Baseball After Moneyball

How Numbers Changed Americas Game

WEEKEND JOURNAL W1
ASIA
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(India facsimile Vol. 3 No. 83)
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8
ADeals Collapse Clouds
Pakistans China Alliance
A Chinese mining company
pulled out of what was to be
Pakistans largest foreign-in-
vestment deal because of se-
curity concerns, complicating
Islamabads effort to position
its giant neighbor as an alter-
native to the U.S. as its main
ally.
An official at China
Kingho Group, one of Chinas
largest private coal miners,
said on Thursday it had
backed out in August from a
$19 billion deal in southern
Sindh province due to con-
cerns for its personnel after
recent bombings in Pakistans
major cities.
Zubair Motiwala, chairman
of the Sindh Board of Invest-
ment, acknowledged the can-
cellation of plans to build a
coal mine, power and chemi-
cal plants over 20 years. But
he said he was hopeful that
Kingho would reconsider.
Pakistan has been playing
up its friendship with China
ever since the U.S. killing of
Osama bin Laden in Pakistan
in May sent relations between
Islamabad and Washington
into a tailspin.
But Chinas response has
been lukewarm so far, sug-
gesting that Islamabad may
remain dependent on billions
of dollars in military and ci-
vilian aid from Washington
for some time to come.
Pakistan Prime Minister
Yousuf Raza Gilani used a
visit this week from Meng Ji-
anzhu, Chinas minister of
public security, to promote
the friendship, which Mr. Gi-
lani said was higher than
mountains, deeper than
oceans, stronger than steel
and sweeter than honey.
Army chief Gen. Ashfaq
Kayani thanked Mr. Meng,
who pledged $1.2 million in
aid for Pakistans law-enforce-
ment agencies, for his coun-
trys unwavering support.
The gushing compliments
contrasted recent U.S.-Paki-
stani rhetoric, after outgoing
U.S. Chairman of the Joint
Chiefs of Staff Adm. Mike
Mullen called an insurgent
Please turn to page 8
By TomWright
in NewDelhi and
Jeremy Page in Beijing
Germany
Clears Wider
Bailout Fund
BERLINGerman Chancel-
lor Angela Merkels fractious
coalition won a brief reprieve
on Thursday, as lawmakers
from the center-right ruling
parties closed ranks and
passed legislation to expand
the euro-zones bailout fund.
In the run-up to the vote,
Ms. Merkel had faced a revolt
of critics within her coalition
who were determined to stop
expansion of the European Fi-
nancial Stability Facility,
threatening to add to the
chancellors difficulties in
helping tackle the euro-zone
debt crisis. In the end, she re-
ceived the psychologically im-
portant absolute majority, but
Parliament gave itself veto
rights over any future bail-
outs, tying Ms. Merkels hands
in future euro-zone negotia-
tions.
A total of 523 lawmakers
voted in favor of the EFSF re-
form bill; 85 voted against,
with three abstentions. The
overall result includes the
votes of the opposition Social
Democrats and the environ-
mentalist Greens, who unani-
mously backed the bill in
stark contrast to Ms. Merkels
unruly coalition.
Her coalition of Christian
Democrats, its Bavarian sister
party the Christian Social
Union and the pro-business
Free Democrats backed the
EFSF bill with a razor-thin ab-
solute majority of 315 votes,
barely more than the 311 Ms.
Merkel needed for a govern-
ment majority. Thirteen coali-
tion lawmakers voted against
the bill and two abstained.
This is a temporary boost
for Merkels coalition, but the
problems will not go away,
said Moritz Schularick, an
economics professor at Ber-
lins Free University.
The 17 euro-zone govern-
Please turn to page 16
By WilliamBoston, n
Mary M. Lane
and Bernd Radowitz
Agence France-Presse/Getty Images
A powerful typhoon hit southern China on Thursday after coming within 350 kilometers of Hong Kong, above, where it forced the stock
market and businesses to close but caused little damage. Typhoon Nesat made landfall on Hainan islandofficials there evacuated nearly
58,000 people from low-lying areasas the storm moved across the South China Sea from the Philippines, where it killed 35 people.
Typhoon Hits Southern China, After Skirting Hong Kong
VOL. XXXVI NO. 22 * *
Friday - Sunday, September 30 - October 2, 2011
Rising bailout costs divide
Germans........................................ 14
Greece is split over cuts to
public-sector jobs..................... 16
WSJ.
Magazine
WSJ.
Magazine
The State of Man
Playboys,
Philanthropists,
Entrepreneurs
And Dandies
David Beckham
Suits Up
WSJ.com/magazine
Copyright 2011, Oracle and/or its affiliates. All rights reserved.
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2 * * THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
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PAGE TWO
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and hiring a search firm. 17
n Currency traders tested
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limit on the value of the yuan for
the second straight day. 17
n China helped a big construction
firm move closer to a stock list-
ing, just as avenues for fund rais-
ing by mainland companies ap-
peared to be narrowing. 26
n Greeces government is divided
over a plan to cut thousands of
public jobs, as some agencies de-
cline to offer layoff lists. 16
n Nokia will cut as many as 3,500
jobs globally as it realigns its
business and scales down. Many
jobs will shift to Asia. 21
n Apples legal battle against
Samsung over alleged patent in-
fringements took a surprise twist
when an Australian court heard
evidence that Apple founder Steve
Jobs personally sought to head off
a confrontation last year. 18
n Panasonic plans to cancel the
expansion of a Japan factory that
makes lithium-ion batteries. 20
n Dell is set to unveil its latest
aluminum-clad thin notebook in
China with a design reminiscent
of some popular Apple laptops. 20
n Jardine appointed Ben Keswick
as managing director to succeed
Anthony Nightingale, who plans to
retire in April. 18
n Qantas expects a strike in Aus-
tralia to disrupt travel for almost
8,500 passengers Friday. 20
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World-Wide
n Afghanistan plans to suspend
an effort to work with Pakistan
and the U.S. to bring the Taliban
to the negotiating table. 3
n An explosion ripped through a
small hotel in Pakistans capital,
Islamabad, wounding at least two
people, police said.
n Interpol placed another of
ousted Libyan leader Gadhafis
sons, al-Saadi, on the equivalent
of its most-wanted list.
n Japan is planning to abolish
one of the evacuation zones
around the Fukushima plant, the
first such move since the March 11
earthquake and tsunami. 6
n A turboprop plane crashed in
western Indonesia, and all 18 peo-
ple aboard were feared dead.
n Chinese organizers offered the
Confucius Peace Prize as an alter-
native to the Nobel prize, but Bei-
jing rejected the new award, too. 6
China launched an experimental module to lay the groundwork for a future space station, underscoring its ambitions to become a major space power over the
coming decade. Above, a Long March 2FT1 rocket carrying the Tiangong-1 module lifts off Thursday from the Jiuquan launch center in Gansu province.
G
e
t
t
y
I
m
a
g
e
s
Whats News
Inside
World News: Japan
officials failed to hand
out radiation pills. 4
Business & Finance:
Japan quake still
rattles suppliers. 19
Ahead of the Tape:
Why is Japan now a
safe haven? 27
Heard on the Street:
Android loses out after
Samsung deal. 32
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. * * 3
WORLD NEWS
Kabul to Drop Trilateral Peace Effort
KABULAfghanistan plans to
suspend an effort to work with Paki-
stan and the U.S. to bring the Tali-
ban to the negotiating table, Afghan
officials said, taking a tougher line
with Pakistan after last weeks as-
sassination of Kabuls top peace ne-
gotiator.
Afghan leaders have been trying
to compel Pakistan to play a more
constructive role by openly facilitat-
ing talks between Afghanistan and
Taliban leaders. Officials in Presi-
dent Hamid Karzais government
now say they are convinced Pakistan
is intent on disrupting its attempts
to engage the Taliban in negotia-
tions without interference from Is-
lamabad.
Senior U.S., Pakistani and Afghan
officials had been set to meet in
Kabul on Oct. 8 to discuss ways of
getting insurgents into peace talks
and ending the 10-year-old conflict.
Afghanistan has decided to cancel
this meeting, deputy national secu-
rity adviser Shaida Mohammad Ab-
dali said Thursday.
Afghanistan is also shelving
plans for Pakistani Prime Minister
Yusuf Raza Gilani to visit Kabul at
the end of October for a meeting of
the Afghanistan-Pakistan Joint Com-
mission for Reconciliation and Peace
in Afghanistan, a three-month-old
initiative intended to galvanize the
peace process.
Officials at the U.S. Embassy in
Kabul declined to comment on Af-
ghanistans moves. The U.S. still
plans to send Marc Grossman, the
State Departments special repre-
sentative for the region, to Kabul for
talks next week that were meant to
include the trilateral meeting, said
Gavin Sundwall, a spokesman for
the U.S. Embassy.
Afghanistans decision to scuttle
the meetings is another setback for
U.S.-led efforts to cultivate a re-
gional dialog that would make it
easier to withdraw most coalition
military forces by late 2014.
The cancellations signal a change
in strategy for Afghan leaders, who
had sought to use the killing in May
of Osama bin Laden in Pakistan as a
chance to open a new, conciliatory
chapter with Pakistan.
From now on Afghanistan will
follow trust but verify approach to-
wards Pakistan, in particular with
regard to our peace effort, said Mr.
Abdali, suggesting that Kabul would
no longer accept Pakistans offers of
help without questioning its sincer-
ity.
Afghan and U.S. relations with
Islamabad have deteriorated in re-
cent weeks following the Sept. 13 at-
tack on the U.S. Embassy in Kabul
and the subsequent assassination of
former Afghan President Burhanud-
din Rabbani.
Last week, outgoing U.S. Joint
Chiefs of Staff Chairman Adm. Mike
Mullen accused Pakistans Inter-
Services Intelligence agency, or ISI,
of sponsoring the Haqqani network,
the militant group blamed by the
U.S. for the embassy attack. Paki-
stani officials rejected the charge.
Afghan officials have also ac-
cused Pakistani intelligence of orga-
nizing the elaborate ruse that al-
lowed a purported Taliban emissary
to kill Mr. Rabbani.
The former president was lead-
ing attempts to broker a peace deal
with the Talibans top leaders, who
are believed to be based in Quetta,
Pakistan.
This was a turning point, Mr.
Abdali said of the assassination.
Definitely it goes back to the same
place: Pakistan. The phone calls go
all the way from here to Quetta.
The alleged four-month project
to kill Mr. Rabbania plot that con-
vinced Mr. Karzai the Taliban were
sending a peace envoywas too
complex to have been the sole work
of the Taliban or Haqqanis, said Mr.
Abdali.
There is no question Haqqani is
hand in glove with the ISI, echoed
Jawed Ludin, Afghanistans deputy
foreign minister. For Afghanistan,
were very very clear that the ulti-
mate responsibility rests with the
ISI.
Matthew Rosenberg
contributed to this article.
BY DION NISSENBAUM
AND MARIA ABI-HABIB
Afghan President Hamid Karzai attends a ceremony for Burhanuddin Rabbani.
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4 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
WORLD NEWS: JAPAN
Japan Was Late With Radiation Pills
Delay in Distributing and Recommending Potassium Iodide Joins List of Government Failures to Protect Health
TOKYOGovernment officials
failed to distribute to thousands of
people pills that could have mini-
mized radiation risks from the
March nuclear accident, govern-
ment documents show.
The disclosure is the latest evi-
dence of government neglect of
emergency procedures in the cha-
otic days after the disaster, in which
an earthquake and tsunami dam-
aged the Fukushima Daiichi nuclear
plant.
The Fukushima area and some
municipalities surrounding the
stricken plant had ample stocks of
potassium iodide, like most local
communities near nuclear reactors
around the world. A relatively safe
compound also known by its chemi-
cal formula KI, it can prevent thy-
roid cancer, the most common seri-
ous outcome of a major nuclear
accident.
Government disaster manuals re-
quire those communities to wait for
the central government to give the
order before distributing the pills.
Though Japans nuclear-safety ex-
perts recommended dispensing pills
immediately, Tokyo didnt order
pills be given out until five days af-
ter the March 11 accident, the docu-
ments show. Potassium iodide,
which blocks radioactive iodine
from entering the thyroid gland, is
most effective when taken just be-
fore exposure, or within two hours
after. It has little effect when ad-
ministered days after the release of
radiation.
By the time the pills were
handed out, most of the nearly
100,000 residents evacuated had
gone to safer areas and the release
of radiation from the plant had sub-
sided from its earlier peaks.
In interviews with The Wall
Street Journal, several national and
local government officials and ad-
visers blamed the delay on a com-
munications breakdown among dif-
ferent government agencies with
responsibilities over various aspects
of the disaster.
They also cited an abrupt deci-
sion shortly after the accident to
raise sharply the level of radiation
exposure that would qualify an indi-
vidual for iodine pills and other
safety measures, such as thorough
decontamination.
Most of our residents had no
idea we were supposed to take med-
ication like that, said Juichi Ide,
general-affairs chief of Kawauchi
Village, located about 20 miles from
the plant. By the time the pills
were delivered to our office on the
16th, everyone in the village was
gone.
Mr. Ide said the boxes containing
pills for Kawauchis 3,000 residents
still sit in its now-empty village hall.
The towns closest to the plant
had pills in stock, and two of them
Futaba and Tomiokadid distribute
them to residents without awaiting
word from Tokyo. Two communities
farther away from the plant, Iwaki
and Miharu, handed them out to
their residents based on their own
decisions. While Iwaki residents
were told to hold off until the gov-
ernment gave instructions, those in
Miharu took the pills, leading late to
a reprimand from prefectural offi-
cials.
Japanese radiation experts say
results of subsequent tests among
Fukushima residents suggest few
had been exposed to dosages large
enough to raise the risk significantly
of developing thyroid disease, even
without the medication.
Still, officials from two govern-
ment bodiesthe Nuclear Safety
Commission and the Nuclear and In-
dustrial Safety Agencyare asking
why the residents werent given the
pills known to be highly effective,
particularly among young children.
A NISA official said the agency is
investigating the case.
It was very clear to us experts
what we needed to worry about the
most was to provide protection
against the risk of thyroid cancer
among children, said Gen Suzuki,
a physician specializing in radiation
research who was summoned to the
Nuclear Safety Commission follow-
ing the March 11 accident as a mem-
ber of its emergency advisory team.
I had simply assumed local resi-
dents had been given potassium io-
dide.
When he learned recently that
wasnt the case, Dr. Suzuki said he
was flabbergasted.
The NSC, a national government-
policy advisory body, recently
posted on its website a handwritten
note dated March 13 as proof that it
recommended distribution and in-
gestion of the pills.
NISA, the main nuclear-regula-
tory body charged with administer-
ing the governments nuclear-disas-
ter headquarters, says the note
never arrived.
Kenji Matsuoka, director of the
Nuclear Emergency Preparedness
Division at NISA, said the agency
was still investigating the case of
the lost memo. We are sorry if the
message was lost because of the
chaos at the disaster headquarters,
he said. Our priority at that time
was getting people out as quickly as
possible.
Officials in Fukushima prefecture
in charge of distributing potassium
iodide to local communities say they
waited in vain for instructions from
the governments disaster headquar-
ters, headed by then-Prime Minister
Naoto Kan.
The preventive-pill confusion
joins the list of government failures
to implement available measures
aimed at protecting residents from
the harm of radiation. Some local
officials have accused the govern-
ment of failing to share the data
from its radiation-projection sys-
tems, which, they said, resulted in
their evacuating residents into
highly contaminated areas.
Others blame the authorities for
taking weeks before asking some
residents outside the initial evacua-
tion zones to evacuate, despite signs
of radioactive dangers. The govern-
ment was widely criticized for de-
claring food, including beef, to have
been safely tested, only to find later
that contaminated meat had been
sold in grocery stores.
Potassium iodide is an inexpen-
sive and readily available substance
that governments and local commu-
nities with nuclear reactors typically
have on hand. Following the Cher-
nobyl accident in 1986, Poland gave
10.5 million children at least one
dose soon after the accident, with
very few reports of side effects. In
the U.S., Congress passed a law in
2002 promoting distribution of the
pills to communities near nuclear
plants, but the law hasnt been im-
plemented.
The disputed document that Ja-
pans NSC recently posted on its
website says Fukushima residents
aged 40 or younger should be given
potassium iodide, if radiation
screening confirmed they received
certain levels of exposure. The com-
mission says the document, dated
March 13, was sent to NISA, the co-
ordinator of disaster response, at
10:46 a.m. that same daytwo days
before the worst day of the acci-
dent, March 15, when explosions of
two reactors sent thick radioactive
plumes across many towns of Fuku-
shima prefecture.
Like most of the correspondence
between government officials fol-
lowing the accident, the statement
was sent to disaster headquarters in
Tokyo by fax, rather than via e-mail.
An NSC representative stationed in
that office then handed a copy to a
NISA official, according to Hideaki
Tsuzuku, director of the radiation-
protection and accident-manage-
ment division at the NSC. Its not
for us to know what kind of judg-
ment was made and action was
taken after that, he said in an in-
terview.
NISAs Mr. Matsuoka says the
agency cant confirm a NISA official
received the memo, adding that an
investigation into the case contin-
ues.
NISA issued an instruction on
March for residents of towns within
20 kilometers of the plant to take KI
pills. That was nearly four days af-
ter the government issued an evacu-
ation order for those same towns.
People close to the situation say
the delay may have been caused in
part by an abrupt change in the
standard used in determining what
level of radiation exposure would
trigger distribution of the pills. Ac-
cording to official disaster manuals
written before the accident, anyone
who showed radiation readings of
13,000 counts per minutea mea-
sure for external exposure, as op-
posed to the more commonly used
benchmark of sieverts, which mea-
sures health effectswas to be
given KI pills, as well as a thorough
decontamination, including shower-
ing and a change of clothes.
On March 14, Fukushima prefec-
ture raised that cutoff to 100,000
cpm. From that point, people regis-
tering between 13,000 and 100,000
were given wet wipes to clean off
the top layer of their clothing. They
were not given pills. During March,
roughly 1,000 residents registered
readings of 13,000 cpm or higher.
Only 102 had readings above
100,000 cpm.
When they told us they wanted
to raise the screening level, we in-
stantly knew we had a serious level
of contamination, said Mr. Suzuki,
the NSC adviser. They were implic-
itly telling us they had more people
than they could handle logistically,
amid the shortage of water, clothing
and manpower.
Naoki Matsuda, a professor of ra-
diation biology at Nagasaki Univer-
sity and an adviser to the Fukushima
prefecture government, recalled a
meeting with prefectural staff after
a day of screening local residents on
March 14. They reported gauges on
radiation monitors set for 13,000
cpm going off repeatedly.
It was very clear the previous
level of 13,000 cpm wouldnt work,
Mr. Matsuda wrote in an essay
posted on the universitys website.
We discussed how the staff should
turn off alarm sounds and refrain
from wearing protective suits and
face masks in order not to fan wor-
ries among residents.
The NSC was initially cautious
about allowing the higher screening
benchmark. On March 14, it issued a
statement advising Fukushima to
stick to the current level of 13,000
cpm, noting that level is equivalent
to a thyroid-gland exposure level at
which the International Atomic En-
ergy Agency recommends disbursing
KI. The World Health Organization
advocates one-tenth of that level for
giving the compound to children.
The NSC relented on March 20,
after the prefecture used the new
benchmark for days. In a statement,
the commission noted 100,000 cpm
was permissible according to the
IAEAs screening standard in the ini-
tial stage of a nuclear emergency.
Before the governments March
16 order to disburse the iodine pills,
two towns located near the plants,
Futaba and Tomioka, with a com-
bined population of 22,500, inde-
pendently ordered some of their
residents to take the pills that were
in their stock, according to town of-
ficials.
Those in other nearby towns
never did so, including Namie,
where contamination was later con-
firmed to be worst among Fuku-
shima communities.
In all, after the governments
March 16 order, the prefecture deliv-
ered to all communities located
within 50 kilometers of the plant
enough KI pills and powder to be
given to 900,000 people. Most went
untouched.
BY YUKA HAYASHI
Potassium iodide pills at a shelter in Miharu town, Fukushima prefecture, on
March 20nine days after the tsunami crippled the nearby nuclear plant.
Okuma
Namie
Futaba
Hirono
Tamura
Miharu
Tomioka
Kawauchi
Katsurao
Kawamata
Minamisoma
Koriyama
Iitate
Towns where pills were
not distributed.
Towns where pills were
distributed but not taken.
Naraha
Towns where potassium
iodide pills were distributed
and taken by residents.
Passing Pills
Japanese towns near the Fukushima Daiichi power plant and their
access to potassium iodide for combating effects of radiation.
EVACUATION
ZONES
Fukushima
Daiichi
Source: Japans Nuclear Safety Commission
1
8
.6
m
i
le
s
(
3
0
k
i
l
o
m
e
t
e
r
s
)
1
2
.4
m
il
e
s
(
2
0
k
i
l
o
m
e
t
e
r
s
)
March 12
Government
expands
evacuation
zone from
6.2 to
12.4 miles.
78,000
evacuated.
April 22
Elevated radiation
found outside
12.4-mile zone.
10,000 more
ordered to evacuate.
April 22
People told to be prepared
to evacuate. 28,500 left.
The Nuclear Safety
Commission has posted on
its website a document it
says proves it recommended
distribution and ingestion
of the pills on March 13.
A
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An evacuation zone reopens, but
will residents return?............................. 6
Aftershocks are still shaking the
manufacturing supply chain............. 19
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. 5
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6 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
WORLD NEWS: ASIA
Confucius Prize
Falls Out of Favor
When China boycotted last
years Nobel Peace Prize ceremony
after it was awarded to a Chinese
dissident, local organizers offered
the Confucius Peace Prizean al-
ternative meant to be more ac-
ceptable to Chinas views on world
peace.
Now Beijing has rejected the
Confucius award, too.
Chinas Ministry of Culture has
revoked permission by an arm of
the Chinese Native Art Associa-
tion to offer the prize, which was
set to be awarded in December, a
spokesman for the group said
Thursday. A spokesman for the
Ministry of Culture referred ques-
tions to the department that han-
dles outside groups, which
couldnt be reached Thursday. The
ministry oversees a large number
of cultural groups, though they re-
main separate organizations.
But the award may still go on.
Liu Haofeng, an artist and the
Confucius awards executive chair-
man, said in an interview that the
award would continue outside the
auspices of the government and
would be given out next year un-
der a new name. He said he un-
derstood the ministrys decision,
adding that another groupunder
the ministrys supervision
wanted to offer a similar award
and there couldnt be two.
We are a nongovernment orga-
nization and we will keep doing it
to express our wishes within the
law, no matter how hard it will
be, he said.
Mr. Liu said the new version of
the prize would be called the Con-
fucius World Peace Prize.
Organizers first offered the
Confucius Peace Prize last year
just days before the Nobel Prize
was awarded to jailed Chinese dis-
sident Liu Xiaobo, dealing Beijing
a sharp public-relations blow. Ear-
lier in September, the organizers
offered a short list of candidates
for this years award that included
Russian Prime Minister Vladimir
Putin.
The prize was described last
year in the state-run Global Times
newspaper as a way for the Chi-
nese to declare Chinas views on
peace and human rights to the
world and came with a 100,000
yuan (about $15,600) purse. The
inaugural winner of the prize
Lien Chan, former vice president
of Taiwan and honorary chairman
of its Nationalist Partyfailed to
appear at the awards ceremony in
December in Beijing. Mr. Lien was
credited with helping to smooth
relations between mainland China
and Taiwan.
Other nominees for the award
alongside Mr. Putin were German
Chancellor Angela Merkel for her
contribution to regional peace in
Europe; the Panchen Lama, a Ti-
betan Buddhist appointed by Bei-
jing, for promoting harmony in
China; South African President
Jacob Zuma; Yuan Longping, a
Chinese scientist known as the fa-
ther of hybrid rice; Microsoft
Corp. co-founder Bill Gates; for-
mer United Nations Secretary-
General Kofi Annan; and James
Soong, chairman of Taiwans Peo-
ple First Party and a proponent of
closer Chinese relations with Tai-
wan.
The announcement of candi-
dates itself wasnt without conten-
tion, however. After the names
were made public, Tan Changliu,
last years jury chairman and a
member of this years jury, told
the Global Times that some of the
nominees hadnt yet been ap-
proved and that it was inappro-
priate to release the name of can-
didates on which the jury panel
has not reached a consensus.
By Brittany Hite
in Hong Kong
and Josh Chin in Beijing
The first Confucius award, in 2010.
A
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Japan Plans to Abolish
One Evacuation Zone
Cities Still Must Restore Lightly Contaminated Areas for Residents
TOKYOThe Japanese govern-
ment is planning Friday to abolish
one of the evacuation zones around
the Fukushima Daiichi nuclear plant,
the first such move since the March
11 earthquake and tsunami crippled
the plants reactors and sent local
residents fleeing the radiation re-
leased by the accident.
The dissolution would be the
first step in coaxing some 114,000
people back to their homes and
starting what is expected to be a de-
cades-long process of restoring the
region around the plant. The lifting
of the order applies to an area
where radioactive contamination is
relatively light, and thus evacuation
isnt mandatory, as it is in other
zones.
But the task of restoring even
this lightly contaminated zone will
be tough, as a look at some of the
affected towns revival plans shows.
Tamura city, for instance, has
said it wants to decontaminate all of
its 32 square miles that lie within
the zone, but it hasnt figured out
what that will cost and where to put
the radioactive cesium-infested
earth after it is removed. Minami-
soma city said it wont be able to
restart in-patient services at one of
the five hospitals in the affected
zone, since it cant find enough doc-
tors to staff it. The town of Hirono
plans to ask the national govern-
ment to distribute radiation coun-
ters to all its households, to help
anxious residents stay on top of ra-
diation levels.
It doesnt matter if the [evacua-
tion zone] is liftedwe cant tell
residents to return without some
guarantee theyll be safe, says Hi-
rono Mayor Motohoshi Yamada,
whos living, along with the bulk of
Hironos 5,500 citizens, in neighbor-
ing Iwaki city.
The area in question is one of
three danger zones around the
Fukushima Daiichi plant, where ra-
diation levels or the proximity of
the unstable reactors prompted the
government to warn residents away.
The first area is a no-go zone that
covers the region up to 20 kilome-
ters, or about 12 miles, from the
plant, from which 78,000 residents
were evacuated in mid-March. The
second zone covers a highly con-
taminated corridor that stretches
northwest from the plant, where
10,000 people were told to leave at
the end of April.
The third zone, the one to be dis-
solved Friday, lies largely in a band
between 20 and 30 kilometers, or
about 12 to 19 miles, from the nu-
clear plant. The government decided
in March that radiation levels were
low enough that the roughly 59,000
people living there didnt have to
evacuate, though they should be
prepared to do so at any moment.
Most residents of that evacuation
preparation zone did leave in the
months after the accident, and
about halfan estimated 29,000
are still staying away.
Now that the Fukushima Daiichi
reactors are releasing much less ra-
diation and the government expects
them to be stabilized by years end,
it is beginning the process of bring-
ing those residents back in earnest.
In July, the education ministry con-
ducted detailed radiation surveys of
schools, parks, roads and public fa-
cilities in the evacuation prepara-
tion zone, finding that most areas
registered well below the 20 mil-
lisievert-per-year level the govern-
ment has determined could be un-
safe. It also asked the affected cities
and towns to draw up plans of how
they will rebuild services like
schools and hospitals, as well as de-
contaminate.
The city of Tamura, where about
10% of the population lived in the
affected zone, hopes to create an
environment where residents feel
comfortable returning by the end
of March, says Norimasa Senzaki, a
spokesman in the mayors office. Mr.
Senzaki admits that is a stretch,
since Tamura still hasnt found a
temporary spot to park contami-
nated earth it removes from parks
and playgrounds, and doesnt know
what level of radioactivity will be
low enough to entice the roughly
2,000 residents who have fled to re-
turn. Currently, the highest official
radiation reading in the zone is 0.8
microsievert per hour, which works
out to roughly a third of the level at
which Japan suggests evacuation,
but still around 20 times as high as
before the nuclear accident.
Some people dont want to
come back until everything is the
same as it was before the accident,
Mr. Senzaki says.
In the city of Minamisoma,
where more than half the population
lived in the evacuation prepara-
tion zone, so many medical staffers
have fled out of fear of radiation
that the continuation of medical
services is in peril, according to the
citys revival plan. The five hospitals
in the zone have seen full-time staff
levels fall to a bit more than a third
of the levels before the accident,
while the number of patients has
plummeted to around 8%, leaving
the hospitals with a severe funding
crunch. Minamisoma has been urg-
ing its residents to return as fast as
possible, and is asking the national
government for help securing doc-
tors and nurses.
The town of Hirono, by contrast,
hasnt yet asked its citizens to re-
turn, though it is hoping to bring
them back by the end of 2012 if its
decontamination and rebuilding ef-
forts go well. The town has to re-
open its medical facilities, which are
nearly all closed now, and find a
new crematorium and waste-pro-
cessing facility to replace the ones it
had been using, which are in the no-
go zone. Its revival plan calls for the
national government to increase the
number of radiation-monitoring
posts and devise a system that dis-
plays levels in real time at the front
gates of schools. It is planning to
dredge the drains on each side of its
roads, where radioactive material
tends to gather. And it is asking the
government for school buses to
carry children so they can lessen
their exposure to the outside.
The residents have become
quite nervous about radiation, says
Mr. Yamada, the mayor. Decontami-
nation will be quite expensive. And
its not something that will be over
in three or four months.
BY PHRED DVORAK
Okuma
Namie
Futaba
Hirono
Tamura
Tomioka
Kawauchi
Katsurao
Kawamata
Minamisoma
Iitate
Evacuation zone
remains in force
Zone Japan plans
to abolish Friday
Fukushima
Daiichi
Source: Nuclear Safety
Commission of Japan
1
8
.6
m
i
le
s
(
3
0
k
i
l
o
m
e
t
e
r
s
)
1
2
.4
m
il
e
s
(
2
0
k
i
l
o
m
e
t
e
r
s
)
s
)
e
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s
)
JAPAN
Tokyo
Area of detail
Residents on a bus from Tamura don protective gear to visit their homes.
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Japanese Tanker Attacked
By Pirates in the Red Sea
TOKYOA Japanese chemical
tanker came under fire in the Red
Sea near Yemen Wednesday, but no
one was injured and the ship re-
mains operational, vessel owner To-
kyo Marine Co. said Thursday.
A rocket-propelled grenade
launched from a small high-speed
boat hit low on the Ginga Bobcats
bridge, a spokesman at Tokyo Ma-
rine said. A transport ministry offi-
cial said it left a 10-centimeter hole.
Yemen lies across the Gulf of
Aden from Somalia and borders
Oman, off which a Japanese oil
tanker was attacked by pirates ear-
lier this year. The area near Somalia
has been patrolled by Japanese Self-
Defense Forces to protect ships
from pirates since 2009.
The Ginga Bobcat has a crew of
24, all Bangladeshi, and is carrying
phosphoric acid from Europe to In-
dia, the Tokyo Marine spokesman
said.
Tokyo Marine is a subsidiary of
Mitsui O.S.K. Lines Ltd.
About 45 minutes before it was
hit, another tanker operated by To-
kyo Marine in the same stretch of
sea was also attacked by a small
boat, but not hit, the ministry offi-
cial added.
In the March attack, on a heavy-
fuel tanker also operated by Mitsui
O.S.K., the pirates were driven away
after ships of the U.S. and Turkish
navies intervened.
Most cases of trouble for Japa-
nese vessels this year have involved
theft while in Southeast Asian ports,
the ministry official said.
BY YOSHIO TAKAHASHI
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. 7
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8 * * THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
WORLD NEWS
Chinese Firm Drops Pakistan Deal
group that targets Americans a
veritable arm of Pakistans mili-
tary intelligence agency, and U.S.
lawmakers threatened to withhold
Pakistani aid.
Islamabad responded with a
warning that the U.S. risks losing an
ally with such accusations.
China has backed Pakistan, its
largest export market for arma-
ments, for many years as a strategic
counterweight to India in the Indian
Ocean region. The countries have
developed military hardware to-
gether, such as the JF-17 fighter jet,
and China is helping Pakistan build
civilian nuclear reactors.
Beijing constructed and financed
Pakistans Gwadar port, opened in
2007, as part of plans to develop a
road and rail transport corridor
from Chinas northwest to the Ara-
bian Sea.
In many cases, though, Chinas
support has stopped short of what
Pakistan had hoped, while Islama-
bad, in Beijings eyes, has failed to
live up to its promises, including to
ensure security for investments.
Pakistans army has been lobby-
ing for a formal defense pact with
China in the wake of the U.S. raid
that killed bin Laden, angering many
in Pakistan and straining relations
with Washington, a Pakistani gov-
ernment official said.
Such a pact would draw China
into any conflict involving their ally
and likely anger the U.S. and India,
Pakistans regional rival.
China hasnt commented on the
matter. A spokesman for Pakistans
military declined to comment.
The Chinese wouldnt go in for
that. Its too much to put on their
plate when they cant ensure how
much they can control their own
ally, says Aisha Siddiqa, a Pakistani
military analyst.
Beijing is keen to balance its
support for Islamabad with a re-
newed push to improve relations
with India, a growing trade partner.
China also is anxious to avoid fresh
tensions with the U.S. that could
disrupt a first official visit to Wash-
ington early next year by Vice Presi-
dent Xi Jinping, who is expected to
take over as Communist Party chief
in 2012 and president in 2013, diplo-
mats and analysts say.
The U.S., meanwhile, wants
China to engage in a dialogue on
Continued from first page
Pakistan as Washington looks for
ways to bring pressure to bear on
Islamabad over its ties with Islamist
militants. Secretary of State Hillary
Clinton made the request directly to
Chinas Foreign Minister Yang Jiechi
in New York on Monday, according
to a senior State Department offi-
cial.
Han Hua, an expert on South
Asia at Peking University, said China
viewed Pakistan as an increasingly
important strategic partner given
the imminent withdrawal of U.S.
troops from Afghanistan.
That doesnt mean China wants
to replace the U.S. in the role it
played. Its not a zero sum game,
she said.
Some deals are going ahead. Pak-
istan last week signed a preliminary
agreement with another smaller
Chinese company, Global Mining
Co., to invest $3 billion in a mine
and power project close to the one
that Kingho canceled, Mr. Motiwala
said.
Pakistans navy recently agreed
to buy two Chinese-made Azmat-
class attack boats and, in August,
China launched a Pakistani telecom-
munications satellite.
Other Pakistani requests for
China to increase its funding of in-
frastructure projects havent pro-
gressed.
In May, Pakistans Defense Minis-
ter said that China had agreed to
take over operation of Gwadar,
which is doing little business as a
commercial port, and that Islama-
bad has asked China to build a base
there for Pakistans navy.
China has remained silent on the
issue. Pakistani officials involved in
Gwadars operations say there is no
sign China will take over. The offi-
cials say they have been frustrated
by Chinas failure to finance and
build a road network to connect the
port to the rest of the country.
A number of Chinese workers
have been killed in Pakistan in the
past decade, some of them in trou-
bled Baluchistan province, where
armed separatist insurgents have
opposed Chinese investments.
Some Chinese experts say Gwa-
dars cut-off location in Baluchistan
detracts from its attractiveness as a
military base and as a transit point
for Chinas oil imports, given the
high cost and security risk of piping
them across some of Pakistans least
stable regions.
Bay of
Bengal
Arabi an
Sea
500 miles
500 km
I NDI A
CHI NA
AFGH.
I RAN
PAKI STAN
NEPAL
SRI LANKA
Islamabad
Kashmi r
Gwadar
Aynak Mine
Kashgar
XINJIANG
Japan Aims
To Lift Role
In Maritime
Cooperation
TOKYOJapanese defense offi-
cials and their Southeast Asian
counterparts agreed this week on
the need to deepen regional cooper-
ation amid concerns about Chinas
growing assertiveness in the South
China Sea, as Tokyo again signaled
its willingness to play a bigger role
with its neighbors.
The relationship between Japan
and the members of the Association
of Southeast Asian Nations has
matured from dialogues to one
where Japan plays a more specific
cooperative role on a range of re-
gional security issues, Japanese
Vice Minister of Defense Kimito Na-
kae said Thursday in Tokyo, the day
after meeting with senior defense
officials from the 10 Asean nations.
Mr. Nakae was speaking at the
opening of a seminar on common
security issues held the day after
the annual defense meeting. At-
tended by representatives of Japan
and Asean countries, which include
the Philippines, Vietnam, Indonesia
and Thailand, the seminar this year
prominently featured maritime is-
sues.
At the meeting, Asean nation of-
ficials underlined the need to estab-
lish a common understanding on
the interpretation of international
law regarding freedom of naviga-
tion, and to implement a formal,
binding code of conduct to keep dis-
putes in check. Several countries,
such as Vietnam and the Philip-
pines, have territorial claims that
conflict with Chinas in the South
China Sea, which some geologists
suspect covers oil and gas reserves.
Bolstering the possibility of es-
tablishing a wider multilateral stra-
tegic framework, Mr. Nakae said re-
solving the maritime problem
requires stronger cooperation from
Japan, the U.S. and others.
Chinas growing naval confi-
dence was the primary subject dis-
cussed by a panel of regional secu-
rity experts during the session on
efforts to strengthen maritime se-
curity in the region.
Chinese naval activism will not
likely be a temporary phenomenon,
but will be a permanent feature of
Asian politics in the years to come,
said one panelist, Toshi Yoshihara,
a professor of Asia-Pacific studies
at the U.S. Naval War College. Mar-
itime Asia is going to be a busy
place. It is going to be a busy the-
ater as China fulfills what it be-
lieves is its rightful maritime pre-
rogative.
Earlier this week, Japan and the
Philippines tightened military and
security ties, elevating the bilateral
relationship to a strategic partner-
ship in a joint statement signed by
Prime Minister Yoshihiko Noda and
Philippine President Benigno Aquino
III in Tokyo.
BY YOREE KOH
Bahrain Protester Sentenced to Death
MANAMA, BahrainBahrains
National Safety Court sentenced a
man to death Thursday for allegedly
killing a policeman and handed
down hefty jail terms to 20 doctors
and nurses, in another round of
punishments for those involved with
the antigovernment uprising earlier
in the year.
The sentences come amid sim-
mering tensions on the tiny Gulf is-
land in the wake of elections last
weekend that were boycotted by the
opposition and marred by fresh pro-
tests. Some observers fear a pro-
tracted political stalemate and in-
creasingly violent protests as the
Sunni monarchy refuses to cede
power or enact real changes.
A statement from Bahrains gov-
ernment said the military prosecu-
tor had found the protester guilty of
murdering a policeman by running
over him intentionally with his car
several times. Another demonstra-
tor was given a life sentence for the
same charge, it added. In a different
case earlier in the year, two other
men were given the death penalty
for also allegedly murdering two po-
licemen.
Some 13 doctors were given 15
years in prison, with others receiv-
ing between 10- and five-year sen-
tences, for charges ranging from
possession of weapons to fabri-
cating stories to disturb public secu-
rity, the statement said.
On Wednesday, the sentences of
21 dissidents were upheld, including
eight high-profile activists. Earlier
in the week the head of Bahrains
teachers union was jailed for 10
years on charges of inciting hatred
against the Gulf states Sunni rulers.
Doctors, along with politicians,
sportsmen and journalists, were
among those allegedly targeted by
the government in the aftermath of
the uprising earlier in the year that
left about 30 people dead. In March,
Bahrain invited a Gulf force of
mainly Saudi troops to help it quell
a large protest movement that saw
hundreds arrested and thousands
lose their jobs.
Clashes between police and more
radicalized protesters in the villages
circling the capital Manama turn vi-
olent on an almost daily basis.
Al Wefaq, the largest opposition
party, is worried by the growing
threat of extremism among disaf-
fected Shiites.
Of course we are worried [about
extremism] if a political solution is
not being adopted, said Abdul Jalil
Khalil, a senior Wefaq member. Its
a big concern.
Mr. Khalil says he fears more
protesters will turn to violence,
risking deepening sectarian tensions
between the wealthier Sunnis and
islands Shiites. But he denied dem-
onstrators would carry weapons.
The regime has failed to offer
proper political changes, critics say.
Theyre not ready for constitu-
tional monarchy, and they dont
wish to take the steps to solve the
problem, said Michael Stephens, a
researcher at Royal United Services
Institute for Defense and Security
Studies in Doha. Failed reforms
means more tension and more dis-
appointment for the Shiites.
In an olive branch to the opposi-
tion, Bahrains King Hamad bin Isa
Al Khalifa set up an independent
commission in July to probe human
rights abuses during the unrest.
Shiites make up around 70% of
the population in Bahrain and have
long campaigned for better jobs and
greater political rights in the Sunni-
ruled kingdom.
Wefaq boycotted elections last
weekend held to replace its 18 mem-
bers of the lower house of parlia-
ment who that quit in protest in
February over the regimes crack-
down on protesters. Turnout was
17%, according to the party. Run-offs
for nine of the 14 constituencies are
due to take place on Saturday where
candidates failed to win a majority.
BY ALEX DELMAR-MORGAN
The relationship between
Japan and Asean has
matured from dialogues to
one where Japan plays a
more specific cooperative
role, one official said.
Prime Minister Yousuf Raza Gilani, right, shakes hands with Meng Jianzhu, Chinas minister of public security, on Tuesday.
R
e
u
t
e
r
s
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. 9
10 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
WORLD NEWS
In Nigeria, a Cop Takes On Other Cops
Officer Agbonika Cracks Down on Bribe-Taking and Naps, as Police Culture Is Scrutinized After Terrorist Attacks
LAGOSOn a recent overnight
patrol in a bullet-ridden truck, po-
lice supervisor Monday Agbonika
carried out what critics call mission
impossiblepolicing Nigerias po-
lice.
Blind in one eye from a past re-
venge attack, Mr. Agbonika drove
between police checkpoints, scan-
ning for officers who were drinking
on duty or straying from their posts.
He upbraided an officer for sleeping
on the job. He yelled at others for
trying to extract bribes from drivers
and detainees.
Police corruption is widespread
and bribe-taking is endemic in Nige-
ria, say locals and rights groups.
Here in Lagos, the countrys biggest
city, Divisional Police Officer Agbon-
ika is working to clean up his three-
square-mile territory. With depart-
ment budgets tight and incentives
scarce, his weapons consist of stern
warnings, threats of reassignment
and, ultimately, dismissal.
When Mr. Agbonika took control
of his station about four years ago,
saying bribe-taking wouldnt be tol-
erated, nearly half of the 350 offic-
ers asked for transfers, he says.
Nigerians are used to paying
money when they come to a police
station, he says. They say, Im go-
ing to go down to the station, let me
bring some cash. Were trying to
change the conversation here.
Mr. Agbonika and a smattering
of other officers are part of a drive
by foreign and local organizations
to reform police forces in develop-
ing countries. Here, the British gov-
ernment is working in conjunction
with Nigerias justice ministry and
several state governments to spon-
sor a $1 million program, Justice for
All, that advocates Western-style
community policing and improved
accountability for police officers.
Such efforts come at a pivotal
point for Nigeria, where police cor-
ruption has dirtied politics and
casts a grubby shadow over the fu-
ture of Africas most-populous coun-
try. Police abuse has been blamed,
in part, for terrorism in Nigeria, in-
cluding the late August attack on
the United Nations building in Abuja
that killed at least 23 people.
Islamic militants belonging to
Boko Haramthe group that
claimed responsibility for the Abuja
attacksay police killed the groups
leader while he was in custody in
2009 and have since mounted re-
venge attacks.
Obstacles are many. Most Nige-
rian cops make $200 or less a
month and often arent supplied
with basics such as phones or fuel
for vehicles.
Politicians use policemen as se-
curity guards and chauffeurs and to
intimidate rivals, say rights organi-
zations and several Nigerians.
Rights groups say collusion with
criminals is also typical among po-
lice, as is rounding up innocent ci-
vilians to extract bribes.
The International Society for
Civil Liberties and the Rule of Law,
a civil-society group based in the
small state of Anambra, estimated
that bribe-seeking police in the
state collected $4.5 million from
some 70 checkpoints in 2008.
Police in Anambra couldnt be
reached to comment. Spokesmen for
the Lagos police force and the Nige-
rian national police declined to com-
ment on the issue of police corrup-
tion.
Mr. Agbonika appears laid-back
but focused. In his office hangs a
map of his Agege district, peppered
with push pins to designate high-
crime areas or escape routes for car
thieves where he wants his officers
positioned. He raised his voice
rarely on recent patrols, except
when officers strayed from these
posts.
The chief didnt discuss his moti-
vations for attempting to bring his
charges into line. He lost his eye, he
says, when a group of robbers he
had arrested were released and re-
turned to beat him up.
Mr. Agbonika says Western-style
community policing will help reduce
crime, and says his officers do
things others in Nigeria often
dontincluding resolving domestic
disputes, going on foot patrols and
recruiting local religious and cul-
tural leaders to assist them.
On a recent evening, he con-
vinced three battered women to
pursue a domestic-violence case and
counseled a small-business owner to
check his supplies carefully before
accusing an employee of theft.
Other stances fit less with West-
ern-style policing. Mr. Agbonika
says he wouldnt be above looking
the other way if one of his men or
an armed member of a neighbor-
hood-watch-style volunteer group
were to gun down an armed robber
rather than send the person through
a sluggish court system.
If one of the vigilantes with a
shotgun shoots an armed robber, I
wouldnt even ask him for his gun li-
cense, he says.
Mr. Agbonikas superiors, con-
tacted through a police spokesman,
declined to comment about his
work.
At his station on a recent night,
he admonished his staff for trying
to extract a bribe from a man
brought in the previous night on
theft accusations but not yet
charged. The man was lying in a
dank cell, where someone had
scrawled All is Well. Upon gaining
his release, the man thanked Mr.
Agbonika.
Later, toting an AK-47 and a
small pistol on night patrol, Mr. Ag-
bonika visited several businesses
that had been recently robbed, in-
cluding a nightclub with an area for
pole-dancing.
He drove back and forth between
his officers checkpoints, chiding
them for not doing their jobs. Close
to dawn, a potbellied policeman on
loan from a different neighborhood
was brought before Mr. Agbonika
for sleeping on the job.
This is not your old station,
said Mr. Agbonika, as a small crowd
of officers gathered round.
While Nigerias official crime
statistics are widely viewed as in-
accurate, Lagos officials say the
megacitys crime rate is below av-
erage. In a 2010 survey, the Cleen
Foundation, a nongovernmental or-
ganization working on police re-
form in Nigeria, found that 80% of
Lagos residents said violent crime
had noticeably decreased since the
previous year.
Some of Mr. Agbonikas officers
remain wary of his tactics. Several
were seen to have shuffled a de-
tainee between cells during a recent
visit, apparently in a bid to keep the
man, from whom they hoped to ex-
tract a bribe, out of Mr. Agbonikas
sight.
Others say the results speak for
themselves. Before, there were rob-
beries every night, said plain-
clothes policeman Sayid, as he
walked along the train tracks near
Mr. Agbonikas station. Now things
are quieter.
BY WILL CONNORS
Officer Monday Agbonika, center, in his Lagos police station, has attempted to crack down on corruption.
W
i
l
l
C
o
n
n
o
r
s
f
o
r
T
h
e
W
a
l
l
S
t
r
e
e
t
J
o
u
r
n
a
l
Nigerians are used to
paying money when they
come to a police station.
They say, Im going to go
down to the station, let me
bring some cash.
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. 11
OPINION: REVIEW OUTLOOK
A
feud within Indias cabinet has
all of New Delhi wondering
whether the Congress-led govern-
ment will implode. Recent corruption
scandals have weakened public support,
and now top ministers
are squabbling over
who is to blame. Mean-
while, Prime Minister
Manmohan Singh ap-
pears to be in hiding.
According to a
memo leaked last
week, Finance Minister Pranab Mukher-
jee claims his predecessor, Palaniappan
Chidambaram, could have halted the
sale of telecom spectrum at below-mar-
ket prices in 2008. Mr. Chidambaram,
now home minister, reportedly offered
to resign late last week, though the
Congress Party is now rallying around
him.
That 2008 sale is turning out to be
the biggest graft case in Indias history.
The national auditor estimates that be-
cause then Telecom Minister Andimuthu
Raja sold licenses on a first-come, first-
served basis, instead of
an open auction, the
exchequer lost $39 bil-
lion.
The problem is Mr.
Singh hasnt stepped
forward to clarify how
this happened. His past
comments suggest that he knew how
Mr. Raja was selling licenses. If the
manner of selling spectrum was legiti-
mateand if it should be used for the
sale of other natural resourcesMr.
Singh isnt strongly defending it. If it
was wrong, he refuses to take responsi-
bility. In this vacuum, his deputies are
passing the buck.
Such weakness at the top is spelling
confusion elsewhere. Take the issue of
opening the multibrand retail industry
to foreign investment. New Delhi has
dangled this possibility for
years, and the will-they-or-
wont-they game continued this
week as an official acknowl-
edged that differences among
various ministries were holding
up the reform. Similarly, this
week saw infighting over the lu-
crative pharmaceutical business,
with some parts of the govern-
ment pushing to limit overseas
investment, while another right-
fully resists.
In these cases, investors are
left jittery, since Mr. Singh hasnt put
his foot down one way or the other.
This lack of direction is a big reason
much-needed reforms are delayed, hurt-
ing economic growth. And in some
cases, India is left embarrassed on the
international stage: In 2009, Indians
saw Mr. Singh waffling on the countrys
position on carbon emissions in
the run-up to Copenhagen be-
cause of competing voices in his
administration.
Few politicians like making
tough choices, but even in that
company Mr. Singh stands out
for avoiding them. The buck
never really stopped with him in
the first place, because Congress
President Sonia Gandhi holds
the true political reins. Still, Mr.
Singhs abdication of responsi-
bility and his aversion to risk is
striking today, not least because it en-
courages others in Indias government
to go into hiding the moment theres a
sign of trouble.
I
f you thought the $535 million Solyn-
dra scandal had chastened the fear-
less venture capitalists of the Obama
Administration, think again. The Depart-
ment of Energy shovelled out $1.1 billion
in new loan guarantees to solar projects
in Nevada and Arizona Wednesday, and
more deals are pending before the $18
billion program funded by the 2009
stimulus expires Friday.
Well go out on a limb and say the
rush raises questions about how care-
fully these outlays are being vetted, es-
pecially in light of solar-panel-maker
Solyndras August bankruptcy. The FBI,
Treasury Department and Congress are
all investigating who approved the po-
litically connected California companys
loan guarantee and why. The case is an
embarrassment for the White House,
which touted Solyndra as a model for its
green jobs agenda.
Yet the Department of Energy seems
oddly removed from the uproar. In a
statement Wednesday, Secretary Steven
Chu said: If we want to be a player in
the global clean energy race, we must
continue to invest in innovative technol-
ogies that enable commercial-scale de-
ployment of clean, re-
newable power like
solar. Translation:
China is throwing tax-
payer money into solar,
so Americans should,
too.
That comparison
isnt straightforward; without a free me-
dia, its impossible to know how many
Solyndras Beijing is creating, much less
how many are making any money. We
doubt most Americans want its govern-
ment to get in the business of competing
dollar-for-subsidy-dollar with the politi-
cally directed credit decisions of the Chi-
nese Communist Party. If solar energy
collection technology has a chance to be
a commercial winner, someone will in-
vest in it. If no one does, there may be a
very good reason.
One of those reasons may be this: The
Energy Information Administration esti-
mates that new natural
gas-fired plants will
create electricity at a
cost of $63.10 per
megawatt hour, com-
pared to the Adminis-
trations green favor-
ites, offshore wind and
solar thermal plantslike the one in Ne-
vada funded Wednesdaywhich cost
$243.20 and $311.80.
Even if you believe in the green job
mantra, heres some more math: Wednes-
days $737 million loan guarantee to
Tonopah Solar Energy will create 600
construction jobs and 45 permanent
jobs, according to the company. The
$337 million loan guarantee to Sempra
Energy will fund up to 300 construction
jobs. Thats $1.1 billion for 45 permanent
jobs.
By comparison, the proposed Key-
stone XL pipeline to carry crude oil
from Western Canada to refineries on
the U.S. Gulf Coast would create some
13,000 union jobs and around 118,000
spin-off jobsif the U.S. State Depart-
ment ever gets around to approving it.
And taxpayers wouldnt have to risk a
dime.
Its always possible that some of the
Energy Departments latest investments
will turn out to be winners, but if they
do then the profits will go to the private
shareholders. If they fail like Solyndra,
then taxpayers will get stuck with the
bill. Come to think of it, that really isnt
all that different from Chinas political
business model, a free press and demo-
cratic Congress aside.
T
he political class is doing the
will-he-wont-he dance over a
2012 Chris Christie Presidential
run, but today wed like to focus on the
speech he delivered Tuesday evening at
the Reagan Presidential library. Its the
best thematic statement from any Re-
publican recently on how to transcend
the calcifying ambitions of the Obama
era.
The New Jersey Governor spoke
about the obligations of leadership, es-
pecially Presidential leadership, but his
larger theme was the meaning of
American exceptionalism. He defined
that oft-abused phrase not in the con-
text of assertive American power over-
seas, as the left likes to caricature it,
but as the power of Americas example
that flows from economic and political
success at home. Earned American ex-
ceptionalism, he called it.
There is no better way to reinforce
the likelihood that others in the world
will opt for more open societies and
economies than to demonstrate that our
own system is working, Mr. Christie
said. Unfortunately, through our own
domestic political conduct of late, we
have failed to live up to our own tradi-
tion of exceptionalism. Today, our role
and ability to affect
change has been di-
minished because of
our own problems and
our inability to effec-
tively deal with them.
Mr. Christie men-
tioned entitlement and tax reform as
challenges that have been abdicated by
President Obama and Congress. This
overlooks the contribution made by
Paul Ryan and House Republicans on
Medicare, despite the political risk that
only weeks ago had Democrats chor-
tling about their prospects of re-crown-
ing Speaker Nancy Pelosi.
But Mr. Christie wasnt delivering a
policy or partisan address so much as a
statement of optimism about Americas
ability to meet its challenges if leaders
tell the truth. Mr. Christie has some
credibility on the issue given his will-
ingness to take on teachers unions,
public pensions and other heretofore
taboo subjects in Trenton.
Mr. Christie is onto something that
is likely to resonate
with Americans who
are worried about
their economic pros-
pects and increasingly
disappointed with
President Obamas re-
sponse. As Mr. Christie put it, Mr.
Obama ran on themes of postpartisan
inspiration and U.S. revival. But now
President Obama prepares to divide
our nation to achieve re-election. This
is not a leadership style. This is a re-
election strategy.
Paradoxically, however, this creates
an opening for the GOP Presidential
candidates to fill the void left by Mr.
Obamas reversion to divide-and-con-
quer politics. This means more than
pointing out Mr. Obamas economic fail-
ures, or offering a jobs plan, and cer-
tainly more than sprinkling words like
optimism or Reagan or city on a
hill in speeches. It means finding a
way to speak to the better angels of
Americas political character in the con-
text of our current discontents.
Mr. Christie continues to say he isnt
running for President, but Tuesdays
theme is the basis for a campaign if he
does take the leap. In any event, the
best Republican speeches this year have
come from Indiana Governor Mitch
Daniels, Florida Senator Marco Rubio
and Messrs. Ryan and Christie. None of
them is running for President, but per-
haps the candidates who are running
have been paying attention.
Where Is Manmohan Singh?
Denying the Solyndra Fiasco
Earned American Exceptionalism
The U.S. Department of
Energy keeps shoveling
out taxpayer money.
New Delhis leadership
vacuum prompts
feuds and confusion.
Christies critique
of the Obama era.
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
Manmohan
Singh
12 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
OPINION
Night raids by U.S. and British
special forces are one of the most
successful tactics for capturing
high-value Taliban targets. How-
ever, like drone strikes they have
long been unpopular with the Af-
ghan population and government
because of civilian casualties. Nev-
ertheless, the use of night raids
has continued to increase to the
point where the costs now out-
weigh the benefits.
Thats the message of several
independent studies, the most re-
cent of which was jointly released
by the Open Society Foundations
and the Liaison Office earlier this
month. But none of these reports
explains a critical reason why the
use of night raids, otherwise
known as kill/capture operations,
has expanded beyond the point of
diminishing returns: the bureau-
cratic politics of intelligence anal-
ysis.
Raids are the final stage of a
process that starts with analysts
identifying an insurgent target,
making a case for the individuals
capture and providing detailed in-
formation on the targets location.
These analysts are usually asked
to find targets based on function,
geography or a combination of the
two. One analyst might be looking
for bomb makers in Jalalabad
while another is hunting com-
manders in the Haqqani network.
Intelligence analysts are re-
sponsible both for understanding
their target network and for rec-
ommending action to degrade that
network. In theory, recommenda-
tions can be as diverse as building
a school or a well in location X or
pressuring the local government
to prosecute a particular corrupt
official. In the past, proposing an
individuals capture was reserved
for the most extreme cases.
Today, however, kill/capture
is the most commonly suggested
course of action by intelligence
analysts. The reason is that such
operations are almost always con-
ducted by special forces, and spe-
cial forces trust the analysts and
act on their recommendations, be-
cause their past association has
proven successful. Conventional
forcesthe Marines and soldiers
who execute more complicated,
long-term operations aimed at
winning hearts and mindsdo not
have the same association or
trust.
Conventional forces view ana-
lysts with a dont tell me how to
do my job mentality. Over time,
that has encouraged analysts to
gravitate toward supporting spe-
cial forces and away from generat-
ing more complicated courses of
action better aligned with coun-
terinsurgency objectives.
Field officers typically com-
plain that intelligence analysts do
not understand what is happening
on the ground, and so their more
creative courses of action are
not feasible. While this may often
be the case, the blame should fall
in part on conventional field offic-
ers for not allowing analysts ac-
cess.
On one of my deployments to
Iraq as an analyst back in 2007, I
was assigned an insurgent group
based out of Basra, in the south of
the country. But I was located be-
hind a desk in Baghdad. When I
petitioned my boss to go down to
Basra, he axed the idea because
Basra was the second most dan-
gerous city in Iraq. The most dan-
gerous, of course, was Baghdad.
The situation in Afghanistan is
the same. Despite desperate,
sometimes even public calls to re-
form the relationship between
conventional forces and intelli-
gence analysts, little has changed.
Instead of conventional forces
stepping up communication with
analysts, it is the special forces
who invite them to small forward
operating bases in remote areas
and give them increased access to
detainees.
This helps improve the accu-
racy of targeting and reduce civil-
ian casualties during night raids,
as the Open Society/Liaison Office
report acknowledges. Yet it is not
a solution to the underlying prob-
lem. Because special forces are in
Afghanistan to execute kill/capture
operations, their efforts to
strengthen the analyst-operator
bond result in even more such
missions.
Until conventional forces place
the same amount of trust in ana-
lysts as special forces do, analysts
will continue to tailor their target-
ing to the abilities of special
forces. Every report that criticizes
night raids also contains an im-
plicit criticism of conventional
forces for failing to leverage the
thousands of analysts who signed
up to deploy to Afghanistan for
the same reason as their military
brethren: to make a difference.
Mr. Conway is a doctoral candi-
date at the University of St An-
drews in Scotland and a former
analyst for the U.S. Department
of Defense.
Kill/capture missions
have become excessiveand
the politics of intelligence
gathering are to blame.
BY J. EDWARD CONWAY
The Heat of the Afghan Night
Even before the Internet be-
came a household word, there
were those who conceived of it as
an actual placean alternative re-
ality of mystery, possibility and
danger. Science-fiction novelist
William Gibson dubbed computer
networks cyberspace in a story
written as far back in the dark
ages as 1982. By 1984 he had
penned the novel Neuromancer,
in which characters used a brain-
computer interface to travel
through a virtual reality called
The Matrix.
The metaphor of cyberspace
has a certain validity. There are
ways in which the Internet, like
the printing press before it, has
expanded our communal imagina-
tion, and there are ways in which
the imagination can be usefully
conceived of as a piece of mental
real estatea place of conse-
quence, in fact, where adventures
may occur that affect our actual
lives. But in the end, the metaphor
is only thata metaphor.
Worm is an attempt by jour-
nalist Mark Bowden to craft a
thrilling nonfiction adventure tale
from the story of how, a few years
ago, a bunch of pencil heads tried
to clean one of those malware
thingies out of the worlds com-
puter networks. Mr. Bowden, it
should be said, is a wonderfully
entertaining writerhis Black
Hawk Down (1999) and Killing
Pablo (2001) are master classes
in telling true stories well. But his
effort, though valiant, succeeds
only as long as he keeps the Inter-
net-as-Wonderland metaphor
afloat. It collapses as the meta-
phor sinks under the weight of re-
ality.
The book tells the story of an
Internet worm dubbed Con-
ficker, which may have originated
in Eastern Europe and which, as of
this writing, has spread to com-
puters world-wide. A worm is a
form of harmful software, like a
virus. But while a virus requires
users to download a file a worm
simply enters the operating sys-
tem and starts to replicate itself
and spread to other computers. Its
purpose is to form a botnet, a
fleet of linked computers that can
be controlled by the worms cre-
ator, possibly without the comput-
ers owners even knowing about it.
If the right command were
given, Mr. Bowden writes, and
all bots in a large net worked to-
gether in one concerted effort,
they could crack most codes, break
into and plunder just about any
protected database in the world,
and potentially hobble or even de-
stroy almost any computer net-
work, including those that make
up a countrys vital modern infra-
structure: systems that control
banking, telephones, energy flow,
air traffic, health-care informa-
tioneven the Internet itself.
Worm goes on to give a
blow-by-blow description of the
thoughts and actions of a network
of cyber-security expertsself-
christened The Cabalwho at-
tempt to trace the source of Con-
ficker, limit its effects and
command the attention of a clue-
less American government before
the malware does . . . whatever it
may eventually do. The Cabals
worried speculations about the
worms ultimate purpose are a key
part of the story.
Mr. Bowden uses every weapon
in his impressive writing arsenal
to convince us that this is gripping
stuff. He subtitles the book The
First Digital World War. He takes
great pains to etch the personali-
ties and quirks of individual Cabal
members: the nice guy, the hard
case, the potential traitor.
And all of this works for a
while. The high-tech chess game
played between the good-guy Ca-
bal and the mysterious Black
Hats who are spreading the worm
has some genuinely interesting
twists and turns, as when a soft-
ware patch produced by Microsoft,
meant to thwart the worm, only
alerts the worms creators to new
vulnerabilities. And because Mr.
Bowden is at great pains to draw
readers into this complicated
story, he must likewise take great
pains to explain it.
In doing so, he offers some
captivating and comprehensible
descriptions of what the Internet
is, how it was invented and how it
works: Imagine your computer to
be a big spaceship, like the star-
ship Enterprise on Star Trek. The
ship is so complex and sophisti-
cated that even an experienced
commander like Captain James T.
Kirk has only a general sense of
how every facet of it works. . . .
Now imagine a clever invader, an
enemy infiltrator, who does under-
stand the inner workings of the
ship.
But the book, while short, still
feels like a paddedversion of the
June 2010 Atlantic Monthly article
on which its based. Not to give
too much away, but the problem
with Worm is that nothing much
finally happens here in the real
world. While Conficker is still out
there, its actual effects have been
minimal. The race against the
clock turns into an amorphous and
inconclusive slog, and Mr.
Bowdens attempts to keep the
thrill alive begin to feel breathless
and labored.
It was as good as the plot of a
Hollywood thriller, Mr. Bowden
insists toward the end. Was the
Internet going to explode? Would
ecommerce grind to a halt? The
vital computer networks govern-
ing the nations electrical grid, air
traffic control, transit systems,
telecommunications . . . were they
going to fly off the rails? But no
amount of hype can hide the fact
that were talking about a bunch
of geeks and their gizmos here
and that, for all the build-up, the
whole thingso far, at leasthas
ended with a whimper.
Mr. Klavans latest novel is The
Final Hour.
[ Bookshelf ]
BY ANDREWKLAVAN
A Battle Versus Whatever It Is
Worm: The First Digital World War
By Mark Bowden
(Atlantic Monthly, 245 pages, $25)
The Law of the Sea Treaty
(LOST)signed by the U.S. in 1994
but never ratified by the Senate
is showing some signs of life on
Capitol Hill, even as new circum-
stances make it less attractive
than ever. With China emerging as
a major power, ratifying the treaty
now would encourage Sino-Ameri-
can strife, constrain U.S. naval ac-
tivities, and do nothing to resolve
Chinas expansive maritime terri-
torial claims.
At issue is Chinas intensified
effort to keep Americas military
out of its Exclusive Economic
Zone, a LOST invention that af-
fords coastal states control over
economic activity in areas beyond
their sovereign, 12-mile territorial
seas out to 200 miles. Properly
read, LOST recognizes exclusive
economic zones as international
waters, but China is exploiting the
treatys ambiguities to declare no
go zones in regions where centu-
ries of state practice clearly per-
mit unrestricted maritime activity.
Take the issues of intelligence
gathering. LOST is silent on the
subject in the exclusive zones, so
China claims it can regulate
(meaning prohibit) such activity.
China wants to deny American
access so it can have its way with
its neighbors. Beijing is building
anti-access and area denial
weapons such as integrated air de-
fenses, submarines, land-based
ballistic and cruise missiles, and
cyber and anti-satellite systems.
If the Senate ratifies the treaty,
America would become subject to
its dispute-resolution mechanisms
and ambiguities. Right now, since
the U.S. is the worlds major naval
power, its conduct dominates cus-
tomary international lawto its
decided advantage.
This dispute is not really about
law. China simply does not want
the U.S. military to gather intelli-
gence near its shores. And others
quietly support Chinas position,
including Russia, Iran, and India.
Given Chinas incursions into other
Asian nations exclusive zones,
these states may seek to restrict
international maritime activities
as well, complicating U.S. efforts.
All Washington wants is to do
what it has done since it became a
maritime power: use its Navy to
enhance international peace and
security, deter conflict, reassure
allies, and collect intelligence.
LOST undercuts these strategic
imperatives, and that is why it has
always been a bad idea for the
U.S.
The treaty is not an answerit
is only a beguiling, flawed escape
hatch from the hard work America
and others must do to meet
Chinas challenge.
That hard work must include
properly funding and equipping
the U.S. Navy and exercising it in
Chinas exclusive zones, especially
on intelligence missions, based on
long-established state practice.
Together with diplomacy to pre-
vent conflicts, these steps will re-
assure allies of full U.S. support in
resolving disputes with China.
Mr. Bolton served as U.S. ambas-
sador to the United Nations from
2005 to 2006. Mr. Blumenthal
was a senior country director for
China and Taiwan in the Office of
the U.S. Secretary of Defense.
BY JOHN BOLTON
AND DAN BLUMENTHAL
Lured by the
Law of the Sea
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. 13
OPINION
The European debt discussions
always paint the alternatives as
either bail out countries (really,
bail out their bondholders) or
break up the euro. In fact, the
euro and the European economic
union would be stronger if coun-
tries can default. For that reason,
I advocated letting Greece go a
year and a half ago when the cri-
sis first erupted.
That chance to save the euro is
fading. The European Central
Bank (ECB) has bought sovereign
debt from Greece, Portugal, Ire-
land, Italy and Spain. It has lent
even more money to banks whose
main asset is the same sovereign
debt. Deposits are fleeing those
countries banks, and lending from
the ECB is making up the differ-
ence.
Bank regulation is making the
situation worse: Banks carry most
of the ECB and sovereign debt at
face value. And their own govern-
ments are pressuring banks to buy
more sovereign debt.
When the defaults come, the
ECB will take a big hit. Then Ger-
many and the others will be faced
with an awful choice: Pony up tril-
lions to recapitalize the central
bank or abandon the euro along
with the union it represents.
Eurobonds that would be is-
sued to buy sovereign debt,
backed by EU-wide taxes, have
been suggested but arent going
anywhere in the face of taxpayer
resistance. In reality, Eurobonds
have already been issuedthey
are called euros. The countries of
the European Union are already
pledged to make up any capital
loss of the European Central Bank,
and this must eventually come
from tax revenues. Thats the
same as paying off Eurobonds.
The central bank doves and
their defenders deny this is a
problem. They say the ECB got
collateral from banks. They say it
sterilized the bond purchases,
by selling high quality bonds to
buy poor ones, so the total supply
of euros did not increase. They
think that euros will stay out-
standing forever so central-bank
capital does not matter.
But the ECBs collateral is the
same sovereign debt that upon
default will bring down the banks.
If collateral evaporates on the
same day as the loan, its not col-
lateral. Sterilizing is a mirage,
and central-bank capital matters.
When the ECB needs to raise rates
or contract the money supply, it
needs assets to sell to soak up eu-
ros. And if currency holders know
the central bank is empty, they
will run away from euros, so that
need to buy euros may come
quickly.
The ECB involvement has only
just begun. Last weekends bright
idea is to leverage the 440 bil-
lion bailout fund by borrowing
from the ECB, and using the fund
to insure debt rather than to buy
it. In this way the fund could
support trillions of euros of
debt. But risk can only be trans-
ferred; it does not evaporate. And
the risk ends up at the ECB and,
ultimately, with taxpayers.
This sort of scheme should
sound familiar from the financial
crisis. Take a fund designed to
buy bonds, and goose its credit
exposure by leveraging and writ-
ing credit default swaps (bond in-
surance) instead. This move just
explodes the ECBs already large
lending against rotten collateral.
German Finance Minister Wolf-
gang Schauble saw through the
scheme quickly, calling it a stupid
idea that would endanger the
AAA sovereign debt rating of
other member states. I think he
misspoke a bit. The goal is stupid,
but it takes clever financial engi-
neering to turn a 440 billion
fund into several trillions of credit
exposure.
And we can forecast more.
What happens, say, when an Ital-
ian bond auction fails? The Ger-
man taxpayer is unlikely to stand
for direct government purchase, so
the politicians will surely decide
that the only immediate choice is
for the ECB to provide what they
will call bridge financing.
Europes deepest problem is
bad ideas. Unpleasant price move-
ments represent illiquidity,
speculators, market manipula-
tion, lack of confidence and
contagion, not the hard reality
of looming default. The point of
policy is to calm markets and
provide confidencenot to
solve financial problems.
When the price of bread rose
in their revolution, the French
took bakers to the guillotine. They
got more inflation, and less bread.
When their descendants saw bond
prices falling, they passed restric-
tions on short sales. They got
lower prices, and less liquidity.
This is not a temporary market
dislocation. This debt will not be
paid back. Greece and the others
might well rather default. Cleared
of past debt, like Argentina, they
are likely to be able to borrow
again soon. These countries surely
dont want austerity. And least of
all do their political classes want
to reform their great-scam
statesthere is pervasive rot in
an economy where every occupa-
tional license is a political favor
though reform is the one thing
that could actually return them to
strong growth and let them pay
back debt.
Facing global markets might be
enough pressure for them to re-
form. Facing the International
Monetary Fund and the ECB is
surely not.
The euro, and the economic in-
tegration that goes with it, must
be saved (political, regulatory, bu-
reaucratic, and fiscal integration
less so). Greece has 11 million peo-
ple, about the same as the Los An-
geles metro area, and a $320 bil-
lion gross domestic product,
about the same as Maryland. It
needs its own currencyand to
rely on periodic devaluation of
that currency for competitive-
nesslike a hole in the head. That
road leads to trade and capital
isolation.
The worst idea of all is that
Europes admirable economic free
trade zone and currency union
cannot survive a sovereign de-
fault. It is precisely allowing sov-
ereign default, and isolating the
central bank from sovereign de-
fault, that is the only way to keep
the union together. That is, after
all, how the euro was set up in the
first place. Its almost too late. But
not quite.
Mr. Cochrane is a professor of
finance at the University of Chi-
cago Booth School of Business
and an adjunct scholar of the
Cato Institute.
C
o
r
b
i
s
Last Chance to Save the Euro
BY JOHN H. COCHRANE
Who says bipartisanship in
Washington is dead? Although
Republicans and Democrats cant
agree on how to tame budget def-
icits, both want to weaken the
Federal Reserves independence,
which bodes ill for the economy.
First lets look at the Republi-
cans. Republican presidential can-
didates have been regularly beat-
ing up on Ben Bernanke and the
Federal Reserve, with Texas Gov.
Rick Perry even going so far as to
label the Feds recent expansion-
ary policies as close to treason-
ous. Such rhetoric might be ex-
pected during a presidential
campaign, but in an unusual step
GOP congressional leaders issued
a letter at the onset of the most
recent Federal Open Market Com-
mittee (FOMC) meeting asking
the Fed to resist further extraor-
dinary intervention in the U.S.
economy.
The Democrats have also
sought to pressure the Fed, with
Massachusetts Congressman Bar-
ney Frank recently proposing leg-
islation that would strip the pres-
idents of the Federal Reserve
banks of their FOMC votes and
replace them with presidential
appointees subject to Senate con-
firmation. Mr. Frank has made it
abundantly clear that he is upset
with the dissenting votes of three
of the Federal Reserve Bank pres-
idents who have opposed recent
Fed actions to stimulate the
economy. Threatening to take
away their votes is a not-so-sub-
tle message that the bank presi-
dents will be cut out of policy-
making if they resist
expansionary policies.
Why are these attempts to in-
terfere in Fed policy-making so
dangerous?
Politicians, God love em, nec-
essarily focus on the short term.
After all, they have to get re-
elected. Monetary policy needs to
focus on the longer-term health
of the economy. Monetary policy
affects the economy with long
lags: It takes a minimum of a
year for monetary policy to have
a major impact on economic ac-
tivity and longer to have an im-
pact on inflation.
Furthermore, keeping inflation
stable requires that long-term ex-
pectations of inflation stay an-
chored in both directions, neither
rising nor falling. Hence mone-
tary policy makers need to be
forward-looking and not focus on
the short run. If political pres-
sures force them to focus on the
current unemployment rate or
the latest blip in inflation, both
economic activity and inflation
are likely to be less stable.
A substantial body of eco-
nomic research and practical ex-
perience shows that insulating
central banks from short-run po-
litical pressure improves both
performance on employment and
inflation. As a result, there has
been an increasing trend for gov-
ernments throughout the world
to grant increased independence
to their central banks, thereby
giving their central banks the
freedom to focus on longer-term
considerations. These efforts
have been rewarded with much
lower and more stable inflation.
While the attacks by Republi-
cans on the Fed may lead to a
more politicized central bank less
willing to take anti-inflationary
measures in the future, the legis-
lation proposed by Mr. Frank to
weaken the Federal Reserve Sys-
tem is even more dangerous. Tak-
ing away the votes of the presi-
dents of the Federal Reserve
banks will mean that the prestige
of the banks and the quality of
people willing to take the presi-
dency jobs will plummet.
As someone who has served in
the Federal Reserve System, both
as an executive at the Federal Re-
serve Bank of New York and a
member of the Board of Gover-
nors, I can attest that the re-
gional banks play an enormously
important role in the Federal Re-
serve system. First, they are en-
gaged in supervision of banking
institutions, especially the larg-
est. Weakening the leadership of
the Federal Reserve banks will
compromise the quality of this
supervision, making the financial
system even more vulnerable to
financial crises of the type we
have just experienced.
Second, the prestige of the
bank presidents enables them
and their banks to collect infor-
mation from businesses in their
districts, which helps the FOMC
understand where the economy is
heading. Third, the participation
of the Federal Reserve bank pres-
idents in policy-making keeps the
Fed from losing touch with the
views and desires of the public
throughout the country. Making
the Federal Reserve more a crea-
ture of Washington is not a way
to improve its policy-making ca-
pabilities.
The last 20 years have wit-
nessed the willingness of Ameri-
can politicians to back off from
day-to-day interference in the
Federal Reserves policy-making.
Their restraint has helped con-
tribute to an environment in
which inflation has fallen and has
remained remarkably stable de-
spite the shocks to the economy
in recent years. The recent ac-
tions by both Republicans and
Democrats to pressure the Fed-
eral Reserve are a departure from
what has served the American
public well, and I sincerely hope
that they will cease and desist.
Mr. Mishkin, a professor at Co-
lumbia Universitys Graduate
School of Business, is a former
member of the Board of Gover-
nors of the Federal Reserve and
the author of Macroeconomics:
Policy and Practice (Addison-
Wesley, 2011).
BY FREDERIC S. MISHKIN
The Threat to the Feds Independence
A Greek default
wont destroy Europes
currency. Bailouts will.
Stripping the regional bank
presidents of votes would
make the systema weak
creature of Washington.
Almar Latour, Editor in Chief, Asia
Dean Napolitano, Senior Editor
Hugo Restall, Editorial Page Editor
Shawn Hiltz, Vice President, Marketing
Charlotte Lee, Circulation Director
Alice Chai, Research Director
Oliver Temple, Operations Director
Simon Wan, IT Director
Olivier Legrand, General Manager Digital
Christine Brendle, Publisher
Published since 1889 by
Dow Jones and Company
2011 Dow Jones & Company. All Rights Reserved
jk
ASIA
14 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
IN DEPTH
Germans Reconsider Their Ties
To Europe as Bailout Costs Rise
Chancellor Merkel Confronts Resistance Even From Her Own Party Amid Growing Doubts Over Monetary Union
A
S Angela Merkel races to convince
Germans that their continued pros-
perity rests on preserving the euro,
she is encountering strong resistance even
from those in her own party who have been
traditionally among the countrys most
pro-European politicians.
When German lawmakers voted Thurs-
day on whether to put more money into
Europes bailout funda step many inves-
tors see as essential to prevent a market
panicseveral conservative deputies, in-
cluding Wolfgang Bosbach, a prominent
champion of European integration, voted
no. Mr. Bosbach, a high-ranking conser-
vative in Ms. Merkels Christian Democratic
Union, has recently become an outspoken
critic of the bailout strategy.
The first medicine didnt work, and
now we are simply doubling the dose, said
the lanky Mr. Bosbach of the Greek debt
crisis. My fear is that when the big bang
happens, it wont just be us who will have
to pay but generations hereafter.
The lawmaker rebellion underscores a
broader shift among Germans about their
nations role in Europe
since the crisis erupted
nearly two years ago. While
the Thursday vote passed,
and a vast majority of Ger-
mans continue to feel a
strong, historical commit-
ment to Europe, with a
common currency as its an-
chor, many have grown
doubtful of whether its
worth the ever-growing
cost of saving the euro.
Like many Europeans,
few in Germany today fear
the return of armed con-
flict in Western Europe, the
decades-long impetus be-
hind what Germans still of-
ten call the European
peace project.
Instead, economic prosperity and stabil-
ity have become the main rationale for
monetary union, an argument many Ger-
mans say they have trouble reconciling
with one ineffective bail-
out after another.
Unable to persuade an
increasingly skeptical Ger-
man nation to go along
with more rescue mea-
sures, Ms. Merkel risks
presiding over Germanys
growing isolation and the
dissolution of the euro
the crowning achievement
of Europes post-World
War II drive toward inte-
gration.
Ms. Merkel, a 57-year-
old trained physicist and
a famously cautious poli-
tician, is making a belated
attempt to rekindle Ger-
mans love affair with the
idea of European unity.
Last Sunday, the normally interview-shy
chancellor defended her euro rescue efforts
in an hour-long prime-time conversation on
public television.
We need the euro. The euro is good for
us, Ms. Merkel said.
Germanys main opposition party has
agreed to support the bailout, ensuring its
passage. Yet the growing backlash within
Ms. Merkels conservative base suggests
that her coalition will face strong internal
headwinds in the coming months if, as ex-
pected, Germany is asked to commit even
more resources to contain Europes spiral-
ing debt crisis.
Mr. Bosbach, a party veteran whose dis-
trict runs along the eastern wooded hills of
the Rhinelandthe cradle of Germanys de-
cades-long engagement with Europeis at
the vanguard of a movement against fur-
ther bailouts.
A longtime ally of the chancellor, Mr.
Bosbach brought Ms. Merkel flowers in
June to congratulate her on receiving the
U.S. Presidential Medal of Freedom in
BY VANESSA FUHRMANS
Bergisch Gladbach, Germany
German Chancellor Angela
Merkel is surrounded by
lawmakers before casting
their ballots Thursday in
Berlin on legislation to
expand the EUs rescue fund.
A
g
e
n
c
e
F
r
a
n
c
e
-
P
r
e
s
s
e
/
G
e
t
t
y
I
m
a
g
e
s
Notes: 1 billion = $1.36 billion at current
exchange rate; includes European Union and
International Monetary Fund rescue loans
Source: German Finance Ministry
Picking Up the Tab
Germanys share of guarantees
in country rescue-loan packages
22.0%
13.0% 18.4%
110
billion
85
78
Greece
2010
Ireland
2010
Portugal
2011
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. 15
IN DEPTH
Washington. Last year, Mr. Bosbach, affec-
tionately called Wobo by many colleagues
and constituents, also threw his support
behind the initial European debt bailouts.
But after six decades of embracing and
funding an integrated Europe, the pro-Eu-
ropean heart of Germanys ruling class is
divided over how much further to go to de-
fend it.
I dont want to be co-opted into an
anti-euro movementthe EU is an impor-
tant political project, argues the 59-year-
old Rhineland Catholic, whose straight-
talking manner and public battle with
advanced prostate cancer has won him
friends across political lines. But what we
promised the people was a union of stabil-
ity, not a union of debt.
A poll for national German broadcaster
ZDF in early September shows three-quar-
ters of Germans are against the expanded
European rescue fund that was subject to
Thursdays vote.
Its no longer some remote debate; its
about our daily lives and what will happen
to our savings, our economic standing,
said Ria Borgmann, a retired local govern-
ment administrator while shopping on a re-
cent afternoon in Bergisch Gladbach, the
heart of Mr. Bosbachs voter district.
While Ms. Borgmann, 64, said she typi-
cally votes left of the more conservative
Mr. Bosbach, shes found herself agreeing
with his reasoning. I am very much for
Europe, but at some point theres got to be
a limit to rescue packages.
The measures that the German parlia-
ment approved Thursday will nearly double
the main euro-zones bailout funds lending
capacity to 440 billion ($595 billion) and
allow the fund to buy sovereign bonds in
the open market.
Ever since the debt crisis began in
Greece nearly two years ago, Ms. Merkel
and her party have agreed to bailouts of
struggling euro members only reluctantly.
As the crisis has deepened, posing an exis-
tential threat to the currency union, Ms.
Merkel has come under fire for jeopardiz-
ing the legacy of Helmut Kohl, the chancel-
lor who built todays unified Germany as
well as the European Union.
Though Germany has played the euro-
zones fiscal task master, insisting on pain-
ful austerity before opening its purse
strings, there remains little support for
withdrawing from the common currency
that underpins European integration. Sur-
veys show most Germans still see a united
Europe as key to ensuring prosperity and
peace on a continent with a legacy of con-
flict.
Still, many fear they will soon be forced
to choose between watching the common
currency collapse and sacrificing their
prized fiscal rigor to a European super
state that enables debt-ridden countries
such as Italy and Greece.
Germanys contribution to the new, ex-
panded rescue loan package is 211 billion,
still less than half the 500 billion it
pledged to bail out its banks in 2008. But
many see the European Central Banks
moves to buy billions of euros in low-grade
government bonds of Southern European
countries as another sign that European in-
stitutions are slipping away from them.
Even more unpalatable is the prospect of
making the euro zone collectively liable for
its members debts, as a growing chorus of
European officials have recently urged.
Many argue so-called euro bonds, which
Ms. Merkel has steadfastly opposed, are
the bulwark to relieve financial pressure on
debt-ridden members and underpin the
euro zones full fiscal union.
But to Germans, it would mean relin-
quishing their hard-won low borrowing
rates to pay for the largess of more free-
wheeling members.
Ultimately the euro-bond issue will
come to a head, and Ms. Merkel will have
an impossible dilemma, says one senior
German coalition lawmaker. If she goes
back to the German people with [euro
bonds], she is out. If she doesnt, she will
be a very lonely person in Europe.
In Berlin and beyond, Mr. Bosbachs anti-
bailout stance has resonated loudly. Hun-
dreds of letters in support have poured
into his parliamentary office, as have doz-
ens of media requests. Back home on the
streets of Bergisch Gladbach, and other dis-
trict towns, voters have rushed up to en-
courage him.
Mr. Bosbachs position, though, has put
him at odds with the majority of his coali-
tion colleagues. One senior Christian Demo-
crat said voters in other districts now rou-
tinely ask him and other lawmakers why
they dont oppose the broader bailout fund
like Mr. Bosbach. Another, the partys dep-
uty parliamentary chairman, Michael
Fuchs, criticizes Mr. Bosbach for taking his
position too early in the rescue fund de-
bate.
Wolfgang Bosbach gets a lot of things
right, but in this case he is plain wrong,
Mr. Fuchs says of his friend and colleague.
Early on, I had a stomachache just think-
ing about a [bigger] rescue fund, but now
Im satisfied, he says. Its necessary to
protect Germany.
Like many of his constituents, Mr. Bos-
bachs fiscal and political world view was
shaped by Germanys postwar years, as a
newly minted deutsche mark helped fuel
the countrys economic miracle. Born into a
deeply Catholic family, he grew up in
woodsy hills east of Cologne and the Rhine
Valley, the same region as ex-chancellors
Konrad Adenauer and Kohl and one partic-
ularly scarred by 20th-century conflict.
At home, religion and conservative poli-
tics dominated dinner conversations. So
did lessons in responsibility. As a child, Mr.
Bosbach would collect scrap paper around
the neighborhood to deliver to the local pa-
per mill.
It wasnt for money, it was about show-
ing responsibility, said Mr. Bosbach,
whose website lists two of his three favor-
ite books as the Bible and Germanys Con-
stitution (the third is Paulo Coelhos The
Alchemist). Introduced to the Christian
Democrats local youth group at local foot-
ball-league matches, Mr. Bosbach began a
career in municipal politics in his 20s and,
later, practiced law.
He eventually won election to Germanys
national parliament in 1994, climbing the
party ranks as one of its top homeland se-
curity and interior affairs experts. There,
he was a backer of then-Chancellor Kohls
pursuit of monetary union as a measure of
Germanys commitment to a united Europe.
He has also been a staunch ally of Ms.
Merkel. In 2004, he threw his weight be-
hind her chancellor candidacy, going
against the tide of some fellow CDU con-
servatives. She texted him between euro-
crisis meetings last year to wish him a
speedy recovery while he was in the hospi-
tal after prostate surgery.
But after voting to ratify a Greek rescue
package and initial euro-zone bailout fund
last year, Mr. Bosbachs doubts about the
effort began to stack up. First Portugal,
then Ireland, Spain and Italy became en-
snared in the contagion.
By spring, as Greeces economy seized
up further and its debts appeared even
more unwieldy, he became convinced of the
futility of bailouts.
Like many ordinary Germans, Mr. Bos-
bach objects to the reasoning that the euro
zone can survive only if a country as in-
debted as Greece is kept on board. Instead,
he argues, the currency bloc needs clear
rules that let an insolvent country exit, and
can only achieve stability if theyre rein-
forced. The issue isnt whether Greece
wants to turn around, its whether it can,
he said.
Germanys political and business elite
overwhelmingly oppose such a hard line,
arguing that cutting off aid now could
cause the euro zone to unravel.
No really good and fast solution exists,
the chiefs of Germanys top industry feder-
ations wrote in an open letter to parlia-
ment on Friday. But without an expanded
European rescue fund, incalculable conse-
quences threaten the European Union and
its common currency.
But in Mr. Bosbachs district and beyond,
his views are gaining ground.
Horst Becker, founder and head of Isotec
GmbH, a German building restoration com-
pany with headquarters in Mr. Bosbachs
voter district, has known Mr. Bosbach since
their days as young CDU activists. But in
recent months he found himself debating
his old friend. Id say, Wobo, there is no
alternative to supporting Greece. How else
can you stop a chain reaction? Mr.
Becker, 49, said.
In recent weeks, though, Mr. Becker said
he has come to see rescuing Greece as
hopeless and bailouts only buying time.
The final straw came in early September
when a team of euro-zone debt inspectors
cut short a review in Athens over disagree-
ment with Greek officials over how to fill
its budget-deficit gap.
I am for Germany supporting its neigh-
bors, but they have to be able to do their
homework, too, he explained.
A big problem for the rest of the euro
zone is that many ordinary Germans say
they dont see the tangible benefits of a
common currency. The German economy,
which came roaring out of the global finan-
cial crisis, is Europes economic locomotive,
but much of its growth and productivity
gains have come with entitlement trimming
and wage restraint. Average peoples wages
have stagnated over the past decade, even
as exports and corporate profits have
boomed.
Meanwhile many, like 57-year-old Franz
Dahlen of Bergisch Gladbach, worry that
the more Germany spends to rescue its less
prudent neighbors the bigger the cuts to
Germanys already-pruned welfare state.
Theres no end in sight and so much in
our own country that needs to be restored
and fixed, said Mr. Dahlen, a former sales-
man who now runs a foster children pro-
gram. I wish Germany would look at its
own challenges more closely because other-
wise soon well be poor.
David Crawford and Marcus Walker
contributed to this article.
Wolfgang Bosbach, a longtime ally of Ms. Merkel, has shifted to opposing bailouts for countries such
as Greece as problems persist. Below, Greek students protest austerity moves in Athens Thursday.
(
T
o
p
t
o
b
o
t
t
o
m
)
Z
u
m
a
P
r
e
s
s
;
A
s
s
o
c
i
a
t
e
d
P
r
e
s
s
Source: Association of German Chambers of Industry and Commerce (DIHK)
Eurocentric
Germany relies on Europe as its primary export market, though sales to Asia are rising rapidly.
Share of German exports, by destination
Euro zone Rest of
Europe
North
America
Asia
2007 10 2007 10 2007 10 2007 10
40%
30
20
10
0
Many fear theyll be forced to
sacrifice fiscal rigor to a European
state that enables debt-ridden
nations such as Italy and Greece.
16 * * THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
EUROPES DEBT CRISIS
Germany Approves Expanded Euro-Zone Bailout Fund
ments agreed in July to expand and
reform the EFSF, boosting the lend-
ing capacity of the fund to 440 bil-
lion ($596 billion) from 250 billion.
The fund also will receive additional
powers, such as the ability to extend
credit lines to banks and buy bonds
on the secondary market.
The EFSF overhaul increases Ger-
manys commitment to the fund to
211 billion from 123 billion. The
temporary EFSF is set to expire in
2013 and to be replaced by a perma-
nent European Stability Mechanism.
Ms. Merkels problems are just
beginning. While the EFSF is a big
Continued from first page step, it is widely seen as not bold
enough to immunize Europe against
the spread of financial contagion.
During a 2-hour parliamentary
debate, opposition lawmakers and
coalition euro-rebels pressed Fi-
nance Minister Wolfgang Schuble
to confirm speculation that the fund
already needed more money than
the current legislation provides for,
and to say whether it is planned to
allow the fund to leverage its assets.
The EFSF framework guidelines
must still be worked out.
Nothing is being concealed or
hidden, Mr. Schuble told parlia-
ment. Those guidelines will need
the approval of the German parlia-
ment.
It is clear that any permanent so-
lution to the euro-zones debt crisis
is likely to be much more expensive
than the money that Germany and
its allies are now committing to the
bailout fund. Some analysts say a
Greek default is inevitable. Some ex-
perts, such as former European Cen-
tral Bank economist Ottmar Issing,
are calling for a haircut of as much
as 50% on Greek debt.
The step that we are taking now
will certainly not be sufficient, said
Kurt Lauk, a CDU lawmaker and
head of the partys economy council.
There will be another sequel to the
euro thriller.
A major question looming on
Germanys agenda is how to in-
crease the firepower of the EFSF.
European officials are talking about
creating technical instruments that
would allow the fund to leverage its
cash in order to borrow more cash
from the European Central Bank, or
to turn the fund into an kind of in-
surance company. However, many
Germans are concerned that lever-
aging the fund will put the countrys
triple-A sovereign credit rating at
risk.
Responding to such concerns, Mr.
Schuble told FDP lawmakers in a
closed-door session on Tuesday that
he ruled out allowing the EFSF to
borrow from the ECB, according to
Otto Fricke, budget expert for the
FDP. There are a hundred possible
ways to leverage, said Mr. Fricke.
But the legislation makes it clear
that there can be no additional risk.
And that means that some of these
leveraging ideas can be excluded be-
cause there are 211 billion plus in-
terest, plus costs, and thats it.
Chancellor Merkel with Finance Minister Schuble before Thursdays vote.
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Athens Divided on Cuts to Public Jobs
ATHENSGreece concluded the
first round of meetings Thursday
with visiting international inspec-
tors in Athens, with local officials
describing talks as positive after
discussions between the two
abruptly ended about a month ago.
The inspectors, however, faced
scores of protesters who occupied
Greeces finance ministry in an ef-
fort to block the officials from en-
tering. At the same time, Greeces
cabinet met to discuss cuts in civil-
service wages, among other things,
to narrow Greeces budget gap.
Senior representatives from the
European Commission, the Interna-
tional Monetary Fund and the Euro-
pean Central Bank known as the
troikaarrived to assess Greeces
eligibility to receive the next
tranche of needed aid.
We are satisfied as the talks
were held in a positive and creative
environment, after the difficult deci-
sions that have been taken and the
sacrifices being made by the Greek
people, said a finance ministry offi-
cial who asked not to be named. The
inspectors are to continue their
meetings with Finance Minister
Evangelos Venizelos and other
Greek government officials in com-
ing days, the ministry official added,
without providing further details.
At stake is an 8 billion ($10.84
billion) tranche of aid sought by
Greece that is part of a 110 billion
bailout the country received from
its fellow euro-zone members and
the IMF early last year. Without that
next slice of aid, Greeces govern-
ment will run out of money by the
middle of October.
Greeces Socialist government it-
self is divided over a controversial
plan to cut tens of thousands of jobs
in the public sector, as it has prom-
ised the countrys international
creditors, with some agencies de-
clining to put forward layoff plans.
Other austerity measures include
new property taxes, pension cuts
and new taxes on lower incomes.
Two senior government officials
with direct knowledge of the matter
said the job cuts were to be dis-
cussed at the cabinet meeting, but
was pulled from the agenda after
many ministries failed to compile
lists of personnel to be cut. Instead,
the cabinet is to revisit the issue at
an extraordinary meeting set for
Sunday, when it also is set to ap-
prove Greeces draft 2012 budget.
The job cuts represent a highly
contentious issue for the Socialist
government, which has traditionally
drawn electoral support from em-
ployees in the countrys public sec-
tor. With the Socialists now trailing
the chief opposition party in the
polls, government insiders worry
the debt crisis could evolve into a
political crisis leading to new elec-
tions.
Its an extremely difficult pro-
cess, said one cabinet minister,
who described a range of issues be-
deviling the plan. Problems vary
from constitutional restraints on fir-
ing permanent staff; to real needs
for even more staff in education, po-
lice and hospitals; to resistance
from heads of departments in put-
ting together lists of colleagues that
basically will at some point be
fired.
Greece made a commitment to
its international creditors to cut
30,000 public-sector staffers this
year and put them in a special labor
reserve pool at substantially re-
duced pay for 12 months. If those
workers cant find another job dur-
ing that period, they will be let go.
The 30,000 job cuts represent the
first step of a longer term plan to
erase at least 100,000 public-sector
jobs by 2015.
Greece has been under pressure
to reach a deal with the troika after
talks were abruptly suspended Sept.
2 in a dispute over whether the
country would have to take addi-
tional austerity measures to meet
its 2011 deficit targets.
A senior government official in
Thursdays cabinet meeting said the
government is wrestling with how
to establish objective criteria for de-
ciding who would be placed on the
labor reserve.
The plan faces challenges. One
issue: Under Greeces constitution,
civil servants working in ministries
are guaranteed jobs for life, a pro-
tection that has existed since the
start of the 20th century and was
aimed at protecting civil servants
from mass firings after each change
of government.
We want the criteria regarding
the labor reserve to be objective,
the official said. The problem is
very complicated. If someone wants
to find constitutional objections,
they will find them.
The troika has asked for job cuts
from across the public sectorre-
gardless of job statuswhile many
in the Greek government say there
are genuine shortages in some areas
that must be filled.
As for the rest of the public sec-
tor, this official said, there is ex-
treme reluctance by heads of de-
partments to put together layoff
lists. Nobody wants this ugly role.
Stelios Bouras
contributed to this article.
BY ALKMAN GRANITSAS
AND COSTAS PARIS
Civil servants protesting plans to cut thousands of jobs blocked the entrance to the Finance Ministry in Athens on Thursday, ahead of a visit by lender inspectors.
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The steps that we are
taking now will certainly
not be sufficient, said one
coalition lawmaker.
Friday - Monday, September 30 - October 2, 2011 * *
As of 12 p.m. ET Euro 1.3638 0.09% Yen/US$ 76.69 0.23% Yen/A$ 75.28 g 0.56% Oil 83.05 2.27% Gold 1625.00 0.55% 10-year Treasury g 1/32 yield 2.006% 3-month Libor 0.37211
THE WALL STREET JOURNAL. asia.WSJ.com
&
BUSINESS FINANCE.
Nokia to Cut 3,500 Jobs,
Shift More Work to Asia
CORPORATE NEWS 21
Emerging-Market Debt
Comes of Age
HEARDONTHE STREET 32
Traders Test Chinas Limits on Yuan
For Second Straight Day, Currency Falls to Low Edge of Government-Set Range as Demand for Dollars Climbs
SHANGHAICurrency traders on
Thursday tested Chinas govern-
ment-set trading limit on the value
of the yuan for the second straight
day, putting a spotlight on one of
the ways Beijing keeps the currency
stable amid turbulent markets.
Chinas central bank sets a daily
rate, called the parity rate, around
which the yuan trades in over-the-
counter mainland markets. It then
prohibits the yuan from rising or
falling against the U.S. dollar more
than 0.5% from that value.
On Thursday, the dollar strength-
ened to 6.3983 yuan, putting the
Chinese currency at its weakest per-
mitted level for the day against the
U.S. dollar, off 0.5% from the central
parity rate of 6.3665 set earlier in
the day by the Peoples Bank of
China. Traders also tested the lower
limit Wednesday.
Traders rarely take the yuan to
its limit. Before this week, the yuan
had hit its daily trading limit only
three times since June 2010, when
China essentially unpegged its cur-
rency from the U.S. dollar. A push at
the limit is seen as a signal that in-
vestors believe the PBOC has set the
daily rate too weak or too strong.
While Thursdays trading-limit
test would typically suggest inves-
tors think the yuan should weaken,
currency watchers said the moves
are more likely the result of the glo-
bal pursuit of assets perceived as
safe, spurring demand for U.S. dol-
lars. That has led to investors sell-
ing a broad swath of investments,
even those seen as likely to rise
over the longer term, such as the
yuan. Traders also said demand for
dollars has risen among Chinas im-
porters because of their need to set-
tle contracts in the currency at the
end of the month.
The moves come as an increasing
number of economists and analysts
question whether Beijing should
widen the trading range.
If conditions permit, there may
be no harm in allowing the yuan to
fluctuate around 1% above or below
the central parity from October, and
to widen that to around 2% after
2015, Wang Yong, a professor at
the central banks training institute
in Zhengzhou, Henan province,
wrote last month in the Economic
Information Daily, a magazine
backed by the official Xinhua news
agency.
PBOC officials couldnt immedi-
ately be reached for comment.
A shift in the trading band would
be unlikely to affect Chinas long-
term trend of letting the yuan grad-
ually appreciate against the U.S. dol-
lar. Rather, it could add volatility to
the growing market for the yuan,
potentially drawing more interest
from currency traders and marking
another step toward Beijings plan
to give the yuan a greater interna-
tional presence.
While its unclear whether Bei-
jing is considering a change in the
trading limit, analysts said a shift in
the near term is unlikely because of
Chinas coming National Day holi-
day, which will close offices and
businesses in China next week. I
Please turn to page 27
BY SHEN HONG
Testing Limits
Value of dollar vs. yuan,
plus parity rate and
daily trading limit. Daily
high and low represents
dollar strength
Sources: Thomson Reuters;
Peoples Bank of China
6.44 yuan per U.S. dollar
6.32
6.34
6.36
6.38
6.40
6.42
Parity rate
0.5% trading range
Daily highs
Daily lows
Weaker
yuan
Sept. 16 Sept. 29
UBS Hires a Firm
To Find New CEO
UBS AG has hired head-hunting
firm Egon Zehnder International to
help find a permanent chief execu-
tive officer following the surprise
resignation of Oswald Grbel, ac-
cording to a person familiar with
the matter.
At the same time, the Swiss
bank, which has said it would con-
sider internal and external appli-
cants for the job, has already con-
tacted at least one potential
external candidateformer J.P. Mor-
gan Chase & Co. executive Bill Win-
ters, according to a person familiar
with the matter. The approach was
preliminary, the person said, and it
is unclear what his level of interest
is and who the other potential can-
didates are.
The race for the top job at UBS,
which Mr. Grbel had been expected
to stay in for perhaps two more
years, was thrown open when he
abruptly resigned in the aftermath
of a $2.3 billion loss the bank dis-
closed this month and attributed to
unauthorized trades. People familiar
with the matter say the person who
made the alleged trades was Kweku
Adoboli, a 31-year-old trader on one
of its equity desks in London. Mr.
Adoboli has been charged with fraud
and false accounting in a U.K. court.
Though his lawyer has expressed
contrition on his behalf, Mr. Adoboli
hasnt yet entered a plea.
Sergio Ermotti, the head of UBSs
business in Europe, the Middle East
and Africa and formerly a top
banker at what is now Bank of
America Merrill Lynch and Unicredit
SpA, emerged as an early frontrun-
ner for the job when he was ap-
pointed interim CEO last weekend,
even though the bank hasnt ruled
out other internal candidates, such
as investment-bank chief Carsten
Kengeter. Mr. Ermotti has been at
UBS only since April and has never
been CEO of a public company.
A number of factors are likely to
give external candidates such as Mr.
Winters pause. Whoever gets the
job will inherit the task of turning
around a bank with an uncertain fu-
ture, following the equity loss and
other sharp setbacks in recent
years, starting with $50 billion of
credit losses in the depths of the fi-
nancial crisis.
Please turn to page 24
By Dana Cimilluca,
David Enrich
and Joann S. Lublin
Oswald Grbel resigned unexpectedly.
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Tomorrow
needs
commitment
We help you to protect, grow and pass on your wealth.
Our commitment has always been rooted in transparency and long-term vision.
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and help you build an enduring legacy.
Face the future with peace of mind.
www.ca-privatebanking.com
B A H R A I N - B E L G I U M - B R A Z I L - F R A N C E - H O N G K O N G - I S R A E L - L E B A N O N - L U X E M B O U R G
M I A M I - M O N A C O - Q A T A R - S I N G A P O R E - S P A I N - S W I T Z E R L A N D - U A E - U R U G U A Y
18 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
BUSINESS FINANCE
INDEX TO BUSINESSES AND PEOPLE
Advanced Micro
Devices.......................25
Apple..............18,20,21,32
Asahi Group Holdings.. 22
Bank of America...........26
BASF............................. 19
Beijing Automotive
Industry Holding Co.. 20
Beijing Hyundai Motors
Co. .............................. 20
BHP Billiton..................25
BNP Paribas..................24
China Communications
Construction.............. 26
China Kingho...................1
Chrysler Group LLC.......19
Chubb............................ 25
Citigroup....................... 26
CME Group....................18
CRBC International.......26
Credit Agricole..............24
DBS Group Ltd..............26
Dell................................ 20
DuPont.......................... 19
Egon Zehnder
International..............17
Ford Motor....................19
Fortescue Metals
Group..........................22
Fosters Group.............. 22
General Motors.............19
Global Mining Co............8
Goldman Sachs
Group.....................25,26
Google............ 18,20,21,32
Great Wall Motor.........26
Griffins Foods.............. 22
Hennes & Mauritz AB..22
Hewlett-Packard...........25
Honda Motor.................25
HTC................................32
Hynix Semiconductor... 25
Hyundai Motor Co... 20,25
Inditex...........................22
Intel..........................20,21
Jardine Cycle &
Carriage......................18
Jardine Matheson
Holdings.....................18
Jiangxi Copper.............. 25
J.P. Morgan Chase...17,25
Kansai Paint ................. 19
Kia Motors....................25
Merck KGaA..................19
Microsoft.............18,21,32
Mitsui O.S.K. Lines........ 6
Motorola Mobility........ 32
Myer Holdings.............. 22
NASA...........................W3
Nikko Asset
Management Co........ 26
Nippon Paint.................19
Nissan Motor......19,20,25
Nokia............................. 21
Nokia Siemens
Networks................... 21
Nomura Holdings..........26
Nvidia............................20
Oracle............................ 32
Pacific Equity Partners 22
Panasonic......................20
PPG Industries..............19
Qantas Airways............20
Rio Tinto....................... 25
SABMiller......................22
Samsung Electronics
Co. .......... 18,20,21,25,32
Sany Heavy Industry....26
Sanyo Electronic Co..... 20
Siemens........................ 21
Sinohydro Group...........26
SMBC-Nikko Securities26
Societe Generale.......... 24
Sumitomo Trust &
Banking Co.................26
Suzhou Anjie
Technology.................26
Toyota Motor................19
UBS.......................... 17,26
UniCredit.......................17
Volkswagen...................19
Xiao Nan Guo................26
Yantai Valiant Fine
Chemicals...................26
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.
Adoboli, Kweku............ 17
Attenborough,
Stephen....................W3
Bezos, Jeff..................W3
Boyd, Ed........................20
Branson, Richard........ W3
Bratton, Sarina...........W5
Burd, Sam.....................20
Burley, Steven..............18
Capron, Jeremie........... 19
Catterns, David............ 18
Condon, Tim................. 27
Critchlow, Anne............22
Dawson, Doug.............. 21
Elop, Stephen...............21
Ermotti, Sergio............ 17
Fink, Naomi .................. 25
Forrest, Andrew...........22
Gao Ting....................... 26
Grbel, Oswald.............17
Han Hua..........................8
Huang Yiping................27
Jobs, Steve...................18
Kengeter, Carsten........ 17
Keswick, Adam.............18
Keswick, Ben................18
Keswick, Henry............ 18
Klopfenstein, Adam..... 27
Lien, Kathy................... 24
Lutton, Richard............ 18
Martin, John............19,20
Matsuda, Hitoshi ......... 19
Matsuda, Naoki..............4
Mawston, Neil..............32
McCarthy, Tim..............26
McDowell, Mary...........21
Miller, Adrian K............25
Motiwala, Zubair............1
Nightingale, Anthony.. 18
Noh, Jae-Man...............20
Osborne, George.......... 24
Persson, Karl-Johan.....22
Pope, Stephen..............24
Price, Russell................25
Roach, Stephen............ 27
Roeser, Karl..................19
Rogan, Jason................25
Schularick, Moritz..........1
Shepherd, Tim..............21
Shi Jianxun...................26
Siddiqa, Aisha................ 8
Stockton, Katie............ 27
Trinh, Sue.....................25
Tsuzuku, Hideaki............4
Uenoyama, Makoto......20
Wang Yong................... 17
Wang Zongnan.............22
Wilder, Bill....................26
Wilson, David...............27
Winters, Bill.................17
Wirth, Olivia.................20
Wu Xiaoqiu...................26
Yoshihara, Toshi.............8
Zhao Qingming.............27
Corrections Amplifications
There were an average of 12 suicide at-
tacks per month in Afghanistan in the
first eight months of 2011, unchanged
from the same period in 2010, a United
Nations report said. A World News arti-
cle Thursday incorrectly said suicide
bombings rose about 50%. There were
nine suicide attacks in July. The article
incorrectly said the monthly average fell
to nine in July. Also, southern and south-
eastern Afghanistan accounted for ap-
proximately two-thirds of security inci-
dents in the eight-month period, the U.N.
said. The article incorrectly said about
75% of incidents happened in the south.
Data-analytics firm CMA is a unit of
CME Group. A Business & Finance article
in some editions Thursday on credit-de-
fault swaps incorrectly said CMA is a
unit of CMA Group.
Idaho issued bonds to pay nearly $208
million it owed the U.S. government. A
U.S. Economy article Thursday incor-
rectly said Idaho repaid nearly $230 mil-
lion.
Tablet Wars Take Twist
Court Is Told Apples Jobs Sought to Head Off Spat With Samsung
SYDNEYApple Inc.s legal bat-
tle against Samsung Electronics
Co. over alleged patent infringe-
ments took a surprise twist Thurs-
day when an Australian court heard
evidence that Apple founder Steve
Jobs had personally sought to head
off a confrontation last year.
The federal court in Sydney is
expected to decide next week
whether it will grant Apple a tempo-
rary injunction on sales of Sam-
sungs rival tablet, which Apple
claims stole design elements of its
iPad.
Testifying Thursday, Richard
Lutton, who was Apples chief
patent counsel at the time, said Mr.
Jobs directly contacted Samsung to
express his concerns because of the
close relationship between the com-
panies.
The discussions started with
contact from [Mr. Jobs], and then
he wasnt involved in meetings be-
yond that, Mr. Lutton said under
cross-examination by Samsung at-
torney David Catterns.
Apple has declined to comment
on the proceedings in Sydney. A
spokeswoman for Samsung wasnt
available to comment Thursday.
The case was adjourned until
Friday and Justice Annabelle Ben-
nett said she hoped to decide next
week whether to block temporarily
the launch of Samsungs Galaxy Tab
10.1. The South Korean company had
planned to put its device on sale in
Australia Friday but said it would
wait until a judgment is made.
Mr. Lutton said Samsung is an
important supplier of components
to Apple and the two companies
have a deep relationship. He said
this relationship was one of the rea-
sons that Apple started talking to
Samsung in the summer of 2010 to
give them a chance to do the right
thing.
This initial conciliatory approach
didnt work. Samsung, which sup-
plies memory chips and flat panels
that are used in iPhones and iPads,
released its first Galaxy tab in Ger-
many in September last year.
In April this year, Apple sued
Samsung in California claiming its
smartphones and tablets had slav-
ishly copied the iPhone and iPad. It
has also filed suits against the com-
pany in Germany, Japan, France,
South Korea and Australia.
In Sydney, Apple is seeking a
temporary sales injunction ahead of
a final hearing that could go on for
months.
A rejection of Apples claim
could threaten the companys domi-
nance of the global market for tab-
lets and smartphones, which are the
main drivers of its blistering profit
growth.
Apple has already recorded a vic-
tory in Germany, where a court this
month barred Samsung from selling
its Galaxy Tab 10.1 in Europes big-
gest economy on the grounds that it
copied the iPad. That ruling fol-
lowed a similar decision by a court
in The Hague, which restricted sales
of some Samsung smartphones
across Europe because they violate
Apple patents.
Even as Samsung is fighting Ap-
ple in numerous venues over the
Galaxy Tab 10.1, which runs on
Google Inc.s Android platform, the
South Korean company is hedging
its bets on operating systems. Sam-
sung, the largest maker of Android
products, revealed a patent-sharing
deal with Microsoft Corp. on
Wednesday that will see Microsoft
receive royalties for Samsungs An-
droid-based smartphones and tab-
lets. Samsung will also work with
Microsoft to develop such devices
based on Microsofts Windows plat-
form.
The Microsoft patent deal, which
follows a move by Samsung last
week to open up its homegrown
Bada mobile-software platform to
outside developers and device mak-
ers next year, signals the companys
effort to reduce its reliance on
Googles free operating system.
Thursdays proceedings in Syd-
ney were largely taken up with at-
torneys presenting arguments on
what can be submitted to the judge
as evidence and discussing technical
aspects of the case.
Mr. Catterns, Samsungs attor-
ney, said the company has given a
pledege to drop a patent covering
so-called selective rejection technol-
ogy from its product. Selective re-
jection refers to the ability of a tab-
let computer to recognize and
ignore accidental touches on the
screen.
Apple has filed about a dozen
patent-infringement claims but only
three, all related to touch-screen
technology, were being considered
in this weeks hearing.
In pushing for the injunction,
Steven Burley, an attorney for Ap-
ple, told the court that even a tem-
porary release of the Galaxy Tab 10.1
could substantially dent Apples
market share in Australia, where
Credit Suisse in June estimated it
has sold more than 500,000 iPads.
This is going to be launched on
to the market with the velocity of a
fire hose, Mr. Burley said.
Apple in July said it almost tri-
pled global iPad sales in the three
months to June 30 to 9.25 million,
up from 3.3 million a year earlier. By
contrast, analysts estimate Sam-
sungthe largest technology manu-
facturer by revenueshipped only
about two million tablets in the first
half of the year, a small proportion
of the 140 million cellphones it
shipped in the period.
BY ROSS KELLY
An iPad, left, and a Galaxy Tab 10.1.
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Jardine Matheson
Names Next Chief
HONG KONGJardine Matheson
Holdings Ltd., one of East Asias
oldest trading firms, Thursday ap-
pointed Ben Keswick, a scion of the
conglomerates founding family, to
succeed Anthony Nightingale as
managing director. Mr. Nightingale
plans to step down in April.
Mr. Keswick, 39 years old, a
nephew of Jardine Chairman Sir
Henry Keswick, will take the helm of
the group at a time when the com-
pany, with deep British roots, faces
increasing challenges as it competes
with large Chinese players in its ef-
forts to tap mainland Chinas boom-
ing market.
The London- and Singapore-
listed company, which has interests
spanning real estate, engineering,
motor vehicles, retail and hotels,
said Mr. Keswick will take over from
Mr. Nightingale, 63, when he retires
in April. Mr. Nightingale is a veteran
of the company, having joined in
1969. He has been managing direc-
tor for nearly six years.
Mr. Keswick will also assume
Nightingales managing-director du-
ties in Jardines key listed units.
Founded in 1832, Jardine was a
major driving force behind Hong
Kongs evolution from a quiet fish-
ing village into an international
trade and financial center. Jardine
executives traditionally served on
Hong Kongs policy-making councils
during its days as a British colony.
The group itself grew from a
trading house, or hong, into an in-
ternational empire.
However, citing concern over
Hong Kongs 1997 return to Chinese
rule, the company began easing it-
self out of the colonys legal and
regulatory framework in 1984. It
transferred its legal domicile to Ber-
muda and secured listings in Lon-
don and Singapore while delisting
from Hong Kong in 1994. Prior to
Hong Kong being handed back to
China, Chinese officials had criti-
cized the groups lack of commit-
ment to the province.
Though it still maintains a
strong presence in Hong Kong and
China, Jardine has in recent years
expanded rapidly in Southeast Asia,
with Mr. Keswick playing an instru-
mental role in developing the com-
panys business there, Sir Henry
Keswick said in a written statement
Thursday.
Since 2007, the younger Keswick
has been group managing director
at Singapore-based Jardine Cycle &
Carriage Ltd., which owns a 50.9%
stake in Indonesian automobile unit
Astra International. He joined the
group in 1998.
Jardine said earlier that 2010
was the first year in which the share
of the groups underlying profit
from Southeast Asia overtook that
of Greater China, largely due to the
strong performance of Astra.
The group also said Thursday it
has named Adam Keswick, a cousin
of Ben Keswick and another nephew
of the chairman, to be deputy man-
aging director effective in April. The
38-year-old is currently chief execu-
tive of Jardine Pacific, which repre-
sents a number of Jardines non-
listed interests in Asia.
Jardine Matheson Holdings is
the holding company through which
the Keswick family controls the
listed companys interests. Members
of the Keswick family are descen-
dants of Jardines founders and hold
significant shareholding interest in
the company and its units.
Mr. Nightingale will remain non-
executive director at Jardine and its
key units upon his retirement as
managing director on April 1, the
company said. Mr. Nightingale and
Ben and Adam Keswick werent
available for comment Thursday.
BY POLLY HUI
AND JEFFREY NG
Ben Keswick, a scion of the
groups founding family, will
become managing director
in April. He will succeed
Anthony Nightingale,
who plans to retire.
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. 19
BUSINESS FINANCE
Japans Quake Still Rattles Suppliers
Tussle Between Toyota and Germanys Merck Shows How Relationships Are Strained After Return to Production
TOKYOSix months after Ja-
pans earthquake cut crucial links in
the global supply chain, production
now is largely back to normal. But
the disruption has forced parts buy-
ers and suppliers to rethink tried-
and-true business modelsfraying
once-tight business relationships
and prompting many buyers to get
parts from other countries.
Take, for example, the tussle over
a pearl-luster pigment called Xirallic
that makes car paint sparkle. Merck
KGaA produces 100% of the global
supply at a factory in an area of
northeastern Japan that was hit hard
by the quake, forcing a temporary
suspension of operations. The Ger-
man company said it caught up on
back orders Sept. 1, after reopening
the factory in May, and remains com-
mitted to manufacturing in Japan.
But Merck also aims to have an-
other production line for the pig-
ment ready in Germany by year end
to meet demand from its global cus-
tomersand to have a backup in
case of another disaster.
Toyota Motor Corp., one of
Mercks biggest customers, was un-
happy with how its supplier handled
the disruption, according to an inter-
nal report that was reviewed by The
Wall Street Journal. The auto maker
suffered from a shortage of one-third
of the 200 colors it offers, about 20%
of its total production volume, be-
cause of Xirallics scarcity. Nerves
frayed about the suppliers crisis-
management activities, which, the
September report said, were less
than transparent.
A Toyota spokesman in Tokyo
declined to comment on the com-
panys supplier relationships.
The closure of Mercks Onahama,
Japan, plant for two months after
the March 11 quake set off a search
for scarce stockpiles or substitutes.
Many of the worlds auto makers,
including Toyota, Nissan Motor Co.,
Ford Motor Co., Chrysler Group
LLC, Volkswagen AG and General
Motors Co., used metallic paints
made with Xirallic, an aluminum-ox-
ide-crystal compound, for some ve-
hicles in their product lineups.
After the quake, Chrysler dealers
were told not to order vehicles in 10
colors that used Xirallic, a restric-
tion that has since been lifted. The
auto marker also developed a re-
placement red tone, which Chrysler
plans to use in its 2012 lineup.
John Martin, Nissans global sup-
ply-line chief, said the auto maker
changed its supplier and made other
adjustments. We could draw on
some of our existing colors no lon-
ger in use and get them formulated
quite quickly, he said. Nissan plans
to resume using Xirallic now that
production has been restored.
The acute Xirallic shortage nev-
ertheless illustrates how much the
global auto industry came to rely on
just a handful of producers for key
components and materials, many of
which are made in Japan. The post-
quake crisis has prompted auto
makers to seek ways to diversify
their supply chains for critical com-
ponents, which ranged from hum-
drum rubber O-rings to advanced
semiconductors.
In a Japanese trade ministry sur-
vey released Aug. 1, 97% of manu-
facturers that used suppliers in
northern Japan have found alternate
sourcing since the quake. Of the 123
companies surveyed, 42% said they
will switch permanently to procur-
ing parts and materials overseas.
Mercks success is a legacy of
having a good product that became
the industry standard, said Jeremie
Capron, an analyst at CLSA Asia-Pa-
cific Markets. But Xirallics market
share is going to go one way: down.
Many auto makers had been sur-
prised to find their standard two-
supplier rule for critical parts had
been circumvented further down the
supply chain. As a result, traceabil-
ity of lower-tier suppliers has be-
come an industry watchword follow-
ing the earthquake, a senior Toyota
executive said.
Despite the Xirallic supply dis-
ruption, Merck said it doesnt ex-
pect to cede its dominant position.
I am not aware of any persistent
loss of business, said Karl Roeser,
president of Mercks unit in Japan.
Merck declined to quantify the
business lost from the disruption or
the costs of repairing the plant. The
companys sales of all pigments
amounted to about 325 million, or
about $440 million, last year, ac-
cording to Farbe und Lack, a Ger-
man paint-and-pigment trade publi-
cation. But as the auto industry
sharpens its focus on expanding its
supply base, Merck may find it hard
to hold onto its lead in a market for
specialty pigments that CLSA Asia-
Pacific values at an estimated $1 bil-
lion or more annually. Rivals such as
BASF SE, DuPont Co. and PPG In-
dustries Inc. could aim for a bigger
chunk of that business.
Osaka-based Kansai Paint Co.,
Japans biggest maker of automotive
paint, has stopped using Xirallic for
some colors, even after supplies re-
sumed, said company spokesman Hi-
toshi Matsuda. The switch came at
customer request, he said. Its im-
possible to substitute pigments for
an existing paint because it can
never be matched exactly. What that
really means is coming up with a
new paint. Nippon Paint Co., Ja-
pans No. 2 automotive-paint pro-
ducer, said all customers who had
used substitutes switched back to
Xirallic-based products once sup-
plies returned to normal.
A reason Xirallic caught on with
Japanese auto makers since its de-
but in 2000 has been Mercks repu-
tation for reliability. But that image
was bruised by the companys re-
sponse to the earthquake. All cus-
tomer queries regarding the Ona-
hama plants output were handled
out of Mercks headquarters in
Darmstadt, Germanyeven queries
from Japanese customers. That
didnt go down well in Toyota City.
Although the internal Toyota re-
port didnt mention Merck by name,
it clearly described the company, re-
ferring to one foreign-affiliated
second-tier supplier that manufac-
tures special pigments and had a
plant within a 50-kilometer radius
from the Fukushima Daiichi plant.
While Onahama is 57 kilometers
south of the tsunami-damaged nu-
clear-reactor complex, Mercks fac-
tory is the only facility to which the
report could refer.
Toyota criticized its supplier for
having evacuated the plant of em-
ployees and keeping the auto maker
in the dark about the extent of the
plants damage. Further complicat-
ing the matter, TMC was unable to
evaluate the status of production fa-
cilities and inventories because the
company refused to allow nonem-
ployees to enter, something that
had helped other suppliers get back
on track, the report said.
Toyota set about making its own
replacements for its 67 missing col-
ors, 37 of which were developed
successfully before the full recovery
of Mercks Onahama factory in June.
Toyota declined to comment on
whether it continues to use the pig-
ments developed in house.
Mr. Roeser said clients werent
turned away cold. I wouldnt say
we did not allow them to enter the
plant, he said. Frankly speaking,
nobody really can help you by going
in the plant and reconstructing
highly specialized equipment.
Japanese auto makers penchant
for the latest new thing may spare
Merck some defections. Merck plans
to introduce a new pigment called
Meoxal, with a better hiding effect
on sheet metal than Xirallics, that
will be made in Onahama.
Sharon Terlep
contributed to this article.
BY CHESTER DAWSON
Toyota suffered a color shortage because a Merck pigment wasnt available after the quake. Above, Toyotas await export.
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20 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
Panasonic Curbs Spending Plan
Amid Strong Yen and Price Competition, the Firm Halts a Battery Factorys Expansion
TOKYOPanasonic Corp. will
cancel the planned expansion of a
domestic factory that makes lith-
ium-ion batteries, as the strong yen
and price competition from South
Korean rivals make it difficult to
keep producing the batteries in Ja-
pan, a person familiar with the mat-
ter said Thursday.
The Japanese electronics com-
pany originally planned to invest a
total of 100 billion ($1.31 billion) in
two stages in the Suminoe plant in
Osaka, western Japan, which makes
lithium-ion batteries for use in con-
sumer electronics.
The plant began operating last
year after the first stage was com-
pleted, but the company has now
decided to cancel the second stage
and wont make any additional in-
vestments, the person said.
Panasonic hasnt disclosed how
much of the 100 billion it has al-
ready invested in the factory.
Although Panasonic is scaling
back domestic production of lith-
ium-ion batteries, the company is
boosting its output in China. In a
few years, production in that coun-
try will take up a much larger share
of Panasonics overall lithium-ion
battery output, the person added.
The shift highlights the impact
of the strong yen on Japans indus-
trial base, as companies in key ex-
port sectors such as autos and elec-
tronics look to move production
overseas to mitigate the effects of
the currency, which is near record
highs against the dollar.
Nissan Motor Co. Corporate Vice
President John Martin this week
urged the Japanese government to
take decisive action to prevent the
strong yen from hollowing out the
countrys industrial base.
Seiji Maehara, policy chief of the
ruling Democratic Party of Japan,
said in an interview this week that
Tokyo should consider setting up a
sovereign-wealth fund, which would
buy foreign assets by selling the
yen, to combat the Japanese cur-
rencys strength.
In July, Panasonic Chief Financial
Officer Makoto Uenoyama said that
it was becoming extremely diffi-
cult to keep manufacturing opera-
tions in Japan, citing the yens
strength, high corporate taxes and
concerns over higher electricity
costs since the Fukushima Daiichi
nuclear crisis.
The market for rechargeable lith-
ium-ion batterieskey components
in many consumer products and
electric carsis expanding.
But price competition is intense,
particularly in the market for bat-
teries used in consumer electronics,
where Samsung Electronics Co. of
South Korea and Panasonic are com-
peting for the largest share.
Panasonic is building a new lith-
ium-ion battery plant in the eastern
Chinese city of Suzhou, and is also
planning to boost capacity at the ex-
isting Chinese plant of subsidiary
Sanyo Electronic Co.
In April, Panasonic turned major-
ity-owned Sanyo into a wholly
owned unit and is realigning pro-
duction to benefit from the integra-
tion. When Panasonic acquired a
majority stake in Sanyo in 2009, the
latters strength in lithium-ion bat-
teries was cited as one of the rea-
sons for the deal.
BY JURO OSAWA
Panasonic employees with lithium-ion batteries at the electronics companys Suminoe plant in Osaka, Japan, last year.
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In China, Dell Set to Unveil
High-Performance Laptop
NEW YORKDell Inc. on Friday
plans to unveil in China its latest
aluminum-clad thin notebook that
boasts high-performance capabili-
tiesand a design reminiscent of a
popular line of Apple Inc. laptops.
The new laptop, the core of Dells
holiday strategy, is a follow-up to
the companys 15-inch notebook.
Dubbed the XPS 14z, it features a
screen that measures 14 inches diag-
onally while packed into a 13-inch
form, is less than an inch thick and
has about seven hours of battery life
with normal use.
What is likely to capture custom-
ers attention, however, are the sim-
ilarities with Apples MacBook Pro
line of laptops, which share metallic
coloring with high-end screens,
backlit chiclet keyboards and a large
track pad.
But Dell says it isnt trying to
follow Apples lead or create a so-
called ultrabook, or ultrathin lap-
tops, being pushed by Intel Corp.
Instead, Dell says it is seeking to
offer the worlds thinnest fully fea-
tured laptop, first targeting the
fast-growing Chinese PC market and
appealing to high-end customers.
The latest device comes with
high-end computing and graphics
processors from Intel and Nvidia
Corp., and includes an optical drive,
which is typically left out of many
thin laptops.
This is a high-performance ma-
chine that can do things ultrabook-
type products would struggle to do,
said Ed Boyd, vice president of
Dells experience and design group.
When you compare this to other
products in the market, theres
nothing in the size envelope were
delivering with these performance
capabilities.
The company hasnt announced
pricing plans, but the lowest config-
uration of the XPS 14z will likely be
priced above $999. It will be avail-
able on Friday in China, which
starts its Golden Week holiday at
the beginning of October.
Dell says China is the largest
market for 14-inch laptops. Then the
company will roll out the new lap-
top to the rest of the world in time
for the holidays.
Dells new laptop comes as the
company has renewed its efforts to
gain traction with customers willing
to purchase higher-priced comput-
ers.
The companys focus already has
begun to pay off, with sales volumes
of its XPS laptop brand doubling in
the past year.
For the second quarter that
ended July 29, Dell said sales of its
consumer laptops and desktops
grew 4% as the division swung to an
operating profit of $73 million.
To further spur sales, the com-
pany also released a new ad cam-
paign and a mobile app that helps
customers purchase computers and
accessories on Google Inc.s An-
droid-based smartphones.
Dell still faces challenges, how-
ever. Numerous technology execu-
tives have said consumer sales look
weak heading into the holiday shop-
ping season as economic concerns
remain.
Worries also have emerged about
slowing public sector and enterprise
spending, as well as tablets cutting
into traditional PC sales.
Dell said the environment would
normally push sales prices lower to
entice consumers, but it hopes to at-
tract shoppers interested in higher-
end models that are usually sold for
a premium.
If you put a great product to-
gether that delivers on customers
needs but costs more, a lot of them
are willing to pay for that, said
Sam Burd, vice president of Dells
consumer and small and medium
business product group.
BY SHARA TIBKEN
AND IAN SHERR
Hyundai
Warns of
Big Rise in
China Costs
BEIJINGRapidly rising wages
in China have reached the point at
which foreign manufacturers need
to give up on the notion of the
country as a low-cost production
base, a senior Hyundai Motor Co.
executive said Thursday.
Jae-Man Noh, head of Hyundais
joint-venture operations in China,
said average manufacturing-worker
wages in Chinaabout 27,000 yuan,
or roughly $4,200, a year per
worker in 2009are likely to double
by 2015 from current levels.
Auto makers are expected to be
affected as much as other industries
by the trend, if not more, Mr. Noh
said, adding that wage costs for
many foreign auto manufacturers al-
ready have doubled in less than a
decade. He said that a rival foreign
auto maker that Hyundai has re-
searched has seen worker wages in
China rise to 49,000 yuan a year per
worker in 2010, up from 24,500
yuan a year in 2003.
We need to let go of our per-
ception that the Chinese market is a
low-cost production base, Mr. Noh
told a group of reporters at Hyun-
dais office in Beijing. He didnt offer
specifics on Hyundais wage costs in
China.
Mr. Noh leads Beijing Hyundai
Motors Co., a joint venture be-
tween the South Korean auto maker
and Beijing Automotive Industry
Holding Co.
In contrast to earlier decades,
when the flow of Chinese workers
from the countryside pushed factory
labor costs down, Chinas workers
now are demanding higher wages
and better jobs. Manufacturing
wages, in fact, have begun rising
dramatically since last year, ac-
cording to Mr. Noh, with auto mak-
ers taking the brunt of it.
The Hyundai executive pointed
to a series of high-profile labor
strikes that hit Japanese-run auto
factories and others in China last
year. Normally quick to break up or-
ganized worker walkouts, the gov-
ernment tolerated those strikes to a
large extent last year, and minimum
wages in some parts of China have
been rising steadily since.
China still offers other draws, in-
cluding strong economic growth, an
increasingly affluent population and
a quickly growing car culture.
Plus, Hyundais average factory
labor cost in China is still one-fifth
of that in South Korea, Mr. Noh said.
What concerns him most is the dra-
matic rate of increase, he said.
This trend is inevitable as the
Chinese economy grows and society
improves, Mr. Noh said.
Despite rising labor costs,
Chinas auto exports will continue to
increase in part because of excess
auto-production capacity in the
country, he said.
Chinas central government will
also continue to focus on automo-
tive exports, he said.
BY NORIHIKO SHIROUZU
CORPORATE NEWS
A Hyundai executive said
average manufacturing-
worker wages in China are
likely to double by 2015.
Qantas Sees
Travel Woes
Amid Strikes
MELBOURNEQantas Airways
Ltd. said on Thursday that it expects
almost 8,500 domestic and interna-
tional passengers to have their
travel plans disrupted Friday, one of
the busiest days of the year in Aus-
tralia, by workers going on strike.
Qantas said in a written state-
ment that the airline had been
forced to delay 39 flights by as
much as an hour and cancel two
flights on the eve of the Australian
Football League and National Rugby
League grand finals this weekend
and during school holidays.
The airline said it would deploy
Australia-based Qantas management
staff to cover baggage-handling and
catering roles during the strikes.
Transport Workers Union work-
ers are due to strike for an hour
Friday morning around Australia,
while Australian Licenced Aircraft
Engineers Association workers will
go on strike for an hour in Mel-
bourne in the early evening.
This really couldnt have come
at a worse time with passengers
trying to get to the AFL and NRL
grand finals and many families
heading away for the school holi-
days, said Olivia Wirth, Qantas
group executive.
BY GAVIN LOWER
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. 21
CORPORATE NEWS
NokiaAimsSoftware
ForLow-EndPhones
Nokia Corp., having abandoned
its ambition to develop a high-end
operating system, is shifting its pro-
gramming efforts toward creating
software for its low-end phones, ac-
cording to people familiar with the
matter.
The project is a Linux-based op-
erating system code-named Meltemi,
the Greek word for dry summer
winds that blow across the Aegean
Sea from the north. It is being led by
Mary McDowell, the handset makers
executive vice president in charge of
mobile phones, these people say.
A spokesman for Nokia, Doug
Dawson, declined to comment on the
Finland-based companys future
products or technologies.
Nokias attempt to build its own
software is another sign that the
value in the technology industry is
shifting from hardware to software.
In the past year, Google Inc.s An-
droid software has dominated the
midrange smartphone market while
Apple Inc.s iPhone, which runs Ap-
ples iOS software, has captured the
high end.
Analysts say mobile-handset
makers that have their own soft-
ware, such as Apple, have big advan-
tages. They can better define their
products against rivals and arent
dependent on other companies for
growth. Nokias efforts mirror those
of South Koreas Samsung Electron-
ics Co., which is investing in its own
operating system called Bada and
making high-end smartphones that
run Android, people familiar with
the matter say. There is a danger in
being overcommitted to one plat-
form, says Canalys analyst Tim
Shepherd, referring to vendors who
build smartphones that run Android.
The key, important thing is to
spread the risk, he adds.
The issue for Nokia, says one of
the people familiar with the matter,
is that even consumers in emerging
markets now expect low-end feature
phones to act like smartphones. Fea-
ture phones offer limited Internet
functionality and are used mainly
for voice and text communications.
For Nokia, the low-end mobile-
phone business is crucial to its sur-
vival. Feature phones accounted for
about 47% of the companys device-
and-services sales in the second
quarter. In February, Nokia Chief Ex-
ecutive Stephen Elop pledged to
boost the companys low-end phone
business by targeting people in
emerging markets who dont yet
have cellphones.
Emerging markets traditionally
have been a source of strength for
the Finnish company, but its lead in
the category has been challenged by
low-cost Chinese manufacturers.
Less-costly smartphonesin part
thanks to Android, which Google of-
fers to manufacturers free of
chargealso threaten to eclipse the
low-end phone market. Feature-
phone shipments fell 4% from a year
earlier in the second quarter for the
first time since 2009, according to
market researcher IDC.
Nokia has a long history in devel-
oping its own software. The com-
pany started work in 2003 on its
own high-end operating system,
called Maemo, but the effort faced
setbacks inside Nokia due to man-
agement changes and shifts in strat-
egy. Nokia initially envisioned the
platform for use in tablet computers
and electronic devices other than its
phones, because the company didnt
want to divert focus from its Sym-
bian operating system, according to
people familiar with the matter. Af-
ter Apple launched the iPhone in
2007, Nokia started targeting
Maemo for smartphones.
Then last year, Nokia said it
would combine Maemo with soft-
ware from Intel Corp. to create a
next-generation operating system
called MeeGo. But in February, Mr.
Elop said Nokia would make smart-
phones using Microsoft Corp. soft-
ware, effectively ending Nokias Intel
partnership.
This week, Nokia began shipping
its N9 smartphone, its last and only
MeeGo device. The high-end smart-
phone features a 3.9-inch touch
screen, and unlike Apples iPhone
and other touch-screen smart-
phones, lacks a home button at the
bottom of the device.
The N9 will be available in 50
markets including Russia, Brazil and
China, but currently not the U.S. It
will retail for between 480 and
560, or approximately $650 to
$760, depending on storage size.
It is unclear how successful
Nokia will be with its new software.
To cope with the competitive chal-
lenges, Nokia introduced so-called
dual-SIM phones that allow users to
have two phone numbers, a popular
feature in emerging markets.
BY CHRISTOPHER LAWTON
The N9 smartphone is a result of previous Nokia software efforts.
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Nokia Axes 3,500 Jobs
Restructuring to Include Shifting Work From Romania to Asia
HELSINKINokia Corp. Thurs-
day said it will cut 3,500 manufac-
turing jobs, in addition to the 6,800
research and development job cuts
announced earlier this year, as it
continues to realign its business, cut
costs and refocus manufacturing op-
erations closer to customers in Asia.
The job cuts are the latest in
several restructuring efforts that so
far havent done much for the trou-
bled telecommunications-equipment
makers share price.
With these planned changes we
will emerge as a more dynamic,
nimble and efficient challenger,
Nokia Chief Executive Stephen Elop
said.
Nokia, the worlds largest mobile
phone maker by volume, has seen
its market share plummet in recent
years on rising competition from
Apple Inc.s iPhone and Google
Inc.s Android operating platform.
Nokia earlier this year scrapped its
Symbian platform and concentrated
its efforts on an alliance with Mi-
crosoft Corp., which will allow
Nokia to use Windowss operating
system in all new Nokia smart-
phones.
Including the job cuts in Thurs-
days announcement, Nokia has now
reduced its work force by 7.4%.
Nokia said the measures will
help it meet a previously announced
savings target of cutting expenses
by 1 billion ($1.35 billion) by 2013.
The latest cuts will involve the
additional closure of a low-end-fea-
ture-phone manufacturing plant in
Romania by the end of the year and
the transfer of manufacturing to
Asian factories. The handset maker
said it will also review the long-
term role of factories in Finland,
Hungary and Mexico.
In addition, Nokia plans to con-
centrate its mapping and commer-
cial development operations in Ber-
lin, Boston and Chicago and will
close those operations in Bonn, Ger-
many and in Malvern, Pa. Nokia said
those plans will affect about 1,300
employees starting next year.
Nokia shares dropped more than
2% in early trade Thursday but re-
covered by midday to trade flat at
4.18. The shares have halved in
value since the February announce-
ment of the Microsoft alliance.
Gartner Inc., a market research
firm, said Nokia sold 97.87 million
units in the second quarter, down
from 111.47 million units a year ear-
lier, giving it a total global market
share of 22.8%, down from 30.3%.
Nokias Symbian operating system
had a 22.1% share of the smart-
phone market in the second quarter,
down from 40.9% last year.
Also Thursday, Nokia and Sie-
mens AG said they would each pro-
vide 500 million in capital to their
network-equipment joint venture
Nokia Siemens Networks, stepping
up efforts to turn around the un-
profitable unit.
BY ARILD MOEN
Workers leave Nokias facility in Romania Thursday after learning it will close.
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22 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
CORPORATE NEWS
Fortescue to Appeal
Earlier Conviction
MELBOURNEFortescue Metals
Group Ltd. and its billionaire chair-
man Andrew Twiggy Forrest re-
ceived a court go-ahead to appeal a
conviction that they misled inves-
tors seven years ago. That convic-
tion carries the threat of fines and a
possible ban on Mr. Forrest from
acting as a director.
The High Court in Adelaide on
Thursday said the Perth-based iron
ore producer and Mr. Forrest can ap-
peal a lower-court decision this year,
reviving civil proceedings brought
by the Australian Securities and In-
vestments Commission.
The regulator launched the ac-
tion against Fortescue and Mr. For-
rest in 2006, alleging the company
engaged in deceptive conduct in
2004 and 2005 by claiming bind-
ing contracts had been signed with
Chinese entities to build a railway,
port and mine in Western Australia
when they were in fact framework
agreements. A federal court judge
cleared both in 2009, but this was
overturned in mid-February by a full
bench of the federal court.
Mr. Forrest said the High Courts
decision to allow an appeal vindi-
cated the companys actions to de-
fend the case over the past six years.
A spokeswoman said the company
wouldnt comment further.
Belinda Gibson, acting chair-
woman of the securities regulator,
said the agency will defend the ap-
peal. This case raises important is-
sues which form the bedrock of con-
fidence in the integrity of our
markets, including misleading and
deceptive conduct, continuous dis-
closure and directors duties, Ms.
Gibson said.
A date to hear the appeal hasnt
been set yet.
Mr. Forrest has previously said
he was confident of winning an ap-
peal and has argued management of
Fortescue and the Chinese compa-
nies at the time believed the agree-
ments they had signed were legally
enforceable.
Mr. Forrest formed Fortescue in
2003 and it has quickly grown into
the third-largest supplier of iron ore
from Australias remote Pilbara re-
gion, which accounts for roughly
40% of the worlds trade in the steel-
making ingredient by sea. The com-
pany took on large amounts of debt
to develop mining operations and
build a railway to rival those belong-
ing to Rio Tinto PLC and BHP Billi-
ton Ltd., transporting ore to ships
that take the bulk of the commodity
to China. Fortescue is investing
US$8.4 billion to boost output to 155
million metric tons a year by 2014
from about 55 million this year.
Mr. Forrest stood down as chief
executive this year to make way for
Nev Power, but he denied that a re-
turn to the chairman role he held in
Fortescues early days was related to
the legal case.
The federal judges, in reviving
the case this year, said the earlier
trial judge had erred in rejecting the
regulators allegations of miscon-
duct, although one judge in the deci-
sion added it was a curiosity of the
case that there was no evidence that
any investor suffered a loss.
BY ROBB M. STEWART
Griffins Sales Starts
Buyout Firm Aims to Close Deal for Snack-Food Company This Year
SYDNEYPrivate-equity firm Pa-
cific Equity Partners formally
kicked off the sale process of biscuit
and snack-food company Griffins
Foods by sending out information
memorandums about the business
to prospective buyers, a person fa-
miliar with the matter said.
The firm hopes to close a sale,
which could be for up to one billion
New Zealand dollars (US$777 mil-
lion), by the end of the year, the
person said.
Griffins is a well-known brand in
New Zealand that has expanded into
Australia in the past few years. In
New Zealand, the group has a 50%
share of the cookies market, accord-
ing to a person who saw the infor-
mation memorandum about the
business.
Previous asset sales in the food
sector have attracted interest from
overseas buyers. Australian private-
equity firm Champ recently sold
Manassen Foodswhich sells Jelly
Belly sweets and Laughing Cow
cheeseto Chinas Bright Food
Group Co. Bright Food Chairman
Wang Zongnan said the company is
interested in acquiring more assets
in Australia.
Japanese brewer Asahi Group
Holdings agreed to buy New
Zealands Independent Liquor for
US$1.3 billion last month, and multi-
national brewer SABMiller PLC just
won the boards recommendation
for its US$9.8 billion bid for Austra-
lias Fosters Group Ltd.
Australia-targeted merger and
acquisition activity rose 47% in the
first three quarters of 2011, com-
pared with the year earlier, accord-
ing to Thomson Reuters data. Aus-
tralia was the second-most targeted
nation in the region behind China,
data show.
PEP bought Griffins, which
makes brands like Gingernuts,
Squiggles and Solay, in 2006. The
firm has been growing Griffins in-
ternational sales: 28% of net reve-
nue is expected to come from inter-
national sales in 2011, up from 10%
in 2006, according to the memo. In
addition to New Zealand and Aus-
tralia, Griffins sells products in
markets like the U.S., U.K. and Eu-
rope.
Griffins Foods is expected to
have earnings of NZ$108.5 million in
2011 and net revenue of NZ$302
million, according to the person.
UBS and Goldman Sachs are ad-
vising PEP on the sale.
Private-equity firms have been
keen to sell assets they bought be-
fore the global financial crisis hit
the Australian market, but the ini-
tial public offering climate has made
it difficult to do so. The disappoint-
ing IPO of Myer Holdings Ltd. in
late 2009 left investors wary of new
floats coming out of private-equity
hands and has forced firms to pur-
sue sales to companies in the sector
or to other private-equity firms to
exit their holdings.
Earlier this month, Australian
private-equity firms Archer Capital
and Ironbridge appointed advisers
to consider the sale of their iNova
Pharmaceuticals business for be-
tween 700 million Australian dollars
(US$686.4 million) and A$850 mil-
lion, people familiar with the matter
said. The pair are considering the
sale because theyve already re-
ceived interest in the asset from
overseas companies and other pri-
vate equity firms, the people said.
BY CYNTHIA KOONS
Raising M&A
Australia and New Zealand's inbound
M&A, in billions of dollars
Source: Dealogic
$60
0
10
20
30
40
50
billion
Australia New Zealand
10 2000 05
YTD
H&M Skirts Retail Worries
STOCKHOLMHennes & Mau-
ritz AB said Thursday that its third-
quarter net profit fell 15%, less than
feared as the fashion company
weathered the difficult European re-
tail environment despite a hit from
the strong Swedish krona.
The worlds second-largest fash-
ion retailer after Inditex SA said net
profit for the three months to the
end of August was 3.59 billion kro-
nor ($527 million), down from 4.24
billion kronor in the same period a
year earlier but ahead of analysts
forecasts.
Stockholm-based H&M said on
Sept. 15 that total sales for the quar-
ter were little changed at 26.91 bil-
lion kronor from 26.89 billion kronor
a year earlier, despite the challeng-
ing environment for retailers. Com-
parables were tough, and unfavor-
able weather in several European
markets hurt sales.
The company said the strength-
ening of the Swedish krona contin-
ued to have a negative impact on re-
ported profit. September sales were
also hit by unseasonably warm
weather, although sales between
Sept. 1 and Sept. 27 in local curren-
cies were up by 3%, the retailer said.
H&M said it would open more
stores in this current fiscal year
than originally planned, suggesting
the troubled European retail sector
may be on the road to recovery.
H&M continues to gain market
share in a challenging environment
for the fashion-retail industry ... We
are increasing our expansion for
full-year 2011 to approximately 265
new stores net, from the originally
planned 250, President and Chief
Executive Karl-Johan Persson said.
H&M had 2,325 stores as of Aug. 31.
Analysts in the past have ex-
pressed concern that H&M was over-
exposed to mature markets, but
many of the planned new stores will
be in markets such as China, Roma-
nia and Croatia. Socit Gnrale an-
alyst Anne Critchlow said H&Ms
presence in emerging markets is
growing quite fast.
We are sticking to our target of
10% to 15% more stores each year,
Mr. Persson said. We continue to
expand in mature markets, and there
is continued great potential to ex-
pand on those markets. But there
are definitely opportunities to ex-
pand in Asia, and the brunt of ex-
pansion in coming years will be
there.
He added that the company is
also looking at Brazil, Argentina,
Australia and South Africa as future
markets. Markets south of the equa-
tor bring new challenges, with re-
versed seasons, but Mr. Persson was
confident the company in time will
find solutions to this. Its not a big
problem, he said. Well be there.
China, the U.K., U.S. and Germany
will be the companys largest expan-
sion markets in 2011. Ms. Critchlow
said H&Ms stock levels were 26%
higher than a year ago, raising con-
cerns that the retailer will have to
cut prices to clear inventory during
October and November, which would
hurt margins in the fourth quarter.
Nils Vinge, H&Ms head of inves-
tor relations, said that when looking
at stock levels over several years,
the current levels arent especially
high. There was a heat wave from
the middle of August in central Eu-
rope and in southern Europe, he
said. We had introduced autumn
clothes that we planned to sell, but
you dont buy a warm fall jacket
when its hot.
Since September sales were soft,
sales figures in October and Novem-
ber will be even more important
than usual, he said. If it continues
like this, there will naturally be a
higher risk that there will have to be
markdowns, Mr. Vinge said.
The gross margin at H&Ma
measure of the cost of goods sold
decreased slightly to 58.6% from
60.5%, hit by cost inflation in the
sourcing markets, including high
cotton prices and a weaker U.S. dol-
lar relative to its reporting currency,
the Swedish krona. But the drop was
less than analysts had expected.
BY JENS HANSEGARD
China, the U.S. and Germany are among H&Ms largest expansion markets.
B
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w
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Andrew Forrest in early August.
B
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BUSINESS OPPORTUNITIES
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Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. 23
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Y0U lRL hLRLBY h0IlllLD tlot o leorir] Will |e lel1 |efcre tle Suprere Ccurt cf tle Stote cf heW Ycrl, Iertl 1u1iciol District, hossou Ccurt] (tle "Ccurt"), ot I Suprere Ccurt Drie, Nireclo, Y0U lRL hLRLBY h0IlllLD tlot o leorir] Will |e lel1 |efcre tle Suprere Ccurt cf tle Stote cf heW Ycrl, Iertl 1u1iciol District, hossou Ccurt] (tle "Ccurt"), ot I Suprere Ccurt Drie, Nireclo, Y0U lRL hLRLBY h0IlllLD tlot o leorir] Will |e lel1 |efcre tle Suprere Ccurt cf tle Stote cf heW Ycrl, Iertl 1u1iciol District, hossou Ccurt] (tle "Ccurt"), ot I Suprere Ccurt Drie, Nireclo, Y0U lRL hLRLBY h0IlllLD tlot o leorir] Will |e lel1 |efcre tle Suprere Ccurt cf tle Stote cf heW Ycrl, Iertl 1u1iciol District, hossou Ccurt] (tle "Ccurt"), ot I Suprere Ccurt Drie, Nireclo,
heW Ycrl II>I, cr hcer|er I1, ZII ot J.J o.r. (tle "loirress heorir]") tc 1eterrire. (I) Wletler tle prcpcse1 Stipuloticr cf Settlerert ("Settlerert l]reerert") cf tle o|ce-copticre1 heW Ycrl II>I, cr hcer|er I1, ZII ot J.J o.r. (tle "loirress heorir]") tc 1eterrire. (I) Wletler tle prcpcse1 Stipuloticr cf Settlerert ("Settlerert l]reerert") cf tle o|ce-copticre1 heW Ycrl II>I, cr hcer|er I1, ZII ot J.J o.r. (tle "loirress heorir]") tc 1eterrire. (I) Wletler tle prcpcse1 Stipuloticr cf Settlerert ("Settlerert l]reerert") cf tle o|ce-copticre1 heW Ycrl II>I, cr hcer|er I1, ZII ot J.J o.r. (tle "loirress heorir]") tc 1eterrire. (I) Wletler tle prcpcse1 Stipuloticr cf Settlerert ("Settlerert l]reerert") cf tle o|ce-copticre1
Deriotie lcticr slcul1 |e opprce1 |] tle Ccurt os foir, just, reoscro|le or1 o1euote, (Z) Wletler tle Ploirtiff foirl] or1 o1euotel] represerts tle sirilorl] situote1 Stccllcl1ers ir erfcrcir] tle Deriotie lcticr slcul1 |e opprce1 |] tle Ccurt os foir, just, reoscro|le or1 o1euote, (Z) Wletler tle Ploirtiff foirl] or1 o1euotel] represerts tle sirilorl] situote1 Stccllcl1ers ir erfcrcir] tle Deriotie lcticr slcul1 |e opprce1 |] tle Ccurt os foir, just, reoscro|le or1 o1euote, (Z) Wletler tle Ploirtiff foirl] or1 o1euotel] represerts tle sirilorl] situote1 Stccllcl1ers ir erfcrcir] tle Deriotie lcticr slcul1 |e opprce1 |] tle Ccurt os foir, just, reoscro|le or1 o1euote, (Z) Wletler tle Ploirtiff foirl] or1 o1euotel] represerts tle sirilorl] situote1 Stccllcl1ers ir erfcrcir] tle
ri]lts cf Llc]1s, os 1efire1 |elcW, or1 (J) Wletler tle Deriotie lcticr slcul1 |e 1isrisse1 Witl preju1ice. ri]lts cf Llc]1s, os 1efire1 |elcW, or1 (J) Wletler tle Deriotie lcticr slcul1 |e 1isrisse1 Witl preju1ice. ri]lts cf Llc]1s, os 1efire1 |elcW, or1 (J) Wletler tle Deriotie lcticr slcul1 |e 1isrisse1 Witl preju1ice. ri]lts cf Llc]1s, os 1efire1 |elcW, or1 (J) Wletler tle Deriotie lcticr slcul1 |e 1isrisse1 Witl preju1ice.
Ile Settlerert l]reerert rescles o 1eriotie loWsuit file1 cr |elolf cf Llc]1s Borlir] Grcup PLC or1 Llc]1s IBS Borl PLC (ccllectiel], "Llc]1s") |] o Stccllcl1er cf Llc]1s cer Ile Settlerert l]reerert rescles o 1eriotie loWsuit file1 cr |elolf cf Llc]1s Borlir] Grcup PLC or1 Llc]1s IBS Borl PLC (ccllectiel], "Llc]1s") |] o Stccllcl1er cf Llc]1s cer Ile Settlerert l]reerert rescles o 1eriotie loWsuit file1 cr |elolf cf Llc]1s Borlir] Grcup PLC or1 Llc]1s IBS Borl PLC (ccllectiel], "Llc]1s") |] o Stccllcl1er cf Llc]1s cer Ile Settlerert l]reerert rescles o 1eriotie loWsuit file1 cr |elolf cf Llc]1s Borlir] Grcup PLC or1 Llc]1s IBS Borl PLC (ccllectiel], "Llc]1s") |] o Stccllcl1er cf Llc]1s cer
Wletler tle rore1 lr1ii1uol Defer1orts |reocle1 tleir fi1ucior] 1uties tc Llc]1s or1 Woste1 Llc]1s' ccrpcrote ossets. Wletler tle rore1 lr1ii1uol Defer1orts |reocle1 tleir fi1ucior] 1uties tc Llc]1s or1 Woste1 Llc]1s' ccrpcrote ossets. Wletler tle rore1 lr1ii1uol Defer1orts |reocle1 tleir fi1ucior] 1uties tc Llc]1s or1 Woste1 Llc]1s' ccrpcrote ossets. Wletler tle rore1 lr1ii1uol Defer1orts |reocle1 tleir fi1ucior] 1uties tc Llc]1s or1 Woste1 Llc]1s' ccrpcrote ossets.
Ile Settlerert l]reerert Will prci1e tlot Llc]1s Will tole sucl steps os recessor] tc o1cpt or1 irplerert tle ccrpcrote ]cerrorce prcce1ures, reosures or1 pclicies cutlire1 ir tle Ile Settlerert l]reerert Will prci1e tlot Llc]1s Will tole sucl steps os recessor] tc o1cpt or1 irplerert tle ccrpcrote ]cerrorce prcce1ures, reosures or1 pclicies cutlire1 ir tle Ile Settlerert l]reerert Will prci1e tlot Llc]1s Will tole sucl steps os recessor] tc o1cpt or1 irplerert tle ccrpcrote ]cerrorce prcce1ures, reosures or1 pclicies cutlire1 ir tle Ile Settlerert l]reerert Will prci1e tlot Llc]1s Will tole sucl steps os recessor] tc o1cpt or1 irplerert tle ccrpcrote ]cerrorce prcce1ures, reosures or1 pclicies cutlire1 ir tle
Settlerert l]reerert, Wlicl ro] |e c|toire1 |] ccrtoctir] o represertotie cf Ploirtiff's Ccursel. Settlerert l]reerert, Wlicl ro] |e c|toire1 |] ccrtoctir] o represertotie cf Ploirtiff's Ccursel. Settlerert l]reerert, Wlicl ro] |e c|toire1 |] ccrtoctir] o represertotie cf Ploirtiff's Ccursel. Settlerert l]reerert, Wlicl ro] |e c|toire1 |] ccrtoctir] o represertotie cf Ploirtiff's Ccursel.
lf tle Settlerert l]reerert is opprce1, ]cur le]ol ri]lts os o Stccllcl1er Will |e offecte1 Wletler ]cu oct cr 1c rct oct. Pleose reo1 tlis hctice corefull]. lf tle Settlerert l]reerert is opprce1, ]cur le]ol ri]lts os o Stccllcl1er Will |e offecte1 Wletler ]cu oct cr 1c rct oct. Pleose reo1 tlis hctice corefull]. lf tle Settlerert l]reerert is opprce1, ]cur le]ol ri]lts os o Stccllcl1er Will |e offecte1 Wletler ]cu oct cr 1c rct oct. Pleose reo1 tlis hctice corefull]. lf tle Settlerert l]reerert is opprce1, ]cur le]ol ri]lts os o Stccllcl1er Will |e offecte1 Wletler ]cu oct cr 1c rct oct. Pleose reo1 tlis hctice corefull].
Ilis lcticr is o 1eriotie octicr |rcu]lt cr |elolf cf Llc]1s or1 rct cr |elolf cf tle Slorelcl1ers. lcccr1ir]l], tlere is rc cloir fcrr. Ilis lcticr is o 1eriotie octicr |rcu]lt cr |elolf cf Llc]1s or1 rct cr |elolf cf tle Slorelcl1ers. lcccr1ir]l], tlere is rc cloir fcrr. Ilis lcticr is o 1eriotie octicr |rcu]lt cr |elolf cf Llc]1s or1 rct cr |elolf cf tle Slorelcl1ers. lcccr1ir]l], tlere is rc cloir fcrr. Ilis lcticr is o 1eriotie octicr |rcu]lt cr |elolf cf Llc]1s or1 rct cr |elolf cf tle Slorelcl1ers. lcccr1ir]l], tlere is rc cloir fcrr.
1h|s aot|ce |s aot ea express|oa of eay op|a|oa by the 6ourt ebout the mer|ts of eay of the c|e|ms or defeases esserted by eay perty |a th|s Act|oa or the fe|raess or edequecy of the 1h|s aot|ce |s aot ea express|oa of eay op|a|oa by the 6ourt ebout the mer|ts of eay of the c|e|ms or defeases esserted by eay perty |a th|s Act|oa or the fe|raess or edequecy of the 1h|s aot|ce |s aot ea express|oa of eay op|a|oa by the 6ourt ebout the mer|ts of eay of the c|e|ms or defeases esserted by eay perty |a th|s Act|oa or the fe|raess or edequecy of the 1h|s aot|ce |s aot ea express|oa of eay op|a|oa by the 6ourt ebout the mer|ts of eay of the c|e|ms or defeases esserted by eay perty |a th|s Act|oa or the fe|raess or edequecy of the
proposed sett|emeat. proposed sett|emeat. proposed sett|emeat. proposed sett|emeat.
Sttemeat eI Bck]reea4 eI the Cse Sttemeat eI Bck]reea4 eI the Cse Sttemeat eI Bck]reea4 eI the Cse Sttemeat eI Bck]reea4 eI the Cse
0r le|ruor] Z6, ZJ, Ploirtiff file1 o slorelcl1er 1eriotie ccrploirt ir tle Suprere Ccurt cf tle Stote cf heW Ycrl, hossou Ccurt], cr |elolf cf Llc]1s o]oirst tle lr1ii1uol Defer1orts, Wlc ore 0r le|ruor] Z6, ZJ, Ploirtiff file1 o slorelcl1er 1eriotie ccrploirt ir tle Suprere Ccurt cf tle Stote cf heW Ycrl, hossou Ccurt], cr |elolf cf Llc]1s o]oirst tle lr1ii1uol Defer1orts, Wlc ore 0r le|ruor] Z6, ZJ, Ploirtiff file1 o slorelcl1er 1eriotie ccrploirt ir tle Suprere Ccurt cf tle Stote cf heW Ycrl, hossou Ccurt], cr |elolf cf Llc]1s o]oirst tle lr1ii1uol Defer1orts, Wlc ore 0r le|ruor] Z6, ZJ, Ploirtiff file1 o slorelcl1er 1eriotie ccrploirt ir tle Suprere Ccurt cf tle Stote cf heW Ycrl, hossou Ccurt], cr |elolf cf Llc]1s o]oirst tle lr1ii1uol Defer1orts, Wlc ore
currert rer|ers cf Llc]1s' Bcor1 cf Directcrs or1 seerol cf Llc]1s' presert or1 fcrrer cfficers or1 1irectcrs. currert rer|ers cf Llc]1s' Bcor1 cf Directcrs or1 seerol cf Llc]1s' presert or1 fcrrer cfficers or1 1irectcrs. currert rer|ers cf Llc]1s' Bcor1 cf Directcrs or1 seerol cf Llc]1s' presert or1 fcrrer cfficers or1 1irectcrs. currert rer|ers cf Llc]1s' Bcor1 cf Directcrs or1 seerol cf Llc]1s' presert or1 fcrrer cfficers or1 1irectcrs. |e|at|ff e||eges thet the |ad|v|due| 0efeadeats breeched the|r f|duc|ery dut|es ea |e|at|ff e||eges thet the |ad|v|due| 0efeadeats breeched the|r f|duc|ery dut|es ea |e|at|ff e||eges thet the |ad|v|due| 0efeadeats breeched the|r f|duc|ery dut|es ea |e|at|ff e||eges thet the |ad|v|due| 0efeadeats breeched the|r f|duc|ery dut|es eadddd
wested corporete essets by fe|||ag to superv|se l|oyds emp|oyees who seat, or otherw|se by eageg|ag |a coaduct thet eaeb|ed l|oyds emp|oyees to sead, certe|a 0a|ted Stetes do||er peymeats t wested corporete essets by fe|||ag to superv|se l|oyds emp|oyees who seat, or otherw|se by eageg|ag |a coaduct thet eaeb|ed l|oyds emp|oyees to sead, certe|a 0a|ted Stetes do||er peymeats t wested corporete essets by fe|||ag to superv|se l|oyds emp|oyees who seat, or otherw|se by eageg|ag |a coaduct thet eaeb|ed l|oyds emp|oyees to sead, certe|a 0a|ted Stetes do||er peymeats t wested corporete essets by fe|||ag to superv|se l|oyds emp|oyees who seat, or otherw|se by eageg|ag |a coaduct thet eaeb|ed l|oyds emp|oyees to sead, certe|a 0a|ted Stetes do||er peymeats toooo
correspoadeat beaks |a the 0a|ted Stetes efter hev|ag removed |aformet|oa fromthose peymeats thet wou|d heve |ad|ceted thet those peymeats were re|eted to 0lA6seact|oaed eat|t|es. |e|at|f correspoadeat beaks |a the 0a|ted Stetes efter hev|ag removed |aformet|oa fromthose peymeats thet wou|d heve |ad|ceted thet those peymeats were re|eted to 0lA6seact|oaed eat|t|es. |e|at|f correspoadeat beaks |a the 0a|ted Stetes efter hev|ag removed |aformet|oa fromthose peymeats thet wou|d heve |ad|ceted thet those peymeats were re|eted to 0lA6seact|oaed eat|t|es. |e|at|f correspoadeat beaks |a the 0a|ted Stetes efter hev|ag removed |aformet|oa fromthose peymeats thet wou|d heve |ad|ceted thet those peymeats were re|eted to 0lA6seact|oaed eat|t|es. |e|at|fffff
e|so e||eges thet the |ad|v|due| 0efeadeats e|ded ead ebetted breeches of f|duc|ery dut|es ead weste of corporete essets |a coaaect|oa w|th the process|ag of those peymeats e|so e||eges thet the |ad|v|due| 0efeadeats e|ded ead ebetted breeches of f|duc|ery dut|es ead weste of corporete essets |a coaaect|oa w|th the process|ag of those peymeats e|so e||eges thet the |ad|v|due| 0efeadeats e|ded ead ebetted breeches of f|duc|ery dut|es ead weste of corporete essets |a coaaect|oa w|th the process|ag of those peymeats e|so e||eges thet the |ad|v|due| 0efeadeats e|ded ead ebetted breeches of f|duc|ery dut|es ead weste of corporete essets |a coaaect|oa w|th the process|ag of those peymeats.... Ploirtiff reueste1 Ploirtiff reueste1 Ploirtiff reueste1 Ploirtiff reueste1
1oro]es or1 ccsts, irclu1ir] reoscro|le ottcrre]s', occcurtorts' or1 etperts' fees. 0r le|ruor] >, ZI, Ploirtiff orer1e1 its slorelcl1er 1eriotie ccrploirt tc o11 olle]oticrs re]or1ir] Llc]1s' 1oro]es or1 ccsts, irclu1ir] reoscro|le ottcrre]s', occcurtorts' or1 etperts' fees. 0r le|ruor] >, ZI, Ploirtiff orer1e1 its slorelcl1er 1eriotie ccrploirt tc o11 olle]oticrs re]or1ir] Llc]1s' 1oro]es or1 ccsts, irclu1ir] reoscro|le ottcrre]s', occcurtorts' or1 etperts' fees. 0r le|ruor] >, ZI, Ploirtiff orer1e1 its slorelcl1er 1eriotie ccrploirt tc o11 olle]oticrs re]or1ir] Llc]1s' 1oro]es or1 ccsts, irclu1ir] reoscro|le ottcrre]s', occcurtorts' or1 etperts' fees. 0r le|ruor] >, ZI, Ploirtiff orer1e1 its slorelcl1er 1eriotie ccrploirt tc o11 olle]oticrs re]or1ir] Llc]1s'
Decer|er ZZ, ZJ settlerert o]reerert Witl 0llC relotir] tc tle sore po]rert irstructicrs. Decer|er ZZ, ZJ settlerert o]reerert Witl 0llC relotir] tc tle sore po]rert irstructicrs. Decer|er ZZ, ZJ settlerert o]reerert Witl 0llC relotir] tc tle sore po]rert irstructicrs. Decer|er ZZ, ZJ settlerert o]reerert Witl 0llC relotir] tc tle sore po]rert irstructicrs.
Resea Ier the Sett|emeat ]reemeat Resea Ier the Sett|emeat ]reemeat Resea Ier the Sett|emeat ]reemeat Resea Ier the Sett|emeat ]reemeat
Ile prircipol reoscr fcr tle Settlerert l]reerert is tle |erefit tc |e prci1e1 tc Llc]1s rcW ir tle fcrr cf tle ccrpcrote ]cerrorce prcce1ures, reosures, or1 pclicies tlot Llc]1s Will Ile prircipol reoscr fcr tle Settlerert l]reerert is tle |erefit tc |e prci1e1 tc Llc]1s rcW ir tle fcrr cf tle ccrpcrote ]cerrorce prcce1ures, reosures, or1 pclicies tlot Llc]1s Will Ile prircipol reoscr fcr tle Settlerert l]reerert is tle |erefit tc |e prci1e1 tc Llc]1s rcW ir tle fcrr cf tle ccrpcrote ]cerrorce prcce1ures, reosures, or1 pclicies tlot Llc]1s Will Ile prircipol reoscr fcr tle Settlerert l]reerert is tle |erefit tc |e prci1e1 tc Llc]1s rcW ir tle fcrr cf tle ccrpcrote ]cerrorce prcce1ures, reosures, or1 pclicies tlot Llc]1s Will
erlorce cr o1cpt or1 irplerert os o result cf tle settlerert. Ilis |erefit rust |e ccrpore1 tc tle ccsts tc Llc]1s cf liti]oticr or1 tle risl tlot rc reccer] ri]lt |e ocliee1 ofter o ccrteste1 triol erlorce cr o1cpt or1 irplerert os o result cf tle settlerert. Ilis |erefit rust |e ccrpore1 tc tle ccsts tc Llc]1s cf liti]oticr or1 tle risl tlot rc reccer] ri]lt |e ocliee1 ofter o ccrteste1 triol erlorce cr o1cpt or1 irplerert os o result cf tle settlerert. Ilis |erefit rust |e ccrpore1 tc tle ccsts tc Llc]1s cf liti]oticr or1 tle risl tlot rc reccer] ri]lt |e ocliee1 ofter o ccrteste1 triol erlorce cr o1cpt or1 irplerert os o result cf tle settlerert. Ilis |erefit rust |e ccrpore1 tc tle ccsts tc Llc]1s cf liti]oticr or1 tle risl tlot rc reccer] ri]lt |e ocliee1 ofter o ccrteste1 triol
or1 lilel] oppeols, pcssi|l] ]eors irtc tle future. or1 lilel] oppeols, pcssi|l] ]eors irtc tle future. or1 lilel] oppeols, pcssi|l] ]eors irtc tle future. or1 lilel] oppeols, pcssi|l] ]eors irtc tle future.
P)meat eI Wet|ce Cests P)meat eI Wet|ce Cests P)meat eI Wet|ce Cests P)meat eI Wet|ce Cests
Llc]1s is ossurir] oll respcrsi|ilit] (irclu1ir] firorciol respcrsi|ilit]) fcr prci1ir] tlis rctice tc its Slorelcl1ers. Llc]1s is ossurir] oll respcrsi|ilit] (irclu1ir] firorciol respcrsi|ilit]) fcr prci1ir] tlis rctice tc its Slorelcl1ers. Llc]1s is ossurir] oll respcrsi|ilit] (irclu1ir] firorciol respcrsi|ilit]) fcr prci1ir] tlis rctice tc its Slorelcl1ers. Llc]1s is ossurir] oll respcrsi|ilit] (irclu1ir] firorciol respcrsi|ilit]) fcr prci1ir] tlis rctice tc its Slorelcl1ers.
Sttemeat eI tterae)s' |ees a4 Cests Sttemeat eI tterae)s' |ees a4 Cests Sttemeat eI tterae)s' |ees a4 Cests Sttemeat eI tterae)s' |ees a4 Cests
ls o uritor] port cf tle Settlerert l]reerert, Ploirtiff Will oppl] fcr tle Ccurt's opprcol, pursuort tc heW Ycrl Busiress Ccrpcroticr LoW Secticr 6Z6(e), cf or oWor1 tc Ploirtiff's Ccursel ls o uritor] port cf tle Settlerert l]reerert, Ploirtiff Will oppl] fcr tle Ccurt's opprcol, pursuort tc heW Ycrl Busiress Ccrpcroticr LoW Secticr 6Z6(e), cf or oWor1 tc Ploirtiff's Ccursel ls o uritor] port cf tle Settlerert l]reerert, Ploirtiff Will oppl] fcr tle Ccurt's opprcol, pursuort tc heW Ycrl Busiress Ccrpcroticr LoW Secticr 6Z6(e), cf or oWor1 tc Ploirtiff's Ccursel ls o uritor] port cf tle Settlerert l]reerert, Ploirtiff Will oppl] fcr tle Ccurt's opprcol, pursuort tc heW Ycrl Busiress Ccrpcroticr LoW Secticr 6Z6(e), cf or oWor1 tc Ploirtiff's Ccursel
cf tleir ottcrre]s' fees plus tleir octuol ccsts or1 etperses. Llc]1s Will rct cppcse sucl oWor1 sc lcr] os it 1ces rct etcee1 ir tle o]]re]ote SZ,1,. Ile |olorce cf tle Settlerert is rct ccrtir]ert cf tleir ottcrre]s' fees plus tleir octuol ccsts or1 etperses. Llc]1s Will rct cppcse sucl oWor1 sc lcr] os it 1ces rct etcee1 ir tle o]]re]ote SZ,1,. Ile |olorce cf tle Settlerert is rct ccrtir]ert cf tleir ottcrre]s' fees plus tleir octuol ccsts or1 etperses. Llc]1s Will rct cppcse sucl oWor1 sc lcr] os it 1ces rct etcee1 ir tle o]]re]ote SZ,1,. Ile |olorce cf tle Settlerert is rct ccrtir]ert cf tleir ottcrre]s' fees plus tleir octuol ccsts or1 etperses. Llc]1s Will rct cppcse sucl oWor1 sc lcr] os it 1ces rct etcee1 ir tle o]]re]ote SZ,1,. Ile |olorce cf tle Settlerert is rct ccrtir]ert
cr or] 1ecisicr |] tle Ccurt Witl respect tc Ploirtiff's opplicoticr fcr ottcrre]s' fees or1 ccsts. cr or] 1ecisicr |] tle Ccurt Witl respect tc Ploirtiff's opplicoticr fcr ottcrre]s' fees or1 ccsts. cr or] 1ecisicr |] tle Ccurt Witl respect tc Ploirtiff's opplicoticr fcr ottcrre]s' fees or1 ccsts. cr or] 1ecisicr |] tle Ccurt Witl respect tc Ploirtiff's opplicoticr fcr ottcrre]s' fees or1 ccsts.
R|]ht te 0|ject te the Sett|emeat ]reemeat R|]ht te 0|ject te the Sett|emeat ]reemeat R|]ht te 0|ject te the Sett|emeat ]reemeat R|]ht te 0|ject te the Sett|emeat ]reemeat
lf ]cu ore o Stccllcl1er, ]cu cor c|ject tc tle prcpcse1 Settlerert l]reerert if ]cu 1c rct lile or] port cf it. Ycu cor ]ie reoscrs Wl] ]cu tlirl tle Ccurt slcul1 rct opprce tle Settlerert lf ]cu ore o Stccllcl1er, ]cu cor c|ject tc tle prcpcse1 Settlerert l]reerert if ]cu 1c rct lile or] port cf it. Ycu cor ]ie reoscrs Wl] ]cu tlirl tle Ccurt slcul1 rct opprce tle Settlerert lf ]cu ore o Stccllcl1er, ]cu cor c|ject tc tle prcpcse1 Settlerert l]reerert if ]cu 1c rct lile or] port cf it. Ycu cor ]ie reoscrs Wl] ]cu tlirl tle Ccurt slcul1 rct opprce tle Settlerert lf ]cu ore o Stccllcl1er, ]cu cor c|ject tc tle prcpcse1 Settlerert l]reerert if ]cu 1c rct lile or] port cf it. Ycu cor ]ie reoscrs Wl] ]cu tlirl tle Ccurt slcul1 rct opprce tle Settlerert
l]reerert, or1 tle Ccurt Will ccrsi1er ]cur ieWs. Ic c|ject tc tle prcpcse1 Settlerert l]reerert, ]cu rust ser1 o si]re1 letter stotir] tlot ]cu c|ject tc tle prcpcse1 Settlerert l]reerert ir l]reerert, or1 tle Ccurt Will ccrsi1er ]cur ieWs. Ic c|ject tc tle prcpcse1 Settlerert l]reerert, ]cu rust ser1 o si]re1 letter stotir] tlot ]cu c|ject tc tle prcpcse1 Settlerert l]reerert ir l]reerert, or1 tle Ccurt Will ccrsi1er ]cur ieWs. Ic c|ject tc tle prcpcse1 Settlerert l]reerert, ]cu rust ser1 o si]re1 letter stotir] tlot ]cu c|ject tc tle prcpcse1 Settlerert l]reerert ir l]reerert, or1 tle Ccurt Will ccrsi1er ]cur ieWs. Ic c|ject tc tle prcpcse1 Settlerert l]reerert, ]cu rust ser1 o si]re1 letter stotir] tlot ]cu c|ject tc tle prcpcse1 Settlerert l]reerert ir
Lrste-Sporirest Kopitolorlo]e]esellscloft r.|.h., etc. et ol. Lrste-Sporirest Kopitolorlo]e]esellscloft r.|.h., etc. et ol. Lrste-Sporirest Kopitolorlo]e]esellscloft r.|.h., etc. et ol. Lrste-Sporirest Kopitolorlo]e]esellscloft r.|.h., etc. et ol. . . . . Blorl, et. ol, Blorl, et. ol, Blorl, et. ol, Blorl, et. ol, lr1et hc. J/J6>. Ycur c|jecticr rust irclu1e ]cur rore, o11ress or1 teleplcre rur|er, list lcW ror] or1 Wlot t]pe cf lr1et hc. J/J6>. Ycur c|jecticr rust irclu1e ]cur rore, o11ress or1 teleplcre rur|er, list lcW ror] or1 Wlot t]pe cf lr1et hc. J/J6>. Ycur c|jecticr rust irclu1e ]cur rore, o11ress or1 teleplcre rur|er, list lcW ror] or1 Wlot t]pe cf lr1et hc. J/J6>. Ycur c|jecticr rust irclu1e ]cur rore, o11ress or1 teleplcre rur|er, list lcW ror] or1 Wlot t]pe cf
Llc]1s Grcup securities ]cu currertl] lcl1 or1 slcul1 stote tle specific reoscrs, if or], fcr eocl sucl c|jecticr ]cu role. Ycur Writter c|jecticr rust olsc irclu1e Writter prccf cf stor1ir] tc ossert Llc]1s Grcup securities ]cu currertl] lcl1 or1 slcul1 stote tle specific reoscrs, if or], fcr eocl sucl c|jecticr ]cu role. Ycur Writter c|jecticr rust olsc irclu1e Writter prccf cf stor1ir] tc ossert Llc]1s Grcup securities ]cu currertl] lcl1 or1 slcul1 stote tle specific reoscrs, if or], fcr eocl sucl c|jecticr ]cu role. Ycur Writter c|jecticr rust olsc irclu1e Writter prccf cf stor1ir] tc ossert Llc]1s Grcup securities ]cu currertl] lcl1 or1 slcul1 stote tle specific reoscrs, if or], fcr eocl sucl c|jecticr ]cu role. Ycur Writter c|jecticr rust olsc irclu1e Writter prccf cf stor1ir] tc ossert
sucl c|jecticr. Noil ]cur c|jecticr tc eocl cf tle o11resses liste1 |elcW, pcstrorle1 rc loter tlor 0ctc|er JI, ZII. Ycu ro] c|ject eitler cr ]cur cWr cr tlrcu]l or ottcrre] lire1 ot ]cur cWr sucl c|jecticr. Noil ]cur c|jecticr tc eocl cf tle o11resses liste1 |elcW, pcstrorle1 rc loter tlor 0ctc|er JI, ZII. Ycu ro] c|ject eitler cr ]cur cWr cr tlrcu]l or ottcrre] lire1 ot ]cur cWr sucl c|jecticr. Noil ]cur c|jecticr tc eocl cf tle o11resses liste1 |elcW, pcstrorle1 rc loter tlor 0ctc|er JI, ZII. Ycu ro] c|ject eitler cr ]cur cWr cr tlrcu]l or ottcrre] lire1 ot ]cur cWr sucl c|jecticr. Noil ]cur c|jecticr tc eocl cf tle o11resses liste1 |elcW, pcstrorle1 rc loter tlor 0ctc|er JI, ZII. Ycu ro] c|ject eitler cr ]cur cWr cr tlrcu]l or ottcrre] lire1 ot ]cur cWr
etperse. lf ]cu lire or ottcrre], ]cur ottcrre] rust file o rctice cf oppeororce Witl tle Ccurt or1 prci1e ccursel fcr tle Porties Witl ccpies cf tle rctice ot tle |elcW o11resses rc loter tlor 0ctc|er etperse. lf ]cu lire or ottcrre], ]cur ottcrre] rust file o rctice cf oppeororce Witl tle Ccurt or1 prci1e ccursel fcr tle Porties Witl ccpies cf tle rctice ot tle |elcW o11resses rc loter tlor 0ctc|er etperse. lf ]cu lire or ottcrre], ]cur ottcrre] rust file o rctice cf oppeororce Witl tle Ccurt or1 prci1e ccursel fcr tle Porties Witl ccpies cf tle rctice ot tle |elcW o11resses rc loter tlor 0ctc|er etperse. lf ]cu lire or ottcrre], ]cur ottcrre] rust file o rctice cf oppeororce Witl tle Ccurt or1 prci1e ccursel fcr tle Porties Witl ccpies cf tle rctice ot tle |elcW o11resses rc loter tlor 0ctc|er
JI, ZII. Ycu cr or ottcrre] retoire1 |] ]cu ro], |ut is rct reuire1 tc, oppeor ot tle loirress heorir]. lf ]cu cr or ottcrre] irter1s tc oppeor ot tle loirress heorir], ]cu cr ]cur ottcrre] rust file JI, ZII. Ycu cr or ottcrre] retoire1 |] ]cu ro], |ut is rct reuire1 tc, oppeor ot tle loirress heorir]. lf ]cu cr or ottcrre] irter1s tc oppeor ot tle loirress heorir], ]cu cr ]cur ottcrre] rust file JI, ZII. Ycu cr or ottcrre] retoire1 |] ]cu ro], |ut is rct reuire1 tc, oppeor ot tle loirress heorir]. lf ]cu cr or ottcrre] irter1s tc oppeor ot tle loirress heorir], ]cu cr ]cur ottcrre] rust file JI, ZII. Ycu cr or ottcrre] retoire1 |] ]cu ro], |ut is rct reuire1 tc, oppeor ot tle loirress heorir]. lf ]cu cr or ottcrre] irter1s tc oppeor ot tle loirress heorir], ]cu cr ]cur ottcrre] rust file
o rctice cf irtert tc oppeor Witl tle Ccurt or1 prci1e ccpies tc ccursel fcr tle Porties ot tle |elcW o11resses rc loter tlor 0ctc|er JI, ZII. lll c|jecticrs or1 rctices slcul1 |e file1 Witl tle Ccurt o rctice cf irtert tc oppeor Witl tle Ccurt or1 prci1e ccpies tc ccursel fcr tle Porties ot tle |elcW o11resses rc loter tlor 0ctc|er JI, ZII. lll c|jecticrs or1 rctices slcul1 |e file1 Witl tle Ccurt o rctice cf irtert tc oppeor Witl tle Ccurt or1 prci1e ccpies tc ccursel fcr tle Porties ot tle |elcW o11resses rc loter tlor 0ctc|er JI, ZII. lll c|jecticrs or1 rctices slcul1 |e file1 Witl tle Ccurt o rctice cf irtert tc oppeor Witl tle Ccurt or1 prci1e ccpies tc ccursel fcr tle Porties ot tle |elcW o11resses rc loter tlor 0ctc|er JI, ZII. lll c|jecticrs or1 rctices slcul1 |e file1 Witl tle Ccurt
cr prci1e1 tc ccursel fcr tle Porties ot tle fcllcWir] o11resses. cr prci1e1 tc ccursel fcr tle Porties ot tle fcllcWir] o11resses. cr prci1e1 tc ccursel fcr tle Porties ot tle fcllcWir] o11resses. cr prci1e1 tc ccursel fcr tle Porties ot tle fcllcWir] o11resses.
PLllhIlll'S C0UhSLL PLllhIlll'S C0UhSLL PLllhIlll'S C0UhSLL PLllhIlll'S C0UhSLL
Rc|ert I. hoefele Rc|ert I. hoefele Rc|ert I. hoefele Rc|ert I. hoefele
Nctle] Rice LLC Nctle] Rice LLC Nctle] Rice LLC Nctle] Rice LLC
Z& Bri1]esi1e Bculeor1 Z& Bri1]esi1e Bculeor1 Z& Bri1]esi1e Bculeor1 Z& Bri1]esi1e Bculeor1
Ncurt Pleosort, SC ZJ161 Ncurt Pleosort, SC ZJ161 Ncurt Pleosort, SC ZJ161 Ncurt Pleosort, SC ZJ161
or1 or1 or1 or1
Setl D. Ri]rc1sl] Setl D. Ri]rc1sl] Setl D. Ri]rc1sl] Setl D. Ri]rc1sl]
Iirctl] 1. Nocloll Iirctl] 1. Nocloll Iirctl] 1. Nocloll Iirctl] 1. Nocloll
Ri]rc1sl] Lcr], P.l. Ri]rc1sl] Lcr], P.l. Ri]rc1sl] Lcr], P.l. Ri]rc1sl] Lcr], P.l.
>&> SteWort lerue, Ste. J1 >&> SteWort lerue, Ste. J1 >&> SteWort lerue, Ste. J1 >&> SteWort lerue, Ste. J1
Gor1er Cit], hY II>J Gor1er Cit], hY II>J Gor1er Cit], hY II>J Gor1er Cit], hY II>J
Ile Ccurt ro] clor]e tle 1ote cf or1 tire cf tle loirress heorir]. lf ]cu loe c|jecte1 or1 Wort tc otter1 tle leorir], ]cu slcul1 ccrtoct o represertotie cf Ploirtiff's Ccursel. Ile Ccurt ro] clor]e tle 1ote cf or1 tire cf tle loirress heorir]. lf ]cu loe c|jecte1 or1 Wort tc otter1 tle leorir], ]cu slcul1 ccrtoct o represertotie cf Ploirtiff's Ccursel. Ile Ccurt ro] clor]e tle 1ote cf or1 tire cf tle loirress heorir]. lf ]cu loe c|jecte1 or1 Wort tc otter1 tle leorir], ]cu slcul1 ccrtoct o represertotie cf Ploirtiff's Ccursel. Ile Ccurt ro] clor]e tle 1ote cf or1 tire cf tle loirress heorir]. lf ]cu loe c|jecte1 or1 Wort tc otter1 tle leorir], ]cu slcul1 ccrtoct o represertotie cf Ploirtiff's Ccursel.
|erther |aIermt|ea |erther |aIermt|ea |erther |aIermt|ea |erther |aIermt|ea
lurtler irfcrroticr re]or1ir] tle lcticr or1 tlis hctice, irclu1ir] uesticrs o|cut tle settlerert cf tle lcticr cr ccpies cf tle Settlerert l]reerert or1 occcrpor]ir] etli|its, ro] |e c|toire1 |] lurtler irfcrroticr re]or1ir] tle lcticr or1 tlis hctice, irclu1ir] uesticrs o|cut tle settlerert cf tle lcticr cr ccpies cf tle Settlerert l]reerert or1 occcrpor]ir] etli|its, ro] |e c|toire1 |] lurtler irfcrroticr re]or1ir] tle lcticr or1 tlis hctice, irclu1ir] uesticrs o|cut tle settlerert cf tle lcticr cr ccpies cf tle Settlerert l]reerert or1 occcrpor]ir] etli|its, ro] |e c|toire1 |] lurtler irfcrroticr re]or1ir] tle lcticr or1 tlis hctice, irclu1ir] uesticrs o|cut tle settlerert cf tle lcticr cr ccpies cf tle Settlerert l]reerert or1 occcrpor]ir] etli|its, ro] |e c|toire1 |]
ccrtoctir] o represertotie cf Ploirtiff's Ccursel. Iirctl] 1. Nocloll, Ri]rc1sl] Lcr], P.l., >&> SteWort lerue, Suite J1, Gor1er Cit], heW Ycrl II>J. ccrtoctir] o represertotie cf Ploirtiff's Ccursel. Iirctl] 1. Nocloll, Ri]rc1sl] Lcr], P.l., >&> SteWort lerue, Suite J1, Gor1er Cit], heW Ycrl II>J. ccrtoctir] o represertotie cf Ploirtiff's Ccursel. Iirctl] 1. Nocloll, Ri]rc1sl] Lcr], P.l., >&> SteWort lerue, Suite J1, Gor1er Cit], heW Ycrl II>J. ccrtoctir] o represertotie cf Ploirtiff's Ccursel. Iirctl] 1. Nocloll, Ri]rc1sl] Lcr], P.l., >&> SteWort lerue, Suite J1, Gor1er Cit], heW Ycrl II>J.
EIIect eI Ceert ppre| eI the Sett|emeat ]reemeat EIIect eI Ceert ppre| eI the Sett|emeat ]reemeat EIIect eI Ceert ppre| eI the Sett|emeat ]reemeat EIIect eI Ceert ppre| eI the Sett|emeat ]reemeat
lf tle Settlerert l]reerert is opprce1 |] tle Ccurt, tle Ccurt Will erter o lirol 1u1]rert tlot, orcr] ctler tlir]s, Will prci1e tlot Ploirtiff, Llc]1s or1 oll offiliotes cf Llc]1s sloll releose or1 lf tle Settlerert l]reerert is opprce1 |] tle Ccurt, tle Ccurt Will erter o lirol 1u1]rert tlot, orcr] ctler tlir]s, Will prci1e tlot Ploirtiff, Llc]1s or1 oll offiliotes cf Llc]1s sloll releose or1 lf tle Settlerert l]reerert is opprce1 |] tle Ccurt, tle Ccurt Will erter o lirol 1u1]rert tlot, orcr] ctler tlir]s, Will prci1e tlot Ploirtiff, Llc]1s or1 oll offiliotes cf Llc]1s sloll releose or1 lf tle Settlerert l]reerert is opprce1 |] tle Ccurt, tle Ccurt Will erter o lirol 1u1]rert tlot, orcr] ctler tlir]s, Will prci1e tlot Ploirtiff, Llc]1s or1 oll offiliotes cf Llc]1s sloll releose or1
1isclor]e Llc]1s or1 tle lr1ii1uol Defer1orts ir occcr1orce Witl tle terrs cf tle Releose ccrtoire1 ir tle Settlerert l]reerert. lt is tle irtert cf tle Porties tc tle lcticr tlot tle Settlerert 1isclor]e Llc]1s or1 tle lr1ii1uol Defer1orts ir occcr1orce Witl tle terrs cf tle Releose ccrtoire1 ir tle Settlerert l]reerert. lt is tle irtert cf tle Porties tc tle lcticr tlot tle Settlerert 1isclor]e Llc]1s or1 tle lr1ii1uol Defer1orts ir occcr1orce Witl tle terrs cf tle Releose ccrtoire1 ir tle Settlerert l]reerert. lt is tle irtert cf tle Porties tc tle lcticr tlot tle Settlerert 1isclor]e Llc]1s or1 tle lr1ii1uol Defer1orts ir occcr1orce Witl tle terrs cf tle Releose ccrtoire1 ir tle Settlerert l]reerert. lt is tle irtert cf tle Porties tc tle lcticr tlot tle Settlerert
l]reerert, if opprce1, sloll ettir]uisl fcr oll tire oll ri]lts, cloirs or1 couses cf octicr tlot Were cr ccul1 loe |eer osserte1 ir tle lcticr cr tlot relote tc sucl cloirs o]oirst tle Releosees. Ile l]reerert, if opprce1, sloll ettir]uisl fcr oll tire oll ri]lts, cloirs or1 couses cf octicr tlot Were cr ccul1 loe |eer osserte1 ir tle lcticr cr tlot relote tc sucl cloirs o]oirst tle Releosees. Ile l]reerert, if opprce1, sloll ettir]uisl fcr oll tire oll ri]lts, cloirs or1 couses cf octicr tlot Were cr ccul1 loe |eer osserte1 ir tle lcticr cr tlot relote tc sucl cloirs o]oirst tle Releosees. Ile l]reerert, if opprce1, sloll ettir]uisl fcr oll tire oll ri]lts, cloirs or1 couses cf octicr tlot Were cr ccul1 loe |eer osserte1 ir tle lcticr cr tlot relote tc sucl cloirs o]oirst tle Releosees. Ile
Ccurt Will 1isriss tle lcticr Witl preju1ice cr tle rerits Witl respect tc oll Releosees. Ccurt Will 1isriss tle lcticr Witl preju1ice cr tle rerits Witl respect tc oll Releosees. Ccurt Will 1isriss tle lcticr Witl preju1ice cr tle rerits Witl respect tc oll Releosees. Ccurt Will 1isriss tle lcticr Witl preju1ice cr tle rerits Witl respect tc oll Releosees.
Cea4|t|eas Ier Sett|emeat Cea4|t|eas Ier Sett|emeat Cea4|t|eas Ier Sett|emeat Cea4|t|eas Ier Sett|emeat
Ile Settlerert is ccr1iticre1 upcr tle cccurrerce cf certoir eerts. Ilcse eerts irclu1e, orcr] ctler tlir]s. (I) ertr] cf tle 1u1]rert cf tle Ccurt, os prci1e1 fcr ir tle Stipuloticr, or1 (Z) tle Ile Settlerert is ccr1iticre1 upcr tle cccurrerce cf certoir eerts. Ilcse eerts irclu1e, orcr] ctler tlir]s. (I) ertr] cf tle 1u1]rert cf tle Ccurt, os prci1e1 fcr ir tle Stipuloticr, or1 (Z) tle Ile Settlerert is ccr1iticre1 upcr tle cccurrerce cf certoir eerts. Ilcse eerts irclu1e, orcr] ctler tlir]s. (I) ertr] cf tle 1u1]rert cf tle Ccurt, os prci1e1 fcr ir tle Stipuloticr, or1 (Z) tle Ile Settlerert is ccr1iticre1 upcr tle cccurrerce cf certoir eerts. Ilcse eerts irclu1e, orcr] ctler tlir]s. (I) ertr] cf tle 1u1]rert cf tle Ccurt, os prci1e1 fcr ir tle Stipuloticr, or1 (Z) tle
1u1]rert |eccrir] lirol. lf fcr or] reoscr, or] cre cf tle ccr1iticrs 1escri|e1 ir tle Stipuloticr is rct ret, tle Stipuloticr ri]lt |e terrirote1 or1, if terrirote1, Will |eccre rull or1 ci1, or1 tle 1u1]rert |eccrir] lirol. lf fcr or] reoscr, or] cre cf tle ccr1iticrs 1escri|e1 ir tle Stipuloticr is rct ret, tle Stipuloticr ri]lt |e terrirote1 or1, if terrirote1, Will |eccre rull or1 ci1, or1 tle 1u1]rert |eccrir] lirol. lf fcr or] reoscr, or] cre cf tle ccr1iticrs 1escri|e1 ir tle Stipuloticr is rct ret, tle Stipuloticr ri]lt |e terrirote1 or1, if terrirote1, Will |eccre rull or1 ci1, or1 tle 1u1]rert |eccrir] lirol. lf fcr or] reoscr, or] cre cf tle ccr1iticrs 1escri|e1 ir tle Stipuloticr is rct ret, tle Stipuloticr ri]lt |e terrirote1 or1, if terrirote1, Will |eccre rull or1 ci1, or1 tle
Porties tc tle Stipuloticr Will |e restcre1 tc tleir respectie pcsiticrs os cf tle 1ote settlerert 1iscussicrs |e]or. Porties tc tle Stipuloticr Will |e restcre1 tc tleir respectie pcsiticrs os cf tle 1ote settlerert 1iscussicrs |e]or. Porties tc tle Stipuloticr Will |e restcre1 tc tleir respectie pcsiticrs os cf tle 1ote settlerert 1iscussicrs |e]or. Porties tc tle Stipuloticr Will |e restcre1 tc tleir respectie pcsiticrs os cf tle 1ote settlerert 1iscussicrs |e]or.
PLLlSL D0 h0I C0hIlCI IhL C0URI 0R IhL CLLRK'S PLLlSL D0 h0I C0hIlCI IhL C0URI 0R IhL CLLRK'S PLLlSL D0 h0I C0hIlCI IhL C0URI 0R IhL CLLRK'S PLLlSL D0 h0I C0hIlCI IhL C0URI 0R IhL CLLRK'S
0lllCL 0R lhY RLPRLSLhIlIlVL 0l LL0YDS RLGlRDlhG IhlS h0IlCL. 0lllCL 0R lhY RLPRLSLhIlIlVL 0l LL0YDS RLGlRDlhG IhlS h0IlCL. 0lllCL 0R lhY RLPRLSLhIlIlVL 0l LL0YDS RLGlRDlhG IhlS h0IlCL. 0lllCL 0R lhY RLPRLSLhIlIlVL 0l LL0YDS RLGlRDlhG IhlS h0IlCL.
Dote1. Septer|er J, ZII Dote1. Septer|er J, ZII Dote1. Septer|er J, ZII Dote1. Septer|er J, ZII
B] 0r1er cf tle Suprere Ccurt fcr tle Stote cf heW Ycrl, Iertl 1u1iciol District ot hossou Ccurt] B] 0r1er cf tle Suprere Ccurt fcr tle Stote cf heW Ycrl, Iertl 1u1iciol District ot hossou Ccurt] B] 0r1er cf tle Suprere Ccurt fcr tle Stote cf heW Ycrl, Iertl 1u1iciol District ot hossou Ccurt] B] 0r1er cf tle Suprere Ccurt fcr tle Stote cf heW Ycrl, Iertl 1u1iciol District ot hossou Ccurt]
LRSIL-SPlRlhVLSI LRSIL-SPlRlhVLSI LRSIL-SPlRlhVLSI LRSIL-SPlRlhVLSI
KlPlIlLlhLlGLGLSLLLSChllI r.|.h., Deriotiel] cr Belolf cf LL0YDS BlhKlhG GR0UP PLC lhD LL0YDS KlPlIlLlhLlGLGLSLLLSChllI r.|.h., Deriotiel] cr Belolf cf LL0YDS BlhKlhG GR0UP PLC lhD LL0YDS KlPlIlLlhLlGLGLSLLLSChllI r.|.h., Deriotiel] cr Belolf cf LL0YDS BlhKlhG GR0UP PLC lhD LL0YDS KlPlIlLlhLlGLGLSLLLSChllI r.|.h., Deriotiel] cr Belolf cf LL0YDS BlhKlhG GR0UP PLC lhD LL0YDS
ISB BlhK PLC, ISB BlhK PLC, ISB BlhK PLC, ISB BlhK PLC,
Ploirtiff, Ploirtiff, Ploirtiff, Ploirtiff,
. . . .
VlCI0R BLlhK, w0LlGlhG C.G. VlCI0R BLlhK, w0LlGlhG C.G. VlCI0R BLlhK, w0LlGlhG C.G. VlCI0R BLlhK, w0LlGlhG C.G.
BLRhDI, Lwlh BR0wh, 1lh P. DU PLLSSlS, PhlLLlP h. GRLLh, 1ULllh h0Rh-SNlIh, L0RD LLlICh, DlVlD BLRhDI, Lwlh BR0wh, 1lh P. DU PLLSSlS, PhlLLlP h. GRLLh, 1ULllh h0Rh-SNlIh, L0RD LLlICh, DlVlD BLRhDI, Lwlh BR0wh, 1lh P. DU PLLSSlS, PhlLLlP h. GRLLh, 1ULllh h0Rh-SNlIh, L0RD LLlICh, DlVlD BLRhDI, Lwlh BR0wh, 1lh P. DU PLLSSlS, PhlLLlP h. GRLLh, 1ULllh h0Rh-SNlIh, L0RD LLlICh, DlVlD
NlhhlhG, ClR0LYh 1. NCClLL, NlRIlh l. SClCLUhl, 1. LRlC DlhlLLS, lRChlL G. KlhL, G. IRULII IlIL, NlhhlhG, ClR0LYh 1. NCClLL, NlRIlh l. SClCLUhl, 1. LRlC DlhlLLS, lRChlL G. KlhL, G. IRULII IlIL, NlhhlhG, ClR0LYh 1. NCClLL, NlRIlh l. SClCLUhl, 1. LRlC DlhlLLS, lRChlL G. KlhL, G. IRULII IlIL, NlhhlhG, ClR0LYh 1. NCClLL, NlRIlh l. SClCLUhl, 1. LRlC DlhlLLS, lRChlL G. KlhL, G. IRULII IlIL,
1lN 1.w. I00KLY, hLLLh l. wLlR, NlChlLL L. lllRLY, ILRRl l. DllL, GlVlh 1.h. GLNNLLL, DLlhhL S. 1lN 1.w. I00KLY, hLLLh l. wLlR, NlChlLL L. lllRLY, ILRRl l. DllL, GlVlh 1.h. GLNNLLL, DLlhhL S. 1lN 1.w. I00KLY, hLLLh l. wLlR, NlChlLL L. lllRLY, ILRRl l. DllL, GlVlh 1.h. GLNNLLL, DLlhhL S. 1lN 1.w. I00KLY, hLLLh l. wLlR, NlChlLL L. lllRLY, ILRRl l. DllL, GlVlh 1.h. GLNNLLL, DLlhhL S.
1ULlUS, NllRILh l. Vlh DLh BLRGh, lhGLLl l. KhlGhI, DlVlD P. PRlIChlRD, ChRlSI0PhLR S. GlBS0h- 1ULlUS, NllRILh l. Vlh DLh BLRGh, lhGLLl l. KhlGhI, DlVlD P. PRlIChlRD, ChRlSI0PhLR S. GlBS0h- 1ULlUS, NllRILh l. Vlh DLh BLRGh, lhGLLl l. KhlGhI, DlVlD P. PRlIChlRD, ChRlSI0PhLR S. GlBS0h- 1ULlUS, NllRILh l. Vlh DLh BLRGh, lhGLLl l. KhlGhI, DlVlD P. PRlIChlRD, ChRlSI0PhLR S. GlBS0h-
SNlIh, Ih0NlS l.w. NCKlLLlP, 10hh R0UhDLLL PlLNLR, SILVL C. IlRGLII, PLILR G. lYLlllL, N. KLhI SNlIh, Ih0NlS l.w. NCKlLLlP, 10hh R0UhDLLL PlLNLR, SILVL C. IlRGLII, PLILR G. lYLlllL, N. KLhI SNlIh, Ih0NlS l.w. NCKlLLlP, 10hh R0UhDLLL PlLNLR, SILVL C. IlRGLII, PLILR G. lYLlllL, N. KLhI SNlIh, Ih0NlS l.w. NCKlLLlP, 10hh R0UhDLLL PlLNLR, SILVL C. IlRGLII, PLILR G. lYLlllL, N. KLhI
lIKlhS0h, ShLlLl N. l0RBLS, lLlh L. N00RL, l. CLlVL BULILR, PLILR B. LLLw00D, NlChlLL D. R0SS, lIKlhS0h, ShLlLl N. l0RBLS, lLlh L. N00RL, l. CLlVL BULILR, PLILR B. LLLw00D, NlChlLL D. R0SS, lIKlhS0h, ShLlLl N. l0RBLS, lLlh L. N00RL, l. CLlVL BULILR, PLILR B. LLLw00D, NlChlLL D. R0SS, lIKlhS0h, ShLlLl N. l0RBLS, lLlh L. N00RL, l. CLlVL BULILR, PLILR B. LLLw00D, NlChlLL D. R0SS,
PhlLlP R. hlNPI0h, LlwRLhCL N. URQhlRI, BRllh PlINlh, DLhhlS h0LI, L.L. (PlDDY) LlhlKLR, PhlLlP R. hlNPI0h, LlwRLhCL N. URQhlRI, BRllh PlINlh, DLhhlS h0LI, L.L. (PlDDY) LlhlKLR, PhlLlP R. hlNPI0h, LlwRLhCL N. URQhlRI, BRllh PlINlh, DLhhlS h0LI, L.L. (PlDDY) LlhlKLR, PhlLlP R. hlNPI0h, LlwRLhCL N. URQhlRI, BRllh PlINlh, DLhhlS h0LI, L.L. (PlDDY) LlhlKLR,
Defer1orts Defer1orts Defer1orts Defer1orts
-or1- -or1- -or1- -or1-
LL0YDS BlhKlhG GR0UP PLC or1 LL0YDS ISB BlhK PLC, LL0YDS BlhKlhG GR0UP PLC or1 LL0YDS ISB BlhK PLC, LL0YDS BlhKlhG GR0UP PLC or1 LL0YDS ISB BlhK PLC, LL0YDS BlhKlhG GR0UP PLC or1 LL0YDS ISB BlhK PLC,
hcrirol Defer1orts. hcrirol Defer1orts. hcrirol Defer1orts. hcrirol Defer1orts.
X X X X
C0URI C0URI C0URI C0URI
Clerl cf tle Ccurt Clerl cf tle Ccurt Clerl cf tle Ccurt Clerl cf tle Ccurt
Suprere Ccurt fcr tle Stote Suprere Ccurt fcr tle Stote Suprere Ccurt fcr tle Stote Suprere Ccurt fcr tle Stote
cf heW Ycrl, Iertl 1u1iciol cf heW Ycrl, Iertl 1u1iciol cf heW Ycrl, Iertl 1u1iciol cf heW Ycrl, Iertl 1u1iciol
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LL0YDS' C0UhSLL LL0YDS' C0UhSLL LL0YDS' C0UhSLL LL0YDS' C0UhSLL
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1effre] I. Scctt 1effre] I. Scctt 1effre] I. Scctt 1effre] I. Scctt
Sullior CrcrWell Sullior CrcrWell Sullior CrcrWell Sullior CrcrWell
LLP LLP LLP LLP
IZ> Brco1 Street IZ> Brco1 Street IZ> Brco1 Street IZ> Brco1 Street
heW Ycrl, hY heW Ycrl, hY heW Ycrl, hY heW Ycrl, hY
I1-Z1J& I1-Z1J& I1-Z1J& I1-Z1J&
24 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
For information about listing your funds, please contact: Carson Wong tel: +852 2831-6481; email: carson.wong@dowjones.com
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INTERNATIONAL INVESTMENT FUNDS
[ Search by company, category or country at asia.WSJ.com/funds ]
Data as shown is for information purposes only. No offer is being made by
Morningstar, Ltd. or this publication. Funds shown arent registered with the
U.S. Securities and Exchange Commission and arent available for sale to United
States citizens and/or residents except as noted. Prices are in local currencies.
All performance figures are calculated using the most recent prices available.
NAV %RETURN
FUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
NAV %RETURN
FUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
NAV %RETURN
FUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
NAV %RETURN
FUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
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 09/29 EUR 51.94 -16.0 -6.4 2.4
Industria AE EU EQ DEU 09/29 EUR 62.90 -17.6 -12.9 -2.8
InternRent AE EU BD DEU 09/29 EUR 42.22 4.4 4.4 10.8
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 09/23 USD 323595.26 -22.0 -10.3 19.1
nGAMFUNDMANAGEMENTLIMITED
George's Court, 54-62TownsendStreet, Dublin2, Ireland
Tel +353 1 6093927 Fax +353 1 611 7941, Internet: www.gam.com
GAMAsia Equity Hedge US GL EQ VGB 09/26 USD 217.76 -19.5 -8.4 -9.7
GAMAsia Equity USD OT OT VGB 09/28 USD 542.13 -25.1 -19.7 -5.2
GAMAsia-Pacific Eq USD AS EQ VGB 09/28 USD 1093.29 -21.4 -14.9 -7.8
GAMComGlb Bal EUROp US BA VGB 09/26 EUR 96.65 -6.7 -2.9 3.6
GAMComGlb Bal USDOp US BA VGB 09/26 USD 127.29 -5.9 0.2 2.0
GAMComp Glb Eq EUROp GL EQ VGB 09/26 EUR 95.43 -12.9 -5.6 2.8
GAMComp Glb Eq USDOp GL EQ VGB 09/26 USD 120.21 -12.4 -1.6 0.8
GAMComp Glb Gr EUROp US BA VGB 09/26 EUR 86.29 -9.8 -5.2 3.5
GAMComp Glb Gr USDOp US BA VGB 09/26 USD 123.02 -8.5 -0.7 1.1
GAMCompAbsRT EUROp OT OT VGB 09/26 EUR 138.35 -7.5 -4.2 -1.2
GAMCompAbsRT SGDOp OT OT VGB 09/26 SGD 99.41 -7.7 -4.3 -1.4
GAMCompAbsRT USDOp OT OT VGB 09/26 USD 827.38 -7.4 -3.9 -1.1
GAMCptal Apprec Eq Inc US EQ VGB 09/28 USD 251.83 -11.2 1.3 5.1
GAMDiversity EUROp OT OT VGB 09/26 EUR 611.61 -1.3 1.0 -1.8
GAMDiversity USD2.5XL OT OT VGB 09/19 USD 66.30 -6.4 -1.0 NS
GAMDiversity USDOp OT OT VGB 09/19 USD 652.69 -1.6 0.9 -1.7
GAMDvrsty II USDOp OT OT VGB 09/19 USD 199.06 -2.0 0.6 -2.4
GAMEuro Eq Hdg EUROp EU EQ VGB 09/26 EUR 214.68 -12.5 -1.2 0.6
GAMEuro Eq Hdg USDOp EU EQ VGB 09/28 USD 197.39 -11.9 -1.8 0.4
GAMGAMCOEq US EQ VGB 09/28 USD 906.03 -9.9 2.1 8.7
GAMGbl Divers USDInc. GL EQ VGB 09/26 USD 234.74 -14.9 -9.7 -3.8
GAMGrtr China Eq Hdg Op GL EQ VGB 09/26 USD 183.63 -23.9 -17.4 -14.1
GAMIntrst Trend Inc OT OT VGB 09/26 USD 282.46 -8.7 -8.7 9.3
GAMJapan Eq Hdg USDOp AS EQ VGB 09/26 USD 114.22 -10.4 -5.1 -3.9
GAMJapan Eq Hdg YENOpen AS EQ VGB 09/26 JPY 7890.48 -10.3 -4.9 -3.7
GAMJapan Eq USD JP EQ VGB 09/28 USD 974.98 -18.6 -11.3 -8.2
GAMJapan Eq YEN JP EQ VGB 09/28 JPY 7344.71 -19.6 -13.5 -10.2
GAMMoney Mkt EuroOp EU MM VGB 09/28 EUR 51.27 0.3 0.5 0.6
GAMMoney Mkt USD US MM VGB 09/28 USD 100.08 0.0 0.1 0.1
GAMMulti-Emer Mkts USD OT EQ VGB 09/19 USD 626.98 -8.0 -2.0 2.1
GAMMulti-Eur EUROp OT EQ VGB 09/19 EUR 277.06 -1.3 6.2 NS
GAMMulti-Eur II EUROp OT EQ VGB 09/19 EUR 142.58 -1.3 6.2 1.6
GAMMulti-Eur II USDOp OT EQ VGB 09/19 USD 116.26 -1.7 5.7 1.5
GAMMulti-Eur USDOp OT EQ VGB 09/19 USD 481.81 -1.7 5.9 NS
GAMSelection Hdg US EQ VGB 09/23 USD 2932.86 -5.3 7.3 14.9
GAMSing/Malaysia Eq EA EQ VGB 09/28 USD 2259.38 -22.8 -17.3 0.9
GAMSterling Spe Bd Inc OT OT VGB 09/26 GBP 236.96 -3.6 -2.4 8.6
GAMTrading EURInc OT OT VGB 09/19 EUR 335.23 -2.2 1.8 2.0
GAMTrading USDInc OT OT VGB 09/19 USD 1005.44 -2.5 1.8 2.2
GAMTrdg II IncUSDOp OT OT VGB 09/19 USD 326.61 -2.4 1.8 2.2
GAMUSDSpecBondInc OT OT VGB 09/26 USD 587.99 -6.5 -5.1 9.8
GAMWorldwide GL EQ VGB 09/28 USD 1933.78 -15.5 -10.8 -4.1
GAMut Investments OT OT VGB 09/21 USD 7937.38 -2.4 1.4 2.2
GAMut Investments - T class OT OT VGB 09/21 USD 121.54 -2.4 1.6 2.4
nGAMStar FundPlc
GAMStar China EqUSD(SCHUA) AS EQ IRL 09/27 USD 14.69 -27.4 -26.1 2.0
GAMStar DiversMktNeutCredit USDAcc OT OT IRL 09/23 USD 10.27 1.7 1.8 NS
GAMStar Emer Mkt Rates USDAcc OT OT IRL 09/26 USD 10.63 -2.8 1.3 NS
GAMStar Emer Mkt Total Ret USDAcc GL BD IRL 09/27 USD 10.91 -1.8 -1.6 NS
GAMStar GEOUSDAcc OT OT IRL 09/16 USD 7.91 -20.9 NS NS
GAMStar Global Conv.Bd USDAcc OT OT IRL 09/26 USD 9.73 -3.9 NS NS
GAMStar Global Eq Inflat Focus USDAcc GL EQ IRL 09/27 USD 121.91 -13.4 5.2 NS
GAMStar Global Rates USDAcc OT OT IRL 09/27 USD 9.81 -9.0 -7.8 NS
GAMStar Keynes Quant Strategy USDAcc OT OT IRL 09/26 USD 10.62 0.6 0.2 NS
GAMStar Technology USDAcc OT EQ IRL 09/26 USD 8.78 NS NS NS
GAMStar Trading USDAcc OT OT IRL 09/26 USD 9.39 NS NS NS
GAMStar-AsEqUSDOrd Ac OT OT IRL 09/28 USD 11.16 -24.7 -19.5 -5.1
GAMStar-AsPacEqEURAcc AS EQ IRL 09/28 EUR 92.59 -21.1 -15.3 -4.0
GAMStar-ContEurEqEURAc EU EQ IRL 09/28 EUR 10.49 -15.9 -8.7 0.7
GAMStar-EurpEqEURAcc EU EQ IRL 09/28 EUR 168.95 -15.2 -9.5 -2.5
GAMStar-EurpEqUSDAcc EU EQ IRL 09/28 USD 13.95 -13.1 -8.0 -5.0
GAMStar-JpnEq EURAcc JP EQ IRL 09/28 EUR 83.97 -13.8 -5.6 -2.2
GAMStar-JpnEq JPY Acc JP EQ IRL 09/28 JPY 766.57 -19.1 -13.0 -10.2
GAMStar-JpnEq USDAcc JP EQ IRL 09/28 USD 9.75 -17.1 -10.1 -6.7
nGAMStar FundPlc
GAMStar US All CapEqUSDAcc US EQ IRL 09/27 USD 8.31 -11.7 -0.5 3.5
nHSBCTrinkaus Investment Managers SA
E-Mail: funds@hsbctrinkaus.lu
Telephone: 352- 47 18471
Prosperity Return Fund A JP BD LUX 09/26 JPY 9057.70 -6.8 -11.5 NS
Prosperity Return Fund B OT OT LUX 09/26 JPY 7309.55 -14.3 -20.0 NS
Prosperity Return Fund C OT OT LUX 09/26 USD 86.05 -7.1 -10.2 NS
Prosperity Return Fund D OT OT LUX 09/26 EUR 108.86 -1.2 -1.9 NS
Renaissance Hgh Grade Bd A JP BD LUX 09/26 JPY 9189.76 -7.9 -11.1 NS
Renaissance Hgh Grade Bd B JP BD LUX 09/26 JPY 7444.37 -14.8 -18.7 NS
Renaissance Hgh Grade Bd C JP BD LUX 09/26 USD 86.85 -7.9 -9.0 NS
Renaissance Hgh Grade Bd D JP BD LUX 09/26 EUR 94.96 -9.6 -11.1 NS
nALEXANDRAINVESTMENTMANAGEMENT
Tel: +1 212301 1800Fax: +1 212301 1810
Alexandra Convertible Bond Fund I, Ltd. (Class A) OT OT VGB 08/31 USD 2155.22 -6.8 -0.9 22.3
nCREDITPACIFICASSETMANAGMENT
www.creditpacific.com
CPS-Master Priv Fund GL OT WSM 09/28 USD 118.03 NS 29.8 25.7
nPLATINUMCAPITAL MANAGEMENT
Tel: +44207 0249840, www.platinumfunds.net
Platinm-All Star OT OT CYM 08/31 USD 100.29 -1.7 3.8 4.2
Platinm-All Weather OT OT USA 10/31 USD 129.92 2.4 3.2 3.8
Platinm-Dynasty OT OT USA 08/31 USD 110.38 -5.0 0.6 2.3
Platinm-Emancipation OT EQ USA 08/31 USD NS -4.2 9.1 7.3
Platinm-Equity Plus OT OT USA 05/29 USD 35.02 -18.2 -63.7 -45.6
Platinm-Gbl Dividend GL EQ CYM 08/31 USD 69.71 -9.7 -3.4 11.3
Platinm-Nordic OT OT CYM 08/31 SEK 524.05 -21.6 -13.5 -5.3
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 infoabout openfunds, contact info@superfund.comandwww.superfund.com
*Closedfor NewInvestments
Superfund Cayman* GL OT CYM 09/27 USD 55.18 7.9 49.2 9.3
Superfund GCT USD* GL OT LUX 09/27 USD 2566.00 5.3 29.3 4.4
Superfund Green Gold A(SPC) GL OT CYM 09/27 USD 1474.01 24.7 47.7 23.9
Superfund Green Gold B(SPC) GL OT CYM 09/27 USD 1441.05 29.0 43.9 20.1
Superfund Q-AG* GL OT AUT 09/27 EUR 7363.00 2.3 16.6 3.2
nWINTONCAPITAL MANAGEMENTLTD
Tel: +44(0)2076105350Fax: +44(0)2076105301
Winton Evolution EURCls H GL OT CYM 08/31 EUR NS 0.5 4.9 8.8
Winton Evolution GBP Cls G GL OT CYM 08/31 GBP NS 0.1 4.7 8.9
Winton Evolution USDCls F GL OT CYM 08/31 USD NS 0.2 5.1 9.0
Winton Futures EURCls C GL OT VGB 08/31 EUR NS 6.3 11.5 12.1
Winton Futures GBP Cls D GL OT VGB 08/31 GBP NS 6.0 11.4 12.2
Winton Futures JPY Cls E GL OT VGB 08/31 JPY NS 6.8 11.9 12.3
Winton Futures USDCls B GL OT VGB 08/31 USD NS 6.1 11.7 12.3
NAV %RETURN
FUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
NAV %RETURN
FUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
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FUND SCORECARD
USDMoney Market
Funds that invest in US Dollar-denominated money market instruments. The residual aggregate
maturity of money market securities is at most 12 months. Ranked on % total return (dividends
reinvested) in U.S. dollars for one year ending September 29, 2011
Leading 10Performers
FUND FUND LEGAL %Return in $US **
RATING* NAME FUNDMGM'T CO. CURR. BASE YTD 1-YR 2-YR 5-YR
NS Phillip US Philip Capital USDSGP 0.39 0.57 0.71 NS
Dollar Money Market A Management (S) Limited
4 BOCHKIF - BOCI-Prudential USDHKG 0.46 0.53 0.36 1.92
USDMoney Market A Asset Management
2 Legg Mason Legg Mason Fds USDLUX -0.43 0.53 1.57 0.41
Funds Money (USD) - Dis Investment Series (Jap)
4 SinoPac USD SinoPac Securities USDTWN 0.27 0.35 0.34 1.95
Money Market Inv Trust Co., Ltd
NS HSBC Global HSBC Investments USDIRL 0.20 0.25 0.12 NS
Liquidity USDLiq A Funds Ltd
4 Amundi Funds Amundi Luxembourg USDLUX 0.11 0.24 0.21 2.00
Money Market USDAU-C
2 Western Western Asset USDIRL 0.12 0.21 0.18 0.25
Asset USDLiquidity D Management Company
3 Investec GSF Investec Asset USDLUX 0.12 0.18 0.18 1.80
US Dlr Mny AInc Grs USD Management Luxembourg
4 Pictet-USD Pictet Funds USDLUX 0.11 0.16 0.15 1.84
Liquidity-P (Europe) S.A.
3 Parvest BNP Paribas USDLUX 0.08 0.15 0.15 1.72
Short TermUSDC Investment Partners Lux
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
Strains onFrenchBanks
Fitch Ratings Cites Funding Hurdles but Says Reaction Overdone
Fitch Ratings said French banks
credit ratings are under increased
pressure from funding difficulties
and their hefty exposure to sover-
eign debt in troubled euro-zone
countries, but it acknowledged that
market reaction to these problems
has been overdone.
In its six-month report on French
banks, scheduled for publication fol-
lowing full- and half-year results,
Fitch on Thursday said that fund-
ing is becoming more challenging
and that it expects market pressure
to continue until the euro-zone cri-
sis has been resolved.
Fitch rates Frances largest bank
by market value, BNP Paribas SA,
at double-A-minus; second-largest
listed bank Socit Gnrale SA at
A-plus; and Crdit Agricole SA at
double-A-minus. All the ratings are
stable, it said.
Since the beginning of the sum-
mer, the three main listed French
banks have shed about half of their
market value over worries that their
capital ratios are too low to cope
with potential losses from their
euro-zone sovereign-bond holdings.
Fitch said these share losses were
disproportionate to the banks un-
derlying risks.
The ratings firm said French
banks have more cross-border expo-
sure to Greece, Italy, Ireland, Portu-
gal and Spain than any other coun-
try, putting the overall figure at 71
billion ($96.17 billion). While the
banks could absorb any further
write-downs on their Greek hold-
ings, Fitch said problems with Ital-
ian debt would be more worrying. It
added, however, that it doesnt ex-
pect an Italian default.
Despite recent efforts to assuage
market concerns by taking steps to
boost their capital ratios, Fitch said:
Current and target ratios compare
less favorably to benchmarks set by
some other European banks or their
regulators.
The key ratio used to measure
bank capital against assets was 9.6%
for BNP Paribas at the end of June,
9.3% for SocGen and 8.9% at Crdit
Agricole. The more common bench-
mark among European banks is
above 10%.
The banks have said repeatedly
they dont need fresh capital, and
French government officials say
there is no plan for state interven-
tion. Instead, all three main French
banks have moved to calm investors
by promising to cut sharply the size
of their huge balance sheets and im-
prove liquidity. The ratings firm
said this may not be enough.
Banks recent announcements on
asset reductions may not suffice to
allay concerns, it said.
BY ART PATNAUDE
AND NOEMIE BISSERBE
Euro Gains as Dollar Eases
SAN FRANCISCOThe euro ex-
tended modest gains and the dollar
eased further Thursday on better-
than-expected U.S. economic data
and the German Parliaments ap-
proval of financial aid for the euro
zone.
U.S. jobless
claims dropped by
37,000 to 391,000
last week, the lowest since April 2,
the Labor Department said. Econo-
mists had expected new claims to
fall to 417,000 on a seasonally ad-
justed basis.
In Europe, Germanys Bundestag
voted in favor of legislation to in-
crease the size and flexibility of the
European Financial Stability Facility,
the euro zones bailout fund.
Chancellor Angela Merkels rul-
ing center-right coalition reportedly
provided 315 out of the 523 yes
votes, indicating that she didnt
have to rely on the backing of oppo-
sition parties to win passage of the
measures.
In early afternoon trading, the
common currency was at $1.3603,
up from $1.3544 late Wednesday.
The dollar was at 76.73 from
76.61, while the euro was at
104.41 compared with 103.76.
The pound bought $1.5647 from
$1.5576, while the dollar fetched
0.8972 Swiss franc from 0.9001
franc.
The dollar index, which mea-
sures the U.S. unit against a basket
of six major currencies, slipped to
77.69 from 77.995 late Wednesday.
Better-than-expected U.S. eco-
nomic data and the smooth passage
of the amendments to the European
Financial Stability Facility in Ger-
many helped to boost risk appetite
across the financial markets, Kathy
Lien, director of currency research
for GFT, said in her daily note.
Ms. Merkel had struggled in re-
cent weeks to limit defections from
the coalition made up of her Chris-
tian Democratic Union, its sister
party, the Christian Social Union,
and the Free Democrats, the junior
coalition partner.
Europe and the euro dont need
a weakened German chancellor,
said Stephen Pope, managing direc-
tor of Spotlight Ideas.
Failure to maintain an absolute
majority through her own coalition
would have left Ms. Merkel vulnera-
ble to calls for early elections, ana-
lysts said.
More important, strong support
from within her coalition signals po-
tential support for future bailouts,
Ms. Lien said.
BY SUE CHANG
AND WILLIAM L. WATTS
CURRENCY
MARKETS
In part because of the alleged
unauthorized trading, UBS is under
tremendous pressure from Swiss
regulators to shrink its investment
bank and cut down on the risk it
takes.
The loss has raised concern
among key staff about the size of
the bonus pool and prompted some
to consider leaving.
That has raised questions among
some people inside the firm about
the future of the investment bank
even as UBS officials say they are
committed to having a strong,
standalone securities operation.
Though Mr. Winters has attri-
butes that recommend him for the
job and he has been the most widely
discussed external candidate in
banking circles since Mr. Grbel
Continued from page 17 stepped down on Saturday, a num-
ber of factors could complicate his
candidacy.
The myriad challenges of the job
could limit interest among other
strong candidates. That has the po-
tential to increase the odds that Mr.
Ermotti will get the job on a perma-
nent basis by the time UBS wraps
up the search process, as soon as
the spring.
An American based in London,
Mr. Winters was co-head of J.P.
Morgans investment bank until the
summer of 2009, when he left in a
management shakeup.
He has a reputation as a savvy
risk manager and had been viewed
as a candidate to one day become
J.P. Morgans CEO.
Deborah Ball
contributed to this article.
UBS Hires CEO Search Firm
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. 25
For information about listing your funds, please contact: Carson Wong tel: +852 2831-6481; email: carson.wong@dowjones.com
Advertisement
INTERNATIONAL INVESTMENT FUNDS
[ Search by company, category or country at asia.WSJ.com/funds ]
NAV %RETURN
FUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
NAV %RETURN
FUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
NAV %RETURN
FUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
NAV %RETURN
FUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
nJ.P. MORGANASSETMANAGEMENT
For additional fundprices, please visit www.jpmorganam.com.sg
Tel: +6568821328
JF ASEANEq (SGD)A(acc) AS EQ LUX 09/28 SGD 13.59 -13.8 -8.0 NS
JF ASEANEq (USD)A(acc) AS EQ LUX 09/28 USD 13.89 -13.5 -5.4 16.0
JF Asia Pac ex-Jap Eq(SGD)A(acc) AS EQ LUX 09/28 SGD 11.22 -25.4 -22.7 NS
JF Asia Pac ex-Jp (USD)A(acc) AS EQ LUX 09/28 USD 15.48 -25.6 -20.6 -4.0
JF China (SGD)A(acc) AS EQ LUX 09/28 SGD 9.40 -28.8 -27.7 NS
JF China (USD)A(dist) AS EQ LUX 09/28 USD 35.49 -28.9 -25.6 -8.8
JF Greater China (SGD)A(acc) AS EQ LUX 09/28 SGD 11.57 -22.8 -16.9 NS
JF Greater China (USD)A(dist) AS EQ LUX 09/28 USD 22.30 -23.2 -14.8 -0.9
JF India (SGD)A(acc) EA EQ LUX 09/28 SGD 12.70 -23.0 -23.2 NS
JF India (USD)A(acc) EA EQ LUX 09/28 USD 22.35 -23.2 -21.1 2.8
JF Korea Equity (USD) A(acc) AS EQ LUX 09/28 USD 8.23 -27.6 -14.4 0.8
JF Pacific Tech (USD) A(acc) OT EQ LUX 09/28 USD 13.41 -21.3 -10.9 -2.3
JF Singapore (SGD)A(acc) AS EQ LUX 09/28 SGD 13.66 -15.9 -12.0 NS
JF Singapore (USD)A(dist) AS EQ LUX 09/28 USD 28.03 -16.2 -9.5 7.6
JPMAfrica (USD) A(acc) OT OT LUX 09/28 USD 9.03 -24.1 -12.6 3.4
JPMAmer Large Cap (USD)A(Dist) US EQ LUX 09/28 USD 9.62 -6.4 5.1 4.8
JPMAsia Pac Bond (USD)A(acc) AS BD LUX 09/28 USD 10.82 -0.1 1.4 NS
JPMBrazil Eq (SGD)A(acc) OT OT LUX 09/28 SGD 11.44 -22.8 -20.7 NS
JPMBrazil Eq (USD)A(acc) OT OT LUX 09/28 USD 9.30 -22.6 -18.3 0.9
JPMEast Eur (EUR)A(dist)(JF) EU EQ LUX 09/28 EUR 23.89 -31.1 -24.9 3.4
JPMEmerg EMEA(SGD)A(acc) OT OT LUX 09/28 SGD 11.59 -24.3 -19.6 NS
JPMEmerg EMEA(USD)A(dist) OT OT LUX 09/28 USD 48.60 -24.6 -17.3 2.4
JPMEmerg Mid East Eq(SGD)A(acc) OT OT LUX 09/28 SGD 11.41 -22.4 -22.2 NS
JPMEmerg Mid East(USD)A(acc) OT OT LUX 09/28 USD 14.42 -22.1 -20.1 -3.0
JPMEmerg Mid East(USD)A(dist) OT OT LUX 09/28 USD 19.33 -22.3 -20.2 -3.1
JPMEmerg Mkt Eq (SGD)A(acc) GL EQ LUX 09/28 SGD 12.21 -20.4 -17.1 NS
JPMEmerg Mkt Eq (USD)A(acc) GL EQ LUX 09/28 USD 19.03 -20.6 -14.9 1.1
JPMEmerg Mkt Eq (USD)A(dist) GL EQ LUX 09/28 USD 26.60 -20.7 -14.9 1.1
JPMEmerg Mkt Infra(USD)A(acc) OT OT LUX 09/28 USD 7.00 -22.4 -14.2 0.6
JPMEmerg Mkt LC Debt(USD)A(acc) OT OT LUX 09/28 USD 17.41 -1.6 -1.2 7.7
JPMEmerg Mkt LC Debt(USD)A(mth) OT OT LUX 09/28 USD 15.19 -1.6 -1.1 NS
JPMGlb Dyn (SGD)A(acc) GL EQ LUX 09/28 SGD 12.62 -13.4 -6.9 NS
JPMGlb Dyn (SGD)A(acc)(Hedged) GL EQ LUX 09/28 SGD 10.05 NS NS NS
JPMGlb Dyn (USD)A(dist)(JF) GL EQ LUX 09/28 USD 11.52 -13.7 -4.3 0.9
JPMGlb Nat Res (EUR)A(dist) GL EQ LUX 09/28 EUR 16.08 -29.3 -12.0 11.8
JPMGlb Nat Res (SGD)A(acc) GL EQ LUX 09/28 SGD 19.43 -27.7 -13.3 NS
JPMGlb Nat Res (USD)A(acc) GL EQ LUX 09/28 USD 15.60 -28.0 -10.9 7.9
JPMGlbl Consumer Trends (USD)A(Acc) OT EQ LUX 09/28 USD 14.81 -17.1 -10.9 NS
JPMGlbl Mining (USD)A(Acc) GL EQ LUX 09/28 USD 100.52 NS NS NS
JPMLatin Amer Eq(SGD)A(acc) GL EQ LUX 09/28 SGD 12.05 -21.5 -15.9 NS
JPMLatin Amer Eq(USD)A(dist)JF GL EQ LUX 09/28 USD 37.09 -21.2 -13.6 4.8
JPMRussia (USD) A(dist) EE EQ LUX 09/28 USD 10.73 -33.6 -24.1 -1.1
JPMUS SmCap Grwth (USD)A(Dist) US EQ LUX 09/28 USD 85.30 -13.5 5.3 9.3
JPMIF Global Convertibles - USDClass A(acc) OT OT LUX 09/28 USD 104.20 -8.8 -5.7 -0.6
JPMIF Global Financials - USDClass A(acc) OT EQ LUX 09/28 USD 74.86 -24.4 -21.4 -13.0
JPMIF Global Select Eq USDClass A(acc) GL EQ LUX 09/28 USD 132.58 -15.3 -8.5 -0.7
JPMIF Income Opportunity USDClass A(acc) OT OT LUX 09/28 USD 162.62 -2.1 -0.6 2.3
nMANULIFEASSETMANAGEMENT TEL:(852)21081110
Internet:http://www.manulife.com.hk 47/FManulife Plaza, Causeway Bay, HongKong
American Growth US EQ LUX 09/28 USD 16.18 -6.1 4.8 6.2
American Growth AA US EQ LUX 09/28 USD 0.93 -6.2 4.5 5.9
Asian Equity OT OT LUX 09/28 USD 2.38 -17.0 -9.7 2.8
Asian Equity AA OT OT LUX 09/28 USD 0.76 -17.2 -9.9 2.5
Asian SmCap Equity AA OT OT LUX 09/28 USD 1.34 -14.8 -4.2 15.0
China Value A AS EQ LUX 09/28 USD 6.23 -24.6 -19.8 0.5
China Value AA AS EQ LUX 09/28 USD 1.95 -24.8 -20.0 0.3
Dragon Growth AS EQ LUX 09/28 USD 1.34 -24.9 -20.7 -4.1
Dragon Growth AA AS EQ LUX 09/28 HKD 6.50 -24.8 -20.5 -4.1
Emg Eastrn Europe A EU EQ LUX 09/28 USD 3.99 -25.6 -17.4 -1.1
Emg Eastrn Europe AA EU EQ LUX 09/28 USD 1.71 -25.6 -17.5 -1.2
European Growth EU EQ LUX 09/28 USD 7.84 -18.5 -13.6 -4.6
European Growth AA EU EQ LUX 09/28 USD 0.56 -18.7 -13.8 -4.8
Global Contrarain AA GL EQ LUX 09/28 USD 0.84 -28.8 -23.5 0.1
Global Property AA OT EQ LUX 09/28 USD 0.68 -14.1 -7.7 3.3
Global Resources AA GL EQ LUX 09/28 USD 1.10 -14.9 -3.7 6.3
Healthcare AA OT EQ LUX 09/28 USD 0.95 -5.8 1.2 4.8
India Equity AA EA EQ LUX 09/28 USD 1.00 -24.3 -22.7 -0.9
International Growth GL EQ LUX 09/28 USD 2.89 -10.1 -4.4 -0.8
International Growth AA GL EQ LUX 09/28 USD 0.67 -10.3 -4.7 -1.0
Japanese Growth JP EQ LUX 09/28 USD 2.66 -11.8 -2.4 -1.9
Japanese Growth AA JP EQ LUX 09/28 USD 0.68 -11.9 -2.5 -2.6
Latin America Equity AA GL EQ LUX 09/28 USD 1.10 -24.5 -18.2 0.3
Manulife GF Strategic Income Fund AA OT OT LUX 09/28 USD 1.10 0.2 2.7 NS
Manulife Glbl Fund Asia Total Return AA AS BD LUX 09/28 USD 0.94 NS NS NS
MGF Asia Value Dividend Equity Fund OT OT LUX 09/28 USD 1.13 -18.1 -12.4 4.8
Russia Equity AA EE EQ LUX 09/28 USD 0.59 -28.0 -14.4 3.8
Taiwan Equity AA AS EQ LUX 09/28 USD 1.11 -14.8 -1.3 6.9
Turkey Equity AA OT OT LUX 09/28 USD 0.77 -22.4 -22.8 5.4
U.S. Bond AA US BD LUX 09/28 USD 1.21 3.5 3.3 7.5
U.S. SmCap Equity AA US EQ LUX 09/28 USD 0.76 -28.6 -16.0 0.6
U.S. Special Opportunities US BD LUX 09/28 USD 0.82 -18.6 -7.4 7.5
U.S. Tsy Inf-ProtSec AA OT OT LUX 09/28 USD 1.31 10.3 8.5 8.5
nPTCIPTADANAASSETMANAGEMENT
Tel: +6221 25574883 Fax: +6221 25574893 Website: www.ciptadana.com
Indonesian Grth Fund GL EQ BMU 09/21 USD 176.41 -3.1 4.2 22.7
nSENSIBLEASSETMANAGEMENTLIMITED
www.samfund.com.hk Tel: (852) 28686848 Fax: (852) 28109948
Asia Value Formula Fd-B OT OT CYM 09/27 USD 8.76 -17.1 -8.8 8.7
nSGAMFUND
AMUNDI HONGKONGLIMITED
Hotline inHongKong(852) 2521 4231
Bonds US OppsCoreplus A US BD LUX 06/22 USD 41.46 3.2 7.6 10.4
Bonds World A OT OT LUX 06/22 USD 44.92 2.3 9.0 6.5
Eq. AsiaPac Dual Strategies A AS EQ LUX 06/22 USD 11.64 -1.6 18.5 21.4
Eq. China A AS EQ LUX 06/22 USD 23.45 -3.2 6.0 9.3
Eq. Global Energy A OT EQ LUX 06/22 USD 19.81 2.5 27.6 15.9
Eq. Global Resources A GL EQ LUX 06/22 USD 129.82 -2.2 18.8 26.5
Eq. Gold Mines A OT EQ LUX 06/22 USD 36.44 -10.4 6.8 25.6
Eq. India A EA EQ LUX 09/28 USD 117.60 -24.9 -23.5 -1.3
Eq. Luxury &Lifestyle EUROA OT EQ LUX 06/22 EUR 92.80 -2.0 18.2 38.4
Eq. Luxury &Lifestyle USDA OT EQ LUX 06/22 USD 133.95 5.4 38.9 41.1
Eq. MENAEUROA OT OT LUX 06/22 EUR 37.95 -13.0 -10.0 3.5
Eq. MENAUSDA OT OT LUX 06/22 USD 54.77 -5.2 5.5 5.6
Eq. US Rel Val A US EQ LUX 06/22 USD 24.02 1.7 20.5 22.2
Money Market EUROA EU MM LUX 06/22 EUR 27.64 0.4 0.7 0.6
Money Market USDA US MM LUX 06/22 USD 15.89 0.1 0.3 0.2
nTHENATIONAL INVESTOR
TNI Tower | Zayed1st Street Khalidia| Web:www.tni.ae
TNI MENASpecial Sits Fund OT OT BMU 08/29 USD 1016.70 -11.4 -8.2 -3.2
TNI MENAUCITS Fund OT OT IRL 09/22 USD 950.52 -13.5 -9.0 NS
TNI UAE Blue Chip Fund OT OT ARE 09/22 AED 4.69 -7.2 -6.5 -15.4
nWEBSITE: WWW.VALUEPARTNERS.COM.HK, TEL: (852) 28809263, FAX: (852) 25648487
*formerly knownas China ABHShares Fund
Intel-Chin Mainlnd Foc AS EQ CYM 09/27 USD 28.96 -21.7 -15.4 6.3
Intel-China Converg* AS EQ CYM 09/27 USD 104.52 -24.5 -18.3 2.9
VP Classic - A AS EQ CYM 09/27 USD 176.13 -21.4 -18.8 4.6
VP CLassic - B AS EQ CYM 09/27 USD 81.38 -21.7 -19.2 4.1
VP High Dividend Stk OT OT CYM 09/27 USD 48.81 -14.6 -10.9 10.7
nYUKI MANAGEMENT&RESEARCH
nYMR-NSeries
YMR-NGrowth Fund JP EQ IRL 09/29 JPY 8103.00 -14.0 -6.6 -4.7
nYuki 77 Series
Yuki 77 General JP EQ IRL 09/29 JPY 4902.00 -15.2 -7.8 -10.1
Yuki 77 Growth JP EQ IRL 04/27 JPY 5230.34 -7.3 -5.4 -27.3
nYuki Asia Umbrella Series
Yuki Rebounding Gro Fd JP EQ IRL 09/29 JPY 8750.00 NS NS NS
nYuki ChugokuSeries
Yuki Chugoku Jpn Gen JP EQ IRL 09/29 JPY 5637.00 -16.0 -8.8 -6.8
Yuki Chugoku JpnLowP JP EQ IRL 09/29 JPY 6632.00 -15.8 -9.1 -9.2
nYuki HokuyoJapanSeries
Yuki Hokuyo Jpn Gen JP EQ IRL 09/29 JPY 3819.00 -11.5 -6.1 -7.4
Yuki Hokuyo Jpn Inc JP EQ IRL 09/29 JPY 4429.00 -12.2 -6.6 -7.5
Yuki Hokuyo Jpn SmCap JP EQ IRL 09/29 JPY 4328.00 -13.0 -4.9 -9.5
nYuki MizuhoSeries
Yuki Mizuho Gen Jpn III JP EQ IRL 09/29 JPY 3584.00 -11.8 -6.6 -8.4
Yuki Mizuho Jpn Dyn Gro JP EQ IRL 09/29 JPY 3518.00 -19.4 -13.4 -12.5
Yuki Mizuho Jpn Exc 100 JP EQ IRL 09/29 JPY 5719.00 -10.5 -4.7 -6.5
Yuki Mizuho Jpn Gen JP EQ IRL 09/29 JPY 7306.00 -14.7 -7.5 -6.5
Yuki Mizuho Jpn Gro JP EQ IRL 09/29 JPY 5233.00 -16.4 -9.9 -8.8
Yuki Mizuho Jpn Inc JP EQ IRL 09/29 JPY 6584.00 -12.3 -6.8 -6.4
Yuki Mizuho Jpn Lg Cap JP EQ IRL 09/29 JPY 4137.00 -16.6 -10.4 -9.0
Yuki Mizuho Jpn LowP JP EQ IRL 09/29 JPY 9810.00 -14.3 -8.9 -9.2
Yuki Mizuho Jpn PGth JP EQ IRL 09/29 JPY 5993.00 -18.1 -12.3 -12.6
Yuki Mizuho Jpn SmCp JP EQ IRL 09/29 JPY 6092.00 -13.1 -4.7 -9.5
Yuki Mizuho Jpn Val Sel AS EQ IRL 09/29 JPY 4618.00 -17.3 -10.8 -8.9
Yuki Mizuho Jpn YoungCo AS EQ IRL 09/29 JPY 2240.00 -10.8 -1.5 -14.8
INTERNATIONAL INVESTOR
Data Give Stocks a Fresh Push
NEW YORKU.S. blue chips rose
after two economic reports out-
stripped forecasts and markets
showed some relief over Germanys
vote to expand the euro zones bail-
out fund.
The Dow Jones Industrial Aver-
age advanced 127.79 points, or 1.2%,
to 11138.69 early Thursday after-
noon, erasing much
of Wednesdays 180-
point loss. The
Standard & Poors
500-stock index added 0.8%, to
1160.06, but the technology-oriented
Nasdaq Composite fell 0.3%, to
2484.58.
If the blue-chip gains hold, it
would mark their fourth rise in the
last five sessions. Even so, they are
on track to show losses for this
month as well as for the quarter.
Friday will close trading for both
periods.
Stocks opened higher after the
number of idled U.S. workers filing
new claims for unemployment bene-
fits fell more than expected last
week, by 37,000, according to the
Labor Department. The improve-
ment in the U.S. employment pic-
ture may have been driven by tech-
nical factors, however, such as
seasonal adjustments in the survey.
Meanwhile, gross domestic product,
the broadest measure of all the
goods and services produced in an
economy, expanded at an inflation-
adjusted annual rate of 1.3% from
April to June.
Its better-than-expected data,
but dont get too excited, said Rus-
sell Price, senior economist at
Ameriprise Financial. There is little
other ancillary data that I see to in-
dicate that the labor market is re-
ally showing any material improve-
ment.
Europes progress in creating a
backstop for banks and indebted
countries is whats really going to
set the tone for markets, he said.
Financial stocks led blue chips
higher; J.P. Morgan Chase added
3.2%.
Hewlett-Packard hired Goldman
Sachs Group as it defends against
possible activist investors who
could push for change at H-P, The
Wall Street Journal reported, citing
people familiar with the matter.
Hewlett-Packards stock added 3.3%.
Advanced Micro Devices
slumped 15% after the chip maker
lowered its revenue-growth forecast
and its margin estimate for the cur-
rent quarter.
Chubb added 2.3%. The insurer
said it expects third-quarter pretax
losses from catastrophes to be
about $400 million to $475 million,
including losses of $300 million to
$375 million from Hurricane Irene.
European Stocks
Shares shook off early weakness
to end higher, as upbeat U.S. data
and Germanys approval of the Eu-
ropean Financial Stability Facility
extension propped up confidence
for now, at least.
The Stoxx Europe 600 rose 0.7%
to close at 228.90, its fourth gain in
five sessions.
European banks rose, boosted by
the German vote and the U.S. data.
Socit Gnrale surged 5.8%, BNP
Paribas jumped 5% and Commerz-
bank climbed 4.7%.
Luxury retailers fell on concerns
about a hard economic landing in
China. LVMH Mot Hennessy Louis
Vuitton dropped 5.1% in Paris, while
shares of Burberry Group fell 8.3%
in London.
But Hennes & Mauritz climbed
6.8% in Stockholm. The clothing re-
tailers third-quarter net profit fell
15%, but the company said it will
open more stores than originally
planned this fiscal year.
BY BRENDAN CONWAY
AND NATHALIE TADENA
Treasury Sale
Isnt as Strong
As Expected
The Treasury market was tripped
up Thursday as demand at a $29 bil-
lion auction of seven-year notes was
weaker than some had expected.
Many investors had predicted a
strong auction, on speculation that
the notes will get a boost from
planned buying by the Federal Re-
serve in coming
months.
That optimism
sparked buying in
Treasurys ahead of the sale. Yet the
buying pushed down yields from
session highs, denting some bidding
interest among investors who had
looked to buy at higher yields.
After the auction, the seven-year
note was 3/32 lower, yielding
1.493%.
The benchmark 10-year note was
3/32 lower to yield 2.011%. The 30-
year bond, battered in recent ses-
sions, was the only maturity trading
higher. Its price rose 31/32 to yield
3.043%. Bond prices move inversely
to their yields.
Demand at the auction was the
highest since May, with the notes
sold at a yield of 1.496%, the lowest
auctioned yield since the maturity
was reintroduced in February 2009.
But the yield was slightly higher
than 1.487% traded right before the
sale, signaling demand was a bit
weaker than some dealers expected.
A gauge of foreign demand was
41.6%, lower than 42.8% from the
past four sales. But the direct bid
surged to 13.6%, the highest since at
least 2009.
Earlier in the trading day, a slew
of U.S. data dented some fears about
a recession and investors moved out
of haven Treasurys and sought the
prospects of higher returns in
stocks. In addition, Germanys Par-
liament approved the expansion of
the euro zones bailout fund, boost-
ing some hopes that it would pave
the way to end the sovereign-debt
crisis that has boosted Treasury
prices.
BY MIN ZENG
ABREAST OF
THE MARKET U.S. CREDIT
MARKETS
Seoul, Tokyo Shares Rise; Sydney Falls
South Korean shares gained and
Japanese stocks moved off lows, fol-
lowing a volatile session as inves-
tors braced for the latest twist in
Europes debt saga.
South Ko-
reas Kospi in-
dex jumped
2.7%, to 1769.29,
while Japans Nikkei Stock Average
rose 1%, to 8701.23, Indias Sensex
rose 1.5%, to 16698.07, and Austra-
lias S&P/ASX 200 index fell 0.8%, to
4008.30.
Trading on the Hong Kong Stock
Exchange was canceled Thursday af-
ter a typhoon warning remained in
place through the day. On the main-
land, the Shanghai Composite index
lost 1.1%, to 2365.34.
In general I think that double-
dip concerns in the U.S. and the euro
debt crisis are overshadowing ev-
erything at the moment, said
Naomi Fink, a strategist at Jefferies.
Marketwide, risk aversion [has
been] hitting stocks.
U.S. stocks broke a three-session
run of gains on Wednesday, after
European leaders appeared to hold
differing opinions on the best way
to resolve the regions debt crisis
ahead of a crucial vote on the Euro-
pean Financial Stability Fund in Ger-
many on Thursday. German lawmak-
ers later in the day voted to expand
and overhaul the euro zones bailout
fund.
Headline risk is very acute to-
day, and Europe will be front and
center for investors, said Sue Trinh,
strategist at RBC Capital.
Asian stocks started on a weak
note on Thursday, but South Korean
shares rallied, with investors head-
ing into the end of the third quarter
picking up some beaten-down com-
panies. Notable gainers in Seoul in-
cluded chip makers Samsung Elec-
tronics, up 3.7%, and Hynix
Semiconductor, up 6.3%.
Memory-chip stocks in general
have been under pressure over the
past few months due to concerns
about weak demand, along with [a]
precipitous decline in chip prices,
said analysts at Daiwa Capital Mar-
kets.
However, they believe that recent
production cuts are likely to lead to
the dynamic-random-access-memory
cycle bottoming out in the near
term and said they like both Sam-
sung and Hynix.
Auto makers also advanced in
Korea, with Hyundai Motor jumping
2.9% and Kia Motors rising 1.6%.
Honda Motor rose 1% and Nissan
Motor advanced 3.8% in Tokyo.
Nomura Securities analysts said
Nissan is their top pick of the Japa-
nese auto sector as it looks the
most undervalued and has been gen-
erating strong sales and profits.
Meanwhile, mineral extractors
were under pressure, with copper
futures falling in the Asian elec-
tronic-trading session. Rio Tinto fell
2.5% and BHP Billiton lost 1.4% in
Sydney, while Jiangxi Copper fell
2.7% in Shanghai.
BY SARAH TURNER
AND NICK GODT
ASIAN-PACIFIC
STOCKS
Dow Jones
Industrial Average
Thursday: 11138.69*, up 1.2%
Source: WSJ Market Data Group
*1 p.m. EDT
13000
10500
11000
11500
12000
12500
J F M A M J J A S
For information about listing your funds, please contact: Carson Wong tel: +852 2831-6481; email: carson.wong@dowjones.com
In print & online. Contact:
carson.wong@dowjones.com
LIST YOUR
FUNDS
26 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
MARKETS
Giant China Stock Listing Nears
China Communications Construction Gets Regulatory OK; Sinohydros Sale Shrinks
China helped a major construc-
tion company move a step closer to
a jumbo stock offering just as ave-
nues for fund raising by Chinese
companies appeared to be narrow-
ing amid widespread share-market
jitters.
China Communications Con-
struction Co. won the nod from the
securities regulator for a Shanghai
listing, in which it could raise 20
billion yuan (US$3.1 billion) in the
largest domestic listing so far this
year, the China Securities Regula-
tory Commission said in a statement
published on its website.
The approval came as Chinese
companies are finding it harder to
sell new shares in initial public of-
ferings, or IPOs, which traditionally
have performed strongly.
The weakened IPO market comes
as Chinas tight credit policies have
made banks clamp down on lending
and forced companies to turn to the
securities market for funds. The
central bank has been wrestling
with stubbornly high inflation while
the bank regulator has been trying
to prevent bad loans, which could
pose a threat to banking system.
Sinohydro Group Ltd., one of
Chinas largest builders of dams,
said Thursday its three billion IPO
shares were priced at 4.50 yuan, or
70 U.S. cents, each, the low end of
an indicative range, as demand
proved to be weaker than expected.
The company, which also cut the
number of shares it sold, raised 13.5
billion yuan, or $2.12 billion, from
the IPO, 20% less than an originally
estimated 17.3 billion yuan. It will
trade in Shanghai.
In another sign that investors
are wary, car maker Great Wall Mo-
tor Co. fell on its first day of trading
Wednesday in Shanghai, defying a
trend of newly listed shares in China
often rising at least 30% on their
trading debut.
Like elsewhere, Chinas stock
market is struggling. The Shanghai
Composite Index ended down 1.1% at
2365.34 Thursday, the lowest clos-
ing level since July 2010. The index
has lost 12% since August and nearly
16% this year.
Its the time for the securities
regulator to consider slowing the
pace of approving IPOs, said Wu Xi-
aoqiu, a senior finance professor at
Renmin University of China.
But there is no sign that the
China Securities Regulatory Com-
mission plans to slow or suspend
the IPO approval process, a measure
it adopted in past years when main-
land bourses were under pressure.
Besides China Communications Con-
struction, two small companies,
Yantai Valiant Fine Chemicals Co.
and Suzhou Anjie Technology Co.,
also won approval to raise a com-
bined 642 million yuan in new share
sales. According to documents pub-
lished on the CSRCs website, about
20 companies are likely to tap the
Chinese stock market in the fourth
quarter.
Hong Kong has also become a
tougher place to raise funds. Xiao
Nan Guo, a popular Chinese restau-
rant chain, scrapped its $95 million
IPO last week and Chinese construc-
tion machinery maker Sany Heavy
Industry Co. postponed its planned
offer of as much as $3.3 billion
worth of stock earlier this week.
Both fell victim to a sharp drop in
appetite for new share offers amid
investor concerns over a possible
global recession.
Shi Jianxun, a professor at
Tongji University in Shanghai, said
it is still easier for companies to of-
fer new shares in mainland China
than elsewhere due to the limited
investment channels available. The
retail portion of Sinohydros Shang-
hai offerwhich accounted for 80%
of the totalwas oversubscribed
more than nine times even though
the response from institutional in-
vestors was cool.
He said the rush by Chinese com-
panies to get their IPOs to market is
a sign of pessimism over the local
market and the economy. These
companies are hoping to sell their
shares before the window of oppor-
tunity closes.
Since its unclear when the mar-
ket will be on the mend, it might be
better to raise funds sooner rather
than later, he said, adding that
some companies might be more con-
cerned that Chinas cooling economy
and weakening global demand will
hurt their earnings. That could make
them less appealing to investors or
even make them fail to qualify for a
listing.
Despite the sagging market, its
an illusion to believe that Chinese
stocks are cheap, said Gao Ting,
chief China strategist at UBS Securi-
ties. He said companies profit mar-
gins are deteriorating due to weak-
ening global demand and strong
inflation at home.
China Communications Construc-
tion, an infrastructure company that
has shares listed in Hong Kong, said
it plans to sell up to 3.5 billion yuan-
denominated shares in its Shanghai
offering. The funds will be used to
take over CRBC International Co., a
Shanghai-listed subsidiary, and re-
pay bank loans and fund certain
projects. No timetable was given for
the offer but companies with plans
to list their stock usually start meet-
ing investors within two weeks of
gaining regulatory approval.
Rose Yu
*Novo Mercado
Note: In the case of dual listings, the full value of each deal will be allocated to each exchange
Source: Dealogic
2011 (Jan. 1-Sept. 29)
Going Public | Global IPO by exchange, in billions
2010 (Jan. 1-Sept. 29)
Sao Paulo*
Madrid
Singapore
Nasdaq
Shenzhen (ChiNext)
Shanghai
Shenzhen
London
Hong Kong
New York
0 5 10 15 20 25 30 $35
Nikko AM
Adds Banks
to IPO Push
Nikko Asset Management Co.,
one of Japans largest asset man-
agers, has hired two more banks to
help it navigate volatile markets and
push ahead with its planned listing
in Tokyo, people familiar with the
matter said.
Nikko AM had already asked UBS
AG, Goldman Sachs Group Inc., No-
mura Holdings Inc. and SMBC-Ni-
kko Securities Inc. to help manage
the share sale, and it recently added
Citigroup Inc. and Singapores DBS
Group Ltd. to the list.
The IPO is part of Nikko AMs
plans to become a pan-Asian asset
manager, and it is pushing ahead de-
spite turbulent markets that have
thwarted some companies looking to
raise capital globally. There have
been tentative plans to kick off the
IPO in November, said one of the
people familiar with the plans. The
company is looking to raise at least
US$500 million, the people said.
However, the size of the IPO
hasnt been fixed, and Nikko AM
may push back the timing of the
deal due to market volatility, the
people said.
Nikko AM is led by two foreign
executives, Tim McCarthy, a former
president of Charles Schwab Corp.,
and Bill Wilder, former head of Fi-
delity Investments Japan, who have
long harbored ambitions of making
the company independent. Nikko AM
is majority-owned by Sumitomo
Trust & Banking Co.
DBS and Citi have been involved
in recent transactions involving Ni-
kko AM, which may have helped
them snag a role in the IPO.
In the wake of the global finan-
cial crisis, Citigroup sold its stake in
Nikko AM to Sumitomo Trust, in a
deal that valued the firm at 112.4
billion (US$1.47 billion).
DBS sold its asset-management
operations to Japans Nikko AM for
137 million Singapore dollars
(US$106 million) last year and re-
ceived a 7.25% stake in the Japanese
outfit as part of the deal. Citi ad-
vised on the transaction.
Kana Inagaki
contributed to this article.
BY P.R. VENKAT
AND ALISON TUDOR
BofA to Charge $5 Monthly Fee for Debit-Card Use
NEW YORKBank of America
Corp., the largest U.S. bank by as-
sets, plans to charge customers a $5
monthly fee for making debit-card
purchases starting early next year,
according to an internal memo sent
to bank executives Thursday.
The fee will apply to customers
with various checking accounts dur-
ing any month they use their debit
card to make a purchase. The fee
wont apply to customers who dont
use their debit card to make a pur-
chase or who only use it to make
ATM transactions.
Bank of America is trying to
cushion revenue losses it expects to
incur from new caps on the fees
merchants pay when a customer
uses a debit card at their stores. In
June, the Federal Reserve Board fi-
nalized rules capping such fees at
24 cents per transaction, compared
with a current average of 44 cents.
Bank of America has said it ex-
pects the caps, which take effect
Oct. 1, to erase $2 billion in revenue
annually. Other banks have intro-
duced or are testing new fees in re-
sponse to the debit-fee caps.
BY ANDREWR. JOHNSON
and underwriting following the announce-
ment of a proposed tie-up between CLSAs
French parent, Crdit Agricole, and Citic
Securities, Chinas largest securities firm
by market value.
CLSA Chief Executive Officer Jonathan
Slone could now see his firm catapulted
ahead of the other foreign businesses vying
for access to the appetizing Chinese securi-
ties market. If the deal goes through,
CLSAs opportunity in China will be clear.
But can the firmfounded by two former
journalists in 1986retain its unorthodox
image while keeping happy both its French
asylum for people that cant work in the
mainstream industry. We have open forums
where we invite junior members of the
team to just muck things over. We include
junior analysts, new people, trainees. Peo-
ple that have only been here for a few days
can go to the most senior meetings to dis-
cuss their ideas.
WSJ: How will CLSA retain that culture
given the introduction of a new, significant
partner, Citic Securities?
Mr. Slone: For day-to-day management,
there is not a change in structure, just a
tegic intent and a shared understanding of
where the marketplace was going.
WSJ: How do you split your management
time?
Mr. Slone: The bulk of my time is interacting
with peoplefirst thing in the morning
with some of the senior people in CLSA, or
calling people in overseas operations to see
how its going, or speaking to clients. For
instance, I spent a lot of time this morning
talking to people about the implications of
the iPhones sales in Asia in the last quarter
and what that means for search engines.
New York and Australia. Opportunity
missed. The worst decision is always not
seeing the opportunity right in front here.
We should be twice the size [we are] in
both Australia and New York.
WSJ: Is there a profile for a successful man-
ager in Asia?
Mr. Slone: Asian managers are much more
hands-on and entrepreneurial in their ap-
proach. Asias economy is not as steady as,
say, Europe is. There is labor flexibility here
and a wide range of bright people coming
here. So its a better home for creativeness.
PublishedbyDowJonesPublishingCompany(Asia).PrintedinHongKongbySuperflagAdvertisingandCommunicationLimited.8ChunYingStreet,NT.PrintedinIndonesiabyPTGramediaPrintingGroup,JalanPalmerahSelatan22-28,Jakarta10270
Sdn.Bhd.(ROCNo:235060-A)Lot10&12,JalanModal23/2,Seksyen23KawasanMielPhase8,40000ShahAlam,Selangor,Malaysia.PrintedinPhilippinesbyFEPPrintingCorporation,3817MascardoSt.,CornerMetropolitanAve.,PasongTamo,M
10260.PublishedandprintedonbehalfoftheWallStreetJournalIndiaPublishingPvtLtd,517BWorldTradeCentre,BarakhambaLane,NewDelhi110001byMrSumanDubeyatA-8Sector7,GautamBudhNagar,Noida-201301andPLOTNo.EL208,
PublishedbyDowJonesPublishingCompany(Asia).PrintedinHongKongbySuperflagPrintingandCommunicationLimited.8ChunYingStreet,NT.PrintedinIndonesiabyPTGramediaPrintingGroup,JalanPalmerahSelatan22-28,Jakarta10270.PrintedinJapanbyYomiuriShimbun,1-7-1,Otemachi,Chiyoda-ku,Tokyo100-8055.PrintedinKoreabyJoongAngIlbo.7,Soonwha-Dong,Chung-Ku,Seoul100-130.1997June04Registrationno.:SeoulKA00020(DailyNewspaper),Publisher/Editor/Printer:Song,Pil-Ho.PrintedinMalaysiabyKHLPrintin
Sdn.Bhd.(ROCNo:235060-A)Lot10&12,JalanModal23/2,Seksyen23KawasanMielPhase8,40000ShahAlam,Selangor,Malaysia.PrintedinPhilippinesbyFEPPrintingCorporation,3817MascardoSt.,CornerMetropolitanAve.,PasongTamo,MakatiCity.PrintedinSingaporebyKHLPrintingCo.PteLtd.,57LoyangDrive,Singapore508968.PrintedanddistributedinTaiwanbyTheChinaPost,8FuShunStreet,Taipei104.PrintedinThailandbyNationMultimediaGroupPublicCo.,Ltd.,1854Bangna-TradRoad,(K.M.4.5),Prakanong,Bangk
10260.PublishedandprintedonbehalfoftheWallStreetJournalIndiaPublishingPvtLtd,517BWorldTradeCentre,BarakhambaLane,NewDelhi110001byMrSumanDubeyatA-8Sector7,GautamBudhNagar,Noida-201301andPLOTNo.EL208,TTCIndustrialArea,Mahape,NaviMumbai-400710(Maharashtra),India,Editor:SumanDubey,phone:+91-11-64620215.ACPno.F.2(T/3)Press/2009FACSIMILEEDITION.
MANAGEMENT
Peninsula Hotels boss is building for the future
Seated in a plush corner suite of Hong
Kongs Peninsula Hotel, Clement Kwok
seems relaxed as he runs through the list of
daunting challenges he has faced in the
past 12 months as chief executive of
Hongkong & Shanghai Hotels Ltd., the
company that owns the Peninsula chain.
In March, a new 235-room hotel on the
Bund in Shanghai officially
opened during the World
Expo. In May, the Bangkok
Peninsula endured political
unrest. All the while, Mr. Kwok managed a
chain of nine luxury hotels across Asia and
the U.S.as well as a handful of other resi-
dential, commercial and office proper-
tiesthrough the global economic down-
turn.
Yet none of these is as tough as finding,
training and holding on to good staff, he
says. Youre bound to have surprises and
shocks, like when the Manila Peninsula was
occupied by rebel forces [in 2007], he
says. But you have to have a team and an
organization that has the ability to handle
crises. Once youve got that, it doesnt mat-
ter whether its rebels in Bangkok, or
troops in Manila, or a construction issue in
Shanghai.
Mr. Kwok talked to The Wall Street Jour-
nals Duncan Mavin. The following inter-
view has been edited:
WSJ: How has the financial crisis affected
the way you run the business?
Mr. Kwok: We are a traditional owner-opera-
tor, so by definition were very long term. If
you think of the grand hotels of Europe,
built by families that ran them for genera-
tions, they never would have had a five- or
10-year timeline. They would have been
thinking of 30 or 50 years and the legacy
for future generations. That has always
been our mindset, too. Of course, you get
ups and downs. Today people focus more
on the short term, but theres no way for
the economics to add up with that mindset.
WSJ: So where are we in the cycle now?
Mr. Kwok: Clearly we are not anywhere near
the top of the cycle. Actually, I think right
now were not badly off. The future is still
difficult to predict. Have all the adjust-
ments been made that would return the
world markets to being competitive again?
I personally rather doubt it. But as far as
me running a hotel business? This is part of
the cycle, and I dont get too concerned
about it because you have to look at it in
the context of a longer time frame.
WSJ: How are different markets perform-
ing?
Mr. Kwok: Some markets in Asia are a lot
closer to where they were before the crisis
startedHong Kong, for example. But then
you have other factors elsewhere, such as
in Beijing.There was so much new supply
that was built for the Olympics in 2008
that we continue to have an oversupply. In
the U.S., Chicago is very dependent on do-
mestic corporate and conference business,
so its very closely aligned to the domestic
U.S. economy. In New York, it is a more in-
ternational market, and so long as interna-
tional companies are still raising capital in
New York, there is business there. Los An-
geles has its own economic circumstances
that are more related to the entertainment
industry. We are generally seeing recovery,
but clearly we are still nowhere near where
we were before the global crisis came
along.
WSJ: How do you change the way you man-
age the business during a downturn?
Mr. Kwok: To some extent you have to
match costs to the revenues. At the bottom
of the cycle, wed be watching our costs and
judging which expenditures are not really
required at that time. But in terms of the
product, we dont cut back on services or
amenities. So far even in the cycle weve
just been through, or the cycle in Hong
Kong during [the 2003] SARS [ contagion] ,
we havent laid off any of our staff. We
reckon weve invested a lot of money in our
staff, and in the long term you are not do-
ing yourself any favors if you get rid of
those people. A downturn is also a good
time to carry out capital expenditureif
your rooms are not filled, renovations are
easier, and also the costs of these projects
are lower because contractors are cheaper.
WSJ: How will the growth in outbound Chi-
nese tourism affect your business? Mr.
Kwok: There are definitely more Chinese
guests now. Because of visa restrictions, we
are mostly seeing them in Asia. But we are
not doing anything specific because of Chi-
nese customers. Theyll come hopefully be-
cause theyd like to enjoy our product. That
also applies to other segments that are
growingthere are more customers from
the Middle East and Eastern Europe and
South America, for instance. The only thing
the change affects is where we allocate our
marketing budget.
WSJ: Whats the most important lesson
youve learned in business?
Mr. Kwok: When I was an audit junior and
the senior manager came to review our
work, this was like a god descending from
heaven. So I thought hed only be interested
in a very high level. But it made a huge im-
pact on me that he took a degree of inter-
est in the details. That was a huge lesson.
Just because one has a senior position, one
should not only look at the big picture.
There are many times that the details are
important.
SamanthaSinforTheWallStreetJournal
Rsum
Education: Honors degree in economics
from the London School of Economics.
Qualified as a chartered accountant in the U.K.
Career: After stints with the former Price
Waterhouse and Barclays de Zoete Wedd, Mr.
Kwok returned to Hong Kong, where he was
appointed head of corporate finance at
Schroders Asia. He then went on to be
Finance Director at MTR Corp., Hong Kongs
transport operator . He has been CEO of
Hongkong & Shanghai Hotel since 2002.
On training as an accountant: It was a
good mixture of academic learning and
practical experience. In my day, investment
banks would only recruit people after they
became a chartered accountant.
MANAGING
IN ASIA
[ Clement Kwok ]
Chief Executive
40 THE WALL STREET JOURNAL. Monday, May 10, 2010
MANAGEMENT
Hong Kong-based brokerage CLSA Asia-
Pacific Markets is known for its research,
both serious and quirky (the company pro-
duces an annual Feng Shui Index), as well
as publicity-grabbing inves-
tor forums that have fea-
tured keynote speakers in-
cluding Bill Clinton,
Desmond Tutu and Sarah Palin.
But the firm, already a major player in
Asias brokerage industry, could soon get a
boost to its standing in investment advisory
and underwriting following the announce-
ment of a proposed tie-up between CLSAs
French parent, Crdit Agricole, and Citic
Securities, Chinas largest securities firm
by market value.
CLSA Chief Executive Officer Jonathan
Slone could now see his firm catapulted
ahead of the other foreign businesses vying
for access to the appetizing Chinese securi-
ties market. If the deal goes through,
CLSAs opportunity in China will be clear.
But can the firmfounded by two former
journalists in 1986retain its unorthodox
image while keeping happy both its French
major shareholder and its proposed Chinese
joint-venture partner? Mr. Slone spoke to
Almar Latour and Duncan Mavin in Hong
Kong. The following interview has been ed-
ited.
WSJ: How do you find the right people for
your business?
Mr. Slone: Were not looking for people with
M.B.A.s or fancy titles or pedigrees.
A person who wants to fit into a structure
and get a card with a fancy title on it
doesnt want to work at CLSA. People who
work here are really interested in whats
going on in the world and talking to clients.
The DNA of CLSA is to always be the insane
asylum for people that cant work in the
mainstream industry. We have open forums
where we invite junior members of the
team to just muck things over. We include
junior analysts, new people, trainees. Peo-
ple that have only been here for a few days
can go to the most senior meetings to dis-
cuss their ideas.
WSJ: How will CLSA retain that culture
given the introduction of a new, significant
partner, Citic Securities?
Mr. Slone: For day-to-day management,
there is not a change in structure, just a
number of added opportunities that we will
prioritize and work through as necessary.
WSJ: Does negotiating the proposed tie-up
detract from day-to-day management tasks?
Mr. Slone: What I spend time on is ensuring
that we communicate clearly to the team
where we want to go and how we want to
get there. If everyone understands the vi-
sion and path that gets you there, you dont
spend a lot of time detracted by the little
stuff. Any deal like this takes years of dis-
cussion and thought. The process was cer-
tainly not deal driven, but rather developed
out of a series of discussions over time con-
cerning management goals, long-term stra-
tegic intent and a shared understanding of
where the marketplace was going.
WSJ: How do you split your management
time?
Mr. Slone: The bulk of my time is interacting
with peoplefirst thing in the morning
with some of the senior people in CLSA, or
calling people in overseas operations to see
how its going, or speaking to clients. For
instance, I spent a lot of time this morning
talking to people about the implications of
the iPhones sales in Asia in the last quarter
and what that means for search engines.
One of my roles is stirring things up a bit,
trying to challenge the existing thought
process, whether thats a strategic issue at
CLSA or something in our research depart-
ment.
WSJ: How much time do you spend with
your major shareholder, Crdit Agricole?
Mr. Slone: We talk every other week. They
dont want to get in the way of what were
doing. We dont spend a lot of time with
our major shareholders. Crdit Agricole lets
us get on with what we do.
WSJ: Looking at the financial crisis, do you
think you read it well?
Mr. Slone: I dont think anybody out there
did particularly well during the crisis, espe-
cially in understanding how policy makers
would impact the marketplace. Our ability
to discern what those guys in Washington
or Beijing are going to do is always limited.
But what we did is kick our analysts out of
the office and said, Hit the street. Go to
suppliers, go to the factories, go to the guys
on the street and understand whats going
on.
WSJ: Whats your worst management deci-
sion?
Mr. Slone: It was to blink [during] the finan-
cial crisis and not expand faster in both
New York and Australia. Opportunity
missed. The worst decision is always not
seeing the opportunity right in front here.
We should be twice the size [we are] in
both Australia and New York.
WSJ: Is there a profile for a successful man-
ager in Asia?
Mr. Slone: Asian managers are much more
hands-on and entrepreneurial in their ap-
proach. Asias economy is not as steady as,
say, Europe is. There is labor flexibility here
and a wide range of bright people coming
here. So its a better home for creativeness.
CLSA
Rsum
Career: Joined CLSA in 1988 in Hong Kong,
and moved to New York in 1991 to establish
CLSA in the U.S. In 1999, he founded G-Trade
Services, which was sold to Bank of New York
in 2002. Stayed with G-Trade until 2005,
when he rejoined CLSA.
On competition: If you worry about
competition you are not doing your job. I dont
think we spend one half of one percent of our
time thinking about it.
On Asia: Asian managers are much more
hands-on and entrepreneurial in their
approach...its a better home for creativeness,
but also a slightly easier place to manage
because you are managing growth.
Culture
is key to
CLSA
MANAGING
IN ASIA
[ Jonathan Slone ]
Chief Executive
PublishedbyDowJonesPublishingCompany(Asia).PrintedinHongKongbySuperflagAdvertisingandCommunicationLimited.8ChunYingStreet,NT.PrintedinIndonesiabyPTGramediaPrintingGroup,JalanPalmerahSelatan22-28,Jakarta10270.PrintedinJapanbyYomiuriShimbun,1-7-1,Otemachi,Chiyoda-ku,Tokyo100-8055.PrintedinKoreabyJoongAngIlbo.7,Soonwha-Dong,Chung-Ku,Seoul100-130.1997June04Registrationno.:SeoulKA00020(DailyNewspaper),Publisher/Editor/Printer:Song,Pil-Ho.PrintedinMalaysiabyKHLPrintingCo.
Sdn.Bhd.(ROCNo:235060-A)Lot10&12,JalanModal23/2,Seksyen23KawasanMielPhase8,40000ShahAlam,Selangor,Malaysia.PrintedinPhilippinesbyFEPPrintingCorporation,3817MascardoSt.,CornerMetropolitanAve.,PasongTamo,MakatiCity.PrintedinSingaporebyKHLPrintingCo.PteLtd.,57LoyangDrive,Singapore508968.PrintedanddistributedinTaiwanbyTheChinaPost,8FuShunStreet,Taipei104.PrintedinThailandbyNationMultimediaGroupPublicCo.,Ltd.,1854Bangna-TradRoad,(K.M.4.5),Prakanong,Bangkok
10260.PublishedandprintedonbehalfoftheWallStreetJournalIndiaPublishingPvtLtd,517BWorldTradeCentre,BarakhambaLane,NewDelhi110001byMrSumanDubeyatA-8Sector7,GautamBudhNagar,Noida-201301andPLOTNo.EL208,TTCIndustrialArea,Mahape,NaviMumbai-400710(Maharashtra),India,Editor:SumanDubey,phone:+91-11-64620215.ACPno.F.2(T/3)Press/2009FACSIMILEEDITION.
THE WALL STREET JOURNAL. Monday, July 12, 2010
MANAGEMENT
pitches Asia as a cruise destination
t of Carnival
pean vacation-
cruise compa-
a, where cruise
y fraction of
the company
ment in Asia
rman and chief
r Luigi Foschi
eak even in
r and turn a
2.
tourists rising
nce last year in
ng, according
portthe op-
already moved
e region, and
in Singapore,
elop facilities
e ships. Also,
estrictions on
le Chinese
headwinds in
m the likes of
tourism indus-
n the idea of
ly Veach in
o developing
lop Asia not
but as a source
more terminals.
marketing to
roduct, other-
ng a huge,
y you move
mely high-qual-
ne for the
environment
s of the world?
wouldnt allow
oday you can
ou also call at
not do, because
Chinese ports.
Chinese flag.
cruising in
There are
large markets like Japan and South Korea
where for whatever reason they are not
consuming the holidays as we intended.
China is emerging now as a consumer of
tourism, but trying to add a niche like
cruising is difficult. We expected a difficult
time and we were right on the point. But
we sent a larger ship because signs are en-
couraging.
WSJ: How do you market your product for
specific tastes and regions?
Mr. Foschi: We market our product as a Eu-
ropean product with some Italian grammar.
Western people like to go under the sun.
People in Asia dont. We have to cover the
open deck space and provide big umbrellas
to create shade in order to invite them to
enjoy the sea. The food experience has to
be tailored with the one the customer ex-
pects. You cannot expect they can eat West-
ern food if they are not used to it.
WSJ: Have you experienced setbacks as a
manager and how have you learned from
them?
Mr. Foschi: My previous job was running a
very large operation in South Korea. I tried
to set up joint ventures there. There is a
barrier to investing there because of the at-
titude of the consumer. For whatever rea-
son they have their mind preventing them
from buying products that are not South
Korean products. So I think I failed two
times with two different partners to try to
set up the same joint venture to manufac-
ture certain products there. We were will-
ing to invest, we were willing to transfer
technology, we needed to teach people. It
was a very tough time.
WSJ: One of your competitors has said the
cruise industry here could reach $50 billion
a year. What do you think?
Mr. Foschi: This would not be in my time
certainly. Today the world-wide industry is
below $20 billion per year. So we need to
wait many, many years before we have that
size of business here in this part of the
world.
I would be surprised if today the market
in total is larger than $1 billion in Asia. To
grow 50 times is a challenge.
ThomasLeeforTheWallStreetJournal
Rsum
Education: Studied at INSEAD in
Fontainebleau (France) after completing his
economic-financial education.
Career: Director of Carnival PLC and
Carnival Corp., since April 2003. Director of
Costa Crociere SpA since October 1997.
Previously at Otis Elevator.
Extracurricular: Cooking
xecutive
Pier Luigi Foschi
of Costa Cruises
at the companys
Hong Kong office.
PublishedbyDowJonesPublishingCompany(Asia).PrintedinHongKongbySuperflagPrintingandCommunicationLimited.8ChunYingStreet,NT.PrintedinIndonesiabyPTGramediaPrintingGroup,JalanPalmerahSelatan22-28,Jakarta10270.PrintedinJapanbyYomiuriShimbun,1-7-1,Otemachi,Chiyoda-ku,Tokyo100-8055.PrintedinKoreabyJoongAngIlbo.7,Soonwha-Dong,Chung-Ku,Seoul100-130.1997June04Registrationno.:SeoulKA00020(DailyNewspaper),Publisher/Editor/Printer:Song,Pil-Ho.PrintedinMalaysiabyKHLPrintingCo.
Sdn.Bhd.(ROCNo:235060-A)Lot10&12,JalanModal23/2,Seksyen23KawasanMielPhase8,40000ShahAlam,Selangor,Malaysia.PrintedinPhilippinesbyFEPPrintingCorporation,3817MascardoSt.,CornerMetropolitanAve.,PasongTamo,MakatiCity.PrintedinSingaporebyKHLPrintingCo.PteLtd.,57LoyangDrive,Singapore508968.PrintedanddistributedinTaiwanbyTheChinaPost,8FuShunStreet,Taipei104.PrintedinThailandbyNationMultimediaGroupPublicCo.,Ltd.,1854Bangna-TradRoad,(K.M.4.5),Prakanong,Bangkok
10260.PublishedandprintedonbehalfoftheWallStreetJournalIndiaPublishingPvtLtd,517BWorldTradeCentre,BarakhambaLane,NewDelhi110001byMrSumanDubeyatA-8Sector7,GautamBudhNagar,Noida-201301andPLOTNo.EL208,TTCIndustrialArea,Mahape,NaviMumbai-400710(Maharashtra),India,Editor:SumanDubey,phone:+91-11-64620215.ACPno.F.2(T/3)Press/2009FACSIMILEEDITION.
32 THE WALL STREET JOURNAL. Monday, August 9, 2010
PublishedbyDowJonesPublishingCompany(Asia).PrintedinHongKongbySuperflagPrintingandCommunicationLimited.8ChunYingStreet,NT.PrintedinIndonesiabyPTGramediaPrintingGroup,JalanPalmerahSelatan22-28,Jakarta10270.PrintedinJapanbyYomiuriShimbun,1-7-1,Otemachi,Chiyoda-ku,Tokyo100-8055.PrintedinKoreabyJoongAngIlbo.7,Soonwha-Dong,Chung-Ku,Seoul100-130.1997June04Registrationno.:SeoulKA00020(DailyNewspaper),Publisher/Editor/Printer:Song,Pil-Ho.PrintedinMalaysiabyKHLPrintingCo.
Sdn.Bhd.(ROCNo:235060-A)Lot10&12,JalanModal23/2,Seksyen23KawasanMielPhase8,40000ShahAlam,Selangor,Malaysia.PrintedinPhilippinesbyFEPPrintingCorporation,3817MascardoSt.,CornerMetropolitanAve.,PasongTamo,MakatiCity.PrintedinSingaporebyKHLPrintingCo.PteLtd.,57LoyangDrive,Singapore508968.PrintedanddistributedinTaiwanbyTheChinaPost,8FuShunStreet,Taipei104.PrintedinThailandbyNationMultimediaGroupPublicCo.,Ltd.,1854Bangna-TradRoad,(K.M.4.5),Prakanong,Bangkok
10260.PublishedandprintedonbehalfoftheWallStreetJournalIndiaPublishingPvtLtd,517BWorldTradeCentre,BarakhambaLane,NewDelhi110001byMrSumanDubeyatA-8Sector7,GautamBudhNagar,Noida-201301andPLOTNo.EL208,TTCIndustrialArea,Mahape,NaviMumbai-400710(Maharashtra),India,Editor:SumanDubey,phone:+91-11-64620215.ACPno.F.2(T/3)Press/2009FACSIMILEEDITION.
MANAGEMENT
Ad agency boss tempers Asia expectations
Advertising and marketing budgets in
Asia are beginning to return to something
like pre-financial crisis levels. But with
spending on the rise, in China and India in
particular, expectations are also reaching
lofty heightsand suddenly
one of the challenges for
Nirvik Singh, chief executive
officer of ad agency Grey
Group Asia-Pacific, is to keep a lid on oth-
ers exuberance. In Asia, you need to
marry the optimism with caution, he says.
Mr. Singh could have his work cut out.
Sir Martin Sorrell, CEO of Grey Groups par-
ent, global advertising giant WPP PLC, told
reporters last month that China alone will
drive a third of the growth in the worlds
media market this year. Everybodys say-
ing Asias growing, and you could get car- ried away with it, says Mr. Singh. The big
learning [from the financial downturn] is
that things can come and whack you on the head if youve not tempered the optimism.
A 21-year Grey Group veteran, Mr. Singh
now oversees a unit with 2,000 employees across 17 countries, and clients that include
Procter & Gamble, AXA and the Hong Kong Tourism Board. He talked with Duncan Ma-
vin in Hong Kong.
The following interview has been edited:
WSJ: How is digital affecting your business?
Mr. Singh: The blogosphere is becoming
more important to marketers. Consumers
are talking to other consumers and making
up their minds on the Internet. I think the
big challenge in Asia is going to be what re-
ally is digital. Between India and China you are going to have several hundred million
handphones which will technically be digi-
tal. I think the way consumers will consume
entertainment or advertising or interact
with their banks will be on a smartphone.
WSJ: How do you manage your global head
offices expectations for Asia?
Mr. Singh: Given the sort of news that is
coming out of China constantly about GDP
growth numbersand in India and Indone-
sia and the Philippines and Vietnamit is
fair to say people should look for growth in
these markets. But that growth is a func-
tion of different companies and industries.
Were seeing a lot of growth in all our 17
markets in Asia. Also theres this strange thing in Asia: When the world is down,
then were down and dead. But when the
world is up theres no bluer sky than the
sky in Asia. Theres no halfway. Either
theres complete gloom and doom like last
year or theres complete optimism.
WSJ: How much of your growth will come
from existing client relationships and how
much from new clients?
Mr. Singh: A lot of existing clients are look-
ing at media in a completely new way. The
retail landscape in Asia is changing dramat-
ically as we speak. People are moving from
mom-and-pop stores to supermarkets. How
a consumer shops, how a consumer be- haves, the whole fragmentation of mediaI
think there is enough to be done with our
existing clients understanding where the
consumer is going. And of course, there are
constantly clients coming into Asia, want- ing to understand Asia better. Its a mix.
WSJ: So whats the biggest challenge for you right now?
Mr. Singh: Talent management is especially
heightened when the economys doing bet-
ter, as there are more job opportunities and
more companies hiring. Plus, I find Asians are willing to relocate far more than people
in some other parts of the world, so theres
this constant churn. Challenge No. 2 is un-
derstanding this new digital world. And
then of course there are all the cultural nu-
ances across Asia. Its all very differ-
entlanguages, cultures, eating habits.
WSJ: How do you think independent agen-
cies will shape up in this changing environ-
ment compared with the big networks?
Mr. Singh:: A lot of [creative boutiques]
come along, a few stay and a few become
big. But I think it wont be just creative
boutiques, therell be mobile boutiques and
Internet boutiques and retail boutiques. As
the media keep fragmenting, youll find
more and more people put their hands up
and want a slice of that pie. We need to
make sure we have enough skills to com-
pete.
WSJ: How do you think you managed the
downturn? Mr. Singh: I think the late 90s downturn in
Asia taught people some caution, and be-
cause of that legacy we dealt with some of
the issues faster this time. We took some
hard calls, and I think we got lucky with some calls too. In 1997, when I was running
Grey India, we went through a near-death
experience as an organization. That taught me to err on the side of caution. Philosoph-
ically weve also tried to be flexible too.
WSJ: And how are you doing during the re-
covery?
Mr. Singh: In Asia youve just gone suddenly
into racing mode. Its all about growth and
wheres the next opportunity and how do you get talent on board. Weve done a fairly
good job.
Maybe weve just been lucky but weve
been ahead of the curve and spent the last
six months hiring 25 to 30 senior people who are all in place.
GreyGroup
Rsum
Education: Bachelor of Commerce from St.
Xaviers College, Kolkata in India.
Career: A 21-year veteran of Grey Group, his
previous roles include head of Grey India and
chief operating officer of Grey South Asia. He
was appointed to his current role in January
2009.
Extracurricular: Watching Chelsea Football
Club. Member of the Cultural Committee for
the 2010 Commonwealth Games in India.
On his business hero: Im truly inspired by
Steve Jobs. Hes challenged the status quo, in
the computer industry, music industry, phone
industry, and hes always come out ahead.
On Asias growth: The China/India story is
well-known. I think Indonesia, Vietnam,
Bangladesh, the Philippines, we are seeing a
lot of growth out of those countries as well.
MANAGING
IN ASIA
[ Nirvik Singh ]
Chief Executive
36 THE WALL STREET JOURNAL. Monday, October 18, 2010
MANAGEMENT
Pushing high-tech in growing Asia market
Citigroup Inc. is investing heavily in
technology to support the expansion of its
consumer-banking business in the Asia-Pa-
cific region. New Citibank branches are tak-
ing on what it calls the smart-banking
model, with interactive
touch panels, video-confer-
encing capabilities and full-
service banking from de-
vices such as iPhones and iPads.
In addition, it is teaming with telecom
operators Vodafone Group in India, M1 Ltd.
in Singapore and Chunghwa Telecom Co.
in Taiwan to offer mobile payment services.
Citigroup says the Asia-Pacific region is
one of the most important to its profitabil-
ity and market share. During the first half
of this year, Citigroup reported net income
from Asia of $2.5 billion on revenue of $7.2
billion. Asia-Pacific was the largest contrib-
utor to net income for Citigroup globally
last year. The banks consumer group is one
of its fastest growing businesses globally.
Yun-Hee Kim sat down with Jonathan Lar-
sen, Asia-Pacific head for consumer bank-
ing at Citibank, recently to discuss how
technology is playing a role in the banking
sector.
WSJ: Where do you see technology heading
for banks?
Mr. Larsen: Speed, simplicity and ubiquity
are guiding our use of technology. Banking
works well through devices like Apple Inc.s
iPad for example, it is a good fit for us. We
have had good success with the i-Phone.
Were taking a hard look at what ATMs do,
too. The whole field of authentication will
get more sophisticated. Our challenge is
how to make it easy to authenticate across
multiple platforms. Most of the industry
still relies on the paper format, all of that
is unnecessary nowour new branches are
paperless and wireless. Were in the pro-
cess of getting rid of all the forms and put-
ting them all online. You can now apply for
a credit card online without any paper
formsthis was unthinkable 10 years ago.
WSJ: As technology evolves, what chal-
lenges do you see in your business?
Mr. Larsen: Adoption is a challenge. We have
the technology, but in order to be a main-
stream player in all of the markets we com-
pete, we have to have a minimal physical
presence in terms of branches. If people
dont see physical locations, theres a credi-
bility gap. We have gone from under 100
branches to over 700 in under a decade
and that gap has been largely bridged in
many markets.
WSJ: What are some technology initiatives
youre employing in new branches?
Mr. Larsen: As we look at our branch net-
work (710 at the end of the second quar-
ter), we will increase that number over the
next three to four years by 50%. All of
those new branches will be in the smart
banking format. Thats a substantial thing
for us. It differentiates us fundamentally. It
will be a common element in our retail of-
fering.
WSJ: Why did you decide to roll out this
smart banking model in Asia first?
Mr. Larsen: The global crisis has been more
of a factor in the U.S. and less of a factor in
Asia. Were also looking at the possibility
of bringing it to Russia, Poland and New
York. We dont have a timeframe though.
WSJ: The buzz words in the tech industry
are smartphones and tablets. What kinds of
products or services do you have that will
cater to increasing demand for mobile de-
vices? What about applications?
Mr. Larsen: Weve launched mobile banking
that works on all 3G formats whether its
Apple, Google, Samsung or Nokia. You can
do everything you do onlinesuch as ac-
cessing your account balance, making ac-
count transfers and so onon your mobile
phone and its incredibly fast. We have now
launched mobile banking in all markets in
which we operate in the region.
WSJ: How do you make sure that security
isnt compromised as more and more trans-
actions are being done online and increas-
ingly via mobile devices?
Mr. Larsen: Theres a new technology called
out-of-band authentication, which we will
be launching in Hong Kong in a couple of
months. It allows you to receive a phone
call with a PIN number and you can key
that number back into your phone so it
never goes through the PC channel. Au-
thentication will be something that will
also evolve further. Were already testing
voice biometrics in Australia, where we can
identify a customer based on voice pat-
terns.
WSJ: Will the number of your branches de-
cline as you move more toward Internet/
mobile transactions?
Mr. Larsen: Nearly 98% of all our transac-
tions in Asia are now via non-branch chan-
nels. What branches used to do can virtu-
ally all be done by electronic means now.
We do though understand that many clients
still want to bank in a branch. We have a
wide range of technology-based channels
which can do everything you need to do in
your financial life. Well continue to roll out
branches but along the principles of smart
banking. Over the next three years, well
have 110 branches in China. Today we have
30. We are also doubling in Hong Kong and
should be at around 50 in the next few
months. All of the new branches will use
smart banking. We also have launched
transit branches in Singapore, Hong Kong
and Shanghai and one soon in Tokyo. These
are branches to serve customers on the go
and are located on commuter routes.
Citibank
Rsum
Career: Joined Citibank in 1998 and has
held various leadership roles across Asia
Pacific. Prior to his current role as head of
consumer banking for Asia-Pacific, he was
country head for Singapore and CEO of
Citibank Singapore Ltd. with oversight of the
Institutional Clients Group, Consumer Banking
and Global Wealth Management businesses.
Before joining Citibank, he was a principal in
the financial services group of management
consulting firm Booz, Allen & Hamilton (now
Booz & Co.) He began his career at the
insurance and banking operations of the
National Mutual Group in Australia and New
Zealand (now part of AXA).
Education: Bachelor of arts from the
University of Melbourne
MANAGING
IN ASIA
[ Jonathan Larsen ]
Citibank
ishedbyDowJonesPublishingCompany(Asia).PrintedinHongKongbySuperflagPrintingandCommunicationLimited.8ChunYingStreet,NT.PrintedinIndonesiabyPTGramediaPrintingGroup,JalanPalmerahSelatan22-28,Jakarta10270.PrintedinJapanbyYomiuriShimbun,1-7-1,Otemachi,Chiyoda-ku,Tokyo100-8055.PrintedinKoreabyJoongAngIlbo.7,Soonwha-Dong,Chung-Ku,Seoul100-130.1997June04Registrationno.:SeoulKA00020(DailyNewspaper),Publisher/Editor/Printer:Song,Pil-Ho.PrintedinMalaysiabyKHLPrintingCo.
Bhd.(ROCNo:235060-A)Lot10&12,JalanModal23/2,Seksyen23KawasanMielPhase8,40000ShahAlam,Selangor,Malaysia.PrintedinPhilippinesbyFEPPrintingCorporation,3817MascardoSt.,CornerMetropolitanAve.,PasongTamo,MakatiCity.PrintedinSingaporebyKHLPrintingCo.PteLtd.,57LoyangDrive,Singapore508968.PrintedanddistributedinTaiwanbyTheChinaPost,8FuShunStreet,Taipei104.PrintedinThailandbyNationMultimediaGroupPublicCo.,Ltd.,1854Bangna-TradRoad,(K.M.4.5),Prakanong,Bangkok
60.PublishedandprintedonbehalfoftheWallStreetJournalIndiaPublishingPvtLtd,517BWorldTradeCentre,BarakhambaLane,NewDelhi110001byMrSumanDubeyatA-8Sector7,GautamBudhNagar,Noida-201301andPLOTNo.EL208,TTCIndustrialArea,Mahape,NaviMumbai-400710(Maharashtra),India,Editor:SumanDubey,phone:+91-11-64620215.ACPno.F.2(T/3)Press/2009FACSIMILEEDITION.
THE WALL STREET JOURNAL. Monday, October 25, 2010
MANAGEMENT
by the nature of the beast, there are many more men than there are women in our company because were so heavily engineer- ing focused. As a company we are always trying to maintain a balance because diver- sification is one of the things that we think gives us a real competitive advantage. But Ive never felt that I was in a male- dominated industry, only because I feel that Ive always been treated for the job that I do, not because Im a woman.
WSJ: Intellectual-property protection is very important to Emerson. How far do you think the IP legal framework in China has come since you began working with the country? Ms. Yang Bosco: In the earlier days, IP en- forcement was relatively weak, but China has always had a very good legal regime. The basic legal framework for IP protection has been there. What we have seen develop over time is not so much better laws, but better enforcement. Thats much to the credit of not only the Chinese government, but also the domestic companies that have pushed the whole area as they are the ones who need IP protection as much as we do as they became multinational. As those domes-
tic industries have matured, all the infra- structure that goes with making them glo- bally competitive has come along with it.
WSJ: Which of your businesses are doing particularly well in China? Ms. Yang Bosco: The one area that is proba- bly in most customers minds, and also in the governments, is energy efficiency. So we make the components and systems for end-manufacturers, many of whom were re- ceiving government subsidies. As a result of the crisis, the government accelerated the efficiency standards for air conditioning, which relates to how the compressor works. Our equipment was already at a very high standard, probably higher than Chinas mar- ket was at the time, but because of the re- cession and the need for China to accelerate the standards so people use less energy, the government mandated higher efficiency. We just slotted right in and it was very good timing for us.
WSJ: Youve spoken a lot about the success Emerson has enjoyed in China. What do you think are some challenges or problems that you face? Ms. Yang Bosco: As the company grows, one
of the key challenges is to find and keep the right people and have the right leadership in place to grow the companys business in the market. Staying competitive by ensuring sales network coverage is also a challenge. At Emerson, management is about achieving superior financial results consistently over the long term.
Energy
efficiency
appeals to
Emersons
Asia boss
EmersonElectric
Rsum
Career: After moving to Hong Kong in 1993, worked as a partner in Baker & McKenzie and Perkins Coie before joining Emerson as general counsel in 2005. Appointed president of Asia-Pacific in January 2008.
Education: BA from University of Notre Dame, and juris doctorate from Indiana University, Bloomington. Member of the New York State Bar Association.
Emerson in a nutshell: Were kind of a silent infrastructure entity that keeps things running quietly and efficiently, without you even knowing about it.
Extracurricular: Coaches under-6 mini rugby team, the Flying Kukris.
PublishedbyDowJonesPublishingCompany(Asia).PrintedinHongKongbySuperflagPrintingandCommunicationLimited.8ChunYingStreet,NT.PrintedinIndonesiabyPTGramediaPrintingGroup,JalanPalmerahSelatan22-28,Jakarta10270.PrintedinJapanbyYomiuriShimbun,1-7-1,Otemachi,Chiyoda-ku,Tokyo100-8055.PrintedinKoreabyJoongAngIlbo.7,Soonwha-Dong,Chung-Ku,Seoul100-130.1997June04Registrationno.:SeoulKA00020(DailyNewspaper),Publisher/Editor/Printer:Song,Pil-Ho.PrintedinMalaysiabyKHLPrintingCo.
Sdn.Bhd.(ROCNo:235060-A)Lot10&12,JalanModal23/2,Seksyen23KawasanMielPhase8,40000ShahAlam,Selangor,Malaysia.PrintedinPhilippinesbyFEPPrintingCorporation,3817MascardoSt.,CornerMetropolitanAve.,PasongTamo,MakatiCity.PrintedinSingaporebyKHLPrintingCo.PteLtd.,57LoyangDrive,Singapore508968.PrintedanddistributedinTaiwanbyTheChinaPost,8FuShunStreet,Taipei104.PrintedinThailandbyNationMultimediaGroupPublicCo.,Ltd.,1854Bangna-TradRoad,(K.M.4.5),Prakanong,Bangkok
10260.PublishedandprintedonbehalfoftheWallStreetJournalIndiaPublishingPvtLtd,517BWorldTradeCentre,BarakhambaLane,NewDelhi110001byMrSumanDubeyatA-8Sector7,GautamBudhNagar,Noida-201301andPLOTNo.EL208,TTCIndustrialArea,Mahape,NaviMumbai-400710(Maharashtra),India,Editor:SumanDubey,phone:+91-11-64620215.ACPno.F.2(T/3)Press/2009FACSIMILEEDITION.
32 THE WALL STREET JOURNAL. Monday, June 14, 2010
MANAGEMENT
networking; the new Office package has
built into its Outlook email client many of
the features seen in sites such as Facebook.
On top of all this, Microsoft recently shook
up management in its entertainment and
devices division, signaling bigger changes
to its consumer strategy.
Mr. Pickup spoke with Sam Holmes in
Singapore. The following interview has
been edited.
WSJ: How have you gone about trying to
tackle software piracy in the emerging mar-
kets you work in?
Mr. Pickup: One of the major challenges we
face in emerging markets is piracy. The pri-
mary reason why people pirate is because
of the initial up-front cost of perpetual li-
censing. Its not that theyre evil, its just
that the value proposition of piracy is
stronger.
If you turn that on its head and say $2
per user per month and you can get email
as a businessthats much easier to con-
sume than the up-front cost of a perpetual
licensing agreement.
WSJ: What is the key to successful manage-
ment in Asia?
Mr. Pickup: Unlike Europe, theres no mone-
tary, military, economic union that exists
here. Its a flotilla of different boats all go-
ing in different directions. The diversity of
the heritage, the history, culture, the lan-
guage, the time zones is extraordinary. In
order therefore to be successful as a man-
ager in Asia, you need to bring a situa-
tional-leadership approach, which is around
managing people according to where they
are in their development cycles.
WSJ: How do you use social networking as
a management tool?
Mr Pickup: I have a Facebook account, a
Twitter account and a LinkedIn account.
Facebook is the one I find most difficult to
qualify. LinkedIn is simple, its an online
Rolodex. Twitter is like live radiothe
first thing I had to think about is who is
the target audience that you are trying to
communicate with? Im trying to commu-
nicate internallyIve got 450 people fol-
lowing me and half of them are internal.
And because Im following them as well, Im
crowd-sourcing. The second thing I
wanted to do was show the human face of
Microsoft. Sometimes I tweet what Im do-
ing in my private life that is okay to share
and sometimes I tweet about what Im do-
ing at work, sometimes I just tweet about
the frustration and stupidity of the things
Ive been asked to do.
WSJ: What is your biggest failure as a man-
ager?
Mr. Pickup: In life and in business you need
to deliver on your commitments so people
can trust your ability to deliver but they
also need to trust you, your integrity and
your ability to connect.
For a long time, my IQ and conviction
were stronger than my EQ (emotional intel-
ligence) and connection. The further up the
slippery pipe you go in any corporation, the
more EQ is important: the ability to con-
nect, the ability to attract talent is what its
about.
WSJ: How do you see your product market
changing in the next five years?
Mr. Pickup: As PC sales come back, infra-
structure starts to get refreshed65% of
the install base is still on Windows XP. Or-
ganizations are now coming on the back of
a recession and theyre now doubling down
on refreshing their infrastructure and we
see tremendous opportunities there. Win-
dows XP is based on a 10-year-old operat-
ing system. You think about what didnt ex-
ist 10 years ago: security threats, social
networking, Facebook didnt exist as a cor-
poration.
SashAlexanderforTheWallStreetJournal
Rsum
Career: Chief operating officer for Microsoft
Asia-Pacific (ex-China, India, Japan). Joined
Microsoft in the U.K. in 1993. Moved to
Singapore in 2003, as the Business and
Marketing director for country operations.
Schooling: Bachelor of Science (Hons.),
Marketing, Lancaster University
Extracurricular: Spending time with his
young family, golfing, skiing and diving.
On diversity in Asia: You can go to the
U.K. you can go to France, you can go to
Germany but where else are you going to get
exposure to large corporations like Microsoft
Australia and Koreaa very rich cultural
diversity--and to the emerging markets of
southeast Asia?
On travel: Although I travel extensively
with my role, its invariably an airport-hotel-
office-airport routine, so I do enjoy spending
extended time in a country when the
opportunity allows, learning about its history,
culture, religion, food and people.
Tackling
Microsofts
challenge
in Asia
In Microsoft Corp.s ever-tougher battle
for global IT supremacy, Andrew Pickup is
charged with taking the fight to Asia. The
U.S. software giants Asia-Pacific chief oper-
ating officer excluding China, India and Ja-
pan has a lot on his plate
these days. Microsoft is
planning new tablet-PC de-
signs that use the Windows
operating system to rival Apple Inc.s iPad,
and it recently launched the 2010 incarna-
tion of the Office suite.
To help ramp up the enhanced connectiv-
ity of Office, Microsoft has established re-
mote data centers in Singapore and Hong
Kong. Its bread-and-butter applications are
now free online. In direct competition with
Google Inc., Word, Excel and PowerPoint
have been pushed into the realm of cloud
computing and can be used in Web brows-
ers without users needing to install new
software. Microsoft is also targeting social
PublishedbyDowJonesPublishingCompany(Asia).PrintedinHongKongbySuperflagPrintingandCommunicationLimited.8ChunYingStreet,NT.PrintedinIndonesiabyPTGramediaPrintingGroup,JalanPalmerahSelatan22-28,Jakarta10270.PrintedinJapanbyYomiuriShimbun,1-7-1,Otemachi,Chiyoda-ku,Tokyo100-8055.PrintedinKoreabyJoongAngIlbo.7,Soonwha-Dong,Chung-Ku,Seoul100-130.1997June04Registrationno.:SeoulKA00020(DailyNewspaper),Publisher/Editor/Printer:Song,Pil-Ho.PrintedinMalaysiabyKHLPrintingCo.
Sdn.Bhd.(ROCNo:235060-A)Lot10&12,JalanModal23/2,Seksyen23KawasanMielPhase8,40000ShahAlam,Selangor,Malaysia.PrintedinPhilippinesbyFEPPrintingCorporation,3817MascardoSt.,CornerMetropolitanAve.,PasongTamo,MakatiCity.PrintedinSingaporebyKHLPrintingCo.PteLtd.,57LoyangDrive,Singapore508968.PrintedanddistributedinTaiwanbyTheChinaPost,8FuShunStreet,Taipei104.PrintedinThailandbyNationMultimediaGroupPublicCo.,Ltd.,1854Bangna-TradRoad,(K.M.4.5),Prakanong,Bangkok
10260.PublishedandprintedonbehalfoftheWallStreetJournalIndiaPublishingPvtLtd,517BWorldTradeCentre,BarakhambaLane,NewDelhi110001byMrSumanDubeyatA-8Sector7,GautamBudhNagar,Noida-201301andPLOTNo.EL208,TTCIndustrialArea,Mahape,NaviMumbai-400710(Maharashtra),India,Editor:SumanDubey,phone:+91-11-64620215.ACPno.F.2(T/3)Press/2009FACSIMILEEDITION.
[ AndrewPickup ]
Chief Operating Officer
MANAGING
IN ASIA
THE WALL STREET JOURNAL. Monday, June 28, 2010
MANAGEMENT
golf resort in ak game, you nd day. Thats came vice oup. The com- on what is ub in Shen- uilding a 10- outhern Chi- as a tourism
uld be the On a recent he Mission st an hour or ong Kong was following in China is ddle classes, it average greens s as high as At the same in Hainan as ort island. will reach the d Europe. It to reach its re- why clubs like mbership sys- e sales. Real- to the devel- why were the past 18
inclusion in w wave of funding for lic facilities. Dongguan,
courses on ce 2004, af- n? t out our mas- because we the schedule ut on the land res not even a ate. Not even down. Not here is no in- Hainan theyre ustry, service comes into embership aying.
hallenge been
nas golf into e ever thought f courses and
recruiting all those signature designers to collaborate together on this master plan.
WSJ: What is your management style and how do you balance the responsibilities of your job? Mr. Chu: The Chinese have a saying: Theres a different length for all the fingers on a hand. You really need to find out each in- dividuals strength, to help them compen- sate for their weakness. I do have weak- nesses. We just need to isolate each individuals problem, so we can watch each others backs. Always give duties to the busiest people, because they for sure can make it happen, get the work done.
WSJ: Whats next for Mission Hills? Mr. Chu: Continuously we are adding more support facilities, more hotels, more resi- dential development, more recreation ser- vices, even spas. A painter uses his brush to paint a picture whereas we use a bulldozer and dirt as material to do this carving in the field. We have no soil whatsoever to construct this project. What we have done
there is turn a wasteland into another eco- logical piece of artwork. Building up the club in Hainan was far more expensive than this club in Shenzhen (which cost $1.5 bil- lion). We plan to build 10 courses in Hainan and weve finished six already. We carried all the lessons weve learned in Shenzhen to the Hainan development. It took us 10 years to develop the worlds largest golf club. It took us a year and a half to re-de- velop this entire Hainan project.
WSJ: As many as 200,000 people attended the 2009 Omega Mission Hills World Cup. Analysts have said the number of golfers in China is about 300,000, other reports are as high as 3 million. What are your esti- mates and how can you turn those specta- tors into golfers? Mr. Chu: There are close to 3 million golfers in China already, and that is increasing. The supply of golf is under the demand thats required. It will grow, definitely. In the coming years, maybe around 50 courses will be built (in Hainan). We are building for the demand.
MissionHills
Rsum
Career: Joined Mission Hills group in 1995, named vice chairman in 2004.
Education: Bachelors degree in economics from University of Western Ontario (1995); bestowed Doctor of Laws, honoris causa, in 2007 by UWO.
Extracurricular: Enjoys charity and social works, including the All-China Youth Federation and Hong Kong United Youth Exchange Foundation.
On networking: Chinese always say guanxi, guanxi. Golf is a tool that really helps business development.
Mission Hills:
building
for Chinas
golf boom
WSJ.com
Online today: See a video from the club in southern China, where Mr. Chu talks about managing its development, at asia.WSJ.com
mited.8ChunYingStreet,NT.PrintedinIndonesiabyPTGramediaPrintingGroup,JalanPalmerahSelatan22-28,Jakarta10270.PrintedinJapanbyYomiuriShimbun,1-7-1,Otemachi,Chiyoda-ku,Tokyo100-8055.PrintedinKoreabyJoongAngIlbo.7,Soonwha-Dong,Chung-Ku,Seoul100-130.1997June04Registrationno.:SeoulKA00020(DailyNewspaper),Publisher/Editor/Printer:Song,Pil-Ho.PrintedinMalaysiabyKHLPrintingCo.
Selangor,Malaysia.PrintedinPhilippinesbyFEPPrintingCorporation,3817MascardoSt.,CornerMetropolitanAve.,PasongTamo,MakatiCity.PrintedinSingaporebyKHLPrintingCo.PteLtd.,57LoyangDrive,Singapore508968.PrintedanddistributedinTaiwanbyTheChinaPost,8FuShunStreet,Taipei104.PrintedinThailandbyNationMultimediaGroupPublicCo.,Ltd.,1854Bangna-TradRoad,(K.M.4.5),Prakanong,Bangkok
arakhambaLane,NewDelhi110001byMrSumanDubeyatA-8Sector7,GautamBudhNagar,Noida-201301andPLOTNo.EL208,TTCIndustrialArea,Mahape,NaviMumbai-400710(Maharashtra),India,Editor:SumanDubey,phone:+91-11-64620215.ACPno.F.2(T/3)Press/2009FACSIMILEEDITION.
36 THE WALL STREET JOURNAL. Monday, September 13, 2010
MANAGEMENT
Bank chief
eyes
big catch
Shayne Nelsons banking career has
spanned several continents and 34 years.
l h h l b l hi f
opportunity in these markets, says Mr. Nel-
son. Youre seeing the wealth move from
West to East. Youre seeing the creation of
wealth just explode across Asia, Africa and
the Middle East.
Mr. Nelson talked to Duncan Mavin in
Hong Kong. The following interview has
been edited:
WSJ: How do you deal with the competition
for talent?
Mr. Nelson: Our attrition rate has been
pretty low. I think its because the name,
the brand, the referral system we have from
wholesale bankingtheyre not out cold-
calling a bunch of new customers. We have
the capacity to attract bankers. Some we
[i ll ] h h i i b
cost-income. Quite high. A lot of that has
been impacted because margins on deposits
have come right in with rates. It means you
need more added-value products. Thats a
challenge for the industry. How high can
you keep pushing salaries is a good ques-
tion. I dont think we are there yet. The
market opportunity is still huge.
WSJ: What are clients looking for today?
Mr. Nelson: Theres a lot more money going
to structured cash products than equity
structures. I think the industry will see a
swing back to riskier products as appetite
returns. I think the most important thing is
suitability. The challenge for private banks
is to ensure that the risk appetite of our cli-
entele matches the products that were sell-
ing.
ChristieJohnstonfortheWallStreetJournal
Rsum
Career: Thirty-four years in banking,
including 13 with Standard Chartered, where
roles have included regional CEO for the
Middle East and North Africa, and chairman of
the banks Islamic Banking Board.
Education: Edith Cowan University,
Associate Fellow Australian Institute of
Management, Graduate Member Australian
Institute of Company Directors.
Extracurricular: sport fishing, golf.
On leadership: The old saying is right. Its
hard to fly like an eagle when youre
surrounded by turkeys. You cant be
successful without really good people.
[ Shayne Nelson ]
Standard Chartered
Private Bank
100-8055.PrintedinKoreabyJoongAngIlbo.7,Soonwha-Dong,Chung-Ku,Seoul100-130.1997June04Registrationno.:SeoulKA00020(DailyNewspaper),Publisher/Editor/Printer:Song,Pil-Ho.PrintedinMalaysiabyKHLPrintingCo.
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MANAGING IN ASIA
Published every Monday, Managing in Asia is a weekly series of executive
interviews in which key leaders in Asia explain howthey apply well-known
principles of management and other leadership lessons in the worlds
fastest-growing region. These inspiring conversations will offer valuable
lessons for any business leader in the region.
Dont miss the next interviewon October 3.
The Managing in Asia interviewseries is proudly sponsored by Mercedes-Benz
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. 27
MARKETS
dont think China will announce
such big policy changes during the
National Day holiday amid the glo-
bal market turmoil, said ING Asia
economist Tim Condon.
He said the recent launch of the
Operation Twist monetary easing
program by the U.S. Federal Re-
serve, which came amid mounting
concerns about a global economic
slowdown, has triggered an outflow
of hot moneyor speculative capi-
talfrom Asia, including China. Un-
der the program, the Fed will sell
$400 billion of its short-term debt
holdings and buy longer-term bonds
in an effort to drive down long-term
interest rates.
China has gradually strengthened
the yuans parity rate since last
week, even as investors have tested
the mainland trading limits and sent
the currency down sharply in the
nascent market for yuan trading in
Hong Kong, where investors are al-
Continued from page 17
lowed to buy and sell with fewer re-
strictions. Last week, in the market
for yuan-tied derivatives called non-
deliverable forwards, investors
pushed down the value of the yuan
forwards, signaling expectations for
a weaker yuan, though the market
has since reversed much of that
trend.
The yuan is still undervalued
and the central bank will let it rise,
said Zhao Qingming, a senior ana-
lyst at China Construction Bank
Corp., citing the parity-rate moves.
The yuan is still seen as likely to
strengthen over the long term as
China continues to attract capital
from around the world. But the re-
cent volatility has raised questions
about whether Beijing might let the
currencyalso known as the ren-
minbiweaken in the meantime.
Barclays Capitals chief economist
for emerging Asia, Huang Yiping,
said Thursday that he sees recent
evidence that policy makers are
paying closer to attention to the
value of the yuan against a basket of
currencies, rather than the dollar
alone. Though the bank still expects
the yuan to strengthen, the currency
could weaken under that scenario if
a global recession hits, he said.
Amy Li in Shanghai and Aaron
Back and William Kazer in Beijing
contributed to this article.
Traders Test Chinas Limits
On Yuan Value Vs. Dollar
Coppers Fall Triggers Alarm
In little more than a month, cop-
per has careened into a bear mar-
ket, catching commodities traders
off guard and triggering alarm bells
across financial markets.
Copper prices have plunged 23%
this montha decline of 20% or
more is commonly considered a
bear market. The declines have far
exceeded the slide in the stock mar-
ket, where the Standard & Poors
500-stock index has lost 5.6%.
The drop in copper is seen as
particularly significant because the
metal is used in everything from
Apple Inc.s iPads to indoor plumb-
ing and electrical wires, making it a
good leading indicator for the global
economy, and the stock market.
Some investors are such believers in
its ability to forecast economic con-
ditions that they refer to it as Dr.
Copper.
Coppers recent declines are es-
pecially unsettling given that finan-
cial markets already have been bat-
tered by worries about the debt
crisis in Europe and concerns about
the U.S. and Chinese economies.
It also is bad news for investors
hoping stocks will soon find a foot-
hold, rather than begin a new leg
down.
Youre seeing coppers declines
outpace equities, which is telling
me that equities are too buoyant at
this point in the recovery, said
Adam Klopfenstein, a strategist
with MF Global.
On Wednesday, copper futures
fell 5.6% to close at $3.2360 a
pound, a 13-month low. That helped
drag down the broader stock mar-
ket. The S&P 500 slumped into the
close, falling nearly 1.5% in just over
30 minutes to end down 24.32
points, or 2.1%, at 1151.06.
At noon Thursday, copper was at
$3.2565 a pound.
Copper has been a good predic-
tor of stock performance before, no-
tably, in the peak of the financial
crisis. The metal slumped well
ahead of other markets heading into
2009, and the correlation between
copper and stocks now looks eerily
similar to back then, according to
Katie Stockton, chief market techni-
cian at MKM Partners. In December
2008, copper slumped, reaching a
bottom late in the month. Stocks
didnt follow until March 2009.
There was a really decisive bot-
tom that was put in copper in late
2008. The S&P was starting to put
its bottom in during that time, but
it had further to fall, Ms. Stockton
said. You want to see copper stabi-
lize before we can expect the stock
market to do the same.
Traders seeking to explain cop-
pers sudden slump point to obvious
influences such as signs Chinas
economy is slowingpotentially
sapping a huge source of demand
for products that use copper. As
well, a general contraction globally
would hurt copper in particular.
But other factors are likely at
play. For a start, copper has been
on a powerful bull run since find-
ing its nadir in 2008. Prices had
tripled through February of this
year, and they hovered near those
highs until the recent rout.
As copper began to decline,
hedge funds and other speculators
bailed out. Data from the Commod-
ity Futures Trading Commission
show that, in late August, specula-
tive investors had more bets copper
would fall than rise for the first
time since September 2009.
And, as global markets slumped
last week, some fund managers
were likely closing out their remain-
ing bullish bets, said David Wilson,
head of metals research at Socit
Gnrale SA.
Many are also looking at China,
which accounted for 40% of world
refined copper consumption last
year.
Copper imports in China this
year were down 26% from year-ago
levels, Chinas General Administra-
tion of Customs said last week.
By Jerry A. DiColo,
Matt Day
and Jonathan Cheng
Bad Prognosis
Coppers fall outpaces stocks
Sources: SIX Telekurs; WSJ Market Data Group
10
30
20
10
0
%
2011
Nymex copper
S&P 500
If Japan is in such a bind, why
is it now a haven?
The country has been mired in
not one but at least two lost
decades since its own credit
bubble collapsed in the late 1980s.
Data out Friday are likely to show
another drop in core consumer
prices in August, according to J.P.
Morgan, despite the Japanese
central banks longtime battle
against deflation.
And it doesnt help that Japan
now has one of the lowest
potential growth rates in the
world, thanks to an aging and
declining population.
On top of all this, Japan has
one of the worlds highest
sovereign-debt loads, which might
seem likely to send investors
fleeing in todays environment.
Instead, they are piling in.
Flows into stock and bond
funds, including exchange-traded
funds, have totaled about $7.4
billion this year, up more than
25% from all of 2010 and a sea
change from the outflows of the
prior two years, according to
EPFR Global.
Foreigners now are the largest
owners of Japanese shares traded
on the Tokyo Stock Exchange,
notes brokerage firm Brockhouse
Cooper.
The yen, meanwhile, continues
to climb despite the central banks
repeated efforts to push it lower;
it is up more than 5% against the
dollar year to date.
What gives? For one, Japan
has become more attractive
because the rest of the world has
gotten less so. With the U.S., U.K.
and Europe all easing or likely to
ease monetary policy as their
economies struggle, the yen by
comparison looks more stable.
Moreover, Japan also seems to be
nearing the end of its private-
sector deleveraging process, while
these other regions are closer to
the start of theirs.
That, plus a post-tsunami
rebound in economic activity,
helps explain why Morgan
Stanleys Stephen Roach has
called Japan Asias sleeping
giant.
Investors shouldnt be
complacent, however. A recent
drop in exports, which account for
more than 15% of Japans gross
domestic product, could deepen
amid slowing global growth. To
lower its sovereign-debt burden,
Japan ultimately needs to expand,
inflate or devalue. Yet all three of
these options continue to prove
elusive.
The nation still is in a tough
spot. That investors nonetheless
see it as one of the safest places
to invest right now speaks
volumes about prospects
everywhere else.
[ Ahead of the Tape ]
BY KELLY EVANS
Japan the More Bearable
Of Many Ugly Ducklings
Heavyweight
How many dollars 100 Japanese
yen buy
Source: WSJ Market Data Group
$1.50
0.50
0.75
1.00
1.25
2007 '08 '09 '10 '11
The yuan is still seen as
likely to strengthen over the
long term as China
continues to attract capital.
28 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
Giants aroundthe world In U.S.-dollar terms.
DowJones Country Titans
INDEXPERFORMANCE
Previous session Year-to-date 52-week
South Africa -1.62% -5.2% 1.5%
Spain 1.51 -8.0 -12.1
Turkey 1.28 -10.1 -11.4
U.K. 0.11 -11.1 -5.9
Russia 3.44 -13.2 2.6
Canada 0.88 -14.0 -7.3
Australia -0.70 -14.1 -12.7
South Korea 3.06 -14.7 -3.0
China 88 -0.56 -15.0 -10.3
Switzerland 1.64 -15.5 -12.6
Singapore 0.08 -15.7 -12.5
Netherlands 2.16 -19.9 -16.8
Japan 0.75 -20.4 -13.3
France 1.69 -20.4 -18.5
Hong Kong Closed -20.8 -17.8
Germany 1.68 -21.0 -12.2
Sweden 2.53 -21.1 -15.3
Brazil 2.15 -24.1 -20.2
Italy 2.59 -25.9 -26.1
DowJones Regional Sector Titans
Health Care 1.34% 1.2% 2.6%
Food Bev 1.18 -0.3% 6.0
Retail 0.60 -3.4 1.6
Travel Leisure 0.59 -4.4 5.5
Telecomm 0.98 -4.4 -2.1
Pers H'hold Gds 0.52 -5.0 0.9
Global 50 unch. -8.7 -1.9
Tiger 50* 0.63 -18.4 -11.1
Arab 50 -0.37 -19.2 -14.1
Asian 50 -0.02 -19.4 -11.2
*Asia excluding Japan
Source: DowJones Indexes
Major players
benchmarks
At right, a look at the Asia Titans, the biggest and best known
companies in Asia. Below, some of the Dow Jones Titans indexes of
biggest and most liquid stocks in individual countries and regions
DowJones Asia Titans: Thursday's best and worst...
Market value, Previous
in billions close, in STOCKPERFORMANCE
Company Country Industry of US$ local currency Previous session 52-week Three-year
Nissan Motor Japan Automobiles $37.6 690.00 3.76% -7.3% -5.0%
Samsung Electronics South Korea Semiconductors 92.6 837,000 3.72 8.4 53.9
Nintendo Japan Toys 18.9 11,330 3.09 -50.8 -74.9
Tokio Marine Hldgs Japan Property Casualty Insurance 19.8 1,984 2.69 -14.1 -49.3
POSCO South Korea Steel 24.8 377,000 2.45 -26.4 -17.0
Seven I Hldgs Japan Broadline Retailers $25.1 2,185 -2.59% 10.3 -29.1
Rio Tinto Ltd. Australia General Mining 26.8 62.45 -2.50 -19.2 -34.6
KDDI Japan Mobile Telecomms 30.7 555,000 -2.29 35.2 -12.7
Nippon Steel Japan Steel 18.3 223.00 -2.19 -23.1 -46.0
Mitsui Japan Industrial Suppliers 27.2 1,156 -2.03 -7.9 -11.3
...And the rest of Asia's blue chips
Latest,
Market value, in local STOCKPERFORMANCE
Company/Country (Industry) in billions (U.S) currency Latest 52-week Three-year
Mitsubishi UFJ Finl 65.3 355.00 2.31% -12.1% -62.1%
Japan (Banks)
Reliance Industries 54.3 33.19 2.28 -26.0 -18.7
India (Exploration Production)
Sumitomo Mitsui Finl 40.3 2,219 2.26 -12.3 -99.7
Japan (Banks)
Softbank Corp. 32.5 2,259 2.03 -17.2 55.9
Japan (Mobile Telecommunications)
East Japan Railway 24.0 4,660 1.64 -9.0 -99.4
Japan (Travel Tourism)
Shinhan Financial Grp 17.0 42,050 1.57 -2.7 -1.6
South Korea (Banks)
Canon 56.3 3,560 1.57 -9.8 -12.5
Japan (Electronic Office Equipment)
Hon Hai Precision Ind 24.4 70.00 1.45 -40.4 -34.7
Taiwan (Electrical Components Equipment)
Japan Tobacco 45.1 361,500 1.40 28.8 -12.7
Japan (Tobacco)
Honda Motor 54.7 2,332 1.00 -22.2 -27.4
Japan (Automobiles)
Nippon T&T 63.4 3,685 0.96 -1.6 -99.2
Japan (Fixed Line Telecommunications)
Toyota Motor 110.7 2,702 0.90 -12.1 -41.1
Japan (Automobiles)
Mizuho Financial Grp 35.1 114.00 0.88 -8.1 -100.0
Japan (Banks)
Sony 19.6 1,515 0.80 -42.7 -55.3
Japan (Consumer Electronics)
Hitachi Ltd. 22.8 392.00 0.77 4.8 -45.9
Japan (Electronic Equipment)
Woodside Petroleum 25.1 32.14 0.63 -27.7 -41.1
Australia (Exploration Production)
Takeda Pharm 37.8 3,680 0.55 -6.1 -33.5
Japan (Pharmaceuticals)
NTT DoCoMo 76.6 141,000 0.21 -0.6 -16.7
Japan (Mobile Telecommunications)
Commonwlth Bk of Aus 69.9 45.51 0.02 -12.6 3.7
Australia (Banks)
Panasonic 23.0 763.00 ... -33.9 -59.8
Japan (Consumer Electronics)
Latest,
Market value, in local STOCKPERFORMANCE
Company/Country (Industry) in billions (U.S) currency Latest 52-week Three-year
China Mobile (HK) 198.2 77.00 Closed -3.5% 2.7%
Hong Kong (Mobile Telecommunications)
Bank of China 27.6 2.57 Closed -34.5 -9.1
Hong Kong (Banks)
China Construction Bank 156.7 5.08 Closed -23.3 6.7
Hong Kong (Banks)
Indl CommBk China 45.0 4.04 Closed -31.0 -8.7
Hong Kong (Banks)
China Life Insurance 17.7 18.58 Closed -40.2 -33.6
Hong Kong (Life Insurance)
Cheung Kong 25.9 87.10 Closed -24.1 0.1
Hong Kong (Real Estate Holding Development)
Sun Hung Kai Prop 30.4 92.30 Closed -29.1 13.8
Hong Kong (Real Estate Holding Development)
Taiwan Smcndtr Mfg 59.8 70.30 Closed 14.3 31.6
Taiwan (Semiconductors)
CNOOC 76.2 13.30 Closed -11.8 47.8
Hong Kong (Exploration Production)
PetroChina 26.3 9.72 Closed 8.5 22.7
Hong Kong (Integrated Oil Gas)
Woolworths 29.9 25.00 -0.32% -14.6 -11.9
Australia (Food Retailers Wholesalers)
Westpac Bking 61.4 20.55 -0.48 -13.3 -11.2
Australia (Banks)
Wesfarmers Ltd. 31.2 31.66 -0.69 -5.7 11.4
Australia (Home Improvement Retailers)
Shin-Etsu Chml 21.0 3,810 -0.78 -10.0 -25.3
Japan (Specialty Chemicals)
Aus NZ Bk 50.8 19.58 -0.81 -18.9 4.2
Australia (Banks)
BHP Billiton 111.0 35.04 -1.35 -11.0 2.3
Australia (General Mining)
Westfield Grp 17.8 7.82 -1.64 -18.6 -42.1
Australia (Retail)
Mitsubishi 34.0 1,590 -1.67 -21.2 -31.5
Japan (Industrial Suppliers)
Kansai Elec Power 15.7 1,342 -1.83 -35.4 -45.3
Japan (Electricity)
National Australia Bk 48.8 22.50 -1.96 -13.1 -12.4
Australia (Banks)
Sources: DowJones Indexes; WSJ Market Data Group
Credit derivatives
Spreads on credit derivatives are one way the market rates
creditworthiness. Regions that are treading in rough waters can see
spreads swing toward the maximumand vice versa. Indexes below
are 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: 16/1 1.93 95.66% 0.01% 1.99 1.85 1.92
Eur. HighVolatility: 16/1 2.74 92.19 0.01 2.77 2.55 2.69
Europe Crossover: 16/1 8.06 88.85 0.05 8.43 7.95 8.17
Asiaex-JapanIG: 16/1 2.28 93.98 0.01 2.40 1.96 2.20
Japan: 16/1 2.04 94.95 0.01 2.08 1.85 1.97
Note: Data as of September 28
Spreads
Spreads on five-
year swaps for
corporate debt;
based on Markit
iTraxx indexes.
In percentage points
8.00
6.00
4.00
2.00
0
t
Europe Sub Financials
t
Europe Crossover
2011
April May June July Aug. Sept.
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 which way the market was moving yesterday.
Showingthe biggest improvement...
CHANGE, in basis points
Yesterday Yesterday Five-day 28-day
Renesas Electrs 333 24 8 40
JXHldgs 65 4 9 8
Asahi Kasei 54 3 8 9
Mitsubishi Elec 62 3 4 4
NipponExpress 57 3 ... 7
Toyota 95 4 4 10
GLOBALFOUNDRIES
SINGAPOREPTE
222 8 24 38
Asahi Breweries 70 2 5 14
Tokyu 73 2 4 7
Teijin 74 2 7 16
Andthe most deterioration
CHANGE, in basis points
Yesterday Yesterday Five-day 28-day
Kawasaki KisenKaisha 449 63 136 242
SumitomoRlty Dev 262 36 65 129
Mitsubishi 106 12 24 34
Shimizu 176 18 50 77
TOKYOGAS 63 6 9 14
Marubeni 227 21 56 84
ITOCHU 175 15 42 66
Mitsubishi Estate 103 9 19 31
Mitsui Co 107 9 23 29
ALL NIPPONAwys 333 26 68 103
Source: Markit Group
BLUE CHIPS BONDS
WSJ.com
Follow the markets throughout the day, with updated stock
quotes, news and commentary at WSJ.com.
Also, receive emails that summarize the days trading in Eu-
rope and Asia. To sign up, go to WSJ.com/Email.
Europe, Middle East & Africa: 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
60% 6
40 4
20 2
0 0
2005 2006 2007 2008 2009 2010 2011
nEquity capital markets nDebt capital markets (both in billions, left axis)
ECM as a percentage of total
(right axis)
t
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. 29
WSJ.com
Follow the markets throughout the day with updated stock quotes, news and commentary at
at WSJ.com. Also, receive email alerts that summarize the days trading in Europe and Asia. To
sign up, go to WSJ.com/Email
Commodities Prices of futures contracts with the most open interest
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
ONE-DAY CHANGE Year Year
Commodity Exchange Last price Net Percentage high low
Corn (cents/bu.) CBOT 632.50 1.75 0.28% 779.00 536.00
Soybeans (cents/bu.) CBOT 1233.50 10.00 0.82 1,465.00 1,209.25
Wheat (cents/bu.) CBOT 651.00 12.25 1.92 986.75 624.25
Live cattle (cents/lb.) CME 121.125 0.275 0.23 126.450 111.250
Cocoa ($/ton) ICE-US 2,705 41 1.54 3,600 2,610
Coffee (cents/lb.) ICE-US 233.60 0.10 0.04 313.75 224.60
Sugar (cents/lb.) ICE-US 25.86 1.56 6.42 30.60 21.10
Cotton (cents/lb.) ICE-US 101.75 2.22 2.23 144.66 93.20
Rapeseed (euro/ton) LIFFE 417.25 -1.75 -0.42% 483 385
Cocoa (pounds/ton) LIFFE 1,745 15 0.87 2,285 1,714
Robusta coffee ($/ton) LIFFE 1,988 3 0.15 2,673 1,932
Copper ($/lb.) COMEX 3.28 0.03 0.88 4.61 3.07
Gold ($/troy oz.) COMEX 1624.20 6.10 0.38 1,923.70 1,317.40
Silver ($/troy oz.) COMEX 30.70 0.57 1.88 49.81 26.15
Aluminum($/ton) LME 2,222.50 -21.00 -0.94 2,774.00 2,205.50
Tin ($/ton) LME 20,630.00 -570.00 -2.69 33,210.00 19,005.00
Copper ($/ton) LME 6,996.00 -454.00 -6.09 10,124.00 6,996.00
Lead ($/ton) LME 2,000.00 -15.00 -0.74 2,853.00 1,974.50
Zinc ($/ton) LME 1,897.50 -43.00 -2.22 2,574.00 1,893.00
Nickel ($/ton) LME 18,455 -180 -0.97 29,075 18,050
Crude oil ($/bbl.) NYMEX 83.34 2.13 2.62 115.46 76.61
Heating oil ($/gal.) NYMEX 2.8674 0.0403 1.43 3.3740 2.5545
RBOBgasoline ($/gal.) NYMEX 2.6014 0.0261 1.01 3.0740 2.3402
Natural gas ($/mmBtu) NYMEX 3.740 -0.059 -1.55 5.1060 3.6850
Brent crude ($/bbl.) ICE-EU 103.87 1.31 1.28 124.34 93.32
Gas oil ($/ton) ICE-EU 899.50 -4.25 -0.47 1,060.50 793.75
Sources: SIX Telekurs; WSJ Market Data Group
Currencies London close on Sept. 29
Per In
AMERICAS Per euro In euros U.S. dollar U.S. dollars
Argentina peso-a 5.7336 0.1744 4.2043 0.2379
Brazil real 2.4756 0.4039 1.8153 0.5509
Canada dollar 1.4097 0.7094 1.0337 0.9674
Chile peso 689.68 0.001450 505.72 0.001977
Colombia peso 2581.19 0.0003874 1892.70 0.0005283
Ecuador US dollar-f 1.3638 0.7333 1 1
Mexico peso-a 18.3726 0.0544 13.4719 0.0742
Peru sol 3.7692 0.2653 2.7639 0.3618
Uruguay peso-e 27.483 0.0364 20.153 0.0496
U.S. dollar 1.3638 0.7333 1 1
Venezuela bolivar 5.93 0.168566 4.35 0.229885
ASIA-PACIFIC
Australia dollar 1.3892 0.7198 1.0187 0.9817
1-mo. forward 1.3947 0.7170 1.0227 0.9778
3-mos. forward 1.4045 0.7120 1.0299 0.9710
6-mos. forward 1.4173 0.7056 1.0393 0.9622
China yuan 8.7188 0.1147 6.3932 0.1564
Hong Kong dollar 10.6256 0.0941 7.7914 0.1283
India rupee 66.7569 0.0150 48.9505 0.0204
Indonesia rupiah 12131 0.0000824 8895 0.0001124
Japan yen 104.58 0.009562 76.69 0.013040
1-mo. forward 104.54 0.009566 76.65 0.013046
3-mos. forward 104.45 0.009574 76.59 0.013056
6-mos. forward 104.29 0.009588 76.47 0.013076
Malaysia ringgit-c 4.3352 0.2307 3.1789 0.3146
NewZealand dollar 1.7560 0.5695 1.2876 0.7766
Pakistan rupee 119.323 0.0084 87.495 0.0114
Philippines peso 59.118 0.0169 43.349 0.0231
Singapore dollar 1.7623 0.5675 1.2922 0.7739
South Korea won 1600.45 0.0006248 1173.56 0.0008521
Taiwan dollar 41.471 0.02411 30.410 0.03288
Thailand baht 42.527 0.02351 31.183 0.03207
Per In
EUROPE Per euro In euros U.S. dollar U.S. dollars
Euro zone euro 1 1 0.7333 1.3638
1-mo. forward 1.0003 0.9997 0.7335 1.3634
3-mos. forward 1.0005 0.9995 0.7336 1.3631
6-mos. forward 1.0005 0.9995 0.7336 1.3631
Czech Rep. koruna-b 24.609 0.0406 18.045 0.0554
Denmark krone 7.4414 0.1344 5.4565 0.1833
Hungary forint 292.24 0.003422 214.29 0.004667
Norway krone 7.8758 0.1270 5.7750 0.1732
Poland zloty 4.4142 0.2265 3.2368 0.3090
Russia ruble-d 43.456 0.02301 31.865 0.03138
Sweden krona 9.2334 0.1083 6.7705 0.1477
Switzerland franc 1.2205 0.8193 0.8950 1.1173
1-mo. forward 1.2197 0.8199 0.8943 1.1182
3-mos. forward 1.2182 0.8209 0.8933 1.1195
6-mos. forward 1.2154 0.8228 0.8912 1.1221
Turkey lira 2.5211 0.3967 1.8486 0.5409
U.K. pound 0.8698 1.1496 0.6378 1.5679
1-mo. forward 0.8701 1.1493 0.6380 1.5674
3-mos. forward 0.8706 1.1487 0.6384 1.5665
6-mos. forward 0.8712 1.1479 0.6388 1.5654
MIDDLE EAST/AFRICA
Bahrain dinar 0.5141 1.9452 0.3770 2.6528
Egypt pound-a 8.1368 0.1229 5.9665 0.1676
Israel shekel 5.0806 0.1968 3.7254 0.2684
Jordan dinar 0.9653 1.0359 0.7079 1.4127
Kuwait dinar 0.3774 2.6500 0.2767 3.6140
Lebanon pound 2055.13 0.0004866 1506.95 0.0006636
Saudi Arabia riyal 5.1150 0.1955 3.7507 0.2666
South Africa rand 10.7708 0.0928 7.8979 0.1266
United Arab dirham 5.0091 0.1996 3.6730 0.2723
a-floating rate b-commercial rate c-government rate c-commercial rate d-Russian Central Bank rate.
Source: ICAPPlc.
Major stock market indexes Stock indexes fromaround the world, grouped by region. Shown in local-currency terms.
PREVIOUS SESSION PERFORMANCE
Region/Country Index Close Net change Percentage change Yr.-to-date 52-wk.
ASIA-PACIFIC DJ Asia-Pacific 118.99 0.40 0.34% -16.5% -9.0%
Australia SPX/ASX200 4008.30 -31.20 -0.77% -15.5 -12.5
China CBN600 21709.80 -315.40 -1.43 -18.7 -13.4
Hong Kong Hang Seng 18011.06 Closed -21.8 -19.5
India Sensex 16698.07 252.05 1.53 -18.6 -16.8
Indonesia Jakarta Composite 3537.178 24.012 0.68 -4.5 1.0
Japan Nikkei Stock Average 8701.23 85.58 0.99 -14.9 -7.1
Topix 762.30 8.23 1.09 -15.2 -8.1
Malaysia Kuala Lumpur Composite 1387.46 15.91 1.16 -8.7 -5.2
NewZealand NZSX-50 3300.168 1.448 0.04 -0.3 3.8
Pakistan KSE 100 11642.46 16.77 0.14 -3.2 16.3
Philippines Manila Composite 3877.63 1.51 0.04 -7.7 -5.4
Singapore Straits Times 2708.13 6.96 0.26 -15.1 -12.6
South Korea Kospi 1769.29 46.20 2.68 -13.7 -5.5
Taiwan Weighted 7182.61 35.63 0.50 -19.9 -12.8
Thailand SET 926.21 -5.39 -0.58 -10.3 -5.0
EUROPE Stoxx Europe 600 228.90 1.51 0.66 -17.0 -11.9
Stoxx Europe 50 2178.71 15.46 0.71 -15.8 -12.2
PREVIOUS SESSION PERFORMANCE
Region/Country Index Close Net change Percentage change Yr.-to-date 52-wk.
Euro Zone Euro Stoxx 218.47 2.72 1.26% -20.4% -17.4%
Euro Stoxx 50 2212.44 35.80 1.64 -20.8 -19.5
Denmark OMXCopenhagen 327.54 2.81 0.87 -23.3 -15.7
Finland OMXHelsinki 5374.42 69.50 1.31 -29.9 -24.3
France CAC-40 3027.65 32.03 1.07 -20.4 -18.5
Germany DAX 5639.58 61.16 1.10 -18.4 -9.5
Italy FTSE MIB 15046.02 304.80 2.07 -25.4 -26.6
Netherlands AEX 283.98 5.67 2.04 -19.9 -15.1
Russia RTSI 1389.14 21.77 1.59 -21.5 -7.9
Spain IBEX35 8592.5 112.30 1.32 -12.8 -18.3
Switzerland SMI 5608.60 56.95 1.03 -12.9 -10.9
Turkey ISE National 100 59758.18 769.72 1.30 -9.5 -9.1
U.K. FTSE 100 5196.84 -20.79 -0.40% -11.9 -6.3
AMERICAS DJ Americas 306.10 2.71 0.89 -10.2 -0.6
Brazil Bovespa 53492.76 222.40 0.42 -22.8 -23.0
Argentina Merval 2529.24 14.68 0.58 -28.2 -4.3
Mexico IPC 33977.24 539.08 1.61 -11.9 1.9
Europeanand Americas index data are as of 12:00 p.m. ET. Sources: SIXTelekurs; WSJ Market Data Group
Cross rates U.S.-dollar and euro foreign-exchange rates in global trading
US$ A$ C$ YUAN EURO HK$ RUPEE RUPIAH YEN NZ$ WON RINGGIT PH. PESO S$ SFRANC TW$ BAHT
U.S. 1.019 0.638 1.034 6.393 0.733 7.791 48.950 8895.40 76.688 1.288 1173.56 3.179 43.349 1.292 0.895 30.410 31.183
Australia 0.982 0.626 1.015 6.276 0.720 7.649 48.054 8732.41 75.282 1.264 1152.05 3.121 42.555 1.269 0.879 29.852 30.612
Britain 1.568 1.597 1.621 10.024 1.150 12.216 76.747 13946.66 120.235 2.019 1839.96 4.984 67.965 2.026 1.403 47.678 48.891
Canada 0.967 0.985 0.617 6.185 0.709 7.538 47.356 8605.68 74.190 1.246 1135.33 3.075 41.937 1.250 0.866 29.419 30.168
China 0.1564 0.159 0.100 0.162 0.115 1.219 7.657 1391.40 11.995 0.201 183.56 0.497 6.781 0.202 0.140 4.757 4.878
Euro 1.364 1.389 0.870 1.410 8.719 10.626 66.757 12131.24 104.584 1.756 1600.45 4.335 59.118 1.762 1.221 41.471 42.527
HongKong 0.128 0.131 0.082 0.133 0.821 0.094 6.283 1141.70 9.843 0.165 150.62 0.408 5.564 0.166 0.115 3.903 4.002
India 0.0204 0.0208 0.0130 0.0211 0.1306 0.0150 0.1592 181.72 1.5666 0.0263 23.97 0.0649 0.8856 0.0264 0.0183 0.6212 0.6370
Indonesia 0.0001 0.0001 0.0001 0.0001 0.0007 0.0001 0.0009 0.0055 0.0086 0.0001 0.13 0.0004 0.0049 0.0001 0.0001 0.0034 0.0035
Japan 0.013 0.013 0.008 0.013 0.083 0.010 0.102 0.638 116.00 0.017 15.30 0.041 0.565 0.017 0.012 0.397 0.407
NewZealand 0.777 0.791 0.495 0.803 4.965 0.569 6.051 38.016 6908.41 59.558 911.41 2.469 33.666 1.004 0.695 23.617 24.218
SouthKorea 0.0009 0.0009 0.0005 0.0009 0.0054 0.0006 0.0066 0.0417 7.58 0.0653 0.0011 0.0027 0.0369 0.0011 0.0008 0.0259 0.0266
Malaysia 0.315 0.320 0.201 0.325 2.011 0.231 2.451 15.399 2798.31 24.124 0.405 369.18 13.637 0.407 0.282 9.566 9.810
Philippines 0.023 0.023 0.015 0.024 0.147 0.017 0.180 1.129 205.20 1.769 0.030 27.07 0.073 0.030 0.021 0.702 0.719
Singapore 0.774 0.788 0.494 0.800 4.947 0.567 6.030 37.881 6883.87 59.346 0.996 908.18 2.460 33.546 0.693 23.533 24.132
Switzerland 1.117 1.138 0.713 1.155 7.143 0.819 8.706 54.695 9939.22 85.686 1.439 1311.27 3.552 48.436 1.444 33.978 34.842
Taiwan 0.033 0.033 0.021 0.034 0.210 0.024 0.256 1.610 292.52 2.522 0.042 38.59 0.105 1.426 0.042 0.029 1.025
Thailand 0.032 0.033 0.020 0.033 0.205 0.024 0.250 1.570 285.26 2.459 0.041 37.63 0.102 1.390 0.041 0.029 0.975
Source: ICAPPlc.
Price-to- PERFORMANCE
Dividend earnings Net Year- Three-yr.,
yield* ratio* Dows Jones Index Last change Daily to-date 52-wk. annualized
Shenzhen -c 345.85 -8.15 -2.30% -20.7% -13.9% 17.4%
2.02% 16 U.S. TSM 12072.99 189.01 1.59 -8.1 2.2 2.3
5.24 12 Global Select Div -d 196.03 -0.58 -0.29 -9.5 -4.9 2.6
5.87 10 Asia/Pacific Select Div -d 277.92 -0.79 -0.28 -6.6 -1.4 1.5
5.46 7 HongKongSelect Div -d 162.38 0.05 0.03 -26.3 -22.2 2.6
4.10 14 U.S. Select Dividend -d 353.07 5.96 1.72 -1.5 4.8 -0.9
1.82 15 Islamic Market 1970.06 18.49 0.95 -11.6 -2.3 2.7
2.17 13 Islamic Market 100 2068.13 26.55 1.30 -7.8 0.6 1.1
2.78 13 Islamic China/HKTitans 30 1397.61 0.19 0.01 -16.2 -14.3 5.1
1.38 16 Sustainability Korea 1263.97 46.48 3.82 -15.2 -4.0 8.0
3.31 19 BrookfieldInfrastructure 2301.92 -1.45 -0.06 1.6 5.9 7.0
DJ-UBSCommodity -p 142.96 -0.28 -0.19 -12.0 1.9 -5.2
MSCI indexes
Developed and emerging-market regional and country indexes
fromMSCI Barra as of September. 29, 2011
Price-to- LOCAL-CURRENCY
Dividend earnings PERFORMANCE
yield ratio Morgan Stanley Index Last Daily YTD 52-wk.
2.80% 12 ALL COUNTRY(AC) WORLD* 285.15 1.41% -13.8% 2.2%
2.90 13 World(DevelopedMarkets) 1,122.45 1.58 -12.3 3.9
2.10 19 WorldSmall Cap 199.37 2.24 -15.7 7.0
2.90 12 Kokusai (Worldex-Japan) 1,110.40 1.83 -12.3 4.1
3.70 12 EAFE 1,394.52 0.81 -15.9 -2.2
2.80 11 EmergingMarkets (EM) 891.05 0.27 -22.6 -8.1
3.20 12 ACASIAPACIFICEX-JAPAN 381.83 -0.05 -20.3 -4.7
2.80 12 ACFar East ex-Japan 417.91 -0.04 -20.4 -5.9
2.20 16 Japan 462.11 0.42 -17.7 -7.6
2.80 11 China 50.65 0.61 -23.8 -16.8
1.30 17 China A(China Domestic) 2,544.25 -1.19 -17.6 -10.9
2.70 14 HongKong 9,703.34 -1.83 -20.5 -5.9
1.40 15 India 643.69 -0.38 -20.7 -10.7
1.40 10 Korea 487.29 -0.28 -17.0 -0.9
3.20 16 Malaysia 502.07 0.81 -10.4 -3.3
3.50 12 Singapore 1,447.42 -1.16 -17.6 -10.7
4.50 13 Taiwan 254.47 0.95 -20.3 -5.7
3.20 11 Thailand 366.10 -1.84 -11.0 2.8
4.70 14 Australia 821.13 0.85 -15.0 -9.1
4.60 20 NewZealand 86.74 -0.72 3.5 10.2
2.00 14 USBROADMARKET 1,288.40 2.40 -9.5 10.0
4.10 10 EUROPE 78.77 -1.13 -17.4 -9.7
*Twenty-three developed and 26emerging markets Source: MSCI Barra
*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: DowJones Indexes
DowJones Indexes
Price-to- PERFORMANCE
Dividend earnings Net Year- Three-yr.,
yield* ratio* Dows Jones Index Last change Daily to-date 52-wk. annualized
2.53% 14 Global TSM 2261.90 24.79 1.11% -13.3% -5.6% 0.5%
2.34 12 Global DOW 1779.72 24.35 1.39 -14.7 -8.6 -3.9
2.53 12 Global Titans 50 161.61 -0.01 0.00 -8.7 -1.9 -2.8
2.78 13 Asia/Pacific TSM 1175.55 3.88 0.33 -16.7 -9.3 2.1
3.03 12 Asia/Pacific ex-JapanTSM 2862.18 5.83 0.20 -20.8 -15.2 5.9
3.28 12 Europe TSM 2323.33 29.62 1.29 -15.5 -11.4 -4.3
2.63 12 EmergingMarkets TSM 3730.53 16.66 0.45 -22.3 -18.4 4.6
3.19 12 AsianTitans 50 117.45 -0.03 -0.02 -19.4 -11.2 -4.2
3.07 12 BRIC50 493.93 -0.21 -0.04 -24.6 -21.2 2.8
CBNChina 600 -c 21709.80 -315.41 -1.43 -18.7 -13.4 6.9
2.82 14 China Offshore 50 3367.50 -8.88 -0.26 -20.7 -19.1 3.3
Shanghai -c 294.51 -4.73 -1.58 -17.3 -12.7 7.2
GLOBAL MARKETS LINEUP
30 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
Dow Jones Industrial Average P/E: 12
LAST: 11184.10 s 173.20, or 1.57%
YEAR TO DATE: t 393.41, or 3.4%
OVER 52 WEEKS s 396.05, or 3.7%
*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
12900
12400
11900
11400
10900
10400
1 8 15 22 29
July
5 12 19 26
Aug.
2 9 16 23
Sept.
High
Close
Low
50day
moving average
t
Nasdaq Composite Index P/E: 11*
LAST: 2496.40 s 4.82, or 0.19%
YEAR TO DATE: t 156.47, or 5.9%
OVER 52 WEEKS s 127.78, or 5.4%
2950
2800
2650
2500
2350
2200
1 8 15 22 29
July
5 12 19 26
Aug.
2 9 16 23
Sept.
S&P 500 Index P/E: 13
LAST: 1163.01 s 11.95, or 1.04%
YEAR TO DATE: t 94.63, or 7.5%
OVER 52 WEEKS s 21.81, or 1.9%
1375
1300
1225
1150
1075
1000
1 8 15 22 29
July
5 12 19 26
Aug.
2 9 16 23
Sept.
DJIAcomponent stocks
Volume,
CHANGE
Stock Symbol in millions Latest Points Percentage
AT&T T 12.5 $28.74 0.19 0.67%
Alcoa AA 18.7 9.99 0.03 0.25
AmExpress AXP 2.7 46.65 0.18 0.39
BankAm BAC 114.3 6.34 0.18 2.92
Boeing BA 2.5 62.80 0.88 1.43
Caterpillar CAT 4.7 74.81 0.27 0.36
Chevron CVX 5.0 93.71 1.97 2.15
CiscoSys CSCO 24.7 15.81 0.03 0.19
CocaCola KO 4.3 69.06 1.00 1.47
Disney DIS 5.4 31.04 0.56 1.84
DuPont DD 2.9 41.26 0.37 0.89
ExxonMobil XOM 11.3 73.69 1.62 2.25
GenElec GE 24.9 15.80 0.35 2.27
HewlettPk HPQ 14.0 23.90 0.71 3.07
HomeDpt HD 5.8 33.92 0.32 0.97
Intel INTC 32.6 22.41 0.11 0.47
IBM IBM 3.2 178.98 1.43 0.81
JPMorgChas JPM 21.8 31.40 0.93 3.06
JohnsJohns JNJ 3.5 63.64 0.39 0.62
KftFoods KFT 3.5 34.54 0.31 0.91
McDonalds MCD 3.6 88.23 0.20 0.23
Merck MRK 7.5 32.71 0.77 2.41
Microsoft MSFT 24.8 25.64 0.06 0.25
Pfizer PFE 19.6 18.05 0.49 2.79
ProctGamb PG 4.0 63.49 0.76 1.21
3M MMM 2.3 74.89 1.29 1.75
TravelersCos TRV 1.5 49.23 1.06 2.20
UnitedTech UTX 2.3 72.56 0.71 0.99
Verizon VZ 6.7 37.03 0.19 0.52
WalMart WMT 4.5 51.87 0.56 1.09
U.S. stocks: most active...
Volume, CHANGE
Stock Symbol in millions Latest Points Percentage
SPDRS&P500 SPY 145.5 $115.94 0.80 0.69%
BankAm BAC 114.3 6.34 0.18 2.92
SiriusXM SIRI 64.9 1.60 0.05 3.32
SPDRFnclSelSct XLF 48.3 12.15 0.25 2.06
AdvMicro AMD 45.3 5.30 0.85 13.82
PwrShrs QQQ QQQ 44.2 54.12 0.41 0.75
DrxFinancBull 3x FAS 35.9 11.49 0.55 5.03
iShrRu2000 IWM 34.6 65.66 0.46 0.71
Intel INTC 32.6 22.41 0.11 0.47
ProShrsUShrt S&P SDS 31.4 24.33 0.35 1.42
iShrMSCIEmrgMkt EEM 30.4 37.03 0.58 1.59
YRCWorldwide YRCW 29.8 0.05 ... 5.04
iShrSilverTr SLV 26.4 29.59 0.72 2.49
FordMotor F 25.6 10.01 0.08 0.79
iShrFTSEChina25 FXI 25.5 33.03 0.54 1.66
Biggest gainers...
HarlysvlGp HGIC 3,108.7 $58.56 27.04 85.79%
AmSuprcnd AMSC 2,517.3 4.62 0.74 19.07
ImperialHoldings IFT 1,021.7 2.60 0.41 18.72
ThorInd THO 1,074.5 23.62 3.31 16.30
LGDisplayADS LPL 1,152.8 8.68 0.96 12.44
...Biggest losers
BioDlvrSci BDSI 3,792.4 $1.27 1.79 58.50%
Tegal TGAL 15.1 2.45 0.64 20.71
Youku.comADS YOKU 3,601.7 16.14 3.74 18.81
Tranzyme TZYM 15.6 2.39 0.45 15.85
AdvMicro AMD 45,331.0 5.30 0.85 13.82
ADRs of Asiancompanies*
52-WEEK
Volume,
CHANGE
High Low Stock Symbol in OOOs Latest Points Percentage
$165.96 $94.33 BaiduADS BIDU 15,033.6 $108.82 12.60 10.38%
37.58 20.60 FocusMediaHldg FMCN 5,800.6 21.55 3.33 13.38
53.16 30.29 CtripInt ADS CTRP 4,898.3 33.71 0.04 0.12
14.05 10.08 TaiwanSemi TSM 4,309.5 11.83 0.06 0.51
104.59 65.82 BHPBiltonADS BHP 3,710.5 68.17 0.22 0.32
77.92 46.12 InfosysADS INFY 2,025.2 51.84 1.01 1.99
10.83 2.48 SuntechPwr STP 1,775.3 2.56 0.03 1.19
18.92 7.38 LGDisplayADS LPL 1,152.8 8.68 0.96 12.44
10.87 3.97 AUOptrncs AUO 1,084.7 4.13 0.11 2.74
53.87 43.51 ChinaMobile CHL 1,068.8 48.80 0.26 0.54
37.65 14.50 TataMtrs ADS TTM 955.8 16.26 0.81 5.24
5.68 4.06 MitsuUFJ ADS MTU 906.0 4.55 0.11 2.48
7.27 3.92 Slcnwr ADS SPIL 900.9 4.77 0.08 1.71
58.22 33.59 ICICI BkADS IBN 870.2 36.65 1.05 2.95
22.50 13.17 ChinaUnicomHK CHU 823.8 21.18 0.27 1.27
55.00 35.20 Netease.com NTES 748.2 39.10 0.75 1.88
5.97 3.51 AdSemEgADS ASX 704.7 4.32 0.01 0.23
3.52 1.77 UtdMicroADS UMC 629.9 1.96 0.02 1.03
8.54 1.66 SifyTechADS SIFY 481.5 4.15 0.15 3.45
38.29 27.50 HDFCBnk HDB 463.3 30.18 0.80 2.72
52.30 42.15 CanonADS CAJ 418.2 45.78 0.63 1.40
36.97 18.39 SonyCpADS SNE 377.2 19.71 0.37 1.91
11.70 6.99 TeleNZADS NZT 322.3 9.93 0.19 1.95
20.29 13.35 SKTele ADS SKM 321.7 14.43 0.08 0.56
26.80 11.16 AluCpChina ACH 268.7 11.53 ... ...
44.56 28.90 HondaMtr ADS HMC 263.0 30.17 0.46 1.55
271.94 144.73 Cnooc ADS CEO 257.3 169.05 4.92 3.00
37.46 27.16 ChunghwaTel CHT 234.2 33.06 0.17 0.52
14.00 3.83 SilicnMotnTch SIMO 225.4 12.38 0.38 2.98
41.80 29.08 DrRdyLabADS RDY 78.7 30.37 0.18 0.59
*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 on benchmark two-year
and 10-year government bonds around the world. Data as of 12 p.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 1.065 79.8 84.7 89.6 51.9 1.110 1.116 0.961
3.500 10 2.754 75.2 74.9 53.8 27.4 2.804 2.813 2.780
4.000 Belgium 2 1.478 121.1 130.3 174.9 61.9 1.566 1.969 1.061
4.250 10 3.729 172.7 175.5 169.8 62.4 3.810 3.973 3.130
4.250 Finland 2 0.648 38.1 40.6 59.9 42.7 0.669 0.819 0.869
3.375 10 2.342 34.0 29.2 24.8 -0.7 2.347 2.523 2.499
3.750 France 2 0.829 56.2 57.4 72.1 47.0 0.837 0.941 0.912
2.500 10 2.597 59.5 56.8 47.7 12.4 2.623 2.752 2.630
1.750 Germany 2 0.578 31.1 31.9 51.5 34.4 0.582 0.735 0.786
3.250 10 1.979 -2.3 -7.7 -8.4 -27.6 1.978 2.191 2.230
4.600 Greece 2 68.329 6806.2 7489.7 4424.9 819.0 75.160 44.469 8.632
6.250 10 21.757 1975.5 2004.5 1526.8 811.7 22.100 17.543 10.623
2.000 Italy 2 4.215 394.8 398.1 317.6 145.6 4.244 3.396 1.898
3.750 10 5.476 347.4 347.2 262.4 139.7 5.527 4.899 3.903
4.250 Netherlands 2 0.695 42.8 44.9 61.5 31.1 0.712 0.835 0.753
3.250 10 2.387 38.5 35.2 35.4 -3.6 2.407 2.629 2.470
5.450 Portugal 2 16.528 1626.1 1689.6 1252.8 390.9 17.159 12.748 4.351
4.800 10 12.301 1029.9 1047.5 963.1 393.1 12.530 11.906 6.437
2.300 Spain 2 3.289 302.2 304.8 307.2 175.7 3.311 3.292 2.199
5.500 10 5.094 309.2 301.8 272.3 161.2 5.073 4.998 4.118
4.500 U.K. 2 0.585 31.8 33.7 38.3 17.6 0.600 0.603 0.618
3.750 10 2.363 36.1 32.3 22.7 40.7 2.378 2.502 2.913
0.125 U.S. 2 0.267 ... ... ... ... 0.263 0.220 0.442
2.125 10 2.002 ... ... ... ... 2.055 2.275 2.506
Source: ICAPplc
Key moneyrates
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 1.50 1.00
Switzerland 0.50 0.56
Australia 4.75 4.50
Hong Kong 5.00 5.25
Libor
One month 0.23889% 0.25625%
Three month 0.36856 0.29000
Six month 0.54839 0.46250
One year 0.85489 0.77825
Latest 52 wks ago
EuroLibor
One month 1.29750% 0.57813%
Three month 1.49000 0.83438
Six month 1.70125 1.11625
One year 2.03875 1.40625
Euribor
One month 1.35700% 0.62100%
Three month 1.54400 0.88600
Six month 1.74600 1.14100
One year 2.07500 1.42500
Hibor
One month 0.21143% 0.23929%
Three month 0.28143 0.32893
Six month 0.38143 0.45000
One year 0.66143 0.80000
Offer Bid
Eurodollars
One month 0.1100% 0.2500%
Three month 0.1500 0.2800
Six month 0.3500 0.5000
One year 0.8000 0.7000
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. 0.08% 0.24%
U.K. (BBA) 0.528 0.543
Euro zone 0.78 0.53
Sources: WSJ Market Data Group, SIXTelekurs, ICAP
U.S. Treasury yield curve
The curve shows the yield to maturity of current bills, notes and bonds; all data as of 3 p.m. ET.
1
month(s)
3 6 1
years
2 3 5 710 30
maturity
5%
4
3
2
1
0
s
One year ago
s
Wednesday
TOTAL RETURN
Yield to Modified Month Quarter Year
Ryan Index maturity duration to-date to-date to-date 12-month
30-year Treasury 3.090% 18.59 9.92 % 27.00% 28.84 % 17.42 %
10-year Treasury 2.004 8.86 2.07 11.39 14.91 8.04
7 Year Treasury 1.481 6.55 0.62 7.68 11.82 7.02
Five-year Treasury 1.008 4.87 0.05 4.50 7.98 4.89
Ryan Index 1.376 7.30 2.04 8.50 11.15 6.92
3 Year Treasury 0.415 2.95 0.24 1.37 3.25 2.54
Two-year Treasury 0.258 2.00 0.10 0.46 1.28 1.12
1 Year Treasury 0.102 0.98 0.03 0.27 0.65 0.74
Six-month Treasury 0.041 0.50 0.03 0.12 0.30 0.38
Ryan Cash Index-a 0.038 0.45 0.02 0.11 0.29 0.36
Three-month bill 0.010 0.25 0.01 0.06 0.16 0.24
One-month bill ... 0.08 ... 0.01 0.06 0.10
a-Performance of a cash investment
Source: Ryan ALM
SCANNING THE GLOBE
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. 31
Asian stocks in the news
Daewoo Shipbuilding &Marine Engineering
Korea 22,450won
s 4.9% or 1,050won
Overseas investors bought Korean
transportation stocks.
2010
O N D
2011
J F M A M J J A S
12500
25000
37500
50000
62500 In won
Price-to-earnings ratio N.A.
Earnings per share, past four quarters N.A.
Dividend yield 1.2
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Indus Gds &Svcs 0.5% -0.9% -11.0%
Daewoo Shipbuilding &Marine Engineering 4.9% -12.0% -15.9%
Hynix Semiconductor Inc.
Korea 21,850won
s 6.3% or 1,300won
Technology stocks led the Korean rally.
2010
O N D
2011
J F M A M J J A S
7500
15000
22500
30000
37500 In won
Price-to-earnings ratio N.A.
Earnings per share, past four quarters N.A.
Dividend yield N.A.
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Technology 1.0% 1.7% -11.1%
Hynix Semiconductor Inc. 6.3% 1.2% ...
Hana Financial Group Inc.
Korea 34,900won
s 6.7% or 2,200won
Expectations mounted that Hana will win
approval to buy Korea Exchange Bank.
2010
O N D
2011
J F M A M J J A S
15000
30000
45000
60000
75000 In won
Price-to-earnings ratio N.A.
Earnings per share, past four quarters N.A.
Dividend yield 0.9
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Banks 0.4% 3.3% -11.8%
Hana Financial Group Inc. 6.7% 2.5% 1.9%
LGDisplay Co. Ltd.
Korea 20,150won
s 11.0% or 2,000won
Pension-fund buying aided stocks. Aregulator
recently urged funds to expand their market
presence.
2010
O N D
2011
J F M A M J J A S
10000
20000
30000
40000
50000 In won
Price-to-earnings ratio N.A.
Earnings per share, past four quarters N.A.
Dividend yield 1.3
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Technology 1.0% 1.7% -11.1%
LGDisplay Co. Ltd. 11.0% -5.4% -49.0%
LGElectronics Inc.
Korea 68,800won
s 11.1% or 6,900won
South Korean technology stocks, seen as
undervalued by some investors, surged higher.
2010
O N D
2011
J F M A M J J A S
30000
60000
90000
120000
150000 In won
Price-to-earnings ratio N.A.
Earnings per share, past four quarters N.A.
Dividend yield 1.5
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Personal &Hshld Gds 0.8% 1.4% -8.5%
LGElectronics Inc. 11.1% 6.8% -29.1%
Nikon Corp.
Japan 1,815
t 2.3% or 43
The Nikkei newspaper said Nikon's full-year
earnings outlook is likely to remain unchanged.
2010
O N D
2011
J F M A M J J A S
700
1400
2100
2800
3500 In yen
Price-to-earnings ratio 57
Earnings per share, past four quarters 32.49
Dividend yield 1.5
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Personal &Hshld Gds 0.8% 1.4% -8.5%
Nikon Corp. -2.3% -2.4% 17.6%
Rio Tinto Ltd.
Australia A$62.45
t 2.5% or A$1.60
Weakness in commodity prices hurt the
mining house.
2010
O N D
2011
J F M A M J J A S
30
60
90
120
150 In Australian dollars
Price-to-earnings ratio 9
Earnings per share, past four quarters 7.32
Dividend yield 2.5
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Basic Resources -1.2% -3.2% -17.1%
Rio Tinto Ltd. -2.5% -10.3% -19.2%
Newcrest Mining Ltd.
Australia A$34.16
t 2.7% or A$0.95
The gold miner fell in response to recent
weakness in the price of the metal.
2010
O N D
2011
J F M A M J J A S
12
24
36
48
60 In Australian dollars
Price-to-earnings ratio 28
Earnings per share, past four quarters 1.26
Dividend yield 0.9
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Basic Resources -1.2% -3.2% -17.1%
Newcrest Mining Ltd. -2.7% -12.0% -14.6%
Compal Electronics Inc.
Taiwan TW$28.00
t 2.8% or TW$0.80
Concern over demand for Taiwan's technology
exports weighed on the firm.
2010
O N D
2011
J F M A M J J A S
12
24
36
48
60 In Taiwan dollars
Price-to-earnings ratio N.A.
Earnings per share, past four quarters N.A.
Dividend yield 9.7
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Technology 1.0% 1.7% -11.1%
Compal Electronics Inc. -2.8% -8.8% -24.6%
Tokyo Electric Power Co. Inc.
Japan 233
t 11.4% or 30
Worry about compensation following Tepco's
nuclear disaster hit the stock.
2010
O N D
2011
J F M A M J J A S
160
720
1280
1840
In yen
Price-to-earnings ratio N.A.
Earnings per share, past four quarters -853.33
Dividend yield 25.8
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Utilities -0.5% -0.6% -24.4%
Tokyo Electric Power Co. Inc. -11.4% -24.4% -88.9%
Movingthe
markets
At right, Japans benchmark stock index and
the biggest movers among the larger Asian
stocks indexes and stocks Thursday. Below
each index are its most actively traded stocks.
The charts showthe percentage change in
each indexs or stocks value, rather than the
point change, for purposes of comparison. The
index level or stock price is indicated on each
axis. All indexes and stocks are shown in local
currency terms.
Asianindexmovers
Nikkei StockAverage
Japan 8701.23
s 0.99% or 85.58
2010
O N D
2011
J F M A M J J A S
5000
7500
10000
12500
15000
Volume Change
Stock in millions Close Net %
Mizuho Fin 184.35 114 1 0.88
Tokyo Electric 142.95 233 -30 11.41
MitsuUFJFin 70.57 355 8 2.31
Hitachi 41.64 392 3 0.77
Toshiba 41.10 321 4 1.26
Sensex
India 16698.07
s 1.53% or 252.05
2010
O N D
2011
J F M A M J J A S
10000
15000
20000
25000
30000
Volume Change
Stock in millions Close Net %
JaiprakashAssocts 4.57 74.40 4.40 6.29
TataMotors 3.28 160.95 5.00 3.21
DLF 1.31 223.60 0.45 0.20
RelianceComm 1.26 77.65 0.75 0.96
Larsen&Toubro 1.05 1,369.55 34.70 2.47
CBN600
China 21709.80
t 1.43% or 315.40
2010
O N D
2011
J F M A M J J A S
12500
18750
25000
31250
37500
Volume Change
Stock in millions Close Net %
TCL 140.12 2.09 0.05 2.34
ChinaMinshengBkA 125.63 5.61 0.03 0.54
ZijinMiningGroup 80.65 4.29 0.18 4.03
AgricBkofChinaA 75.19 2.46 0.01 0.40
PingdingshanTianan 69.30 13.84 0.36 2.67
ASX200
Australia 4008.30
t 0.77% or 31.20
2010
O N D
2011
J F M A M J J A S
2000
3000
4000
5000
6000
Volume Change
Stock in millions Close Net %
ConnectEastGroup 89.44 0.55 unch.
LynasCorp 66.54 1.12 0.005 0.45
Alumina 35.37 1.46 0.04 2.82
FortescueMetalsGrp 34.49 4.45 -0.07 1.55
PaladinEnergy 33.59 1.17 -0.14 10.69
A late round of buying linked to improving
sentiment over the European crisis helped
the market reverse early losses. It was the
indexs third consecutive day of gains.
Investors closed out bets that stocks would
fall as renewed hope regarding the European
debt crisis boosted most global markets. Re-
sources stocks fell.
The index has fallen for five of the past six
trading days as investors worried about
slowing growth. Construction-related stocks
lost ground.
Weakness in prices for a broad range of
commoditiesa mainstay of the Australian
economysent the market lower. Late buy-
ing limited the losses.
MARKETS LINEUP
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32 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
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HEARD ON THE STREET
Email: heard@wsj.com FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard
Sovereign Bonds Emerge
As Western governments mire
themselves in debt, emerging-market
sovereign bonds are coming of age.
Asias economies and relatively
strong fiscal positions have lured
ever more foreign investors. But, at
least when it comes to local-currency
bonds, investors should remember
that there are two legs supporting
their value.
One buckled in recent weeks.
Many currencies fell sharply as in-
vestors fled to the dollar for safety,
leaving J.P. Morgans Government
Bond Index Emerging Markets down
10% from its peak at one stage this
week. But the other legbonds lo-
cal-currency yieldshavent changed
significantly. Hedge away currency
moves and the index fell just 1.5%,
reflecting only a modest rise in in-
terest rates.
That bodes well for the future.
Emerging nations such as Indonesia
have relatively low debt, healthy
banks and faster economic growth
rates than does the developed world.
And emerging nations have accumu-
lated larger foreign-currency re-
serves in the past three years to help
fight speculative outflows, as hap-
pened in the 2008 crisis.
After the dust settled from the
crisis, their economies were the first
to rebound. More cross investment
by sovereign-wealth funds and Asian
central-bank reserve managers since
then could provide stability, as these
arent the types of investors who sell
in a panic. But, while the long-term
prospects look good, there may be
cheaper prices on these bonds ahead.
The risk of another drop in curren-
cies and, in some countries, a rise in
yields is real, should market turmoil
continue because of the euro-zone
crisis. In particular, an outflow of
capital could be at hand, after a pe-
riod in which foreign flows into
these still-small and illiquid markets
have been significant.
Money has come into local-cur-
rency emerging-market bond funds
and exchange-traded funds in 25 out
of the past 26 months through Au-
gust, a total of $54 billion, according
to EPFR Global. Since early 2009,
foreign ownership of government
bonds has gone from 2.6% in Thai-
land to near 10% recently. In Malay-
sia, it went from 10% to 25%.
The outflows already have
started in some markets. Since the
start of the month, foreigners sold
$2.5 billion of Indonesian govern-
ment debt. The finance ministry and
the central bank masked the pain by
announcing they would snap up gov-
ernment debt. As a result, yields on
10-year government bonds actually
fell to 7.3% from 7.4% on Monday,
even as the rupiah lost 3% against
the dollar. It isnt clear such inter-
ventions could stem a more-pro-
longed backwash of capital into dol-
lars. And with yields near historic
lows, there isnt much cushion to be
had when currencies fall. It used to
be that if the currency fell sharply,
investors could stand pat, knowing
high yields would preserve their in-
vestment. But a 3.8% yield in Thai-
land or even 7% yield in Indonesia,
because of its history of higher infla-
tion, doesnt provide that much com-
fort.
An option that avoids the imme-
diate currency risk is dollar-denomi-
nated bonds issued by these coun-
tries. The yields have risen a bit
along with the market turmoil, yet
the chances of default havent
changed much. Indonesias 10-year
dollar bond traded Thursday with a
yield of 4.6% compared with 4% in
August. It is low in the history of
emerging markets, but a nice return
compared with 2% for Treasurys.
Alex Frangos
The Kremlin and Oil
Combine to Rumble Ruble
Russian voters werent consulted
on the deal by President Dmitry
Medvedev to stand aside for
Vladimir Putin in next years presi-
dential elections. But the markets
are having their say.
The Central Bank of Russia was
forced this week into its biggest
currency intervention since 2009, as
the ruble threatened to fall below its
official band of 32.50 rubles to 37.50
rubles against a basket of euros and
dollars. That could be a sign of
things to come.
Politics isnt the only problem.
Recent oil and gas price falls have
weakened the ruble, as they make up
two-thirds of Russias exports. When
oil tanked during the financial crisis,
so did the ruble; the central bank
spent more than $200 billion in
2008 defending the currency and
was forced to raise interest rates.
Since then, the central bank has
been intervening less and widening
the trading band. Such moves had
encouraged hopes of Russia moving
toward a free-floating currency.
But the political uncertainty has
put those ambitions on hold. Net
capital outflows in the first half of
this year topped $30 billion. This
weeks sacking of Finance Minister
Alexei Kudrin has fueled investor
concerns. Capital outflows could hit
$25 billion to $30 billion in the
fourth quarter alone, ING forecasts.
If Russian households start switch-
ing deposits into foreign currency,
pressure on the ruble will increase.
The central bank has decided to
freeze the trading band, a setback
for its liberalizing ambitions. Unless
oil prices recover, or the political
outlook suddenly improves, it faces
digging into its reserves again to
hold the ruble line.
Andrew Peaple
Android Loses Out
In Patent Skirmish
So much for Googles new patent
power.
A key reason for the search gi-
ants $12.5 billion deal for Motorola
Mobility was to get hold of the lat-
ters huge intellectual-property port-
folio. The idea was to protect mo-
bile-device makers using Googles
Android mobile operating system
from the likes of Microsoft, Apple,
Oracle and others claiming that An-
droid violates their intellectual prop-
erty.
But it didnt stop Samsung from
striking a deal Wednesday to pay
royalties on its Android devices to
Microsoft. That appears to resolve
patent claims Microsoft has against
Samsungs Android devices.
That is bad news for Googles mo-
bile strategy as it means Android is
no longer free. Google gives away
the operating system to device mak-
ers because it wants the widest pos-
sible distribution. With 48% market
share, Android took the top spot
among smartphone operating sys-
tems globally in the second quarter,
estimates Strategy Analytics. The
hope is that will drive more mobile
searches and give Google an advan-
tage in delivering future mobile
services.
But now that the top two Android
device makers, Samsung and HTC,
are paying royalties to Microsoft, it
becomes harder for others to get
away without payingand poten-
tially easier for Apple and others to
extract their own pound of flesh. In
addition, it narrows the effective
price gap with operating systems
like Microsofts Windows Phone.
Android partners likely want to
diversify their device portfolios any-
way. With Motorola Mobility in
hand, Google becomes a rival device
maker. Samsung will throw more re-
sources behind developing Windows
models, argues Neil Mawston of
Strategy Analytics.
Ultimately, handset makers will
sell the devices consumers want to
buy, and Android, along with Apples
iOS, are likely to remain the domi-
nant mobile operating systems pow-
ering them.
But Microsoft has given Windows
an opening.
Rolfe Winkler
Associated Press
Samsung will pay royalties to Microsoft on its Android devices.
Net capital outflows in the
first half topped $30 billion
and could hit another $30
billion in the fourth quarter.
WEEKEND JOURNAL.
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W
hen Chicago Cubs owner Tom Rick-
etts attends home games at Wrigley
Field, he spends part of the day
hearing from fans who have endured more
than a century without a World Series Cham-
pionship. He must endure inevitable ques-
tions about Moneyball, Michael Lewiss
2003 book about baseballs statistical revolu-
tion. Fans used to ask when theyre going to
trade for a starting pitcher; now they beg for
a computer whiz to save the franchise.
It comes up all the time, says Mr. Rick-
etts, whose family bought the Cubs two
years ago. The fans hope that the deci-
sions made on the baseball side are made
with the evidence at hand.
Moneyball the book sold more than one
million copies. Moneyball the movie
opened in the U.S. last week and stars Brad
Pitt as the Oakland As iconoclastic general
manager Billy Beane.
The film tells the story of how Mr. Beane
ignored the intuitive powers of his crusty
old scouts and instead evaluated talent us-
ing a statistical approach based largely on
the theories of Bill James, the founder of
what he called Sabermetrics. The resulting
team, on a bargain-basement payroll, won
103 games in 2002.
Whats the legacy of Moneyball? One
thing its not anymore: a raging culture war.
Mr. Lewis deftly framed it that way. Now,
both sides acknowledge that statistical
analysis has a place, but so does gut in-
stinct, tradition, money, mysteryand
plenty of luck. This was all about using
technology to analyze and measure things
that used to be measured by guys with
stopwatches or playing hunches, said Steve
Greenberg, former deputy commissioner of
Major League Baseball and now a sports in-
vestment banker, Theres still a place for
that stuff, but technology has changed the
game forever. Here are some ways of look-
ing at the legacy:
The Big-Money Guys Get the Playbook
Early in the last decade, there was a mo-
ment when it looked like baseball might be-
come a mental battle instead of a financial
one. Wily numbers-crunchers could outwit
Please turn to next page
TRAVEL
Why The Best Part of Any
Journey is Going Home W5
FASHION
Pierre Corthay: In Shoes, As in
Cooking, Ingredients Matter W8
FILM
Jackie Chans Revolutionary
New Role W10
Friday - Sunday, September 30 - October 2, 2011
W2 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
the teams that were writing big checks for
crowd-pleasing big swingers. After all, Mr.
Beanes As were winning 100 games a year
while spending a fraction of the New York
Yankees budget. Word had spread through
baseball that Mr. Beane was doing some-
thing different.
What followed is a scenario that has been
playing out in baseball for decades, accord-
ing to Ken Burns, the filmmaker and pro-
ducer of Baseball, the games definitive
documentary. He compares Mr. Beanes inno-
vations to Branch Rickeys creation of the
modern farm system when he was running
the St. Louis Cardinals in the 1920s. He
couldnt afford to buy Babe Ruth, but he
thought he could grow one, Mr. Burns says.
Likewise, in 2002 when the Boston Red
Sox failed to woo Mr. Beane to the East
Coast, it promoted to general manager Theo
Epstein, who brought in Bill James and ad-
opted Mr. Beanes approach, only with more
money. Two years later they won the World
Series. Yankees general manger Brian Cash-
man, with what is now a $200 million pay-
roll, steered his club in the same direction.
The notion that a small-market team
could replicate what the As did is silly,
says Andrew Zimbalist, the noted sports
economist. Once every team knows about
a market mechanism, its gone. Any notion
that you can have some sort of competitive
balance because of Sabermetrics is very
misleading, says Mr. Zimbalist.
Rightly or wrongly, the lesson sports
executives drew from the publication of
Moneyball was that opening the curtain
speeds up the copycat process, and the po-
tential for ridicule.
Today, in the post-Moneyball era, its
probably easier to discuss battle plans in
Afghanistan with Pentagon officials than to
get a member of the New England Patriots
staff to talk honestly about the teams inju-
ries or its defensive philosophies. A veil of
secrecy has descended over sports unlike
anything the industry has ever seen.
All research is proprietary. General man-
agers will barely mention what statistics
they focus on, much less which companies
they use to gather data, or how many peo-
ple they employ to analyze it. A scout could
tell a rival over a beer, that kid really has
some pop in his bat. But when numbers
and formulas get into the picture, all of a
sudden, lips clamp shut.
Yet small-market teams need not abandon
hope: What Moneyball theory is really about
is finding value in places where your compet-
itors arent looking and therefore arent driv-
ing up prices. In the 1990s, that was players
who were expert at getting on base and mak-
ing pitchers throw a lot of pitches, which al-
lowed a lineup to face middle relief, where
baseballs worst pitchers reside.
More recently, as teams soured on spend-
ing millions on second and third-tier free
agents, Mr. Beane has tried to find value
there, signing veterans like Coco Crisp and
Hideki Matsui for less than they had earned
in previous deals. Likewise, hes tried draft-
ing more high school players as other teams
ran up prices on college prospects with more
experience. Mr. Beane has little choice, as his
annual payroll remains a fraction of that of
what the games biggest spenders.
Trust the Numbers, Except
When Theyre Juiced
Not coincidentally, Major League Base-
balls so-called Moneyball Era, roughly the
mid-late 1990s until the mid-late 2000s, co-
incided with its so-called Steroid Era.
The uncomfortable fact is that when Sa-
bermetricians run through the names com-
puters indicated were the great players of
their times, many of those same names have
been connected to the games steroid scan-
dals, including Jason Giambi, perhaps the
Oakland As greatest Moneyball player
(though he left the team just before the
movie begins). Mr. Giambi testified in the
Barry Bonds trial earlier this year that he
had used steroids. Alex Rodriguez admitted
steroid use in a 2009 TV interview. Former
Continued from previous page
Red Sox star Manny Ramirez, who never ad-
mitted steroid use, was suspended for failing
a steroid test in 2009 and retired this year
rather than facing the consequences of a sec-
ond failed test. Barry Bonds, the Sabermetric
quintessence (lots of walks, lots of homers),
was found guilty of obstructing an investiga-
tion into his steroid use.
In other words, a lot of the theories and
formulas used to decide the games best
players were based essentially on pumped-
up numbers. With steroid use and power on
the wane, pitching is ascendant, runs are
precious, and Moneyballs win formulas
dont work so well anymore.
Sal Galatioto, a sports investment banker,
says some of these formulas remind him of
the U.S. housing bubble, and disastrous lev-
eraged buyout deals, which were facilitated
when analysts used unreliable models and
overvalued investments. The computer anal-
ysis is only as good as the information you
put into it, Mr. Galatioto said.
The Baseball Geeks
Become Insufferable
Bart Giamatti, the late baseball commis-
sioner, medieval scholar and president of
Yale, used to say that the game of baseball
was really the conversation surrounding it.
If Mr. Giamatti were alive today, hed likely
find the conversation a little too inside
baseball. A discussion about the game can
resemble one about the Grateful Deads mu-
sic in the early 1980s. It was no longer
enough simply to like the song Sugar Mag-
nolia. Which version? From which bootleg?
And how many bootlegs do you own? And
how many shows have you been to?
In the age of Moneyball, baseball de-
bate can quickly devolve into whether one
players WAR (wins above replacement)
says more about him than another players
VORP (value over a replacement player). Do
you like WHIP (walks and hits divided by
innings pitched) or FIP (fielding indepen-
dent pitching)?
The geeks have definitely been let off
the leash, says Michael Lewis, the Money-
ball author. Mention batting average,
earned run average, fielding percentage, a
pitchers win total, or any other statistic
thats dependent on other variables and
risk banishment as hopelessly anachronis-
tic. Never suggest a player should steal, or
give away an out with a sacrifice. And by
the way, Derek Jeter stinks. Hes overrated
because he doesnt get to enough balls at
shortstop, and the math proves it.
Im O.K. until someone starts explaining
to me why Bobby Abreu is better than Ro-
berto Clemente, says the longtime broad-
caster and MLB Network host Bob Costas, an
early Bill James disciple. Then Ive had it.
Former baseball commissioner Fay Vin-
cent hates speaking out against statistical
analysis because it makes him sound like a
Luddite, which he swears he isnt, but he
says numbers are often taken out of context.
I remember sitting at Joe DiMaggios
funeral and listening to [former Yankee
teammate and American League president]
Dr. Bobby Brown explain how there were no
statistics kept on how many times Joe had
stretched a single into a double in the
eighth inning or later and then come
around to score the winning run, or made a
spectacular catch or throw to save a game.
He said he saw those things and rated
Joe at the top because of it. The only num-
bers he cared about were how many pen-
nants and championships the Yankees won
when Joe was in center field. It was bril-
liant because Bobby was a man of science, a
cardiologist who had played with Joe and
he was arguing that you can only take the
numbers so far.
Baseball Is a Metaphor For Everything
The business world used to look to sports
only for inspiration. Coaches would come in
to fire up a sales force with talk of a winning
attitude, never giving up. Moneyball al-
lowed the business world to see sports in
terms of strategic tools, especially in envi-
ronments where resources are scarce and in-
novation becomes a requirement.
Beyond that, Moneyball celebrated
measurements at exactly the time when com-
puters and simple programs were exponen-
tially increasing the speed at which the edu-
cated working public could analyze data and
hold everyone accountable for their results.
John Challenger, principal of the job
placement firm Challenger, Gray & Christ-
mas, remembers reading Moneyball for the
first time, then going out and buying copies
for each of his top managers. In his view,
this was the first book to coherently address
the issue of finding the key measurements
that will help you run your business, the
kind of data that a company like General
Electric sought tirelessly for decades.
People thought it was crazy, Mr. Chal-
lenger said of GEs approach. Moneyball
gave everybody a way to understand and
think about it, and everybody finally got it.
WEEKEND JOURNAL
What We Learned From Moneyball
Clockwise from top left, Oaklands Billy Beane; the Red Sox Theo Epstein and Yankees Brian Cashman followed Beanes lead; Bill James; Jason Giambi.
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Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. W3
WEEKEND JOURNAL
For the Rich and Patient, Space Awaits
Plenty of Wealthy Travellers Are Lining Up To Voyage Beyond the Earths Atmosphere
P
rivate space travel hit a speed
bump earlier this month when
Amazon Chief Executive Jeff
Bezoss spaceship went off course
and had to be destroyed. But ac-
cording to Virgin Galactic, the inter-
stellar arm of Richard Bransons
holdings, there are plenty of travel-
ers waiting for liftoff.
Only seven people have paid their
way into space so far, spending $20
million to $35 million to hitch rides
on Russian rockets into low earth or-
bit. Virgin Galactic, seeking to be-
come the first private space tourism
firm to operate regular flights, prom-
ises to send flyers, at $200,000 a
ticket, on a suborbital hop that fea-
tures a few minutes in space.
It has booked some 450 custom-
ers so far, says Stephen Attenbor-
ough, Virgin Galactics commercial
director. Our initial ambition was
to have signed 500 people up by the
time we start commercial opera-
tions. So well be significantly ahead
of thatit could be 700 to 800, he
says. Were very happy to see that
the market, which was unproved, is
definitely in existence.
The prospective space tourists in-
clude people from Japan, Singapore
and Malaysia, and sales are underway
in Hong Kong, South Korea and India,
he adds. But the prized mainland Chi-
nese marketawash with the first-
generation wealth that typifies many
of Virgin Galactics customersre-
mains off-limits for now. Until our
regulatory position is clarified and fi-
nalized, we dont sell tickets into
China, Mr. Attenborough says.
Weve been pretty busy in other
markets, but I hope eventually to be
able to sell to the whole of this re-
gion. It wouldnt surprise me if there
was a large demand from China, but
were not quite there yet.
He spoke with the Journal about
the spaceship business and what the
modern-day space traveler is look-
ing for in a flight these days.
Whats the latest on actually getting
customers into space?
Our original intention was to build a
vehicle more like SpaceShipOne
that was built to win a competi-
tionand there would have been
room for one passenger strapped to
the seat throughout.
But we started talking to our
customers and discovered what they
want is the space experience like
that of past astronauts. [They said:]
What we really want to do is have
a few precious minutes where we
can leave their seats, experience
weightlessness, drift over to a win-
dow and see Earth from space.
So we chose the harder path
went for a much bigger vehicle that
can take more passengers and give
them cabin space for a zero-gravity
experience, and we also put lots of
big windows in. Thats one of the
reasons why the project has taken a
little longer, and become more ex-
pensive than anticipated. But it is
much better to go that route in
terms of ensuring the viability of
the long-term business.
What are Virgin Galactics plans for a
nonpassenger business?
We recognize that commercially we
needed to de-risk our reliance on
one market. So we gave the builders
of our vehicles the specification that
their uses would be many and var-
ied. We identified the research and
education market as one that was
being poorly served by existing
technology, and one that we could
potentially transform by providing
regular, flexible, cheap and safe ac-
cess to space. NASA are great
friends of ours, and we had always
been hopeful that they would be-
come early customers.
Whos the average aspiring space trav-
eler?
Many are self-made, so its first-
generation moneyon average they
tend to be reasonably wealthy, but
not necessarily super-wealthy.
About 50% of them come from
the U.S., and we have 47 countries
represented now. There are a lot of
people who booked tickets with us
who will be the first astronauts
from their country. Maybe 70% are
male, although we do have very en-
thusiastic female customers.
The thing that really binds these
people together is that they have a
great spirit of adventure. They rec-
ognize they have a part to play in
building a new industry, as did the
early flyers in commercial aviation.
How do you find them?
Generally speaking, its been more
important for us to have people who
really understand the nature of
what theyre getting into, then nec-
essarily where it is that they come
from.
We want customers who under-
stand, for instance, that the time-
lines potentially open-ended, and
there are a lot of unknowns. We sell
two things: the flight itself, and the
experience in the lead-up to the
flights.
Theres a unique chance right
now to be involved in making his-
tory as a group of people who
helped get this industry off the
ground. Once we start commercial
operations, youll never have that
product again.
BY CHUN HAN WONG
Virgin Galactic is seeking to offer the first regular private space tourism flights
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W4 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
1RAVL
A New Generation of Global Jet-Setters
20-Somethings Rack Up Frequent-Flier Miles to Take Far-Flung Journeys; Flying to Fiji for Lunch
When class is out,
most college-age
students flock to
the beach or
schlep home to
mom and dad. But
18-year-old Andy Nguyen jets
around the world: London, Bang-
kok, Tokyo, Ho Chi Minh City.
The 18-year-old Drexel Univer-
sity student in Philadelphia buys
cheap tickets and takes mileage
runs solely to build up frequent-
flier account balances. Then, he
cashes in the miles for expensive,
far-flung journeys. Once there, he
buys rail passes and catches the
first train that comes along
doesnt matter where its going
just to see some of the city. Its
hard for me to stay home. I just
want to go, said Mr. Nguyen, who
is from Seattle.
Mr. Nguyen is among a grow-
ing number of 20-somethings
mastering the calculus of fre-
quent-flier miles, making globe-
trotting their hobby. Its a genera-
tion that has grown up with
airline deregulation, discount air-
lines, global airline alliances and
open skies treaties that make
flying between countries easier.
Theyre also at an age when they
have time and flexible schedules.
Moreover, study-abroad pro-
grams have boomed in recent
years, fed by pressure for language
skills and international experience
on rsums. The Paris-based Or-
ganisation for Economic Co-opera-
tion and Development says that the
number of students studying over-
seas has skyrocketed to 3.7 million
in 2009 from 800,000 in 1975. Any
student can book a trip anywhere
on a credit card, while 20 years ago
you had to walk into a travel
agency, said Atle Skalleberg, exec-
utive vice president of StudentUni-
verse.com, a discount airline ticket
seller for students. The whole
Facebook generation has a go-out-
and-get-it attitude. They have
fewer borders mentally. Its not a
big deal to spring break in Viet-
nam, where before kids just drove
to the nearest beach.
Mr. Skalleberg notes that stu-
dent travel has been a very resil-
ient market during the economic
downturn, with travel among 16-
to 29-year-olds dropping a scant
0.3% from 2008 to 2009, accord-
ing to a study by the World Youth
Student & Educational Travel Con-
federation.
For 20-somethings, finding
ways to score free tickets with
minimal expense is part of the
thrill. Ryan Hoult, a 27-year-old
who works at a Canadian consult-
ing company, found an Expe-
dia.com sale for $300 off a pack-
age trip to Vegas, with no
minimum for the trip cost. So he
found a cheap fare, booked an in-
expensive hotel far outside Vegas
that qualified and paid a total of
$35 for a 12-hour mileage run
from his home in Calgary, con-
necting in San Francisco just to
boost the mileage total. Trips like
that added up to first-class mile-
age award tickets for him and his
wife to visit Germany, Switzer-
land, Japan, Korea and Hong Kong
over 17 days next year.
Its beating the system, said
Mr. Nguyen, who finances his trips
with side work trading collect-
ibles. Hell spot a cheap ticket and
fly from Seattle, his home, to Flor-
ida by way of Philadelphia, leaving
at 6 a.m. and returning home
about 11:30 p.m. with a load of
frequent-flier miles. Pool several
of those trips together, and soon
you have both elite status in an
airlines frequent-flier program
plus miles for free trips.
Mr. Nguyen finds checking into
hotels can sometimes be tricky
when you are only 18, so he typi-
cally opts for youth hostels or
waits until late at night, when
desk clerks are less likely to fret
over rules.
Oleg Krogius, a 24-year-old
computer scientist at Microsoft
Corp. in Seattle, developed a
travel passion in graduate school,
where figuring out how to see the
world cheaply was like solving a
puzzle. It was an interesting
value calculation when you had
flexibility and free time in gradu-
ate schoolwhere can I go
cheap? he said. It isnt that ex-
pensive to do lots of travel.
By lots he means trips to
Geneva, Sao Paulo, Paris, Tokyo,
Vancouver and Montreal in the
past year. Often its just a week-
end tripsometimes just to see a
friend for dinner.
Some of the attraction is hav-
ing elite status at a young age.
Will Maxwell-Steele is only 23, but
hes been an elite-level frequent
flier since he was 15. A law stu-
dent in New Zealand with a busy
telecommunications consulting
practice, Mr. Maxwell-Steele has
been known to spot cheap tickets,
or airline mistake fares, and hop a
plane to lunch in Fiji with a friend
from Brisbane, Australia. Lunch
was McDonalds at the airport.
My priority is spending every
cent I have on travel, Mr. Max-
well-Steele said. A lot of people
say, Youre mad. But I enjoy the
whole process.
Airlines coddle top-tier fre-
quent fliers with upgrades and
perks no matter what age, and
thats rare when youre barely old
enough to legally drink. Part of
the allure is status. I have some-
what of a superiority complex. I
have to be top-tier everything,
Mr. Maxwell-Steele said.
It doesnt always work: Air
New Zealand wouldnt allow Mr.
Maxwell-Steele into its airport
lounges until he turned 21 and
was old enough to be served a
drink.
Ross Gale has been taking busi-
ness trips with his father since he
was 7, and has been booking
flights for his family since he was
9. He started working for his fa-
ther in a company that buys and
sells distressed manufacturing as-
sets when he was 17. Now he takes
classes at Babson College in Mas-
sachusetts on Monday through
Wednesday afternoon, then trav-
els the world examining dis-
tressed assets the rest of each
week. This year, hell fly about
200,000 miles.
I dont like sitting at a desk,
said Mr. Gale, who looks older
than his 22 years. I like the chal-
lenge of the physical travel grind.
No trip goes smoothly. His work
takes him to small towns in the
Midwest and in Europe, and one
of his biggest challenges, he says,
is arguing with rental-car compa-
nies who want to charge added
fees for renting to someone
younger than 25.
A few airlines market to young
fliersAirTran Airways offers col-
lege kids $50 standby tickets, for
examplebut Anthony Menendez,
24, who will fly more than 40,000
miles this year, thinks most are
missing an opportunity. You get
someone traveling at my age, you
get them hooked for life, he said.
[ The Middle Seat ]
BY SCOTT MCCARTNEY
A W||| Maxwe||-5tee|e, 23, tr|es out f||ght s|mu|ator as
part of a junket for a|r||ne enthus|asts. |e f|rst earned
frequent-f||er e||te status at I5.
< Ryan |ou|t, 27, earns m||es from cheap f||ghts so he
can f|y to exot|c dest|nat|ons, such as Petra, Jordan,
shown here.
Y Andy Nguyen (wear|ng backpack) |s an I8-year-o|d
0rexe| 0n|vers|ty student who v|s|ted 8angkok on
frequent-f||er m||es.
Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. W5
Sarina Bratton is the managing
director of Orion Expedition Cruises, a
two-ship cruise line that offers luxury
expeditions to 174 destinations. Ms.
Bratton, who lives in Sydney, started
working in the tourism industry
shortly after an injury ended her
career in gymnastics and diving.
How often are you up in the air?
About 120 days on the road this year.
In fact, Ive been away from home
more often than Ive been home this
year.
Where do you spend the most time?
This year, Ive spent a lot of time in
Asia in places like Japan and
Singapore. Ive made three trips to
North America and one down to the
Netherlands Antilles. [One of the more
memorable trips] was on the inaugural
journey for Orion II where we went
past Alaska, the Aleutian Islands and
into the Russian Far East.
What loyalty schemes do you
participate in? [Digs out a host of
cards from purse] Qantas Chairmans
Lounge, Virgin, Singapore Airlines
Krisflyer, InterContinental Priority Club,
amongst others.
Who has the best airport? I know
Sydney Airport very well, but there are
no airports that I like.
Who has the best check-in process?
Fullerton Bay Hotel Singapore. I came
in at 10:15 p.m. last night and was
welcomed by name. I was taken to my
room, so there was no standing
around while waiting to check in. Its
very easy.
Where are the best taxis? In terms
of numbers, New York. But not in
terms of comfort. In that regard,
Singapore is pretty good.
Best airport-to-city journey? I live a
distance from the airport, and I have a
driver who knows me and asks about
the family when he picks me up.
When you travel this much, the best
part of the journey is going home.
Whats your favorite frequent-flier
lounge? The Qantas first-class lounge
in Sydney is the best of any lounge in
the world. It has exceptional food and
service, and they serve you
champagne.
Favorite frequent-flier program?
Qantas, but thats maybe because Ive
been a member for a long time. They
upgrade me when theres an
opportunity.
Whats your preferred carrier?
Singapore Airlines with its A380.
Favorite luggage? Briggs & Riley due
to its sturdiness and quality.
Which airline has the best food? I try
not to eat too much while on the
plane.
How about seats? I like Virgin and
Cathays angled business class seats
because they feel private. I tried an
angled seat for the first time on
Virgin, and it was exceptional.
Singapore Airlines business class seats
also offer you a bigger space than any
other carrier.
Wheres the best coffee in Asia? I
stopped drinking coffee five years ago.
Whats your exercise regiment while
on the road? I used to be a
springboard platform diver, but its
very hard to keep fit when you travel.
I try to go for walks and eat well and
avoid fatty food and sweets. At home,
Ill hit golf balls, although I dont think
that really counts.
How do you beat jetlag? I dont read
work-related material when Im about
to rest. I always read a novel.
Whats your advice on getting an
upgrade? Ive been upgraded to first
class six times in the past year but
never had to ask.
Essential travel gadgets? IPod with
music, pictures of family, my little H-P
notebook and a multi-adaptor.
How long does it take you to pack? I
was picked up at 1 p.m. yesterday, and
at 12, my husband asked me Dont
you have to pack? So not long. But
thats also because I wrote a packing
list over breakfast.
Edited from an interview with
Kristiano Ang Sairina Bratton, above left; A fishing trawler near the Aleutian Islands, above.
The Best Part of the Journey Is Going Home
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ROAD WARRI OR
W6 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
FASHION
When the word
lounge attaches
itself to anything
sartorial, it con-
jures up all sorts
of Sopranos im-
agery and connotations. So youd
be correct in calling me a snob
where the wearing of a certain
type of casual clothing is con-
cerned, because lounge is all
too often simply an excuse for
I cant be bothered.
The New Lounge, however, is
quite the opposite. New Lounge is
a panacea, covering events as var-
ied and manifold as the school run,
pre-pilates coffee, the weeks be-
tween seasons when one is neither
hot nor cold but feels that nothing
in ones wardrobe quite works, ca-
sual suppers and sometimes, just
sometimes, supermarket shopping
and illicit liaisons (though one
hopes these are not one and the
same).
It requires some effort, but the
results pay dividends in comfort,
self confidence and an all-around
smugness in knowing that every-
one who clocks you will wish they
were similarly attiredread cozy,
but hold the pajamas.
The newly married Duchess of
Cambridge was sporting New
Lounge when she so adroitly
pushed her supermarket trolly
round the Anglesey, Wales, Wait-
rose a few days post marriage,
wearing jeans, a slim-line cash-
mere sweater and a cashmere
shawl. The look says: Im chic,
Ive got money, Ive got a home
life and I dont try too hard.
Inevitably, its very tricky to
get New Lounge right. Claudia
Schiffer spotted that before em-
barking on her own line of knit-
wear, which she launched earlier
this year. Schiffers pieces are sur-
prisingly good. I particularly like
the sleeveless turtleneck tank in
cashmere and merinothe per-
fect off duty investment, accord-
ing to her websiteand the A-line
dress. Schiffer supposedly was in-
spired to create her line by,
among other things, the school
run. In other words, we Brits look
like hell at the school gates (its
always the international mummies
who look groomed).
New Lounge is not about track-
suits. Unless, of course, they are
cashmere tracksuits and then,
well, I saw a woman in London
dining hotspot Cecconis the other
evening in what I suppose might
be marketed as an evening track-
suitgray/green cashmere worn
with open-toed heels, a blonde
up-do and lots of diamonds.
Wearing a tracksuit to do any-
thing other than sweat comes
dangerously close to poor taste,
with cashmere being the only re-
deeming factor. Even then, I draw
the line at dining in a hoodie. For
cashmere tracksuits, see the
source: Juicy Couture and Bird by
Juicy Couture. Im going to stick
my neck out here and predict a
Juicy Couture velour tracksuit Re-
naissance, too. So if you dont
want the cashmere, buy velour.
Every woman should own one.
Whether she should leave the
house wearing it is a matter for
discussion.
When you are thinking New
Lounge, think luxy cashmere com-
fort of the sort available to those
of us who buy regularly from U.K.
label Bamford, where the soft
wool is not just an option but a
vital ingredient (check out their
cashmere double-faced poncho,
1,195, and their wool cashmere
straight-legged trousers, 275).
Pulled together and softly tai-
lored, the Bamford collection is
the perfect example
of New Lounge.
Donna Karan has always been
big into comfort chic. In fact, she
was doing New Lounge before Old
Lounge was a glint in the eye of
the Capra hircus laniger (thats
cashmere goat to you and me).
For recent looks, try her over-
sized, hooded cashmere cardigan
and her cowl-neck cashmere
dress. Karan does Evening Lounge,
too; her most recent collection
contained a sequined, cashmere
and silk blend dress. You dont
need me to tell you to proceed
with caution where lounging
in public beyond 6 p.m. is con-
cerned, lest you appear indolent
rather than casually chic.
Few designers other than
Karan do Evening Lounge well.
Stella McCartney is one. You could
wear her Dran fleece, wool-
blend sweater-dress to the office
or to cocktails without impunity,
or, if you were more daring (and
in heels), her degrad wool jump-
suit in gray. Alternatively, try Al-
exander Wang, whose designs
have arguably always been in-
spired by lounge; his degrad
wool-blend and satin dress would
look equally as good and comfy on
The New Loungewear Goes Luxurious
From School Runs to Casual Suppers, This Laid-Back Look Can Be Both Cozy and Chic
[ Style ]
BY TINA GAUDOIN
Clockwise from far left, Alexander Wang quilted,
zip-front merino-wool blend and satin dress;
Stella McCartney degrad wool-fleece jumpsuit;
Rick Owens long-sleeved jersey maxidress,and
paneled leather jacket; Dona Karan oversized
hooded cashmere cardigan; Gucci patent-rubber
Chelsea boots.
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Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. W7
Since transforming an aban-
doned Milan factory into her epon-
ymous Spazio Rossana Orlandi
showroom and gallery in 2002, Ms.
Orlandi has become a tastemaker
and a champion of contemporary
design. The scion of textile indus-
trialists, Ms. Orlandi, 68, started
out as a fashion designer herself
before turning her attention to pro-
moting innovative product and in-
terior design. She spoke to us while
preparing a solo exhibition of the
designer Nacho Carbonell, whom
she will showcase in November.
The one design object Id never sell
is my miniature brass Scivolavo
chair by Alessandro Mendini. I
cant separate myself from it.
My three essential wardrobe pieces
are: a very thin white Aspesi rain
jacket that I can keep in my purse,
a light bag and comfortable
shoesRepetto ballerina shoes in
summer and Ugg boots in winter. I
admire shoes with amazing heels,
which I think of as sculptures, but I
really cant wear them.
Every living room should be com-
fortable and warm, with furniture
that you can get up from easily.
And ideally it should have a beau-
tiful view. If you dont have a
good view, photography or trompe
loeil can give the effect of a beau-
tiful vantage point. A great option
is modular wallpaper made by the
German company Bless, which has
enormous photographs of creative
rooms in Berlin.
I wish I could find better headboards
for beds and round table designs,
in any size. Designers have over-
looked the importance of these
items, and there just hasnt been
enough research and thought.
The most overrated design trend
right now is eco-design. Im very
disturbed by claims that every-
thing is sustainable, which I think
is often not the case. Companies
are exploiting that idea.
My style in dressing is very simple
and minimal, but I always like to
add interesting details and acces-
sories.
To add humor to a home, you have
to have courage in your choices.
Mix different periods, do it with
your own sense of style and taste
and even add a few things that
are kitsch. You have to be dar-
ing and to find things that make
you say wow.
When I travel, the most important
thing is to see my friends, and to
experience a foreign city through
them, not as a tourist.
My gallery keeps itself fresh just be-
cause designers know theyre al-
ways welcome here. They drop off
their things without my asking.
Last week, the Swedish designer
Johan Carpner dropped off his
lamp, Luchsia, which combines dif-
ferent textiles. Its extraordinary.
When I think of Italian style, its
very varied. Italians are extremely
curious and very well-informed.
Milanese style is more closedthe
Milanese are less curious and
more conformist, with less wish to
find new things.
The secrets to working well are
elasticity and simplicity. Its im-
portant to be really open to all
ideas, and to be able to organize
events without much warning.
My work space is organized chaos.
In my desk I put everything I
needmagazines, newspapers,
things that designers are suggest-
ing to me. Its a great chaos, a
great efficient chaos.
Edited from an interview
by Jackie Cooperman
FASHION
the school run as it would at a
supper party. And Rick Owens, the
designer who made wearing
leather as easy and delicious as
slipping on an old, worn cashmere
cardi, has a long-sleeved jersey
maxidress and a fabulous, if some-
what daring, cutout-front cash-
mere dress. If you dont already
own one, then Owenss soft
leather jackets are an (expensive)
New Lounge staple.
You might be wondering what
to wear on your feet with this
look. The answer is flats for any-
thing worn before 6 p.m. No
doubt Claudia et al would team
their cozy sweater dresses with
leggings from Falke or Wolford
and over-the-knee boots (see
Jimmy Choos towering April
leather thigh boots, or Duncan
over-the-knee flat boots).
Lesser mortals (myself in-
cluded) might prefer Miu Mius
suede knee boots, Yves St. Lau-
rents New Chyc leather biker
boots or Guccis patent-rubber
Chelsea boots. As for shoes or
trainers, I really think the latter
undermine the smart, cozy chic
premise of New Lounge (though
Miu Mius patent-leather high-
tops, or Lanvins suede and shear-
ling high-tops might do the job).
As for the former, try a pair of
classic Churchs brogues, Christian
Louboutins Fred leopard-print,
calf-hair brogues, or even Bottega
Venetas patent-leather ballerina
flats.
But really, with New Lounge,
its not what you wear, but
how you wear itpolished, pulled-
together and squeaky clean
that counts.
NewLounge requires
effort, but pays dividends
in comfort, self confidence
and all-around smugness.
Clockwise from top, Claudia
Schiffer cashmere and merino
wool blend sleeveless turtleneck;
Miu Miu suede knee boots;
Lanvin suede and shearling high-
top sneakers.
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Rossana Orlandi, La Donna di Mobili
[ 20 Odd Questions ]
K
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MESURE ET DMESURE
TONDA HEMISPHERES
Rose gold
Automatic movement
Dual time zone indication
Alligator Herms strap
Made in Switzerland
www.parmigiani.ch
LES ATELIERS PARMIGIANI PORTO CERVO - ISTANBUL - MOSCOW - DUBAI - BEIJING - SHANGHAI
HONG KONG EMPEROR WATCH & JEWELLERY | SINGAPORE YAFRIRO INTERNATIONAL
W8 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
FASHION
In Shoes, Like Cooking,
Ingredients Matter
F
or Pierre Corthay, life revolves
around leather. The Frenchman
began his shoemaking career at
Les Compagnons du Tour de France,
a venerable crafts guild. He later
worked for John Lobb Paris before
taking over as atelier head at Berluti.
In 1990, he went independent.
Corthay is best known for its be-
spoke shoes, which cost upwards of
3,000 ($4,080) and take three
months to make. Its most notable
customer is the sultan of Brunei,
who famously ordered 150 pairs in
1992. In 2001, Corthay began pro-
ducing ready-made shoes, and since
then has collaborated with the likes
of Lanvin and Yohji Yamamoto.
Mr. Corthay spoke to The Wall
Street Journal from his atelier in
Paris about the importance of shoes,
American Graffiti and why his fa-
vorite vacation spots are places
where nobody goes. The interview
has been edited.
When I was around nine years old, I
started working with leather. It was
in 1970 and 1971, and the mood at
the moment was very beatnik and
hippie, so the goods I made were
simple things like bracelets, belts
and small bags.
The quality of leather is very impor-
tant when making a good shoe. Its
like cookingyou cannot make
something extraordinary if the in-
gredients are not there. You must
have the best product.
Shoes are the vehicle that you use to
walk through life. You spend more
than half of your life in your shoes.
My grandfather used to say he was
too poor to buy cheap. So for me,
its clever to buy six or seven expen-
sive shoes instead of two-dozen
pairs of midrange shoes. When you
have six or seven pairs of bespoke
shoes, you are okay for 25 years. If
you are not wearing comfortable
shoes, it can be torture.
We are very comfortable in Asia. The
sensibility of the Asian customer to-
tally matches what we do. They un-
derstand how sophisticated our
shoes are.
My design is very inspired by vehicles.
The first time I saw the Shinkansen
in Japan, I was shocked. The aero-
dynamics and the design are abso-
lutely crazy. Like the foot, it has
only curves and no angles.
Working at John Lobb Paris was an
exceptional experience. This was in
1983 and the old craftsmen were
still there but in their last few years
of activity. I really saw the old way
of making shoes, which does not ex-
ist now. It was really a privilege.
In 1992, I had an article in the Inter-
national Herald Tribune by Suzy
Menkes. The lady who was in charge
of the personal items of the sultan
of Brunei read the article and called
me and said my boss would like to
meet you. He was very open to de-
signs. It took me two years of work
to make his shoes, but it was great.
Paris is a great city for living. Its not
like New York, but it has a different
kind of energy.
I really, really like Serge Gainsbourg. I
loved how he was mixed between
very smart and very relaxed. Hes a
good model for me.
Paris is a dream for restaurants. I re-
ally love Le Baratin, and Verre Vol
is a great bistro. They cook without
any complications. Its very simple,
but controlled and well done. Even
the butter is perfect.
I love cinema. I go as often as I can.
Im not a filmmaker, but when I was
a kid I discovered George Lucass
American Graffiti, and that was
great for me.
In the South of France, theres a place
called Cevennes. It has mountains
and small valleys and is very wild. I
love it, because its very quiet, and
theres nobody there.
My advice to young craftsmen is to be
very passionate. You have to be
more than eager and give it 200% of
your life at the very start. Talent is
not nothing, but it is not the biggest
thing.
C
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(
4
)
BY KRISTIANO ANG
Top left, Pierre Corthay. Corthay shoes, top to bottom, Belphegor, an arched
foot shoe; Arca Monk derby shoe with a buckle; Arca derby shoe with laces.
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Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. W9
FOOD DRINK
The Worlds Best Eating Wines
With Their Bright Acidity and Tantalizing Bitter Edge, Italian Wines Are Magnifico With Meals
The wine world is
rife with clichs
(wines are made
in the vineyard
or express a ter-
roir), but the
most persistent clich is that Ital-
ian wines go well with foodper-
haps better than any other wines
in the world. Is it possible that
this is one clich that might actu-
ally be true?
There are several reasons why
I think it could.
First of all, the Italians put the
two together quite often, perhaps
more often than anyone else.
Wine is an important, even inevi-
table, part of an Italian meal.
Second of all are the actual
wines themselves. An Italian wine
usually has a lot of acidity. Ital-
ians love acidity the way Ameri-
cans love sugar or the way the
French love a wine that only they
can pronounce properly. Acidity is
a critical component in a wine
paired with food. It can cut
through the fat of a Florentine
steak or the richness of a plate of
pasta Bolognese. A wine with low
acidity becomes tiresome to drink,
while a wine with a brisk acidity
keeps the palate stimulated. Or as
Tuscan producer Giovanni
Folonari put it, Acidity makes
you want to eat and drink more.
(Who knew acidity was also an
Italian sales tool?)
Acidity lends a wine freshness
and liveliness. You want to have
a wine dancing with acidity, Al-
berto Chiarlo, son of famed Barolo
producer Michele Chiarlo, told me
during his recent visit to New
York. The 2009 Michele Chiarlo Le
Orme Barbera dAsti did, in fact,
dance with a vigorous and vibrant
acidityand shimmer with dark
cherry fruit. I observed as much
to Mr. Chiarlo, who in turn nod-
ded enthusiastically. With Bar-
bera it is always about freshness
and acidity. For us it is great
when it cuts your tongue in two.
(I told him I wasnt sure if I would
put that particular attribute in my
tasting note.)
Italians prize acidity in their
wines perhaps even more than
they do fruit, at least the sort of
ripe, sweet fruit that most Ameri-
cans find appealing. Other flavors
and aromas, like earth and spice,
dried herbs and balsamic, tend to
dominate more than fruit or, for
that matter, wood. Italian wines
may often be tannic but theyre
rarely oaky. (The tannins tend, in
most cases, to come from the
grapes, not the wood.)
Italian winemakers are unlikely
to use a lot of new oak. (There
was once a fad for new French
oak that lasted for a while, espe-
cially in Piedmont and Tuscany,
but fortunately that seems to have
faded a bit.) A wine aged in new
oak is hard to pair with food. An
oaky white, for example, is best
suited to buttery dishesand ol-
ive oil is, of course, the Italian
emollient.
And then there is bitterness.
Italians love bitterness seemingly
as much as they do aciditynot
just in alcoholic drinks distilled
with herbs, like Fernet Branca and
Averna, but also in their wines,
many of which have a tantalizing
edge of bitterness.
In fact, just about every region
in Italy can claim its own wonder-
fully piquant, slightly bitter vari-
etal. For example, in Piedmont
there is the Barbera grape, while
in the Veneto, the Corvina grape
of Valpolicella and Amarone has a
spicy, bitter note. And the list
goes on and on: in Emilia Ro-
magna, theres the Lambrusco
grape; in Umbria, its the fruity
yet slightly bitter red grape Sa-
grantino; and in Sicily, the Frap-
pato grape is juicy and bright with
a tiny bitter note.
There are plenty of Italian
white wines with a bitter and of-
ten slightly nutty or spicy note as
well, including Falanghina and
Greco di Tufo, both grapes grown
in Campania; Verdicchio, from the
Marche region; and Vermentino, a
sprightly white grown all over the
coastal regions of Italy.
All of these grapes were repre-
sented among the 40 or so wines
that I put together for my tasting.
I chose wines from all over the
bootfrom the Valle dAoste, in
Italys extreme north, to Sicily
and concentrated on examples
that had the characteristics that
would make them good compan-
ions to food. They werent neces-
sarily the showiest winesBarolos
and Barbarescos or Super Tuscans
(though such wines from the right
producers can go well with food,
too). Instead, they were the earth-
ier, less exalted (and typically less
expensive) winesthe kind the
Italians themselves most com-
monly drink with meals.
The result was one of the most
uniformly successful tastings Ive
put together this year.
There were actually very few
wines that didnt pair well with
food. Even wines with particularly
high aciditylike the 2010 Hauner
Salina Bianco, a mostly Malvasia
white wine from Sicily, or the
2009 Grosjean Petite Arvine, a
white wine from the alpine climes
of the Valle dAostewere accept-
able with a bit of pasta or a piece
of cheese on the side. Or as a
friend of mine put it after tasting
the Grosjean, This wine is painful
to drink alone, but its all right
with food. (Americans apparently
arent as keen as Italians to cut
their tongues.)
There were lots of white wines
with refreshing acidity as well as
lovely fruit, and the best had an
expressive minerality, too.
A few of the highlights in-
cluded a gorgeously nuanced 2009
Terre Alte, a Fruiliano-Bianco-Sau-
vignon blend from Livio Felluga
that put me in mind of a first-rate
Chablis (and admittedly it was
comparably priced, around $70 a
bottle). But there also were plenty
of white wines with smaller price
tagsincluding the generously
proportioned, vivacious 2009 Pa-
vese Ermes Blanc de Morgex de la
Salle from the Valle dAoste ($28)
and a 2010 Donnachiara Fa-
langhina ($12).
The reds were even more uni-
formly successful and included
several of my favorite Barberas
and Dolcettos from Piedmont (the
2008 Eraldo Viberti Barbera
dAlba was a piquant charmer), as
well as a few Lagreins from the
Alto Adige region (the 2010 Hofst-
atter was a juicy delight) and
Frappatos from Sicily (the 2010
Valle dellAcate was a bright,
lively star and a great deal at $14
a bottle).
There were a few problem
winesa couple with two much
oak and one that proved a chal-
lenge not because it was lacking
acidity or fruit but because it
smelled like a bed of roses. An
otherwise lovely 2009 Stefano
Mancinelli Lacrima de Morro, a
red wine from the Marche, had
delicious flavors of earth and sour
cherry and a snappy acidity, but
its floral aromas were so pro-
nounced it would be like pairing a
plate of pasta with a bottle of my
grandmothers perfume.
And I couldnt consider a wine
without food. Every time I opened
a bottle, I thought about what I
wanted to eat. Mr. Folonari was
right. A successful Italian wine is
one that provokes the appetite.
[ On Wine ]
BY LETTIE TEAGUE
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r
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way Americans love sugar
and the French love wines
only they can pronounce.
www.corum.ch
W10 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
FILM
A Revolutionary Role For Veteran Chan
In a Movie That Marks a Career Milestone, Action Star Plays an Entirely Different Kind of Hero
For his 100th film,
Jackie Chan can
add a new title to
his rsum: revolu-
tionary hero.
His latest film
is 1911, a sprawling epic about
Chinas Xinhai Revolution, which
led to the downfall of the Qing
Dynasty. Mr. Chan stars as Huang
Xing, a true-life military figure
who worked alongside Sun Yat-
sen Chinas first presidentin
establishing the Chinese republic.
The film also stars Winston Chao,
Li Bingbing and Joan Chen.
The movie reaches a pair of
auspicious milestones: It comes on
the centennial of the October 1911
Wuchang Uprising, which sparked
the revolution. It also marks the
57-year-old Mr. Chans 100th
movie in a career thats spanned a
half century, including his early
Hong Kong action comedies like
Drunken Master and the hit
Rush Hour series in Hollywood.
Mr. Chan says that he was
drawn to 1911 after the produc-
ers approached him to play the
role of Huang Xing.
They explained the whole
story, he says in an interview, de-
tailing the war, the human drama
and the historical aspects of the
revolution. He was struck by the
stories of the revolutionaries, giv-
ing their lives in order to advance
their cause.
Then I said wow!
The development of modern
China, says Mr. Chan, is because
of these people. They died for
something. They did not die for
nothing.
He pushed aside work on an-
other movie to hop on board, and
it quickly became a passion proj-
ect. Im so proud Im involved in
this movie, because I really
learned something, he says.
Nowadays many Chinese peo-
pleboth in China and around the
worldarent familiar with the
events of 1911 that changed the
course of the countrys history, he
says. Not even my childreneven
myselfthere are a lot of things I
dont really know, he says. But
now, I realize how very impor-
tant the events of 1911 were
they changed the whole of
China.
Mr. Chan says the trappings of
modern materialism have pushed
aside interest in history. Children
today just know what kind of
telephone they are going to buy,
what kind of clothes, what kind of
car, what kind of food, he says.
No. Dont forget what [the revo-
lutionaries] did for us. Dont
forget history.
The film marks another per-
sonal turning point in Mr. Chans
career. In recent years, he has
been stretching his talents beyond
the action-adventure comedies
that made him famous to take on
more dramatic roles. Gone are the
days of his trademark death-defy-
ing stunts, such as his mid-air
leap onto a floating hot air bal-
loon in 1986s Armour of God.
But he still maintains a busy ca-
reer, releasing a few films a year
and alternating regularly between
Asia and Hollywood.
In 2009s Shinjuku Incident,
he played an illegal Chinese immi-
grant in Japan who gets caught up
in Tokyos organized-crime gangs.
It was a dark film without any of
the traditional Chan stunt set
pieces.
Last year, he appeared in the
Hollywood remake of The Karate
Kid, winning strong reviews for
his role as a handyman who men-
tors a young American boy in
kung fu. The film was a huge hit,
and Mr. Chan will soon begin
work on a sequel.
But he hasnt completely aban-
doned action comedy, having also
starred last year in The Spy Next
Door as a secret agent living in
suburban U.S.
[ Talking Movies ]
BY DEAN NAPOLITANO
Jackie Chan stars as Huang Xing, a true-life figure of the Xinhai Revolution.
M
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Moneyball: Stars, Stats and Perfect Pitch
One of the best
sports movies ever,
Bull Durham has
one of the best
opening lines ever:
I believe, Susan
Sarandons ardent groupie de-
clares, in the church of baseball.
The church is desanctified in
Moneyball, whose context is
runaway commerce, and whose
subtext is statisticsi.e., a scien-
tific approach to the major-league
version of the game that seeks to
sweep away nostalgic notions and
dry the moist eyes of the faithful.
Never before, though, have statis-
tics added up to such electrifying
entertainment. After the mostly
minor-league productions of re-
cent months, this movie, which
was directed by Bennett Miller, re-
news your belief in the power of
movies.
Brad Pitt playsto perfec-
tionBilly Beane, the current Oak-
land Athletics general manager
who, in 2002, guided his small-
market, underfunded team to an
unprecedented 20 consecutive
wins. (He was the subject of the
Michael Lewis book from which
the script, an inventive work of
fiction based on fact, has been
adapted by Steven Zaillian and
Aaron Sorkin.) In that year, as the
film has it, Billy finds salvation
from the As relative povertyrel-
ative most painfully to the filthy-
rich Yankeesby putting into
practice the theories of Bill James,
whod been preaching the gospel
of so-called sabermetrics.
Instead of paying lavish salaries
to superstars who sometimes fail
to produce needed wins, the cash-
strapped GMhimself an ex-player
who didnt deliver on his shining
promisedepends on intricately
detailed computer analyses of indi-
vidual performance. By doing so,
hes able to buy specific talents em-
bodied by players who might oth-
erwise be unwanted or ignored. His
brainiac aide in this abstruse enter-
prise is his assistant general man-
ager Peter Brand (Jonah Hill), a
young, Yale-educated economist
with a picture of Plato on his bed-
room wall
Theres nothing abstruse about
the way Moneyball dramatizes
the enterprise. Thanks to the ele-
gant understatement of Mr. Hills
portrayal, the unworldly Pete pro-
vides a wonderful foil to Mr. Pitts
eccentric, flamboyant Billy in just
about every scene they share. But
just about every scene in the film
crackles with intelligence, brittle
humor and edgy conflict.
From top to bottom the casting
is inspired. Mr. Pitt couples a star
presence to a beautifully mea-
sured ensemble performance that
makes Billy a minimalist ironist,
tossing off funny remarks with an
abandon that almost conceals his
deep anger, pain or self-doubt.
Good meeting, he says brightly
after a horrible meeting with his
stern-faced field manager, Art
Howe (Philip Seymour Hoffman),
an implacable foe of anything that
smacks of sabermetrics: Every
time we talk Im reinvigorated by
your love of the game.
Arts character is written
rather repetitivelyhes implaca-
ble, and implacable, and then im-
placablebut Mr. Hoffman, as
ever, gives his man a special, if
ever-glowering, cachet. Robin
Wright does a brief, graceful turn
in the role of Billys estranged
wife. Chris Pratt is affecting as
Scott Hatteberg, the washed-up
catcher recycled by Billy, accord-
ing to sabermetric precepts, into a
valuable first-baseman. Billys
daughter, Casey, is played by Ker-
ris Dorsey, a young actress, in her
feature debut, whos the essence
of sweet simplicity in a couple of
crucial scenes.
The force that binds all of this
fine work is fine direction.
Whether Mr. Miller is dealing with
the professional actors in his cast,
or with real-life baseball players
standing in for the players and
scouts of the Oakland As, his
touch is unerring and his narra-
tive vision is clear.
On the whole,the film gets
many important things exactly
right. It isnt about numbers, be
they player stats or the stagger-
ing sums spent by top-tier fran-
chises, even though the story
seems at first to be asking us to
root for the gimlet-eyed statisti-
cian, rather than the sharp-eyed
pitcher or batter; for data, rather
than intuition; for the cool satis-
factions of science, rather than
the fevered romance of sport.
What its really about is the old-
fashioned heroism of a traditional
hero in a fresh guisea flawed
guy with little to show for his 40-
odd years; a smart guy who finds
a way to make his smarts matter.
[ Review]
BY JOE MORGENSTERN
Brad Pitt as the Oakland Athletics
Billy Beane in Moneyball.
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Friday - Sunday, September 30 - October 2, 2011 THE WALL STREET JOURNAL. W11
BOOKS
Its Good to Be Boss
During the recent debt-ceiling
debate, a passel of politicians and
pundits offered variations on the
same sound bite: While their sides
plan was necessary to stop Americas
slide toward financial Gtterdmmer-
ung, their opponents were recklessly
placing electoral politics above the
good of the country. President Obama
finger-wagged at Republicans for cre-
ating a partisan three-ring circus.
Doing his best impression of Captain
Renault in Casablanca, Republican
Speaker of the House John Boehner
expressed shock that the presidents
worried about his next election. But
my God, shouldnt we be worried
about the country?
Not exactly. To political scientists
Bruce Bueno de Mesquita and Alastair
Smith, the authors of The Dictators
Handbooka lucidly written,
shrewdly argued meditation on how
democrats and dictators preserve po-
litical authorityits not only unsur-
prising that politicians craft legisla-
tion with an eye toward re-election
but also deeply rational. All leaders,
whether of democracies or
autocracies, dictatorships or monar-
chies, desire the same goals. Why do
leaders do what they do? To come to
power, to stay in power and, to the ex-
tent that they can, to keep control
over money.
So how is it that undemocratic
leaderswho exploit, imprison and
brutalize their subjectsfrequently
maintain power for far longer periods
than their democratic counterparts?
Autocrats, the authors argue, need
only reward only a small class of loy-
aliststhe army, judiciary, an inner
circle of adviserswho will reliably
suppress opposition. While democrats
likewise dispense rewardssweet-
heart contracts, farm subsidies, wel-
fare paymentsthey are constrained
by a system of government that re-
quires the loyalty of fickle voters.
This ensures that if a leader
accumulates wealth and power in a
few hands, his job security weakens.
In a style reminiscent of Freak-
onomics, Messrs. Bueno de Mesquita
and Smith present dozens of clever
examples of how researchers identify
and compare graft in autocracies and
democracies. The authors demon-
strate, for instance, that roads con-
necting airports to major cities in de-
mocracies tend to be circuitous,
zigging and zagging across the land-
scape, while in autocracies they tend
to be fairly straight. Why? Because
autocrats are less likely to respect the
property rights of those inhibiting
their public-works plans. Powerless
peasants, after all, are hardly in a po-
sition to threaten government
authority. In a democracy, a large-
scale use of eminent domain would be
wildly unpopular, probably resulting
in the ruling partys replacement.
One might presume that a badly
handled natural disaster greatly
shortens time in office. It doesbut
only in democracies. Dictators, the
authors argue, should view mass
death by natural disaster as good
politics. This is a jarring assertion,
but consider that the higher the
death toll in a democracy, the less
likely an incompetent government is
to be re-elected. The higher the
death toll in an autocracy, however,
the more money leaders can extract
from foreign governments and aid
agencies, money that is then used to
strengthen the position of
government loyalists.
And how about those well-mean-
ing debt-forgiveness campaigners?
While it might seem intuitively true
that clearing balance sheets helps
poor countries, The Dictators Hand-
book suggests that pardoning debt
obligations tends to entrench authori-
tarian leaders and retard the develop-
ment of democracy. With a wounded
economy, autocrats find it more diffi-
cult to bribe their small group of key
supporters.
The most fascinating chapter in
The Dictators Handbook concerns
the rewards that governments pro-
vide other governments. The authors
make the obvious, but nevertheless
controversial, argument that almost
all aid money is dispersed not to alle-
viate poverty but to purchase loyalty
and influence. There also exists an
important political calculus for auto-
cratic aid recipients, who are often
willing to make unpopular domestic
political decisions provided that the
benefits are ample enough to satiate
those loyalists who sustain their
power.
Consider that democratic Turkey
refused the Bush administrations
request to use its military bases for
an attack on Iraq. After long and la-
bored negotiations, Ankara calculated
that the offered financial reward
wasnt enough to risk alienating its
political reputation with its own peo-
ple, who can simply retaliate at the
ballot box. Instead, American planes
flew from autocratic Kuwait, a gov-
ernment with a very small power
baseand one that neednt answer
to an angry electorate.
Messrs. Bueno de Mesquita and
Smith are polymathic, drawing on
economics, history and political sci-
ence to make their points. But in a
book of such wide scope, the errors
inevitably intrude. It is silly to sug-
gest that the major event
precipitating the Bolshevik Revolu-
tion was the outlawing of vodka sales,
which eliminated a major source of
tax revenue and affected the czars
ability to pay the army. Russian Prime
Minister Vladimir Putin is not the
former head of the Soviet secret po-
lice. The 2003 Iraq War was not
launched from Saudi Arabia; nor is
it clear that in post-Mubarak Egypt
the people [are] now in charge.
Though The Dictators Handbook
contains many points that are com-
mon-sensicalof course government
transfer payments ensure voter loy-
altythe pithy volume unpacks these
political truisms, challenging readers
to apply them to contemporaneous
politics. For instance, while it is not
their intention, Messrs. Bueno de Mes-
quita and Smith offer plenty of dis-
heartening lessons for American vot-
ersspecifically those sympathetic to
the tea-party movement.
Freshman Republicans crow about
the need for entitlement reform, but
why is it that few multiple-term con-
gressmen seriously address the issue?
If they desire a political career longer
than one term, they will behave ratio-
nally and, like most Republicans who
preceded them, choose survival over
principle. Democratic election means
maintaining the loyalty of a majority
of your constituentsand for most
politicians, this means protecting en-
titlements. As Messrs. Bueno de Mes-
quita and Smith observe, voters
might feel guilty about the latest $1
trillion program, but see if they actu-
ally vote to reject it.
After Rick Perry tagged Social
Security a ponzi scheme, Mitt Rom-
ney, his most serious rival for the
2012 Republican nomination, counter-
attacked, underscoring his support
for the program. This invited charges
that Romney was a Republican in
name only. But presidential candi-
dates too must promise rewards to
their future loyaliststhose indepen-
dents that can tip an electionand a
reduction in spending requires a re-
duction in rewards.
In other words, the reader will be
hard-pressed to find a single govern-
ment that doesnt largely operate ac-
cording to Messrs. Bueno de Mesquita
and Smiths model. So the next time a
hand-wringing politician, Democrat
or Republican, claims to be taking a
position for the good of his country,
remember to replace the word coun-
try with career.
Mr. Moynihan is the managing
editor of Vice magazine.
IM NO. 1 One of numerous statues that Saparmurat Niyazov, Turkmenistans
dictator until his 2006 death, erected to himself.
C
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The Most Dangerous Game
Neal Stephenson is the Warren
Buffett of near-future cyber-sci-fi. An
uber-geek himself, au fait with all the
facts of geekdom, he can also turn a
devastatingly sardonic eye on geek
fantasies and illusions. Yes, there are
all manner of fascinating possibili-
ties out there. But as with dot-coms,
many have been incubated by people
astonishingly ill-informed about non-
cyber reality.
The core idea of REAMDE is
TRain: a MMORPG, or massively
multi-player online role-playing
game, set in a world whose every cu-
bic millimeter has billions of years of
geological backstory. Its designers
are a stereotypical kid with
Aspergers syndrome, who plans the
physical world, and an obese nerd
living in a trailer in the Midwest,
who does the beings and the magic.
When the customers start to get
more demanding, Richard, TRains
founder, brings in another designer,
D-squared, a Cambridge don who
begins by triggering the Apostro-
pocalypse.
Why, he asks, are Tolkienian elf-
creatures in TRain called KShet-
riae? What do the apostrophes and
the uppercase letters mean? Stunned
silence. They just look cool, man. D-
squared points out that if the world
is designed in depth, the languages
should be too. Its no good taking the
name of the Hindu warrior caste (Ks-
hatriya), spelling it wrong, sticking
in an apostrophe and thinking that
will do. Not in the Asian market, it
wont.
The Asian market is important
because in TRain money can be
exchanged between the virtual world
and the real world. A thousand gold
pieces, won by stealing or robbing in
TRain, will get you about $75. This
means that cash-rich but time-poor
Westerners can hire Chinese teenag-
ers to play the game, build up char-
acter points, and acquire magic
properties or martial skills and sur-
render them to their real-world
employers.
Everything is great till the teen-
age gold-miners think of a better
way to get richspreading a virus,
named with cunning mock-sloppi-
ness REAMDE (instead of Re-
adMe), which encrypts players files
till each of them pays a virtual-world
ransom. The individual payments are
modest, but the total pool of ransom
money can be converted into many
millions of real-world dollars, if only
it can be recovered.
Thats the scenario, but then the
virus spreads from a borrowed
thumb-drive to Russian gangsters
pursuing a different scam. That
brings in their special-forces-veteran
operatives, who clash accidentally
with jihadists. And since the thumb-
drive came from Richards nieces
geek partner, she ends up in the
hands of the jihadists, this time pur-
sued by MI6 and the CIA as well as
the Russian gangsters, while the Chi-
nese teenagers still have to win des-
perate virtual-world battles in order
to get their real-world money.
Cue massive chase-sequences set
partly in the sprawl of a Chinese
port city, partly deep in the equally
dangerous woods of British Colum-
bia, all ending in a complex shoot-
out. The action also unfolds in the
virtual world, where everyone is try-
ing to find the Troll, the head of the
Chinese gold-miners, who alone has
the remedy for the virus.
Mr. Stephenson runs both plots
with equal skill, the real world pro-
viding the tension, the geek world,
often, the humor. Its great that D-
squared doesnt use email or own a
mobile phone. All messages ad-
dressed to him are read by his staff.
The tiny proportion thought to be
worth his attention are written on
parchment with a quill pen and
passed on to his castle, where his
troubadour sings them to him in the
banqueting hallin medieval Occi-
tan, of course.
It sure cuts out the spam. More
important, it gives D-squared room
for creative and consecutive thought,
a faculty, as Mr. Stephenson notes, in
short supply among people who type
with their thumbs. He raises a simi-
larly pointed question with the acro-
nym MACUMAPPIS: Why, in the
modern world, is Medieval Armed
Combat the Universal Metaphor and
All-Purpose Protocol Interface
Schema? Or to put it another way,
isnt TRain a vast trivialization of
life, rendering it one huge virtual
killing machine?
And what is it doing to its ad-
dictspeople who know that Weird-
ing Wards come cheaper if you har-
vest Filamentous Cobwebs yourself
and that a Ban of Execration can be
exempted by a Frond of Peace from
the High Pontiff of the Glades of En-
thorion? You have to wake up some-
time and remember what you really
are. Thats what triggered the revolt
of the gold-miners: They realized
that they were doing virtual-world
work for real-world peanuts.
There is one more distinctive
Stephenson feature, which goes back
to his first novel, The Big U (1984),
a satire set on the archetypal Ameri-
can state campus. Its his corrosive
contempt for the official education
system, his conviction that we could
and should do much better. The
geeks are mostly self-taught, which
is why they have to bring in people
like D-squared, and even so theyre
outclassed by Chinese teenagers.
American students have spent too
much time learning things like the
Other and Othering, derided by
Mr. Stephenson as just so much in-
tellectual duct tape. For gagging
people with? For patching up leaky
arguments? Both work for me.
All humanities professors should
read this book and so should all
those buried deep in geek-world. The
professors wont, but the geeks prob-
ably will. Theres an intellectual pill
buried deep in Mr. Stephensons nar-
rative candy, one powerful enough
that he deserves to be classified as a
major national and international re-
source.
Only one nagging thought re-
mains: Is this really science fiction/
fantasy? Or are we just about there
already? See The Mongoliad, com-
ing soon from Mr. Stephenson and
friends, a multi-author and possibly
reader-interactive novel, published
serially through a dedicated app.
Wow. Scary stuff for traditionalists.
Mr. Shippey regularly reviews
fantasy and science fiction
for the Journal.
BY MICHAEL MOYNIHAN
BY TOM SHIPPEY
The Dictators Handbook
By Bruce Bueno de Mesquita
and Alastair Smith
PublicAffairs, 319 pages, $27.99
REAMDE
By Neal Stephenson
William Morrow, 1,044 pages, $35
Roads connecting airports
to major cities tend to be
circuitous in democracies
but direct in autocracies.
Chinese kids playing
an online game tangle with
jihadists and gangsters.
W12 THE WALL STREET JOURNAL. Friday - Sunday, September 30 - October 2, 2011
AUTOS
All technology is
idiomatic. A Ger-
man Leica camera
has a feel and op-
eration utterly dif-
ferent than a Japa-
nese-designed Canons, for
instance. An LG front-loading
washer doesnt beep or buzz when
the cycle is over; it plays a cheer-
ful musical phrase to announce
the gifting of clean clothes, which
is so Korean. And nothing makes a
hole in the ground quite so
roundly and fragrantly as an
American Hellfire missile.
Italian motorcycles? We get
them, dont we? They chatter at
idle, rev to the moon, weigh noth-
ing, cost mega-lira and are ridden
by skinny leather-clad knee-grind-
ing monkeys with a death wish.
Ah, but thats so 2010. Meet
the Ducati Diavel, a power
cruiser built by the Italian com-
pany famed for its scarlet sport
bikes. As a rough analogue to a
Harley-Davidson V-Rod, the Diavel
is more than surprising; its a rad-
ical exercise in multiculturalism.
Perhaps youre wondering
what, exactly, constitutes a power
cruiser, also known by the vaguely
homoerotic term muscle cruiser.
Essentially its a huge and power-
ful motorcycle with a sinister
technological mienthe Ducati
looks like it was designed by the
Borgthat is exceptionally com-
fortable and doesnt handle very
well. This class of bike includes
the V-Rod, the Suzuki Boulevard
M109R, the Star VMax, the Vic-
tory Hammer S and a couple of
other huge honking bikes I
wouldnt be caught dead on.
Now, to be clear, the Japanese-
brand bruiser cruisers came first,
and Harley answered with the V-
Rod in 2001. BMW also had a
splendid power cruiser called the
R1200C for a while. But all of
these bikes targeted the American
road and rider, which is to say, the
American attitude. And thus the
categorys gun-slinging stance, big
pipes, straight-line power and
general lack of subtlety.
Its one thing when Yamaha
builds a power cruiser. I mean,
they also make pianos, right? Its
another thing when a brand so fo-
cused and self-defined, so Italian,
as Ducati lumbers into the cruiser
segment. The purists outrage is
exactly what Porsche heard when
it decided to build the Cayenne
SUV.
My take? Deal with it, tifosi.
The Diavel is a fantastic bike.
The Diavel hits a lot of the
power cruiser notes: a stretched
wheelbase (62.6 inches, a whop-
ping 6.3 inches longer than the
wheelbase of the Ducati 1198), a
28-degree rake, a 30.3-inch seat
height, a 41-degree lean angle, a
hilariously fat 8-inch-wide rear
tire. The Diavel design isnt quite
as ludicrous as some of its class-
matesif the Star VMax were a
mens cologne it would be called
Sex Pantherbut its still pretty
bonkers: Bleak, malevolent, a sui-
cide machine like Kevorkian
couldnt have imagined.
And its also recognizably, still,
a Ducati. The trademark trellis
frame peeks out from underneath
the bunched biceps of a gas tank,
amid the sculptural shrouds and
radiator faring. The single-sided
swing-arm drives a gorgeous
Marchesini forged wheel wrapped
in a specially engineered Pirelli
tire, a 240/45 ZR17 Diablo Rosso
IIspecially engineered because
tires this fat make bikes fretful in
corners.
On both wheels, Brembo cali-
pers grip cross-drilled discs, abet-
ted by an antilock braking system.
A two-way-adjustable rear shock
by Sachs comes with a preload
dial. The heat-anodized downpipes
wriggle out from under the frame
to unite on the right side in a pair
of massive alloy cylinders, the si-
lencers. Yeah, right.
Speaking of noise, this engine
the same unit as in the 1198 Super-
bike and Multistrada 1200snick-
ers with Ducatis characteristic
desmodromic valvetrain noise.
The so-called Testastretta en-
gine (90-degree twin, water-
cooled, four-valve, throttle-by-
wire) has been mildly retuned to
produce more torque across a
lower and wider rev band. Peak
torque is 94 pound-feet at 8,000
rpm, and yet, in aural character,
the Ducati has little of the molten
flatulence of a Harley V-twin. This
is still a pricey Italian sound:
stressed, refined, musically me-
chanical, and loud.
Horsepower is respectable: 162
hp at 9,600 rpm. On my test ride
through the Mojave there were
times when I wished for a little
more throttle twist, another 500
rpm or so, so pleasant is the
sound of the Testastretta being
caned. The six-speed gearbox with
hydraulically actuated multiplate
wet clutch ascends through the
gears beautifully and a slipper-
clutch provides assurance as you
ratchet down coming into a cor-
ner. Stick a pitchfork in the Diavel
and it will accelerate from zero to
60 in under 3 seconds, and it will
also pull the front wheel up with a
well-goosed throttle.
But what this bike does abso-
lutely best is course serenely
through the air of the high desert
at 80 mph. Even the cacti turn
around to look.
In one important respect, the
Diavel flouts power-cruiser con-
vention. Its lightweight, and not
by a little but a lot. The dry
weight of 456 pounds for the Car-
bon Edition, which I tested, is
about 200 pounds lighter than
some competitors and nearly 300
pounds lighter than the Suzuki.
That lack of mass translates into a
long, rakish bike that can actually
manage corners pretty well. The
turn-in is affirmative and precise
but not too abrupt. You can heft
the bike from right-side rail to left
and not feel like youre getting be-
hind in the twisties. The other
great thing about the Diavel is the
riding position, which is upright
and natural, with the footpegs di-
rectly under the seat and not
stuck out forward. The seat height
is low and comfortable.
Heres where it lands for me:
Im too old and too sane for a
Ducati superbike. The tank-hump-
ing riding position is massively
uncomfortable. The throttle re-
sponse and braking of the race-
bred bikes is just too frantic for
me. At the same time, I dont
want to ride some Rose Bowl pa-
rade float. The Diavel gene-splices
the lean, rider-first nature of
Ducatis hot-snot bikes with a
more relaxed, livable bike configu-
ration. And the whole thing is
carved in strokes of Machine Age
lightning.
An Italian cruiser. Whod a
thunk it?
BY DAN NEIL
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Ducatis Multicultural Power Cruiser
From The Nation That Produces Lean, Chattery Bikes Comes a Big, American-Style Motorcycle
[ Rumble Seat ]