomats
accuse Syrian Kurds of refusing to
cooperate with the Syrian Na-
tional Coalition, the main opposi-
tion coalition. This charge is true.
Kurds and local Christians, how-
ever, explain that Mr. Kerry ig-
nores extremism and Arab chau-
vinism within the coalition, and
that it does not respect federalism
or reflect reality on the ground.
Third, the State Department
accuses Syrian Kurds of cooperat-
ing with Assad. Here, there is
some truth. The Assad regime
controls pockets of Qamishli. Syr-
ian Kurds fly to Damascus and
Latakia to attend university. And
Assad pays salaries to some civil
servants who moonlight for the
local autonomous government.
Then again, Iraqi Kurdish lead-
ers like Masoud Barzani and Jalal
Talabani cooperated with Saddam
Hussein until 2003 in similar
ways. Kurdish YPG officials say
their truce with Assad lets them
concentrate on al Qaeda and save
lives: If the truce ends, sur-
rounded Syrian army troops
would either fight to the death or
surrenderand surrender would
mean exposing their families to
torture, arrest or death.
The Kurds understand this re-
ality. Accusations that their truce
translates into regime sympathy
rile these Kurds, many of whom
bear scars from Assads prisons
and point out that Mr. Kerry now
talks to regime officials more than
they do.
With a terror-sponsoring re-
gime and a terror-embracing op-
position, American officials are
right to be frustrated by Syria.
Just as in Iraq, however, the
Kurds provide an alternative, fed-
eral model. That they are also sec-
ular and pro-American is icing on
the cake. How ironic it is, then,
that the State Department seems
so committed to making them pa-
riahs.
Mr. Rubin is author of Dancing
with the Devil: The Perils of En-
gaging Rogue Regimes (Encoun-
ter, 2014).
BY MICHAEL RUBIN
The U.S. Gets the Kurds WrongAgain
The International Monetary
Fund needs to get its house
in order before Washington
green-lights more money.
In Iraq, Washington ignored
them until it discovered
that they were its best allies.
Now those in Syria
are being neglected.
OPINION
12 | Monday, February 17, 2014 THE WALL STREET JOURNAL.
As Children
Get Fatter,
Doctors Turn
To the Knife
Bariatric Surgery Is Booming in the Gulf States
D
aifailluh al-Bugami was just a year old
when his parents noticed that his lips
turned blue as he slept at night. It was
his weight, doctors said, putting pressure on
his delicate airways.
Now Daifailluh is 3, and at almost 28 ki-
lograms he is nearly double the typical
weight of a child his age. So the Bugamis are
planning the once unthinkable: To have their
toddler undergo bariatric surgery to perma-
nently remove part of his stomach in hopes
of reducing his appetite and staving off a
lifetime of health problems.
That such a young child would be consid-
ered for weight-loss surgerysomething
U.S. surgeons generally wont dounder-
scores the growing health crisis here and
elsewhere in the Middle East. Widespread
access to unhealthy foods, coupled with sed-
entary behavior brought on by wealth and
the absence of a dieting and exercise cul-
ture, have caused obesity levels in Saudi
Arabia and many other Gulf states to ap-
proach or even exceed those in Western
countries.
While solid national data are hard to
come by, some experts say that obesity has
turned into a serious health problem for
Saudi children, with an estimated 9.3% of
school-age youths meeting
the World Health Organiza-
tions body-mass-index cri-
teria for obesity, according
to research published in
2013 in the Saudi Journal of
Obesity. About 18% of
school-age children in the
U.S. were considered obese
in 2010, according to the
Centers for Disease Control
and Prevention.
Daifailluhs doctor, Aayed
Alqahtani, is a leading advo-
cate of a radical approach to
the problem. Patients travel
to him from across the
country and the Gulf region.
Over the past seven years,
he has performed bariatric
surgery on nearly 100 chil-
dren under the age of 14, which experts on
the procedure believe is the largest number
performed by one doctor on young children.
Dr. Alqahtanis work is being watched
amid a global debate about the appropriate
age for bariatric surgery. In the U.S., the
minimum is generally considered 14. The
World Health Organization, in a 2012 report
on pediatric bariatric surgery, concluded
that there is a dearth of data available on
the long-term outcomes of the procedure in
children and that a conservative approach
is necessary until long-term studies are con-
ducted.
Bariatric surgery has been embraced as
an effective and relatively safe procedure
for morbidly obese adults. The concern with
children revolves mostly around nonsurgical
risks, such as how the abrupt change in nu-
trition could affect long-term brain develop-
ment and sexual maturation.
Dr. Alqahtani says the decision to oper-
ate on Daifailluh is a difficult one because of
his age. But after nearly two years of con-
sultation with the clinic, Daifailluhs obesity-
related medical problems havent gotten any
better. We should not deprive our patients
from bariatric surgery based on their age
alone, the surgeon says. If they have
[medical] conditions that threaten their
lives, then we should not deny the bariatric
surgery.
The worsening obesity problem here also
is manifesting itself in other ways. Some
20% of the Saudi adult population has Type
2 diabetes, a condition linked to obesity, ac-
cording to the International Diabetes Feder-
ation, compared with 8.3% in the U.S., ac-
cording to the CDC. The cost of diabetes
treatment in Saudi Arabia is expected to
rise to $2.4 billion in 2015, more than triple
that spent in 2010, according to a recent
study in the Journal of Family and Commu-
nity Medicine.
Obesity, particularly among women, has
become rampant across much of the Middle
East, particularly in oil-rich
Gulf nations. In Kuwait, al-
most half of adult women
are considered obese, while
44% of Saudi women and
45% of Qatari women meet
the criteria, according to
the International Associa-
tion of the Study of Obe-
sity. Experts says Saudis,
in particular, are more
likely to carry certain
genes linked to obesity.
Saudi lifestyle and par-
enting practices may exac-
erbate the problem, ac-
cording to doctors at
weight-loss clinics. Nannies
or cooks are often em-
ployed, so parents may not
know what their children
are eating. Saudis often are coaxed to eat
large quantities of food when visiting rela-
tives and friends.
In Riyadh, physical activity is limited,
particularly for girls, and high temperatures
and few green spaces make walking diffi-
cult. School gym classes generally take place
just once a week. Western-style fast food is
abundant, particularly at the air-condi-
tioned malls frequented by children and
families.
Bariatric surgery has become an ac-
cepted treatment among obese Saudi adults
and is paid for by the government. An esti-
mated 11,000 bariatric surgeries were per-
formed on Saudis in 2012, according to Dr.
Alqahtani.
The surgery, of which there are several
types, generally reduces the size of the
stomach and, with some techniques, rear-
ranges the digestive path to bypass much of
the intestines. Some types are reversible but
generally considered less effective. After the
surgery, patients must eat very small
mealsideally for the rest of their lives.
Many studies have shown that adults, on av-
erage, lose over 50% of their body weight
after surgery.
Increasingly, youngsters are heading to
the operating room here, where parents see
no other options. These days, Dr. Alqahtani
performs surgery on three to four youths a
week.
I have seen in my clinic patients who
cannot sleep lying downthey sleep sit-
tingbecause of sleep apnea, and their age
is 10 years, sometimes 5 years, says Dr.
Alqahtani, a professor in the college of med-
icine and an obesity specialist at King Saud
University.
Pediatric surgeons in the U.S. say they
also are facing demands from families to op-
erate on younger patients. Thomas Inge,
surgical director of the Surgical Weight Loss
Program for Teens at Cincinnati Childrens
Hospital, says he will be operating on a 12-
year-old later this month. He says that as
younger and younger children are referred
for consideration of surgery, care teams will
need to carefully weigh the pros and cons.
Evan Nadler, a pediatric surgeon at Chil-
drens National Medical Center in Washing-
ton, D.C., is considering doing the operation
on two young children. He and the family of
a 7-year-old D.C. boy have agreed that sur-
gery likely is the best option, he says. The
family of an 8-year-old from the Middle East
has decided to wait until their daughter is
older and can better understand the sur-
gery, he says.
Many doctors say they arent ready to
follow Dr. Alqahtani yet. Kirk Reichard,
chairman of the pediatric-surgery commit-
tee for the American Society for Metabolic
and Bariatric Surgery, notes that there are
no data to show that surgery doesnt affect
young childrens long-term sexual matura-
tion or cognitive functioning. The brain,
particularly in growing children, is sensitive
to nutrition and needs enough energy to
mature properly. Nutrition also has the po-
tential to affect hormones linked to sexual
maturation.
Dr. Alqahtani says he has seen evidence
of normal growth following the procedure in
his under-14 patients, many of whom are
now four years postsurgery.
We will certainly use his experience to
inform us in some ways, but [Dr. Alqahtanis
work] wont take the place of trials, says
Dr. Reichard.
One of the main criticisms from some
weight-loss experts about performing the
surgery on those under 14 is that changes in
diet and exercise can prevent further weight
gain. In addition, says Dr. Reichard, there
are a lot of other therapies short of surgery
that can be helpful in managing related
medical conditions.
Saudi Arabias Dr. Alqahtani says he re-
quires his child patients to enroll in a
weight-loss program for at least six months
because patients able to lose even a bit tend
to have better outcomes after surgery. But
he says that by the time families come to
him, their children have such substantial
health problems it is generally too late for
diet and exercise alone.
Dr. Alqahtani was trained as a surgeon at
McGill University in Montreal and at a mini-
mally invasive surgery center in Denver.
When he returned home to Riyadh in 2002,
he says, he was inundated with pediatric pa-
tients so obese they were suffering from ad-
vanced stages of fatty liver disease, diabetes
and sleep apnea, a disorder in which pa-
tients repeatedly stop breathing for short
periods during sleepall diseases typically
not seen until middle age.
Om Abdullah Asiri says she tried to help
BY SHIRLEY S. WANG
Riyadh, Saudi Arabia
IN DEPTH
Daifailluh al-Bugami, 3 years old and weighing almost 28 kilograms, is awaiting bariatric surgery.
*Body-mass index of 30 or more
Sources: United Nations; Saudi Journal of
Obesity; Aayed Alqahtani
The Wall Street Journal
Saudi Trouble
Saudi Arabia faces a growing
weight-related health crisis.
Overall obesity rate* 35.2%
Obesity rate for
school-age children 9.3%
Obesity rate for
preschool-age children 6.0%
Bariatric surgeries
in 2012 11,000
J
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y
f
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THE WALL STREET JOURNAL. Monday, February 17, 2014 | 13
IN DEPTH
her 11-year-old son lose weight by restrict-
ing his eating at home. But he would eat
fast food while out with his friends and
plays videogames for hours on end, she
says. I cant control him outside the home,
she says.
He grew to 113 kilograms. His body-mass
indexa calculation that uses weight and
height to estimate percentage of body fat
was 61. A BMI of 40 or above is the most se-
vere obesity category, according to the
World Health Organization.
Ms. Asiri traveled with her son, Abdullah,
from their home in Abha, more than 960 kilo-
meters south of Riyadh, to see Dr. Alqahtani
for the operation. Lying on a hospital bed the
day before his surgery, Abdullah said he is
happy and ready for the surgery.
His mother says surgery is the best solu-
tion for Abdullah, who has high blood pres-
sure, fatty liver, hip pain and severe sleep
apnea. Afterward, he wont have a choice
but to eat better, she says. The surgery will
make him change. She says he dreams of
playing soccer with his friends.
The procedure Dr. Alqahtani performs is
called the gastric sleeve, which slices off a
portion of the stomach but leaves the rest of
the digestive tract intact. It is gaining in
popularity because of its good weight-loss
results and minimal side effects. The opera-
tion, conducted through tiny incisions in the
abdomen, takes him just 30 minutes.
One recent morning, he operated on a
20-year-old, two 17-year-olds, a 12-year-old,
then Abdullah, who was then 10.
Complications can include bleeding in
about 10% of cases, and leaking and blood
clots in 1% to 2%. Dr. Alqahtani says he has
had only two leaks in 1,700 cases, neither in
children.
Dr. Alqahtani says each of his pediatric
patients has lost at least some weight, and
nearly three-quarters have lost more than
50% of their initial body weight. Abdullah
has lost close to 23 kilograms since his sur-
gery about two months ago, according to his
29-year-old brother, Ahmad.
Dr. Alqahtani says about 90% of his pa-
tients have seen medical conditions such as
diabetes and hypertension clear up, accord-
ing to a paper scheduled for publication in
the journal Surgery for Obesity and Related
Diseases. He published outcomes on 108
children in the peer-reviewed Annals of Sur-
gery journal in 2012.
Recovery involves a six-week transition
diet starting with clear liquids and pured
food. Patients eventually can resume solid
foods at much-reduced quantities. At first,
patients feel full after just one to two
spoonfuls of food, though they gradually can
eat more as their stomachs stretch.
Some bariatric-surgery experts have
raised questions about whether children are
capable of maintaining the restrictive life-
time diet after surgery or whether they will
sabotage the procedure when they become
teenagers and have a greater autonomy to
eat what they want. Some experts question
whether parents should make such a drastic
and permanent decision for a child.
The decision has been excruciating for
the family of Daifailluh, the toddler from
Taif. Daifailluh was referred to Dr.
Alqahtanis clinic about two years ago after
difficulty breathing sent him to the inten-
sive-care unit at a hospital in his hometown.
Doctors there determined the toddler was
seriously overweight. His mother, Hessa Sa-
lem al-Bugami, says she tried to improve his
diet but didnt have good guidance until she
came to Dr. Alqahtanis clinic, a trip of about
800 kilometer from Taif. I feel like I
failed, she says.
At first, the family wanted Daifailluh to
lose weight without the operation. Ms.
Bugami says her son has always had an
open appetite and never refuses food. She
says she feeds him brown bread and boiled
chicken and rice, and limits his portions,
hiding the rest of the food. But his obesity
hasnt improved, she says.
Daifailluh will cry and sometimes throw
temper tantrums when he wants food, she
says. She has tried distracting him with
toys, locking the two of them in a room to
play for so long she ended up missing her
own meal.
When he starts crying, its hard not to
give him any of the food, to make the crying
stop, she says. I feel like I work really
hard, but its just too much on me.
Daifailluh, who was hospitalized again
for pulmonary problems, is waiting for a
surgery date, which will come if he gets fi-
nal medical clearance from Dr. Alqahtani.
The entire family is worried about the
surgery, particularly the effects of anesthe-
sia and whether the surgery will reduce his
appetite too much. Ms. Bugami also worries
that her son will regain the weight when he
leaves the house eventually and is no longer
under her watch.
But that is a concern for another day.
Right now is the most scary situation, she
says.
S
h
i
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l
e
y
W
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g
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W
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n
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l
Projections Projections
*includes Europe, North America, Australia, New Zealand and Japan includes the Middle East; excludes Japan excludes Australia and New Zealand **includes the Caribbean
Note: Overweight is dened as a body-mass index of 25 to 30 and obesity as a BMI of 30 or more.
Sources: The American Journal of Clinical Nutrition; World Health Organization The Wall Street Journal
Weight Problems
Rates of overweight and obese children age 5 and under are rising in much of the world, but the problem
is more severe in developed countries. Numbers are expected to rise signicantly over the next decade,
especially in afuent Middle Eastern countries, partly because of sedentary behavior and widespread
access to unhealthy foods.
Projections
0
5
10
15
20%
90 95 00 05 10 15 20
Africa
12.7%
Asia
6.8%
Latin
America**
7.2%
Oceania
3.8%
0
5
10
15
20%
90 95 00 05 10 15 20
Developing
countries
8.6%
Developed
countries*
14.1%
in 2020
30
0
5
10
15
20
25
%
90 95 00 05 10 15 20
Western
Asia
29.1%
We should not deprive our patients
from bariatric surgery based on their age alone.
Surgeon Aayed Alqahtani (above center)
14 | Monday, February 17, 2014 THE WALL STREET JOURNAL.
FROMPAGE ONE
TalibanTightenHoldonPakistansBiggestCity
groups leadership in the tribal areas
along the Afghan border, security of-
ficials said.
The January assassination of Ka-
rachis most prominent counterter-
rorism police officer, Chaudhry
Aslam, showcased the militants
reach and had a chilling effect on
the police force, officers said.
Everyone now is at a loss about
who will step into Chaudhry Aslams
shoes, said Omar Shahid Hamid, a
senior counterterrorism officer now
on leave. He had become a symbol,
someone who is standing up to
[Tehreek-e-Taliban Pakistan].
In January, the militant group at-
tacked police officers, shot and
killed three journalists, repeatedly
bombed paramilitary Rangers who
are helping carry out the crackdown,
gunned down three polio-vaccina-
tion workers, and slit the throats of
six devotees visiting a shrine. Kara-
chi police said 27 officers were
killed in January, after 168 were
killed last year.
Mr. Sharif, concerned that his
economic-revival plans would be un-
dermined by spreading mayhem, ini-
tiated the security operation in Sep-
tember. Karachi, a fast-growing city
of at least 20 million, has a huge in-
dustrial base, the countrys only ma-
jor port and is the nations center of
banking and finance.
Some officers said they fear local
political support is fading for the
Karachi operation, which they view
as a last chance to regain control of
the city from TTP and other militias.
The operations implementation de-
pends largely on the Sindh provin-
cial government, which is run by the
opposition Pakistan Peoples Party,
and which controls Karachis police.
There are signs of tension between
the Rangers, who answer to Islam-
abad, and the provincial govern-
ment, which is based in Karachi, se-
curity officials and politicians said.
This is a difficult path, said In-
terior Minister Chaudhry Nisar Ali
Khan, visiting Karachi on Thursday.
But, God willing, we will bring
peace back to Karachi.
Ahmed Chinoy, head of the Citi-
zens Police Liaison Committee, a
statutory body that works with the
Continued from first page
police to reduce crime, said parts of
Karachi were still too dangerous for
regular patrols, while the crackdown
targeted regular crime. While the
focus of the operation was on other
crimes, the militants got breathing
space and took advantage.
Last year, five different police
chiefs served Karachi, disrupting the
battle against crime. The current
chief, Shahid Hayat, said that at any
given time, he had about 7,000 offic-
ers available to be deployed on the
streets, out of a total force strength
of 27,0009,000 officers are kept on
personal security duty for politicians
and other officials.
It is only in recent weeks, he
added, that the operation has shifted
focus to jihadi groups such as TTP.
Im being asked to control Kara-
chi with such small numbers of po-
lice, said Mr. Hayat. Policemen are
being killed day in, day out. But
were still fighting.
More than 13,000 people have
been arrested in the sweep since
September, in more than 10,000
raids by police and the paramilitary
Rangers force, the provincial Sindh
government said. But officials and
residents said it has left largely un-
touched the poor outlying neighbor-
hoods that remain under TTP con-
trol, encircling the city, including
one adjacent to the new U.S. Consul-
ate compound.
TTP is the most aggressive
armed group operating in multieth-
nic Karachi, alongside the ethnic Ba-
luch gangs in Lyari, and the Mutta-
hida Qaumi Movement, a party that
represents the descendants of Mus-
lim migrants from current India, and
that has traditionally dominated Ka-
rachi politics.
The Karachi security operation
led to the arrest of just 63 TTP
members through the end of Janu-
ary, police said. That compared with
the arrest of 296 people affiliated
with the MQM, 101 with links to the
Awami National Partya secular
Pashtun political partyand 171
members of Lyari gangs.
Sharfuddin Memon, the adviser
to the Sindh provincial chief minis-
ter on security issues, said the oper-
ation had led to a 50% drop in assas-
sinations and kidnapping for ransom
in the city. He said police morale is
high but the conviction rate for se-
rious crimes is just 5%.
There has been an impact from
the operation, but if we dont sus-
tain it, we are in trouble, said Mr.
Memon.
Research by The Wall Street
Journal, based on conversations
with security officials and urban
planners, shows TTP still control or
dominate about 470 square miles of
Karachi, or nearly a third of its area,
where at least 2.5 million people
live.
TTPs sway in Karachi extends
right up to Saddarthe city center
and into areas such as Sultanabad, a
ramshackle community next to the
new U.S. Consulate compound.
These are districts with a major-
ity population of Pashtuns, the same
ethnic group as TTPs leadership.
These areas that encircle the city in-
clude Baldia and the Sindh Indus-
trial Trading Estate to the west and
Gadap in the north. Residents in
these areas said TTPs hold had got-
ten stronger over the past year.
Theres been no action against
the main body of the TTP, just
against some smaller factions, said
Khawaja Izharul Hassan, a provincial
MQM lawmaker.
In addition to the main TTP fac-
tion from the Mehsud tribe of South
Waziristan in the tribal areas, long
established in Karachi, the city is in-
creasingly plagued by another TTP
faction from the Mohmand tribal
area, police officers said, along with
TTP Swat.
Islamist militants also have influ-
ence over some non-Pashtun dis-
tricts of the city, such as Lyari in the
southwest where TTP ally Lashkar-
e-Jhangvi has a base. TTP has an
ability to stage attacks across Kara-
chi.
TTP dominates 33 of Karachis
178 administrative unitsknown as
union councils security officials
said. These tend to be the larger, pe-
ripheral, districts, with ever expand-
ing shanty settlements that eat into
the surrounding desert. The mili-
tants are also now getting more edu-
cated recruits, including non-Pash-
tuns, and spreading to neighboring
areas outside Karachi, including Hub
to the west and Jamshoro to the
northeast.
In the areas it controls, TTP is
levying a tax on residents and busi-
nesses, said a businessman in
Sohrab Goth, a Taliban-run neigh-
borhood just north of the city center.
The militant group has set up
courts in neighborhoods to resolve
disputes, which give written judg-
ments, handling matters that include
disagreements over land ownership
and regulating levels of theft from
power lines that they allow, resi-
dents said.
The Taliban milk money from
their own communities, the busi-
nessman said. They have calculated
the worth of every person here.
For instance, on a monthly in-
come of 40,000 rupees ($379), TTP
takes a levy of 1,000 rupees. Concen-
trate blocks made for use in con-
structiona major business in the
Pashtun areasare sold for 18 ru-
pees each, of which three rupees
goes to the Taliban. The business-
man said TTPs hold had hardened
over the past year.
The Taliban have complete con-
trol of Karachi, said Bashir Jan, a
senior member of the Awami Na-
tional Party, the main secular Pash-
tun political party in the city. They
can go anywhere and do what they
want.
Pssst! Heres the Skinny on NBCs Olympic Latte Secret
journalist for NPR, trailed the mys-
tery cup for some distance, its owner
told him that he was out of luck. It
came from the office, she saidthe
Olympic broadcasting center where
NBC has its own secret Starbucks.
The media giant, which paid $775
million for exclusive U.S. broadcast-
ing rights for the Games, has erected
the Sochi Starbucks in its cordoned-
off area of the Olympic media center.
Baristas serve the free java 24-hours-
a-day to the roughly 2,500 people
NBC says it sent here.
Bringing in the joe is a delicate
exercise. NBC flies in a rotating crew
of some 15 baristas from Starbucks
coffee shops in Russia, sets them up
with accommodations in Sochi, and
pays their regular wages. As with
past Games, Starbucks has gladly co-
operated with the effort.
All told, the barista battalion is
larger than the Sochi Olympic teams
of some 57 countries.
One barista working at the covert
facility next to the NBC cafeteria on
Friday night said she had come from
Moscow; another one arrived from
St. Petersburg.
Continued from first page Its what Napoleon said: An
army travels on its stomach, says
John Fritsche, NBCs senior vice
president of Olympic operations.
We, in a lot of ways, operate that
way.
NBCs special Starbucks has inad-
vertently created a coffee buzz. A
stream of branded Starbucks cups
has seeped around the Olympic
grounds in what some initially sur-
mised was a cunning ambush market-
ing campaigna suggestion that
Starbucks and NBC deny.
NBC says its Starbucks doesnt
run afoul of Olympic rules, which
prevent nonsponsor companies from
showing their brands or offering
products at Games facilities. Their
logic: The secret coffee shop is se-
cluded within an NBC facility and
isnt open to the public. Its a per-
sonal item, says Mr. Fritsche, who
calls the drinks perk a huge morale
booster.
Though it looks like a normal out-
post, the private kiosk doesnt offer
the full Starbucks menu. It indulges
drinkers with an array of specialty
espresso and chai drinksbut no
plain black coffee.
Mr. Fritsche says NBC keeps
pretty tight security around the
coffee, but notes that we dont mind
sharing a bit with neighboring
broadcasters.
The International Olympic Com-
mittee is vigilant in keeping at bay
brands that havent paid for sponsor
privileges. In the past, markings on
nonsponsor brands of elevators, light
switches and even thermostats have
been covered up.
Rachel Rominger, an IOC repre-
sentative, says the NBC Starbucks
isnt violating any rules. She says the
broadcasters can bring in supple-
mentary facilities, so long as the
companies providing the services
dont publicize or suggest any associ-
ation with the Olympics.
A spokeswoman for Coca-Cola,
which spent millions of dollars to se-
cure the exclusive rights to sell bev-
erages at the Olympics, said it was
aware of the Starbucks. She said
Coke isnt too concerned about a few
Starbucks cups making their way into
the park.
The Atlanta-based drinks giant
waived its rights to serve coffee at
the Olympics because it doesnt have
a hot-beverage business in Russia.
That allowed McDonalds, which
bought the Olympics retail food
rights, to offer coffee through its Mc-
Caf operation.
The roughly 11,000 media who
have descended upon Sochi can get
their joe from McDonalds, vending
machines or concession stands that
serve nonbranded brew.
For Pittsburgh Tribune-Review
sports columnist Dejan Kovacevic,
the Starbucks lockout has been
tough. As a newspaper journalist, Mr.
Kovacevic cant get past the invisible
velvet rope that bars his access to
the Starbucks. Withdrawal pangs
have set in for the three venti-iced-
chai lattes he normally sucks down in
a single day.
So instead, he goes to McDonalds.
A lot. The chains branch in the media
center basement includes a McCaf
that serves sweet cold drinks like
strawberry-banana smoothies. Mr.
Kovacevic says his wife, seeing his
credit-card activity, asked with some
wonderment recently: You went to
McDonalds eight times in a day?
At one point, Mr. Kovacevic had a
connection who could hook him up
with Starbucks drinks. But that friend
is now working on the other side of
the Olympic Park, leaving Mr. Kova-
cevic to walk around with an empty
green and white cup. He pours vend-
ing machine coffee into it.
Its a status symbol, he explains.
It shows Im not some kind of low-
life.
McDonalds seems unruffled by
the unofficial presence of its rival.
McCaf continues to be a popular
beverage choice for athletes, media
and spectators who want to enjoy a
delicious cup of coffee, a McDonalds
spokeswoman said.
There is precedent here. NBC has
set up its own personal Starbucks at
every Olympics since the 2000 Sum-
mer Games in Sydney, according to
Mr. Fritsche. But Sochi is only the
second time NBC has brought Star-
bucks to a city that doesnt have one.
Turin, the coffee-rich site of the 2006
Winter Games, was the other.
Starbucks opened its first shop in
Russia in 2007 and now has 69 out-
lets in Moscow, St. Petersburg and
Rostov-on-Don. A spokeswoman for
the company said Starbucks plans to
open a shop in Sochi later this year.
5 miles
5 km
Karac hi
Orangi
Town
Gadap
Town
Mangopir
Hub
Baldia Town
Korangi
Industrial
Area
Defence
Housing
Authority
Neighborhood
where
Thursdays
bombing
took place
North
Karachi
Malir
JINNAH INTL
AIRPORT
Landhi
Saddar
Town
KARACHI
PORT
U.S. CONSULATE
CIVIC
CENTER
Sohrab
Goth
Tightening Grip
The Pakistani Taliban have
taken control of parts of
Karachi, Pakistans largest city.
It is the biggest base for the
militant group outside the
countrys tribal areas.
The Wall Street Journal
Approximate areas of
Pakistani Taliban control
A
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a
b
i
a
n
S
e
a
S
H
A
H
R
AH-E-FAISAL
H
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b
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r
PAKI STAN
AFGHANI STAN
I NDI A
300 miles
300 km
Islamabad
Kabul
Karachi
Arabi an
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Monday, February 17, 2014
As of 4 p.m. ET Euro 1.3690 0.15% Yen/US$ 101.83 g 0.34% Yen/A$ 91.88 0.15% Oil 100.30 g 0.05% Gold 1319.00 1.43% 10-year Treasury g 3/32 yield 2.746% 3-month Libor 0.23585
THE WALL STREET JOURNAL. asia.WSJ.com
France Caps Dongfengs Stake
In Peugeot Following Deal
BUSINESS &FINANCE 17
Europes Economic News
Cuts 2 Ways for Investors
HEARDONTHE STREET 28
Credit-Card
Firms Get
Suspensions
SEOULSouth Koreas financial
regulator suspended some opera-
tions of three credit-card issuers for
three months starting Sunday as a
result of the theft of data from as
many as 104 million cards.
KB Financial Group, NongHyup
Financial Group and retailer Lotte
Group have been barred from issu-
ing new credit and debit cards or
extending loans until May 16, the Fi-
nancial Services Commission said
Sunday. All three companies said
they would try to minimize inconve-
nience to customers.
The average South Korean car-
ries four credit cards and uses them
for even the smallest purchases.
Their use has been encouraged by
the government, because it makes it
difficult for businesses to hid e
transactions from tax authorities
and also helps to boost domestic
consumption.
The commission may seek pun-
ishment for company executives in-
volved following the completion of
investigations, it said. It may also
seek to double suspensions to six
months for future cases.
The three companies neglected
their legal duties of preventing any
leakage of customer information
and [complying with] internal con-
trols, the commission said.
Company executives have offered
apologies and deep bows in front of
the media in response to the theft,
which was disclosed in January.
The information was stolen be-
tween October 2012 and December
last year by an individual working at
a credit-services company hired by
the card issuers, prosecutors said in
early January, and then was sold to
two others. The alleged offenders
have been arrested and prosecutors
said the stolen information wasnt
passed further along.
The stolen data includes email
and residential addresses and tele-
phone and identification numbers.
However, passwords werent taken.
BY KANGA KONG
Small Aircraft Score Big Orders in Asia
SINGAPOREMakers of smaller
regional aircraft were big winners at
the Singapore Airshow last week,
signing $5 billion in new passenger-
plane orders and eclipsing those of
their dominant counterparts Airbus
Group NV and Boeing Co.
Brazils Embraer SA surprised
industry watchers on Thursday
with a big order from startup In-
dian carrier Air Costa for 50 jets,
helping illustrate a growing view
that there is now a market emerg-
ing in Asia for commercial aircraft
with capacity of below 130 seats.
A surge in small-plane purchases
could point to a new trend in the
Asian market: a proliferation of routes
that bypass the crowded major hubs
and connect smaller cities directly.
Regional jets and turboprops
produced mainly by companies such
as Embraer, Bombardier Inc. and
ATRhave for years been staples in
commuter airline fleets across the
U.S. and Europe, serving smaller cit-
ies from large airline hubs.
So far, Asia has seen explosive
growth in commercial aviation, but
the focus has largely been on linking
larger population centers, thus re-
quiring larger aircraft.
But emerging low-cost carriers
such as Air Costa and Thailands Nok
Airlines PCL see value in serving
thinner routes that have so far been
ignored by others because of inade-
quate airport infrastructure or lower
earnings potential on those flights.
Patee Sarasin, Nok Airs chief ex-
ecutive, said his airline decided to
have both small and big aircraft on
its fleet so that it can create new
routes and then dominate them by
being the first mover.
Around 200 small regional jets
currently are flying with Asian air-
lines, compared with more than
5,000 larger-capacity planes. Re-
gional jets are likely to play an in-
creasing role as hub busters, bypass-
ing congested hubs such as Jakarta,
said Greg Waldron, the Asia manag-
ing editor at aviation data and infor-
mation provider Flightglobal.
The smaller jets also offer flexibil-
ity for airlines to use the airplanes on
weekends or midday flights, Mr. Wal-
dron said.
Apart from Embraers $2.94 bil-
lion Air Costa order, Canadas Bom-
bardier wrapped up the Singapore
Airshow with new orders and com-
mitments for 17 aircraft valued at
US$852 million at list prices. Sepa-
rately, European plane-maker ATR,
which makes turboprops, sealed new
orders and commitments for 48 air-
craft worth US$1.2 billion.
Airlines typically get steep dis-
counts over list prices, especially on
larger orders.
These figures compare with just
one new order announced at the
show among both Boeing and Air-
bus, involving a deal by Boeing to
sell 15 single-aisle 737 jets worth to
Please turn to page 18
BY GAURAV RAGHUVANSHI
Apple Supplier Prepares $4 Billion IPO
TOKYOJapan Display Inc., the
worlds biggest maker of displays for
smartphones and a key Apple Inc.
supplier, is aiming to raise up to $4
billion in what would be Asias big-
gest initial public offering so far this
year.
The move, if successful, would
represent a rare turnaround for Ja-
pans manufacturing industry, which
has been battered by the rise of Chi-
nese and South Korean rivals.
The company has thrived by tak-
ing advantage of its manufacturing
scale and focusing its resources on
small and medium-size displays, de-
spite earlier criticism that Tokyo was
throwing good money after bad when
it helped set up the firm in 2012.
Japan Display was formed from
the unprofitable liquid-crystal-display
units of Hitachi Ltd., Toshiba Corp.
and Sony Corp., with a Japanese gov-
ernment-backed fund pouring $2 bil-
lion into the combined entity.
In addition to making displays
for Apples iPhone 5S and iPhone 5C,
Japan Displays client list includes
other top U.S. and Asian smartphone
makers, according to people in the
industry.
The display maker on Friday
gave the first concrete numbers on
its lucrative business supplying Ap-
ple, saying that the U.S. company ac-
counts for nearly a third of its reve-
nue.
Apple representatives in Tokyo
couldnt be reached for comment.
Japan Display grabbed a top
share of 17% in the global market for
small and medium-size LCD panels
by value of goods shipped last year,
according to estimates by research
firm NPD DisplaySearch.
Japan Display said Friday it
would offer up to 158 million new
shares in the IPO. That could raise
170 billion, or about $1.7 billion.
The company intends to use the
money to boost its production ca-
pacity and to develop new technolo-
gies. In addition, the current share-
holders will unload part of their
stakes, bringing the total IPO value
to an estimated $4 billion.
While Japanese companies have
lost out to Asian rivals in producing
the panels that go into big televi-
sions, Japan Display and Osaka-
based Sharp Corp. have maintained
their technological edge in making
high-resolution smaller displays.
The Japanese companies have
proved skillful in improving the en-
ergy efficiency of their screensal-
lowing Apple to boast of longer bat-
tery lifeand in helping smartphone
makers make their devices thinner.
Japan Display integrated touch
sensors into its liquid crystal dis-
play, eliminating the need for a sep-
arate touch-screen layer.
The technological lead for Japa-
nese makers has increased espe-
cially after Apples iPhone 5 came
out, said Hiroshi Hayase, a Tokyo-
based analyst for NPD Display-
Search.
Still, analysts say rivals such as
Samsung Electronics Co. and Tai-
wans AU Optronics Corp. are
quickly catching up, and display
prices are coming down.
The commoditization of smart-
phones is already starting. Its un-
certain whether Japanese companies
can make the kind of investment
needed to maintain their edge in
technology as prices go down, Mr.
Hayase said.
People involved in the deal said
they expected solid demand for Ja-
pan Display shares, in part because
investors are reassured that the
company is backed by government
money. Innovation Network Corp. of
Japan, a government-backed invest-
ment fund, currently holds about
70% of Japan Display, while Sony,
Toshiba and Hitachi hold a little less
than 10% each.
For the nine months through De-
cember, the company booked reve-
nue of 483 billion, or just under $5
billion, of which 32% was from Ap-
ple orders. That was slightly higher
than the revenue it brought in dur-
ing the entire year ended March
2013. Japan Display said it made a
small profit in the year ended March
2013, but didnt give profit figures
for the current fiscal year.
The IPO would be Japans largest
since the $8.5 billion offering in
2012 for shares of Japan Airlines
Co., which relisted in Tokyo after a
bankruptcy filing. The final offering
price for Japan Display is set to be
announced March 10.
Japanese shares have slumped
12% this year following a stellar rise
in 2013 on the back of investor
hopes for Prime Minister Shinzo
Abes policies to galvanize the econ-
omy. Still, bankers say the countrys
broader environment for financing
remains strong.
On Friday, Hitachi Ltd. said it
would relist a battery and projector
subsidiary, Hitachi Maxell Ltd., in an
IPO worth about $750 million. The
electronics conglomerate had made
Hitachi Maxell a wholly owned sub-
sidiary in 2010 after the unit suf-
fered steady losses. But as Hitachi
Maxells earnings recovered, the
parent decided to relist its shares.
BY KANA INAGAKI
AND HIROYUKI KACHI
Japan Display was formed from the unprofitable liquid-crystal-display units of Hitachi, Toshiba and Sony, with a Japanese
government-backed fund pouring $2 billion into the combined entity. Above, a clean room at its plant in Mobara, Japan.
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16 | Monday, February 17, 2014 THE WALL STREET JOURNAL.
INDEX TO BUSINESSES AND PEOPLE
Air Costa.......................15
Airbus............................15
Amazon.com................. 19
ANA Holdings...............18
Apple.............................15
AT&T..............................18
ATR................................15
Au Optronics.................15
Banco Santander.......... 17
Bank of China.................4
Bank of America...........20
BNP Paribas..................20
Boeing........................... 15
Bombardier ................... 15
Bright House.................28
Carlyle Group................20
C&C Group.....................17
Charter
Communications........28
Chevron........................... 8
China Metal Resources
Utilization..................20
Comcast ........................ 18
Cox Communications....28
Crdit Agricole..............20
DBS Group Holdings.....23
Deutsche Bank..............21
Dongfeng Motor........... 17
Embraer.........................15
Facebook....................... 19
Fazio Mechanical
Services..................... 19
Fortune Minerals............8
Garuda Indonesia............5
Giant Interactive.......... 20
Goldman Sachs Group... 20
Google........................ 8,18
Hitachi...........................15
HSBC............................... 4
Japan Display............... 15
KB Financial Group.......15
Kickstarter.................... 16
Liberty Media............... 28
Lotte Group...................15
McDonald's..................... 1
Microsoft.......................19
Millennium
Management..............20
Mitsubishi Aircraft.......18
Naver.............................19
NOK Airlines.................15
NongHyup Financial ..... 15
Oversea-Chinese
Banking......................23
PowerShares DB Base
Metals Fund...............22
PSA Peugeot Citron... 17
Qantas Airways..............5
Rakuten.........................19
Rolls-Royce Holdings... 17
Samsung Electronics
................................ 8,15
Socit Gnrale.......... 23
Sony.............................. 15
SPDR Gold Trust .......... 22
SPDR S&P 500 ETF
Trust...........................22
Sprint............................ 19
Starbucks........................1
Symmetry
Investments...............20
Target............................19
Tencent Holdings..........19
Time Warner...................8
Time Warner Cable...... 28
Tokyo Broadcasting
System Holdings.......19
Toshiba..........................15
United Parcel
Service.................... 8,18
Verizon
Communications...18,28
Viber Media.................. 19
Vipshop Holdings..........20
Virgin Australia..............5
Volkswagen...................17
Yahoo Japan..................19
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.
Bondi, Bradley.............. 21
Brown, Jason................20
Casteel, Gary................ 17
Ceresney, Andrew.........21
Choudhrie, Bhanu......... 17
Choudhrie, Sudhir.........17
Cohen, David L..............18
Cohen, Steven A...........21
Cuban, Mark..................21
Eng, Kim........................23
Eun, David.......................8
Fagel, Marc................... 21
Fischer, Frank............... 17
Gallois, Louis................ 17
Gorman, Thomas.......... 21
Gupta, Piyush............... 23
Hauser, Grard..............17
Hug, Peter.....................22
Jury, Stephen................22
Kilian, Gunnar...............17
King, Bob.......................17
Kotecha, Mitul..............20
Kuhn, Wolfgang............21
Lieberman, Sam........... 21
Luschini, Mark.............. 22
Malone, John................ 28
Marco, Talmon..............19
Meir, Edward................ 22
Merk, Axel .................... 22
Mikitani, Hiroshi...........19
Mulligan, John..............19
ONeill, Bill....................22
Patta, Frank.................. 17
Peugeot, Thierry...........17
Reid, Harry....................18
Robinson, Michael........20
Saluzzi, Joe...................20
Samana, Sameer.......... 22
Sheets, Nathan...............3
Silvia, Steve..................17
Sobel, Mark.....................3
Solomon, Matthew.......21
Strickler, Yancey...........16
Tsein, Samuel ............... 23
Tuttle, Stephen.............22
White, Mary Jo............ 21
Worah, Mihir.................22
BUSINESS & FINANCE
Bitstamp Restores Withdrawals
Hackers Had Crippled the Bitcoin Exchanges Operations; Mt. Gox Freezes Deposits
Bitstamp, the manager of the
worlds largest bitcoin exchange,
said Saturday it had restored auto-
mated customer withdrawals, after
they were halted for four days be-
cause of a hacking attack that crip-
pled various platforms for exchang-
ing the digital currency and raised
questions about the security of its
global network.
Separately, Tokyo-based Mt. Gox,
whose struggle with fraudulent cus-
tomer requests paved the way for a
networkwide denial-of-service at-
tack on Tuesday on elements of bit-
coins shared infrastructure, said it
had temporarily frozen deposits.
The freeze was part of software
changes intended to allow Mt. Gox
to restore full operation, including
withdrawals, which have been fro-
zen for more than a week. The Jap-
anese exchange said it would rigor-
ously test the changes before
restoring withdrawal capability and
would update customers on Mon-
day.
Slovenia-based Bitstamp said
that after rigorous testing, we have
restored fully automated processing
for Bitcoin withdrawals.
Bitcoins price rose 9.7% on Fri-
day, according to an index provided
by Coindesk, after Bitstamp first
said it expected to restore with-
drawals by the end of Friday. The
statement announcing the revival of
operations didnt appear until Sat-
urday.
On Friday, Jeff Garzik, a pro-
grammer at payment processor Bit-
Pay and a member of the bitcoin
networks five-person core develop-
ment team, said he was working
with Bitstamp and other exchanges
to devise work-around solutions to
allow them to clean up, reconcile
and restore their accounts.
However, it is expected to take
longer for a more comprehensive fix
to be implemented for the special
software that many exchanges use
to interact with the so-called core
protocol code that manages bit-
coins central ledger of transactions.
Bitcoin Foundation chief scien-
tist Gavin Andresen, who leads the
core development team, said a per-
manent fix to that adjunct software,
known as the reference implemen-
tation, should be ready this week.
On Saturday, Bitstamp echoed
comments of many in the bitcoin
community who have said that al-
though changes are needed to the
reference implementation, bitcoins
core protocol is secure.
Unforeseen incidents like this
[denial-of-service] attack against an
edge case in the Bitcoin protocol
are to be expected with such a
young technology, Bitstamp said.
The core protocol remains sound
and the world has seen how these
incidents are addressed by the Bit-
coin community. Every challenge
that is successfully overcome is a
milestone that allows the world to
grow their confidence in Bitcoin.
The problems for the bitcoin
network first arose after Mt. Gox
said Feb. 10 that it had been hit by
fraudulent requests for payment by
users exploiting a feature in the
core protocol known as transaction
malleability, which allowed users
of the digital currencys network to
alter the ID of a completed transac-
tion.
People were using that feature
to mutate transactions and trick the
software that ran Mt. Goxs digital
wallet into believing that outgoing
bitcoin payments had failed even
though they had actually gone
through. The people would then de-
mand that bitcoin be resent.
Initially, many in the community
argued that Mt. Gox had simply
failed to use the correct internal
procedures to protect its accounts
against anyone who might exploit
transaction malleability, a long-rec-
ognized and deliberately created
feature of the bitcoin protocol.
The next day, however, hackers
escalated the problem by exploiting
a hitherto unnoticed bug in the ref-
erence implementation software,
using it to overwhelm and confuse
exchanges with a barrage of mu-
tated transactions.
BY MICHAEL J. CASEY
Cyber attacks against bitcoin exchanges have raised questions about the security of the digital currencys global network.
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BUSINESS & FINANCE
Kickstarter
User Data
Is Accessed
In Breach
Crowdfunding site Kickstarter
Inc. said some customer data was
accessed in a computer attack.
The company, which has set up an
exchange in which people can con-
tribute often small amounts of
money to fund projects such as the
documentary Ai Weiwei: Never
Sorry or the Pebble smartwatch,
said in a blog post Saturday and
emails to users that no credit-card
data was compromised.
The data accessed included user-
names, encrypted passwords, email
and mailing addresses and phone
numbers, Chief Executive Yancey
Strickler said in the post.
Unauthorized activity occurred
on two users accounts, the company
said, adding that it had contacted
those users. It recommended that
users change their passwords.
Were incredibly sorry that this
happened, Mr. Strickler said. We
have since improved our security
procedures and systems in numer-
ous ways, and we will continue to do
so.
The attack is the latest in a string
that has included a massive breach of
payment-card data at Target Corp., as
well as intrusions at other retailers.
Breaches like Kickstarters that
dont involve financial data still con-
cern security experts. Hackers with
email addresses and knowledge of
personal interests, such as funding
Kickstarter projects, can craft more-
sophisticated phishing emails
aimed at getting recipients to dis-
close more sensitive information.
Kickstarter, which is based in
Brooklyn, was founded five years
ago. It has drawn more than $850
million in pledges.
Payments in the U.S. are pro-
cessed by Amazon Payments, the
company says on its site.
Kickstarter said it was informed
by law-enforcement officials Wednes-
day night. Kickstarter said it waited
until the breach was closed and in-
vestigated before notifying users.
Jamie Heller
contributed to this article.
BY ANDREWDOWELL
Target staff raised caution flags
before breach............................................ 19
Every challenge that is successfully overcome is a
milestone that allows the world to grow their
confidence in Bitcoin, Bitstamp said.
THE WALL STREET JOURNAL. Monday, February 17, 2014 | 17
France, Dongfeng Reach Peugeot Deal
PARISThe French government
took steps to prevent Dongfeng Mo-
tor Co. from taking control of PSA
Peugeot Citron after the Chinese
company becomes one of the car
makers leading shareholders, peo-
ple with direct knowledge of the
matter said.
The government and state-owned
Dongfeng have agreed to the main
terms of a deal under which each
would subscribe to parts of a 3 bil-
lion to 3.8 billion ($4.1 billion to
$5.2 billion) rights issue and acquire
equal stakes of about 14% in the un-
profitable company, the people said
Friday. The stake of the Peugeot fam-
ily, which owns 25.4% of the com-
pany, would be diluted to the same
level.
Peugeots board is expected to
approve a draft agreement on Tues-
day. The document could be ratified
in late March, during an official visit
of Chinese President Xi Jinping to
Paris, the people said.
In a bid to contain the Chinese
companys influence over Peugeot,
France imposed a clause under
which Dongfeng committed not to
increase its interest in the car
maker for several years, possibly a
decade, the people familiar with the
matter said.
The restriction also applies to
the French state and the Peugeot
family. But it highlights how Chinese
investors are viewed with a mix of
hope and fear. French officials, in-
cluding President Franois Hollande,
have courted Chinese investment in
France. At the same time, they have
pledged to keep Peugeot and other
companies that are deemed strate-
gic in French hands.
The clause effectively protects
Dongfeng from the Peugeot family
attempting to recapitalize the car
maker in the coming years, although
the family lacks the financial muscle
to do so on its own, one of the peo-
ple familiar with the matter said.
Peugeot, one of Frances largest
and oldest industrial companies is in
a race to repair its finances, which
have been hurt by dwindling sales in
its core European markets. Large
Peugeot factories are operating well
below capacity.
A French Finance Ministry offi-
cial declined to confirm or deny the
existence of a cap in the proposed
agreement but said the objective
was to find a balance among the
government, the family and Dong-
fengs holdings.
A Dongfeng spokesman said the
Chinese company and Peugeot were
still negotiating details and that no
agreement had been signed.
The two companies have said
they were in talks over a broad in-
dustrial alliance that could involve a
capital increase.
Under the proposed deal, Peu-
geot would issue 3 billion in new
shares, with the government and
Dongfeng investing about 800 mil-
lion each. Peugeot also would give
existing holders an option to buy
one new share for every three
shares held, the people familiar with
the matter said.
If all the options are exercised,
Peugeot could raise a total of about
3.8 billion, a person said. The lat-
ter transaction would dilute Dong-
feng, the state and the familys hold-
ings to about 12% each, the person
said.
The incoming shareholdersthe
government and Dongfengare still
arguing with the family over who
should succeed Thierry Peugeot as
company chairman, the people fa-
miliar with the matter said.
The government supports Louis
Gallois, an adviser to the French
government and a former chief ex-
ecutive of Airbus Group NV who sits
on the Peugeot board, the people
said.
They said that some members of
the Peugeot family have proposed
Grard Hauser, who led French ca-
ble maker Nexans SA until 2009.
Dongfeng would like the chair-
man to be independent, a person
said.
Although Mr. Hauser has no ob-
vious ties to the government, he
lacks the corporate rsum of Mr.
Gallois, a person said.
Messrs. Gallois and Hauser
couldnt be reached to comment.
When they gather on Tuesday,
Peugeot directors also are expected
to approve a deal with Spains
Banco Santander SA to unload part
of the car makers in-house bank,
Banque PSA Finance, the people fa-
miliar with the matter said. Under
the proposed agreement, Santander
would assume the bulk of Banque
PSAs refinancing needs, the people
said.
Santander declined to comment.
BY NOMIE BISSERBE
AND DAVID PEARSON
VW Labor Officials Consider Next Move
New Drive Begins to Create Works Council Despite Defeat of Auto Workers Union in U.S.
Volkswagen AG labor represen-
tatives in Germany started a new
drive to create a German-style works
council at the companys Chata-
nooga, Tenn., factory, despite a de-
feat for the United Auto Workers
union at the plant.
VW workers in Chattanooga on
Friday voted 712-626 to reject the
UAWs efforts to unionize the factory.
We have always stressed that
the decision over union representa-
tion lies in the hands of the work-
force in Chattanooga, Gunnar Kil-
ian, secretary-general of VWs works
council in Germany, said in a pre-
pared statement Sunday. The result
of the election has not changed our
goal of creating a works council in
Chattanooga.
A win would have marked the
first time the union had been able to
organize a foreign-owned auto plant
in the South. It also would have
been particularly meaningful be-
cause the vote was set in a right-to-
work state in the South, where anti-
union sentiment is strong and past
UAW organizing drives at automo-
bile plants have failed.
The Chattanooga workers had
been courted steadily for nearly two
years by the UAW and Germanys IG
Metall union, which pushed Volks-
wagen management to open talks
with the UAW and to refrain from
trying to dissuade American workers
from union representation.
Under an agreement the UAW
has with Volkswagen, the union now
must cease all organizing efforts
aimed at the Chattanooga plant for
at least a year.
The UAW had appeared to have
strong chances in the election be-
cause the Germany-based auto
maker and the IG Metall union both
wanted the Chattanooga plant to
have a works council, a formal com-
mittee of union and nonunion em-
ployees who negotiate with manage-
ment on day-to-day working matters
at the plant.
Works councils are standard in
German workplaces. In the U.S.,
however, it appears to many labor-
law experts that councils can only be
implemented legally if workers are
represented by an outside union.
We know from many discussions
with our colleagues in Chattanooga
that there is great interest on the
part of workers to establish worker
representation inside the plant, Mr.
Kilian said.
The chief executive of the plant,
Frank Fischer, said Volkswagen
would continue to search for a
method of establishing a works
council.
The most direct route to creating
a works council would have been for
workers to accept UAW representa-
tion. Now officials at VWs German
works council are looking for an al-
ternative.
Mr. Kilian and Frank Patta, who
oversees VWs global network of
works councils, will fly to the U.S. in
two weeks to begin talks with U.S.
labor-law experts to see if there is a
way to establish a works council in
Tennessee.
Many of Germanys largest com-
panies adhere to so-called co-deter-
mination, a system that grants the
workforce and labor unions powers
to jointly manage the companies.
The system is credited in Germany
with preventing strikes and allowing
management and workforces to find
consensus on major changes, such as
layoffs and plant closures.
VW has established a works
council at all its foreign plants, with
the exception of Chattanooga and its
factories in China.
The UAWs defeat raises questions
about the future of a union that for
years has suffered from declining
membership and influence. The vote
almost certainly leaves UAW Presi-
dent Bob King, who had vowed to or-
ganize at least one foreign auto
maker by the time he retires in June,
with a tarnished legacy.
If the union cant win [in Chat-
tanooga], it cant win anywhere,
said Steve Silvia, an economics and
trade professor at American Univer-
sity who has studied labor unions.
The UAW said outside interfer-
ence affected the outcome of the
vote. Unfortunately, politically mo-
tivated third parties threatened the
economic future of this facility and
the opportunity for workers to cre-
ate a successful operating model
that would grow jobs in Tennessee,
Gary Casteel, the UAW official in
charge of the VW campaign, said in
a written statement.
The vote was held amid cam-
paigning against the union by Re-
publican politicians, including Ten-
nessee Gov. Bill Haslam, and
conservative groups. A small but de-
termined group of workers who op-
posed the UAW also worked to tilt
their colleagues against the union.
Workers were persuaded to vote
against the union by the UAWs past
of bitter battles with management,
costly labor contracts and complex
work rules. If the union comes in,
well have a divided work force,
said Cheryl Hawkins, 44 years old,
an assembly-line worker with three
sons. It will ruin what we have.
Other UAW opponents said they
disliked the unions support of poli-
ticians who backed causes like abor-
tion rights and gun control that
rubbed against the conservative
bent of southern states like Tennes-
see. Still others objected to paying
dues to a union from Detroit that is
aligned with Volkswagen competi-
tors like GM and Ford.
BY NEAL E. BOUDETTE
AND WILLIAM BOSTON
The vote threatens the legacy of UAW President Bob King, left, with Secretary-Treasurer Dennis Williams.
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BUSINESS & FINANCE
Rolls-Royce
Probe Turns
To Financier
LONDONA leading Indian fi-
nancier and his son are being inves-
tigated by the U.K.s Serious Fraud
Office in connection with a probe
into alleged bribery and corruption
at engine maker Rolls-Royce PLC, a
spokesman for the men said Friday.
The spokesman said Sudhir
Choudhrie and his son Bhanu were
questioned by the fraud office for a
few hours Wednesday before being
released on unconditional bail. The
Choudhries both have U.K. citizen-
ship, the spokesman said.
The arrests of the two men were
the latest development in a yearlong
probe of Rolls-Royce, one of the
U.K.s best-known engineering com-
panies, which relates to concerns
about alleged bribery and corrup-
tion in Indonesia and China.
The allegations made against
Bhanu and Sudhir Choudhrie are be-
ing very strongly denied. They are
fully cooperating with the authori-
ties, the family spokesman said.
Bhanu Choudhrie is chief execu-
tive of London-based investment
firm C&C Group Ltd., a family-run
business with investments in banks,
luxury hotels, airlines, restaurants
and care homes around the world.
His father, Sudhir, is an independent
investment adviser with no direct
links to C&C Group.
The two men have donated
around 500,000, or roughly
$835,000, to Britains Liberal Demo-
crats, the governments junior coali-
tion partner, according to the U.K.
Electoral Commission.
The Serious Fraud Office said on
Wednesday that search warrants
were executed at various proper-
ties in London and that two men
had been arrested.
A fraud-office spokeswoman said
Friday she couldnt confirm the
identities of the two men.
A Rolls-Royce spokesman de-
clined to comment.
Rolls-Royce, which derives
around 17% of its revenue from the
defense sector, said more than a
year ago that it had passed informa-
tion to the fraud office relating to
concerns about bribery and corrup-
tion after an internal investigation.
BY COSTAS PARIS
18 | Monday, February 17, 2014 THE WALL STREET JOURNAL.
BUSINESS & FINANCE
Sen. Harry Reid recently said he was against fast tracklegislation to speed approval of big new trade deals in the works.
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Air Costas Ramesh Lingamaneni, left,
with Embraers Paulo Cesar Silva
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Small Aircraft Get Big Orders
Nok Air, worth $1.45 billion at list
prices. Nok Air also purchased two
turboprops from Bombardier and
Mr. Sarasin said he would buy more.
Though Airbus said it confirmed
two large deals totaling around $17.3
billion, the agreements had previ-
ously been announced.
To be sure, the Singapore Air-
show hasnt traditionally featured
large aircraft orders because many
airlines have chosen larger shows in
the West to make announcements.
The strong showing for regional air-
craft was to some a surprise.
Embraer projects that the global
market for 70-130 seat aircraft to be
about 6,400 planes over the next 20
years, including 1,500 to be sold in
the Asian-Pacific region.
The biennial Singapore Airshow,
which officially ended Sunday, also
featured a significant aerospace and
defense display, with the largest-
ever presence of U.S. defense con-
tractors abroad at a time of tighter
defense budgets at home.
Still, some industry watchers be-
lieve that the market for small jets
may just be a small transitory niche
because of rapid growth of aviation
in Asia.
What might be a market for a
small jet today can become a market
for multiple frequencies on a [Boe-
ing] 737 or [Airbus] A320 in a cou-
ple of years, said Andrew Herdman,
Continued from page 15
director general of the Association
of Asia Pacific Airlines.
Further complicating efforts by
the regional aircraft makers is the
increasingly competitive landscape
with more manufacturers entering
the fray, including Japanese consor-
tium Mitsubishi Aircraft Corp.
Mitsubishi is producing regional
jets that will seat between 70 and 90
passengers, but delays have pushed
back the first flight of the jet to the
second quarter of 2015 from the end
of last year.
The MRJ already has 165 con-
firmed orders, but only ANA Hold-
ings Inc.s All Nippon Airways of Ja-
pan is on the list.
CableDeal CouldOpenNetRules
Telecommunications regulators
may never have a better opportunity
to regulate.
Even before Comcast Corp.s $45
billion bid for Time Warner Cable
Inc. was announced Thursday, the
telecom industry was anxiously
watching the Federal Communica-
tions Commission for action on how
Internet providers can treat traffic
on their networks.
Now, the proposed acquisition
gives the commission additional le-
verage to act on the issue, known as
net neutrality, as well as other policy
matters. The deal might even forces
the regulators hand. Its decision
could further a trend in which regula-
tors make telecom policy through
merger approvals, rather than
through traditional rule making.
As they review the merger, regu-
lators must address the question of
whether the combined company
would hold so much power in the
marketplace that it could favor cer-
tain content providers and limit con-
sumers choices.
To limit that power, the FCC and
antitrust regulators could allow the
deal while subjecting it to conditions
designed to protect competition and
public interest, telecom lawyers and
analysts say. the review process will
force regulators to take positions that
will dictate the future of nascent in-
dustries, such as online video.
As part of its 2011 agreement to
acquire NBCUniversal, Comcast
agreed to treat all content traveling
over its broadband networks equally.
Last month the District of Columbia
U.S. Circuit Court of Appeals struck
down net-neutrality rules that the
FCC issued in 2010, opening the door
for broadband providers to start
charging Web companies such as
Netflix Inc. or Google Inc. a toll to
reach consumers at the fastest
speeds.
Streaming-video provider Netflix
sees the review process as a potential
opportunity to expand Comcasts
commitments to cover peering, the
interconnections deals between net-
works that make up the Internets
backbone, people familiar with the
matter say. Comcasts current net-
neutrality pledge only applies to traf-
fic traveling over the so-called last
mile of the broadband pipe to con-
sumers.
Netflix wants to prevent broad-
band providers from charging a fee
to handoff traffic from Netflixs
servers to their networks. Netflix
has been trying to get broadband
providers to connect directly to its
specialized servers, which it argues
would improve the delivery of its
streaming video. But major provid-
ers including Comcast and Time
Warner Cable have pushed back, de-
manding compensation in some
cases.
Netflix hasnt decided whether to
pursue a peering regulation as part
of the Comcast merger but is said to
be considering the idea. Analysts
and lawyers agreed that the FCC is
likely to consider conditions to en-
courage the online video market as
part of the review.
The primary focus of the Comcast
reviewis likely to be its impact on the
market for broadband Internet access,
which is increasingly the preferred
conduit for all voice, data and video
traffic into households. The combined
company would control roughly a
third or more of the home broadband
market.
Comcast argues that the broad-
band Internet market is highly com-
petitive, citing the wired and wire-
less broadband offerings from
national phone companies, such as
AT&T Inc. and Verizon Communica-
tions Inc.
Comcast Executive Vice President
David L. Cohen dismissed sugges-
tions that the deal would negatively
affect competition in the broadband
market. Where is the evidence,
where is the analysis? The fact of
the matter is the broadband market
has multiple competitors, and we
face intense competition nationally,
Mr. Cohen said.
BY GAUTHAM NAGESH
With just a few
words, Harry Reid
recently sent a
shudder through
U.S. business.
Im against fast
track, the Senate majority leader
declared, referring to legislation
the White House needs to speed
approval of big new trade deals in
the works, including the Trans-
Pacific Partnership.
But business should take heart.
This is a dance, not a rethink of
trade. These new trade accords
arent just meant to bring down
tariffs. Theyre also designed to fix
frustrating problems that afflict
current global commerce (think
China). And thats something a
wide array of groups in the U.S.
companies, lawmakers, even some
unionistshave been demanding.
Mr. Reid himself knows a fix is
needed. The senator may have
voted against virtually every piece
of trade liberalization in recent
memory. But here he is in a letter
to the White House in 2011
validating the same trade
negotiations hes now ostensibly
blocking:
We have an opportunity
through the Trans-Pacific
Partnership negotiations to make
significant improvements to
international trade and investment
rules that would help level the
playing field for our companies
and workers, he wrote. I urge the
Administration to seize this
opportunity.
The letter, which is posted
online with this column, is an
exhortation to fix the very
problems the draft Trans-Pacific
Partnership now addresses, most
notably how to prevent huge state-
owned enterprises from continuing
to distort global competition.
Adam Jentleson, Sen. Reids
spokesman, says the senator was
merely encouraging negotiators to
correct trade distortions.... Sen.
Reid has a decades-long record of
opposition to trade agreements,
and his current stance is
completely consistent with that
record.
That said, Mr. Reid could have
gummed up ratification of recent
free-trade agreements with South
Korea, Colombia and Panama. But
he didnt.
Laura Lane, who oversees
global government relations for
United Parcel Service Inc., the
package carrier, says she wasnt
surprised by Sen. Reids recent
comment. It was more of the same.
Meanwhile, the business
community is kind of energized
right now by progress in the
Pacific trade negotiations, she
says. Every 22 packages that
cross a border for UPS support a
job in our network.
Chief negotiators for the 12
nations in the Pacific talks are
meeting again in Singapore next
week.
China is a very powerful
strategic calculation in the
background, adds an executive
with a multinational manufacturer.
While China isnt part of the TPP,
the pact will discipline some of
the behavior out there, including
Chinese behavior, by creating a
gravitational force around rules-
based trade.
People familiar with the
negotiations say China is watching
closely, consulting with players at
the table and lobbying through its
proxies against proposed new
standards for state-owned
enterprises.
The reason? New rules ratified
in the Trans-Pacific Partnership
would set a minimum expectation
for any future, broader deal that
might one day include China, such
as an all-Asia free-trade zone, says
Scott Miller, a former director of
global trade policy for Procter &
Gamble who is now at the Center
for Strategic and International
Studies.
As for Mr. Reids comments, a
vote in Congress on the trade deal
in advance of the November
elections was never in the cards,
Mr. Miller believes. Trade is too
much of a political hot potato.
For companies, TPP isnt in the
near-term business plan, he says.
The Pacific trade deal is just
one of several big trade
agreements the administration has
under construction. A
Transatlantic Trade and
Investment Partnership also aims
to liberalize commerce and set
new standards with European
partners.
The Pacific pact, however, is
farther along. Among many other
provisions, the draft agreement
seeks to restrict subsidies and
preferential treatment that
governments give their state
enterprises, force the enterprises
to behave like commercial entities,
and require all parties to agree to
transparent dispute settlement.
It would also set new standards
to promote cross-border
investment and data flows and
new rules to tighten antitrust
enforcement, intellectual-property-
rights protection, labor rights, and
environmental regulation.
Were addressing the concerns
of those who may have had issues
with previous trade policy,
Michael Froman, the U.S. trade
representative, said in an
interview.
People familiar with the talks
say the question now is whether
the U.S. will blink. For example,
might Singapore get some form of
exemption for the way Temasek,
its giant state investment
company, structures its holdings?
China, where state-owned
enterprises dominate the economy,
might then try to use any Temasek
precedent and model to protect its
own state enterprises in future
negotiations.
And that wouldnt correct the
big distortions that global
companiesand Sen. Reidwant
fixed.
Write to John Bussey at
john.bussey@wsj.com; follow
@johncbussey on Twitter
Why Trade Talks Are Still on Track, Really
BY JOHN BUSSEY
[ The Business ]
THE WALL STREET JOURNAL. Monday, February 17, 2014 | 19
Rakutens Deal forViber
ExpandsMessagingBase
TOKYOJapans biggest online
retailer, Rakuten Inc., said it is pay-
ing $900 million for a Cyprus-based
maker of messaging and calling ap-
plications, as it looks to double its
world-wide reach and become a
truly global Internet-services player.
The deal for Viber Media Inc.,
whose software lets users make In-
ternet-based calls and chats on
smartphones and computers, high-
lights growing interest from global
Internet companies in applications
that enable messaging and voice
communications.
Viber will bring 300 million of
its users to Rakutens global net-
work of 200 million, said Rakuten
Chief Executive Hiroshi Mikitani, at
a Friday news conference in Tokyo.
The acquisition will expand Ra-
kutens services, a portfolio that al-
ready spans e-readers, financial
services and a baseball team that
until recently hosted star pitcher
Masahiro Tanaka.
Viber isnt yet making money: It
logged a net loss of $29.5 million on
revenues of $1.5 million for the year
ended in December. But Mr. Mikitani
said the company was willing to
foot Vibers nearly billion-dollar
price tagaround $3 per userbe-
cause of the huge potential for
growth in revenue and customers,
especially in emerging markets
where Rakuten has struggled to gain
customers so far. Viber has users in
193 countries, including Brazil, Rus-
sia, Vietnam, and Myanmar.
If we didnt buy [Viber] now, I
dont think we could have bought it
later, its growing so fast, said Mr.
Mikitani, in a presentation con-
ducted almost entirely in English.
After the news conference, Viber
managers said they were hoping to
celebrate with the Japanese delicacy
fugu, a poisonous blowfish that can
be fatal if not prepared correctly.
The deal underscores Rakutens
ambitions to become a global pro-
vider of mobile Internet content,
following in the footsteps of Soft-
Bank Corp., which bought up con-
trolling stakes in U.S. wireless car-
rier Sprint Corp. and mobile game
maker Supercell of Finland last year.
Rakuten, founded in 1997 by Mr.
Mikitani, an outspoken, Harvard-ed-
ucated former banker who once ad-
vised SoftBank, now pulls in 519
billion ($5.1 billion) in annual reve-
nue from its main businesses, which
include an online shopping mall
with tens of thousands of mer-
chants, a Web-based travel service
and an Internet bank.
But most of that revenue comes
from its 90 million members in Ja-
pan, where its dominance is increas-
ingly under threat from other Inter-
net giants like Amazon.com Inc.
and Yahoo Japan Corp.
In recent years, Rakuten has
been on an overseas buying spree,
spending billions of dollars on ac-
quisitions in countries from Spain to
Singapore. Among its major invest-
ments in the last four years are a
stake in U.S. online scrapbooking-
site Pinterest and the acquisition of
Canadian e-book firm Kobo for $315
million in 2012.
Since 2012, Mr. Mikitani has also
mandated that all in-house busi-
nessfrom meetings to memos to
cafeteria menusbe in English, to
prepare Rakutens 3,498 employees
for life in the international business
community.
Buying Viber would give Rakuten
access to millions of its users, who
could use their phone number and
password to open a Rakuten shop-
ping account, Mr. Mikitani said.
Vibers virtual stickers will also
bring in cash, and the two compa-
nies said they hoped to make games
available on Viber in the future.
Viber rival Line Corp., the Japa-
nese arm of South Koreas Naver
Corp., offers gamesa lucrative
source of app revenue.
Founded in 2010 by Israeli entre-
preneur Talmon Marco, Viber re-
cently started an instant-messaging
service for desktops allowing users
to call non-Viber users mobile
phones, a move against Microsoft
Corp.-owned rival Skype.
Viber further gives Rakuten
members a way to communicate
with one another and with vendors
in an age when more people are mi-
grating to messaging services from
email. For example, a customer
could exchange messages with a
sommelier via Viber while browsing
choices at an online wine store, Mr.
Mikitani said.
Global Internet companies are
becoming increasingly interested in
the potential of messaging services.
Facebook Inc. last year offered to
buy fellow Silicon Valley-based mes-
saging service Snapchat for about
$3 billionan offer that was re-
fused. Chinas biggest Internet firm
Tencent Holdings Ltd. also has ex-
pressed an interest in Snapchat.
Meanwhile, Alibaba Group has been
trying to promote its own messag-
ing app as part of its efforts to at-
tract smartphone users to its shop-
ping sites and other services.
Rakutenwhich failed to gain
control over Japanese TV broad-
caster Tokyo Broadcasting System
Inc. seven years agohas also been
active in acquisitions in video con-
tent distribution. Last year, the
company bought Singapore-based
Viki, a supplier of online video-on-
demand foreign-language television
programming, for an estimated
$200 million. The prior year, it
bought Wuaki.tv, a Spanish video-
on-demand and streaming service
that has since expanded to the U.K.
and is now planning to roll out serv-
ices in other parts of Europe.
Before that, it bought U.S. online
retailer Buy.com for $250 million and
French Internet marketplace PriceMi-
nister SA for 200 million ($274 mil-
lion) in 2010.
BY MAYUMI NEGISHI
Rakuten CEO Hiroshi Mikitani, left, announced the $900 million deal for Talmon Marcos Viber Media in Tokyo on Friday.
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Target Staff Raised
Flags Before Breach
Target Corp.s computer security
staff raised concerns about vulnera-
bilities in the retailers payment card
system at least two months before
hackers stole 40 million credit and
debit card numbers from its servers,
people familiar with the matter said.
At least one analyst at the Min-
neapolis-based retailer wanted to do
a more thorough security review of
its payment system, a request that
at least initially was brushed off, the
people said. The move followed
memos distributed last spring and
summer by the federal government
and private research firms on the
emergence of new types of mali-
cious computer code targeting pay-
ment terminals, a former employee
said.
The suggested review also came
as Target was updating those pay-
ment terminals, a process that can
open security risks because analysts
would have had less time to find
holes in the new system, the em-
ployee said. It came at a difficult
timeahead of the carefully
planned and highly competitive
Black Friday weekend that would
kick off the holiday shopping period.
It wasnt clear whether Target
did the requested review before the
attack that ran between Nov. 27 and
Dec. 18. The specific nature of the
feared security holes wasnt imme-
diately clear, either, or whether they
allowed the hackers to penetrate the
system.
The sheer volume of warnings
that retailers receive makes it hard
to know which to take seriously.
Target has an extensive cybersecu-
rity intelligence team, which sees
numerous threats each week and
could prioritize only so many issues
at its monthly steering committee
meetings, the former employee said.
It is everyones worst-case sce-
nario, the former employee said.
As an intelligence analyst, there is
only so much you can do.
Target declined to confirm or
comment on the warning.
The breach has caused head-
aches for Target customers who
have dealt with fraudulent charges
and have had millions of credit and
debit cards replaced by issuers. In-
vestigators and card issuers havent
quantified damages from the attack.
The new details, culled from in-
terviews with former Target em-
ployees, people with knowledge of
the post-breach investigation and
others who work with large corpo-
rate networks, show that the breach
wasnt entirely a bolt from the blue,
but instead a sophisticated attack
on a known point of vulnerability.
Retailers last year had received a
number of indications of dangers. In
addition to the alerts from the gov-
ernment, Target and other retailers
saw a significant uptick in mal-
ware trying to enter their systems,
people familiar with the investiga-
tion said.
Still, the discovery of the in-
truder that ravaged Targets systems
came as a surprise. Chief Financial
Officer John Mulligan told Congress
last week that the company wasnt
aware the malicious computer code
that carried out the attack was in its
system until contacted by federal in-
vestigators late last year.
The U.S. Secret Service declined
to comment. It and several private
companies are investigating the at-
tack.
At last weeks congressional
hearings, Mr. Mulligan said Target
passed an audit in September that
certified its compliance with pay-
ment industry requirements for pro-
tecting card data.
More broadly, Target may not
have done enough to wall off its
payment systems from the rest of
its vast network, people who work
with large corporate networks said.
The company has since moved to
isolate its different platforms and
networks to make it harder for a
hacker to move between them, a
Target executive said.
The hackers, still unnamed, orig-
inally gained access to Targets net-
work by stealing the access creden-
tials of a refrigeration contractor in
Pennsylvania. The contractor, Fazio
Mechanical Services, has con-
firmed it was breached and is coop-
erating with the Secret Service in-
vestigation.
Fazio said it had a data connec-
tion with Target for electronic bill-
ing, contract submission and project
management, and that Target was
its only customer for which it han-
dled those matters on a remote ba-
sis.
After entering through that con-
nection, the hackers then moved lat-
erally through Targets system,
eventually accessing the system that
handled payments at the companys
cash registers. Target has confirmed
the hackers first entered its network
through a vendor, though it hasnt
said which one.
There shouldnt have been a
route between a network for an out-
side contractor and the one for pay-
ment data, people familiar with large
corporate networks said. In a Febru-
ary memo to retailers that didnt
mention Target, the Federal Bureau
of Investigation said it may be a
vulnerability to connect credit and
debit card readers to remote man-
agement software, which makes it
easier to manage and monitor inter-
nal networks from afar, when com-
bined with weak password selection.
A Target spokeswoman declined
to comment on its network design.
So-called segmentation issues,
where computer systems that
shouldnt be connected for security
reasons are in fact linked, are a
problem at a number of retailers, a
person familiar with retail breaches
said.
The attackers stole not only the
card data, but personal information
like phone numbers and email ad-
dresses for up to 70 million people.
The breach hit a retailer that
puts a lot of resources into security.
In his testimony before Congress,
Mr. Mulligan said the retailer has
spent hundreds of millions of dol-
lars protecting its data and employs
more than 300 people on the issue.
The company also has close ties to
the Federal Bureau of Investigation.
Some of its current and previous
corporate security executives are
former FBI agents, and its cyberse-
curity analysts work with the
agency at the National Cyber-Foren-
sics and Training Alliance in Pitts-
burgh.
Several members of Targets cy-
bersecurity team left the company
in the months before the hack, ac-
cording to people familiar with the
matter and a search of social media
profiles. Many left for more presti-
gious jobs at other firms, the former
employee said.
By Danny Yadron,
Paul Ziobro
and Devlin Barrett
CORPORATE NEWS
Rakuten has been on an
overseas buying spree,
spending billions on
acquisitions in countries
from Spain to Singapore.
20 | Monday, February 17, 2014 THE WALL STREET JOURNAL.
MARKETS
Asia-Based
Hedge-Fund
Openings
Surge Ahead
Hedge funds are setting up in Asia
at a breakneck pace, seeking to cap-
ture a flood of cash from money man-
agers turning to the region after two
years of strong returns.
More than 50 funds have started
trading or are setting up in Asia this
year, 20% more than at this point last
year, according to Bank of America
Merrill Lynch estimates. This year is
distinguished by the number of high-
profile launches, including one
planned by a veteran Goldman Sachs
Group Inc. trader and an Asia spinout
from Millennium Management LLC,
the $21.1 billion U.S. hedge-fund man-
ager.
Fund launches are getting bigger,
and consultants say from the get-go
they are starting with more sophisti-
cated back-office operations than the
smaller startups of the past. That is
helping catch the eye of large over-
seas investors looking to add money
to hedge-fund managers in Asia,
whose average return last year, at
nearly 15%, beat out their peers in the
U.S. and Europe, according to industry
tracker HFR.
Asia-focused hedge funds ended
the year managing a record $112.3 bil-
lion, topping a previous peak hit in
2007. That was after $4.2 billion of
newinvestor cash was added in the fi-
nal three months, the most HFR has
ever recorded for a quarter. By com-
parison, the U.S. hedge-fund industry
manages $1 trillion.
Theres an increased level of opti-
mism, said Martin Visairas at Citi-
group, who runs a team in Asia that
introduces hedge funds to investors.
People are daring to venture out on
their own.
Jason Brown, former head of Gold-
mans Global Special Situations
Groupwhich makes bets with the
banks own capitalis preparing to
take his highly anticipated fund Ark-
kan Capital live within the next couple
of months, according to people famil-
iar with the fund. These people said
the amount it will start with is still
under discussion.
Another startup in Asia is Symme-
try Investments, launched by two
former Millennium executives with
more than $1 billion fromtheir former
employer, according to a person famil-
iar with the fund. Symmetry is ex-
pected to raise external capital in the
future, this person said. A New York-
based spokesman for Millennium and
Michael Robinson, one of the funds
co-founders, declined to comment on
plans for the fund.
BY MIA LAMAR
Delisted Firm Switches Locales
Chinese Copper Recycler Formerly Traded in New York Plans Offering in Hong Kong
HONG KONGTwo years ago, as
Chinese companies listed in the U.S.
battled a perception for being
weak, or were tainted with fraud,
many Chinese companies were
taken private by their owners. Now,
15 months after it was bought out
by its founder, the former New
York-listed Gushan Environmental
Energy Ltd. is raising up to US$96
million in a Hong Kong initial pub-
lic offering.
China Metal Re-
sources Utilization
Ltd. holds most of Gushans operat-
ing assets. Its chairman, Yu Ji-
angqiu, paid US$21 million to take
Gushan private in October 2012,
and is seeking to list China Metal in
Hong Kong on Feb. 21, which would
make it the first Chinese stock de-
listed in the U.S. in a wave of firms
taken private in recent years to go
public. If the copper recycling
firms IPO succeeds, it could spark
more deals.
When it listed as Gushan in
2007 on the New York Stock Ex-
change, the company was a biodie-
sel firm, producing fuel from feed-
stock. Over the years, it has
expanded into copper recycling. Mr.
Yu controls most of China Metal,
which is based in the southwestern
Chinese province of Sichuan. The
company no longer produces biod-
iesel and is primarily focused on re-
cycling copper into communication
cables and power cables.
In its five years as a New York-
listed firm, Gushan rode the wave
of excitement and disgruntlement
with Chinese companies, while the
biodiesel industry lost favor among
investors in the wake of the global
credit crunch. Shares of Gushan,
which went public at US$9.60 each
following an IPO that raised US$185
million, saw its shares fall to lows
of 81 U.S. cents in 2012, when most
of revenue was already from its
copper business.
When it listed in 2007, Gushan
had a valuation of US$800 million;
Mr. Yu took the firm private at a
valuation of US$31 million, and if
China Metal prices at the high end,
the firm would have a valuation of
US$325 million. The assets of the
firm are valued at 10 times more
than their value just over a year
and a half ago. Mr. Yu has no plans
to sell any of his shares in the Hong
Kong IPO.
Its understandable that the
owner is planning to relist some-
where he can get a better valuation
for his assets, said Matthew Kwok,
chief strategist at China Yinsheng
Wealth Management Ltd., which
didnt invest in China Metals IPO.
Two years ago, investors had no
confidence in Chinese companies in
the U.S., and so its not surprising
they exited.
China Metal is planning to raise
up to US$96 million by selling 618.5
million shares in an indicative price
range of one Hong Kong dollar (13
U.S. cents) to HK$1.20 per share. In
its prospectus, the company says its
net profit for the nine months to
September 2013 grew 197% to 132
million yuan ($21.8 million). In its
last results, Gushans net loss for
the three months ended March 2012
narrowed to 2.1 million yuan from
17.5 million yuan in the previous
year.
BNP Paribas is handling China
Metals listing.
Mr. Yu, 49 years old, founded
Gushan in 2001. He received an Ex-
ecutive Master of Business Admin-
istration degree from Hautes
tudes Commerciales de Paris in
2010, according to China Metals
listing prospectus.
In recent years, a growing num-
ber of U.S.-listed Chinese firms
have been seeking to go private as
accounting scandals weighed on the
valuations of many of the firms,
giving their largest shareholders,
and private-equity firms, the
chance to take the companies pri-
vate at lower prices than they
would have otherwise. While
Gushans take-private was done
solo by its founder, the list of pri-
vate-equity firms that went in with
founders to delist companies is
long.
The largest-ever leveraged buy-
out of a Chinese company was done
in this way: Carlyle Group LP
teamed up with a consortium of
other private-equity firms and Fo-
cus Media Holding Ltd.s founder to
buy out the advertising firm for
around US$3.7 billion.
Late last year, the chairman of
U.S.-listed Giant Interactive Group
teamed up with Baring Private Eq-
uity Asia to buy out the Chinese on-
line game developer, valuing the
firm at US$2.8 billion.
With prices of U.S. stocks on the
rise, and a few Chinese companies
recording stellar gains in their U.S.
IPOs, many Chinese companies, es-
pecially in the Internet space, are
looking to list in the U.S. again.
Shares of online retailer Vipshop
Holdings Ltd., which raised US$71.5
million in an IPO ahead of its March
listing in the U.S. last year, closed
at more than 17 times the IPO price
Thursday.
But for non-Internet companies,
Hong Kong is more alluring.
The Hong Kong market is not
seen to have a China discount like
in the U.S. and it is thought that in-
vestors here are more likely to un-
derstand and place a higher value
on Chinese companies, said Paul
Boltz, a lawyer with Ropes & Gray
LLP. The lower cost of being listed
in Hong Kong and lower risk of
shareholder litigation in compari-
son to the U.S. also contributes to
interest in pursuing a Hong Kong
listing.
Mr. Boltz said, Theres a per-
ception that investors in the U.S.
markets dont understand or bother
to fully appreciate the business
models of many companies operat-
ing in China.
Both Mr. Yu and China Metal
couldnt be reached for comment.
BY PRUDENCE HO
IPO FOCUS
Rollin In
Asian hedge funds attracted record
net inows of new investor cash in
the most recent quarter.
The Wall Street Journal
$5
1
0
1
2
3
4
2012 13
billion
Source: HFR
Indonesia Markets Heat Up in Global Rally
8.850% offered in India. Ms. Chans
funds have recently added to hold-
ings of rupiah-denominated bonds
and U.S. dollar-denominated bonds
in Indonesia. She said continued
loose monetary policy by the worlds
biggest central banks has also sup-
ported flows into bonds.
Worries of slowdowns in the
worlds two biggest economies ap-
pear to have abated as the Lunar
New Year in China and bad weather
in the U.S. made economic data
fuzzy. Investors have played down
weak numbers such as Fridays sur-
prise U.S. decline in January indus-
trial production.
The weather is muddying up the
ability to analyze the true strength
of the economy, said Dan Veru,
chief investment officer at Palisade
Capital Management, which oversees
about $5 billion. Weather is the
definition of a temporary event. The
U.S. economy is growing. We might
not like the pace of growth, but
momentum is gradually improving,
he said.
Investors did seize on unexpect-
edly strong Chinese trade data on
Wednesday, which boosted stocks
even though most analysts said the
numbers were distorted by the holi-
day.
Joe Saluzzi, co-head of equity
trading at institutional brokerage
firm Themis Trading, said the recent
sharp rebound in emerging markets,
which were a source of worry during
the markets selloff in January, have
contributed to the grind higher in
U.S. stocks and helped distract in-
vestors from downbeat economic
data.
The [economic] numbers arent
good, Mr. Saluzzi said. But the
Continued from first page
emerging markets are stronger, and
as long as that is the case, it takes
out a huge problem for the market.
The Dow Jones Industrial Aver-
age climbed 126.80 points, or 0.8%,
to 16154.39 on Friday. For the week,
the Dow advanced 360.31 points, or
2.3%, marking the best weekly per-
formance since the week ended Dec.
20.
The S&P 500 gained 2.3% last
week, and is up 5.6% since closing at
a nearly three-month low on Feb. 3,
to trade just 0.5% shy of its Jan. 15
record high. The Nasdaq has climbed
5.8% in a seven-session winning
streak, the longest such stretch
since July 2013, and on Friday it
posted its highest close since July 17,
2000.
European markets closed broadly
higher after data showing gross do-
mestic product in the euro zone ex-
panded by 0.3% in the fourth quar-
ter, slightly ahead of expectations of
a 0.2% rise. The Stoxx Europe 600
rose 0.6% to a three-week high.
It wasnt long ago that stocks
were hitting their lows for the year.
The S&P 500 slumped 5.8% from
mid-January through early February.
Many market participants were
gearing up for the markets first 10%
correction since the summer of 2011.
Emerging-market shares hit a
seven-month low on Feb. 3, but the
MSCI Emerging Markets index is up
nearly 7% since then.
The biggest worry about Indone-
sia last year was the combination of
a plunging currencythe rupiah lost
21%and a gaping current-account
deficit, a broad measure of trade in
goods and services. But the coun-
trys current-account deficit has
fallen, and on Friday Indonesia
posted a balance-of-payments sur-
plus of $4.4 billion for the fourth
quarter of 2013.
Still, some investors remain cau-
tious. Sentiment can be fairly
fickle, and the gyrations can be quite
quick. Im a bit reluctant to jump on
the bandwagon and say things are
all over, said Mitul Kotecha, global
head of currency strategy and global
markets research for Asia at Crdit
Agricole in Hong Kong. When you
look at the external environment, its
going to be more difficult in the
months ahead, and I dont think this
is by any means to be a one-way
bet on Indonesia.
Last weeks gains in Asia suggest
the earlier fears have dissipated.
Even so, many markets remain in
the red for the year: Hong Kongs
Hang Seng Index is down 4.3%,
South Koreas Kospi is off 3.5%, and
Japans Nikkei Stock Average, hurt
by investors driving up the value of
the yen, remains down 12%.
Back in Business
Jakarta Composite index
The Wall Street Journal
Source: FactSet
5000
1000
2000
3000
4000
10 11 12 13 14 2009
Vendors in Jakarta await customers. The rupiah jumped 5% last week.
E
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o
p
e
a
n
P
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e
s
s
p
h
o
t
o
A
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e
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y
THE WALL STREET JOURNAL. Monday, February 17, 2014 | 21
MARKETS
SEC Takes a New Tack
Agency Changes How It Preps for Trials After Courtroom Defeats
The Securities and Exchange
Commission, faced with a recent run
of courtroom defeats, is shaking up
the way it prepares for trials.
Mary Jo White, who took charge
of the SEC in April, has restructured
the agencys trial unit in recent
months, according to people famil-
iar with the matter. The goal in part
is to allow investigators and litiga-
tors to work closer together as a
case develops, the people said.
The changes come as the SECs
win rate in court has slipped. The
agency has won 55% of its trials
since October, a sharp drop after
three consecutive years when it pre-
vailed more than 75% of the time,
according to previously unreleased
figures. Among the recent setbacks
was the verdict finding billionaire
Mark Cuban not liable on insider-
trading charges.
The increase in courtroom losses
could prove a short-term blip, and
the cases were initiated well before
Ms. White became SEC chairman.
Still, defense lawyers say the trend
will likely encourage more people to
fight the agency rather than settle
its allegations.
The weakened score card threat-
ens to be a headache for Ms. White,
who has pledged to take a tougher
approach to enforcement.
In a speech last year, she said
the agencys then-80% courtroom
success rate may explain why most
lawyers counsel their clients against
going to trial against the SEC and
why we achieve strong settlements
in most of our cases.
Ms. Whites promise of tougher
enforcement needs courtroom suc-
cess to be credible, said Thomas
Gorman, a partner at law firm
Dorsey & Whitney LLP. The agency
has to reverse the trend of recent
trial defeats for its enforcement
program to be effective, he added.
Judges and juries have found in
favor of 10 out of 25 individuals and
firms in SEC courtroom battles
since October, with the government
losing five out of 11 trials, according
to the agencys figures. This is a
markedly worse track record than
the 12 months through September,
when only five of 34 defendants
won against the SEC, the new data
show. The latest figures dont yet
include results from the SECs own
administrative judges, where histor-
ically it has won far more often than
in federal courts.
Were proud of our long record
of success at trial in difficult cases,
including victories in our three most
recent trials in the last two weeks,
Andrew Ceresney, the SECs director
of enforcement, said in a statement.
The agencys courtroom record
stands in contrast to Manhattan U.S.
Attorney Preet Bhararas 79-0 re-
cord in securing convictions or
guilty pleas in criminal cases that
have been resolved as part of its
continuing insider-trading crack-
down. SEC officials say privately
that the comparison is unfair, par-
ticularly as most of the civil
agencys enforcement actionsin-
cluding what tend to be its stron-
gest casessettle before trial.
As part of the recent changes, the
SECs trial unit has been restruc-
tured into four groups to mirror
more closely the work of the en-
forcement officials who investigate
the cases, the people familiar with
the matter said. Senior officials in-
cluding Mr. Ceresney and trial unit
chief Matthew Solomon also are per-
sonally conducting practice openings
for upcoming trials, the people close
to the agency added.
BY JEAN EAGLESHAM
Mixed Verdict
The SEC's win rate in trials and
hearings has slipped in recent months.
The Wall Street Journal
Source: Securities and Exchange Commission
Note: Fiscal year ends Sept. 30
100
0
25
50
75
%
12 FY2011 13 14
YTD
55%
German Thriftiness
Puts Banks in Bind
FRANKFURTHauke Hankes fru-
gality is becoming a problem for
Germanys banks. Like many of his
compatriots, the 30-year-old scien-
tist from Berlin typically saves as
much as 25% of his paycheck every
month.
Despite earning a paltry return
on his savings account at Postbank,
a part of Deutsche Bank AG, he said
it is too much work to shop around
for the best deal on interest rates.
As for racier investments such as
stocks, he also thinks it is too much
effort to ensure good returns, while
his friends and family often avoid
them because of the risk.
Germans really hoard their
money, he said.
While Mr. Hanke saves even more
money than his average countryman,
thrifty Germans are leaving the
countrys lenders with a glut of de-
posits. Bank deposits in Germany hit
an all-time high of 3.39 trillion
($4.6 trillion) in June of last year,
before falling slightly to an esti-
mated 3.3 trillion in December, ac-
cording to the latest monthly data
from the Deutsche Bundesbank, Ger-
manys central bank, whose records
stretch back to December 1948.
At a time when economic growth
is lackluster and loan demand tepid,
Germanys banks are finding it hard
to put all of those deposits to work
and earn a decent return.
The interest margin for German
banksnet interest income divided
by average annual total assetshas
been decreasing over the past three
decades.
The European sovereign-debt cri-
sis in 2009 exacerbated the problem,
and the long period of low interest
rates in the euro zone is making the
situation even more difficult. The
margin is now just below 1% from
around 2% in the mid-1990s, accord-
ing to Germanys central bank.
The most important source of
earnings, especially for the German
universal banking systemnet inter-
est incomeis declining, Sabine
Lautenschlger, a European Central
Bank executive board member, said
late last year, when she served as
vice president of Germanys central
bank.
Throughout the crisis, risk-averse
Germans have poured their money
into the safety of the countrys sta-
ble banking network.
Fearing a resurgence of euro-
zone problems, business owners and
customers increasingly keep their
money liquid in the form of demand
deposits, which can be withdrawn at
any time.
Such deposits are expensive to
banks because the interest rate they
pay on them is higher than what
they would pay if they borrowed the
cash from other banks. Rock-bottom
interest rates for longer-term depos-
its provide no incentive for savers to
lay the money down for longer.
Recent data show that the level
of retail demand deposits increased
to a record 935.8 billion in Novem-
ber 2013 from 510.1 billion five
years earlier, according to the latest
data from Barkow Consulting, a fi-
nancial-consulting firm.
The savings culture stems from
the economic troubles following the
two world wars and was amplified by
the euro crisis, according to experts.
Germans are expected to have saved
9.9% of their disposable income in
2013, according to a forecast by the
Organization for Economic Coopera-
tion and Development. That compares
with a forecast saving rate of 7.9% in
the euro zone and 4.5% in the U.S.
About 9.4 million Germans, rep-
resenting about 15% of the popula-
tion, participated in the stock mar-
ket either directly as shareholders
or indirectly via funds as of the first
six months of 2013, according to the
Deutsches Aktieninstitut, a trade
group representing capital-markets
interests in Germany.
Two factors have contributed to
the low participation rate, said An-
dreas Hackethal, a professor at
Frankfurts Goethe University who
has studied the trend. The domi-
nance of government-backed social
pension plans for retirement plan-
ning means Germans dont need to
invest in stock investment vehicles
like the individual retirement ac-
counts or 401(k) plans popular in
the U.S.
In addition, many investors who
waded into the market for the first
time in the past couple of decades
suffered losses, Mr. Hackethal said.
Many Germans have burnt their
fingers, he said.
Traditionally banks have invested
deposits in German government
bonds, known as Bunds, for profits,
but record-low interest rates have
nearly eliminated gains.
And relief from the low rates is
unlikely to come soon. In November,
ECB President Mario Draghi ad-
dressed German banks concerns
about the implication of low inter-
est rates for savers during a visit to
Berlin, calling such worries under-
standable, but said interest rates
are low because the economy is
weak.
BY CHRISTOPHER LAWTON
AND LAURA STEVENS
Super Savers
Frugal Germans are leaving the countrys banks with a glut of deposits.
Bank deposits in Germany
Monthly
Savings rate as a percentage of
disposable household income*
Note: 1 trillion = $1.37 trillion *Forecasts start 2010; euro zone data are
for the 15 original members. Sources: Deutsche Bundesbank (deposits);
Organization for Economic Cooperation and Development The Wall Street Journal
3.3 trillion 9.7%
12
0
3
6
9
%
2000 10 15
4
0
1
2
3
trillion
2000 10 1999
Germany
United States
Euro zone
8umm|t 8ess|ons
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lrlolec|
Summit Chair
Theme Address by
Keynote Address by
SpeciaI Address by
Ganesh Natarajan
Vice Chairman & CEO
Zensar Technologies Ltd
Ludger KuebeI-Sorger
Global Leader- Knowledge
Management Practice and Partner
The Boston Consulting Group
AniI Menon
President
Smart+ Connected Communities &
Deputy Chief Globalisation Officer
CSCO
Suhas Gopinath
Founder, CEO and Chairman
Globals nc
GoId Sponsor
SiIver Sponsor
ExcIusive
Media Partner
For more detaiIs on Programme and Registration, PIease Contact:
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Tel : +91 80 4204 4097 / 98
Fax: +91 80 4204 4097
M: +91 98451 87055 | 89713 77377
DATE
21-22 FEBRUARY 2014
VENUE
THE TAJ WEST END: BANGALORE
22 | Monday, February 17, 2014 THE WALL STREET JOURNAL.
MARKETS
Gold and Silver Fever Returns
Unexpectedly Weak U.S. Economic Data Spark Enthusiasm for the Precious Metals
Gold and silver prices climbed to
their highest levels in three months,
as U.S. economic worries continued
to weigh on the dollar and boosted
prices for precious metals.
Gold for April delivery rose for
an eighth consecutive session on
Friday to close at $1,318.60 an ounce
on the Comex division of the New
York Mercantile Exchange, up
$18.50, or 1.4%.
It was the highest close for the
most actively traded contract since
Nov. 6. Gold for February delivery
also rose 1.4%, to settle at $1,319 an
ounce.
Silver prices posted even greater
gains, with the contract for March
delivery rising $1.02 to $21.42 an
ounce, a price unseen since Nov. 8.
The 5% rise was silvers biggest one-
day percentage gain since Sept. 19.
Silver for February delivery rose to
$21.411 an ounce.
The moves higher by gold and
silver highlight how unexpectedly
weak U.S. economic data have
sparked a newfound enthusiasm for
precious metals among investors,
who had given the asset class a
pounding in 2013.
As long as you have concerns
about the U.S. economy, there will
be capital moving around, and some
of it will inevitably find its way into
precious metals, said Peter Hug, di-
rector of precious metals at Kitco
Metals in Montreal.
Concerns about a flagging U.S.
economy came back into focus Fri-
day, after data showed U.S. manu-
facturing output declining sharply
in January.
Those numbers came on the
heels of Thursdays retail-sales num-
bers for the same month, another
indication that the U.S. recovery
may be on shaky ground.
Gold benefits if the Federal Re-
serve keeps interest rates low, be-
cause the zero-yielding asset faces
less competition from interest-bear-
ing assets like bonds.
Many investors, however, attri-
bute the slowdown to extreme
weather seen throughout much of
the country in January and Febru-
ary.
Fridays gains in the precious
metals came despite a good day for
stocks, as the S&P 500 index rose
0.5% to 1838.63.
Gold and silver often trade in-
versely to equities because some in-
vestors perceive them as stores of
value, while company stocks are
typically considered as bets linked
to economic growth.
The momentum here is very
strong, and thats taking gold higher
despite what is happening in the
stock markets, said Bill ONeill, a
principal with commodities invest-
ment firm Logic Advisors.
Precious metals also got a boost
Friday from a slide in the U.S. cur-
rency. A weaker greenback makes
dollar-denominated gold futures ap-
pear less expensive for buyers using
other currencies, and some traders
use gold as a hedge against a declin-
ing dollar.
The WSJ Dollar Index, which
gauges the dollar against a basket of
major currencies, has lost 1.4% from
its 2014 high and late Friday in New
York was at 73.42, its lowest closing
value this year.
Gold has advanced 9.7% since the
start of the year, and silver has
gained 11%.
The steady march higher has
forced investors expecting a de-
cline in precious metals to hedge
their bets by purchasing contracts,
causing prices to rise even more in
a phenomenon known as a short
squeeze, said Axel Merk, head of
Merk Investments, a $400 million
California-based fund. Mr. Merk
has 15.7% of his funds assets in
gold, up from 8.4% this time last
year.
The Comex will be closed on
Monday for the Presidents Day holi-
day in the U.S.
BY IRA IOSEBASHVILI
A sign advertising a gold buyer in New York. Gold has advanced 9.7% since the start of the year; silver is up 11%..
G
e
t
t
y
I
m
a
g
e
s
Metals Surge
Daily percentage change in front-month Comex futures contracts
The Wall Street Journal Source: Six Financial Information
6
4
2
0
2
4
%
February January
GOLD
1.4%
SILVER
5.0%
Commodities: Approach With Caution
After watching commodities take
a beating over the past three years,
investors may want to consider
carefully treading back into the sec-
tor, financial advisers say.
The average U.S. commodity-fo-
cused mutual fund and exchange-
traded fund has gained 2.2% in 2014
through Thursday, according to Chi-
cago-based investment-research
firm Morningstar. Meanwhile, blue-
chip stocks, as represented by
shares of the SPDR S&P 500 ETF
Trust, are down 0.9% over that pe-
riod.
Commodities still need to be
approached with caution, says Ste-
phen Jury, global head of currencies
and commodities at J.P. Morgan Pri-
vate Bank in New York, which over-
sees $977 billion. Theyre not ready
for another bull run.
Even so, Mr. Jury sees opportu-
nities in segments such as crude oil,
palladium and platinum for inves-
tors who want to broaden their
portfolios to assets that dont al-
ways move in tandem with stocks.
The approach were taking is to
selectively invest on a limited basis
in parts of the market where supply
and demand dynamics are looking
more favorable, he says.
Although he remains on the side-
lines, commodities are starting to
look interesting for the first time in
five years, says Stephen Tuttle, chief
investment officer at Krasney Finan-
cial in Mendham, N.J., with $350
million in assets.
After a long dry spell, were
starting to see some stronger tech-
nical signals of relative strength in
markets like crude oil and a select
group of metals, he says.
Until recently, several commodi-
tiesincluding sugar, coffee, alumi-
num and nickelwere trading at
multiyear lows, says Edward Meir, a
senior consultant at commodities
broker INTL FCStone in New York.
Weve seen a real supply glut in
these markets, something that
should start to reverse course later
this year as the impact of low prices
drives marginal production out of
the system, he says.
For now, investors remain wary.
Since early 2012, nearly $14 billion
has been pulled from commodity
mutual funds and ETFs, according to
analysts at research firm EPFR
Global in Boston. In the past three
years, commodity mutual funds and
ETFs have lost an annual average of
nearly 6%, Morningstar says.
Gold funds have been at the cen-
ter of commodity-fund outflows. In-
vestors in a popular bullion-backed
ETF, the $33.6 billion SPDR Gold
Trust, lost more than 28% last year.
Prices should see more stability
this year, says Mihir Worah, head of
the real-return portfolio-manage-
ment team at Pacific Investment
Management Co. in Newport Beach,
Calif., which oversees $2 trillion.
Gold prices are up 9.7% in 2014.
Earlier this month, Wells Fargo
Advisors, which has $1.4 trillion in
assets under management, recom-
mended that clients consider buying
the PowerShares DB Base Metals
ETF. The ETF has an annual expense
ratio of 0.78%, or $78 per $10,000
invested.
Even moderate growth out of
China later this year should help
boost base metals, says Sameer Sa-
mana, Wells Fargo Advisors senior
international strategist.
Were finding that inventories
in copper, zinc and aluminum are
coming down as growth in the U.S.
firms, especially in housing and au-
tos, he says.
Global economic growth should
pick up in the second half of 2014,
agrees Mark Luschini, chief invest-
ment officer at Janney Capital Man-
agement in Pittsburgh, with $3.3
billion in assets.
Metals used in manufacturing of
catalytic converters for automobiles
are starting to look particularly at-
tractive, he says.
BY MURRAY COLEMAN
Long-Term
Bonds Take
Fast Track
In Europe
On the heels of Valentines Day,
euro-zone governments are looking
for long-term commitment.
Take the Netherlands. On Tues-
day, it will launch a series of ultra-
long-dated government bonds, ma-
turing in 2047, which come amid a
flurry of European sales of 30-year
or even longer bonds this month.
The Netherlands bond breaks
new ground because it is a fresh
launch with a relatively large initial
size.
Among the countries raising
funds, Slovakia, Belgium, the Neth-
erlands, Germany, Spain and France
will have offers of up to roughly 28
billion ($38.3 billion) in government
bonds this week, as a time when
there wont be any funds from re-
demptions available for reinvest-
ment, and thus to support demand.
The new Dutch bond carries an
interest rate of 2.75%. The govern-
ment plans to sell at least 3 billion.
Buyers of this long-dated bond
mostly come from pension funds
and insurance firms, and demand
for this type of debt is typically
much more muted than for shorter-
term, bonds. As a result, this seg-
ment of the debt market is rarely
tapped.
Countries normally try to avoid
competing with one another in sell-
ing these types of bonds.
But current market conditions
give borrowers some incentive to
sell longer-term bonds, analysts
said.
For one, the outlook for inflation
is tepid, meaning that interest-rate
increases by the European Central
Bank arent in the cards.
Rising interest rates tend to
weigh on bond prices, which drives
up borrowing costs. Bond prices and
yields move in opposite directions.
Second, issuers are looking to
get ahead of the Federal Reserve,
which is gradually scaling back a
bond-purchase program it started
after the financial crisis.
Many market observers believe
this reduction in bond purchases
eventually will drive long-term
yields higher.
Bond investors have been hold-
ing relatively few 30-year bonds,
given the uncertain outlook for
bonds and stocks, said Jens Peter
Sorensen, chief analyst with Danske
Markets. When bond markets sell
off in response to fear of rising in-
terest rates, longer-term bonds tend
to fall the most.
Now, it is back to basics, Mr.
Sorensen said. He also noted that
many investors in long-term bonds
are likely to go back to tracking in-
dexes.
Kicking off this weeks bond
sales is Slovakia on Monday, offer-
ing a bond that matures in Novem-
ber 2018 with a 1.5% interest rate
and debt that matures in February
2023, with a 3% rate.
The countrys debt agency said
on Feb. 3 that the expected amount
was 200 million for each bond.
Emese Bartha
BY EMESE BARTHA
Heard on the Street: Europes
recovery gains momentum.............. 28
THE WALL STREET JOURNAL. Monday, February 17, 2014 | 23
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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
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a majority of the funds directionality. Ranked on %total return (dividends reinvested) in U.S. dollars for
one year ending February 14, 2014
Leading 10Performers
FUND FUND LEGAL %Return in $US **
RATING* NAME FUNDMGM'T CO. CURR. BASE YTD 1-YR 2-YR 5-YR
NS Swiss-Asia Swiss-Asia USDCYM -3.40 43.57 NS NS
Growth Fund SubFd 1 Class A Financial Services Pte Ltd
4 Dexia World Candriam EURLUX 43.23 43.23 20.97 11.20
Alt Alphamax I-Cap-eur
3 Abbey Global Abbey Capital USDUSA 27.18 27.18 20.23 14.45
LP Limited
5 Persistent Persistent Asset USDUSA 23.82 23.82 13.58 8.24
Edge Asia Partners Master Fd Management Limited
NS Global Global Selection EURITA 21.85 21.85 15.71 7.00
Managers Selection Fund A Sgr S.P.A.
3 Invitational Asset Mgmt USDUSA -7.47 20.85 20.12 19.79
Partners Fund LP Consulting Services Inc
4 NS Notz, Stucki USDLUX 19.29 19.29 14.17 8.24
SelectionSICAV-SIF-Columbus Class USD Europe SA
5 Permal Permal Asset USDUSA 18.99 18.99 14.19 9.87
Investment Partners, L.P. Management LLC
2 Eurizon Eurizon A.I. SGR EURITA 18.90 18.57 12.44 3.28
Equity Hedge R SpA
2 Hedge Invest Hedge Invest SGR EURITA 18.49 18.49 13.16 5.77
Portfolio Fund I P.A.
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
Singapore Bank Profits Rise
Net profit at Singapores top
two banks rose in the fourth quar-
ter, underpinned by strong loan
growth in their Asian units, an in-
dication that demand for funding
from companies and consumers re-
mains strong.
DBS Group Holdings said Fri-
day that, despite volatile condi-
tions in most emerging markets, its
net profit for the three months
ended Dec. 31 grew nearly 6% to
802 million Singapore dollars
(US$637 million), with revenue ris-
ing 10% to S$2.15 billion. Most of
the income gain came from the
banks Singapore and Hong Kong
operations.
Separately, Oversea-Chinese
Banking Corp. said its fourth-quar-
ter net profit grew 8% to S$715
million, helped by the performance
of its Malaysian and Indonesian
subsidiaries.
Singapore banks, which once re-
lied heavily on their domestic mar-
ket, have in recent years been
forced to look to the wider region
as growth at home slowed. Added
pressure has come from govern-
ment measures designed to tamp
down demand for property.
Last month, OCBC said it had
extended an exclusivity agreement
to buy Hong Kongs Wing Hang
Bank Ltd., a deal that people with
knowledge of the process say could
be valued as high as US$5 billion.
DBS, for its part, is looking to ac-
quire Socit Gnrales private-
banking operations in Asia, accord-
ing to people with knowledge of
that deal.
Looking ahead, our overall out-
look remains optimistic, given the
positive macroeconomic environ-
ment and the underlying growth
prospects in our key markets,
OCBC Chief Executive Officer Sam-
uel Tsein said. Mr. Tsein said that
OCBCs bid for Wing Hang is being
assessed by Hong Kong regulators.
He declined to give further details.
For DBS, which failed to get
regulatory approval last year to
buy Indonesias PT Bank Danamon,
is looking to add to its regional
business and intends to spend
about S$200 million over the next
three years to boost its digital
banking services. CEO Piyush Gupta
said that DBSs Hong Kong and
China businesses continue to re-
port an uptick in customers at both
their retail and corporate branches.
We want to grow our loan
books in line with our deposit
growth, Mr. Gupta said. DBS is
looking to increase its loan portfo-
lio by 8% to 10% this year.
Both DBS and OCBC chief execu-
tives admitted that Singapores
property-cooling measures will
moderate demand for homes and
associated loans. If conditions re-
main the same, we will probably
see a bit of tapering in home-loan
growth, Mr. Tsein said, adding that
the impact would most likely be
seen in 2015 and beyond.
In a filing to Singapore Ex-
change, DBS said net interest in-
come for the fourth quarter grew
12% from a year earlier to S$1.45
billion. OCBC said net interest in-
come was S$1.03 billion, also a rise
of 12% on the previous year.
Shares in OCBC rose as much as
1% Friday, extending a slight recov-
ery following falls of almost 9% in
January, after the bank said it was
entering into talks to acquire Wing
Hang Bank.
DBSs stock price fell 0.4% Fri-
day to S$16.46 per share. Analysts
covering the sector said OCBCs re-
sults exceeded expectations, while
DBSs results were broadly in line
with them.
While 2013 was a tough year for
Southeast Asias financial compa-
nies, most analysts are optimistic
about the long-term outlook. DBS
is our top sector pick as it is the
best-positioned to take advantage
of a rising interest-rate environ-
ment, Maybanks Kim Eng said in
a note. It expects Singapore hous-
ing loans to grow by 4% to 6% in
2014-15, but business loans to
climb 12% to 14%.
BY JAKE MAXWELL WATTS
AND P.R. VENKAT
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 01/31 USD NS 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 01/31 USD 92.43 -4.9 -16.8 -3.1
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 01/31 USD NS -4.1 5.1 4.2
Platinm-Nordic OT OT CYM 10/31 SEK NS 2.6 4.7 1.2
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 02/11 USD 35.90 -6.5 4.4 -5.1
Superfund GCT USD* GL OT LUX 02/11 USD 1616.97 -4.7 1.3 -7.5
Superfund Green Gold A(SPC) GL OT CYM 02/11 USD 847.70 3.4 -24.1 -19.4
Superfund Green Gold B(SPC) GL OT CYM 02/11 USD 735.98 1.7 -23.6 -21.0
Superfund Q-AG* GL OT AUT 02/11 EUR 5836.00 -3.9 -1.3 -3.4
nWINTONCAPITAL MANAGEMENTLTD
Tel: +44(0)2076105350Fax: +44(0)2076105301
Winton Evolution EURCls H GL OT CYM 01/31 EUR NS -3.1 7.2 1.5
Winton Evolution GBP Cls G GL OT CYM 01/31 GBP NS -3.1 7.6 1.9
Winton Evolution USDCls F GL OT CYM 01/31 USD NS -3.1 7.6 1.8
Winton Futures EURCls C GL OT VGB 01/31 EUR 245.63 -2.4 3.8 0.9
Winton Futures GBP Cls D GL OT VGB 01/31 GBP 267.48 -2.4 4.1 1.3
Winton Futures JPY Cls E GL OT VGB 01/31 JPY 17199.60 -2.3 4.4 1.0
Winton Futures USDCls B GL OT VGB 01/31 USD 876.58 -2.4 4.2 1.2
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 02/13 EUR 89.54 -1.2 22.4 20.0
Industria AE EU EQ DEU 02/13 EUR 93.07 1.3 16.8 13.4
InternRent AE EU BD DEU 02/13 EUR 40.30 3.2 -2.1 -1.5
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 02/07 USD 322292.74 -3.0 -22.2 -3.9
nCREDITPACIFICASSETMANAGMENT
www.creditpacific.com
CP Global Alpha Fund OT OT WSM 01/15 USD 98.80 1.0 NS NS
CP Multi-Strategy Currency Fund OT OT CYM 01/15 USD 91.89 -0.2 -6.1 -1.0
CPS-Master Priv Fund GL OT WSM 02/13 USD 126.14 2.8 10.0 11.4
nHSBCTrinkaus Investment Managers SA
E-Mail: funds@hsbctrinkaus.lu
Telephone: 352- 47 18471
Prosperity Return Fund A JP BD LUX 12/06 JPY 8577.68 -9.3 -8.4 0.3
Prosperity Return Fund B EU BA LUX 12/06 JPY 9032.12 4.6 11.0 13.2
Prosperity Return Fund C EU BA LUX 12/06 USD 79.01 -12.2 -11.1 -1.0
Prosperity Return Fund D EU BA LUX 12/06 EUR 121.37 -9.0 -8.8 8.1
Renaissance Hgh Grade Bd A EU BA LUX 12/06 JPY 10807.34 3.5 5.1 11.3
Renaissance Hgh Grade Bd B EU BA LUX 12/06 JPY 11130.39 17.9 25.6 23.9
Renaissance Hgh Grade Bd C EU BA LUX 12/06 USD 96.94 -0.9 0.7 8.4
Renaissance Hgh Grade Bd D EU BA LUX 12/06 EUR 102.83 -4.6 -4.1 6.9
nSENSIBLEASSETMANAGEMENTLIMITED
www.samfund.com.hk Tel: (852) 28686848 Fax: (852) 28109948
Asia Value Formula Fd-B OT OT CYM 02/12 USD 9.39 -6.1 -9.4 -4.4
nTHENATIONAL INVESTOR
TNI Tower | Zayed1st Street Khalidia| Web:www.tni.ae
TNI MENASpecial Sits Fund OT OT BMU 01/30 USD 1127.97 1.1 5.8 6.7
TNI MENAUCITS Fund OT OT IRL 02/06 USD 1353.18 4.5 25.9 18.4
TNI UAE Blue Chip Fund OT OT ARE 02/06 AED 10.31 13.1 76.8 50.5
nWEBSITE: WWW.VALUEPARTNERS.COM.HK, TEL: (852) 28809263, FAX: (852) 25648487
*formerly knownas China ABHShares Fund
Intel-Chin Mainlnd Foc AS EQ CYM 02/12 USD 35.08 -4.5 -2.3 1.6
Intel-China Converg* AS EQ CYM 02/12 USD 123.46 -3.7 -0.9 1.1
VP Classic - A AS EQ CYM 02/13 USD 224.92 -4.4 0.4 3.8
VP CLassic - B AS EQ CYM 02/13 USD 102.70 -4.4 -0.1 3.3
VP High Dividend Stk OT OT CYM 02/13 USD 65.18 -4.5 0.0 7.8
nYUKI MANAGEMENT&RESEARCH
nYMR-NSeries
YMR-NGrowth Fund JP EQ IRL 02/14 JPY 13264.00 -7.8 36.8 28.4
nYuki Asia Umbrella Series
Yuki Rebounding Gro Fd JP EQ IRL 02/14 JPY 16134.00 -4.8 56.4 38.6
nYuki MizuhoSeries
Yuki Mizuho Jpn Dyn Gro JP EQ IRL 02/14 JPY 5653.00 -8.1 35.3 27.3
Yuki Mizuho Jpn Inc JP EQ IRL 02/14 JPY 9916.00 -4.9 26.9 23.2
Yuki Mizuho Jpn Lg Cap JP EQ IRL 02/14 JPY 6053.00 -8.6 26.0 21.8
Yuki Mizuho Jpn LowP JP EQ IRL 02/14 JPY 18175.00 -7.9 52.4 35.7
Yuki Mizuho Jpn Val Sel AS EQ IRL 02/14 JPY 9053.00 -5.3 56.7 40.9
nMANULIFEASSETMANAGEMENT TEL:(852)21081110
Internet:http://www.manulife.com.hk 47/FManulife Plaza, Causeway Bay, HongKong
American Growth A US EQ LUX 02/13 USD 26.23 -2.2 19.2 17.8
American Growth AA US EQ LUX 02/13 USD 1.50 -2.3 18.9 17.5
Asia Total Return AA AS BD LUX 02/13 USD 0.96 0.6 -4.0 1.8
Asia Value Dividend Equity Fund AA OT OT LUX 02/13 USD 1.48 -3.7 3.6 10.4
Asian Equity A OT OT LUX 02/13 USD 3.10 -3.3 6.7 9.3
Asian Equity AA OT OT LUX 02/13 USD 1.00 -3.3 6.5 9.1
Asian SmCap Equity AA OT OT LUX 02/13 USD 2.20 1.2 10.3 20.3
China Value A AS EQ LUX 02/13 USD 7.70 -4.1 0.5 2.9
China Value AA AS EQ LUX 02/13 USD 2.42 -4.1 0.2 2.7
Dragon Growth A AS EQ LUX 02/13 USD 1.87 -1.4 14.4 12.8
Dragon Growth AA AS EQ LUX 02/13 HKD 9.08 -1.4 14.2 12.6
Emg Eastrn Europe A EU EQ LUX 02/13 USD 4.48 -8.7 -7.1 0.5
Emg Eastrn Europe AA EU EQ LUX 02/13 USD 1.92 -8.7 -7.2 0.3
European Growth A EU EQ LUX 02/13 USD 11.40 -1.5 15.4 16.1
European Growth AA EU EQ LUX 02/13 USD 0.82 -1.6 15.0 15.8
Global Contrarain AA GL EQ LUX 02/13 USD 0.90 -2.6 -2.4 -3.6
Global Property AA OT EQ LUX 02/13 USD 0.90 0.4 1.0 10.5
Global Resources AA GL EQ LUX 02/13 USD 1.00 2.8 -5.3 -7.0
Healthcare AA OT EQ LUX 02/13 USD 1.62 3.2 26.5 22.0
India Equity AA EA EQ LUX 02/13 USD 0.94 -5.2 -12.5 -4.7
International Growth A GL EQ LUX 02/13 USD 4.33 -2.2 18.0 14.8
International Growth AA GL EQ LUX 02/13 USD 1.00 -2.2 17.8 14.5
Japanese Growth A JP EQ LUX 02/13 USD 3.09 -5.4 12.4 7.9
Japanese Growth AA JP EQ LUX 02/13 USD 0.79 -5.4 12.1 7.6
Latin America Equity AA GL EQ LUX 02/13 USD 0.97 -8.9 -22.7 -12.3
Russia Equity AA EE EQ LUX 02/13 USD 0.60 -10.0 -11.6 -5.6
Strategic Income AA OT OT LUX 02/13 USD 1.11 0.8 0.1 3.0
Taiwan Equity AA AS EQ LUX 02/13 USD 1.43 -2.8 5.8 5.4
Turkey Equity AA OT OT LUX 02/13 USD 0.76 -7.1 -29.9 -4.6
U.S. Bond AA US BD LUX 02/13 USD 1.21 1.2 0.9 3.7
U.S. SmCap Equity AA US EQ LUX 02/13 USD 1.10 -3.7 12.7 7.2
U.S. Special Opportunities AA US BD LUX 02/13 USD 0.99 1.4 9.0 13.8
U.S. Tsy Inf-ProtSec AA OT OT LUX 02/13 USD 1.28 1.6 -6.9 -2.1
nPTCIPTADANAASSETMANAGEMENT
Tel: +6221 25574883 Fax: +6221 25574893 Website: www.ciptadana.com
Indonesian Grth Fund GL EQ BMU 02/12 USD 145.96 7.1 -19.5 -12.8
DBS reported a nearly 6% gain in quarterly net profit, in line with expectations.
R
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LIST YOUR
FUNDS
24 | Monday, February 17, 2014 THE WALL STREET JOURNAL.
Giants aroundthe world
DowJones CountryTitans
INDEXPERFORMANCE
Previous session Year-to-date 52-week
Italy 1.67% 8.4% 23.0%
Spain 0.41 3.2 28.7
Canada 0.33 2.7 10.3
Switzerland 0.24 2.7 14.6
France 0.65 1.1 19.0
Germany 0.67 0.7 22.2
Sweden 0.13 0.1 12.6
Australia 0.79 -0.04% 12.5
Netherlands 0.42 -1.0 18.7
South Africa 0.57 -1.6 12.9
U.K. 0.03 -1.9 3.9
China 88 0.41 -2.3 -22.5
Hong Kong 0.39 -3.4 0.1
Turkey 1.89 -3.7 -15.8
Singapore 0.09 -3.7 -6.1
South Korea 0.93 -5.0 2.4
Brazil 0.60 -8.1 -21.8
Japan -1.29 -9.8 24.8
DowJones Regional Sector Titans
Arab 50 0.08% 7.2% 15.9%
Health Care 0.74 4.5 28.8
Utilities 0.86 4.0 12.1
Constructn Mat 0.61 2.3 18.6
Technology 0.38 0.9 19.7
Travel &Leisure 0.62 0.8 30.9
Real Estate 0.02 -0.01% 1.2
Global 50 0.57 -1.6 12.9
Asian 50 0.23 -4.7 -0.8
Tiger 50* 0.88 -5.0 -4.2
*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
Reliance Industries GDR United KingdomExploration Production $0.20 26.35 2.45% -17.7% -9.3%
Hyundai Motor Korea Automobiles 0.39 232,500 2.42 8.9 -1.7
Taiwan Semiconductor ManufacturingTaiwan Semiconductors 42.74 107.50 2.38 2.4 1.9
Tencent Holdings Hong Kong Internet 5.67 548.50 1.57 99.9 11.0
Wesfarmers Australia Home Improvement Retailers 2.53 43.84 1.55 9.5 -0.5
Nippon Steel Sumitomo Metal Japan Iron Steel $69.74 295.00 -2.96% 17.1 -16.2
Seven I Holdings Japan Broadline Retailers 3.26 3,849 -2.41 39.7 -7.9
Fanuc Japan Industrial Machinery 1.67 16,200 -2.23 9.2 -15.8
Nomura Holdings Japan Investment Services 39.90 681.00 -2.16 29.0 -15.8
Mitsubishi UFJ Financial Group Japan Banks 66.31 591.00 -2.15 16.3 -14.8
...Andthe rest of Asia's blue chips
Latest,
Volume in local STOCKPERFORMANCE
Company/Country (Industry) in millions currency Latest 52-week YTD
POSCO 0.35 294,500 1.38% -19.1% -9.8%
Korea (Iron Steel)
Nissan Motor 21.02 904.00 1.12 -3.0 2.3
Japan (Automobiles)
China Mobile 14.63 73.85 1.10 -13.9 -8.0
Hong Kong (Mobile Telecommunications)
BHP Billiton 7.51 37.71 1.05 -2.3 -0.7
Australia (General Mining)
Hon Hai Precision Industry 46.37 83.50 0.97 99.8 4.2
Taiwan (Electrical Components Equipment)
Australia NewZeald Bkg 5.02 31.34 0.90 12.9 -2.8
Australia (Banks)
Mitsui Co. 18.05 1,526 0.86 11.3 4.2
Japan (Industrial Suppliers)
Sun Hung Kai Properties 4.24 96.50 0.84 -21.9 -1.9
Hong Kong (Real Estate Holding Development)
Westpac Banking 5.39 32.75 0.68 12.3 1.1
Australia (Banks)
CNOOC 52.67 12.74 0.63 -20.2 -11.7
Hong Kong (Exploration Production)
Industrial Commercial Bank of China 170.20 4.79 0.63 -16.7 -8.6
Hong Kong (Banks)
Bank of China 189.17 3.27 0.62 -14.4 -8.4
Hong Kong (Banks)
Woolworths 2.62 35.50 0.57 7.9 4.9
Australia (Food Retailers Wholesalers)
China Construction Bank 164.81 5.39 0.56 -17.6 -7.9
Hong Kong (Banks)
East Japan Railway 1.36 7,543 0.53 15.7 -10.0
Japan (Travel Tourism)
China Life Insurance 18.43 21.60 0.47 -12.9 -10.9
Hong Kong (Life Insurance)
Tokio Marine Holdings 3.57 3,091 0.39 15.5 -12.1
Japan (Property Casualty Insurance)
National Australia Bank 4.14 34.12 0.32 15.6 -2.0
Australia (Banks)
Commonwealth Bk Australia 3.64 75.99 0.32 13.4 -2.3
Australia (Banks)
NTT DoCoMo 6.18 1,635 0.25 19.3 -5.2
Japan (Mobile Telecommunications)
Latest,
Volume in local STOCKPERFORMANCE
Company/Country (Industry) in millions currency Latest 52-week YTD
Samsung Electronics 0.12 1,301,000 0.23% -13.2% -5.2%
Korea (Semiconductors)
PetroChina 65.13 7.82 0.13 -26.5 -7.9
Hong Kong (Integrated Oil Gas)
Rio Tinto 3.33 67.90 0.10 -3.2 -0.4
Australia (General Mining)
KDDI 4.47 5,553 0.09 63.6 -14.2
Japan (Mobile Telecommunications)
SoftBank 22.21 7,499 -0.09 118.9 -18.5
Japan (Mobile Telecommunications)
Takeda Pharmaceutical 2.87 4,710 -0.19 1.1 -2.4
Japan (Pharmaceuticals)
Canon 6.46 3,013 -0.40 -7.7 -9.5
Japan (Electronic Office Equipment)
Woodside Petroleum 2.27 38.36 -0.57 4.0 -1.4
Australia (Exploration Production)
Mitsubishi 8.08 1,936 -0.67 1.9 -4.0
Japan (Industrial Suppliers)
Nippon Telegraph Telephone 2.86 5,592 -0.67 35.9 -1.2
Japan (Fixed Line Telecommunications)
Honda Motor 6.56 3,713 -1.07 7.5 -14.2
Japan (Automobiles)
Japan Tobacco Inc 6.47 3,280 -1.18 13.1 -4.1
Japan (Tobacco)
Komatsu 6.84 2,101 -1.18 -12.4 -1.7
Japan (Commercial Vehicles Trucks)
Sumitomo Mitsui Financial Group 6.62 4,632 -1.24 27.3 -14.5
Japan (Banks)
Toyota Motor 8.84 5,813 -1.32 23.0 -9.5
Japan (Automobiles)
AIAGroup 27.89 36.60 -1.35 17.9 -5.9
Hong Kong (Life Insurance)
Mizuho Financial Group 182.07 209.00 -1.42 6.6 -8.3
Japan (Banks)
Itochu 6.78 1,264 -1.48 18.8 -2.7
Japan (Industrial Suppliers)
Hitachi 29.85 775.00 -1.77 49.9 -2.6
Japan (Electronic Equipment)
Shin-Etsu Chemical 2.06 5,571 -1.92 0.4 -9.3
Japan (Specialty Chemicals)
Sources: SIX Financial Information; WSJ Market Data Group
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 0.75 101.19% 0.01% 1.04 0.69 0.82
Eur. HighVolatility: 20/1 1.11 99.50 0.01 1.61 1.01 1.24
Europe Crossover: 20/1 2.82 109.42 0.05 4.08 2.75 3.27
Asia ex-JapanIG: 20/1 1.42 98.12 0.01 1.57 1.24 1.38
Japan: 20/1 0.80 100.94 0.01 0.97 0.68 0.82
Note: Data as of February 13
Spreads
Spreads on
ve-year swaps
for corporate
debt; based on
Markit iTraxx
indexes.
In percentage points
3.00
2.00
1.00
0
1
t
Asia ex-Japan IG
t
Australia
2013
Sept. Oct. Nov.
2014
Dec. Jan. Feb.
Index roll
Source: Markit Group
NOTICE TO READERS
All statistics published in
The Wall Street Journal
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
TorayInds 32 3 1 1
SUZUKI Mtr 34 1 5 5
Ptt 139 5 16 4
Mitsui 33 1 1 1
TOKYOGAS 24 ... 1 1
West JapanRwy 25 ... ... ...
Canon 27 ... 2 1
East JapanRwy 23 ... 1 1
YAMAHAMtr 38 1 3 2
Fuji HeavyInds 39 1 2 2
Andthe most deterioration
CHANGE, in basis points
Yesterday Yesterday Five-day 28-day
Panasonic 65 6 2 1
Kobe Stl 135 7 3 17
CHINADevBk 130 6 ... 16
NipponPaper Inds 143 6 25 24
Hyundai CapServices 94 4 1 3
Hana Bank 88 3 ... 5
KT 81 3 1 2
Mitsui Chems 189 7 25 1
Korea Elec Pwr 76 3 ... 3
Bkof China 145 5 1 19
Source: Markit Group
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.
Behind Asias deals: Bank revenues from equity capital markets
Behind every IPO,
follow-on or
convertible equity
offering is one or
more investment
banks. At right,
investment banks
historical and
year-to-date
revenues from global
equity-capital-market
(ECM) deals
Source: Dealogic
75% 3
50 2
25 1
0 0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
nEquity capital markets nDebt capital markets (both in billions, left axis)
ECM as a percentage of total
(right axis)
t
THE WALL STREET JOURNAL. Monday, February 17, 2014 | 25
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>>
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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 February 13, 2014
ONE-DAY CHANGE Year Year
Commodity Exchange Last price Net Percentage high low
Corn (cents/bu.) CBOT 451.00 4.50 1.01% 454.50 414.50
Soybeans (cents/bu.) CBOT 1325.50 -5.00 -0.38% 1,341.00 1,247.50
Wheat (cents/bu.) CBOT 595.25 1.25 0.21 617.75 553.75
Live cattle (cents/lb.) CME 141.075 -1.325 -0.93 143.200 135.375
Cocoa ($/ton) ICE-US 2,962 4 0.14 2,977 2,636
Coffee (cents/lb.) ICE-US 142.85 0.90 0.63 146.10 112.50
Sugar (cents/lb.) ICE-US 15.96 -0.08 -0.50 16.58 14.92
Cotton (cents/lb.) ICE-US 89.00 0.42 0.47 89.67 82.60
Rapeseed (euro/ton) LIFFE 383.00 4.75 1.26 385 349
Cocoa (pounds/ton) LIFFE 1,859 -6 -0.32 1,879 1,676
Robusta coffee ($/ton) LIFFE 1,809 -13 -0.71 1,883 1,575
Copper ($/lb.) COMEX 3.2625 0.0125 0.38 3.4245 3.1750
Gold ($/troy oz.) COMEX 1319.80 19.70 1.52 1,321.50 1,203.70
Silver ($/troy oz.) COMEX 21.410 1.015 4.98 21.445 18.970
Aluminum($/ton)* LME 1,730.50 1.50 0.09 1,813.00 1,686.50
Tin ($/ton)* LME 22,570.00 200.00 0.89 22,570.00 21,410.00
Copper ($/ton)* LME 7,118.50 -18.50 -0.26 7,422.00 7,051.00
Lead ($/ton)* LME 2,120.00 -5.00 -0.24 2,242.00 2,097.50
Zinc ($/ton)* LME 2,024.00 7.50 0.37 2,110.00 1,964.00
Nickel ($/ton)* LME 14,280 -70 -0.49 14,730 13,425
Crude oil ($/bbl.) NYMEX 100.16 0.11 0.11 100.79 91.48
Heating oil ($/gal.) NYMEX 3.0174 0.0271 0.91 3.0501 2.8758
RBOBgasoline ($/gal.) NYMEX 2.9670 0.0189 0.64 2.9797 2.7831
Natural gas ($/mmBtu) NYMEX 4.562 -0.070 -1.51 4.7620 3.8580
Brent crude ($/bbl.) ICE-EU 108.98 0.46 0.42 110.79 104.75
Gas oil ($/ton) ICE-EU 925.00 6.50 0.71 943.75 893.75
Sources: SIX Financial Information; WSJ Market Data Group
Currencies Londonclose onFeb. 14
Per In
AMERICAS Per euro In euros U.S. dollar U.S. dollars
Argentina peso-a 10.6917 0.0935 7.8097 0.1280
Brazil real 3.2663 0.3062 2.3859 0.4191
Canada dollar 1.5032 0.6652 1.0980 0.9107
Chile peso 749.40 0.001334 547.40 0.001827
Colombia peso 2770.41 0.0003610 2023.63 0.0004942
Ecuador US dollar-f 1.3690 0.7304 1 1
Mexico peso-a 18.1408 0.0551 13.2508 0.0755
Peru sol 3.8503 0.2597 2.8125 0.3556
Uruguay peso-e 30.384 0.0329 22.194 0.0451
U.S. dollar 1.3690 0.7304 1 1
Venezuela bolivar 8.69 0.115030 6.35 0.157480
ASIA-PACIFIC
Australia dollar 1.5174 0.6590 1.1084 0.9022
1-mo. forward 1.5203 0.6578 1.1105 0.9005
3-mos. forward 1.5266 0.6550 1.1151 0.8968
6-mos. forward 1.5360 0.6510 1.1220 0.8913
China yuan 8.3053 0.1204 6.0666 0.1648
Hong Kong dollar 10.6172 0.0942 7.7553 0.1289
India rupee 84.6815 0.0118 61.8550 0.0162
Indonesia rupiah 15877 0.0000630 11597 0.0000862
Japan yen 139.41 0.007173 101.83 0.009820
1-mo. forward 139.39 0.007174 101.82 0.009821
3-mos. forward 139.35 0.007176 101.79 0.009825
6-mos. forward 139.27 0.007180 101.73 0.009830
Malaysia ringgit-c 4.5344 0.2205 3.3121 0.3019
NewZealand dollar 1.6367 0.6110 1.1955 0.8365
Pakistan rupee 143.488 0.0070 104.810 0.0095
Philippines peso 60.902 0.0164 44.486 0.0225
Singapore dollar 1.7254 0.5796 1.2603 0.7935
South Korea won 1455.41 0.0006871 1063.10 0.0009406
Taiwan dollar 41.414 0.02415 30.251 0.03306
Thailand baht 44.257 0.02260 32.327 0.03093
Per In
EUROPE Per euro In euros U.S. dollar U.S. dollars
Euro zone euro 1 1 0.7304 1.3690
1-mo. forward 1.0000 1.0000 0.7305 1.3690
3-mos. forward 1.0000 1.0000 0.7304 1.3690
6-mos. forward 0.9999 1.0001 0.7304 1.3692
Czech Rep. koruna-b 27.417 0.0365 20.027 0.0499
Denmark krone 7.4619 0.1340 5.4505 0.1835
Hungary forint 309.15 0.003235 225.82 0.004428
Norway krone 8.3288 0.1201 6.0837 0.1644
Poland zloty 4.1478 0.2411 3.0297 0.3301
Russia ruble-d 48.145 0.02077 35.167 0.02844
Sweden krona 8.8354 0.1132 6.4538 0.1549
Switzerland franc 1.2224 0.8181 0.8929 1.1200
1-mo. forward 1.2221 0.8182 0.8927 1.1202
3-mos. forward 1.2215 0.8187 0.8922 1.1208
6-mos. forward 1.2204 0.8194 0.8914 1.1218
Turkey lira 2.9873 0.3347 2.1821 0.4583
U.K. pound 0.8181 1.2224 0.5975 1.6735
1-mo. forward 0.8182 1.2222 0.5977 1.6732
3-mos. forward 0.8186 1.2216 0.5980 1.6724
6-mos. forward 0.8192 1.2207 0.5984 1.6711
MIDDLE EAST/AFRICA
Bahrain dinar 0.5161 1.9377 0.3770 2.6528
Egypt pound-a 9.5300 0.1049 6.9611 0.1437
Israel shekel 4.8070 0.2080 3.5112 0.2848
Jordan dinar 0.9707 1.0302 0.7091 1.4103
Kuwait dinar 0.3858 2.5918 0.2818 3.5482
Lebanon pound 2058.96 0.0004857 1503.95 0.0006649
Saudi Arabia riyal 5.1346 0.1948 3.7506 0.2666
South Africa rand 14.8831 0.0672 10.8713 0.0920
United Arab dirham 5.0284 0.1989 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 TSM 1395.04 0.54 0.04% -3.7% 3.3%
Australia SPX/ASX200 5356.30 48.20 0.91 0.1 6.4
China Shanghai Composite 2115.85 17.45 0.83 -0.01 -13.0
Hong Kong Hang Seng 22298.41 132.88 0.60 -4.3 -4.9
India S&P BSE Sensex 20366.82 173.47 0.86 -3.8 4.6
Indonesia Jakarta Composite 4508.04 16.384 0.36 5.5 -2.2
Japan Nikkei Stock Average 14313.03 -221.71 -1.53% -12.1 28.1
Topix 1183.82 -15.92 -1.33 -9.1 25.6
Malaysia Kuala Lumpur Composite 1819.37 2.22 0.12 -2.5 11.8
NewZealand NZSX-50 4888.40 14.87 0.31 3.2 16.5
Pakistan KSE 100 26394.13 -147.13 -0.55 4.5 48.3
Philippines PSEi 6113.66 11.94 0.20 3.8 -6.3
Singapore Straits Times 3038.71 -1.19 -0.04 -4.1 -7.4
South Korea Kospi 1940.28 13.32 0.69 -3.5 -2.1
Taiwan Weighted 8513.68 45.98 0.54 -1.1 7.7
Thailand SET 1311.87 Closed 1.0 -14.1
EUROPE Stoxx Europe 600 333.32 1.84 0.56 1.5 16.0
Stoxx Europe 50 2929.12 14.84 0.51 0.3 11.7
PREVIOUS SESSION PERFORMANCE
Region/Country Index Close Net change Percentage change Yr.-to-date 52-wk.
Euro Zone Euro Stoxx 319.36 2.06 0.65% 1.6% 20.9%
Euro Stoxx 50 3119.06 21.11 0.68 0.3 19.3
Denmark OMXCopenhagen 626.38 4.16 0.67 10.7 29.1
Finland OMXHelsinki 7424.64 9.87 0.13 1.2 17.8
France CAC-40 4340.14 27.34 0.63 1.0 18.6
Germany DAX 9662.40 65.63 0.68 1.2 27.2
Italy FTSE MIB 20436.47 326.17 1.62 7.7 23.9
Netherlands AEX 398.95 1.95 0.49 -0.7 16.2
Russia RTSI 1343.20 21.59 1.63 -6.9 -14.8
Spain IBEX35 10132.8 33.90 0.34 2.2 24.3
Switzerland SMI 8417.58 33.68 0.40 2.6 12.2
Turkey BIST 100 64882.91 1117.96 1.75 -4.3 -16.9
U.K. FTSE 100 6663.62 4.20 0.06 -1.3 5.3
AMERICAS DJ Americas 463.18 2.24 0.49 -0.5 17.5
Brazil Bovespa 48201.11 388.28 0.81 -6.4 -16.8
Argentina Merval 6070.60 133.22 2.24 12.6 84.2
Mexico IPC 40710.89 401.93 1.00 -4.7 -7.8
Europeanand Americas index data are as of 5:00 p.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. 1.108 0.598 1.098 6.067 0.730 7.755 61.855 11597.45 101.835 1.195 1063.10 3.312 44.486 1.260 0.893 30.251 32.327
Australia 0.902 0.539 0.991 5.473 0.659 6.997 55.806 10463.31 91.876 1.079 959.13 2.988 40.135 1.137 0.806 27.292 29.166
Britain 1.674 1.855 1.838 10.152 1.222 12.979 103.515 19408.56 170.422 2.001 1779.11 5.543 74.447 2.109 1.494 50.625 54.100
Canada 0.911 1.009 0.544 5.525 0.665 7.063 56.333 10562.13 92.744 1.089 968.19 3.016 40.514 1.148 0.813 27.550 29.441
China 0.1648 0.183 0.098 0.181 0.120 1.278 10.196 1911.70 16.786 0.197 175.24 0.546 7.333 0.208 0.147 4.986 5.329
Euro 1.369 1.517 0.818 1.503 8.305 10.617 84.681 15877.29 139.415 1.637 1455.41 4.534 60.902 1.725 1.222 41.414 44.257
HongKong 0.129 0.143 0.077 0.142 0.782 0.094 7.976 1495.43 13.131 0.154 137.08 0.427 5.736 0.163 0.115 3.901 4.168
India 0.0162 0.0179 0.0097 0.0178 0.0981 0.0118 0.1254 187.49 1.6463 0.0193 17.19 0.0535 0.7192 0.0204 0.0144 0.4891 0.5226
Indonesia 0.0001 0.0001 0.0001 0.0001 0.0005 0.0001 0.0007 0.0053 0.0088 0.0001 0.09 0.0003 0.0038 0.0001 0.0001 0.0026 0.0028
Japan 0.010 0.011 0.006 0.011 0.060 0.007 0.076 0.607 113.89 0.012 10.44 0.033 0.437 0.012 0.009 0.297 0.317
NewZealand 0.836 0.927 0.500 0.918 5.075 0.611 6.487 51.740 9701.04 85.183 889.26 2.771 37.211 1.054 0.747 25.304 27.041
SouthKorea 0.0009 0.0010 0.0006 0.0010 0.0057 0.0007 0.0073 0.0582 10.91 0.0958 0.0011 0.0031 0.0418 0.0012 0.0008 0.0285 0.0304
Malaysia 0.302 0.335 0.180 0.332 1.832 0.221 2.341 18.675 3501.54 30.746 0.361 320.97 13.431 0.381 0.270 9.133 9.760
Philippines 0.022 0.025 0.013 0.025 0.136 0.016 0.174 1.390 260.70 2.289 0.027 23.90 0.074 0.028 0.020 0.680 0.727
Singapore 0.793 0.879 0.474 0.871 4.814 0.580 6.153 49.079 9202.07 80.801 0.949 843.52 2.628 35.297 0.708 24.002 25.650
Switzerland 1.120 1.241 0.669 1.230 6.794 0.818 8.686 69.275 12988.68 114.051 1.339 1190.62 3.709 49.822 1.411 33.879 36.205
Taiwan 0.033 0.037 0.020 0.036 0.201 0.024 0.256 2.045 383.38 3.366 0.040 35.14 0.109 1.471 0.042 0.030 1.069
Thailand 0.031 0.034 0.018 0.034 0.188 0.023 0.240 1.913 358.75 3.150 0.037 32.89 0.102 1.376 0.039 0.028 0.936
Source: ICAPPlc.
Price-to- PERFORMANCE
Dividend earnings Net Year- Three-yr.,
yield* ratio* S&PDowJones Index Last change Daily to-date 52-wk. annualized
1.07%23.74 Shenzhen -c 341.16 4.27 1.27% 4.2% 2.3% -7.7%
1.93 19.85 U.S. TSM 19355.71 81.71 0.42 -0.3 21.9 11.6
6.35 14.98 Global Select Div 250.13 2.09 0.84 0.1 11.1 3.9
6.71 14.35 Asia/Pacific Select Div 327.67 2.34 0.72 -2.0 -5.3 3.1
HongKongSelect Div -c 189.19 0.71 0.38 -5.3 -8.9 -4.5
U.S. Select Dividend -d 1233.57 9.83 0.80 -0.4 21.0 16.1
2.16 19.16 Islamic Market 2740.25 14.60 0.54 -0.0 14.5 5.9
2.50 17.18 Islamic Market 100 2989.81 18.89 0.64 -0.5 16.4 8.6
2.38 10.43 Islamic China/HKTitans 30 1626.55 12.11 0.75 -3.2 -3.2 -0.5
SustainabilityKorea -c 1394.95 9.48 0.68 -5.3 -4.3 -4.9
3.96 23.05 BrookfieldInfrastructure 3256.22 15.60 0.48 2.3 12.5 11.6
DJ-UBSCommodity-p 130.66 0.57 0.44 3.9 -6.1 -7.1
MSCI indexes
Developed and emerging-market regional and country indexes
fromMSCI as of February. 14, 2014
Price-to- LOCAL-CURRENCY
Dividend earnings PERFORMANCE
yield ratio MSCI Index Last Daily YTD 52-wk.
2.50% 16 MSCI ACWI* 402.16 -0.22% -1.6% 13.3%
2.50 17 World(DevelopedMarkets) 1,643.19 -0.33 -1.1 16.9
1.90 25 WorldSmall Cap 319.68 -0.67 0.2 23.5
2.50 17 Kokusai (Worldex-Japan) 1,658.68 -0.48 -0.6 17.2
3.10 16 EAFE 1,889.48 0.04 -1.4 12.0
2.70 11 EmergingMarkets (EM) 945.83 0.79 -5.7 -11.5
3.00 13 ACASIAPACIFICEX-JAPAN 451.74 0.64 -3.5 -5.5
2.60 11 ACFar East ex-Japan 502.81 0.56 -4.5 -4.5
1.80 16 Japan 739.20 -1.68 -8.2 27.4
3.40 9 China 59.34 -0.69 -6.0 -9.3
2.30 11 China A(China Domestic) 2,278.33 -0.65 -1.0 -10.8
2.70 14 HongKong 12,825.58 -0.56 -4.1 -2.0
1.50 16 India 779.30 -1.18 -4.6 0.1
1.20 10 Korea 558.39 -0.47 -5.3 -1.3
3.00 17 Malaysia 646.73 -0.57 -3.0 11.8
3.50 13 Singapore 1,615.03 0.12 -4.9 -6.1
2.90 16 Taiwan 296.68 -0.46 -2.0 5.2
3.40 12 Thailand 462.43 -0.52 0.4 -13.1
4.40 16 Australia 1,084.75 -0.11 -0.8 9.3
4.10 21 NewZealand 110.01 0.14 4.7 3.2
1.90 19 USBROADMARKET 2,091.31 -0.67 -0.7 23.4
3.30 16 EUROPE 113.06 -0.14 0.8 14.3
*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
S&PDowJones Indices
Price-to- PERFORMANCE
Dividend earnings Net Year- Three-yr.,
yield* ratio* S&PDowJones Index Last change Daily to-date 52-wk. annualized
2.45%18.52 Global TSM 3204.54 14.71 0.46% -0.8% 14.6% 5.8%
2.99 17.72 Global DOW 2457.54 12.21 0.50 -1.1 17.1 3.6
3.05 13.47 Global Titans 50 229.23 1.22 0.54 -1.6 13.0 7.2
2.50 15.84 Asia/Pacific TSM 1395.04 0.54 0.04 -3.7 3.3 -0.3
2.47 16.96 S&PBMI Asia Pac EmgMkts 168.98 -0.25 -0.15 -4.2 6.0 0.5
3.17 19.15 DevEurope TSM 3426.11 24.38 0.72 1.1 20.1 5.9
2.99 13.07 S&PBMI EmgMarkets 244.07 2.19 0.91 -4.2 -10.0 -5.1
3.51 11.98 AsianTitans 50 145.05 0.34 0.23 -4.7 -0.3 -0.9
3.61 8.55 BRIC50 472.22 5.45 1.17 -5.9 -13.3 -9.3
2.81 10.32 S&PBMI China 430.92 1.83 0.43 -4.2 -1.4 -1.7
3.26 8.98 China Offshore 50 3963.34 19.18 0.49 -5.5 -3.3 -2.0
2.33 12.50 Shanghai -c 280.00 2.81 1.01 1.0 -10.2 -8.4
GLOBAL MARKETS LINEUP
26 | Monday, February 17, 2014 THE WALL STREET JOURNAL.
DowJones Industrial Average P/E: 16
LAST: 16154.39 s126.80, or 0.79%
YEAR TO DATE: t422.27, or 2.5%
OVER 52 WEEKS s2,172.63, or 15.5%
*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
16500
16200
15900
15600
15300
15000
15 22 29 6 13 20 27
Dec.
3 10 17 24 31
Jan.
7 14
Feb.
High
Close
Low
50day
moving average
t
Nasdaq Composite Index P/E: 21*
LAST: 4244.03 s3.35, or 0.08%
YEAR TO DATE: s67.44, or 1.6%
OVER 52 WEEKS s1,052.00, or 33.0%
4350
4200
4050
3900
3750
3600
15 22 29 6 13 20 27
Dec.
3 10 17 24 31
Jan.
7 14
Feb.
S&P 500 Index P/E: 18
LAST: 1838.63 s8.80, or 0.48%
YEAR TO DATE: t9.73, or 0.5%
OVER 52 WEEKS s318.84, or 21.0%
2000
1900
1800
1700
1600
1500
15 22 29 6 13 20 27
Dec.
3 10 17 24 31
Jan.
7 14
Feb.
DJIAcomponent stocks
Volume, CHANGE
Stock Symbol in millions Latest Points Percentage
AT&T T 18.2 $33.15 0.34 1.02%
AmExpress AXP 2.7 89.00 0.10 0.11
Boeing BA 4.8 130.16 0.66 0.51
Caterpillar CAT 4.1 96.55 0.44 0.46
Chevron CVX 6.8 113.48 0.97 0.86
CiscoSys CSCO 64.3 22.56 0.29 1.30
CocaCola KO 16.0 38.93 0.28 0.72
Disney DIS 7.0 79.23 1.33 1.71
DuPont DD 3.6 64.50 0.52 0.81
ExxonMobil XOM 18.2 94.11 2.68 2.93
GenElec GE 24.9 25.74 0.30 1.18
GoldmanSachs GS 3.3 163.72 0.34 0.21
HomeDpt HD 4.7 77.93 0.34 0.44
Intel INTC 20.4 24.75 0.05 0.22
IBM IBM 4.7 183.69 1.85 1.02
JPMorgChas JPM 12.9 58.15 0.12 0.21
JohnsJohns JNJ 5.5 92.76 0.20 0.22
McDonalds MCD 3.5 95.78 0.32 0.34
Merck MRK 8.6 55.44 0.34 0.62
Microsoft MSFT 30.9 37.62 0.01 0.03
Nike B NKE 3.1 75.07 0.20 0.27
Pfizer PFE 18.8 31.94 0.24 0.76
ProctGamb PG 10.7 79.40 1.60 2.06
3M MMM 3.0 132.12 1.98 1.52
TravelersCos TRV 2.0 84.02 1.14 1.38
UnitedTech UTX 3.5 113.87 0.57 0.50
UtdHlthGp UNH 6.8 73.52 2.31 3.24
Verizon VZ 26.2 46.51 0.80 1.69
VISAClA V 3.1 226.00 1.95 0.87
WalMart WMT 4.9 75.79 0.43 0.57
U.S. stocks: most active...
Volume, CHANGE
Stock Symbol in millions Latest Points Percentage
BankAm BAC 95.0 $16.70 0.05 0.30%
SPDRS&P500 SPY 82.4 184.02 1.01 0.55
iShMSCIEmgMarkets EEM 65.6 39.66 0.48 1.23
CiscoSys CSCO 64.3 22.56 0.29 1.30
Zynga ZNGA 51.6 4.87 0.11 2.31
MktVecGold GDX 50.9 26.35 0.48 1.86
SiriusXMHoldings SIRI 49.2 3.56 0.05 1.28
GalenaBiopharma GALE 40.7 3.73 0.63 14.35
FacebookClA FB 36.6 67.09 0.24 0.36
Comcast A CMCSA 35.7 53.70 0.73 1.39
FordMotor F 34.2 15.24 0.16 1.06
iShMSCIJapanETF EWJ 32.3 11.38 0.05 0.44
MicronTch MU 32.2 25.08 0.17 0.68
PwrShrs QQQ QQQ 31.5 89.81 0.18 0.20
iShRussell2000ETF IWM 31.4 114.06 0.16 0.14
Biggest gainers...
Cray CRAY 4,796.0 $41.66 11.69 39.01%
LCAVision LCAV 5,009.3 5.44 1.19 28.00
Fonar FONR 1,564.6 22.65 4.55 25.14
LogMein LOGM 3,576.4 40.48 7.21 21.67
NoTchInt NTIC 37.5 22.69 3.46 17.99
...Biggest losers
WgtWtchrs WTW 9,801.2 $22.10 8.48 27.73%
Chegg CHGG 4,303.1 6.17 1.77 22.29
CafePress PRSS 914.7 5.26 1.38 20.78
GlobalSCAPE GSB 1,463.0 2.42 0.59 19.60
OhrPharm OHRP 1,663.1 13.34 3.10 18.86
ADRs of Asiancompanies*
52-WEEK Volume, CHANGE
High Low Stock Symbol in OOOs Latest Points Percentage
$20.30 $15.70 TaiwanSemi TSM 11,184.7 $17.89 0.44 2.52%
61.09 18.87 CtripInt ADS CTRP 5,749.8 45.83 0.16 0.35
23.38 13.75 SonyADS SNE 3,836.8 17.06 0.14 0.81
185.50 82.98 BaiduADS BIDU 2,520.5 167.48 2.56 1.51
13.29 2.09 PranaBiotech PRAN 2,423.7 7.25 0.89 10.93
32.89 21.75 TataMtrs ADS TTM 2,024.2 32.27 1.23 3.96
3.35 1.30 GeneticTech GENE 2,007.6 1.90 0.10 5.00
80.54 55.66 BHPBiltonADS BHP 1,423.8 68.32 0.71 1.05
7.31 5.45 MitsuUFJ ADS MTU 1,237.0 5.84 0.09 1.52
25.16 16.91 SKTele ADS SKM 919.1 20.76 0.23 1.10
6.51 5.07 Slcnwr ADS SPIL 895.5 6.25 0.08 1.30
57.42 46.60 ChinaMobile CHL 808.2 48.08 0.62 1.31
61.66 38.91 InfosysADS INFY 745.8 59.30 0.92 1.58
84.35 49.51 Netease NTES 743.7 73.31 0.91 1.26
8.20 1.14 ChinaFinOnADS JRJC 639.3 7.64 0.34 4.66
2.44 1.77 UtdMicroADS UMC 624.7 2.00 ... ...
134.94 99.34 ToyotaMtr ADS TM 620.8 115.17 0.98 0.84
14.83 10.46 LGDisplayADS LPL 551.2 12.43 0.20 1.64
48.44 24.94 ICICI BkADS IBN 539.9 33.51 0.20 0.60
43.81 26.62 HDFCBnk HDB 504.7 32.97 0.24 0.73
17.70 10.67 KoreaElecPwr KEP 417.5 17.63 0.55 3.22
42.96 35.15 HondaMtr ADS HMC 408.8 36.75 0.27 0.73
17.19 12.18 ChinaUnicomHK CHU 356.1 13.55 0.06 0.44
43.81 31.32 DrRdyLabADS RDY 338.9 42.25 0.23 0.55
9.64 5.58 NmuraHldg NMR 331.2 6.75 0.12 1.75
13.67 6.91 WiproADS WIT 324.6 12.97 0.08 0.62
17.70 9.90 SilicnMotnTch SIMO 313.7 17.07 0.34 2.03
18.31 13.26 KTCrpADS KT 307.4 14.08 0.11 0.78
27.99 21.14 NipponADS NTT 291.6 27.59 0.16 0.58
38.89 28.67 CanonADS CAJ 291.6 29.83 0.08 0.27
*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 0.048 -27.1 -28.2 -18.8 -6.0 0.041 0.198 0.218
3.500 10 1.971 -77.2 -76.8 -71.5 -2.8 1.980 2.158 1.973
3.750 Belgium 2 0.169 -15.0 -15.6 -13.2 18.4 0.167 0.254 0.462
2.600 10 2.438 -30.5 -31.8 -42.6 49.6 2.430 2.447 2.497
4.250 Finland* 2 0.185 -13.4 -14.7 -23.1 -12.1 0.176 0.155 0.157
3.375 10 1.682 -106.1 -107.1 -97.4 -16.2 1.677 1.899 1.839
0.250 France 2 0.194 -12.5 -12.9 -8.9 2.0 0.194 0.298 0.298
2.250 10 2.280 -46.3 -47.7 -61.2 26.2 2.271 2.262 2.263
0.250 Germany 2 0.104 -21.5 -23.0 -17.9 -11.5 0.093 0.208 0.162
1.750 10 1.675 -106.8 -108.3 -105.6 -35.5 1.665 1.817 1.646
n.a. Greece 2 n.a. ... ... ... ... ... ... ...
n.a. 10 n.a. ... ... ... ... ... ... ...
3.000 Italy 2 0.835 51.6 54.6 63.3 128.7 0.869 1.019 1.565
4.500 10 3.679 93.6 95.7 101.1 234.6 3.705 3.884 4.347
3.250 Netherlands 2 0.222 -9.7 -11.4 -17.6 -0.1 0.209 0.210 0.276
1.750 10 1.910 -83.3 -84.7 -74.5 -14.3 1.901 2.128 1.858
5.450 Portugal* 2 2.489 217.0 224.2 157.9 292.7 2.565 1.965 3.205
4.800 10 4.924 218.1 225.3 238.3 414.9 5.001 5.256 6.149
3.750 Spain 2 0.851 53.2 59.1 62.5 222.3 0.914 1.011 2.501
3.800 10 3.576 83.3 87.3 94.7 317.5 3.621 3.820 5.176
4.750 U.K. 2 0.513 19.4 19.5 13.0 3.9 0.518 0.516 0.317
2.250 10 2.793 5.0 4.1 -3.5 19.7 2.789 2.839 2.198
0.375 U.S. 2 0.319 ... ... ... ... 0.323 0.386 0.278
2.750 10 2.743 ... ... ... ... 2.748 2.873 2.001
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 0.25 0.75
Switzerland 0.50 0.50
Australia 2.50 3.00
Hong Kong 5.00 5.00
Libor
One month 0.15450% 0.20220%
Three month 0.23585 0.29010
Six month 0.32900 0.46340
One year 0.55080 0.76000
Latest 52 wks ago
EuroLibor
One month 0.19714% 0.05571%
Three month 0.25929 0.14214
Six month 0.34129 0.25786
One year 0.50857 0.47429
Euribor
One month 0.22600% 0.12000%
Three month 0.28700 0.22500
Six month 0.38600 0.36300
One year 0.54800 0.59300
Hibor
One month 0.21106% 0.22714%
Three month 0.37702 0.38500
Six month 0.55000 0.53571
One year 0.86894 0.84500
Offer Bid
Eurodollars
One month 0.2000% 0.1000%
Three month 0.2500 0.1500
Six month 0.3300 0.2300
One year 0.5800 0.4800
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. 0.03% 0.22%
Euro zone 0.14 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
sOne 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 3.700% 18.10 1.05 % 5.54 % 5.54 % 6.47 %
10-year Treasury 2.746 8.68 0.26 3.10 3.10 3.17
7 Year Treasury 2.169 6.43 0.04 2.31 2.31 1.55
Five-year Treasury 1.525 4.76 ... 1.39 1.39 0.47
Ryan Index 1.861 7.15 0.20 2.18 2.18 1.66
3 Year Treasury 0.707 2.96 0.07 0.54 0.54 0.70
Two-year Treasury 0.319 1.95 0.05 0.24 0.24 0.63
1 Year Treasury 0.107 0.98 ... 0.06 0.06 0.34
Six-month Treasury 0.071 0.50 0.01 0.04 0.04 0.17
Ryan Cash Index-a 0.052 0.45 0.01 0.03 0.03 0.17
Three-month bill 0.015 0.25 0.01 0.02 0.02 0.09
One-month bill 0.015 0.07 0.01 0.01 0.01 0.05
a-Performance of a cash investment
Source: Ryan ALM
SCANNING THE GLOBE
THE WALL STREET JOURNAL. Monday, February 17, 2014 | 27
Asianstocks inthe news
GalaxyEntertainment Group
Hong Kong HK$74.30
s 2.4% or HK$1.75
Shares extended gains, recording a two-
day rally of 7.4%.
F
2013
M A M J J A S O N D
2014
J
20
40
60
80
100 In Hong Kong dollars
Price-to-earnings ratio 37
Earnings per share, past four quarters N.A.
Dividend yield N.A.
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Consumer Services -0.2% 1.4% 8.5%
Galaxy Entertainment Group 2.4% 4.5% 115.1%
Uni-President Enterprises
Taiwan TW$48.90
s 2.6% or TW$1.25
The food-product supplier rose onhopes
it will benefit frominvestments inthe
China market.
F
2013
M A M J J A S O N D
2014
J
15
30
45
60
75 In Taiwan dollars
Price-to-earnings ratio 19
Earnings per share, past four quarters N.A.
Dividend yield 2.9
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Consumer Goods -0.5% 0.9% 9.6%
Uni-President Enterprises 2.6% 1.5% 0.6%
Incitec Pivot Ltd.
Australia A$3.02
s 2.7% or A$0.08
The materials company's stock reached
an11-monthhigh.
F
2013
M A M J J A S O N D
2014
J
1.00
2.00
3.00
4.00
5.00 In Australian dollars
Price-to-earnings ratio 13
Earnings per share, past four quarters N.A.
Dividend yield 3.8
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Basic Materials -0.3% 2.1% -10.9%
Incitec Pivot Ltd. 2.7% 2.4% -6.2%
PerusahaanGas Negara
Indonesia 4,930rupiah
s 2.9% or 140rupiah
The energy company was a top gainer in
muted trading onIndonesia's stock
market.
F
2013
M A M J J A S O N D
2014
J
2000
4000
6000
8000
10000 In rupiah
Price-to-earnings ratio 12
Earnings per share, past four quarters N.A.
Dividend yield 8.2
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Utilities 0.1% 1.2% 2.8%
Perusahaan Gas Negara 2.9% 2.1% 4.3%
CapitaMalls Asia Ltd.
Singapore S$1.80
s 3.2% or S$0.05
The mall operator and developer posted
a jump infourth-quarter earnings.
F
2013
M A M J J A S O N D
2014
J
0.75
1.50
2.25
3.00
3.75 In Singapore dollars
Price-to-earnings ratio 15
Earnings per share, past four quarters N.A.
Dividend yield 1.9
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Financials 0.0% 1.5% -3.2%
CapitaMalls Asia Ltd. 3.2% 2.6% -15.7%
Daiwa House IndustryCo.
Japan 1,789
t 2.7% or 49
Shares were weak amid anextended
drop inthe value of custom-built home
orders.
F
2013
M A M J J A S O N D
2014
J
600
1200
1800
2400
3000 In yen
Price-to-earnings ratio 14
Earnings per share, past four quarters N.A.
Dividend yield 2.6
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Consumer Goods -0.5% 0.9% 9.6%
Daiwa House Industry Co. -2.7% -2.5% 9.9%
Mitsui FudosanCo. Ltd.
Japan 3,105
t 2.8% or 89
The real-estate company's shares
continued to lose ground.
F
2013
M A M J J A S O N D
2014
J
1000
2000
3000
4000
5000 In yen
Price-to-earnings ratio 37
Earnings per share, past four quarters N.A.
Dividend yield 0.7
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Financials 0.0% 1.5% -3.2%
Mitsui Fudosan Co. Ltd. -2.8% -3.9% 49.4%
Daiwa Securities GroupInc.
Japan 916
t 3.2% or 30
Financial-services firms were under
pressure inTokyo trading.
F
2013
M A M J J A S O N D
2014
J
250
500
750
1000
1250 In yen
Price-to-earnings ratio 8
Earnings per share, past four quarters N.A.
Dividend yield 2.8
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Financials 0.0% 1.5% -3.2%
Daiwa Securities Group Inc. -3.2% -3.0% 66.5%
Sumitomo Realty&Development
Japan 4,228
t 4.2% or 187
Property developers took a hit as Tokyo
shares pulled back.
F
2013
M A M J J A S O N D
2014
J
1200
2400
3600
4800
6000 In yen
Price-to-earnings ratio 28
Earnings per share, past four quarters N.A.
Dividend yield 0.5
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Financials 0.0% 1.5% -3.2%
Sumitomo Realty &Development -4.2% -5.2% 57.5%
KirinHoldings Co. Ltd.
Japan 1,293
t 9.2% or 131
Adisappointing earnings report and
outlook hurt the beverage maker's
shares.
F
2013
M A M J J A S O N D
2014
J
500
1000
1500
2000
2500 In yen
Price-to-earnings ratio 14
Earnings per share, past four quarters N.A.
Dividend yield 2.8
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Consumer Goods -0.5% 0.9% 9.6%
Kirin Holdings Co. Ltd. -9.2% -7.0% 5.0%
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 14313.03
t 1.53% or 221.71
F
2013
M A M J J A S O N D
2014
J
7000
10500
14000
17500
21000
Volume Change
Stock in millions Close Net %
Mizuho Fin 182.07 209 -3 1.42
MazdaMtr 109.36 476 -16 3.25
NipponStl&SmtmoMtl 69.74 295 -9 2.96
MitsuUFJFin 66.31 591 -13 2.15
KobeSteel 62.38 147 -4 2.65
ASX200
Australia 5356.30
s 0.91% or 48.20
F
2013
M A M J J A S O N D
2014
J
2400
3600
4800
6000
7200
Volume Change
Stock in millions Close Net %
Alumina 27.42 1.30 0.04 3.19
Telstra 24.41 5.20 0.05 0.97
QantasAirways 19.80 1.21 0.02 1.86
TranspacificInds 14.15 1.17 0.02 1.75
GoodmanFielder 12.37 0.62 0.03 5.47
S&PBSESensex
India 20366.82
s 0.86% or 173.47
F
2013
M A M J J A S O N D
2014
J
10000
15000
20000
25000
30000
Volume Change
Stock in millions Close Net %
BhartiAirtel 12.76 305.40 2.50 0.83
TataMotors 6.69 384.34 8.39 2.23
HindalcoIndustries 6.39 99.90 0.30 0.30
TataSteel 6.04 370.80 3.35 0.91
StateBankofIndia 4.58 1,478.91 21.64 1.44
Shanghai Composite
China 2115.85
s 0.83% or 17.45
F
2013
M A M J J A S O N D
2014
J
1000
1500
2000
2500
3000
Volume Change
Stock in millions Close Net %
SichuanChanghongA 115.75 3.69 0.02 0.54
ShangOrientalPrlA 111.75 11.82 0.47 4.14
SINOPEC 108.18 3.21 0.20 6.64
ChinaMinshengBkA 107.56 7.99 -0.08 0.99
HainanAirlinesA 101.49 1.90 0.03 1.60
Exporters, real-estate developers and fi-
nancials were hit especially hard as the
dollar buckled. The benchmark fell for a
sixth consecutive week.
Australian shares closed at a six-week
high, helped by encouraging earnings
reports during the week. The index had
a weekly gain of 3.7%.
The market recouped early losses to
finish higher after upbeat inflation data
helped ease worries over growth. The
index edged lower for the week.
Chinese shares closed at a near seven-
week high as economists read January
inflation data as subdued. The market
gained 3.5% on the week.
MARKETS LINEUP
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28 | Monday, February 17, 2014 THE WALL STREET JOURNAL.
Chartering a Course in Cable
Charter Communications finds
itself back in the land before Time.
With Time Warner Cable now
likely out of reach, thanks to its deal
with Comcast, Charter and its
backer, Liberty Media, must ponder
their next move. Charters stand-
alone prospects may bolster it for
now. But Liberty Chairman John
Malone clearly sees scale as essen-
tial in the cable industry and seems
likely to push for consolidation.
Losing out on Time Warner Ca-
ble might have one silver lining: less
competition in future deals. Com-
cast has said it would divest three
million subscribers after the deal
closes to appease regulators. That
suggests it may be as big as it can
get.
Charter has a good chance of ac-
quiring some of those subscribers.
Another takeover candidate may
be Cablevision Systems, which had
2.8 million video subscribers at the
end of September. The controlling
Dolan family has long been seen as
uninterested in selling. But CNBC
reported Thursday Cablevision ap-
proached Time Warner Cable about
a deal last year and was rebuffed
because the price was too high.
Cablevision may not be Charters
top choice. It overlaps with Verizon
Communicationss FiOS service in
half of its coverage area, a statistic
likely to worsen as FiOS expands,
according to UBS. Charter Chief Ex-
ecutive Tom Rutledge came from
Cablevision and already has applied
his turnaround playbook there.
Besides, one reason Charters
stock trades at a premium to peers
is its growth prospects. Buying Ca-
blevision, which is challenged on
growth, would likely weigh on that
multiple.
Charter has a few other possible
targets. Closely held Cox Communi-
cations, the largest among these,
had about 4.4 million video sub-
scribers at the end of the third
quarter, MoffettNathanson esti-
mates. But the owners of the At-
lanta-based company have said they
arent interested in selling.
Another option may be Bright
House, with about two million video
subscribers. It is owned by the New-
house family. But Time Warner Ca-
ble handles its programming deals
and engineering functions through a
partnership and has the right of
first refusal in the event of a sale. It
is unclear whether that right passes
to Comcast.
Even if Charter could pull off all
of these deals, including the Com-
cast divestitures, it would have
about 16.4 million subscribers. That
would still be well short of Com-
cast-Time Warner Cables roughly
30 million. But it could help Charter
negotiate with media companies and
gird itself against competition from
online video.
In the meantime, Charter has a
strong story of its own. Analysts
forecast earnings before interest,
taxes, depreciation and amortization
to have increased 13% in the fourth
quarter and subscribers by a net
111,000. Deal or no deal, Charter
should still deliver a prime seat at
the cable table. Mirian Gottfried
Chinas Figures on Inflation
Merit a Helping of Skepticism
Chinas economy faces many
challenges. Rising prices arent one
of them, at least according to offi-
cial data.
Consumer prices in January were
up 2.5% from a year earlier, match-
ing Decembers pace and within Bei-
jings comfort zone. While such low
inflation might normally make au-
thorities feel safe opening the credit
spigots, that is unlikely to happen
given the concern about the econ-
omys mounting debt load.
The number was lower than
economists expected: The Lunar
New Year holiday fell at the end of
the month, and family gatherings
and official parties often goose de-
mand for food. Pork, especially, is a
huge part of the inflation basket.
But for the first time in a decade,
prices for the other white meat fell
in the run-up to the holiday, accord-
ing to Capital Economics.
Pork aside, skepticism seems to
be warranted when reading Chinas
inflation numbers. A paper pub-
lished in January by economists Emi
Nakamura, Jn Steinsson and Miao
Liu of Columbia University suggests
the countrys official inflation and
growth data reflect a smoothed
version of reality.
That isnt to say it is totally
wrong. The paper concurs with pre-
vious work that the general direc-
tion of the data is correct, but the
peaks and troughs are more extreme
than reported. It finds inflation in
the late 1990s was lower than mea-
sured, and thus that real growth
was higher. On the flip side, infla-
tion in the 2005-07 period, often
seen as the peak of Chinas boom,
was much higher than measured,
and thus growth lower.
Political manipulation is one pos-
sible explanation, say the authors.
Equally compelling, they say, is the
simple difficulty of counting price
changes in a fast-expanding econ-
omy. As disposable incomes rise,
consumers are constantly upgrading
the quality of products they buy and
venturing into new categories of
goods.
The paper doesnt examine the
most contemporary data, but inves-
tors wouldnt be crazy to think in-
flation is higher today than the offi-
cial figures show. Tight labor
markets are driving up wages, capi-
tal inflows from abroad are strong,
and money supply has increased
faster than measured nominal gross
domestic product for several years.
Property prices, not well-captured
in inflation data, are rising sharply.
Whatever the case, a true picture of
Chinas economy will be hard to
find.
Alex Frangos
Europes Economic News
Cuts 2 Ways for Investors
The euro-zone recovery has been
variously described as weak, fragile,
modest and uneven, and not without
reason.
Growth of 0.3% in the fourth
quarter from the third is sluggish
for a continent emerging from a
deep recession. But under the sur-
face, the recovery is starting to look
more broad-based. Europe still
could surprise investors in a good
way this year.
First, the recovery is spreading.
The fourth quarter marks the first
time that the euro zones big four
Germany, France, Italy and Spain,
which together account for just over
three-quarters of outputall ex-
panded since the first quarter of
2011. Several countries beat expec-
tations, in particular the Nether-
lands, which posted solid growth of
0.7%. Nine countries showed quar-
terly growth accelerating from the
pace recorded in the third quarter.
Second, the benefits of hard de-
cisions on overhauls appear to be
coming through. Portugal, for in-
stance, recorded growth of 0.5% in
the fourth quarter, its third consec-
utive quarter of expansion, with
both domestic demand and exports
contributing. That is in contrast
with Italy, where revamps have
stalled due to political turmoil, and
where growth was just 0.1% in the
fourth quarter.
Third, data this year have sug-
gested that the recovery isnt being
derailed. Financing tensions have
continued to ease, with yields on
Southern European government
bonds falling sharply.
Decent growth should continue
to support investment in the euro
zone. European stocks are outper-
forming their U.S. peers this year,
while euro-zone bonds have rallied.
But the recovery does also sug-
gest that the European Central Bank
may be more likely not to provide
further economic stimulus, even as
inflation has fallen to 0.7%. ECB
President Mario Draghi pointed to
the fourth-quarter growth number
as one of the pieces of data that the
bank was waiting for in determining
what to do about monetary policy. A
continued recovery may encourage
the ECB to live with concerns about
low inflation in the hope of a grad-
ual pickup in the future.
If the euro-zone economy main-
tains momentum, investors betting
on ECB action may well be disap-
pointed. Richard Barley
HEARDON THE STREET
Email: heard@wsj.com FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard
Pork is big in Chinas inflation basket.
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