WSJA FLP FranklinTempleton 081211 China

Dear Participants,
Welcome to The Wall Street Journal Asias China Future Leadership Program in partnership with
Franklin Templeton Investments. As part of this exclusive and free initiative, you will receive a range
of resources and opportunities aimed at better connecting you with the outside business world.
As part of the program, you will receive an electronic copy of The Wall Street Journal Asia each
business day and access to WSJ.com from now until June 30
th
2012. These resources bring the world
to your fingertips and are in essence a living text-book with up-to-date news and intelligence on what
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members before you, youll find the Journal becomes essential reading; packed with analysis and
information that benefits you in your classes, your future career and your personal life.
In addition to your own personal electronic copy of The Wall Street Journal Asia, we will be
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lectures and seminars that bring the world of business into the classroom. At the end of the academic
year Dow Jones and Franklin Templeton Investments will organize an exciting competition to test your
knowledge gained over the academic year with fantastic prizes to be won.
Our program website will provide more information on this and other activities under the China Future
Leadership Program, so I urge you to regularly check the site at: www.wsj-asia.com/flp/china
The Wall Street Journal Asia and Franklin Templeton Investments wish you a successful year and
thank you for your participation in this worthwhile initiative. In case of any inquiries, please feel free
to direct them to Heather.Lowe@dowjones.com
Sincerely,
Christine Brendle
Managing Director, Asia Pacific
Publisher, The Wall Street Journal Asia
Dow Jones Publishing Company (Asia), Inc.
25/F, Central Plaza, 18 Harbour Road
G.P.O. Box 9825, Hong Kong
Tel: (852) 2573-7121 Fax: (852) 2834-5291
asia.WSJ.com
VOL. XXXVI NO. 7 1 * * Thursday, December 8, 2011
The Delhi Durbar
And Liberal India
OPINION Page 15
The Delhi Durbar
And Liberal India
OPINION Page 15
Obama Takes a
Populist Swing
WORLD NEWS Page 10
ASIA
As of 12 p.m. ET DJIA 12102.82 g 0.39% FTSE 100 5546.91 g 0.39% Nikkei 225 8722.17 1.71% Shanghai Comp. 2332.73 0.29% Hang Seng 19240.58 1.58% Sensex 16877.06 0.43% S&P/ASX200 4292.50 0.72%
asia.WSJ.com
(India facsimile Vol. 3 No. 132)
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New Delhi
Backs Off
On Retail
Reforms
India shelved recently an-
nounced plans to allow inter-
national supermarkets and
department stores to enter
the country, disappointing re-
tailers and damaging the gov-
ernments credibility but end-
ing an impasse between the
ruling Congress party and the
opposition.
Finance Minister Pranab
Mukherjee announced the
move in Parliament on
Wednesday after the govern-
ment met its coalition allies
as well as opposition parties.
It suspends a cabinet decision
to allow 51% foreign direct in-
vestment in multibrand re-
tailwhich includes compa-
nies such as Wal-Mart Stores
Inc. and Tesco PLCuntil an
agreement on how to do it is
reached among the main po-
litical parties. Observers said
that would take months, if it
happens at all.
The decision to bring 51%
foreign direct investment in
Please turn to page 20
By Vibhuti Agarwal
in NewDelhi
and Megha Bahree
in Mumbai
Chinese Firms Fill Lending Gap
BEIJINGChinese compa-
nies ranging from pharmaceu-
tical makers to shipbuilders
are making big bets on a po-
tentially lucrative business:
lending money to cash-
strapped companies.
But that emerging profit
center is becoming a hin-
drance for some of the lend-
ers, as scrutiny increases on
an expanding but murky cor-
ner of Chinas shadow bank-
ing system.
Yangzijiang Shipbuilding
(Holdings) Ltd., a Singapore-
traded Chinese shipbuilder,
earned a third of its total in-
come through the third quar-
ter from investment products
and lending to small busi-
nesses, a category that was up
65% from a year earlier.
But the company has been
defending its loan business in
recent weeks in light of a re-
cent slew of bankruptcies of
small manufacturers that
failed to repay private loans
at high interest rates. In a
statement in October, Yangzi-
jiang said it does not foresee
potential negative impact on
its financial performance. It
declined to comment further.
Its shares are down 53% so
far this year compared with a
14% drop in Singapores main
benchmark.
So-called entrusted
loans, as this type of com-
pany-to-company debt is
called, increased by 562.5 bil-
lion yuan ($87.9 billion) from
a year earlier to 1.07 trillion
yuan in the first three quar-
ters, according to the most re-
cent data from the Peoples
Bank of China.
The jump came even as
Chinas total social financing,
a broad measure of credit,
shrank 1.26 trillion yuan to
9.8 trillion yuan over the
same period largely due to a
drop in bank loans amid Bei-
jings tightened monetary pol-
BY LINGLING WEI
Corporate Cash
Company-to-company loans, or entrusted loans, have been on
the rise in China this year, even as total social nancing, a broad
measure of credit, has declined.
Sources: ChinaScope Financial; Peoples Bank of China
5 trillion yuan
0
1
2
3
4
'11 2010
1Q 2Q 3Q 1Q 2Q 3Q 4Q
Total social nancing Entrusted loans as a share
of total social nancing Issuance of entrusted loans
20%
0
4
8
12
16
Sarkozy,
Merkel Press
Integration
French President Nicolas
Sarkozy and German Chancel-
lor Angela Merkel on Wednes-
day set out their plan to press
ahead with changes to the Eu-
ropean Union treaty, a day be-
fore EU leaders convene at a
crucial Brussels summit to
shore up the euro zone.
Mr. Sarkozy and Ms.
Merkel, who made their pro-
posals in a letter to European
Council President Herman
Van Rompuy, issued an ulti-
matum to the 27 EU govern-
ments, saying they must de-
cide whether they will accept
greater central control over
their national budgets.
We are convinced that we
need to act without delay,
the two leaders said in the
letter. We need to make a de-
cision at our next European
Council meeting in order to
have the new treaty provi-
sions ready by March 2012.
Should some countries de-
cide not to participate, the 17
countries in the euro zone
will press ahead with a more
integrated union by signing a
new agreement outside EU
treaties, they said.
Mr. Sarkozy and Ms.
Merkel outlined the procedure
to increase the automatic ap-
plication of sanctions against
budget-rule busters, one of
the most-contentious points
of the Franco-German pro-
posal because it implies an ef-
fective transfer of sovereignty
from national parliaments to
EU institutions.
As soon as the commission
ascertains that a member
state is in breach of the 3%
ceiling of deficit to gross do-
mestic product, penalties will
be automatic unless the con-
sensus of euro-zone states
blocks the move, acting by
qualified majority.
The two leaders said the
BY GABRIELE PARUSSINI
AND WILLIAM BOSTON
Chinese and U.S. defense officials began military talks Wednesday in Beijing, after ties were recently
strained by American arms sales to Taiwan and a planned troop deployment in the Pacific. Above, a
Chinese officer in Beijing stands beneath a portrait of the late Chairman Mao Zedong.
China, U.S. Begin Talks on Reducing Military Risks
Getty Images
Geithner says euro effort
will succeed................................. 6
Japan stands by Europe
despite downgrade risk.......... 6
Heard on the Street: ECBs
potential for radical action 36
16877.06 0.43% S&P/ASX200 4292.50
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.
2 * * THE WALL STREET JOURNAL. Thursday, December 8, 2011
THE WALL STREET JOURNAL ASIA
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PAGE TWO
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n Olympus said it is prepared to
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lion in investment losses. 21, 24
n The planned merger of
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spite the firms efforts to appease
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n ING fourth-quarter earnings
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lion from the companys U.S.-an-
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n The U.S. government filed
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Chinese citizens and a China-
based firm for highly profitable
and highly suspicious trading. 22
n Citigroup will eliminate about
4,500 jobs over the next few quar-
ters and take a $400 million
charge in the fourth quarter. 23
n A Chinese court dismissed Ap-
ples lawsuit against a Chinese
company that owns the trademark
for the iPad brand in China. 23
n RIM was temporarily barred
from using the name BBX for its
next generation smartphones at a
conference in Asia, the latest in a
series of setbacks for the Black-
Berry maker. 23
n BOJ policy board member Koji
Ishida said Japan wouldnt be im-
mune to any global financial tur-
moil if the European debt crisis
deepens. 4
n Japans foreign-exchange re-
serves hit a record in November,
after efforts by the government to
weaken the yen through market
intervention boosted the countrys
dollar holdings. 27
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World-Wide
n Former Soviet leader Mikhail
Gorbachev called for annulling
Sundays parliamentary election
results as discontent simmered
across Russia over widespread al-
legations of election fraud.
n Turkey will open new trade
routes to bypass existing channels
through Syria, underlining Damas-
cuss growing isolation. 7
n Three men were killed in Iraq
amid a rise in attacks aimed at in-
flaming ethnic and sectarian ten-
sions as U.S. troops pull out. 7
n South Koreas ruling party fell
into crisis as three of its seven
leaders quit their posts amid a
vote-suppression scandal. 4
n Pakistani President Zardari
was in stable condition in Dubai
following symptoms related to
his pre-existing heart condition,
the prime ministers office said.
Afghan President Karzai said he would ask Pakistan for answers in the deaths of dozens in two suicide bombings that have heightened strains between the
neighbors. Above, Mr. Karzai talked Wednesday at a Kabul hospital with an Afghan girl who was wounded in Tuesdays suicide bomb attack. Page 7
A
s
s
o
c
i
a
t
e
d
P
r
e
s
s
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In Depth: Russia con-
fronts fresh crisis over
airline safety. 16-17
Heard on the Street:
Chinas gray budget is
hard to predict. 36
Whats News
Thursday, December 8, 2011 THE WALL STREET JOURNAL. 3
WORLD NEWS
Mining Investment Boom Spurs Australia Growth
SYDNEYAustralias commodity-
based economy roared in the third
quarter as the full force of a mining
investment boom began to exert it-
self. But the road ahead is less cer-
tain as Europes future remains far
from clear and Asian growth is
slowing.
Gross domestic product grew 1%
in the third quarter from the second
and climbed 2.5% from a year ear-
lier, the Australian Bureau of Statis-
tics said Wednesday. Economists on
average expected a 0.8% quarterly
rise in GDP. The ABS also revised
higher second-quarter GDP growth
to 1.4% from 1.2%.
Business investment jumped 13%
in the third quarter, led by engi-
neering work. Australias gas sector
is building huge projects across the
countrys north, while port, rail and
mine expansions are also being pur-
sued aggressively.
With 450 billion Australian dol-
lars (US$461 billion) in mining and
energy projects either under way or
in planning, the countrys miners
are driving the expansion of the
economy, showing little regard for
the worsening global backdrop and
signs of a slowdown in China. About
70% of Australian exports go to
Asia.
However, some senior miners
warned recently that if the world
economy loses further momentum,
some projects may be mothballed or
scrapped.
Todays result underscores the
underlying strength and resilience
of the Australian economy and
shows we are better placed than vir-
tually any other advanced economy
to deal with ongoing global instabil-
ity and the unfolding crisis in Eu-
rope, Treasurer Wayne Swan said
in a statement.
The economy continues to battle
its way back from devastating
floods a year ago. Queenslands coal
mines, a key engine of growth, are
yet to return to full production.
Queensland Premier Anna Bligh
said Tuesday the states mines are
still back at only 80% production,
with overall volumes in 2011-12
likely to fall short of forecasts.
Australias economy is powering
ahead despite the relentless nega-
tive news out of Europe, according
to David DeGaris, senior economist
at National Australian Bank.
Still, there are headwinds that
could pick up in the coming months,
with the central bank already acting
to cushion the nations economy
with two cuts to interest rates, an-
nounced in November and Decem-
ber.
BY JAMES GLYNN
Australias GDP
Change from previous quarter,
seasonally adjusted
Source: Australian Bureau of Statistics
1.5
1.0
0.5
0.0
0.5
1.0
%
'11 2010
1Q 2Q 3Q 1Q 2Q 3Q 4Q
Tambour In Black
Aut omat i c chronograph LV 277
Manufactured in Louis Vuittons watchmaking workshops in La Chaux-de-Fonds, Switzerland
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4 THE WALL STREET JOURNAL. Thursday, December 8, 2011
WORLD NEWS: ASIA
Seoul Party Leaders Quit Posts
Three Council Members of Embattled Ruling GNP Leave Amid Vote-Suppression Scandal
SEOULSouth Koreas ruling
political party fell into crisis as
three of its seven leaders quit their
posts and others tried to distance
themselves from a scandal involv-
ing legislative aides who police say
tampered with the government
election agencys computers during
recent polling.
The rapidly-unfolding scandal is
the latestand most significant,
analysts saidthreat to the re-elec-
tion chances for the ruling Grand
National Party. The three who re-
signed were on the Supreme Coun-
cil of the GNP, the members of Par-
liament who lead the party.
The GNP chairman, Hong Joon-
pyo, said at a news conference
Wednesday that he wouldnt resign,
despite pressure from key mem-
bers. Instead, Mr. Hong said he
might dissolve the party and re-
start it under a new name in hopes
of creating some stability before
the April parliamentary elections.
I have a road map and an alter-
native to re-create the party, but it
is not the right time to disclose it,
Mr. Hong said.
The conservative party, which
controls a sizable majority in the
299-seat National Assembly and in-
cludes President Lee Myung-bak,
has lost popularity in every elec-
tion since it took power in 2008, a
pattern that is typical in Korean
politics.
But over the past year, discon-
tent with the party and Mr. Lee has
grown, because they are considered
to have been slow to address the
nations uneven recovery from the
2008 global economic crisis. The
government handled the crisis
mainly by creating favorable condi-
tions for the nations exporters,
while smaller businesses struggled
as domestic consumption slumped.
Politicians in opposition parties
had positioned the GNPs support
for the Korea-U.S. free trade agree-
ment as the main issue for focusing
the broader anger. The anti-FTA ef-
fort was undercut, however, by a
minor-party politician who released
tear gas in the Parliament during
the trade-ratification vote and by
violence at recent opposition-led
street protests.
Mr. Lee and the GNP , in an ef-
fort to appear responsive to public
sentiment, recently proposed sev-
eral welfare-related measures, such
as creating free child-care services
for working parents.
The emergence of the alleged
vote-suppression effort in the re-
cent election to fill a small number
of vacant posts could further dam-
age the partys chances in the regu-
lar election next April, when every
parliamentary and provincial seat
is at stake, analysts said.
People are fed up with what
the GNP was doing, said Kang
Won-taek, a political scientist at
Seoul National University. Im not
sure it will work to change the
party name. Its just a cosmetic way
to escape from the current crisis.
Police last Friday arrested an
aide to a GNP lawmaker for alleg-
edly creating a denial-of-service at-
tack on the website of the National
Election Commission on the morn-
ing of the Oct. 26 election, prevent-
ing voters from finding addresses
of polling sites. On Monday, an aide
to Assembly Speaker Park Hee-tae
also was questioned about his role
in the attack. So far, no elected of-
ficials have been implicated in the
computer attack.
The GNPs candidate in the mar-
quee race that day, the mayorship
in Seoul, trailed in pre-election sur-
veys, and went on to lose to an in-
dependent candidate.
Some analysts say the crisis rep-
resents a more fundamental chal-
lenge to the GNP and the tradi-
tional political party system,
dominated by older men who oper-
ate in top-down fashion by choos-
ing candidates and assigning them
to races.
The whole mood, not only in
Korea but Japan and other coun-
tries, is that people are losing faith
in the two-party system or politics
in the old sense, said Mo Jong-ryn,
international-relations professor at
Yonsei University.
In South Korea, that change has
been seen in the rising influence of
Ahn Chul-soo, a successful doctor
and businessman who provided
crucial support for the independent
candidate who won the Seoul may-
oral race.
Some surveys in recent months
have shown that Mr. Ahn could de-
feat the GNPs long-presumed nom-
inee, Park Geun-hye, in the 2012
presidential election. Mr. Ahn last
week said he wasnt interested in
creating a new political party but
didnt rule out a run in the presi-
dential election, which is in Decem-
ber 2012.
Soo-ah Shin
contributed to this article.
BY EVAN RAMSTAD
Hong Joon-pyo, chairman of the Grand National Party, says he may dissolve and re-start the party under a new name.
R
e
u
t
e
r
s
/
N
e
w
s
1
K
o
r
e
a
Seoul Tries Again to Lift Housing Market
SEOULThe South Korean gov-
ernment issued its sixth plan of the
year on Wednesday to boost the ail-
ing property market, aiming to spur
investments for homes and prop up
domestic demand.
A key component of the plan is
a permanent tax cut on capital
gains from home sales for owners
of multiple properties. Taxes on
such sales will be fixed between 6%
and 35%, compared with rates of as
much as 60% that sellers had been
scheduled to start paying in 2013.
The government also will ex-
pand its loan program for first-time
homeowners, which it said could
support about 15,000 households
next year. And to help renters, for
whom housing supply remains
tight, the government aims to in-
crease rental properties for lower-
income people, provide cheaper
loans and allow for more construc-
tion of rental property within cities.
Koreas property market has
been slumping since the 2008 fi-
nancial crisis, weighing on domes-
tic demand. That is increasingly a
concern as the uncertain global
economic outlook dims the pros-
pects for Korean exporters, who
have been driving economic
growth. The authorities have tried
multiple measures to aid struggling
builders and heavily indebted Ko-
rean households, which would be
hurt by weaker prices of their
homes, typically their cornerstone
asset.
Previous government steps have
included the creation of a so-called
bad bank to buy lenders bad prop-
erty-related loans and allowing
real-estate investment trusts and
funds to buy homes for rental pur-
poses. But recent data indicate that
efforts so far havent been able to
nurse the property market back to
health.
Prices of homes in the Seoul
metropolitan area rose by only 0.6%
from January to November com-
pared with the end of 2010, while
construction-related investments
have fallen from the second quarter
of 2010 to the third quarter of this
year.
On Wednesday, the Bank of Ko-
rea said mortgage lending growth
slowed to 1.5 trillion won ($1.3 bil-
lion) from a 2.4 trillion won rise in
October because of reduced bor-
rowing related to down payments
for apartments.
Korea Investment, a brokerage
firm, said in a report that the latest
government plan will support home
prices and eventually boost the
buying appetite of those seeking
capital gains and companies in the
property rental businesses.
But a turnaround in the housing
and construction sectors is far from
certain.
The easing of policy is unlikely
to reverse the sluggish construction
market onto a recovery path due to
uncertainties in overseas markets,
said Yoo Deok-sang, an analyst at
Dongbu Securities. But at least it
may stimulate new home purchases
due to tax cuts in the short term.
In its latest plan, the govern-
ment said it might also establish
another firm to take on distressed
property market debt related to
project-financing projects next year.
In-Soo Nam and Kyong-Ae Choi
BY SE YOUNG LEE
Home Price Decline
Monthly change in home sale prices
in Seoul Metropolitan Area
11 2010
Source: Kookmin Bank
-0.2
-0.1
0
0.1
0.2%
Japan to Get
Hit if Europe
WoesWiden,
BOJ Says
TOKYOBank of Japan policy
board member Koji Ishida said
Wednesday Japan wouldnt escape
damage from the gyrations markets
would face if the European debt cri-
sis deepens, and said there is no
guarantee that yields on Japanese
government bonds will remain low.
If deepening European debt
problems leads to turmoil in global
financial market, Japan will not be
immune, Mr. Ishida told business
executives in Shizuoka, in central
Japan.
There is no guarantee that low
interest rate levels [on Japanese
bonds] will continue in the future,
he said, adding that yields have
stayed low despite Japans huge
debt because of the countrys cur-
rent-account surplus and the fact
that its bond s are mostly held do-
mestically.
The comments come after the In-
ternational Monetary Fund warned
in a recent report that market con-
cerns over fiscal sustainability could
trigger a sudden spike in Japanese
government bond yields that could
quickly render the nations debt
which stands at around 200% of an-
nual gross domestic productun-
sustainable.
The IMF report was seen as a
signal to Tokyo policy makers that
the international community is al-
ready worried about fallout from Ja-
pans potential fiscal problems, after
debt problems in some European
economies evolved into a Continent-
wide crisis.
Wednesday afternoon in Tokyo,
the benchmark 10-year government
bond yield was at 1.040%.
Mr. Ishida also said a solution to
the European debt crisis will likely
take time, and expressed concern
that slowing global growth as a re-
sult of the crisis could have a nega-
tive impact on Japanese exports.
Moreover, the strong yen, consid-
ered a safe-haven investment, will
likely cut corporate profits and
weaken sentiment among companies
and households, he said.
Mr. Ishida stressed that Euro-
pean leaders have no option other
than cooperation to solve the crisis.
If policy makers can win the mar-
kets confidence, that could prevent
the crisis from worsening, Mr.
Ishida said.
Markets are focused on the out-
come of a European Union summit
Thursday and Friday, where policy
makers are expected to lay out plans
to enforce stricter budget rules.
BY TATSUO ITO
BOJ board member Koji Ishida.
Reuters
WORLD NEWS: EUROPE
Geithner Says EuroEffort Will Succeed
U.S. Treasury Secretary Meets With French Officials to Discuss Crisis Plan as European Summit Approaches
PARISU.S. Treasury Secretary
Timothy Geithner said on Wednes-
day he was confident that the ef-
forts made by European govern-
ments to tackle the sovereign-debt
crisis and economic slowdown will
be successful.
Were encouraged by the prog-
ress [Europeans] are making, not
just to put in place economic re-
forms across Europe to create the
conditions for stronger growth in
the future, but to try to build a
stronger architecture for a fiscal
union...and try to make sure theres
a sufficiently strong firewall in
place to support those efforts, Mr.
Geithner said after meeting with
French Finance Minister Franois
Baroin.
I am confident they will suc-
ceed, Mr. Geithner said, adding he
has a lot of confidence in what the
president of France and what the
[finance] minister are doing, work-
ing with Germany trying to build a
stronger Europe.
Speaking at the same briefing,
Mr. Baroin said European govern-
ments are committed to doing ev-
erything they can to ensure that the
financial crisis ends and that there
is a real economic recovery.
Mr. Geithner is on a three-day
trip to Europe appealing for stron-
ger action as European leaders pre-
pare to meet on Thursday and Fri-
day.
He met with French President
Nicolas Sarkozy later Wednesday
morning.
In Paris, Mr. Geithner and Mr.
Baroin discussed some of the issues
that will be on the table at a Euro-
pean Union summit on Friday in
Brussels, including the shift in gov-
ernance from the European Finan-
cial Stability Facility and its trans-
formation into the European
Stability Mechanism, as well as the
removal of private-sector involve-
ment in future debt restructurings
in Europe, Mr. Baroin said.
Both issues will be part of a joint
proposal to modify the EU treaty
and improve economic governance
in the currency bloc that Mr.
Sarkozy and German Chancellor An-
gela Merkel are submitting to Euro-
pean partners this week.
The two officials also discussed
how to deploy resources at the In-
ternational Monetary Fund, Mr.
Baroin said, as well as ways of mul-
tiplying [their] joint efforts to end
the financial crisis and minimize its
impact on the real economy.
BY GABRIELE PARUSSINI
AND SUDEEP REDDY
U.S. Treasury Secretary Timothy Geithner, at left, with French Finance and Economy Minister Franois Baroin, center, and
French President Nicolas Sarkozy at the lyse Palace in Paris after a meeting on Wednesday.
R
e
u
t
e
r
s
Sarkozy, Merkel Press
For More Integration
currency blocs strengthened struc-
ture will hinge upon regular sum-
mits of euro-zone leaders with a
permanent president, to be held at
least twice a year. Still, during the
crisis, the Eurosummit should meet
on a monthly basis, they said, and
each meeting should focus on a pre-
cise agenda regarding governance
and policies to foster growth.
This framework will be fully
consistent with the EU institutional
architecture, the letter said, adding
that the Commission, the Parliament
and national parliaments will be in-
volved in the process.
Ms. Merkel and Mr. Sarkozy said
the EU should enhance coordination,
surveillance and enforcement in
budgetary matters, notably propos-
ing the adoption by each euro-zone
state of rules on a balanced budget
translating the objectives and re-
quirements of the Stability and
Growth Pact into national legisla-
tion at constitutional or equivalent
level.
Earlier on Wednesday, a senior
German government official said
Germany had all but given up hope
of persuading all 27 EU nations to
rally behind a Franco-German pro-
posal for limited treaty changes to
safeguard the euro and help stem
the euro-zone debt crisis.
I am more pessimistic than I
was last week on the chances of to-
tal agreement, the official said. A
more-likely scenario, the official
said in comments echoed by Ms.
Merkel and Mr. Sarkozy, is that the
17 euro-zone countries, together
with four or five other EU coun-
Continued from first page tries, would separately agree to far-
reaching coordination of economic
policies, supervision of their bud-
gets through European officials and
strict limits on debts and deficits.
In the many discussions over the
past weeks, it has become clear that
many people still dont recognize
the gravity of the situation, the
German official said. We need to
take decisive steps in restructuring
the euro zone. We cannot achieve
our goals by taking small, individual
steps.
The official also confirmed that
Germany has backed down on its
previous demands for special lan-
guage in the treaty to require the
private sector to participate in any
restructuring of sovereign debt in-
volving the European Stability
Mechanism, the euro zones perma-
nent bailout fund.
Meanwhile, Germanys latest five-
year federal note auction proved to
be a significantly smoother sale
than feared by many market partici-
pants, with bids sharply exceeding
the amount on offer, indicating that
the safety of German debt is still in
demand.
The 5 billion ($6.7 billion) auc-
tion of the 1.25% October 2016-
dated federal note, or bobl, was
more closely scrutinized than usual
for a German auction, following the
countrys disappointing 10-year
bund sale two weeks ago. Germany
sold 4.09 billion of the October
2016 bobl against 8.67 billion in
bids.
Emese Bartha
and Neelabh Chaturvedi
Japan Says It Wont Forsake
EuropeDespiteDowngradeRisk
TOKYOJapan will consider fur-
ther investment in Europes bailout
fund, a senior Japanese Finance
Ministry official said on Wednesday,
despite a warning that the fund
could lose its triple-A rating.
The official also said Japans
stance toward the fund, the Euro-
pean Financial Stability Facility,
wont change even if its bonds are
downgraded, as long as Germany
and France continue to guarantee
payments. Such support will grow
more significant as the euro zone,
struggling to resolve its debt prob-
lems, looks for larger contributions.
There is no change in our policy
that we will consider additional pur-
chases while watching efforts by Eu-
ropean nations to resolve their sov-
ereign problems, the official said in
an interview. EFSF bonds are guar-
anteed by the most credible coun-
triesFrance and Germany. As long
as that mechanism remains in place,
we believe there will be no prob-
lems regarding the safeness of EFSF
securities.
Other factors will influence Ja-
pans decision, he said, including the
availability of euros in its foreign
reserves and any conditions at-
tached to future EFSF bonds. Japan
has used euros from its $1.3 trillion
reservesthe worlds second-larg-
est, after Chinasto invest 2.98
billion in EFSF debt so far, accord-
ing to Japans Ministry of Finance.
That is small compared with the
hundreds of billions of euros Euro-
pean leaders are trying to secure to
contain the debt problems. But Jap-
anese support must be more impor-
tant to them than before, as the Eu-
ropean situation has deteriorated,
said Koji Fukaya, chief currency
strategist at Credit Suisse. Euro-
pean nations have already reached a
point where they need to look for
money from the International Mone-
tary Fund, and this means that help
from other countries is important to
them.
The ratings firm Standard &
Poors warned Tuesday that it could
strip the euro zones bailout vehicle
of its triple-A rating if any of the
triple-A countries that guarantee
the fund are also downgraded. S&P
had warned late Monday that the
currency blocs triple-A countries
are in danger of that if policy mea-
sures to resolve the sovereign-debt
crisis arent reached at the Euro-
pean Union summit on Friday.
There has been speculation Ja-
pan might rethink its investment
policy if the EFSF loses its triple-A
status. But the Japanese officials
comments suggest that private-sec-
tor firms ratings may not matter
much as long as policy makers feel
comfortable holding a particular as-
set or see the need for it in their re-
serves.
When S&P removed the triple-A
rating the U.S. had held for 70 years
in August, the Japanese government
quickly declared its continued confi-
dence in U.S. Treasury bonds, which
are believed to account for much of
Japans foreign reserves.
At the latest auction of EFSF
debt in November, Tokyo bought
some 10% of the securities sold, fi-
nance ministry officials sayabout
the same amount China bought, said
people familiar with the matter. It
was only about the half of the share
Japan had purchased in the previous
three auctions.
That cutback isnt likely to mean
Tokyo would walk out on Europe.
One Japanese government official
has said in an interview that Japans
intent was to pressure Europe into
accelerating work to contain the cri-
sis, while others have cited technical
reasons for the reduction, such as
limited euro liquidity in the re-
serves.
The Japanese government has
good reasons for helping, analysts
say. Europes woes have been chill-
ing global growth, threatening Ja-
pans export-led economy. And con-
cerns over the debt crisis and the
world economic outlook have led in-
vestors to sell the dollar and the
euro for the yen, adding to the ex-
port-denting upward pressure on
the Japanese currency.
BY TAKASHI NAKAMICHI
Source: Japans Ministry of Finance
25 January
15 June
22 June
7 November
Buying Less
At the last auction of EFSF debt in
November, Tokyo bought only 10%
of the securities sold. Share of
securities bought by Japan at
each auction in 2011:
20.5%
22.0
18.3
10.0
Mr. Baroin said he and Mr.
Geithner discussed ways of
multiplying joint efforts to
end the financial crisis.
Thursday, December 8, 2011 THE WALL STREET JOURNAL. * * 7
WORLD NEWS
Afghans Ask Questions, Mourn
KABULAfghan President Hamid
Karzai said he would ask Pakistan to
explain why it provides sanctuary
for an extremist group suspected of
killing dozens in two suicide bomb-
ings in Afghanistan that are likely to
exacerbate strains between the two
neighbors.
Mr. Karzai, who visited survivors
at a Kabul hospital, pledged to seek
justice with a thorough investiga-
tion into Tuesdays attacks, which
targeted Shiite gatherings in Kabul
and the northern city of Mazar-e-
Sharif.
Afghanistan takes this very seri-
ously. It is the issue of the life of the
people which we will fully follow up
with Pakistan, he said. We cant
let go and ignore the blood of our
children.
A Pakistan-based militant group
notorious for attacks on Shiites,
Lashkar-e-Jhangvi, took responsibil-
ity for the attacks. Afghan officials
said Wednesday that 56 people were
killed in the Kabul blast, a down-
ward revision from Tuesday when
they said 59 died in the attack. Four
others were killed in Mazar-e-Sharif.
The U.S. Embassy said one Amer-
ican was killed in the Kabul attack,
and it was investigating reports that
a second U.S. citizen may have been
among the dead.
Citing the Lashkar-e-Jhangvi
claim, Mr. Karzai said he would ask
Pakistan to explain why it allows
such groups to operate within its
borders. Tuesdays explosions, some
of the worst since the war began 10
years ago, followed a dramatic dete-
rioration in Pakistans ties with
Kabul.
In September, Afghan officials
accused Pakistans Inter-Services In-
telligence Directorate spy agency of
involvement in the assassination of
former Afghan President Burhanud-
din Rabbani, the countrys main
peace negotiator, by a purported
Taliban emissary who arrived from
Pakistan. Pakistan denied those ac-
cusations.
Last month, ties were further
strained as a joint U.S.-Afghan pa-
trol called an airstrike that mistak-
enly killed 24 Pakistani troops
posted along the border.
Islamabad responded to the air-
strike by shutting the border to co-
alition supplies bound for Afghani-
stan, and ousting the U.S. from an
air base on its soil.
Other Afghan officials have gone
further than Mr. Karzai, openly ac-
cusing the ISI of orchestrating Tues-
days bombings. ISI is directly in-
volved in the attack, a senior
Afghan security official said. The
main purpose is to spark sectarian
violence among Afghans. The mili-
tants have used every single tactic
in the war, but have failedand now
this was their new tactic and they
successfully carried it out.
An ISI spokesman denied this
and challenged Afghan officials to
prove their claims. Can you ask
them to show the proof? he said.
Some Pakistani analysts also
scorned the Afghan assertions. Its
a piece of sheer ignorance on the
part of Afghan intelligence if they
think Lashkar-e-Jhangvi is backed
by the ISI, said Imtiaz Gul, director
of the Islamabad-based Center for
Research and Security Studies, a
think tank.
Lashkar-e-Jhangvi has turned on
the Pakistan state since being
banned a decade ago, and was in-
volved in attempts to kill former
President Pervez Musharraf and
other political leaders. Their cam-
paign against Shiites in Baluchistan
province also has caused significant
security problems for the govern-
ment there.
Critics say Pakistan has been re-
luctant to crack down on the organi-
zation for fear of a backlash.
The Afghan security official,
along with a senior official with the
U.S.-led military coalition, said there
were indications that the Haqqani
network, the Afghan militant group
responsible for most of the recent
high-profile attacks in Kabul, had
helped facilitate Tuesdays blasts.
The Haqqanis are part of the Tal-
iban movement and recognize the
authority of Taliban leader Mullah
Omar, though the group operates on
its own. The Taliban condemned
Tuesdays bombings as inhuman
and un-Islamic, denying any in-
volvement.
On Wednesday, another deadly
blast killed 19 Afghan civilians when
a packed van hit a hidden explosive
in Helmand Provinces Sangin Dis-
trict, a volatile area of southern Af-
ghanistan that remains a focus of
the military effort to drive Taliban
insurgents out of their longtime
strongholds.
In Kabul, as Afghan Shiites bur-
ied their dead, one Shiite cleric
urged mourners not to let the at-
tacks create a dangerous rift be-
tween Afghanistans majority Sunni
and minority Shiite populations that
could drag the country back into a
brutal civil war.
Our people must think sensibly
and realize that the real enemies of
Afghanistan and Afghans want to
destroy the unity between Shiite
and Sunnis in Afghanistan, said
Mohammad Baqer Nateqi, a cleric
speaking to 700 people gathered for
the burial of five victims of the
Kabul blast. Shiites account for
some 20% of Afghanistans Sunni-
majority population.
The mourners directed their fury
at Pakistan. It is Pakistan that kills
our people, said Rafiq, who lost a
25-year-old cousin. Soon, tolerance
will be finished.
At a Kabul hospital, Karima, a
22-year-old mother of four, recov-
ered from the explosion, which took
the lives of 10 of her relatives. Still
disoriented from the blast, which
ravaged the right side of her body,
Karima hadnt been told that three
of her four children were among the
dead. I dont know who is dead and
who is alive, she said.
Her husband, Zabih, buried the
three children and seven other rela-
tives Wednesday morning and
turned his attention to looking after
their surviving child. I am sitting in
my house, alone, with my daughter,
as a single man, he said.
Ziaulhaq Sultani in Kabul
and Tom Wright in New Delhi
BY DION NISSENBAUM
AND HABIB KHAN TOTAKHIL
President Karzai, at a Kabul hospital Wednesday, talks to wounded survivors of Tuesdays bombing in the capital.
A
s
s
o
c
i
a
t
e
d
P
r
e
s
s
Turkey Moves
To Establish
Trade Routes
Avoiding Syria
TURKISH-SYRIAN BORDERTur-
key said on Wednesday that this
week it would start bypassing Syria
to ship goods to the Middle East via
Iraq and the Mediterranean Sea, in
response to a Syrian blockade that
has left hundreds of Turkish vehi-
cles stranded at the border.
The escalating trade dispute
came as relations between the two
neighbors plumbed new depths.
Syrias state news organs accused
Turkey of being run by Jews, of pre-
paring a Western invasion and of
harboring insurgents who staged an
attack across the border.
Economy Minister Zafer
Caglayan told Turkeys CNBC-e tele-
vision channel that Ankara would on
Thursday begin to truck goods
across Iraq and ship them by sea
from the southern port of Mersin to
Alexandria, Egypt, avoiding Syria.
Ankaras decision to reroute
transit freight was forced by Syrias
decision to block traffic at Turkeys
borders, Mr. Caglayan said. He said
the blockade, in turn, was retalia-
tion for Turkeys decision last week
to impose sanctions against the re-
gime of President Bashar al-Assad,
but that it punished mainly the Syr-
ian people.
It is very easy for us to bypass
Syria but we preferred not to do
this, said Mr. Caglayan. But they
wanted it this way. I say again,
whatever they do they will suffer
more than Turkey every time. To
trade with the Middle East and the
Gulf we do not have to go through
Syria. Our A, B and C plans are al-
ready ready.
Ankara and Damascus were close
regional allies until this summer,
when Turkish officials said Presi-
dent Assads refusal to end a bloody
crackdown against opponents forced
a shift. Ankara last week joined the
Arab League in imposing sanctions
on regime officials, but it is neigh-
boring Turkey that has borne the
brunt of anger in Damascus.
Mr. Caglayans announcement
came a day after Syrias state SANA
news agency reported that 35 ter-
rorists had crossed the border
from Turkey and were driven back
in a gunfight, with several wounded
being taken away in Turkish mili-
tary vehicles.
A spokesman for Turkeys for-
eign ministry on Tuesday said An-
kara doesnt send armed persons to
any other country.
On Wednesday, the Free Syrian
Army, whose leadership is based in
Turkey, confirmed that one of its
units did stage an attack on a Syrian
police station close to the border
and that wounded rebels had
crossed the border to seek treat-
ment, Reuters reported. However,
the spokesman said the unit wasnt
from Turkey, but rather was based
inside Syria.
In further signs of Syrian anger,
the state-run Tashir newspaper on
Tuesday ran an Op-ed article that
said: Turkey today is ruled by
Jews. Its foreign minister, [Ah-
met] Davutoglu, and those walking
his walk are all related.
Mr. Davutoglu is Muslim and
Turkey has taken a particularly
tough line against Israel. The article
called that stance a sham.
Nour Malas in Dubai
and Joe Parkinson in Istanbul
BY MARC CHAMPION
Killings in Iraq Fuel Fear of Ethnic, Sectarian Conflict
BAGHDADThe deaths of three
men in separate incidents on
Wednesday extended a resurgence
of attacks aimed at inflaming ethnic
and sectarian tensions in Iraq.
The development comes as the
U.S. troop pullout and the threat of
civil war in neighboring Syria are
stirring up doubts about the ability
of the Iraqi government and secu-
rity forces to control the situation.
The latest spasm of violence be-
gan more than a month ago, after
U.S. President Barack Obama an-
nounced he would bring all troops
home by the end of the year.
Attacks have hit a variety of ar-
eas and targets across the country,
with some of the most worrisome
strikes in provinces with a volatile
ethnic and sectarian mix and a long-
running dispute over land and re-
sources, such as Kirkuk and Diyala,
both north of Baghdad.
On Wednesday, the head of the
local rail authority, Dulair Khodr, a
Kurd, was killed when a sticky bomb
attached to his vehicle exploded on
the southern side of Kirkuk city, ac-
cording to security officials.
Earlier in the day an Arab con-
tractor was killed in a similar man-
ner next to the headquarters of the
North Gas Company west of Kirkuk.
Also, gunmen assassinated an of-
ficer with the Kurdistan regions
armed forces, known as the Pesh-
merga, in a drive-by shooting south-
east of the city, the officials said.
The days violence came after at
least four people were killed over
the previous 10 days in attacks tar-
geting members of the Shiite Turk-
men community in and around
Kirkuk, according to local police.
A police official said pamphlets
were found in some parts of Kirkuk
that were intended to instigate at-
tacks against Turkmen, Shiites and
Kurds to foment discord in Kirkuk.
The pamphlets were signed by a
militant group suspected of main-
taining ties to al Qaeda in Iraq.
In Diyala, a province south of
Kirkuk and home to a similar ethnic
and sectarian patchwork, a bombing
at a vegetable market in a Shiite
town that killed 13 and the execu-
tion of seven people in a Sunni vil-
lage within the span of less than 24
hours last week were blamed on
militants linked to al Qaeda.
The U.S. military, which pulled
out of Kirkuk last month in prepara-
tion for full withdrawal by the end
of the month, has warned that ex-
tremists would seek to exploit eth-
nic and sectarian rifts in Iraq.
The U.S. maintains a diplomatic
presence in Kirkuk and a small team
of military liaison officers to coordi-
nate with the Iraqi and Kurdish
forces securing the area.
Both the region and the central
government claim a disputed swath
of oil-rich territory stretching from
Diyala through Kirkuk to areas on
the Syrian border in the northwest.
BY SAM DAGHER
Special Advertising Section
LOWCOSTS, VERSATILITYAND
VARIETYATTRACTINVESTORS
EASE OF USE ALSO BOOSTS ETFS POPULARITY IN ASIAAND THERES ROOM TO GROW
E
xchange-traded funds, or
ETFs, are quickly gaining
popularity in Asia as more
investors here discover their
convenience, lowcost and
incredible variety.
Assets under management in ETFs in
Asia rose more than 10%in the frst 10
months of the year, to a total of $94.4
billion, according to NewYork-based
BlackRock Inc., the worlds largest money
manager by assets. Tats up from$10.3
billion in 2001.
Te number of ETFs on ofer in the
Asia-Pacifc region, excluding Japan, has
grown to 290 today, fromfour in 2001. In
Japan, the number has grown to 86 from
eight a decade ago.
Asia has roomto growin the ETF
arena. It makes up only 6%of the global
market, compared with 68%for the U.S.
However, that just looks at where the
ETFs are domiciled, notes Nick Good,
Hong Kong-based managing director for
Asia-Pacifc for iShares, the worlds
biggest ETF provider and a unit of
BlackRock. An additional $60 billion to
$70 billion in funds listed in the U.S. or
Europe is owned by institutional or retail
investors in Asia, he says.
All ETFs combine certain traits of
mutual funds and stocks. Like mutual
funds, they are inherently diversifed,
says Seddik Meziani, chairman of the
fnance and economics department at
Montclair State University in Montclair,
NewJersey, and author of two books
about ETFs. You arent depending on
only one asset, but many. So if one
doesnt behave as expected, maybe the
others will.
Like stocks, ETFs trade throughout the
day, with the net asset value computed at
15-second intervals. Tat can be impor-
tant even if you have a long investment
horizon, Dr. Meziani says. Buy and hold
doesnt mean buy and snooze. Issues
might arise and you want to trade. If you
think we will have a fash crash at 1 p.m.,
then the liquidity on that instrument is
very important. By contrast, mutual
funds calculate their net asset value at
4 p.m., even for fund redemptions made
early in the morning, and sometimes
that is too late, he says.
ETFs have a fewunique advantages,
too. In some countries, they have tax
advantages because of the way they
redeemsecurities in kind to those
investors who choose to leave the fund.
Tis in kind redemption could lead to a
taxable event for those who redeemtheir
shares, but not for those who remain
invested in it. ETFs also give individuals
access to certain kinds of investments
that either arent ofered by mutual funds
or are too expensive for themto get alone.
ETFs are quite versatile and can play
into a range of strategies, says Mr. Good
of iShares.
First is cash management, he says. If an
investor has a cash balance and wants to
remain in the market but has no obvious
place to invest, ETFs ofer high liquidity.
Second is portfolio completion. An
investor may have chosen some active
mutual fund managers based on their
style, but the resulting portfolio has a
certain bias, for example toward emerg-
ing markets, which could be countered
with developed-market assets. Because
of the slices you can choose with ETFs,
they are a good way to add specifc
exposures, Mr. Good explains.
While the lions share of ETF assets
under management lies in equities70%
world-wideinvestors are increasingly
using ETFs to enter fxed income and
commodities, he says. Tis year iShares
listed two fxed-income ETFs in Singapore
and has plans for a further two. A
well-balanced portfolio contains some-
thing that tends to move in the opposite
direction, which will cushion the blowof
any losses to core holdings. Finding those
opposite movers is difcult without ETFs.
Tere are ETFs for currencies, bonds,
stocks, commodities, real-estate invest-
ment trusts, for individual countries or
regions, for sectors, for carbon. More than
2,000 ETFs exist world-wide.
ETFs are a beautiful way of getting
asset allocation at your fngertips, says
Eleanor Xu, professor of fnance at the
Stillman School of Business at Seton Hall
University in South Orange, NewJersey.
Tird is access. ETFs are a way for
individuals to enter of-limits asset classes.
For example, regular investors cant buy
shares in China, says Mr. Good. However,
iShares A50 ETF is designed to track the
performance of the FTSE China A50 Index.
Fourth is core holdings. Many inves-
tors choose ETFs over mutual funds for
their lowcosts and tax efciency, Mr.
Good says.
Te expense ratio of regular equity
ETFs tracking an equity index ranges
from0.095%to 0.2%. Tat is a fraction of
the average expense ratio of stock mutual
funds in the U.S., which is around 0.84%.
ETFs can accomplish these goals
simultaneously. For example, a balanced
portfolio includes a mix of stocks, bonds,
By Catherine Bolgar
Continued on following page
P
E
T
E
R
A
N
D
M
A
R
IA
H
O
E
Y
BUY AND HOLD DOESNT MEAN BUY AND SNOOZE.
ISSUES MIGHT ARISE AND YOU WANT TO TRADE.
EXCHANGE-TRADED FUNDS
real estate and other assets.
However, it can be difcult for
an individual investor to achieve
diversity in fxed income, such
as bonds. A fxed-income ETF
can give an investor a piece of
the entire universe of, say, U.S.
government bonds in a single
ticker symbol.
PORTFOLIO RELIEF
Similarly, investors are looking
for a sprinkling of investments
with lowcorrelationsthat is,
they dont followthe broad stock
market. So if stocks go up, they
go down, but more importantly,
when stocks go down, they go
up, bringing relief to the portfolio.
Commodities are known for their
lowcorrelations to traditional
asset classes, says Dr. Meziani of
Montclair State University.
Its very tough, however, for
most individuals to invest in
commodities. Its nearly
impossible to invest in physical
commoditiesit means taking
delivery of barrels of oil, bushels
of wheat or bars of gold. And
investing in commodity futures
is a full-time jobyou have to
sell before the futures come due,
or else you will end up taking
possession of that commodity.
Hence, futures contracts have to
be rolled whenever they get
close to the date on which the
commodity is to be delivered.
Commodity ETFs take care of
the fuss. ETFs track a benchmark,
such as a stock or bond index or
a commodity price. Traditional,
or plain vanilla ETFs do that by
physically holding the underly-
ing securities, whether stocks,
bonds, gold or whatever.
Synthetic ETFs mirror the
benchmark by holding deriva-
tives, fromfutures or options to
complex swaps.
OPTIONS FOR INDIVIDUALS
So an individual can buy a
traditional ETF that actually
holds the commoditysuch as
certain gold ETFs which have
actual gold bars sitting in a vault.
However, relatively fewETFs do
this because of the logistics of
holding the actual commodity.
More common are synthetic
ETFs that use futures contracts
to track the benchmark price.
Its a lot easier than doing
futures on your own, Dr.
Meziani says.
Currencies are very important
for investors who have multina-
tional portfolios and who need
to hedge risks of exchange-rate
fuctuations. In addition, the
currency market is huge, says
Dr. Meziani. Most markets are
dwarfed by the currency market,
so liquidity is good.
Tere are ETFs to be long or
short for various currencies
that is, to expect a certain
currency to appreciate or
weaken against others. Others
are designed to hold a mix of
long and short futures positions
among several currencies.
Investors should beware of
the diferences between ETFs
and ETNs, or exchange-traded
notes, Dr. Meziani cautions.
ETNs are debt instruments, with
higher counterparty risk. Tat is,
the investor is exposed to the
credit risk of the issuer, which
usually is a brokerage frm.
Synthetic ETFs also have
more counterparty risk than
physically backed ETFs, however
some use an overcollateralized
structure to mitigate that.
Another subset of synthetic
ETFs are inverse and leveraged
ETFs, best left to institutions and
high-net-worth individuals with
professionals constantly
monitoring their portfolios.
Inverse ETFs attempt to perform
exactly the opposite of the
underlying index. Leveraged
ETFs promise to multiply the
move of the benchmark. So if
the index rises 1%, it delivers 2%,
or, for inverse leveraged ETFs,
minus 2%.
ONE DAY ONLY
In times of uncertainty,
though, says Dr. Meziani, they
could blowup in our faces. Tey
are not meant to be held more
than one day. Tey were created
to serve a purpose, but that
purpose is often overlooked
since they are also being used by
the wrong crowd.
StephenHoran, headof private
wealth at the CFA Institutes in
Charlottesville, Virginia, studied
two real-estate leveraged ETFs,
one two times long and one two
times short.
Both were highly speculative
vehicles. I looked at the perfor-
mance in the fnancial crisis
during a period in which real
estate was volatile. You would
think, considering that real
estate performed poorly, that
the ultra-short fund would
performverywell andtheultra-
long fund would performvery
poorly. In fact, they both did
very poorly. So even if you made
the right call that real estate would
fall in the fnancial crisis and got
into the short fund, you would
have still lost money, he says.
Due to the compounding
efect, daily-rebalanced leveraged
ETFsarenotsuitableforbuy-and-
hold investors in a highly volatile
market, says Hongfei Tang,
assistant professor of fnance at
the Stillman School of Business
at Seton Hall University.
Te most important thing
investors can do to protect
themselves and their portfolios
is to read the prospectus, says
Dr. Xu of Seton Hall University.
And the funds objective is the
most critical line they should
understand, especially when
they are investing in more exotic
ETFs such as leveraged ETFs.
Te prospectus, which usually
is available on the fund provid-
ers web site, includes a detailed
explanation of the underlying
index that it intends to track, the
target leverage (100%for regular
ETFs, 200%or 300%for double-
andtriple-longETFs, minus 100%,
minus 200%and minus 300%for
single, double and triple inverse
ETFs), the frequency of the
rebalancing (daily for most
leveraged ETFs, monthly or
every fve years for some lever-
aged ETNs), whether it will use
derivatives, and if so what kinds.
If you dont understand it,
avoid it, say the experts.
Special Advertising Section
Continued from previous page
EXCHANGE-TRADED FUNDS
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Source: ETF Landscape, Global Handbook, H1 2011, BlackRock
This advertisement is issued by BlackRock Asset Management North Asia Limited and has not been reviewed by the Securities and Futures Commission.
2011 BlackRock, Inc. All rights reserved. iShares
is a registered trademark of BlackRock Institutional Trust Company, N.A.

WORLD NEWS: U.S.
Obama Takes Partisan Tone to Defend Middle Class
Adopting a partisan and populist
tone, President Barack Obama on
Tuesday painted a picture of the
American middle class under siege
from wealthy interests, drawing a
comparison to the industrial mo-
nopolies of an earlier era.
In a gamble, Mr. Obama largely
put aside optimism about the U.S., a
tone he struck at his State of the
Union address in January, and in-
stead worked to embrace the anger
and skepticism emanating from
much of the electorate.
Too many children can no longer
expect to join the middle class, the
president said, no matter if they
work hard and play by the rules.
Thats inexcusable. Its wrong. It
flies in the face of everything we
stand for, he said in a speech at a
Kansas high school.
His language, borrowing from
Theodore Roosevelt, was unsparing,
blaming the breathtaking greed of
a few for the financial crisis and
deriding huge bets, and huge bo-
nuses, made with other peoples
money on the line. Republicans and
their policies, he suggested, enabled
irresponsibility.
Republicans responded that Mr.
Obama should be held responsible
for the economic bad times. Former
Minnesota Gov. Tim Pawlenty said
Mr. Obama had his hands on the
economic throat of the country and
likened the president to Jimmy
Carter, who lost re-election amid a
steep economic downturn, rather
than Mr. Roosevelt.
The presidents tone sets the
stage for the themes of his re-elec-
tion campaign, and the likely GOP
response. The speech will escalate
charges the president is engaging in
class warfare, a complaint heard
from business executives he has
been trying to court as well as Re-
publicans.
The White House viewed the
speech as a chance to set out a con-
trast in visions heading into 2012
and to deflect blame for the econ-
omy to a swath of sources. It marks
a shift from the summer, when he
tried and failed to cut a deficit deal
with Republicans. Since then, Mr.
Obama has taken a more partisan
tone culminating in Tuesdays re-
marks. Referring to Republicans, Mr.
Obama said, they want to go back
to the same policies that stacked the
deck against middle-class Americans
for way too many years. And their
philosophy is simple: We are better
off when everybody is left to fend
for themselves and play by their
own rules. I am here to say they are
wrong.
The president spoke in Osawat-
omie, Kan., the same town where, in
1910, Mr. Roosevelt, a Republican on
his way to becoming an indepen-
dent, delivered his New National-
ism speech. There, Roosevelt called
for the government to do more to
counter concentrated wealth.
Mr. Obama cited health-insur-
ance companies, mortgage lenders
and financial firms. For too many
Americans, he said, hard work no
longer pays off, while those at the
very top have grown wealthier
than ever before. The president has
periodically bashed Wall Street be-
fore, but Tuesdays speech was more
sweeping and went beyond any one
industry to say that the middle class
as a whole was being left behind in
part because of corporate greed and
wrongdoing.
A Wall Street Journal/NBC News
poll last month found three in four
Americans say the nations current
economic structure is out of bal-
ance and favors a very small pro-
portion of the rich over the rest of
the country.
Tad Devine, a Democratic strate-
gist who has advised several presi-
dential campaigns, said that because
everyone knows the economy is ter-
rible, it is smart for the president to
acknowledge it upfront. Its a short
route to connecting with voters, he
said.
It is a risk, however, to embrace
economic woe, rather than rise
above it, given voters tendency to
punish incumbents who preside over
bad times. Mr. Obama prepares to
stand for re-election amid persistent
unemployment and anemic eco-
nomic growth that have put particu-
lar burdens on the middle class.
House Majority Leader Eric Can-
tor (R., Va.) said he agreed with
much of Mr. Obamas diagnosis of
the problems in the American econ-
omy, but not with his remedies,
such as increasing taxes on wealth-
ier Americans. Where we ought to
be focused is increasing income mo-
bility, he said. You dont accom-
plish that by taking away from
those who have been successful.
Mr. Obama has tried several dif-
ferent tacks this year. At the outset,
the White House talked mostly
about winning the future with a
State of the Union speech focused
on innovation. During the summer,
the president portrayed himself as
the adult in the room, bidding to
rise above the bickering in Congress
over the debt ceiling to push a big,
bipartisan deal.
As part of the latest strategy, Mr.
Obama and his Democratic allies in
the Senate have forced a string of
votes that wouldnt pass but that
put Republicans on the record tak-
ing positions that can be used in fu-
ture campaigns. Recent examples in-
clude votes on extending a payroll-
tax cut by increasing taxes on
millionaires and a push to confirm
the head of the consumer-financial-
protection agency.
Republicans have vowed to block
any nominee until the new agency is
restructured. Hes setting up a vote
he knows will fail so he can show up
afterward and say hes shocked,
Senate Minority Leader Mitch Mc-
Connell (R., Ky.) said on the Senate
floor.
In one case, White House pres-
sure seems to be gaining in Con-
gress. GOP leaders say they are will-
ing to extend the payroll-tax cut,
and the parties are now debating
the details, mostly how to offset lost
revenue.
I think there certainly is ample
evidence that the Democrats are
winning this debate, Sen. John Mc-
Cain (R., Ariz.), told reporters Tues-
day. Republicans, he said, are being
picked apart.
Naftali Bendavid and Jonathan
Weisman contributed
to this article.
BY LAURA MECKLER
U.S. President Barack Obama suggested GOP policies enabled irresponsibility.
R
e
u
t
e
r
s
It sounds like a
great story: The
Federal Reserve
lent the banks $7.7
trillion during the
financial crisis.
And Congress wasnt told.
But it isnt true. Even if Jon
Stewart says otherwise.
The Fed and the taxpayers did
bail out the banks, including some
that occasionally pretend
otherwise today. The Fed lent
enormous sums: $1.6 trillion in
emergency loans and individual
bailouts at the December 2008
peak. The Fed has been too
secretive in the past. The Fed
deserves some blame for not
preventing the crisis. The Fed
executed some aggressive plays
during the crisis that demand
postgame scrutiny.
But lending against collateral
to solvent, but cash-short, banks
during a panic isnt among the
Feds more controversial moves.
Thats what central banks have
done since 19th-century England.
And the Fed didnt lend anywhere
near $7.7 trillion. Nor did it keep
the size of its lending secret,
though it did unsuccessfully try to
keep the borrowers identities
secret.
How did this get started?
Blame the law of large numbers
(large ones crowd out smaller,
more meaningful ones) and the
delight we all take in revealing
and learning secrets (even if they
arent really so secret). Why does
it matter? Because widespread
misunderstanding of what the Fed
does and actually did can cripple
it in taking steps to protect the
economy in a future crisis. Thats
why Fed Chairman Ben Bernanke
protested Tuesday what he
described as egregious errors in
some reports, and released a staff
memo with details. (Full
disclosure: My 2009 book, In Fed
We Trust, recounted the Feds
handling of the crisis favorably.)
Since the onset of the financial
crisis, reporters have been trying
to add the components of the
bailoutloans, guarantees, stock
purchasesto come up with a
grand total. In December 2008,
when the crisis was still
unfolding, this newspaper wrote:
Using the most expansive
counting possible, the U.S. has
pledged to spend, invest or loan
as much as $10 trillion....Yet the
final tab is likely to be much,
much smaller.
Bloomberg did a similar
exercise in March 2009, tallying
what it said the government had
spent, lent or committed. By
that metric, the government total
was pushed to $12.8 trillion and
the Feds share to $7.7 trillion.
In fact, the Fed never came
close to committing to lend that
much. The total reflects not what
the Fed had actually laid out nor
the sum of its promises. Rather, it
adds the ceilings set on a number
of emergency programs, some of
which were more hype than
reality. It counted, for instance,
$900 billion for something called
TALF (for Term Asset-Backed
Securities Loan Facility), based on
Treasury statements that the
program might someday reach
that size. In fact, the Fed board
authorized as much as $200
billion in loans and actually lent
$71 billion. At first, the $7.7
trillion got only a bit of attention.
Then the Fed, its hand forced by
Congress and the courts, revealed
what it had wanted to keep secret:
Which banks borrowed how much
and when.
In July 2011, the General
Accountability Office took the Fed
data and listed the biggest
borrowers: Bank of America and
Citigroup were at the top. A
month later, Bloomberg published
the fruits of its own number
crunching, an extensive bank-by-
bank tally of what it labeled
secret loans. Last monthlong
after the Fed had shut its
emergency lending window
Bloomberg recycled that work in a
story that included this sentence:
Add up guarantees and lending
limits, and the Fed had committed
$7.77 trillion as of March 2009 to
rescuing the financial system,
more than half the value of
everything produced in the U.S.
that year.
This time the figure got
attention. Jon Stewart on The
Daily Show: We ultimately sent
the banks $7.7 trillion...Thats
TARP, the worst program in U.S.
history times 11. CNN: For the
first time we have details now on
how much money the U.S. Federal
Reserve doled out to U.S. banks.
And the number? $7.7 trillion.
The New York Times: Among all
the rescue programs set up by the
Fed, $7.77 trillion in commitments
were outstanding as of March
2009, Bloomberg said.
Actually, at the end of March
2009, the Fed had $1.3 trillion in
loans outstanding, both
emergency-liquidity loans and
those made in the rescues of Bear
Stearns, American International
Group and others. And that was
no secret: It was posted on the
Fed website.
After Mr. Bernankes letter was
released Tuesday, Bloomberg
spokesman Ty Trippet said, We
have met with the Fed numerous
times on this issue and not once
has the Fed ever told us our
reporting on this issue is
inaccurate. The amount, $7.77
trillion, was never characterized
by Bloomberg as money lent by
the Fed, Bloomberg said. However,
other news outlets have
mistakenly done so.
Fault the Fed for failing to
head off the worst crisis since the
Great Depression. Ask if the Fed
should have let Bear Stearns go
under or could have saved
Lehman Brothers from bankruptcy
six months later. Ask why it paid
AIGs counterparties on
derivatives contracts 100 cents on
the dollar. Ask if the Fed failed to
push Congress enough to prevent
banks from growing too big to
fail. Ask if the Fed is doing too
little now to sustain the economy
or so much that it is sowing the
seeds of inflation. Theres plenty
to argue about, without turning to
inflated numbers. The actual facts
are stark enough.
Separating Fact From Fiction on Fed Loans
BY DAVID WESSEL
The Feds Portfolio
The Federal Reserves lending to nancial institutions peaked at $1.6 trillion in
December 2008, but it subsequently expanded its holdings by purchasing
Treasury and mortgage-related debt securities.
Source: Federal Reserve
$3.0
0
0.5
1.0
1.5
2.0
2.5
trillion
'08 '09 '10 '11 2007
Securities
held outright,
other assets
Emergency
loans,
support for
specic
institutions
[ Capital ]
THURSDAY, DECEMBER 8, 2011
&
LIFE STYLE
asia.WSJ.com
Holiday-Wine Case, Solved
ADOZENBOTTLES FORCHRISTMAS CHEER 12
Hoping to get Americans to eat more of
their chocolate, Godiva marketers decided
the answer wasnt inside the 85-year-old
brands signature gold box.
With the box, people tend to deliberately
choose a single piece, the company says.
What Godiva needed were new forms of
chocolate for consumers to munch less
mindfully, and new places to buy them.
We want to get more Godiva into peo-
ples mouths more often, said Lauri Kien
Kotcher, chief marketing officer for Godiva
and senior vice president of global brand
development. Its all about chocolate
snacks, little chocolate treats. When those
things come, you just keep eating.
High-end chocolatiers want to be every-
where shoppers arewhether in an upscale
department store with chocolate-covered
pretzels or at the coffee shop with choco-
late-covered espresso beans. Godiva is ven-
turing into supermarkets with jumbo candy
bars and taking cupcakes and brownies on-
line. And it is adding new products like
chocolate-covered Oreos at its boutiques.
The U.S. chocolate market has been get-
ting especially competitive in supermarkets
and drugstores, with European brands like
Cadbury, Toblerone and Ferrero Rocher,
fancy mass-marketer offerings like Her-
sheys Symphony bars, and familiar boxes
from Whitmans and Russell Stovernot to
mention niche products with cult followings
such as Trader Joes peanut-butter cups.
Premium-priced chocolates are rising in
popularity following widely publicized stud-
ies pointing to health benefits of dark choc-
olate. Godiva says overall sales of premium
chocolate rose 7.5% for a recent 52-week
period, to roughly $1.4 billion, in food, drug
and mass retailers (excluding Wal-Mart). In
2010 U.S. shoppers on spent on average
$58.92 each on chocolate candy, about 5%
more than in 2009, according to the Na-
tional Confectioners Association. Manufac-
turers chocolate shipments grew only
about 1.2%suggesting shoppers are paying
more on average, a spokeswoman said.
Fancy chocolate weathered the recession
better than many other luxuriesthe
theory being that even an expensive choco-
late is a relatively inexpensive indulgence.
A good way to sell more chocolate is to
sell it in more locations. LaTanya Tinsley, a
Raleigh, N.C., masters student, usually has
a few squares of milk chocolate as an after-
noon snack. She used to buy a bar about
once a month at the Godiva store a half-
hour from her home. Now I can go to the
grocery store thats five minutes away and
its in the candy aisle, she said. I bought
two bars day before yesterday.
Godivas grocery-store packaginga stiff
gold paper bagis a lot like that for Lindt
truffles and Ghirardelli squares, high-end
chocolates that global heavyweight Choco-
ladefabriken Lindt & Sprngli AG, of Swit-
zerland sells in U.S. supermarkets.
Godivas chief executive Jim Goldman is
a veteran of Campbell Soup Co., which sold
Godiva Chocolatier Inc. in 2008 to Turkish
conglomerate Yildiz Holding. Mr. Goldman
studied expansion stories of brands such
as Burberry, with its reach beyond the rain-
coat, and Starbucks, which added frappu-
cino to the menu and turbo-charged the
brand, he says. And now of course theyre
selling coffee beans in grocery stores, Mr.
Goldman says. The focus is in addition, he
says. Not instead of. In addition.
Godiva says sales are up more than 13%
this year, and it expects total 2011 sales to
top $650 million, nearly a third from items
developed in the prior 18 months.
There are three basic reasons people buy
premium chocolate, Godiva says: as a gift,
for a group and to eat by oneself. The gift
category long has been Godivas strong suit.
Boxed chocolate for holidays, Mr. Gold-
man says. We were boring. So the com-
pany is looking to appeal to a wider audi-
ence of gift givers. Its holiday catalog reads
like a shopping list, suggesting various new
productsa box of brownies? a chocolate-
fondue basket?for babysitters, neighbors,
teachers and clients.
Godiva stores, once awash in gold boxes,
now also stock small chocolate truffle bars
($2.95), sleeves of chocolate-covered al-
monds ($12) and boxes of chocolate-cov-
ered cookies ($25 for 36). Its a complete
chocolate experience, Mr. Goldman says.
For sharing and self-treating, as Go-
diva calls it, more-casual formats are re-
quired. Sharing often involves a candy
dishsuitable for individually wrapped can-
dies but not delicate truffles. Self-treating
begs for a snack-able form like a candy bar,
along with new flavors and textures.
For grocery-chain and drugstore shop-
pers, Godiva has large candy bars and indi-
vidually wrapped Godiva Gems, including
chocolate truffles and caramel-filled choco-
late squaresthough squares of solid choc-
olate are being phased out of the Gem line.
They lack sex appeal, Mr. Goldman says.
These products were created for choco-
late emergencies. Those are the things
that are very much about, I want chocolate
now, Mr. Goldman says. He dismissed the
risk of diluting the brand by taking it to the
grocery store: If Im going to be a leader,
Ive got to be there for them.
Even so, Godiva is doubling down on
complex fillings and flavors at the high end.
Among the new offerings in Godiva stores
are Ultimate Dessert Truffles (boxes of four,
$10), with flavors mimicking desserts such
as red velvet cake and tiramisu. Parfait
Chocolates are slightly smaller, lighter
pieces, with layers of filling in flavors like
Strawberry Cream Trifle. Consumers love
the idea of something that they can under-
stand translated into a piece of chocolate,
Ms. Kien Kotcher says.
BY ELIZABETH HOLMES
Taking Chocolate Lovers Upmarket
Godivas individually wrapped truffles compete with Ghirardelli and Lindt in the supermarket aisle.
F
.
M
a
r
t
i
n
R
a
m
i
n
f
o
r
T
h
e
W
a
l
l
S
t
r
e
e
t
J
o
u
r
n
a
l
,
S
t
y
l
e
d
b
y
A
n
n
e
C
a
r
d
e
n
a
s
1 Competition is fierce in U.S. drugstores,
where consumers face shelves of options,
from Toblerone triangles to Godiva bars.
2, 4 Godiva is making more-complex fillings
for its higher-priced Parfait Chocolates (2) and
Dessert Truffles (4), which it hopes will take
the place of a weekday dessert.
3, 6 Baked goods are another spot Godiva
found to introduce its chocolate. Godiva sells
cupcakes (3) online only and chocolate-
covered biscuits (6) in wider distribution.
5 Individually wrapped chocolates from Lindt,
Ghirardelli and Godiva are for a reception desk
display or to stash in a drawer.
7, 10, 13 Pretzels (7), truffle bars (10), and
chocolate-covered nuts (13) are designed as
snacks for groups to share.
8, 9 Some self-treating itemschocolate-
covered Oreos (8), chocolate bark (9)are
only in Godiva stores and online.
11 Godiva has store employees dip chocolates
to create drama, hoping shoppers will splurge
at the mall.
12 Classic truffles are boxed for formal gift-
giving rather than the communal candy bowl.
Resistance Is Futile
i
S
t
o
c
k
p
h
o
t
o
(
2
)
LIFE STYLE
Uncorking a Classic Case of Christmas Cheer
With the holidays quickly
approaching, we look for-
ward to a gastronomic
whirlwind of parties, family
reunions and celebratory
drinks. Choosing which
wines to accompany the festive season is
either an absolute delight or a stressful
panic. This year, I have done the hard work
for yousipping, slurping and tasting my
way through hundreds of wines to find a
case full of interesting examples for every
occasion and budget.
If there is one date in the calendar when
you can justify the expense of that really
special bottle, it is Christmas Day, so for
every course, I have recommended an out-
standing wine for the discerning oenophile.
And while there are great sparkling wines
outside of France, many of which have been
featured in this column throughout the
year, it is to the wines from the cool slopes
of Champagne, where the grapes struggle
to ripen fully, that I frequently return when
looking for something sparkling.
But holiday drinking isnt just about
rare or expensive vintages; a good wine
should reflect a sense of place and terroir,
and lend a sense of occasion, no matter
what the price.
With food a central part of any Christmas
celebrations I have tried to pick wines that
match well with a variety of dishes and
dont overpower the palate. From Austria to
New Zealand, I have scoured the map for ex-
amples of easy-drinking bottles that will pair
well with whatever you serve, whether it is
turkey, ham, wild game or fish, or simply to
round off a memorable day. Happy drinking.
Brut NV
Bouvet-Ladubay, Saumur,
Loire Valley
Alcohol: 12.5%
Price: $16
The Saumur region in
Frances Loire Valley has
been involved in the wine
trade since the seventh
century. Perhaps more
famous for its red wines,
the area has sparkling
wines that offer appealing
value for money. Bouvet-
Ladubay is one of the
more distinguished houses
and this has exceptional
fruit on the nose, with
strong aromatics of
honeysuckle, acacia and
wildflowers.
Blanc de Blancs Grand Cru
Clos Cazals, Champagne,
France
Vintage: 2000
Alcohol: 12%
Price: $95
Nothing lifts the mood
quite like a glass of
Champagne. While there
are many famous grandes
marques and prestige
blends on the market, the
smart buyer should look
to individual growers and
vineyards. Clos Cazals
is a good example
of why; coming from
a 3.7-hectare, walled
vineyard, it displays
superb power and depth.
A wine of real character.
S Blanc de Blancs Brut,
Le Mesnil
Salon, Champagne, France
Vintage: 1997
Alcohol: 12%
Price: $300
Salon is undoubtedly one
of the worlds greatest
wines. Made from 40-
year-old vines, it is a
study in perfection. A
first sip reveals the
extraordinary power and
depth of this Champagne,
sourced from Salons
grand cru vineyard in the
heart of the Ctes du
Blanc. The 1997 has
notes of brioche and
green apple, with an
incredible length of flavor.
Simply stunning.
Grner Veltliner
Estoras, Burgenland,
Austria
Vintage: 2010
Alcohol: 12%
Price: $16
Grner Veltliner is a grape
variety growing in
popularity. Its a wonderful
wine to serve by the glass,
or as an aperitif with small
eats. This example is dry
but has an immediately
appealing nose, with a
distinctive nutty character.
Try it at your holiday party;
your guests may not have
heard of it, but they will
be pleasantly surprised.
Convergence
Sauvignon Blanc
Two Rivers of Marlborough,
Marlborough, New Zealand
Vintage: 2010
Alcohol: 13.5%
Price: About $17
There is so much good
Sauvignon Blanc coming
out of Marlborough that
it can be a little
overwhelming. But on
occasion, you come across
a wine that reminds you
just how good this region
can be. The nose on the
Two Rivers version is alive
with all the flavors one
expects from Marlborough,
while on the palate there is
a tangy minerality that
adds an appealing depth.
Chassagne-Montrachet,
Les Masures
Jean-Nol Gagnard,
Burgundy, France
Vintage: 2009
Alcohol: 13.5%
Price: $47
Classic white Burgundy is
the hedonists dream. Jean-
Nol Gagnard produces a
fleshy, plump interpretation
of Chardonnay, with a
trademark creaminess and
buttery zest. Still quite
young, it could probably
do with decanting, but its
obvious quality means it
can accompany a variety
of dishes, or be sipped
and enjoyed on its own.
Conte des Garrigues
Domaine La Prade Mari,
Minervois, France
Vintage: 2008
Alcohol: 14.5%
Price: $22
New World-style
winemaking in an Old
World country: The
Minervois AOC in Frances
Languedoc region is
producing wines of
sensational quality, often
for outstanding value.
This wine is a blend of
Syrah and Grenache, and
offers a rich, ripe style
with dark, red fruits. For
the price, it displays real
elegance with a silkiness
and polished edge.
Zinfandel
Heitz Cellar,
Napa Valley, Calif.
Vintage: 2007
Alcohol: 14.5%
Price: $31
Its not often that I
recommend a Zinfandel
as a Christmas wine, as
too often it can be a little
overpowering, leaving the
palate fatigued. But this
example from Californias
Heitz estate impresses
with its graceful elegance.
Packed full of ripe mulberry
and cracked black pepper,
it will stand up to
whatever game bird
you are serving this year.
Chteau Grand-Puy-Lacoste
Pauillac, Bordeaux, France
Vintage: 1996
Alcohol: 13%
Price: $195
A classic red Bordeaux from
an underappreciated estate
in the regions celebrated
Pauillac commune. The 1996
Cabernet Sauvignon vintage
in Bordeauxs Medoc was a
great one, and this blend of
75% Cabernet Sauvignon
and 25% Merlot really stands
out. Drunk now (though it
will last for a few decades
more), this wine exhibits a
fresh, pure, menthol
character that is fresh and
a pleasure to drink.
Brauneberger
Juffer-Sonnenuhr
Riesling Sptlese
Weingut Schloss Lieser,
Lieser, Germany
Vintage: 2008
Alcohol: 7%
Price: $22
The festive season can try
even the most experienced
tasters with its myriad of
wines and food. What
better way to refresh the
palate than with this light,
taut Riesling from
Germanys Mosel Valley?
With attractive fruits
and notes of lime
and blossom, coupled with
its low alcohol level, the
wine is one you could
happily sip all night.
Noble Late Harvest
Semillon
Nelson Creek Wine Estate,
Paarl, South Africa
Vintage: 2009
Alcohol: 11%
Price: $17
To stand up to the spices
of a Christmas or plum
pudding, a wine needs
to pack a little punch.
This late-harvested
Semillon from Paarl in
South Africa displays plenty
of unctuous fruit, such as
pineapple and honey, on the
nose. But its real quality is
the freshness and tingling
acidity it possesses on the
palate, leaving the drinker
hankering for a second sip.
Croft Vintage Port
Douro Valley, Portugal
Vintage: 1977
Alcohol: 20%
Price: $85
Vintage port is one of the
most underrated wines.
One reason is the
perception that it should
only be served with
cheese at the end of a
meal. Sure, it goes well
there, but try sipping port
on its own to enjoy its full
character. Croft isnt the
most fashionable house,
but the 77 has a creamy,
soft, appealing character
that is sublime.
[ Wine ]
BY WILL LYONS
APERITIFS CHRISTMAS LUNCH FESTIVE STARTERS DESSERT
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OPINION: REVIEW OUTLOOK
S
tandard & Poors Monday night put
nearly every country in the euro
zone on notice for a possible credit
downgrade. The glorious exceptions were
Cyprus, which was already on Credit-
Watch, and Greece, which is already
rated junk. European officials denounced
the announcement as counterproductive
and somehow politically motivated, but
the rating agencies are merely catching
up to the reality that sovereign debt isnt
a risk-free asset.
This same realization may even be
dawning at last on the international
banking regulators in Basel, Switzer-
land. Business Week reports that the au-
thors of the Basel standards, which set
capital and liquidity requirements for
large international banks, are reconsid-
ering rules that all but require banks to
hold large amounts of sovereign debt.
Unfortunately, the rules under review
concern only the new liquidity buffers
that banks will need to hold under the
forthcoming Basel III standards. Under
this new requirement, banks are sup-
posed to have a 30-day supply of funds
available in case lending markets seize
up as they did in the fall of 2008, and
60% of that supply is supposed to be in
high-quality, highly
liquid assets, such as,
believe it or not, gov-
ernment bonds.
As Peter Wallison
has written on these
pages, the Basel rules have been push-
ing banks into government bonds for
years on the assumption that they rep-
resent a risk-free asset. Under Basels
risk-weightings, government debt of
your home country is assigned a zero
risk under both the old rules and the
new.
The rationale is that a government
can always tax more or print more
money to pay off its debts, at least nom-
inally. So a country that issues debt in
its own currency should in theory never
be forced into actual default, even if it
has to resort to inflationary money
printing to avoid it.
On this, the Basel gnomes have a
point, even if its taken
everyone too long to re-
alize that this option
wasnt open to the likes
of Greece and Italy. But
even when correctly ap-
plied, those rules create systemic risk
by nudging large banks toward holding
similar assets. This reduces diversity in
the system, increasing the odds that if
one bank is in trouble, all or most of
them will also be in trouble.
A normal market has a balance of
buyers and sellers, longs and shorts,
bulls and bears. But risk-weightings put
a thumb on the scale. Recall that the Ba-
sel rules also assigned a very low risk-
weighting to triple-A-rated mortgage-
backed securities, which helps explain
why sleepy banks in Dusseldorf loaded
up on the stuff during the housing bub-
ble and lost billions during the panic.
And now here we are doing it again
with sovereign debt. In a paper commis-
sioned by the European Parliament in
2010, former Commerzbank Chairman
Achim Kassow notes dryly that The
regulatory incentive which results from
the 0% risk weight is apparent: banks in
Member States are effectively encour-
aged to place their most liquid assets
into the worst possible government
debt, maximizing the yield with a regu-
latory capital requirement of zero.
Its encouraging that the Basel rule
makers are considering even a limited
climb-down from pushing banks into
government bonds, but the whole policy
needs revision.
O
n the same day U.S. Secretary of
State Hillary Clinton wrapped up
her visit to Burma last week,
President Thein Sein signed a bill allow-
ing peaceful protests. The new law
builds on measures loosening media
controls earlier this year, moves the
government touts as proof it will toler-
ate public dissent. However, only the re-
lease of journalists and protesters im-
prisoned for crimes that no longer
exist will show that the current liberal-
ization is more than what President Ba-
rack Obama has called Burmas flickers
of progress.
Take the case of Ngwe Soe Lin. The
30-year-old reporter for the Democratic
Voice of Burma was arrested in 2009
and sentenced to 13 years in Rangoons
infamous Insein prison. Mr. Lins offense
was reporting on or-
phans of Typhoon Nar-
gis, for which he won
the Rory Peck Award.
DVB video reporter Hla
Hla Win was sentenced
to 20 years in Decem-
ber 2009.
Last Friday, the Burmese government
also agreed to a ceasefire with the rebel
Shan State Army-South, one of the larg-
est ethnic armed groups that had never
agreed to a ceasefire in the past. This is
a positive development. But as Khin
Ohmar of Burma Partnership wrote in
these pages last week, peace negotia-
tions with ethnic
armed groups cannot
succeed without
broader efforts to ac-
cept minorities as
equals and respect
their rights. Releasing
imprisoned minorities
such as Shan national leader U Khun
Htun Oo would signal Burma is serious
about ethnic reconciliation.
Burmas reforms havent reached the
prisons, which remain inhumane. Fifteen
political prisoners on a hunger strike for
their rights in Insein prison were denied
drinking water as punishment early last
month, according to U.N. Special Rappor-
teur Tomas Ojea Quintana. Nor were they
allowed to see their families or receive
medicine. Some strikers were held in win-
dowless and unhygienic conditions that
the prison calls military-dog cells.
The Burmese government has im-
pressed Western governments, and Fri-
days announcement shows real promise.
But the political opening will be incom-
plete as long as nearly 2,000 political
prisoners are behind bars.
N
ew York and California were once
Americas economic growth en-
gines, but their political leaders
seem determined to keep them sputter-
ing. Their Democratic Governors are now
pushing big new tax increases in the
name of soaking the rich and balancing
their budgets, as if that same strategy
hadnt put them in their current fiscal
straits.
In New York, Andrew Cuomo an-
nounced Tuesday that hes agreed with
legislative leaders to rewrite the states
tax code to create four new tax brackets
and rates. Mr. Cuomo is pitching this as
tax reform, but thats a ruse to disguise
the fact that hes repudiating his 2010
campaign pledge not to raise taxes on
anyone while letting a previous income-
tax surcharge expire on schedule at the
end of this month.
This is the same Governor who said as
recently as October 17 that You are kid-
ding yourself if you think you can be one
of the highest-taxed states in the nation,
have a reputation for being antibusi-
nessand have a rosy economic future.
The people who were really kidding
themselves are voters who thought Mr.
Cuomo believed what he said. With the
occupiers in the streets of New York,
perhaps this is Mr. Cuomos first left turn
in his campaign for the Democratic
Partys 2016 nomination.
Equally worthy of scorn are the Re-
publicans who run the state Senate who
buckled under union pressure because
they dont have many
millionaires in their
rural districts. New
Yorks GOP is essen-
tially worthless.
Blame, too, goes to the
Partnership for New
York City, the big busi-
ness grandees who supported a tax in-
crease and for whom higher taxes are a
rounding error. Theyre sticking it to
small business owners with narrow profit
margins.
Mr. Cuomo is also tossing out the
most desirable part of New Yorks tax
code, which is its relative flatness, with a
top income tax rate that would have been
6.85% next year (after the previous sur-
charge expires). The new code will in-
clude a progressive ladder: 6.45% for
couples earning between $40,000 and
$150,000, 6.65% from $150,000 to
$300,000, 6.85% from $300,000 to $2
million, and 8.82% above $2 million ($1
million for individuals).
Such a progressive code will make
the state fisc even more dependent on
millionaire incomes, which soar on capi-
tal gains and bonuses during good times
but crash during recessions. This is the
same progressive trap that has made
Californias budget hostage to economic
boom and bust.
The good times create
an unsustainable revenue
boom, which the politi-
cians spend, only to find
that the budget goes
quickly and steeply into
red when the economy
slows. Then the politicians cry poverty
and raise taxes again, driving more of the
wealthy taxpayers the politicians need out
of the state. This is why the highest-taxed
states are always under fiscal duress.
And speaking of California, Governor
Jerry Brown announced Monday that
hell put a huge new tax increase on the
ballot for voter approval next November.
The income tax rate would rise by one
percentage point to 10.3% for individuals
making between $250,000 and $300,000,
to 10.8% for those up to $500,000, and
two percentage points to 11.3% for any-
one making more than $500,000. All ret-
roactive to Jan. 1, 2012.
Unlike Albany, where the insiders rule
without cavil, California voters have im-
posed a two-thirds vote requirement for
the legislature to raise taxes. Republicans
in Sacramento wont agree to a tax hike
unless Mr. Brown pushes aggressive pen-
sion reform, but the Governors recent
pension proposal is merely a baby step to
solving that problem.
So now hes resorting to the ballot
box, and to what will no doubt be a year-
long campaign to scare voters into be-
lieving that if they dont raise taxes their
children will go uneducated, their roads
will decay, and the middle class will go
without health care. Hollywood and the
unions will be his financiers.
The larger lesson here is the difficulty
of changing the politics of union-en-
forced entitlement. Both states are domi-
nated by public unions that refuse to al-
low serious reforms in pensions or state
welfare spending and whose default pol-
icy is always higher taxes. Like Greece or
Italy, the illusion is that you can chase
revenue by raising taxes without regard
to economic growth and the mobility of
people and capital.
Mr. Cuomo claimed to be different
when he ran in 2010, but his resistance
didnt even last a year in office. So two
states are now taking one more whack at
the people who create wealth, in order to
redistribute more of it. For how that
story ends, look to Europe.
Basels Sovereign-Debt Bubble
Will Burma Follow Through?
The Two Left Coasts
Releasing the roughly
2,000 political prisoners
would quell doubts.
How bank regulations
create systemic risk.
Cuomo and Brown
decide to occupy
taxpayers.
OPINION
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
Innocent Mom-and-Pop ver-
sus Big Bad Wal-Mart. The sto-
ryline is so appealing that its lit-
tle wonder opposition politicians
were quick to seize on it in pan-
ning Prime Minister Manmohan
Singhs now-aborted plan to open
India to foreign big-box retailers.
Is the dichotomy true? No. The
retail debate is about something
quite different.
When Prime Minister Singh
proposed recently to lift a ban on
foreign investment in supermar-
kets, critics railed that Wal-Mart
would wipe out the traditional
neighborhood store. The cacoph-
ony that broke out was loud even
by Indian democracys standards:
The right-wing Bharatiya Janata
Party joined hands with the Com-
munist Party to disrupt parlia-
ment, while one leader threat-
ened arson against any new Wal-
Mart stores. The government
buckled under pressure and yes-
terday officially announced that
the plan is on hold.
The threat to the shop around
the corner is a straw man. The
Indian Council for Research on
International Economic Relations,
a think tank commissioned by
the government in 2007 to study
the potential impact of modern
retail, surveyed 2,020 small busi-
nesses and found that they
wouldnt see a decline in overall
employment. Small stores can ex-
ist side-by-side with corporate
giants, beating the latter at some
traditional areas like customer
service (Wal-Mart typically
doesnt do home delivery) and
innovating easily to match their
new competitors in other ways
(such as accepting credit cards).
The reality is that at the rates
India is growing, the tide will lift
both small and big businesses.
New Delhi-based Technopak Ad-
visors estimates that, if foreign
investment were permitted, or-
ganized retail (Indias term for
modern big-box stores) would
see sales rise to $314 billion in
25 years from $26 billion today.
But traditional stores could see
sales rise to $2.18 trillion over
the same span, from $453 billion
today. As long as growth contin-
ues to boost Indians purchasing
power, the retail pie will expand
for everyone.
So why then all the uproar?
The key is to understand that In-
dias retail debate is not about
who will sell the goods to con-
sumers. Its about who will bring
those goods to market, and how.
The difference between so-called
organized retail and the tradi-
tional kind is how products get
from farm to kitchen. The biggest
losers from investment liberaliza-
tion would be the middlemen
who currently do todays organiz-
ing of Indian retailand do it
badly.
Consider that currently, the
Indian farmer sells a kilogram of
tomatoes for three rupees (six
cents) to the first intermediary
in the chain. Four more interme-
diaries later, the mom-and-pop
store sells that same kilogram
for 15 rupees. Most of the differ-
ence goes to the middlemen, not
Mom and Pop. Meanwhile, some
20% of the tomatoes rot in tran-
sit. On average across the coun-
try, vegetables see a markup of
60% by the time they arrive in
cities.
This system has endured so
long because the government has
supported it. The ban on foreign
investment has been one major
sop to the middlemen. Another is
the proliferation of state-level
mandates that farmers sell their
produce to government commit-
tees that in turn license agents
in a form of cartel.
Multinational investors would
shake up the market most by im-
porting their sophisticated sup-
ply-chain technologies, from just-
in-time delivery to cold storage.
The inevitable adoption of such
methods across the landscape
would benefit both consumers
and the small retailers stifled by
the current systems inefficien-
cies.
The traders obviously prefer
the status quo. The Confedera-
tion of All India Traders, for in-
stance, has been at the forefront
of organizing protests and
strikes.
Yet its worth asking how
long the status quo can continue
even absent foreign investment.
The wastage and inefficiency in
the system is so high that local
retailers increasingly are search-
ing for ways to circumvent it. E-
commerce, which generally elim-
inates at least one or two
middlemen in a products path
to the consumer, already ac-
counts for nearly $10 billion in
annual spending. JuxtConsult, a
research firm in New Delhi,
notes that India now boasts 17
million online shoppers from 10
million last year.
In the meantime, mergers and
acquisitions at home are boost-
ing economies of scale. India has
seen the growth of domestic re-
tailers increasingly able to tap
foreign expertise despite the in-
vestment ban. Bharti has paired
with Wal-Mart in a wholesale
venture selling to small retailers.
Reliance at one time considered
making an investment of its own
in French big-box Carrefour.
While that deal faltered, other
outbound investments are en-
tirely possible that would also
open a back door to the import
of supply-chain expertise. And
dont count out Mom and Pop.
Rising revenue overall is likely to
empower a growing number of
increasingly prosperous small re-
tailers to seek out modernization
opportunities of their own.
The middlemen and their po-
litical backers may think theyve
won an important battle this
week. But they havent won the
war. Blocking foreign investment
may delay the moment of Indias
supply-chain modernization
homegrown improvements could
take a decade or more to
flowerbut change is inevitable.
Mr. Bhattacharya is an editorial
page writer at The Wall Street
Journal Asia.
[ Business Asia ]
BY ABHEEK BHATTACHARYA
Winning Indian Retails Long War
Yu Hua is one of Chinas most
acclaimed novelists, hugely popu-
lar in his own country and the
recipient of several international
literary prizes. He brings a novel-
ists sensibility to China in Ten
Words, his first work of nonfic-
tion to be published in English.
This short book is part personal
memoir about the Cultural Revo-
lution and part meditation on or-
dinary life in China today. It is
also a wake-up call about wide-
spread social discontent that has
the potential to explode in an ugly
way.
The books 10 chapters present
images of ordinary life in China
over the past four decadesfrom
the violent, repressive years of the
1966-76 Cultural Revolution, when
the author grew up, to the up-
heavals and dislocations of the
current economic miracle. Along
the way, Mr. Yu ranges widely into
politics, economics, history, cul-
ture and society. His aim, he
writes, is to clear a path through
the social complexities and
staggering contrasts of contempo-
rary China.
And he succeeds marvelously.
China in Ten Words captures
the heart of the Chinese people in
an intimate, profound and often
disturbing way. If you think you
know China, you will be chal-
lenged to think again. If you dont
know China, you will be intro-
duced to a country that is unlike
anything you have heard from
travelers or read about in the
news.
The books narrative structure
is unusual. Each chapter is an es-
say organized around a single
word. Its not spoiling any sur-
prises to list the 10 words that the
author has chosen in order to de-
scribe his homeland: people,
leader, reading, writing, revolu-
tion, disparity, grassroots, copy-
cat, bamboozle and Lu Xun (an
influential early 20th-century
writer). None is likely to appear
on the list of banned words and
phrases that Chinas censors en-
force when they monitor Internet
use. But in Mr. Yus treatment,
each word can be subversive,
serving as a springboard for dev-
astating critiques of Chinese soci-
ety and, especially, Chinas gov-
ernment.
Take the word people, which,
post-1949, has been ubiquitous in
China: Think Peoples Republic
or Peoples Daily or the people
are the masters, as Chinese
schoolchildren are taught to say.
In Mr. Yus telling, the word be-
comes an opportunity to discuss
the Tiananmen Square incident of
June 4, 1989, when Chinese sol-
diers fired on unarmed democracy
demonstrators. He movingly de-
scribes the dashed hopes of Chi-
nese patriots who longed for
something more from their gov-
ernment.
In his view, the Beijing resi-
dents who marched in support of
the student demonstrators were
less interested in democratic free-
doms than in eradicating the cor-
ruption they witnessed among
government officials, who got rich
at the expense of the rest of the
Chinese citizenry. For him, Ti-
ananmen Square marks the divid-
ing line between a China ruled by
politics and a China where
money is king.
Mr. Yu argues that corruption
infects every aspect of modern
Chinese society, including the le-
gal system. Historically, Chinese
peasants with grievances could go
to the capital and petition the em-
peror for redress. Today, Mr. Yu
writes, millionsyes, millionsof
desperate citizens flock to Beijing
each year hoping to find an hon-
est official who will dispense jus-
tice where the law has failed them
at home. What will happen when
they discover that their leaders at
the national level are just as cor-
rupt as those at the local level?
The violence and deprivations
of the Cultural Revolution are by
now well known, but Mr. Yus rem-
iniscences add color and texture
to what the world has learned in
recent years about that lost de-
cade. The youthful Yu Hua is
something of a wise guy and a
schemer, pitting himself against
bureaucratic inanities. It is some-
times impossible to know whether
to laugh or cry.
In Reading, Mr. Yu describes
his boyhood eagerness to find
something to read other than
grindingly dull accounts of class
struggle. Works of literature
were routinely destroyed in book-
burning bonfires tended by Red
Guards. But fragments survived
and circulated in secret, passed
from reader to reader. One day,
Mr. Yu and a classmate get hold of
a pirated translation of a classic
French novel and decide to hand-
copy it so that they can savor the
pleasure of reading it over and
over again. What ensues is a hilar-
ious description of the boys
frenzied efforts to finish the tran-
scription overnightonly to dis-
cover in the morning, in an O.
Henry-like twist, that they cant
decipher each others handwriting.
As awful as the Cultural Revo-
lution was, in Mr. Yus telling its
horrors sometimes pale next to
those of the present day. The chap-
ter on bamboozle describes how
trickery, fraud and deceit have be-
come a way of life in modern
China. There is a breakdown of
social morality and a confusion in
the value system of China today,
he states. He writes, for example,
about householders around the
country who are evicted from their
homes on the orders of unscrupu-
lous, all-powerful local officials.
Mr. Yus portrait of contempo-
rary Chinese society is deeply pes-
simistic. The competition is so in-
tense that, for most people, he
says, survival is like war. He has
few hopeful words to offer, other
than to quote the ancient philoso-
pher Mencius, who taught that hu-
man progress is built on mans de-
sire to correct his mistakes.
Meanwhile, he writes, Chinas
pain is mine.
Mr. Yu, who lives in Beijing,
made the decision not to publish
China in Ten Words in his own
country. Instead, it came out ear-
lier this year in the other China
Taiwanand, now, in the U.S. It
will be interesting to see how he
is received when, after his Ameri-
can book tour, he goes home
again.
Ms. Kirkpatrick, a former deputy
editor of the Journals editorial
page, is a senior fellow at the
Hudson Institute.
[ Bookshelf ]
BY MELANIE KIRKPATRICK
Cultural Lexicon
China in Ten Words
By Yu Hua
(Pantheon, 225 pages, $25.95)
Manmohan Singh lost the
battle to let Wal-Mart in.
But change is inevitable.
Revolution, disparity,
copycat and bamboozle
words that serve
as a springboard for
critiques of China.
OPINION
On Dec. 12, 1911, a century ago,
the British Empire reached its apo-
gee at the Delhi Durbar (Hindi for
court). Half a million Indians, in-
cluding all the ruling princes and
nobility of the subcontinent, came
to Delhi to celebrate the corona-
tion of their new King-Emperor,
George V. More than 100,000 of
them assembled in the vast Coro-
nation Park outside the city. The
King-Emperor made the surprise
announcement that the capital was
to be transferred from Calcutta to
Delhi.
The ceremony at its culminat-
ing point exactly typified the ori-
ental conception of the ultimate
repositories of imperial power, re-
corded The Times of London. The
monarch sat alone, remote but be-
neficent, raised far above the mul-
titude, but visible to all, clad in
rich vestments, flanked by radiant
emblems of authority, guarded by
a glittering array of troops, the cy-
nosure of the proudest princes of
India, the central figures in what
was surely the most majestic as-
semblage ever seen in the East.
Kenneth Rose, in his biography of
George V, called it the most
splendid spectacle in Indian his-
tory. In some ways, the splendid
ideals of the Empire continue to-
day in Indias vibrant democracy.
The 1911 spectacle was the
most magnificent of the three
Delhi Durbars, but also the last.
The tradition began once Queen
Victoria became Empress of India.
But it stopped when King
George VI accessed to the throne
in 1937, when the Indian National
Congressbusy fighting against
imperialismthreatened a boycott.
Questions were also raised then
in Westminster about the specta-
cles cost. Although none could
know it at the time, the Indian
Empire only had a decade left, for
the two world wars between the
1911 Durbar and Indian indepen-
dence in 1947 would leave Britain
exhausted and near-bankrupt.
But before the Empire quit, it
gave India a great gift in the
spring of 1944it repelled the
Japanese at Indias gates at the
battles of Kohima and Imphal. The
victory was a tribute to the grit
and determination of the Indian
fighting men, who were officered
in great part by Britons and led by
General Sir William Slim. Had the
Japanese broken through into the
Indian plains between March and
July 1944, the ravages they were
then committing across the rest of
their so-called Greater Asia Co-
Prosperity Sphere would un-
doubtedly have been the fate of In-
dia too.
So what remains a century on
from the Delhi Durbar, besides an
obelisk in Coronation Park where
the King-Emperors dais used to
be, and the fabulous 6,170-dia-
mond Imperial Crown of India that
can be seen in the Tower of Lon-
don?
The first and most obvious sur-
vivor is that which lured the Eliza-
bethan merchant adventurers of
the Honourable East India Com-
pany to India in the early 17th cen-
tury: trade. In the 2010-11 fiscal
year, the United Kingdom was In-
dias sixth largest trading partner,
accounting for $7.14 billion of In-
dias exports and $5.39 billion of
its imports, which is set to rise.
Meanwhile, Indias forefront
presence in the Commonwealth
and the success of David Cam-
erons visit in July show how the
intense hostility of the Indias in-
dependence movement from the
1920s to the 1940s was only ever
directed against the British impe-
rial administration, and not
against the British nation itself.
Today, Indian students spend $465
million in tuition fees at British
colleges and universities each year,
while British high-street retailers
such as Marks and Spencer and
Debenhams have done very well in
India.
The legacies of Empire go far
deeper than this, of course. The
architectural splendors of Sir Ed-
win Lutyenss Delhiwhere the In-
dian president lives in what was
formerly the Viceregal Palaceare
the expressions in stone of a confi-
dence in the strength and poten-
tial of India.
The Oxford economist Deepak
Lal, the nephew of a former mayor
of Delhi and Nehru cabinet minis-
ter who was imprisoned by the
British, has another answer. He ar-
gues that what he calls the Liberal
Internationalist Economic Order,
first provided by the British Em-
pire, has been essential for the
working of the benign processes of
globalization, which promote pros-
perity.
The major attributes were free
trade, free mobility of capital,
sound money due to the gold stan-
dard, property rights guaranteed
by law, piracy-free transportation
thanks to the Royal Navy, political
stability, low domestic taxation
and spending and gentlemanly
capitalism run from the City of
London. Despite Marxist and na-
tionalist cant, Mr. Lal writes, the
British Empire delivered astonish-
ing growth rates to India, which
were not seen elsewhere in the
world, and would not have been
seen in India had it remained un-
der the Mughals.
The Empire required a corrup-
tion-free administration to service
it, which is what Britain delivered
in the shape of the Indian Civil
Service. The Services highest ide-
als are still held sacred by some,
though too few bureaucrats and
politicians in Delhi today.
Britains other great legacy to
India is the English tongue, which
is spoken by around 18% of Indians
and serves as the global language
of business, the Internet and ad-
vanced technology. Presently there
are more Chinese learning English
as a second language than there
are people who speak it as their
first, an indication of the head
start that Britain gave India, albeit
one which China is rapidly closing.
The same can be said of the Em-
pires construction of railways and
other massive infrastructure proj-
ects in India.
In the great race to prosper-
ityand thus global hegemony
presently taking place between In-
dia and China, anyone interested
in the survival of a liberal-minded
and tolerant civilization must be
rooting for the victory of India, in-
fused with the best traditions of
Westminster-style representative
institutions, over a sabre-rattling,
resentful and totalitarian China.
The shade of the King-Emperor is
cheering India on.
Mr. Roberts, a historian, is author
most recently of The Storm of
War: A New History of the Second
World War (Harper, 2011).
King George V and Queen Mary preside over the Durbar.
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BY ANDREWROBERTS
India, Still the Brightest Jewel
A century after the Delhi
Durbar, India is shining,
continuing the best ideals of
the British Empire.
On Dec. 7, 1941 the United
States suffered the worst intelli-
gence failure in its historybe-
fore or sincewhen Japanese
planes destroyed much of the U.S.
Pacific Fleet at Pearl Harbor.
The most astounding aspect of
the Pearl Harbor attack was that
the U.S. had already broken the
Japanese code and was listening
to its communications. The U.S.
had hundreds of cryptologists and
linguists, mostly from the Navy,
listening to Japanese wireless
communications. But it wasnt
enough.
We knew something was go-
ing to happen on Sunday, Decem-
ber 7th at around noon Washing-
ton time, Henry Kissinger said at
a speech I attended two years ago
in New York City. The problem is
that nobody knew that when its
noon in Washington, its around 7
a.m. in Hawaii.
In other words, despite being
on a war footing with Japan and
knowing from intercepted commu-
nications that the Japanese were
planning for a significant event to
affect Japanese-U.S. relations that
Sunday, our government couldnt
conceive ofand didnt defend
againstan attack on its largest
Pacific naval facility, Pearl Harbor.
This was a failure to think out-
side the box, coupled with a
strong belief that the Japanese
were inferior and incapable of
mounting such an attack. Eight
U.S. battleships, three cruisers
and three destroyers were either
damaged or sunk, 188 aircraft
were destroyed (almost all on the
ground), and 2,402 Americans
were killed. All of this was accom-
plished in 90 minutes with 353
small Japanese planes.
Twenty years earlier in a
highly publicized demonstration,
Gen. Billy Mitchell had proven
the vulnerability of naval vessels
to airplanes in the waters off
Virginia. In July 1921, Mitchells
planes sank a surplus German
destroyer, a light cruiser and the
battleship Ostfreisland in full
view of hundreds of visitors who
were brought to see the exercise.
One of those visitors was
Osami Nagano, a Japanese naval
captain who was part of Japans
diplomatic corps. Nagano clearly
understood the demonstrations
implications. But the U.S. wasnt
in the mood for military spending
after World War I, when a strong
sense of isolationism took hold of
the country.
Just as the lessons of Viet-
nam shaped todays U.S. military,
the lessons of Pearl Harbor
shaped our armed services
through the 1960s. In 1942, only
months after the attack, then-
Colonel Curtis LeMay was forced
to take ill-trained troops into
combat and watched hundreds of
them die. He never wanted to
see the U.S. in that position
again, a goal that guided his cre-
ation of the Strategic Air Com-
mandAmericas nuclear
punchduring the earliest years
of the Cold War.
LeMay understood that in a
nuclear war the U.S. wouldnt
have the luxury of two years to
build the Army, Navy and Air
Force that it needed in World
War II but didnt yet have in De-
cember 1941. LeMay drilled into
his crews the idea that their first
mission might well be their only
mission, which is why they had
to be constantly prepared. Partly
because of that strength, there
was never a nuclear exchange
between the U.S. and U.S.S.R.
Seventy years after Pearl Har-
bor, the U.S. finds itself in much
the same situation that it was in
prior to World War II. There is a
great effort to cut military spend-
ing, bring troops home from
abroad, and scale back our inter-
national exposure. The countrys
critical financial situation is one
reason. Yet a nuclear-obsessed
Iran, an emerging China and Rus-
sia, along with smaller rogue ac-
tors are enough of a threat to jus-
tify a vigilant and even aggressive
guard. Add to this the weariness
of two prolonged wars in Afghani-
stan and Iraq and the comparison
is complete.
Two weeks ago, National Pub-
lic Radios All Things Consid-
ered examined Republican presi-
dential candidate Newt Gingrichs
statement of concern about the
possibility of an EMP attack on
America. Thats an electro-mag-
netic-pulse attacka huge shock
wave of electricity that could
come from a nuclear weapon det-
onated high in the atmosphere
above the homeland. Such a wave
could destroy the countrys elec-
trical grid, stop almost all cars
and trucks, cause sewage to back
up in every city, and disrupt the
food and water supplyessen-
tially sending us back 250 years.
NPRs guest, Wired magazine
reporter Noah Shachtman, was
skeptical. He called Mr. Gingrich
a charter member of the pro-
fessional EMP, scare-monger,
worry-wart crowd, and he won-
dered if it really made any sense
that Iran or North Korea or
some other country is going to
be so mad at us that they would
actually do something like this.
The doubters may indeed be
right. But 70 years ago similar
doubters believed Japan would
never be so foolish as to take on
the United States of Americaun-
til, of course, it did.
Mr. Kozak is the author of
LeMay: The Life and Wars of
General Curtis LeMay (Regnery,
2009).
BY WARREN KOZAK
Pearl Harbor, Iran and North Korea
Dont be surprised
if one of the U.S.s
underestimated adversaries
does the unthinkable.
Ahmadinejad at the United Nations.
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IN DEPTH
Russia Confronts Fresh Wave
Of Crisis Over Airline Safety
Aviation Experts Say Problem Is Ineffective Regulation, Inefficiently Small Carriers and Poorly Trained Pilots
R
USSIA, once a global aviation power,
has become the most dangerous
country in which to board an airliner.
Investigations of nine commercial plane
crashes this year, including one that killed
an entire professional hockey team, found a
raft of gross violations and errors, such as
drunk or sedated flight crews, forged safety
documents and panicked pilots.
In one crash, the navigator used the
wrong guidance equipment and aimed his
jetliner at a tree, far from the runway.
I dont know what else has to happen
for the recognition of this systemic crisis
to reach the entire aviation community,
said Deputy Transport Minister Valery Oku-
lov, a former chief executive of national
airline Aeroflot, at an emergency industry
meeting in October, according to a report
in a state-run newspaper. A ministry
spokeswoman declined to confirm that ac-
count and said Mr. Okulov wasnt available
to comment.
Russian fatalities and crashes, adjusted
for air-traffic volumes, this year exceed
those in less-developed countries with
longstanding safety problems, including
Congo and Indonesia, according to aviation
consultants Ascend in London.
Eight of the nine crashes involved So-
viet-era planes. But many safety experts
say the real problem isnt aging equipment
but ineffective regulation, inefficiently
small airlines and poorly trained pilots not
following modern safety procedures.
Just two years ago, Russia appeared to
be an air-safety success story. Following a
string of crashes early last decade, the gov-
ernment in 2006 accepted international
help to boost safety at its biggest global
carriers like Aeroflot and Transaero. By
2009, Russia had no fatal crashes. Since
then, accidents have surged amid rising
traffic at small, domestic airlines that were
largely overlooked by the safety campaign.
The Russian air crashes highlight a nag-
ging problem for the global aviation indus-
try and show the limits of generally suc-
cessful efforts to cut the danger of air
travel. A major reason for the world-wide
drop in accidents over recent years is that
most big countries cut their tolerance for
safety lapsesat their own carriers and on
foreign airlines. A critical weakness in this
system of nations watching each others
backs, experts concede, is domestic avia-
tion in countries where people tend to
overlook risks.
In heartland Russia, for example, many
pilots and airplane mechanics show little
concern for basic safety rules that have be-
come second nature elsewhere. Domestic
carriers operate under national regulations
that are much weaker than global rules
that Russias international carriers face.
Falsification is common, down to wide-
spread use of counterfeit spare parts, Rus-
sian officials say.
Its the same sort of societal issue you
see in parts of Africa and Southeast Asia,
says Bill Voss, president of the Flight
Safety Foundation, a global nonprofit orga-
nization that helped implement Russias
safety reforms five years ago.
Russian officials reject comparisons to
less-developed countries. They say tighter
regulations and stricter inspections, man-
dated since the wave of crashes, will soon
resolve the problem. The Kremlin has or-
dered small airlines to close and plans to
ban most Soviet-built planes that remain
prevalent nationwide.
Sergei Masterov, head of safety in the
Russian Aviation Agency, said in an inter-
view that the moves will radically change
the situation and prevent a repeat of this
years surge in crashes. Were taking an
absolutely principled approach to ensuring
safety now. Were not allowing anything
by.
Russia has the know-how to fly safely
because the Soviet Union had a proud his-
tory as a leading aerospace power. Yet that
experience regularly goes unheeded in Rus-
sias smaller carriers and isolated regions,
where Moscows control and foreign influ-
ences remain muted.
Its not just resistance, its a kind of
BY GREGORY L. WHITE
AND DANIEL MICHAELS
Moscow
Rescuers at the crash site of a RusAir Tupolev-134, a Soviet-era jet, near Petrozavodsk in June. A series of errors and problems resulted in 47 people killed.
A
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Perilous Flying
Russian fatal accidents per million ights
*Through Nov. 23 Source: Ascend
8
0
2001 11*
2
4
6
0 0 0
IN DEPTH
sloppiness, carelessness, says Valery
Shelkovnikov, a former top aviation regula-
tor who now runs a safety-consulting firm.
In Europe, the market with most links to
Russia, European Union air-safety watch-
dogs see Russias situation as a mirror of
the society in which laws and rules are
routinely ignored, senior European officials
say. The EU is offering Russia assistance,
but specialists acknowledge they lack influ-
ence over airlines that dont leave Russia.
Many foreign companies that must
transport staff to remote Russian oil fields
or mines have forbidden employees from
using most Russian airlines or boarding
any Russian-built airplane, say corporate
air-safety specialists. Some require staff to
fly between nearby Russian cities using for-
eign carriers, on detours through foreign
hubs such as Vienna or Helsinki.
Experience from other countries indi-
cates steps Russia must take. Nigeria, one
of the deadliest places to fly six years ago,
has become much safer thanks to concerted
government and international efforts.
China transformed its industry nine
years ago after a slew of deadly crashes. To
control the countrys breakneck aviation
growth, Beijing ratcheted up enforcement
of existing regulations, adopted stricter in-
ternational standards and slammed the
brakes on industry expansion, even threat-
ening to block jetliner imports. The govern-
ment invited armies of foreign experts to
train Chinese pilots, controllers and inspec-
tors. Within two years, Chinese aviation
ranked among the worlds safest.
Chinas nascent aviation industry,
though, was simpler to control than the
sector in Russia, where hundreds of tiny
airlines sprouted from the splintering of
Aeroflot at the Soviet Unions breakup in
1991. Scores still survive, but many lack
funds to buy new planes or modernize old
ones. Moscow now reasons that by closing
such carriers and grounding their planes, it
can reduce crashes nationwide.
But even some government officials
question those moves, noting that nearly
all the recent accidents have been blamed
on crew error or inadequate supervision,
not equipment problems.
After the latest crashes, Moscow ordered
inspections of most Soviet-era planes. In-
spectors found hundreds of violations that
had been previously overlooked and
grounded a quarter of the planes, aviation
officials say.
Safety officials blame the laxness partly
on earlier Kremlin efforts to promote busi-
ness by reducing inspections.
Crash investigators at the Interstate Avi-
ation Committee, which probes accidents in
the former Soviet Union, took the unusual
step in November of calling on Moscow to
accelerate adoption of international safety
rules domestically.
There should be no double standards
for Russian companies operating abroad
and inside the country, said committee
chief Tatyana Anodina.
Since the mid-2000s, Russias biggest
carriers have voluntarily adopted interna-
tional standards, often a requirement for
flights abroad. But even top players have
struggled to impose discipline throughout
their operations, industry officials say.
After a Boeing 737 operated by an affili-
ate of Aeroflot crashed in September 2008
on landing at Perm, in the Ural Mountains,
investigators found the pilots had been
trained hastily. As a result, they misread vi-
tal gauges, which presented information
differently from those on Soviet-built
planes that they had long flown. Investiga-
tors said the captain, who had alcohol in
his system, nearly flipped the plane before
flying it into the ground on an approach
that should have been routine. Aeroflot,
which later sold its stake in the affiliate,
didnt respond to a request to comment.
Few crashes highlight the breadth of
problems plaguing Russian aviation more
than one from Moscows Domodedovo Air-
port to Petrozavodsk late on June 20.
RusLine, a small Russian carrier, nor-
mally flew modern Canadian-built Bombar-
dier jets for its daily hop from Moscow to
the regional capital near Finland. But those
planes were busy and RusLine lacked the
backup fleet that regulations require.
Bending Russian rules to run the flight,
investigators said, RusLine chartered a So-
viet-era Tupolev-134 and its crew from an-
other small carrier, RusAir. RusLine said it
fully complies with regulations. It hasnt
been the subject of any special investiga-
tions or disciplinary actions by regulators
since the crash, which involved a plane
from a different carrier. RusAir was shut
down by regulators after the crash and no
one could be reached to comment.
Alexander Fyodorov, the 44-year-old
captain, was new to RusAir. He had quit a
larger, more prestigious airline, rather than
accept demotion for a hard landing in Jan-
uary, investigators said. RusAir wasnt
aware of the violation, which had been im-
properly omitted from his official record,
investigators say. Such falsification of vital
records is common, officials concede.
Investigators say preflight medical
checks, a world-wide requirement, were
perfunctory and possibly falsified. All seven
crew members, including flight attendants,
recorded identical pulses. The airport says
all checks were conducted properly. Still,
an autopsy of the navigator found his
blood-alcohol level, at 0.081%, was above
the legal limit for driving in Russia or the
U.S.
A storm over Finland had brought clouds
and rain to the Petrozavodsk area, but
when Capt. Fyodorov picked up the official
forecast on his way to the plane, it indi-
cated weather would be acceptable for
landing.
Departure was delayed 20 minutes, but
the pilot didnt follow procedure and ask
for a weather update. The forecast would
have shown deteriorating conditions that
would prevent landing, investigators said.
Its most likely that if the captain had
requested the data on the weather at the
Petrozavodsk airporthe would have de-
cided not to take off, investigators said.
The 70-minute flight proceeded
smoothly, but weather in Petrozavodsk was
deteriorating. The airport, known as Bes-
ovets for the small village nearby, couldnt
warn the crew because it lacked modern
equipment to measure visibility. The rudi-
mentary gear it did have barely functioned,
since most of its lights were burned out.
Besovets, a primarily military airstrip
with few commercial flights each day, had a
history of problems. Regulators in 2006
shut civilian operations there for several
weeks due to safety violations. The local
government took the airport over in 2009
after it nearly went bankrupt, according to
reports in the official news agency. Up-
grades to outdated equipment got delayed.
Airport officials declined to comment on
investigators conclusions, saying only that
Besovets is now undergoing renovation.
Mr. Masterov, the safety regulator, said
low traffic at the airport probably didnt
justify the cost of modern equipment such
as an instrument-landing system that could
guide flights in low visibility. For Flight
9605, that proved a fatal economy.
The Tu-134 is such an old design that its
nose, which in modern jetliners houses ra-
dar equipment, is made largely of glass. A
navigator squeezes into the bubble for the
view.
RusAir navigator Aman Attayev relied on
an onboard GPS-based system. Ill get you
in for sure, he assured the captain as they
approached. Neither had landed at Bes-
ovets before.
Mr. Attayevs confidence was misguided.
Russian navigational charts still havent
been fully updated with exact locations and
many smaller airports still rely on data
from 1942. The old information can differ
from modern GPS maps by more than the
length of a football field.
Russian regulations forbid using GPS for
landing, but Mr. Attayev ignored that, in-
vestigators say. As a result, the Tupolev
was about 130 meters off course as it de-
scended through clouds.
It was also descending too quickly, but
without modern equipment on board or at
the airfield, the pilots were unaware. Pro-
cedures required the captain to announce
at 110 meters altitude whether he would
continue the landing or make another pass.
But Capt. Fyodorov couldnt see the ground
and said nothing as the plane crossed that
level. His co-pilot should have aborted the
landing at that stage, but sat silent.
Seconds later, a ground-proximity alarm
sounded. Capt. Fyodorov searched for the
runway. I dont see it yet, he said. Im
looking.
Everything seemed calm, a flight at-
tendant later told a local news website
from her hospital bed. And then I see the
wing hit one evergreen, then another.
The captain pulled back hard on the con-
trol stick, but too late. The last word on the
cockpit recording is the co-pilot cursing.
The plane flipped over, smashing into a
ditch along the airport road. It hit the
power line to the airport, which immedi-
ately went dark. The controller, still un-
aware of the fiery impact, radioed to the
crew to make another pass.
Drivers on the road and local villagers
reached the burning wreckage before fire
crews. Of 52 people on board, 47 died, in-
cluding the pilot, co-pilot and navigator.
Three days later, before any investiga-
tion results had been released, President
Dmitry Medvedev said that although the
cause was likely crew error, he had or-
dered the accelerated grounding of all re-
maining Tu-134s. Its not just because of
this crash, its just time.
Source: Interstate Aviation Committee, Ministry of Industry
ADeadly Run
A string of crashes has made Russia the most dangerous place in the world to y this year,
according to safety experts.
Dec. 4, 2010
Two of three engines on a Dagestan Airlines Tu-154 fail after takeoff from Moscow when the
crew forgets to turn on fuel pump. Poorly trained and panicked pilots misdiagnose problem and
fail to restart engines. Two killed in botched emergency landing.
Jan. 1, 2011
Electrical equipment, which hadnt been serviced in years,
catches re on KogalymAvia Tu-154 taxiing at Surgut airport,
killing three and injuring 43.
March 5, 2011
An-148 passenger jet in the Belgorod region crashes during a training ight after crew exceed
maximum allowed speed in a dive, killing six.
June 20, 2011
RusAir Tu-134 crashes approaching Petrozavodsk airport
on a rainy night, killing 47.
July 11, 2011
Angara Air An-24 suffers an engine re in ight and crashes during an attempted emergency
landing on a beach on the Ob River in Siberia,
killing seven and injuring 28.
Aug. 9, 2010
Avis-Amur An-12 cargo plane crashes in Magadan region, killing 11.
Aug. 22, 2011
An-2 experiences engine failure after takeoff and crashes into a lake in Tuva region,
killing one and injuring seven.
Sept. 7, 2011
Yak-42 carrying a Russian pro hockey team crashes as poorly trained pilots inadvertently apply
brakes during takeoff from Yaroslavl airport, killing 44.
I dont know what else has
to happen for the recognition
of this systemic crisis to
reach the entire aviation
community.
Valery Okulov
Deputy transport minister and
former CEO of Aeroflot
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FROMPAGE ONE
Chinese Companies Step In to Fill the Lending Gap
icy.
In an analysis for The Wall Street
Journal, ChinaScope Financial, a
Hong Kong-based research firm
partly owned by Moodys Corp.,
found that from July to November,
38 listed Chinese companies dis-
closed 52 new issues of entrusted
loans, totaling 6.2 billion yuan. In-
terest rates on these loans reached
as high as 24.5%.
The concern among some ana-
lysts is what happens if the econ-
omy cools and borrowers are unable
to repay. The loans may invoke
higher-than-expected default risk, as
the strength of the borrowers tends
to be relatively low, according to
David Cui, China strategist at Bank
of America Corp.s Merrill Lynch
unit.
Market watchers worry that
loans made to property companies
in particular could have a broader
impact on the economy, as many are
thinly collateralized with land and
could default as the property mar-
ket cools. Chinese banks could also
be affected because some take
credit risk by repackaging them and
selling them to individual investors,
Mr. Cui said.
Sunny Loan Top, a manufacturer
in east Chinas Zhejiang Province,
disclosed in July it had extended for
six months three loans it made to
Continued from first page contractors and developers that
came due in March, totaling 110 mil-
lion yuan ($17.3 million). The com-
pany didnt respond to requests for
comment. Its shares are down 26%
year-to-date, compared with a 16%
drop in Shanghai main stock bench-
mark.
Lending outside formal bank
channelscalled shadow finance or
shadow banking in Chinahas led
to concerns about a potential in-
crease in bad debt in Chinas finan-
cial system as its economic growth
slows. Estimates vary because the
lending is largely unregulated, rang-
ing from 12 trillion yuan ($1.9 tril-
lion) to 20 trillion yuan ($3.2 tril-
lion), or between 30% and 50% of
Chinas gross domestic product.
Shadow finance includes entrusted
loans and other types of loans such
as those extended by black-market
loan sharks.
While large companies continue
to obtain bank loans, small manu-
facturers, which account for a big
part of the economy, have to turn to
alternative sources for financing.
Real-estate companies cut off from
banks as Beijing tries to cool down
the countrys property markets have
also tapped the market.
Meantime, corporations flush
with cash have been eager to find
uses for their money other than
have it sitting in banks. Currently,
the one-year benchmark deposit
rate is 3.5%, while the rate of infla-
tion is 5.5%. Many entrusted loans
are organized through banks, which
receive a fee in return.
In its analysis for the Journal,
ChinaScope found that the compa-
nies that have extended entrusted
loans have underperformed broader
Chinese markets in Shanghai and
Shenzhen, though it isnt clear
whether entrusted loans are the
reason in each case.
Still, investors have become in-
creasingly skeptical of them. The
entrusted loans from public compa-
nies show that these companies
have a large amount of cash in their
hands but might use the money in
detriment of shareholders interest,
said Zhu Chaoping, ChinaScopes
head of research.
Yangzijiang Shipbuilding, one of
Chinas largest shipyards, is based
in southern Chinas Jiangsu Prov-
ince. Previously state-owned, it was
restructured as a private company
in the late 1990s. Its chairman, Ren
Yuanlin, is considered one of Chinas
richest men and has won accolades
from analysts and investors for hav-
ing led the company through the fi-
nancial crisis with solid perform-
ance and a strong balance sheet.
By comparison, some shipyards
in China have closed down or are
teetering due to dwindling orders
amid economic uncertainties world-
wide.
However, Yangzijiang, which
makes a range of commercial ves-
sels, also has seen its stock drop in
recent months partly because of the
companys exposure to informal
lending.
Its investments in held-to-matu-
rity financial products mainly were
sold by various Chinese banks and
others, the company said in its fi-
nancial report released on Nov. 9. It
said that the funds it put into those
products were used to finance Chi-
nese companies and entities in in-
dustries ranging from real estate to
manufacturing and to fund local-
government projects. These prod-
ucts yield an average return of
about 10% to 15% a year, the com-
pany said, representing higher re-
turns as compared to idle cash.
As of September, such financial
assets totaled 10.4 billion yuan, or
about 33% of the companys total
assets, it said, more than double the
level at the end of 2009.
Yangzijiang also owns a small-
loan company and has a 31.5% eq-
uity stake in another. These micro-
finance lenders often charge
interest rates up to four times the
benchmark rate. In a presentation
accompanying its earnings an-
nouncement, the company said its
investments in these two lenders,
totaling 394.5 million yuan, were
purely opportunistic and could
make potential huge profits.
Loans or investments made by
the company are secured against
various collateral, the company said.
But according to its third-quarter fi-
nancial report, 42% of its invest-
ments in financial products were se-
cured by land. These loans are
much more risky, said Mr. Zhu of
ChinaScope.
Yangzijiang also said the com-
pany has been very conservative
and has made provisions in its
books to cushion against any un-
foreseeable losses. The company
hasnt experienced any default since
2008, it said.
Yangzijiang will continue to ex-
plore investment opportunities in fi-
nancial related products that pro-
vide better yield, the company said
in its earnings release in November.
New Delhi Backs Down on Foreign Retailers
retail has been suspended till a con-
sensus is brought among various
stakeholders, Mr. Mukherjee said in
the Lok Sabha, or lower house of
Parliament.
The policy will not be imple-
mented without consultation with
political parties and chief ministers
of various states, he added.
The government didnt back down
from a related cabinet decision to al-
low 100% foreign investment in sin-
gle-brand retail. Until now, single-
brand foreign retailers like Nike Inc.
could hold only 51% of an Indian
joint venture.
The governments defeaton a
measure that can be implemented by
executive decisionwill be con-
strued by many as a serious dent in
the influence of Prime Minister Man-
mohan Singh, who pushed for re-
forms in retail and defended his pol-
icy at a public event last week. It
also will heighten the sense that the
government is suffering from what
its critics call policy paralysis, a
reference to it having passed very
few major new initiatives since being
elected to a second term in office in
2009.
This is extremely disappointing
for both international and Indian in-
vestors, said Saloni Nangia, senior
vice president and head of retail and
consumer goods at Technopak, a
New Delhi-based consulting firm.
This has been under discussion for
more than 10 years. The government
has given in at a weak moment. It
raises doubts about the Indian gov-
ernment and what is its focus when
it comes to the economy and various
stakeholders.
Thomas Verghese, head of the re-
tail committee at the Confederation
of Indian Industries, a business
group, added: I dont think this gov-
ernment will have the guts to pull
this out of the cold storage.
The governments decision late
last month ran into trouble not just
because opposition parties objected,
Continued from first page
but also because the move was un-
popular with coalition allies, who
complained they werent consulted.
The postponement of the govern-
ments policy comes after opposition
partieschiefly the right-of-center
Bharatiya Janata Party and the left-
ist Communist Party of India
blocked any business from being
done in Parliament in protest against
the move. Some of the Congress
partys own alliesTrinamool Con-
gress party and Dravida Munnetra
Kazhagamalso vowed to prevent
any legislative work until the deci-
sion was suspended.
The government is dependent on
the Trinamool Congress and the
DMK for its parliamentary majority
but it doesnt face any immediate
threat of losing power as both have
assured the Congress party they
wouldnt leave the coalition.
The government pitched the fur-
ther opening of retail as a way to
improve Indias supply chain, in-
crease consumer choice, and help
farmers. It was also by and large
supported by Indian industry as a
modernization of an important sec-
tor that is decrepit in many parts of
the country. The government has
been looking for ways to stimulate
foreign investment as economic
growth slows.
Opponents of allowing greater
foreign investment in retail said it
would jeopardize the livelihoods of
farmers and traders.
Some international retailers, for
whom India represents one of the
last great consumer markets, ex-
pressed disappointment.
The decision to defer FDI is a
missed opportunity for Indian pro-
ducers, farmers and consumers,
Tesco of the U.K. said in a statement.
Wal-Mart said it respected the
governments decision and looked
forward to arriving at a consensus.
After Wednesdays announce-
ment, both the opposition parties
and allies agreed to allow Parliament
to function normally.
We welcome the governments
decision. This is a victory of democ-
racy as the government has surren-
dered to the will of the people, said
Sushma Swaraj, BJP leader.
Gurudas Dasgupta of the Commu-
nist Party of India also compli-
mented the governments announce-
ment. It is a virtual roll-back. It is a
victory of the democratic force that
have been fighting for the cause.
The decision was also welcomed
by the Trinamool Congress, a West
Bengal-based party that contributes
19 votes to the ruling coalition in
New Delhi. It is led by the states
chief minister, Mamata Banerjee.
We are happy that this decision
has been taken. Mamata Banerjee
was already told about it. We are
also happy that the BJP also agreed
to this suspension of the decision,
said party member Sudip Bandyo-
padhyay on Wednesday.
Shopkeepers wait for customers in New Delhis old quarters on Wednesday. Indias government shelved plans to let
foreign department stores into the country.
A
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The concern among some
analysts is what happens if
the economy cools and
borrowers, especially
property companies, are
unable to repay their loans.
Thursday, December 8, 2011
As of 12 p.m. ET Euro 1.3386 g 0.08% Yen/US$ 77.69 g 0.05% Yen/A$ 79.76 0.35% Oil 100.03 g 1.23% Gold 1730.20 0.13% 10-year Treasury 8/32 yield 2.065% 3-month Libor 0.54000
THE WALL STREET JOURNAL. asia.WSJ.com
&
BUSINESS FINANCE.
Citigroup to Slice 4,500 Jobs,
Take $400 Million Charge
BUSINESS &FINANCE 23
Australias Gas Boom
Brings Growing Pains
HEARDONTHE STREET 36
China Opens Wider to Takeovers
Antitrust Regulators Clear Nestls Candy-Maker Purchase, the Latest Foreign Acquisition to Gain Approval
BEIJINGChinas antitrust regu-
lators approved Nestl SAs $1.7 bil-
lion offer for candy maker Hsu Fu
Chi International Ltd., in one of the
largest foreign takeovers of a Chi-
nese companyanother sign China
is open to foreign acquisitions.
The Swiss foods company in July
announced plans to buy 60% of Hsu
Fu Chi in a deal that valued the Sin-
gapore-listed company at 3.5 billion
Singapore dollars (US$2.7 billion).
Buying the stake helps Nestl gain
on rivals in a fast-growing confec-
tionery market by opening new dis-
tribution channels and tapping di-
rectly into local tastes.
The approval came less than a
month after antitrust authorities
approved a plan by Yum Brands Inc.
of the U.S. to buy hot-pot restaurant
operator Little Sheep Group Ltd.
China is now saying that its
open to multinational companies,
said Frank Schoneveld, a Shanghai-
based partner at law firm McDer-
mott Will & Emery.
In the past, antitrust authorities
have signaled that the closer foreign
companies get to acquiring Chinese
retailers or consumer companies,
the more difficulties they will face,
Mr. Schoneveld said. A bid by Coca-
Cola Co. of the U.S. in 2009 to buy
juice maker Huiyuan Juice Group
Ltd. was rejected on the assumption
that Coca-Cola would crowd out
smaller rivals and potentially mo-
nopolize the juice market, even
though the two companies com-
bined held only 20% of Chinas juice
market.
But lately, a number of foreign
takeovers have been approved. The
Ministry of Finance and Commerce
in September approved Nestls bid
for a 60% stake in Chinas Yinlu
Foods Group Co., a privately owned
drink and porridge maker. Regula-
tors in June approved U.K.-based li-
quor giant Diageo PLCs takeover of
a top Chinese white-spirit maker,
though the clearance came about 16
months after the deal was an-
BY LAURIE BURKITT
Feeding Foreign Appetite for Acquisitions
Recent foreign buyouts of Chinese companies signal China is open for business
Approval of liquor giant
Diageos takeover of a
top white-spirit maker,
Shui Jing Fang
Approval of
Nestl's bid for
a 60% stake in
China's Yinlu
Foods
Approval of Yum
Brands plan to buy
hot-pot restaurant
operator Little
Sheep
Approval of
Nestl's plan to
buy Chinese candy
maker Hsu Fu Chi
International
Source: the companies Photos from left: Bloomberg News; Imaginechina/Associated Press; Bloomberg News; European Pressphoto Agency
JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER
Olympus Continues
To Probe Scandals
TOKYOIn its most aggressive
stance toward those responsible for
its accounting scandal, Olympus
Corp. said it was prepared to take
legal action against any current and
former executives who helped hide
more than $1.5 billion in investment
losses for decades.
The muscular tone came a day
after an outside panel probing Olym-
pus released a report that said for-
mer senior managersa core group
that included past presidentswas
rotten.
Olympus said it will set up com-
mittees to determine whether 70
former and current board members,
internal auditors and other execu-
tives were responsible for keeping
the losses hidden in an complex
maze of paper companies and off-
shore bank accounts.
Its not yet entirely clear
whether and how many of those
people were involved, Olympus Pres-
ident Shuichi Takayama said
Wednesday. The company also will
continue to monitor probes by po-
lice, prosecutors and securities regu-
lators, he said.
If its possible to make a deci-
sion [on whether to take legal ac-
tion] based on the information we
already have, we will, he said at a
Tokyo news conference.
Mr. Takayama said the company
is considering holding an extraordi-
nary shareholders meeting as early
as February, at which point its entire
board, including Mr. Takayama,
likely would resign.
I cannot say that will happen for
sure, but I think the chances are
high, he said.
But the company said that deci-
sion and othersincluding the pos-
sible return of former Chief Execu-
tive Michael Woodford, who was
fired after raising questions about
the acquisitions at the heart of the
scandalwill have to wait until after
next Wednesday. That is the dead-
line for Olympus to submit earnings
reports with financial statements
that reflect the hidden losses. If
Olympus misses that deadline, its
shares would be delisted from the
Tokyo Stock Exchange.
The company said it likely will
BY JURO OSAWA
Olympus President Shuichi Takayama
R
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Breaking open a quarter-century
secret at Olympus................................. 24
BUSINESS FINANCE
INDEX TO BUSINESSES AND PEOPLE
Aeroflot.........................16
AgStar Financial
Services..................... 28
Alibaba Group Holding
Ltd..............................26
All Know Holdings........22
Aluminum Corp. of
China.......................... 30
Andreessen Horowitz...26
Apple.............................23
Bank of America...........20
Basis International
Ltd..............................23
BHP Billiton..................30
Boeing........................... 25
Brenneman Pork Inc.....28
Caterpillar..................... 30
China Overseas Land &
Investment................ 30
China Resources Land..30
ChinaScope Financial....20
China Shenhua Energy.22
Chrysler Group..............25
Citigroup.................. 23,30
Coca-Cola.......................21
Commerzbank............... 24
Credit Suisse.................. 6
Deutsche Brse............ 31
Diageo........................... 21
Elpida Memory............. 30
Exxon Mobil..................36
Facebook Inc................. 26
Fiat................................25
Ford Motor....................25
Fortescue Metals
Group..........................30
General Electric....... 22,28
General Motors.............25
Global Education and
Technology Group......22
Greylock Partners.........26
Highbridge Capital
Management..............30
Hsu Fu Chi
International..............21
Huiyuan Juice Group....21
Hyundai Motor..............25
ING Group NV...............28
Intel...............................25
IntercontinentalExchange
................................... 31
Japanese Finance
Ministry....................... 6
JC Penney..................... 30
Jiangxi Copper.............. 30
KPMG AZSA................. 24
Lazard Capital...............30
Little Sheep Group.......21
London Stock Exchange
Group..........................31
Mars.............................. 22
Meiji Holdings.............. 22
Mens Wearhouse.........30
MF Global Holdings......28
Microsoft.......................26
Mitcham Industries......30
Mitsui O.S.K. Lines...... 30
Monsanto......................30
Nasdaq OMX Group......31
Nestl............................21
Nike............................... 20
Nippon Yusen................30
NYSE Euronext........30,31
Oil Search..................... 36
Olympus...................21,24
Pandora Media..............26
Pang Da Automobile
Trade.......................... 25
Pearson......................... 22
Proview International
Holdings.....................23
Research in Motion......23
RusAir........................... 17
RusLine......................... 17
Shenzhen Proview Co.. 23
Silver Lake Partners.....26
Socit Gnrale.......... 24
Softbank....................... 26
Sony.............................. 30
Sunny Loan Top............20
Swedish Automobile....25
Talbots.......................... 30
TDK................................30
Tesco............................... 1
Toyota Motor................30
TPG Capital...................26
Transaero...................... 16
United Technologies.....30
Verizon
Communications........30
Wal-Mart Stores............ 1
Woodside Petroleum....36
Yahoo.............................26
Yahoo Japan..................26
Yangzijiang Shipbuilding
(Holdings) Ltd............. 1
Yinlu Foods Group........21
Yum Brands.................. 21
Zhejiang Youngman
Lotus Automobile......25
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.
Akerson, Dan................ 25
Barrett, Craig................25
Bartz, Carol...................26
Brenneman, Rob...........28
Buffett, Warren............28
Busch, Andrew............. 31
Cassidy, Kathryn...........28
Chen, Sha......................22
Corzine, Jon.................. 28
Cui, David......................20
De Gan, Jack.................28
Draghi, Mario................36
Dunn, Brian...................28
Eaton, Bob.................... 25
Fields, Mark..................25
Ford, Henry................... 25
Fukaya, Koji .................... 6
Geers, Eric .................... 25
Gephardt, Richard.........25
Gillette, Merri Jo..........22
Glazer, Larry................. 30
Grove, Andy.................. 25
Hannagan, Tim............. 28
Hinrichs, Joe.................25
Hommen, Jan................28
Iacocca, Lee...................25
Iwata, Kazumasa..........27
Kaluzny, Stefan............ 30
Kikukawa, Tsuyoshi......24
Kishimoto, Masatoshi..24
Kotecha, Mitul..............30
Krafcik, John.................25
Lignos, Elsa...................31
Lim, Shyan Wen........... 30
Li, Song.........................22
Loeb, Dan......................26
Lofalk, Guy....................25
Marchionne, Sergio...... 25
Martens, Phil................25
Menon, Arjun................30
Mizuno, Atsushi ........... 27
Mori, Hisashi ................ 24
Mulally, Alan.................25
Nakagawa, Akio............24
Nangia, Saloni .............. 20
Neal, Mike.....................28
Otellini, Paul.................25
Pandit, Vikram S. ......... 23
Ren Yuanlin...................20
Roberts, Pat..................28
Sagawa, Hajime............24
Schlossberg, Boris........31
Schoneveld, Frank........ 21
Sekido, Takahiro........... 27
Shimoyama, Toshiro.....24
Shirakawa, Masaaki ..... 27
Sonnenfeld, Jeffrey......25
Takayama, Shuichi........21
Tyler, Tony.................... 23
Verghese, Thomas........20
Waha, Marc...................22
Wang, Lili......................22
Wang Tao......................36
Woodford, Michael.......21
Wu, Carolyn.................. 23
Yamada, Hideo..............24
Yao, Zhi.........................22
Yokoo, Nobumasa.........24
Yoo Deok-sang................4
Zhang, Xiadong.............22
Zhou Tianyong..............36
Zuckerberg, Mark......... 26
Corrections Amplifications
Meiji Holdings Co. said radioactive ce-
sium 134 and 137 had been detected in
its Meiji Step baby formula. A World
News article Wednesday incorrectly said
it found cesium 139.
Charges Over Trading
Four Chinese Citizens Are Target of Insider Case in the U.S.
The U.S. government filed civil-
fraud charges against four Chinese
citizens and a China-based firm for
highly profitable and highly suspi-
cious trading ahead of a takeover
that allegedly netted more than $2.7
million in illicit gains.
The Securities and Exchange
Commission said it obtained a court
order to freeze the U.S. assets of the
Chinese individuals and firm within
two weeks of the announcement of
the deal at the center of the allega-
tions, the takeover of Beijing-based
language-testing company Global
Education and Technology Group
Ltd. by London-based educational
company Pearson PLC.
The fast U.S. court action to
freeze money held in U.S. brokerage
accounts by Sha Chen, Song Li, Lili
Wang and Zhi Yao followed a refer-
ral from the Financial Industry Reg-
ulatory Authority, which scans U.S.
markets looking for possible insider
trading, according to people familiar
with the matter.
U.S. regulators seek to fast-track
enforcement actions in cases involv-
ing non-U.S. citizens when there are
concerns that the money could dis-
appear overseas, according to offi-
cials.
Global Education representatives
couldnt be reached for comment. A
spokesman for Pearson said the
company had no comment on the
SEC announcement, but clearly we
would cooperate with any investiga-
tion.
In this case, the U.S. regulatory
alarm bells rang after the four indi-
viduals suddenly purchased mas-
sive amounts of Global Education
shares in U.S. brokerage accounts
that had been largely inactive, said
Merri Jo Gillette, director of the
SECs Chicago office.
The SEC alleged Ms. Wang, a 45-
year-old Beijing resident, and possi-
bly others, had been tipped off
about the impending Pearson take-
over.
The SEC said Xiadong Zhang, a
co-founder of Global Education and
chairman of its board, apparently
tipped Wang and possibly others
about the likely takeover. Ms. Zhang
couldnt immediately be reached for
comment.
The SEC said its investigation is
continuing.
The alleged tip was potentially
lucrative, if illegal to act onthe
stock price of Global Education in-
creased 97%, from $5.37 to $10.60,
on Nov. 21, 2011, the day the take-
over was announced, effectively
doubling investors money, accord-
ing to the SEC complaint.
The SEC said Ms. Wang trans-
ferred new funds into her previously
inactive brokerage account and
bought 28,000 Global Education
shares.
The other accused individuals
also allegedly engaged in suspicious
trading in Global Education stock,
the SEC said.
On Nov. 18, the last trading day
before the acquisition announce-
ment, their purchases accounted for
more than 35% of the days trading
volume in the companys shares, the
SEC said.
The four individuals began sell-
ing shares after the merger was an-
nounced. But U.S. regulators believe
the court order freezing the assets
was imposed before any of the al-
leged illicit profits left the country,
officials said.
Jean Eaglesham
BY NATHALIE TADENA
The SEC acted quickly because the case involved non-U.S. citizens and money that might vanish overseas.
B
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o
o
m
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g
N
e
w
s
have to correct its accumulated
earnings, part of its shareholders eq-
uity, to 117 billion ($1.5 billion) as
of the end of March from the previ-
ously stated 170 billion.
Olympus dominates the global
market for endoscopes, imaging de-
vices that are used for internal med-
ical examinations, and makes cam-
eras. But some major shareholders
have cut their stakes and the com-
panys stock has dropped 54% since
mid-October, when the accounting
scandal became public, making the
company a potential takeover target.
Olympus shares fell 5.2% in Tokyo
trading Wednesday.
The firm would consider selling
assets or establishing capital tie-ups
with other companies, Mr. Takayama
said Wednesday in response to re-
porters. But he said the firm doesnt
Continued from page 21 have any plans along those lines.
Mr. Woodford, meanwhile, has
said he hopes to return to the firm.
He said he will talk to interested
parties to propose a new board for
Olympus, so he can lead the com-
pany. Olympus has said its board
fired the British executive in Octo-
ber because of a self-centered man-
agement style. Mr. Woodford has
said he was ousted because he ques-
tioned several acquisitionsdeals
that ultimately were revealed to be
central to the effort to hide losses.
Mr. Takayama didnt take back
earlier criticism of Mr. Woodford,
but softened his tone about his for-
mer boss. I do appreciate the fact
that he raised questions, Mr. Ta-
kayama said. Its something that
the rest of us didnt do.
Daisuke Wakabayashi
nounced.
Chinas antimonopoly laws are no
longer being used as a protectionist
tool, said Marc Waha, a partner at
law firm Norton Rose, who is based
in Hong Kong.
Chinas regulators are now at-
tempting to present a level playing
field for foreign and domestic com-
panies, Mr. Waha said, adding that
in the past month, Chinese authori-
ties have a stricter stance toward
the countrys own corporations.
Chinas National Development
and Reform Commission last month
began an investigation of two major
state-controlled companies over al-
leged monopolistic business in the
market for broadband Internet ser-
vice. The Ministry of Finance and
Commerce approved a joint venture
between General Electric Co. of the
U.S. and state-owned China Shen-
hua Energy Co., applying conditions
predominantly to Shenhua.
The Nestl approval makes the
food giant the second-largest con-
fectionery company by sales in
China, after Mars Inc. of the U.S.,
according to market-research firm
Euromonitor. Nestl, which already
Continued from page 21 sells a chocolate-covered wafer bar
called Crispy Shark in China, will be
moving into less-familiar territory.
Hsu Fu Chi, founded in 1992, makes
Chinese treats: cookies flavored like
cucumber, and sweet onion, as well
as hawthorn- or lychee-flavored gel-
atin custards that are sold in cups
the size of ping-pong balls and
slurped by Chinese children.
Analysts said the deal will open
Nestl to new distribution that will
help the company influence a small-
but-ballooning candy market.
Chinas 1.34 billion people ate 13.7
million metric tons of candy last
year, according to Euromonitor.
That is slightly more than half the
26.8 million tons eaten by the 310
million U.S. consumers.
Annual sales in Chinas confec-
tionery marketincluding choco-
late, candies and gumclimbed 63%
to more than US$9.2 billion from
2005 to 2010, according to Eu-
romonitor.
Nestl plans to delist Hsu Fu Chi
from the Singapore Exchange.
Hsu Fu Chi, based in the southern
Chinese city of Dongguan, indirectly
will hold the remaining 40% stake,
the company said Wednesday.
Olympus Continues Probe,
Weighs Taking Legal Action
China Opens Wider
To Foreign Takeovers
BUSINESS FINANCE
IATA Cuts Profit View
Aviation Body Warns Banking Crisis Could Mean $8.3 Billion Loss
LONDONThe International Air
Transport Association, or IATA,
Wednesday cut its forecast for air-
lines net profit next year due to the
risk of recession in Europe and
slower global economic growth, but
warned of an industry loss in excess
of $8 billion if the euro-zone tur-
moil turns into a full-blown banking
crisis.
IATA, which represents some
230 airlines comprising 93% of
scheduled international traffic, said
it now expects a combined net
profit in 2012 of $3.5 billion, down
from the $4.9 billion it previously
forecast, on revenue of $618 billion.
The biggest risk facing airline
profitability over the next year is
the economic turmoil that would re-
sult from a failure of governments
to resolve the euro-zone sovereign-
debt crisis, said IATA Director Gen-
eral and Chief Executive Tony Tyler.
Based on the Organization for
Economic Cooperation and Develop-
ments view that a banking crisis
would lead to global gross domestic
product growth falling to 0.8%, IATA
estimates that this has the potential
to cause a global industry loss of
$8.3 billion. Historically, GDP
growth rates below 2% have re-
sulted in the airline industry post-
ing a net global loss. The global
forecast for 2011 profit remains un-
changed at $6.9 billion for 2011.
The aviation body said passenger
demand is forecast to increase 4% in
2012, down from its previous 4.6%
estimate, while cargo is now ex-
pected to be flat compared with
previous estimate that it would
grow 4.2%.
Passenger yieldsaverage pas-
senger revenue per filled seat for
each kilometer flownand cargo
yields next year are expected to be
flat, IATA said.
IATA expects airlines fuel bills
be relatively unchanged from the
previous forecast at $198 billion.
The predictions are based on aver-
age fuel prices at $99 a barrel, com-
pared with its Septembers estimate
of $100 a barrel.
But the industry is really mov-
ing at two speeds with highly taxed
European carriers headed into the
red, Mr. Tyler said. Those European
carriers are expected to book losses
of $600 million in 2012 because of
higher passenger taxes and weak
economies.
Asia-Pacific carriers are expected
to post the largest profit at $2.1 bil-
lion for 2012, sheltered somewhat
by an expanding Chinese market
and high load factors but still down
from $3.3 billion in 2011.
Meanwhile, North American air-
lines are expected next year to gen-
erate $1.7 billion, from the $2 billion
estimated for 2011. Middle East car-
riers are expected to post a $300
million profit in 2012, less than half
the previously forecast $700 million
profit, as long-haul market condi-
tions deteriorate, in particular those
linked to the weak European econo-
mies.
Latin American carriers are ex-
pected to post $100 million profit in
2012, with African carriers seen
swinging to a loss of $100 million.
BY KAVERI NITHTHYANANTHAN
IATA Director General Tony Tyler, seen Wednesday in Geneva, says the big risk to airline profitability is euro-zone turmoil.
A
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e
F
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e
-
P
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e
s
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e
/
G
e
t
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I
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s
Citi to Cut 4,500
From Work Force
Citigroup Inc. will eliminate
roughly 4,500 jobs over the next
few quarters, or about 1.6% of its
work force, as volatile financial
markets and new regulations crimp
profits.
Vikram Pandit, Citigroups chief
executive, disclosed the move on
Tuesday at a Goldman Sachs inves-
tor conference in New York. He said
Citigroup would take a $400 million
charge in the fourth quarter to
cover severance and other expenses.
Citigroup has announced fewer
layoffs than its peers during the lat-
est wave of bank belt-tightening.
Still, the job cuts unveiled Tuesday
include about 1,500 more positions
than what had been expected as re-
cently as last month.
More than 2,500 banks cut their
work forces in the third quarter, re-
ducing employment by a combined
20,332 jobs, or 2.5%, according to an
analysis by The Wall Street Journal
of filings with U.S. regulators.
Citigroup cut thousands of jobs
during the financial crisis but has
been wooing high-profile talent
from competitors lately to rebuild
market share. As recently as April,
Citigroup said it planned to hire 500
bankers and traders over the next
two years.
Since then, however, fears over
the European debt crisis and new
regulations capping bank profits in
other once-lucrative areas have al-
tered the outlook.
Citigroups bonus pool for bank-
ers is expected to be down consider-
ably from last year, people familiar
with the situation said. That is
partly a reflection of the lower in-
vestment-banking profits expected
this year, but also a sign of longer-
term pressures facing the business
from new regulations that require
banks to hold higher capital levels.
Separately, Mr. Pandit warned
that accounting and hedging gains
that contributed to Citigroups
third-quarter profit would probably
reverse in the fourth quarter. Be-
cause of tightening credit spreads,
Citigroup would have reported a
$200 million accounting charge tied
to the putative cost of repurchasing
some liabilities, and a $300 million
hedging loss on its loan book if its
quarter had ended Monday, Mr. Pan-
dit said.
Mr. Pandit also said that Citi-
group would book a $300 million
noncash charge against deferred tax
assets, as a result of a new law in
Japan that will lower the corporate-
tax rate in that country.
The possibility of the lower tax
rate was previously disclosed by
Citigroup.
Analysts said they werent overly
concerned about the charges.
They are a modest distraction
away from what is an overall im-
proving story, said Glenn Schorr of
Nomura Securities.
BY SUZANNE KAPNER
AND MATTHIAS RIEKER
Apple Suit for iPad Brand
Dismissed by China Court
BEIJINGA Chinese court dis-
missed Apple Inc.s lawsuit against
a Chinese company that owns the
trademark for the iPad brand in
mainland China, the latest wrinkle
in the companys ongoing battle for
rights to the product name in one of
its most important markets.
The Shenzhen Intermediate Peo-
ples Court said this week that it
overruled Apples claim that the
iPad trademark, which was regis-
tered in 2001 by a company called
Shenzhen Proview Co., should be
transferred to Apple as part of an
earlier agreement the U.S. con-
sumer-electronics maker struck with
Shenzhen Proviews parent, Proview
International Holdings Ltd., a con-
tract manufacturer of liquid crystal
displays and other audiovisual prod-
ucts.
A summary of the decision pub-
lished on the courts website said
Apples earlier agreement with the
parent company covers only the
iPad trademark in Taiwan, and that
Proviews Shenzhen unit would still
have to authorize a transfer of the
trademark. The lawsuit was dis-
missed due to the lack of facts and
legal proof, it said.
Shenzhen Proview attorney Xie
Xianghui said Wednesday the com-
pany has been in talks with Apple,
hoping the two parties can resolve
the issue through peaceful talks.
The company uses the iPad trade-
mark for some of its products, in-
cluding computer monitors, he said,
declining to give details. The com-
pany may ask Apple to pay for a
trademark transfer, but Shenzhen
Proview hasnt yet decided on how
much to ask for, he added.
Apple spokeswoman Carolyn Wu
declined to comment.
Trademark-transfer issues are
common for companies operating in
multiple markets. This latest battle
comes as China, which in the second
quarter surpassed the U.S. as the
worlds largest personal-computer
market, is an increasingly important
market for Apple. The company is
expanding its retail presence and is
in talks to expand its telecommuni-
cations partnerships.
BY LORETTA CHAO
RIM Gives Up
Phone Name
BBX in Spat
TORONTOResearch In Motion
Ltd. was temporarily barred from
using the name BBX for its next-
generation smartphones at a confer-
ence in Asia, the latest in a series of
setbacks for the BlackBerry maker.
A U.S. federal judge in New Mex-
ico on Tuesday approved a request
for a temporary restraining order
from Albuquerque-based software
company Basis International Ltd.,
which says it has already trade-
marked the name BBX.
The ruling bars RIM from using
the BBX name at a developers con-
ference in Singapore on Dec. 7-8.
In a written statement, RIM ap-
pears to have acquiesced, changing
the name of its next line of phones.
RIM doesnt typically comment
on pending litigation, however RIM
has already unveiled a new brand
name for its next generation mobile
platform, RIM said in the state-
ment, saying the new name will be
BlackBerry 10.
BY WILL CONNORS
MNI Monitor delivers key economic
indicators to traders screens and mobile
devices immediately at release time.
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indicators are displayed in a user friendly,
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www.mni-news.com/monitor
Instant access to
key economic data
Breaking Open the Secrets at Olympus
TOKYOThe secret held for a
quarter century, quietly passed
among senior executives. Within
Olympus Corp. the goal was clear.
Hide some $1.5 billion in investment
losses from public view.
The toll on Olympus mounted as
time went by. The core part of the
management was rotten, and that
contaminated other parts around
it.
So concluded a 200-page re-
ported issued Tuesday, the most
complete account yet of a scandal
that routed money through more
than a dozen banks, funds and in-
vestment firms world-wide, ulti-
mately leading to the departure of
several top executives and putting
the optical-equipment maker on the
bubble for a stock delisting.
Starting in the mid-1980s, Olym-
pus, along with other Japanese ex-
porters, turned to speculative finan-
cial investments as a way to ease
the sting of a surging yen with what
they believed would be easy profits.
At Olympus, that strategy set in
motion events that were the heart
of the companys accounting scan-
dal, according to the report, written
by a six-member outside panel ap-
pointed by the company last month.
The document, based on 189 in-
terviews with current and former
Olympus employees and business
partners, also brought into relief the
organizational problems that plague
many Japanese companies: lack of
transparency, little regard for share-
holder rights and reluctance to chal-
lenge authority.
The situation was an epitome of
the salaryman mentality in a bad
sense, said the panel, referring to
Japans culture of corporate loyalty.
Olympus on Tuesday said it
takes very seriously the results of
the investigation and is consider-
ing further fundamental measures
to restore confidence.
Tuesdays report identified for-
mer Vice President Hisashi Mori, his
former boss in the companys ac-
counting department, Hideo Ya-
mada, and two former Olympus
presidents among a select few
with knowledge of the original in-
vestment losses, the effort to hide
the losses and then the attempts to
account for them through inflated
acquisition prices and advisory fees.
Based on the reports account,
Olympuss financial troubles started
with the Plaza Accord in 1985, an
agreement to devalue the U.S. dol-
lar. The ensuing rise in the yen
dented the companys operating
profit, and its president at the time,
Toshiro Shimoyama, decided Olym-
pus should augment its core busi-
ness with zaiteku, or financial in-
vestments. It didnt go well.
Japans asset bubble burst and
Olympus was saddled with losses
from investments that turned sour.
Instead of cutting the companys
losses, Mr. Mori and Mr. Yamada
made even riskier bets on deriva-
tives and complex structured bonds,
the report said.
In 1993, as the losses continued
to grow, Masatoshi Kishimoto suc-
ceeded Mr. Shimoyama as president.
But the report said he didnt take
drastic action to tackle the bal-
looning losses at the investment
arm. Instead he left Messrs. Mori
and Yamada to manage the portfo-
lio. The situation carried into the
next regime with Mr. Kishimotos
hand-picked successor, Tsuyoshi Ki-
kukawa, who, as the former head of
its finance and accounting division,
was familiar with Olympuss secret.
The head of the company ran an
autocratic regime over a long pe-
riod, generating an internal atmo-
sphere in which people hesitated to
disagree, the report said. Among
executives there was a rampant ten-
dency to treat the company like
their private possession.
Mr. Shimoyama said Tuesday
the panel report was wrong and
he didnt know the company had
been hiding losses. He added that
his memory was vague on what hap-
pened more than a decade ago. The
other Olympus executives named
couldnt be reached for comment.
Messrs. Mori, Yamada and Kiku-
kawa were still at Olympus as re-
cently as a few weeks ago but
stepped down as the accounting
scandal came to light.
By the late 1990s, Olympuss un-
realized securities losses had grown
to nearly 100 billion, or more than
$1 billion, and a new problem
loomed: Changes in Japanese ac-
counting rules soon would require
that such losses be disclosed and, in
some cases, written off.
Messrs. Mori and Yamada cast
about for ways to avoid that expo-
sure. For help, the report said, they
turned to two former brokers whom
they had consulted before: Akio Na-
kagawa and Hajime Sagawa.
Messrs. Nakagawa and Sagawa
had cut their teeth at Nomura Secu-
rities, moving to several foreign fi-
nancial-services companies before
setting up their own shops. By 1998,
Mr. Nakagawa had started a broker-
age in Tokyo, Axes Japan Securities,
while Mr. Sagawa had founded a
U.S. affiliate named Axes America
LLC. The Axes firms have stopped
operating, and Messrs. Nakagawa
and Sagawa couldnt be reached.
The four men devised a plan to
transfer the bad assets off Olym-
puss books to firms that werent of-
ficially connected with the company
and so wouldnt appear in Olym-
puss accounts, the report said. The
intention was to unwind those
transactions gradually, allowing
Olympus to take the losses secretly,
over time. This type of operation
had been employed by so many Jap-
anese companies in the 1990s that it
was widely known in Japan as to-
bashi, meaning, to send something
flying away.
For Olympuss first tobashi ex-
periment, in 1998, Messrs. Naka-
gawa and Sagawa set up a fund in
the Cayman Islands, Central Forest
Corp., which was to buy some of the
bad assets, according to the report.
To supply money for the purchases,
Messrs. Mori and Yamada had Olym-
pus deposit 21 billion in Japanese
government bonds in an account at
LGT Bank in Liechtenstein, and
asked the bank to extend Central
Forest an 18 billion loan in return,
the report said.
Mr. Mori misled LGT Bank man-
agers, saying the arrangement was
so Olympus could conduct secret ac-
quisitions in Europe, according to
the report. LGT declined to com-
ment for this article, saying it
doesnt discuss client relationships.
Between 1998 and 2000, Olym-
pus moved 65 billion worth of bad
assets off its books through this
European route, as the panel
dubbed it, eventually creating as
many as three other funds to re-
ceive the securities.
Messrs. Mori and Yamada cre-
ated a similar Singapore route
that used Olympus accounts at
Commerzbank AG, then Socit G-
nrale SA in Singapore to fund the
transfer of 60 billion more in as-
sets off its books, the report said.
The report doesnt accuse any of
the three banks of wrongdoing.
At all times Commerzbank was
in full compliance with all relevant
laws and obligations and will assist
with any possible enquiries by the
regulator, Commerzbank said Tues-
day. Socit Gnrale declined to
comment.
In 2000, Olympus set up an in-
vestment fund in Japan with an-
other former Nomura broker and
long-time financial adviser, Nobu-
masa Yokoo, which also was used to
fund the purchase of bad assets, the
report said. Mr. Yokoo couldnt be
reached.
All the time, Messrs. Mori and
Yamada kept their bosses informed
of what they were up to. The report
said they told Mr. Kishimoto, who
was president at the time, about
their activities in September 1998
and Mr. Kikukawa at some point be-
fore January 2000, more than a year
before he was to become president.
Not everything was going
smoothly. The report said that in
1999, Olympuss then-auditor, KPMG
AZSA LLC, came across information
that indicated the company was en-
gaged in tobashi, which recently had
become illegal in Japan. Messrs.
Mori and Yamada initially denied
KPMGs assertion, but the auditor
pushed them that same year to ad-
mit to the presence of one fund and
unwind it, booking a loss of 16.8
billion. The executives assured
KPMG that was the only such deal,
the report said.
Meanwhile, the Japanese invest-
ment fund Olympus had set up with
Mr. Yokoo wasnt doing well. Be-
sides channeling money used to buy
some of Olympuss bad assets, the
fund, G.C. New Vision Ventures LP,
invested in start-up companies, the
report said. But most of those went
bankrupt or were forced to stop op-
erations, generating losses for
Olympus.
Messrs. Mori and Yamada de-
cided to unwind and write off the
whole thing, using three small Japa-
nese companies: waste recycler Altis
Co., cosmetics firm Humalabo Co.
and microwave container company
News Chef Inc. Olympus bought the
trio in 2008 for the highly inflated
price of 73.2 billion and wrote the
bulk of that amount off the next
year, an arrangement that allowed it
to repay the loans it had borrowed
from LGT and close down the Euro-
pean route in 2008, the report said.
That left only the funds in the
Singapore route still operating, the
report said. Olympus internal docu-
ments said Messrs. Mori and Ya-
mada wrote off those losses using
$687 million in fees attached to
Olympuss acquisition of U.K. medi-
cal-technology company Gyrus
Group PLC as cover. The last bit of
that deal was completed in March
2010. Those fees were paid to the
company run by Mr. Sagawa, one of
the brokers who first proposed the
loss-covering operation to Olympus
12 years earlier.
Kana Inagaki
BY DAISUKE WAKABAYASHI
AND PHRED DVORAK
Pulling No Punches
Translated excerpts from the Olympus investigation report
ON CORPORATE CULTURE ON SENIOR EXECUTIVES ON THE BOARD
CORPORATE NEWS
TOSHIRO SHIMOYAMA
President 1984-1993
Pushed into financial investments
At the Helm | Some of the Olympus executives named in the accounting scandal served between 30 and 55 years at the company.
MASATOSHI KISHIMOTO
President 1993-2001
Rules changed; didnt reveal losses
TSUYOSHI KIKUKAWA
President 2001-2011
Cleared deals to realize losses
HIDEO YAMADA
Auditor until November
Managed investments, hid losses
HISASHI MORI
Executive VP until November
Managed investments, hid losses
From left to right: Newscom; Agence France-Presse/Getty Images (2); Bloomberg News (2)
The core part of the
management was rotten,
and that contaminated
other parts around it, says
a report by an outside panel
appointed by Olympus.
CORPORATE NEWS
Succession Plan Will Test Fords Mettle
Auto Maker Has Started to Consider a CEO Transition, Including the Appointment of a Chief Operating Officer
Ford Motor Co. avoided bank-
ruptcy and pulled off a remarkable
turnaround under Chief Executive
Alan Mulally over the past five
years. Now, the auto maker faces its
most daunting task: delicately man-
aging the CEOs succession.
Mr. Mulally, who is 66 years old,
is expected to give up the top post
at the auto maker within the next
two years, according to people fa-
miliar with the matter. Ford has be-
gun considering potential successors
and ways of handling the transition,
including the appointment of a chief
operating officer who would work
alongside Mr. Mulally before taking
the helm, these people said.
I think theyve figured that out
that theyll want to have someone
who will be there and overlap with
Mulally for a while, said a former
Ford executive who is close to top
executives. They want the next per-
son to emulate Mulally; someone
with the same temperament, the
same management style. They will
want to replicate Mulally as much as
possible.
A Ford spokeswoman said the
company isnt conducting a CEO
search. On Tuesday during an ap-
pearance on Fox News, Mr. Mulally
said he is not leaving: Its not
truebut I can understand people
following Ford closely because its so
important and its success is so im-
portant to the United States.
An exit by Mr. Mulally may be
the first of a series for Detroit over
the next several years. At General
Motors Co., CEO Dan Akerson, 63, is
expected to stay for at least three to
four years. But he has been weighing
internal candidates to succeed him
since assuming the job last year.
Chrysler Group LLC is run by Sergio
Marchionne, 59, who also runs It-
alys Fiat SpA, and has said he could
retire sometime after 2015.
Transitioning from a charismatic
leader to a new boss is difficult in
any industry, and Detroits auto
makers have had their share of mis-
steps over the years. Founder Henry
Ford named his son Edsel president
in 1919 but continued to wield power
at the company for nearly three
more decades.
In the early 1990s at Chrysler,
Lee Iacocca pushed to stay on be-
yond his expected retirement date,
causing a split on the board. The rift
led to the selection of a compromise
candidate, Bob Eaton, who eventu-
ally agreed to the ill-fated merger
that created DaimlerChrysler AG.
Finding a successor who can
measure up to Mr. Mulally wont be
easy. He is known for an always
smiling, easygoing style. But has
shown the ability to be icily dispas-
sionate when necessary. For in-
stance, he removed Fords former
chief financial officer for butting
heads with other executives.
Mr. Mulally joined Ford in 2006
from Boeing Co. as the Dearborn,
Mich., auto maker and its Detroit ri-
vals were running up billions of dol-
lars in losses. Ford mortgaged most
of its plants, property and assets to
borrow $23.5 billion, giving it a cash
cushion to ride out the subsequent
downturn and finance its restructur-
ing plan.
The executive also focused the
company on its Ford division, and
sold or closed niche brands includ-
ing Jaguar, Land Rover and Mercury,
all part of a One Ford strategy. He
cut production to bring inventories
in line with demand, boosted quality
and reduced profit-eating incentives.
Mr. Mulally put a halt to political in-
fighting at Ford, forcing its warring
global operations to work as one
team.
In 2009, when both GM and
Chrysler required government-
backed bailouts, Ford reported a
profit of $2.7 billion. In the first
three quarters of this year, the com-
pany has earned $6.6 billion. Along
the way, Mr. Mulally has become
something of a corporate celebrity.
Richard Gephardt, a former U.S.
representative who is now a Ford di-
rector, said he doesnt know when
exactly Mr. Mulally plans to retire,
but suggested the CEO is thinking
keenly about how to ensure the tran-
sition doesnt result in backsliding.
His real legacy will be leaving
behind the plan or the One Ford
strategy. I know for a fact that the
whole management team has really
embraced this strategy, Mr.
Gephardt said in a recent interview.
I think he believes that its not
enough to just be the one who helps
bring this company back but he
needs to leave behind the strategy
and have that implemented.
Ford directors have begun plan-
ning for Mr. Mulallys replacement
though the company hasnt hired a
search firm, people familiar with the
matter said.
Internal candidates include Mark
Fields, 50, president of Fords opera-
tions in North and South America;
and Joe Hinrichs, 44, the chief of
Asia operations, these people said.
At least two outside candidates have
been in contact with Ford about re-
joining the company as Mr. Mulallys
heir apparent, these people said.
They are Phil Martens, 51, the cur-
rent CEO of aluminum products
company Novelis Inc., and John
Krafcik, 50, the head of the North
American arm of Hyundai Motor
Co.
Last month, Mr. Fields acknowl-
edged in an interview that he would
like the CEO job. He also said all
members of Fords management
team are aware of the fear that the
culture and practices could revert to
the old Ford, where sharp elbows
and personal agendas muddied prog-
ress, after Mr. Mulally moves on. But
he added he doesnt think that will
happen. We are practical, he said.
This is working.
Mr. Hinrichs couldnt be reached
for comment. Mr. Martens on Mon-
day declined to say if he had been
contacted, adding: Im sure the
board will make the right decision.
He led product development at Ford
before leaving in 2005 and is mar-
ried to the daughter of a former se-
nior Ford executive. Mr. Krafcik, who
worked in product development for
Ford for 14 years before leaving in
2004 to join Hyundai, declined to
comment.
Jeffrey Sonnenfeld, a senior as-
sociate dean at the Yale School of
Management who keeps in touch
with Mr. Fields, said naming an heir
apparent as COO at Ford would work
well because Mr. Mulally has no
grandiosity or ego needs and is a
very nurturing mentor by nature.
A similar process has been used
at chip maker Intel Corp., where for-
mer CEO Andy Grove gave way to
his COO, Craig Barrett, and Mr. Bar-
rett later was replaced by COO Paul
Otellini, the companys current chief
executive.
BY MIKE RAMSEY
AND JOANN S. LUBLIN
Chief Executive Alan Mulally, shown in Germany in March, is known for an always smiling, easygoing style.
A
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Saab Autos Struggles Worsen
STOCKHOLMThe administrator
overseeing stricken Swedish car
maker Saab Automobiles restruc-
turing wants to end the process, po-
tentially paving way for creditors to
put the 64-year-old brand into
bankruptcy, Saab owner Swedish
Automobile NV said on Wednesday.
Administrator Guy Lofalk filed a
court application to end the volun-
tary reorganization of Saab Automo-
bile and two subsidiaries, the Neth-
erlands-based company said.
Saab Automobile and its credi-
tors will now have until Dec. 15 to
submit their views before the court
decides on Dec. 16 whether to termi-
nate the restructuring.
Mr. Lofalk said in an interview
that the recommendation was
strictly mathematical and legal as
the car maker lacks sufficient funds
to continue the reorganization.
Swedish Automobile Chairman
Victor Muller could not be reached
for comment.
Saab has been operating under
creditor protection since September
as it tries to restructure its opera-
tions. Should the court terminate
the restructuring process, the pro-
tection will end, and existing appli-
cations from suppliers for the com-
pany to be ruled bankrupt are likely
to be reactivated.
Production has been suspended
since April due to a lack of suffi-
cient funds to pay suppliers and em-
ployees. Plan by two Chinese com-
paniesZhejiang Youngman Lotus
Automobile Co. and Pang Da Auto-
mobile Trade Co.to invest in the
firm have run into trouble due to re-
sistance from its former owner, Gen-
eral Motors Co.
GM, which owns the technology
on which several Saab models are
based, doesnt believe that a Chi-
nese takeover of Saab would be in
the best interests of GM sharehold-
ers given the Detroit companys
sizeable Chinese operations.
The U.S. auto maker has said it
wont continue to license its tech-
nology to Saab, which currently has
its sole manufacturing operations in
Trollhattan, Sweden, under the pro-
posed ownership change.
Swedish Automobile said on
Monday it is in talks with Youngman
and a bank in China about taking an
equity interest in Saab Automobile.
Youngman is the one we are
talking to right now. We are work-
ing hard on this, spokesman Eric
Geers said. He declined to go into
detail on the deal and declined to
say whether Pang Da is now out of
the picture.
Mr. Lofalk, the administrator,
said Pang Da Automotive Trade has
withdrawn from the proposed deal
for Saab.
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CORPORATE NEWS
Yahoo Requests Better Terms for Bids
Potential Buyers for Minority Stake Are Asked to Provide More Information as Board Considers Proposals
Yahoo Inc. has requested more
information and better terms from
potential buyers of a minority stake
in the company as the board weighs
a variety of proposals, according to
people familiar with the matter.
Talks with private-equity-led
bidders have progressed since offers
for about 20% of Yahoo were sub-
mitted last week, the people said.
Yahoo is evaluating a bid led by Sil-
ver Lake Partners and a rival pro-
posal from TPG Capital. A separate
offer for Yahoos stakes in two Asian
companies is also on the table, peo-
ple familiar with the matter said.
Yahoo also is assessing a possi-
ble process in which it would strike
a deal for a minority investment and
then sell its Asian assets, some peo-
ple said. However, the potential buy-
ers of the Asian assets, Alibaba
Group Holding Ltd. of China and
Softbank Corp. of Japan, would pre-
fer to buy the Asian asset stakes
while the current Yahoo board is in
charge, these people said.
The various offers come amid a
strategic review Yahoo launched in
September after the board ousted
Chief Executive Carol Bartz and
started a search for a new, perma-
nent CEO.
Yahoos directors currently see
the private-equity offers as less
than ideal, partly because they put
a lower premium on Yahoos shares
than the board would like, the peo-
ple said.
Silver Lake, which is working
with Microsoft Corp. and venture-
capital firm Andreessen Horowitz,
has offered approximately $16.60 a
share for about one-fifth of Yahoo.
TPG, which is working with ven-
ture-capital firm Greylock Partners,
has offered about a dollar more.
The private-equity firms view
their bids as reflecting a premium
that emerged on the news of the
strategic review, according to peo-
ple familiar with their thinking. The
companys stock was trading at
about $13 a share in early Septem-
ber. On Tuesday, it closed at $15.84
a share.
Another sticking point is the
amount of control private-equity
buyers are seeking in exchange for
their minority investment. Silver
Lake, for instance, is bargaining
hard to have influence over the
choice of Yahoos next CEO as part
of any deal, the people familiar with
the matter said.
The Silver Lake group is amena-
ble to discussions about a higher
price as long as Yahoo agrees to ap-
point a CEO who has its backing,
one person said. For its part, Yahoo
wants to retain control over who is
appointed to lead the company, the
people said.
If the board and Silver Lake want
the same person, the people said,
the issue could prove moot.
Meanwhile, Yahoo has asked TPG
to provide more details regarding
how its proposed partnership with
Greylock Partners, a venture-capital
firm that has invested in Facebook
Inc. and Pandora Media Inc., would
work and how the partnership could
help Yahoo, some people said.
It is unclear whether a buyer for
the whole company will emerge.
Such a bid hasnt emerged so far,
people said. It would require about
$10 billion in financing, the people
said, a difficult prospect in the cur-
rent economic environment.
For Yahoo, doing nothing has its
own risks. Activist investor Dan
Loeb has threatened to try to boot
directors.
Other shareholders have told Ya-
hoos financial advisers they would
rather the company do nothing than
agree to a deal that doesnt offer
enough value, other people familiar
with the matter said.
Yahoo has struggled in recent
years to increase revenue amid in-
tensifying competition. Although
Yahoo sites get an average of 700
million monthly visitors, it has been
difficult for the company to come up
with new ways to monetize that
user base.
Yahoos board will also study a
joint offer from Alibaba and Soft-
bank, which are proposing to buy
the stakes now owned by Yahoo in
Alibaba and Yahoo Japan, which
also has Softbank as a substantial
stakeholder.
The proposal to buy Yahoos
Asian assets hasnt bowled over
board members either, partly be-
cause of the discounts Alibaba and
Softbank have requested, the people
familiar with that matter said.
Alibaba wants to buy back its
stake for less than the $13 billion
valuation assigned to it earlier this
year, they said, arguing that tax sav-
ings could justify the discount.
Gina Chon
By Anupreeta Das,
Amir Efrati
and Joann S. Lublin
Source:
Yahoos Current Choices
PRO:
Tech expertise
could help Yahoo
CON:
Offers seek
signicant
control for low
premium
MINORITY-STAKE SALE ASIAN ASSET SALE
PRO:
Could unlock
value in Asian
assets now
CON:
Offers are at a
discount
Source:
PRO:
New ownership
and board could
help Yahoo
CON:
Bid would be
complicated and
expensive
SALE OF WHOLE COMPANY DO NOTHING
PRO:
Yahoo could bet
on a new CEO
CON:
Unsatised
shareholders;
difcult CEO
hunt
New Facebook Flaw
Exposes Its CEO
A security vulnerability in Face-
book Inc.s social-networking site
exposed by some users sent the
company scrambling for a fix after
Chief Executive Mark Zuckerbergs
private photos were published on-
line.
In a Nov. 27 post on the Web fo-
rum Bodybuilding.com, an anony-
mous writer listed step-by-step in-
structions on how to access photos
uploaded by other Facebook mem-
bers, even if the images
had been marked as pri-
vate.
The process involved a
Facebook feature that lets
users identify pornographic
or inappropriate images on
the site. The forum post
showed that by flagging
another users profile, one
Facebook member was able
to gain access to the
others private images.
A blogger on Tuesday
reported on the security
flaw, and used it to publish a photo
from Mr. Zuckerbergs private col-
lection. Others then used the flaw to
publish further photos from Mr.
Zuckerbergs collection, including
images of the Facebook CEO prepar-
ing food in a kitchen and distribut-
ing candy to Halloween trick-or-
treaters.
It wasnt immediately clear how
long the Facebook security flaw was
available on the Web, or how many
of the sites more than 800 million
users were affected. But the com-
pany attributed the problem to a re-
cent revision of its software.
In a statement, a Facebook
spokesman said the flaw was the
result of one of our recent code
pushes and was live for a limited
period of time. Upon discovering the
bug, we immediately disabled the
system, and will only return func-
tionality once we can confirm the
bug has been fixed.
The anonymous poster re-
sponded in an email to a request for
comment by saying he discovered
the flaw accidentally. This is simply
terrible programming on
Facebooks part, said the
poster, who gave his name
only as John P., lists his
hometown as Syracuse,
N.Y., and says he is an IT
professional. He added:
Inexcusable considering
how many engineers and
web developers they have
working for them.
Facebook has faced a se-
ries of questions about its
security and privacy fea-
tures since it was founded
in 2004. The site has rapidly gained
popularity, and Facebook is expected
to stage an initial public offering of
shares next year that could value the
company at over $100 billion.
Last month, Facebook announced
it had reached a settlement with the
U.S. Federal Trade Commission, af-
ter the regulator found the company
had misled users about the use of
their personal information.
The settlement requires Face-
book to establish and maintain a
comprehensive privacy program,
the FTC said at the time.
BY JOHN LETZING
Mark
Zuckerberg
Yahoo began considering minority-
stake offers after the ouster of Chief
Executive Carol Bartz earlier this year.
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MARKETS
Proposal to Stem Yen Argued
Ex-BOJ Official Pushes Idea for Central Bank to Buy Foreign-Denominated Assets
TOKYOA former deputy gover-
nor of the Bank of Japan said the
central bank should consider buying
foreign currency-denominated assets
to stem the yens rise, and urged the
central bank and finance ministry to
halt a turf war over control of the
nations currency policy.
A combination of currency in-
tervention and quantitative easing is
effective in taming the yens
strength. Buying foreign bonds
would have a similar effect, Kazu-
masa Iwata said in an interview this
week.
Mr. Iwata, now a member of a
government panel in charge of for-
mulating policy on economic growth,
recently proposed to the national
strategy council the idea of setting
up a crisis prevention fund funded
at 50 trillion, or about $643 billion,
to invest in euro-denominated assets
as well as securities of the U.S. and
emerging economies.
But the idea has run into opposi-
tion from the finance ministry,
which manages the nations currency
interventions and sees such a move
as infringing on its powers.
We have judged there is a high
possibility that [such foreign-bond
buying] would be tantamount to cur-
rency-market intervention, Finance
Minister Jun Azumi told parliament
last month.
The BOJ has refrained from tak-
ing a stance on the sensitive issue.
When Mr. Iwata proposed the
idea to the council in late October,
BOJ Gov. Masaaki Shirakawa said
that it contains delicate issues in-
cluding currency intervention and it
was tough to discuss here, accord-
ing to the minutes of the meeting.
The BOJ is also concerned that
such investments will invite losses
and hurt its credibility as a central
bank, according to those minutes.
The BOJ already has an asset-
purchase program totaling 55 tril-
lion as a key tool of its monetary
policy and which it uses to buy a va-
riety of assets from government and
corporate bonds to listed stock and
real-estate funds. But the program
doesnt extend to foreign assets.
To avoid hurting the fiscal
soundness of the BOJ, Mr. Iwata said
Japan should look at what Britain is
doing.
The Bank of England has set up a
special purpose company and car-
ried out quantitative easing by pur-
chasing bonds through the separate
account. Any losses stemming from
the purchases are the responsibility
of the British Treasury, preventing
any damage to the BOEs balance
sheet, he said.
I think this sort of relationship
is a good case for Japan, Mr. Iwata
said, adding that this wont under-
mine the credibility of the central
bank.
Mr. Iwata also said he is worried
about sudden moves in sovereign
debt that could undermine the dol-
lar.
In the context of such risks, the
sum of 50 trillion isnt that big, he
said, emphasizing that in easing
credit, the larger the volume the
better.
The market is now focusing on
the outcome of European Union
summit on Thursday and Friday, at
which policy makers are expected to
lay out plans to enforce stricter bud-
get rules.
Mr. Iwata said that if Europe
were to agree to issue a European
common bond at some point in the
future, the current crisis could calm
down considerably, although he
notes that Germany is against such
a move. He added his own estimate
that a total of 2 trillion ($2.68 bil-
lion) of such bonds would be needed
to refinance the existing government
bonds issued by each deeply in-
debted nation, a step similar to the
Brady bond issued to deal with the
Latin American debt crisis in the
1980s.
If the BOJ bought such bonds
through the fund, it could help Ja-
pan curb the yens rise because it
would have to sell yen to finance the
purchases, Mr. Iwata said.
BY TATSUO ITO
Bank of Japan Gov. Masaaki Shirakawa said the idea contains delicate issues.
Banks Tap BOJ
For More Dollars
TOKYODemand for dollar loans
from the Bank of Japan has picked
up since the worlds major central
banks acted last week to increase
dollar liquidity amid concerns over
contagion from the European debt
crisis.
The BOJs offering of seven-day
dollar funds at 0.6%, made Tuesday,
attracted $25 million in bids, mark-
ing the first time that institutions
demanded more than a negligible
amount as they took advantage of
the lower interest rate.
Previously, one-week loans by the
BOJ had attracted bids worth only at
most $2 million.
Analysts say the need to procure
funds ahead of year end played a big
role in the bidding, and the in-
creased interest doesnt necessarily
mean Japanese banks are facing
funding difficulties.
Some banks that have gained a
clearer idea of how much extra cash
they will need for the year-end may
have jumpstarted fund-raising, said
Takahiro Sekido, chief Japan econo-
mist at Crdit Agricole, and a former
BOJ official.
Mr. Sekido expects even stronger
demand on Dec. 20, when the BOJ
plans to offer two-week loans, be-
cause banks will likely have finalized
plans for year-end funding and the
money market is likely to be thin
during the holidays.
Tuesdays offering was the BOJs
first since six major global central
banks, led by the U.S. Federal Re-
serve, decided last week to cut the
pricing on the existing U.S. dollar-li-
quidity swap arrangements by 0.50
percentage point. The new interest
rate for the BOJs loans is the U.S.
dollar overnight index swap market
rate plus 0.50 percentage points.
The dollar-loan facility, in which
the BOJ offers unlimited amounts
against collateral, wasnt touched
from July 2010 until November,
when it drew $100 million of bids
for three-month loans. Given the rel-
atively modest size, analysts called
it a test run.
Japans major banks with opera-
tions in New York have continued to
be able to raise dollar funds in the
U.S. money market, even as Euro-
pean banks have been squeezed out.
And BOJ Gov. Masaaki Shirakawa
has also said that Japanese institu-
tions arent facing dollar-funding
problems. But analysts said Japa-
nese institutions were aware that
they werent immune to the effects
of the euro-zone debt crisis.
If Japans sovereign ratings are
downgraded, ratings on financial
firms in the country will also be cut
for sure. In that case, chances are
high that costs for dollar funding
will increase for them, said Atsushi
Mizuno, a vice chairman of the Asia-
Pacific fixed-income department at
Credit Suisse. Mr. Mizuno served as
a BOJ policy board member from
2004 to 2009.
The next BOJ dollar operations
for one-week and three-month funds
take place on Tuesday. The bank
first offered the low-interest one-
week dollar loans after the March 11
earthquake and tsunami.
Tatsuo Ito
BY MEGUMI FUJIKAWA
A Record
For Forex
In Japan
TOKYOJapans foreign-ex-
change reserves hit a record in No-
vember, the Finance Ministry said
Wednesday, after efforts by the gov-
ernment to weaken the yen through
market intervention boosted the
countrys dollar holdings.
Foreign-exchange reserves rose
$94.88 billion from the previous
month to a record $1.305 trillion,
the Finance Ministry said.
Japans foreign reserves are still
dwarfed by Chinas, which stand at
around $3.2 trillion.
The increase was mostly due to
Tokyos recent forays into the for-
eign-exchange market. Japan sold a
monthly record of 9.092 trillion
($117 billion) between Oct. 28 and
Nov. 28 in the hope of weakening its
persistently strong currency and re-
lieving the pressure on the countrys
key export sector, a major driver of
economic growth.
Analysts say the government
likely spent around 7.5 trillion on
Oct. 31 alone, after the dollar fell to
a record low of 75.31, and then
continued to step into the market in
the following days to prevent any
rebound in the yen.
Midday Wednesday in New York,
the dollar was at 77.69, down from
77.73 late Tuesday.
BY TAKASHI NAKAMICHI
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MARKETS
MF Globals Collapse Felt on the Farm
Hedging Positions by Corn and Wheat Growers, Ranchers and Others Are Caught Up in Bankruptcy Filing
Around midnight, on an empty
Colorado highway, Brian Dunn was
hauling cows back to his farm in St.
John, Kan., when he heard on the
radio about the collapse of MF Glo-
bal Holdings Ltd.
I thought, if I come out of the
losing side of this, its going to
hurt, says the 41-year-old farmer,
who had more than $30,000 in
funds with the New York securities
firm.
The havoc wreaked by MF Glo-
bals bankruptcy filing has been felt
not just by Wall Street investors and
traders, but also by wheat and corn
growers, cattle ranchers and pig
farmers. Dotting the farm belt,
many who used the commodities
market to protect against price
swings are finding their money
locked up and their hedges unwound
due to the firms downfall.
Those ramifications will be in fo-
cus Thursday when the House Agri-
culture Committee convenes a hear-
ing on MF Global. The committee
members have subpoenaed former
MF Global Chief Executive Jon Cor-
zine, who is expected to appear in
what would be his first public ap-
pearance since the firms collapse
due to his more than $6 billion bet
on European debt. A spokesman for
Mr. Corzine declined to comment
Tuesday.
Mr. Corzine is scheduled to tes-
tify along with Jill Sommers, a com-
missioner with the Commodity Fu-
tures Trading Commission, MF
Globals main regulator; James Ko-
bak, lead counsel with the trustee
unwinding MF Globals brokerage;
Terrence Duffy, executive chairman
of CME Group Inc.; and several
other figures in the commodity and
derivatives industry.
Capitol Hill has been flooded by
calls and letters from farmers, farm-
industry groups and others demand-
ing help, as well as answers on why
MF Globals demise upended a sys-
tem that had quickly resolved most
earlier brokerage failures.
Legislators are pushing regula-
tors and the firms leaders to fix the
problem and explain who is respon-
sible.
Were getting more calls on [MF
Global] than anything else, said
Sen. Pat Roberts (R., Kan.), ranking
minority member of the Senate Ag-
riculture Committee, in an interview
following a committee meeting last
week. Its now been one month
since MF Global declared bank-
ruptcy, but we still have folks with
their ranches on fire.
Customers are still awaiting a
transfer of another $2.1 billion out
of a total $5.5 billion in funds
owned by former customers of MF
Global, which remains frozen in the
wake of its Oct. 31 bankruptcy filing.
The trustee charged with winding
down the firm continues to search
for what he estimates to be roughly
$1.2 billion in unaccounted-for cus-
tomer money, though some believe
the figure to be significantly less.
We didnt think this was a risk
that we even had to think about,
says Mark Greenwood, vice presi-
dent at AgStar Financial Services,
a Minnesota farm lender that esti-
mates its clients have as much as
$40 million locked up at MF Global.
As one of the largest U.S. com-
modities brokers, MF Global served
hundreds and perhaps thousands of
farmers who use the commodities
markets, often alongside insurance,
to protect themselves against price
swings in their crops in a process
called hedging.
With hedging, the farmers buy
futures contracts to lock in a price,
helping to ease the burden of mar-
ket fluctuations. Being hedged also
makes it easier for farmers to get
loans from banks, industry partici-
pants say.
As many as 36% of U.S. farmers
have done some sort of hedging us-
ing futures, according to a 2006
study in the Journal of International
Food & Agribusiness Marketing.
Hedging has become especially
pressing for farmers in recent years
amid rising volatility in the price of
grains and other crops, says Tim
Hannagan, senior grain analyst at
the Chicago commodities brokerage
PFG Best.
Rob Brenneman, 53 years old,
owner of Brenneman Pork Inc., a
3,000-acre hog farm in Washington,
Iowa, says it is a major part of his
business.
He keeps about 400,000 hogs on
his farm and holds daily meetings
with his commodity trading firm,
which previously used MF Global to
clear his tradesonly a few transac-
tions on some days, hundreds on
others.
Mr. Brenneman says about
$400,000 of his cash remains fro-
zen. While that hasnt sunk his busi-
ness, the situation has led him to
shelve or scale back some construc-
tion projects, including a new equip-
ment shop that he was planning for
next year.
Were going to do part of it in-
stead of the whole thing, Mr. Bren-
neman says.
The trustee liquidating MF Glo-
bals brokerage has returned some
money to customers, including Mr.
Brenneman, and has instituted a
claims process as the search for
funds continues. It still isnt clear
whether account holders will be
made whole if the funds arent lo-
cated.
That situation has disrupted how
farmers plan for a year of working
their fields.
Mr. Dunn estimated in July that
his 700 acres of wheat plantings
would provide about 35,000 bushels
at harvest next spring.
He bought crop insurance for
three-quarters of the estimated pro-
duction. Then he entered into three
futures contracts, each representing
5,000 bushels, where he agreed to
sell winter wheat next spring at
$7.20 a bushel.
My situation is, between crop
insurance and hedging, I want to
guarantee my price for the year, he
says.
Of the more than $30,000 in his
MF Global account at the time of
the collapse, he says, he has gotten
about 20% back.
Like Mr. Brenneman, Mr. Dunn
didnt personally choose MF Global
to process his futures trades.
Rather, he says, he worked with a
country broker who ran his trades
through the firm.
BY JERRY A. DICOLO
AND DAN STRUMPF
Brian Dunn with his son, Garrett, in St. John, Kansas, Mr. Dunn has a years profit at risk with MF Global.
S
a
n
d
y
K
n
o
l
l
F
a
r
m
GE Finance Plans Online Bank
NORWALK, ConnGeneral Elec-
tric Co.s finance arm plans to
launch an Internet-based effort to
attract retail deposits in the U.S.
next year, an experiment aimed at
shoring up its funding base.
The industrial behemoths lend-
ing businessGE Capitalis bigger
than all but seven U.S. banks, but its
so-called wholesale-funding model
means it has to regularly go to the
markets to raise the money it uses
to make loans. That model was
shaken when markets froze during
the financial crisis, prompting GE to
put the business on firmer footing.
Deposits are very sticky, and it
is a much safer funding base than
the short-term market, said Jack
De Gan, chief investment officer at
Harbor Advisory in Portsmouth,
N.H. That said, Mr. De Gan cau-
tioned that building a bank takes a
long time. Its not like it is going to
make a difference anytime soon.
GE realizes it will have to work
to attract deposits from consumers
who already have many choices for
where to put their money. But it
aims to eventually raise enough
money via the online platform to
cover its commercial lending and
leasing business in the Americas.
We are going to launch a direct-to-
retail U.S. deposit program, GE
Capital Chief Executive Officer Mike
Neal told an investor conference.
The move is the latest by GE to
reduce risk at GE Capital, whose
troubles during the financial crisis
led the conglomerate to cut its divi-
dend, lose its top-level credit-rating
and borrow funds at expensive rates
from investor Warren Buffett. GE is
paring the units assets, limiting its
contribution to overall profits and
focusing on core areas like loans to
midsize companies.
GEs interest in pursuing retail
deposits as a way to broaden its
funding base came up last year,
when it looked into the possibility
of acquiring online bank ING Direct
USA.
But the price$9 billionwas
seen as too high, and executives
thought they could aim to build a
similar operation without paying as
much, people familiar with the mat-
ter said.
The move also follows a regula-
tory change at GE Capital. The unit
began being regulated like a bank in
July, when the Federal Reserve took
over from the Office of Thrift Super-
vision.
GE Capital already takes deposits
and has $23 billion in the U.S., but it
plans to ramp up the effort. GE Cap-
ital intends to really go after the
retail market in a bigger way, Trea-
surer Kathryn Cassidy said Tuesday.
In Germany, she said, GE Capital
funds its business through a similar
retail deposit base.
Next year, GE Capital hopes to
get clearance from the Federal Re-
serve to resume paying a dividend
to GE proper. Until then, much of
the companys profits remain bot-
tled up.
The finance unit accounted for
more than a third of the profit from
GEs operating segments in the first
nine months of the year. Executives
said Tuesday that GE Capital is on
track to resume the dividend pay-
ments in 2012.
A spokeswoman for the Fed de-
clined to comment.
BY KATE LINEBAUGH
ING Takes Annuities Hit
AMSTERDAMDutch financial-
services company ING Group NV
said Wednesday that fourth-quarter
earnings will take a hit of up to 1.1
billion ($1.47 billion) from the com-
panys U.S. annuities business as
part of its preparations to spin off
its insurance activities.
ING said the charge is needed to
cover guaranteed payouts from the
annuities as investors are now more
likely to stay put because of the fi-
nancial crisis. Slumping stock mar-
kets caused by the sovereign-debt
crisis, as well as persistently low in-
terest rates, have made INGs vari-
able-annuity policies a more attrac-
tive investment, the company said.
ING sold 500,000 of its U.S. vari-
able-annuity products from 2003 to
2009 before calling a halt to new in-
vestment, giving it total funds of
$45 billion. Assumptions for the U.S.
closed-block variable-annuity busi-
ness have been updated to take into
account changing factors, such as
mortality rates, but ING said its
most significant revision was for the
number of expected lapses.
The Amsterdam-based company
will provide its U.S. insurance busi-
ness with contingent funding of
around 1.1 billion to ensure it com-
plies with regulations.
Chief Executive Officer Jan Hom-
men called the move annoying and
stressed that the charge wouldnt
have a material impact on results at
ING Bank or on the companys Eu-
rope and Asia insurance businesses.
Our new management team in the
U.S. insurance business is taking de-
cisive steps to address legacy issues,
improve results and prepare the
business for its stand-alone future.
In 2009 ING was ordered by the
European Commission to sell its glo-
bal insurance arm as a condition for
the state aid it received during the
financial crisis.
BY ARCHIBALD PREUSCHAT
ING Chief Executive Jan Hommen
B
l
o
o
m
b
e
r
g
N
e
w
s
GE realizes it will have to
work to attract deposits
from consumers who
already have many choices.
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INTERNATIONAL INVESTMENT FUNDS
[ Search by company, category or country at asia.WSJ.com/funds ]
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Morningstar, Ltd. or this publication. Funds shown arent registered with the
U.S. Securities and Exchange Commission and arent available for sale to United
States citizens and/or residents except as noted. Prices are in local currencies.
All performance figures are calculated using the most recent prices available.
NAV %RETURN
FUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
NAV %RETURN
NAV %RETURN
NAV %RETURN
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 12/06 EUR 56.25 -9.0 -8.0 6.1
Industria AE EU EQ DEU 12/06 EUR 67.68 -11.3 -8.9 -0.4
InternRent AE EU BD DEU 12/06 EUR 41.82 5.4 5.2 11.1
nCHARTEREDASSETMANAGEMENTPTELTD- TEL NO: 65-6835-8866
Fax No: 65-68358865, Website: www.cam.com.sg, Email: cam@cam.com.sg
CAM-GTF Limited OT OT MUS 12/02 USD 313985.82 -24.4 -23.1 11.8
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 12/05 USD 229.52 -15.1 -10.6 -9.4
GAMAsia Equity USD OT OT VGB 12/06 USD 589.65 -18.4 -17.4 -4.7
GAMAsia-Pacific Eq USD AS EQ VGB 12/06 USD 1131.16 -18.4 -13.7 -4.3
GAMComGlb Bal EUROp US BA VGB 11/30 EUR 99.65 -5.5 -4.2 4.2
GAMComGlb Bal USDOp US BA VGB 11/30 USD 130.79 -5.6 -2.7 1.5
GAMComp Glb Eq EUROp GL EQ VGB 11/30 EUR 101.61 -10.8 -7.5 4.9
GAMComp Glb Eq USDOp GL EQ VGB 11/30 USD 127.13 -11.9 -6.5 0.8
GAMComp Glb Gr EUROp US BA VGB 11/30 EUR 89.92 -8.5 -6.7 4.8
GAMComp Glb Gr USDOp US BA VGB 11/30 USD 127.56 -8.3 -4.2 0.8
GAMCompAbsRT EUROp OT OT VGB 11/30 EUR 140.84 -5.8 -3.9 -0.3
GAMCompAbsRT SGDOp OT OT VGB 11/30 SGD 101.08 -6.1 -4.2 -0.7
GAMCompAbsRT USDOp OT OT VGB 11/30 USD 842.65 -5.7 -3.7 -0.3
GAMCptal Apprec Eq Inc US EQ VGB 12/05 USD 263.67 -9.7 -7.7 4.0
GAMDiversity EUROp OT OT VGB 11/30 EUR 609.48 -3.0 -2.4 -3.1
GAMDiversity USD2.5XL OT OT VGB 11/30 USD 62.95 -11.1 -10.1 -10.5
GAMDiversity USDOp OT OT VGB 11/30 USD 641.77 -3.3 -2.8 -3.0
GAMDvrsty II USDOp OT OT VGB 11/30 USD 195.92 -3.5 -3.0 -3.6
GAMEuro Eq Hdg EUROp EU EQ VGB 12/05 EUR 208.30 -15.1 -11.7 -0.9
GAMEuro Eq Hdg USDOp EU EQ VGB 12/05 USD 192.39 -14.8 -12.1 -1.3
GAMGAMCOEq US EQ VGB 12/05 USD 1001.19 -3.1 3.3 11.9
GAMGbl Divers USDInc. GL EQ VGB 12/05 USD 240.00 -13.0 -6.9 -0.8
GAMGrtr China Eq Hdg Op GL EQ VGB 12/05 USD 183.82 -23.8 -22.8 -18.6
GAMIntrst Trend Inc OT OT VGB 11/30 USD 265.79 -14.0 -14.2 3.0
GAMJapan Eq Hdg USDOp AS EQ VGB 12/05 USD 117.86 -7.5 -4.3 2.1
GAMJapan Eq Hdg YENOpen AS EQ VGB 12/05 JPY 8132.00 -7.6 -4.4 2.2
GAMJapan Eq USD JP EQ VGB 12/05 USD 988.44 -16.3 -13.6 -4.2
GAMJapan Eq YEN JP EQ VGB 12/05 JPY 7502.80 -16.9 -14.7 -6.1
GAMMoney Mkt EuroOp EU MM VGB 12/05 EUR 51.33 0.5 0.6 0.7
GAMMoney Mkt USD US MM VGB 12/05 USD 100.06 0.0 0.1 0.2
GAMMulti-Emer Mkts USD OT EQ VGB 11/30 USD 600.92 -11.8 -9.3 -3.0
GAMMulti-Eur EUROp OT EQ VGB 11/30 EUR 276.59 -1.4 3.8 1.9
GAMMulti-Eur II EUROp OT EQ VGB 11/30 EUR 142.34 -1.4 3.9 1.9
GAMMulti-Eur II USDOp OT EQ VGB 11/30 USD 116.09 -1.9 3.4 1.7
GAMMulti-Eur USDOp OT EQ VGB 11/30 USD 480.68 -1.9 3.3 1.8
GAMSelection Hdg US EQ VGB 11/30 USD 3019.05 -8.4 -2.5 9.2
GAMSing/Malaysia Eq EA EQ VGB 12/06 USD 2351.57 -19.7 -18.2 -2.5
GAMSterling Spe Bd Inc OT OT VGB 12/05 GBP 239.72 -2.5 -1.4 6.1
GAMTrading EURInc OT OT VGB 11/30 EUR 329.45 -3.9 -2.0 0.4
GAMTrading USDInc OT OT VGB 11/30 USD 986.97 -4.2 -2.4 0.4
GAMTrdg II IncUSDOp OT OT VGB 11/30 USD 320.64 -4.2 -2.4 0.4
GAMUSDSpecBondInc OT OT VGB 12/05 USD 582.25 -7.4 -6.7 6.2
GAMWorldwide GL EQ VGB 12/05 USD 2080.54 -10.5 -8.7 -3.3
GAMut Investments OT OT VGB 11/30 USD 8090.20 -0.5 0.4 3.0
GAMut Investments - T class OT OT VGB 11/30 USD 123.92 -0.5 0.4 3.2
nGAMStar FundPlc
GAMStar US All CapEqUSDAcc US EQ IRL 12/05 USD 8.88 -5.7 -2.5 4.7
GAMStar China EqUSD(SCHUA) AS EQ IRL 12/05 USD 16.39 -19.0 -21.7 -3.1
GAMStar DiversMktNeutCredit USDAcc OT OT IRL 12/02 USD 10.31 2.1 2.3 NS
GAMStar Emer Mkt Rates USDAcc OT OT IRL 12/02 USD 10.82 -1.2 2.2 NS
GAMStar Emer Mkt Total Ret USDAcc GL BD IRL 12/05 USD 11.24 1.5 0.5 6.6
GAMStar GEOUSDAcc OT OT IRL 12/05 USD 7.60 -24.0 NS NS
GAMStar Global Conv.Bd USDAcc OT OT IRL 12/05 USD 9.84 -2.9 NS NS
GAMStar Global Eq Inflat Focus USDAcc GL EQ IRL 12/05 USD 128.78 -8.5 -4.9 NS
GAMStar Global Rates USDAcc OT OT IRL 11/30 USD 10.24 -5.7 -5.8 1.3
GAMStar Keynes Quant Strategy USDAcc OT OT IRL 12/05 USD 10.24 -3.0 -4.1 NS
GAMStar Technology USDAcc OT EQ IRL 12/05 USD 9.85 NS NS NS
GAMStar Trading USDAcc OT OT IRL 12/05 USD 9.29 NS NS NS
GAMStar-AsEqUSDOrd Ac OT OT IRL 12/05 USD 12.31 -16.9 -15.9 -3.8
GAMStar-AsPacEqEURAcc AS EQ IRL 12/06 EUR 96.31 -17.1 -15.1 -0.3
GAMStar-ContEurEqEURAc EU EQ IRL 12/05 EUR 11.20 -11.1 -8.8 2.1
GAMStar-EurpEqEURAcc EU EQ IRL 12/05 EUR 180.56 -9.4 -6.9 0.3
GAMStar-EurpEqUSDAcc EU EQ IRL 12/05 USD 14.77 -9.3 -7.1 -4.7
GAMStar-JpnEq EURAcc JP EQ IRL 12/05 EUR 85.24 -12.5 -9.7 0.5
GAMStar-JpnEq JPY Acc JP EQ IRL 12/05 JPY 783.42 -16.3 -14.2 -6.1
GAMStar-JpnEq USDAcc JP EQ IRL 12/05 USD 9.92 -15.6 -13.2 -4.5
nHSBCTrinkaus Investment Managers SA
E-Mail: funds@hsbctrinkaus.lu
Telephone: 352- 47 18471
Prosperity Return Fund A JP BD LUX 12/05 JPY 8814.63 -9.3 -10.2 NS
Prosperity Return Fund B OT OT LUX 12/05 JPY 7281.48 -14.7 -16.6 NS
Prosperity Return Fund C OT OT LUX 12/05 USD 83.94 -8.6 -9.3 NS
Prosperity Return Fund D OT OT LUX 12/05 EUR 108.04 -0.8 -0.7 NS
Renaissance Hgh Grade Bd A JP BD LUX 12/05 JPY 8953.49 -10.3 -11.3 NS
Renaissance Hgh Grade Bd B JP BD LUX 12/05 JPY 7435.93 -14.9 -16.5 NS
Renaissance Hgh Grade Bd C JP BD LUX 12/05 USD 85.02 -9.1 -9.5 NS
Renaissance Hgh Grade Bd D JP BD LUX 12/05 EUR 92.99 -10.5 -10.2 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 -14.2 -12.4 9.9
nCREDITPACIFICASSETMANAGMENT
www.creditpacific.com
CPS-Master Priv Fund GL OT WSM 12/05 USD 118.05 NS 18.7 21.0
nPLATINUMCAPITAL MANAGEMENT
Tel: +44207 0249840, www.platinumfunds.net
Platinm-All Star OT OT CYM 11/30 USD NS -4.1 -2.7 0.7
Platinm-All Weather OT OT USA 10/31 USD 129.92 2.4 3.2 3.8
Platinm-Dynasty OT OT CYM 11/30 USD NS -11.4 -12.0 -4.6
Platinm-Emancipation OT EQ CYM 11/30 USD NS -8.1 -6.4 5.9
Platinm-Equity Plus OT OT USA 05/29 USD 35.02 -18.2 -63.7 -45.6
Platinm-Gbl Dividend GL EQ CYM 11/30 USD NS -21.9 -21.7 -0.3
Platinm-Nordic OT OT CYM 11/30 SEK NS -23.2 -18.9 -8.4
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 11/30 USD 42.31 -17.3 -4.8 -7.9
Superfund GCT USD* GL OT LUX 11/30 USD 2004.00 -17.7 -10.2 -11.3
Superfund Green Gold A(SPC) GL OT CYM 11/30 USD 1373.84 4.8 19.2 9.6
Superfund Green Gold B(SPC) GL OT CYM 11/30 USD 1261.27 -2.6 -2.5 5.7
Superfund Q-AG* GL OT AUT 11/30 EUR 6446.00 -10.4 -4.4 -5.5
nWINTONCAPITAL MANAGEMENTLTD
Tel: +44(0)2076105350Fax: +44(0)2076105301
Winton Evolution EURCls H GL OT CYM 10/31 EUR NS 1.5 1.5 8.2
Winton Evolution GBP Cls G GL OT CYM 10/31 GBP NS 1.1 1.2 8.2
Winton Evolution USDCls F GL OT CYM 10/31 USD NS 1.1 1.3 8.2
Winton Futures EURCls C GL OT VGB 10/31 EUR NS 3.9 5.5 10.2
Winton Futures GBP Cls D GL OT VGB 10/31 GBP NS 3.6 5.3 10.2
Winton Futures JPY Cls E GL OT VGB 10/31 JPY NS 4.1 5.6 10.2
Winton Futures USDCls B GL OT VGB 10/31 USD NS 3.6 5.3 10.2
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NAV %RETURN
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FUND SCORECARD
Eurozone Large-Cap Equity
Funds investing in equities of large-cap companies fromthe 12 Eurozone countries. At least 75%of total
assets are invested in Eurozone equities. Ranked on % total return (dividends reinvested) in U.S. dollars
for one year ending December 07, 2011
Leading 10Performers
FUND FUND LEGAL %Return in $US **
RATING* NAME FUNDMGM'T CO. CURR. BASE YTD 1-YR 2-YR 5-YR
4 Henderson Henderson EURLUX -7.04 -3.00 -6.63 -7.04
Horizon Euroland A2 Management S.A.
3 Templeton Franklin Templeton EURLUX -9.29 -7.30 -8.56 -9.12
Euroland AAcc Investment Fds
4 DBPlatinum DBPlatinum EURLUX -11.21 -7.42 -8.10 -3.82
IVCROCI Euro R1 Acc Advisors S.A.
3 Generali IS Generali EURLUX -11.86 -9.64 -8.66 -6.27
European Eqs Opp AX Investments Sicav (LUX)
3 db db x-trackers Team EURLUX -13.40 -11.05 -11.54 NS
x-trackers Euro STOXX50ETF 1C
3 UBS (Lux) EF UBS (Lux) Equity EURLUX -13.14 -11.08 -11.65 -7.22
EUROSTOXX50Adv EURP Fund
2 Fidelity Fidelity (FIL EURLUX -12.96 -11.33 -11.91 -7.31
Euro STOXX50 A-EUR (Luxembourg) S.A.)
4 Schroder ISF Schroder EURLUX -12.91 -11.67 -9.91 -7.13
Euro Equity AAcc Investment Management Lux S.A.
3 Franklin Franklin Templeton USDLUX -13.91 -12.12 -9.75 NS
Euroland Core AAcc USD Investment Fds
3 Schroder Sel Schroder EURLUX -13.88 -12.22 -10.44 -7.47
EUROSer EUROEq A Investment Management Lux S.A.
NOTE: Changes in currency rates will affect performance and rankings. Source: Morningstar, Ltd
KEY: ** 2YRand 5YRperformance is annualized 1 Olivers Yard, 55-71 City Road
NA-not available due to incomplete data; London EC1Y 1HQUnited Kingdom
NS-fund not in existence for entire period www.morningstar.co.uk; Email: mediaservice@morningstar.com
Phone: +44 (0)203 107 0038; Fax: +44 (0)203 107 0001
INTERNATIONAL INVESTOR
Stocks Seek EU Clarity
U.S. blue-chip stocks clawed back
most of their morning losses as in-
vestor optimism grew ahead of two
major meetings in Europe later this
week.
The Dow Jones Industrial Aver-
age traded around the flatline, off
three points, or less
than 0.1%, at 12147,
in midday Wednes-
day trade, after fall-
ing as many as 90 points. The Stan-
dard & Poors 500-stock index was
off three points, or 0.3%, at 1255,
while the Nasdaq Composite shed
eight points, or 0.3%, to 2641.
Leading the losses were energy
and telecommunications stocks. Cat-
erpillar lost 1.6%, United Technolo-
gies shed 1% and Verizon Commu-
nications was off 0.8%.
Defensive sectors, including
health-care and consumer-staple
stocks, helped limit the damage.
Consumer discretionary stocks led
the days gains with a modest ad-
vance.
Developments in Europe again
seized the spotlight in a week that
has been billed as a critical one for
the euro zones future.
Stocks pared their losses as Eu-
ropean officials raised hopes for a
summit of leaders set to begin late
Thursday, just hours after the Euro-
pean Central Banks rate-setting
meeting. French Prime Minister
Francois Fillon said there will never
again be even a partial default of a
euro-zone country and no investors
risk losing their money by lending
to countries in the bloc. But prices
fell early after a comment from a
German official appeared to dash in-
vestor hopes for a big new boost to
Europes bailout mechanism. That
also pulled down European shares.
Among stocks in focus, strug-
gling womens retailer Talbots
surged 60% after the company said
the private-equity firm run by retail
veteran Stefan Kaluzny offered a
buyout valuing the company at
$212.1 million.
Citigroup fell 1.3%. The bank is
cutting another 4,500 jobs over the
next several quarters and said it will
take a $400 million charge related
to the action.
Mens Wearhouse rose 16% after
fiscal third-quarter profit rose 58%
and the company boosted its full-
year earnings outlook for the third
time.
Monsanto dropped 2.9% al-
though it increased its first-quarter
earnings guidance and reaffirmed its
full-year growth forecast.
NYSE Euronext fell 4.4% as the
exchange operators planned merger
with Deutsche Brse faced renewed
regulatory challenges. Deutsche
Brse lost 3.2% in Frankfurt.
European Stocks
Shares fell as investors weighed
hopes for progress at this weeks
European summit. The Stoxx Europe
600 index lost 0.2% to 241.44.
Among individual stocks, ING
Groep fell 4.7% after the bank said it
would take a fourth-quarter charge
from its U.S. annuity business.
Retailer Carrefour fell 2.9%. A
report in the French daily Le Figaro
said Wednesday that the group may
buy its main French franchisee Guy-
enne et Gascogne and fund the pur-
chase with Carrefour shares. Neither
company would comment on the re-
port.
German retailer Metro fell 2.7%
as investors continued to react to
Tuesdays profit warning.
BY JONATHAN CHENG
ABREAST OF
THE MARKET
Asia Rises Ahead of Meetings
Asian shares rose Wednesday,
with optimism returning ahead of
this weeks crucial European meet-
ings where the regions leadership
might agree on
measures to
fight the debt
crisis.
Hong Kongs Hang Seng Index
ended up 1.6% at 19240.58, while
the Shanghai Composite Index
climbed 0.3% to 2332.73. Japans
Nikkei Stock Average gained 1.7%
to 8722.17, South Koreas Kospi
rose 0.9% to 1919.42, Australias
S&P/ASX 200 Index climbed 0.7% to
4292.50 and Indias Sensex rose
0.4% to 16877.06.
Markets are effectively tread-
ing water ahead of the European
Union Summit and European Cen-
tral Bank meetings.Hopes of a
strong outcome are rising, and
consequently the potential for dis-
appointment is also high, said
Mitul Kotecha, head of global for-
eign-exchange strategy at Crdit
Agricole.
Exporters advanced in Japan,
with TDK rising 3.1% and Toyota
Motor up 2.5%. Sony and Elpida
Memory climbed 5.9% each.
Shipping firm Mitsui O.S.K.
Lines soared 11% after it an-
nounced plans late Tuesday to
jointly operate large tankers with
four other firms. Rival shipper Nip-
pon Yusen rose 7.9%.
Miners were among the outper-
formers in Australia, as gold and
copper futures advanced in elec-
tronic trading. BHP Billiton ended
up 0.8%, and Fortescue Metals
Group rose 1.2%.
Resource-sector shares also
rose in Hong Kong. Aluminum
Corp. of China was up 3.5% and Ji-
angxi Copper added 3.7%.
Chinese property shares moved
broadly higher, taking back some
losses made in the previous ses-
sion. China Resources Land rose
3.4% and China Overseas Land &
Investment rose 2.1%.
BY SARAH TURNER
AND V. PHANI KUMAR
ASIAN-PACIFIC
STOCKS
Highbridge Refocuses,
Cuts Some Asian Jobs
HONG KONGHighbridge Capi-
tal Management has laid off a few
members of its equities strategy
team, including Asia joint head
Shyan Wen Lim, as the U.S. hedge
fund refocuses its investment strat-
egy, people familiar with the situa-
tion said Wednesday.
The changes leave co-chief Arjun
Menon as the sole regional boss.
Highbridge wound down its Asia
fund after Carl Huttenlocher, its for-
mer Asia head, said he was leaving.
That fund focused on trading equi-
ties and convertible bonds. The firm
now focuses on high-yield credit,
convertible bonds and ways to bene-
fit from market volatility.
Highbridge is growing its in-
vestment in the region, but shifting
to credit, and will hire a couple of
people in that space, said one of the
people. When Carl left in March,
about 70% of Highbridges Asia in-
vestment was in equities. Currently,
Menons strategy, which focuses on
credit, accounts for about 70% of the
firms Asia investment and has made
positive returns this year.
Mr. Huttenlocher launched a new
hedge fund, Myriad Asset Manage-
ment, earlier this month.
BY NISHA GOPALAN
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NAV %RETURN
NAV %RETURN
NAV %RETURN
NAV %RETURN
nMANULIFEASSETMANAGEMENT TEL:(852)21081110
Internet:http://www.manulife.com.hk 47/FManulife Plaza, Causeway Bay, HongKong
American Growth US EQ LUX 12/06 USD 17.49 1.5 4.5 8.9
American Growth AA US EQ LUX 12/06 USD 1.00 1.3 4.3 8.7
Asian Equity OT OT LUX 12/06 USD 2.42 -15.2 -13.9 -0.2
Asian Equity AA OT OT LUX 12/06 USD 0.78 -15.3 -14.1 -0.5
Asian SmCap Equity AA OT OT LUX 12/06 USD 1.40 -10.7 -9.8 10.6
China Value A AS EQ LUX 12/06 USD 6.70 -18.7 -20.9 -3.1
China Value AA AS EQ LUX 12/06 USD 2.10 -18.9 -21.1 -3.4
Dragon Growth AS EQ LUX 12/06 USD 1.38 -21.8 -23.0 -9.0
Dragon Growth AA AS EQ LUX 12/06 HKD 6.72 -22.2 -23.3 -9.2
Emg Eastrn Europe A EU EQ LUX 12/06 USD 4.19 -21.7 -20.8 -4.0
Emg Eastrn Europe AA EU EQ LUX 12/06 USD 1.80 -21.7 -20.8 -4.1
European Growth EU EQ LUX 12/06 USD 7.94 -16.5 -13.9 -6.8
European Growth AA EU EQ LUX 12/06 USD 0.57 -16.7 -14.2 -7.0
Global Contrarain AA GL EQ LUX 12/06 USD 0.86 -26.9 -25.3 -1.1
Global Property AA OT EQ LUX 12/06 USD 0.71 -10.1 -7.7 3.9
Global Resources AA GL EQ LUX 12/06 USD 1.13 -12.3 -10.4 0.2
Healthcare AA OT EQ LUX 12/06 USD 0.99 -1.9 1.0 3.9
India Equity AA EA EQ LUX 12/06 USD 0.95 -27.9 -25.9 -6.4
International Growth GL EQ LUX 12/06 USD 3.05 -5.4 -2.9 0.2
International Growth AA GL EQ LUX 12/06 USD 0.70 -5.6 -3.2 0.0
Japanese Growth JP EQ LUX 12/06 USD 2.55 -15.4 -12.8 -4.7
Japanese Growth AA JP EQ LUX 12/06 USD 0.66 -15.5 -12.9 -5.4
Latin America Equity AA GL EQ LUX 12/06 USD 1.16 -19.6 -18.4 -4.8
Manulife GF Strategic Income Fund AA OT OT LUX 12/06 USD 1.08 2.4 3.6 NS
Manulife Glbl Fund Asia Total Return AA AS BD LUX 12/06 USD 0.95 NS NS NS
MGF Asia Value Dividend Equity Fund OT OT LUX 12/06 USD 1.16 -14.8 -13.0 2.7
Russia Equity AA EE EQ LUX 12/06 USD 0.63 -22.7 -20.4 -0.5
Taiwan Equity AA AS EQ LUX 12/06 USD 1.09 -15.7 -11.7 4.1
Turkey Equity AA OT OT LUX 12/06 USD 0.72 -27.4 -31.5 0.1
U.S. Bond AA US BD LUX 12/06 USD 1.18 4.6 4.4 6.7
U.S. SmCap Equity AA US EQ LUX 12/06 USD 0.83 -22.4 -18.3 3.5
U.S. Special Opportunities US BD LUX 12/06 USD 0.74 -22.2 -22.0 2.7
U.S. Tsy Inf-ProtSec AA OT OT LUX 12/06 USD 1.33 12.7 11.1 7.9
nPTCIPTADANAASSETMANAGEMENT
Tel: +6221 25574883 Fax: +6221 25574893 Website: www.ciptadana.com
Indonesian Grth Fund GL EQ BMU 11/30 USD 176.87 -2.8 -1.6 19.8
nSENSIBLEASSETMANAGEMENTLIMITED
www.samfund.com.hk Tel: (852) 28686848 Fax: (852) 28109948
Asia Value Formula Fd-B OT OT CYM 12/06 USD 9.00 -14.9 -11.9 6.5
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 12/05 USD 112.23 -28.4 -26.4 -6.9
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 10/31 USD 997.32 -13.1 -11.0 -6.5
TNI MENAUCITS Fund OT OT IRL 11/24 USD 917.20 -16.5 -14.4 NS
TNI UAE Blue Chip Fund OT OT ARE 11/24 AED 4.36 -13.8 -15.2 -16.4
nWEBSITE: WWW.VALUEPARTNERS.COM.HK, TEL: (852) 28809263, FAX: (852) 25648487
*formerly knownas China ABHShares Fund
Intel-Chin Mainlnd Foc AS EQ CYM 12/06 USD 31.32 -15.3 -17.0 3.4
Intel-China Converg* AS EQ CYM 12/06 USD 111.23 -19.6 -21.7 -0.5
VP Classic - A AS EQ CYM 12/06 USD 190.80 -14.9 -16.9 1.0
VP CLassic - B AS EQ CYM 12/06 USD 88.08 -15.3 -17.3 0.5
VP High Dividend Stk OT OT CYM 12/06 USD 51.32 -10.2 -13.0 7.4
nYUKI MANAGEMENT&RESEARCH
nYMR-NSeries
YMR-NGrowth Fund JP EQ IRL 12/07 JPY 7780.00 -18.5 -17.0 -8.1
nYuki 77 Series
Yuki 77 General JP EQ IRL 12/07 JPY 4750.00 -18.9 -17.7 -11.7
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 12/07 JPY 8367.00 NS NS NS
nYuki ChugokuSeries
Yuki Chugoku Jpn Gen JP EQ IRL 12/07 JPY 5532.00 -18.5 -17.4 -9.0
Yuki Chugoku JpnLowP JP EQ IRL 12/07 JPY 6400.00 -19.8 -17.6 -8.0
nYuki HokuyoJapanSeries
Yuki Hokuyo Jpn Gen JP EQ IRL 12/07 JPY 3672.00 -16.0 -15.3 -10.4
Yuki Hokuyo Jpn Inc JP EQ IRL 12/07 JPY 4249.00 -16.8 -14.4 -9.7
Yuki Hokuyo Jpn SmCap JP EQ IRL 12/07 JPY 4212.00 -16.3 -13.3 -8.9
nYuki MizuhoSeries
Yuki Mizuho Gen Jpn III JP EQ IRL 12/07 JPY 3445.00 -16.3 -15.6 -10.6
Yuki Mizuho Jpn Dyn Gro JP EQ IRL 12/07 JPY 3394.00 -23.2 -21.8 -13.7
Yuki Mizuho Jpn Exc 100 JP EQ IRL 12/07 JPY 5472.00 -15.5 -14.5 -10.3
Yuki Mizuho Jpn Gen JP EQ IRL 12/07 JPY 7086.00 -18.4 -16.8 -8.4
Yuki Mizuho Jpn Gro JP EQ IRL 12/07 JPY 4968.00 -21.7 -20.4 -11.3
Yuki Mizuho Jpn Inc JP EQ IRL 12/07 JPY 6286.00 -17.4 -15.0 -8.5
Yuki Mizuho Jpn Lg Cap JP EQ IRL 12/07 JPY 3993.00 -20.4 -19.4 -11.3
Yuki Mizuho Jpn LowP JP EQ IRL 12/07 JPY 9681.00 -16.7 -14.2 -8.1
Yuki Mizuho Jpn PGth JP EQ IRL 12/07 JPY 5709.00 -22.7 -21.8 -14.7
Yuki Mizuho Jpn SmCp JP EQ IRL 12/07 JPY 5872.00 -17.3 -13.7 -9.1
Yuki Mizuho Jpn Val Sel AS EQ IRL 12/07 JPY 4394.00 -22.4 -20.8 -11.5
Yuki Mizuho Jpn YoungCo AS EQ IRL 12/07 JPY 2084.00 -17.8 -12.9 -12.3
INTERNATIONAL INVESTOR
More Hurdles for U.S.-German Bourse
NYSE Euronext, Deutsche Brse Consider Fresh Ways to Meet European Union Competition Concerns
The planned merger of Deutsche
Brse AG and NYSE Euronext is
facing severe challenges, despite the
efforts of the two exchange opera-
tors to appease European regulators
by reducing their hold on more of
their prized derivatives assets.
The companies have insisted
they would drop the deal if forced
to completely offload their Liffe and
Eurex derivatives arms, but have
floated smaller-scale asset disposals
in a bid to secure approval from of-
ficials at the European Commission.
A person familiar with the situa-
tion said Wednesday that the
merger partners are considering
further moves after commission of-
ficials gave a cool reception to an
initial offer that included allowing
rivals to access the Eurex clearing-
house for transactions and selling
overlapping portions of their Euro-
pean equity derivatives operations.
Deutsche Brse remains commit-
ted to the deal but not at any
price, Gregor Pottmeyer, chief fi-
nancial officer for the Frankfurt-
based company, said in a statement
Wednesday.
He said the industrial and eco-
nomic logic of the combination
shouldnt be compromised by anti-
trust requirements, reiterating a
point made by executives of both
exchange firms since the deal was
announced in February
The planned merger would cre-
ate the worlds largest venue for
trading listed stocks and deriva-
tives, but the dominant scale of its
European futures and options arms
has concerned regulators at a time
when the region is pushing ahead
with further liberalization of the fi-
nancial sector.
Deutsche Brse owns Eurex, a
big European derivatives exchange
that is home to contracts tied to
German government bonds and
some European stock-market index
contracts, among others. The most
popular contracts on Liffe, owned by
NYSE Euronext, are futures and op-
tions contracts tied to a three-
month euro lending rate known as
Euribor as well as those tied to U.K.
short-term rates and government
bonds.
A final decision on the merger is
expected from the commission in
mid-January, and the prospect of
forced asset sales has attracted
some interest from rivals opposed
to the combination.
The head of Nasdaq OMX Group
Inc. said Wednesday that he would
be interested in acquiring NYSEs
Liffe arm, but isnt interested in the
European equity derivatives that the
merger partners have already of-
fered to sell.
The firms have no plans to sell
Liffe or Eurex, according to a person
familiar with the matter.
To the extent that Liffe is avail-
able, we would be interested in that,
as would be a host of other people,
Nasdaq OMX Group Chief Executive
Bob Greifeld said at an investor
event hosted by Goldman Sachs on
Wednesday. In terms of the reme-
dies proposed and assets for sale,
those are of little or no interest to
us.
Nasdaq and IntercontinentalEx-
change Inc. unsuccessfully sought
to break up the NYSE-Deutsche
Brse deal earlier this year by buy-
ing the Big Board operator. Their
proposal would have seen Nasdaq
acquire the securities business while
ICE took on the derivatives opera-
tion.
London Stock Exchange Group
PLC, which is expanding its own
small derivatives arm, declined to
comment on any potential interest
in acquiring assets from NYSE and
its German partner.
Weve never been against the
[Deutsche Brse-NYSE] deal. But we
will support anything which pro-
motes competition and choice for
customers in the European market,
said a spokeswoman from the Lon-
don Stock Exchange.
NYSE Euronext also owns the
New York Stock Exchange and four
European stock markets, while
Deutsche Brse runs Germanys
main stock market.
BY JRN REHREN
AND JACOB BUNGE
Treasury Prices Climb
On Euro-Zone Doubts
NEW YORKTreasurys were
back in favor Wednesday as remarks
from Germany tempered investors
recent hopes about drastic solutions
to be delivered at this weeks Euro-
pean Union Summit.
Once again, Germanys cautious
comments spoiled the latest bout of
optimism for Euro-
pean leaders to pull
through with a radi-
cal plan on Friday
to fix their regions debt crisis. A se-
nior government official said
chances of a region-wide agreement
are questionable because many
people still dont recognize the
gravity of the situation.
The German official also poured
cold water on hopes about the extra
firepower that would come from a
permanent emergency bailout fund.
Reined-in expectations brought
some signs of life back into the safe-
haven Treasury market, which had
been under pressure since the start
of the week when market partici-
pants were encouraged by signs of
progress.
In late-morning trading, bench-
mark 10-year notes rose 8/32 in
price to yield 2.065%. The 30-year
bond gained 11/32 to yield 3.089%,
while two-year notes were un-
changed to yield 0.258%. Bond
prices move inversely to yields.
Despite the bond-market gains,
trading volumes have been thin, as
investors opt to become bystanders
early this holiday season because of
the plethora of euro-zone uncertain-
ties.
BY CYNTHIA LIN
U.S. CREDIT
MARKETS
nJ.P. MORGANASSETMANAGEMENT
For additional fundprices, please visit www.jpmorganam.com.sg
Tel: +6568821328
JF ASEANEq (SGD)A(acc) AS EQ LUX 12/06 SGD 14.55 -7.7 -7.0 NS
JF ASEANEq (USD)A(acc) AS EQ LUX 12/06 USD 14.86 -7.5 -5.5 15.3
JF Asia Pac ex-Jap Eq(SGD)A(acc) AS EQ LUX 12/06 SGD 12.01 -20.2 -19.8 NS
JF Asia Pac ex-Jp (USD)A(acc) AS EQ LUX 12/06 USD 16.55 -20.5 -18.6 -4.0
JF China (SGD)A(acc) AS EQ LUX 12/06 SGD 10.27 -22.2 -25.2 NS
JF China (USD)A(dist) AS EQ LUX 12/06 USD 38.76 -22.4 -23.9 -11.1
JF Greater China (SGD)A(acc) AS EQ LUX 12/06 SGD 11.81 -21.2 -21.2 NS
JF Greater China (USD)A(dist) AS EQ LUX 12/06 USD 22.76 -21.7 -20.1 -4.6
JF India (SGD)A(acc) EA EQ LUX 12/05 SGD 12.41 -24.8 -24.1 NS
JF India (USD)A(acc) EA EQ LUX 12/05 USD 21.90 -24.8 -22.9 -2.2
JF Korea Equity (SGD) A(Acc) AS EQ LUX 12/06 SGD 13.44 NS NS NS
JF Korea Equity (USD) A(acc) AS EQ LUX 12/06 USD 9.55 -15.9 -8.7 7.9
JF Pacific Tech (USD) A(acc) OT EQ LUX 12/06 USD 13.76 -19.3 -16.1 -2.3
JF Singapore (SGD)A(acc) AS EQ LUX 12/06 SGD 13.94 -14.2 -13.0 NS
JF Singapore (USD)A(dist) AS EQ LUX 12/06 USD 28.60 -14.5 -11.6 4.1
JPMAfrica (USD) A(acc) OT OT LUX 12/06 USD 9.27 -22.1 -19.0 3.5
JPMAmer Large Cap (USD)A(Dist) US EQ LUX 12/06 USD 10.18 -1.0 2.4 4.5
JPMAsia Pac Bond (USD)A(acc) AS BD LUX 12/06 USD 11.01 1.7 2.6 NS
JPMBrazil Eq (SGD)A(acc) OT OT LUX 12/06 SGD 12.26 -17.3 -18.3 NS
JPMBrazil Eq (USD)A(acc) OT OT LUX 12/06 USD 9.96 -17.1 -17.1 -4.5
JPMEast Eur (EUR)A(dist)(JF) EU EQ LUX 12/06 EUR 25.35 -26.8 -27.6 0.6
JPMEmerg EMEA(SGD)A(acc) OT OT LUX 12/06 SGD 12.10 -21.0 -21.3 NS
JPMEmerg EMEA(USD)A(dist) OT OT LUX 12/06 USD 50.73 -21.3 -20.0 0.2
JPMEmerg Mid East Eq(SGD)A(acc) OT OT LUX 12/06 SGD 11.14 -24.3 -25.8 NS
JPMEmerg Mid East(USD)A(acc) OT OT LUX 12/06 USD 14.06 -24.1 -24.7 -1.0
JPMEmerg Mid East(USD)A(dist) OT OT LUX 12/06 USD 18.86 -24.2 -24.8 -1.1
JPMEmerg Mkt Eq (SGD)A(acc) GL EQ LUX 12/06 SGD 12.99 -15.3 -15.6 NS
JPMEmerg Mkt Eq (USD)A(acc) GL EQ LUX 12/06 USD 20.25 -15.6 -14.3 -0.1
JPMEmerg Mkt Eq (USD)A(dist) GL EQ LUX 12/06 USD 28.31 -15.6 -14.3 -0.1
JPMEmerg Mkt Infra(SGD)A(acc) OT OT LUX 12/06 SGD 13.91 NS NS NS
JPMEmerg Mkt Infra(USD)A(acc) OT OT LUX 12/06 USD 7.29 -19.2 -17.4 -0.3
JPMEmerg Mkt LC Debt(SGD)A(acc) OT OT LUX 12/06 SGD 17.60 NS NS NS
JPMEmerg Mkt LC Debt(USD)A(acc) OT OT LUX 12/06 USD 17.49 -1.2 0.1 5.1
JPMEmerg Mkt LC Debt(USD)A(mth) OT OT LUX 12/06 USD 15.07 -1.2 0.1 5.1
JPMGlb Dyn (SGD)A(acc) GL EQ LUX 12/06 SGD 13.28 -8.9 -8.8 NS
JPMGlb Dyn (SGD)A(acc)(Hedged) GL EQ LUX 12/06 SGD 10.58 NS NS NS
JPMGlb Dyn (USD)A(dist)(JF) GL EQ LUX 12/06 USD 12.11 -9.2 -7.4 0.8
JPMGlb Nat Res (EUR)A(dist) GL EQ LUX 12/06 EUR 17.15 -24.5 -22.3 6.6
JPMGlb Nat Res (SGD)A(acc) GL EQ LUX 12/06 SGD 20.33 -24.4 -22.9 NS
JPMGlb Nat Res (USD)A(acc) GL EQ LUX 12/06 USD 16.32 -24.7 -21.7 0.9
JPMGlbl Consumer Trends (SGD)A(Acc) OT EQ LUX 12/06 SGD 18.12 NS NS NS
JPMGlbl Consumer Trends (USD)A(Acc) OT EQ LUX 12/06 USD 15.73 -11.9 -9.9 0.4
JPMGlbl Mining (SGD)A(Acc) GL EQ LUX 12/06 SGD 19.26 NS NS NS
JPMGlbl Mining (USD)A(Acc) GL EQ LUX 12/06 USD 108.40 NS NS NS
JPMLatin Amer Eq(SGD)A(acc) GL EQ LUX 12/06 SGD 12.85 -16.3 -16.4 NS
JPMLatin Amer Eq(USD)A(dist)JF GL EQ LUX 12/06 USD 39.54 -16.0 -15.1 -1.7
JPMRussia (USD) A(dist) EE EQ LUX 12/06 USD 11.36 -29.7 -28.0 -6.3
JPMUS SmCap Grwth (USD)A(Dist) US EQ LUX 12/06 USD 95.44 -3.3 -1.2 15.3
JPMIF Global Convertibles - USDClass A(acc) OT OT LUX 12/06 USD 104.13 -8.9 -8.0 -1.3
JPMIF Global Financials - SGDClass A(acc) OT EQ LUX 12/06 SGD 13.67 NS NS NS
JPMIF Global Financials - USDClass A(acc) OT EQ LUX 12/06 USD 79.42 -19.8 -16.4 -10.8
JPMIF Global Select Eq USDClass A(acc) GL EQ LUX 12/06 USD 138.43 -11.6 -9.2 -1.7
JPMIF Income Opportunity USDClass A(acc) OT OT LUX 12/06 USD 165.34 -0.5 0.1 2.5
German Pessimism Hits Euro
NEW YORKThe dollar edged up
against the euro on Wednesday fol-
lowing reports that Germany is re-
jecting the latest proposal to boost
the euro zones ability to bail out
larger debtors.
Germany appears to be down-
playing expectations for the sum-
mit, said Andrew
Busch, global cur-
rency and public
policy strategist at
BMO Capital Markets. The news
flow from Europe suggests more
struggles for a fiscal union agree-
ment.
The shared currency was under
pressure already after banks aggres-
sively took advantage of the Euro-
pean Central Banks first dollar-li-
quidity operation since major
central banks last week moved to
cut the cost of dollar funding.
Near midday, the euro traded at
$1.3394 from $1.3401 late Tuesday.
Overall risk appetite was boosted
late Tuesday after news reports said
European officials are in talks to
combine the euro zones interim
bailout fund, the 440 billion
($589.64 billion) European Financial
Stability Facility, and the permanent
500 billion European Stability
Mechanism. The proposal was seen
as addressing the lack of adequate
firepower should larger countries
like Italy or Spain need financial as-
sistance.
Then reports early Wednesday
cited an unnamed German official
saying the government opposes
combining the funds.
European Union leaders are set
to meet late Thursday and Friday in
Brussels in what has been billed as
yet another potentially make-or-
break summit for the euro.
German Chancellor Angela
Merkel and French President Nicolas
Sarkozy have vowed to press for
broad treaty changes that would
toughen fiscal rules and impose au-
tomatic sanctions on countries that
violate budget limits.
On top of the EU debates, British
Prime Minister David Cameron has
insisted that he wont sign a treaty
unless it includes safeguards for
British interests.
In midday trade, the dollar was
at 77.69, compared with 77.73,
while the euro was at 104.06 from
104.13. The pound traded at
$1.5692 compared with $1.56, and
the dollar bought 0.9243 Swiss franc
from 0.9261 franc.
The ECB will stay in the spot-
light through Thursday, when policy
makers are expected to cut its key
lending rate while taking additional
steps to shore up liquidity for the
euro zones banking sector.
BY DEBORAH LEVINE
AND WILLIAM L. WATTS
CURRENCY
MARKETS
In print & online. Contact:
wsja.advertising@dowjones.com
LIST YOUR FUNDS
asia.WSJ.com
Giants aroundthe world In U.S.-dollar terms.
DowJones CountryTitans
INDEXPERFORMANCE
Previous session Year-to-date 52-week
South Africa 0.25% 3.6% 5.6%
U.K. -0.79 -6.0% -4.6
Spain -1.63 -7.8 -9.8
Australia 0.74 -8.1 -7.2
South Korea 0.54 -8.3 -3.5
Russia -0.56 -10.9 -8.0
Canada -0.52 -12.0 -9.8
Switzerland -0.74 -12.9 -13.9
Singapore 1.24 -13.8 -14.0
Hong Kong 1.69 -13.9 -14.2
China 88 0.63 -15.9 -17.5
Netherlands -1.18 -16.6 -14.7
Germany -1.40 -16.8 -17.4
Sweden -0.91 -17.1 -16.0
Turkey 0.07 -17.4 -20.0
Brazil -0.44 -17.6 -13.1
France -0.82 -17.7 -18.3
Japan 1.58 -20.4 -19.5
Italy -2.21 -24.9 -25.5
DowJones Regional Sector Titans
Health Care 0.05% 3.9% 6.3%
Food Bev -0.09 3.3 6.3
Retail -0.18 1.4 2.4
Pers H'hold Gds 0.05 -0.2% 1.5
Technology -0.61 -0.5 2.1
Travel Leisure 0.03 -0.8 unch.
Global 50 0.23 -1.6 1.0
Tiger 50* 1.44 -12.5 -10.2
Asian 50 1.54 -15.0 -10.7
Arab 50 -0.10 -20.0 -17.7
*Asia excluding Japan
Source: DowJones Indexes
Major players
benchmarks
At right, a look at the Asia Titans, the biggest and best known
companies in Asia. Below, some of the Dow Jones Titans indexes of
biggest and most liquid stocks in individual countries and regions
DowJones Asia Titans: Wednesday's best and worst...
Market value, Previous
in billions close, in STOCKPERFORMANCE
Company Country Industry of US$ local currency Previous session 52-week Three-year
Sony Japan Consumer Electronics $18.6 1,452 5.91% -51.3% -16.1%
China Life Insurance Hong Kong Life Insurance 20.8 21.75 4.32 -34.7 0.7
Bank of China Hong Kong Banks 30.8 2.86 3.62 -31.7 26.9
Nippon Steel Japan Steel 16.3 201.00 3.61 -29.2 -25.3
Indl CommBk China Hong Kong Banks 54.8 4.91 2.94 -17.8 23.0
Reliance Industries India Exploration Production $50.4 30.82 -1.66% -33.0 42.6
Wesfarmers Ltd. Australia Home Imprvmnt Rtlrs 32.8 32.00 -0.62 -0.7 93.8
Kansai Elec Power Japan Electricity 13.2 1,136 0.09% -44.1 -56.8
Shin-Etsu Chml Japan Specialty Chemicals 20.9 3,830 0.26 -8.8 12.6
NTT DoCoMo Japan Mobile Telecomms 75.0 139,500 0.36 2.9 -17.2
...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
Mizuho Financial Grp 32.3 106.00 2.91% -22.1% -99.9%
Japan (Banks)
East Japan Railway 24.5 4,810 2.78 -5.3 -99.3
Japan (Travel Tourism)
Panasonic 21.9 735.00 2.65 -37.5 -29.9
Japan (Consumer Electronics)
Shinhan Financial Grp 18.0 42,900 2.63 -7.7 35.3
South Korea (Banks)
Sun Hung Kai Prop 32.7 99.00 2.54 -24.7 82.3
Hong Kong (Real Estate Holding Development)
Toyota Motor 108.3 2,672 2.53 -17.9 0.8
Japan (Automobiles)
Softbank Corp. 34.6 2,431 2.10 -19.8 91.1
Japan (Mobile Telecommunications)
China Mobile (HK) 195.9 75.90 1.95 -3.9 0.5
Hong Kong (Mobile Telecommunications)
Woolworths 31.9 25.69 1.86 -3.7 -1.5
Australia (Food Retailers Wholesalers)
Mitsui 28.5 1,222 1.83 -10.3 76.8
Japan (Industrial Suppliers)
Sumitomo Mitsui Finl 40.4 2,250 1.72 -13.5 -99.2
Japan (Banks)
Westfield Grp 19.7 8.32 1.71 -13.6 -19.4
Australia (Retail)
Hon Hai Precision Ind 28.7 81.30 1.63 -28.4 55.7
Taiwan (Electrical Components Equipment)
Cheung Kong 27.3 91.60 1.61 -20.3 35.7
Hong Kong (Real Estate Holding Development)
Takeda Pharm 32.6 3,205 1.42 -17.3 -28.9
Japan (Pharmaceuticals)
POSCO 27.1 397,500 1.40 -16.2 15.4
South Korea (Steel)
Nintendo 18.5 11,270 1.35 -51.4 -63.5
Japan (Toys)
Honda Motor 57.9 2,495 1.34 -18.9 50.9
Japan (Automobiles)
Taiwan Smcndtr Mfg 65.6 76.40 1.33 12.4 105.4
Taiwan (Semiconductors)
CNOOC 88.6 15.42 1.31 -16.0 164.9
Hong Kong (Exploration Production)
Latest,
Market value, in local STOCKPERFORMANCE
Company/Country (Industry) in billions (U.S) currency Latest 52-week Three-year
Canon 54.6 3,490 1.31% -13.9% 36.3%
Japan (Electronic Office Equipment)
Nissan Motor 38.1 708.00 1.29 -12.4 137.6
Japan (Automobiles)
Japan Tobacco 45.8 370,500 1.23 28.2 7.1
Japan (Tobacco)
Aus NZ Bk 57.2 21.24 1.19 -9.6 45.5
Australia (Banks)
Hitachi Ltd. 24.8 430.00 1.18 4.1 3.6
Japan (Electronic Equipment)
Mitsubishi UFJ Finl 63.3 348.00 1.16 -12.6 -20.0
Japan (Banks)
Samsung Electronics 121.0 1,056,000 1.15 17.2 147.3
South Korea (Semiconductors)
Mitsubishi 34.5 1,630 1.12 -25.0 61.9
Japan (Industrial Suppliers)
Rio Tinto Ltd. 29.6 66.25 1.07 -24.1 107.0
Australia (General Mining)
China Construction Bank 176.6 5.71 1.06 -19.1 33.5
Hong Kong (Banks)
Seven I Hldgs 24.7 2,173 0.98 4.9 -24.2
Japan (Broadline Retailers)
Commonwlth Bk of Aus 80.2 50.17 0.95 0.8 62.4
Australia (Banks)
BHP Billiton 121.9 37.02 0.84 -17.9 41.6
Australia (General Mining)
Westpac Bking 67.1 21.61 0.70 -1.5 28.2
Australia (Banks)
Tokio Marine Hldgs 18.1 1,833 0.66 -22.2 -13.7
Japan (Property Casualty Insurance)
PetroChina 27.2 10.04 0.60 -0.6 60.6
Hong Kong (Integrated Oil Gas)
KDDI 27.6 506,000 0.60 5.2 -20.8
Japan (Mobile Telecommunications)
Woodside Petroleum 27.4 33.66 0.54 -21.5 10.5
Australia (Exploration Production)
Nippon T&T 65.4 3,840 0.52 2.0 -99.2
Japan (Fixed Line Telecommunications)
National Australia Bk 55.1 24.40 0.49 1.8 23.2
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 1.72 96.72% 0.01% 2.08 1.50 1.84
Eur. HighVolatility: 16/1 2.57 93.11 0.01 3.16 2.17 2.71
Europe Crossover: 16/1 7.25 91.76 0.05 8.74 6.20 7.65
Asiaex-JapanIG: 16/1 1.97 95.53 0.01 2.78 1.70 2.14
Japan: 16/1 1.92 95.69 0.01 2.32 1.60 1.94
Note: Data as of December 6
Spreads
Spreads on five-
year swaps for
corporate debt;
based on Markit
iTraxx indexes.
In percentage points
3.00
2.25
1.50
0.75
0
t
Asia ex-Japan IG
t
Australia
2011
June July Aug. Sept. Oct. Nov. Dec.
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
CHUBUElec Pwr 211 9 42 70
TelekomMalaysia 128 4 20 7
Fuji HeavyInds 126 4 7 4
Mitsubishi Matls Corp 113 4 4 10
CASIOComputer 86 2 2 24
SHARPCorp 100 3 3 7
Takashimaya 91 2 1 ...
SumitomoElec Inds 53 1 1 1
KyushuElec Pwr 266 6 34 83
MARUI GROUP 163 3 1 2
Andthe most deterioration
CHANGE, in basis points
Yesterday Yesterday Five-day 28-day
MISCBHD 147 7 18 ...
NipponExpress 59 2 2 3
Furukawa Elec 125 4 15 16
NorinchukinBk 111 3 1 7
Yamada Denki 143 3 3 4
SPPowerassets 95 2 1 5
SoftbankCorp 382 9 16 21
NipponSheet Glass 230 4 8 32
Elpida Memory 721 13 93 61
POSCO 184 3 19 1
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: 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
WSJ.com
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at WSJ.com. Also, receive email alerts that summarize the days trading in Europe and Asia. To
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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 594.75 -1.75 -0.29% 789.00 544.25
Soybeans (cents/bu.) CBOT 1129.75 0.25 0.02% 1,474.25 1,102.75
Wheat (cents/bu.) CBOT 607.00 -6.00 -0.98 994.75 586.00
Live cattle (cents/lb.) CME 119.325 -0.225 -0.19 127.000 111.600
Cocoa ($/ton) ICE-US 2,158 -10 -0.46 3,620 2,158
Coffee (cents/lb.) ICE-US 230.65 -5.10 -2.16 313.15 220.40
Sugar (cents/lb.) ICE-US 22.85 -0.90 -3.79 28.53 21.00
Cotton (cents/lb.) ICE-US 92.06 -1.75 -1.87 134.62 88.50
Rapeseed (euro/ton) LIFFE 423.00 2.50 0.59 483 385
Cocoa (pounds/ton) LIFFE 1,342 -17 -1.25 2,285 1,342
Robusta coffee ($/ton) LIFFE 1,990 -20 -1.00 2,658 1,784
Copper ($/lb.) COMEX 3.5485 -0.0270 -0.76 4.58 3.02
Gold ($/troy oz.) COMEX 1733.90 2.10 0.12 1,925.10 1,321.10
Silver ($/troy oz.) COMEX 32.480 -0.264 -0.81 49.50 26.19
Aluminum($/ton) LME 2,109.00 4.00 0.19 2,774.00 1,988.00
Tin ($/ton) LME 20,450.00 500.00 2.51 33,210.00 19,005.00
Copper ($/ton) LME 7,835.50 40.50 0.52 10,124.00 6,812.00
Lead ($/ton) LME 2,120.00 36.00 1.73 2,853.00 1,832.00
Zinc ($/ton) LME 2,025.00 14.00 0.70 2,574.00 1,770.00
Nickel ($/ton) LME 18,160 25 0.14 29,075 16,950
Crude oil ($/bbl.) NYMEX 100.31 -0.97 -0.96 115.22 75.36
Heating oil ($/gal.) NYMEX 2.9942 -0.0275 -0.91 3.4199 2.5868
RBOBgasoline ($/gal.) NYMEX 2.5986 -0.0468 -1.77 3.0363 2.3500
Natural gas ($/mmBtu) NYMEX 3.438 -0.049 -1.41 5.3750 3.4050
Brent crude ($/bbl.) ICE-EU 109.52 -0.99 -0.90 122.50 95.24
Gas oil ($/ton) ICE-EU 946.75 -2.75 -0.29 1,056.75 810.00
Sources: SIX Telekurs; WSJ Market Data Group
Currencies London close on Dec. 7
Per In
AMERICAS Per euro In euros U.S. dollar U.S. dollars
Argentina peso-a 5.7253 0.1747 4.2772 0.2338
Brazil real 2.4032 0.4161 1.7954 0.5570
Canada dollar 1.3529 0.7392 1.0107 0.9894
Chile peso 685.54 0.001459 512.15 0.001953
Colombia peso 2592.12 0.0003858 1936.50 0.0005164
Ecuador US dollar-f 1.3386 0.7471 1 1
Mexico peso-a 18.0875 0.0553 13.5127 0.0740
Peru sol 3.6102 0.2770 2.6971 0.3708
Uruguay peso-e 26.362 0.0379 19.694 0.0508
U.S. dollar 1.3386 0.7471 1 1
Venezuela bolivar 5.82 0.171740 4.35 0.229885
ASIA-PACIFIC
Australia dollar 1.3038 0.7670 0.9740 1.0266
1-mo. forward 1.3085 0.7643 0.9775 1.0230
3-mos. forward 1.3172 0.7592 0.9840 1.0162
6-mos. forward 1.3282 0.7529 0.9922 1.0078
China yuan 8.4797 0.1179 6.3350 0.1579
Hong Kong dollar 10.4042 0.0961 7.7727 0.1287
India rupee 68.5677 0.0146 51.2250 0.0195
Indonesia rupiah 12092 0.0000827 9034 0.0001107
Japan yen 103.99 0.009616 77.69 0.012872
1-mo. forward 103.88 0.009626 77.61 0.012885
3-mos. forward 103.77 0.009637 77.52 0.012900
6-mos. forward 103.59 0.009653 77.39 0.012921
Malaysia ringgit-c 4.1821 0.2391 3.1244 0.3201
NewZealand dollar 1.7212 0.5810 1.2859 0.7777
Pakistan rupee 119.534 0.0084 89.300 0.0112
Philippines peso 57.932 0.0173 43.280 0.0231
Singapore dollar 1.7207 0.5811 1.2855 0.7779
South Korea won 1511.90 0.0006614 1129.50 0.0008854
Taiwan dollar 40.368 0.02477 30.158 0.03316
Thailand baht 41.183 0.02428 30.767 0.03250
Per In
EUROPE Per euro In euros U.S. dollar U.S. dollars
Euro zone euro 1 1 0.7471 1.3386
1-mo. forward 0.9997 1.0003 0.7469 1.3390
3-mos. forward 0.9994 1.0006 0.7466 1.3393
6-mos. forward 0.9992 1.0008 0.7464 1.3397
Czech Rep. koruna-b 25.243 0.0396 18.858 0.0530
Denmark krone 7.4340 0.1345 5.5537 0.1801
Hungary forint 300.51 0.003328 224.50 0.004454
Norway krone 7.7085 0.1297 5.7588 0.1736
Poland zloty 4.4728 0.2236 3.3415 0.2993
Russia ruble-d 41.841 0.02390 31.258 0.03199
Sweden krona 9.0236 0.1108 6.7412 0.1483
Switzerland franc 1.2385 0.8074 0.9252 1.0808
1-mo. forward 1.2376 0.8080 0.9246 1.0816
3-mos. forward 1.2368 0.8085 0.9240 1.0823
6-mos. forward 1.2346 0.8100 0.9223 1.0842
Turkey lira 2.4522 0.4078 1.8320 0.5459
U.K. pound 0.8531 1.1721 0.6374 1.5690
1-mo. forward 0.8534 1.1718 0.6375 1.5686
3-mos. forward 0.8539 1.1712 0.6379 1.5677
6-mos. forward 0.8546 1.1701 0.6385 1.5663
MIDDLE EAST/AFRICA
Bahrain dinar 0.5046 1.9819 0.3769 2.6529
Egypt pound-a 8.0429 0.1243 6.0087 0.1664
Israel shekel 5.0102 0.1996 3.7430 0.2672
Jordan dinar 0.9502 1.0524 0.7099 1.4087
Kuwait dinar 0.3705 2.6987 0.2768 3.6124
Lebanon pound 2015.14 0.0004962 1505.45 0.0006643
Saudi Arabia riyal 5.0202 0.1992 3.7505 0.2666
South Africa rand 10.7445 0.0931 8.0269 0.1246
United Arab dirham 4.9166 0.2034 3.6731 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 122.22 1.61 1.33% -14.2% -10.8%
Australia SPX/ASX200 4292.50 30.50 0.72 -9.5 -8.7
China CBN600 21125.10 89.97 0.43 -20.9 -22.3
Hong Kong Hang Seng 19240.58 298.35 1.58 -16.5 -16.7
India Sensex 16877.06 71.73 0.43 -17.7 -14.3
Indonesia Jakarta Composite 3793.235 40.561 1.08 2.4 0.6
Japan Nikkei Stock Average 8722.17 147.01 1.71 -14.7 -14.8
Topix 749.63 11.62 1.57 -16.6 -15.5
Malaysia Kuala Lumpur Composite 1482.99 2.07 0.14 -2.4 -1.8
NewZealand NZSX-50 3283.043 -8.444 -0.26% -0.8 -0.3
Pakistan KSE 100 11283.89 -88.32 -0.78 -6.1 -3.0
Philippines Manila Composite 4315.17 32.40 0.76 2.7 2.2
Singapore Straits Times 2782.55 33.31 1.21 -12.8 -13.1
South Korea Kospi 1919.42 16.60 0.87 -6.4 -1.9
Taiwan Weighted 7033.00 76.72 1.10 -21.6 -19.2
Thailand SET 1046.73 15.96 1.55 1.4 2.1
EUROPE Stoxx Europe 600 241.44 -0.48 -0.20 -12.5 -12.2
Stoxx Europe 50 2322.46 -0.87 -0.04 -10.2 -10.4
PREVIOUS SESSION PERFORMANCE
Region/Country Index Close Net change Percentage change Yr.-to-date 52-wk.
Euro Zone Euro Stoxx 227.51 -1.15 -0.50% -17.1% -17.5%
Euro Stoxx 50 2344.92 -11.79 -0.50 -16.0 -16.8
Denmark OMXCopenhagen 355.08 0.04 0.01% -16.8 -14.3
Finland OMXHelsinki 5469.01 -103.27 -1.85 -28.6 -26.8
France CAC-40 3175.98 -3.65 -0.11 -16.5 -17.1
Germany DAX 5994.73 -34.09 -0.57 -13.3 -14.1
Italy FTSE MIB 15650.93 -197.28 -1.24 -22.4 -23.3
Netherlands AEX 304.31 -0.49 -0.16 -14.2 -12.2
Russia RTSI 1467.69 -17.98 -1.21 -17.1 -13.4
Spain IBEX35 8644.3 -68.50 -0.79 -12.3 -14.2
Switzerland SMI 5766.24 -1.69 -0.03 -10.4 -11.4
Turkey ISE National 100 55138.85 459.74 0.84 -16.5 -18.6
U.K. FTSE 100 5546.91 -21.81 -0.39 -6.0 -4.3
AMERICAS DJ Americas 330.18 -1.32 -0.40 -3.1 -0.5
Brazil Bovespa 59030.01 -506.15 -0.85 -14.8 -13.4
Argentina Merval 2577.07 -38.51 -1.47 -26.9 -24.8
Mexico IPC 37048.54 -22.63 -0.06 -3.9 -1.5
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. 0.974 0.637 1.011 6.335 0.747 7.773 51.225 9033.50 77.690 1.286 1129.50 3.124 43.280 1.286 0.925 30.158 30.767
Australia 1.027 0.654 1.038 6.504 0.767 7.980 52.590 9274.20 79.760 1.320 1159.59 3.208 44.433 1.320 0.950 30.962 31.586
Britain 1.569 1.528 1.586 9.939 1.172 12.195 80.371 14173.35 121.894 2.017 1772.15 4.902 67.905 2.017 1.452 47.317 48.272
Canada 0.989 0.964 0.631 6.268 0.739 7.691 50.684 8938.05 76.869 1.272 1117.56 3.091 42.822 1.272 0.915 29.839 30.441
China 0.1579 0.154 0.101 0.160 0.118 1.227 8.086 1425.98 12.264 0.203 178.30 0.493 6.832 0.203 0.146 4.761 4.857
Euro 1.339 1.304 0.853 1.353 8.480 10.404 68.568 12091.89 103.993 1.721 1511.90 4.182 57.932 1.721 1.238 40.368 41.183
HongKong 0.129 0.125 0.082 0.130 0.815 0.096 6.590 1162.21 9.995 0.165 145.32 0.402 5.568 0.165 0.119 3.880 3.958
India 0.0195 0.0190 0.0124 0.0197 0.1237 0.0146 0.1517 176.35 1.5166 0.0251 22.05 0.0610 0.8449 0.0251 0.0181 0.5887 0.6006
Indonesia 0.0001 0.0001 0.0001 0.0001 0.0007 0.0001 0.0009 0.0057 0.0086 0.0001 0.13 0.0003 0.0048 0.0001 0.0001 0.0033 0.0034
Japan 0.013 0.013 0.008 0.013 0.082 0.010 0.100 0.659 116.28 0.017 14.54 0.040 0.557 0.017 0.012 0.388 0.396
NewZealand 0.778 0.758 0.496 0.786 4.927 0.581 6.045 39.837 7025.27 60.419 878.40 2.430 33.658 1.000 0.720 23.454 23.927
SouthKorea 0.0009 0.0009 0.0006 0.0009 0.0056 0.0007 0.0069 0.0454 8.00 0.0688 0.0011 0.0028 0.0383 0.0011 0.0008 0.0267 0.0272
Malaysia 0.320 0.312 0.204 0.323 2.028 0.239 2.488 16.395 2891.32 24.866 0.412 361.51 13.852 0.411 0.296 9.653 9.847
Philippines 0.023 0.023 0.015 0.023 0.146 0.017 0.180 1.184 208.72 1.795 0.030 26.10 0.072 0.030 0.021 0.697 0.711
Singapore 0.778 0.758 0.496 0.786 4.928 0.581 6.046 39.848 7027.13 60.435 1.000 878.63 2.430 33.667 0.720 23.460 23.933
Switzerland 1.081 1.053 0.689 1.092 6.847 0.807 8.401 55.364 9763.50 83.968 1.390 1220.77 3.377 46.777 1.389 32.595 33.253
Taiwan 0.033 0.032 0.021 0.034 0.210 0.025 0.258 1.699 299.54 2.576 0.043 37.45 0.104 1.435 0.043 0.031 1.020
Thailand 0.033 0.032 0.021 0.033 0.206 0.024 0.253 1.665 293.61 2.525 0.042 36.71 0.102 1.407 0.042 0.030 0.980
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 328.72 0.86 0.26% -24.6% -25.6% 16.5%
2.04% 16 U.S. TSM 12941.34 -113.23 -0.87 -1.4 1.0 14.1
5.40 13 Global Select Div -d 204.86 0.95 0.47 -5.4 -3.3 21.1
6.32 11 Asia/Pacific Select Div -d 295.44 2.53 0.86 -0.7 2.0 26.4
6.21 6 HongKongSelect Div -d 176.25 2.33 1.34 -20.0 -18.9 15.3
4.05 15 U.S. Select Dividend -d 375.12 -2.80 -0.74 4.6 6.8 8.2
1.85 15 Islamic Market 2097.54 -7.44 -0.35 -5.8 -3.1 15.9
2.12 13 Islamic Market 100 2223.84 -5.69 -0.26 -0.9 1.9 11.0
3.11 8 Islamic China/HKTitans 30 1467.28 15.95 1.10 -12.0 -12.5 16.3
1.47 16 Sustainability Korea 1375.16 18.12 1.34 -7.7 -2.1 32.8
3.23 19 BrookfieldInfrastructure 2445.94 5.42 0.22 8.0 9.8 20.2
DJ-UBSCommodity-p 145.26 -0.58 -0.40 -10.5 -5.8 11.0
MSCI indexes
Developed and emerging-market regional and country indexes
fromMSCI Barra as of December. 07, 2011
Price-to- LOCAL-CURRENCY
Dividend earnings PERFORMANCE
yield ratio Morgan Stanley Index Last Daily YTD 52-wk.
2.90% 12 ALL COUNTRY(AC) WORLD* 303.49 0.58% -8.2% -1.6%
2.90 13 World(DevelopedMarkets) 1,193.68 0.47 -6.7 0.0
2.20 17 WorldSmall Cap 215.12 0.67 -9.0 -0.6
3.00 12 Kokusai (Worldex-Japan) 1,193.01 0.39 -5.7 1.1
3.90 12 EAFE 1,438.59 1.16 -13.2 -6.3
2.90 10 EmergingMarkets (EM) 953.50 1.33 -17.2 -11.4
3.50 11 ACASIAPACIFICEX-JAPAN 406.85 1.48 -15.0 -9.3
3.10 10 ACFar East ex-Japan 447.25 1.37 -14.8 -10.4
2.70 18 Japan 453.63 -1.37 -19.2 -15.9
3.30 9 China 54.56 -1.53 -17.9 -18.4
1.50 15 China A(China Domestic) 2,426.40 -0.16 -21.5 -22.3
3.20 10 HongKong 10,078.57 -1.05 -17.5 -16.9
1.40 14 India 651.43 0.00 -19.7 -15.8
1.30 9 Korea 541.41 -1.12 -7.8 0.3
2.90 15 Malaysia 543.38 -0.60 -3.1 -0.7
3.70 11 Singapore 1,461.72 -0.77 -16.8 -15.5
4.90 13 Taiwan 249.11 -1.96 -22.0 -16.0
3.50 10 Thailand 408.37 -0.07 -0.7 2.5
5.00 12 Australia 863.66 -1.40 -10.6 -7.6
5.30 15 NewZealand 84.30 -0.32 0.6 1.2
2.10 14 USBROADMARKET 1,415.31 -0.04 -0.6 6.0
4.20 10 EUROPE 83.92 -0.33 -12.0 -7.5
*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
2.60% 13 Global TSM 2370.71 -6.86 -0.29% -9.1% -6.5% 14.2%
2.52 13 Global DOW 1841.07 -4.17 -0.23 -11.8 -9.6 9.8
2.49 13 Global Titans 50 174.19 0.40 0.23 -1.6 1.0 8.4
3.03 13 Asia/Pacific TSM 1205.14 14.88 1.25 -14.6 -11.0 15.0
3.36 11 Asia/Pacific ex-JapanTSM 3044.49 30.32 1.01 -15.7 -12.8 25.2
3.33 13 Europe TSM 2380.03 -15.83 -0.66 -13.4 -11.6 10.8
2.94 8 EmergingMarkets TSM 3916.58 10.68 0.27 -18.4 -16.3 23.7
3.40 11 AsianTitans 50 123.81 1.88 1.54 -15.0 -10.7 11.0
3.40 9 BRIC50 534.91 3.78 0.71 -18.3 -15.8 22.4
CBNChina 600 -c 21125.10 89.97 0.43 -20.9 -22.3 9.2
3.16 9 China Offshore 50 3727.05 61.14 1.67 -12.2 -12.7 14.2
Shanghai -c 288.74 1.36 0.47 -18.9 -20.6 10.2
GLOBAL MARKETS LINEUP
Dow Jones Industrial Average P/E: 13
LAST: 12102.82 t 47.31, or 0.39%
YEAR TO DATE: s 525.31, or 4.5%
OVER 52 WEEKS s 730.34, or 6.4%
*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
12500
12000
11500
11000
10500
10000
9 16 23 30 7 14 21 28
Oct.
4 11 18 25
Nov.
2
Dec.
High
Close
Low
50day
moving average
t
Nasdaq Composite Index P/E: 11*
LAST: 2626.62 t 22.94, or 0.87%
YEAR TO DATE: t 26.25, or 1.0%
OVER 52 WEEKS s 17.46, or 0.7%
2825
2700
2575
2450
2325
2200
9 16 23 30 7 14 21 28
Oct.
4 11 18 25
Nov.
2
Dec.
S&P 500 Index P/E: 14
LAST: 1250.82 t 7.65, or 0.61%
YEAR TO DATE: t 6.82, or 0.5%
OVER 52 WEEKS s 22.54, or 1.8%
1375
1300
1225
1150
1075
1000
9 16 23 30 7 14 21 28
Oct.
4 11 18 25
Nov.
2
Dec.
DJIAcomponent stocks
Volume, CHANGE
Stock Symbol in millions Latest Points Percentage
AT&T T 11.2 $29.01 0.16 0.55%
Alcoa AA 8.9 9.86 0.06 0.60
AmExpress AXP 2.5 48.38 0.18 0.37
BankAm BAC 110.6 5.82 0.04 0.61
Boeing BA 2.4 70.92 0.05 0.07
Caterpillar CAT 3.1 94.41 1.55 1.62
Chevron CVX 3.5 104.41 0.05 0.05
CiscoSys CSCO 23.9 19.00 0.27 1.44
CocaCola KO 3.2 66.63 0.05 0.07
Disney DIS 3.6 36.89 0.06 0.16
DuPont DD 1.9 47.82 0.12 0.25
ExxonMobil XOM 6.2 80.68 0.14 0.18
GenElec GE 26.6 16.62 0.10 0.60
HewlettPk HPQ 6.9 28.35 0.17 0.60
HomeDpt HD 5.0 40.55 0.23 0.57
Intel INTC 22.4 25.57 0.22 0.85
IBM IBM 1.6 193.96 1.02 0.53
JPMorgChas JPM 15.1 33.47 0.24 0.72
JohnsJohns JNJ 4.2 64.18 0.69 1.09
KftFoods KFT 3.0 36.32 0.19 0.52
McDonalds MCD 1.6 95.92 0.09 0.09
Merck MRK 7.9 35.58 0.18 0.51
Microsoft MSFT 27.7 25.45 0.21 0.82
Pfizer PFE 20.1 20.44 0.21 1.04
ProctGamb PG 3.6 64.92 0.08 0.12
3M MMM 1.7 81.59 0.54 0.66
TravelersCos TRV 2.3 55.53 0.59 1.07
UnitedTech UTX 1.9 75.38 0.94 1.23
Verizon VZ 5.1 38.02 0.30 0.80
WalMart WMT 6.1 59.02 0.61 1.04
U.S. stocks: most active...
Volume, CHANGE
Stock Symbol in millions Latest Points Percentage
BankAm BAC 110.6 $5.82 0.04 0.61%
SPDRS&P500 SPY 88.0 125.96 0.30 0.24
AMR AMR 88.0 0.96 0.25 36.19
FstNiagaraFnl FNFG 41.3 8.97 0.04 0.44
iShrMSCIEmrgMkt EEM 30.4 39.87 ... ...
Microsoft MSFT 27.7 25.45 0.21 0.82
iShrRu2000 IWM 26.8 74.26 0.57 0.76
GenElec GE 26.6 16.62 0.10 0.60
SPDRFnclSelSct XLF 24.0 13.14 0.04 0.34
CiscoSys CSCO 23.9 19.00 0.27 1.44
Citigroup C 22.6 29.29 0.46 1.55
Intel INTC 22.4 25.57 0.22 0.85
PwrShrs QQQ QQQ 22.2 56.93 0.15 0.26
Pfizer PFE 20.1 20.44 0.21 1.04
VangMSCIEmMkt VWO 16.5 40.76 0.06 0.15
Biggest gainers...
MarthaStew MSO 3,765.6 $4.17 1.05 33.65%
MitchamInd MIND 1,106.0 19.88 3.54 21.66
ChMedTechADS CMED 1,714.7 3.09 0.52 20.23
MensWearhs MW 2,068.8 31.59 4.40 16.18
PowelInd POWL 67.8 35.10 4.28 13.89
...Biggest losers
PoniardPharm PARDD 14.0 $3.81 0.74 16.26%
JaguarMng JAG 5,199.2 6.58 0.66 9.12
Netlist NLST 324.6 2.88 0.25 7.99
ElbitImaging EMITF 4.5 3.26 0.28 7.91
VinaConc ADS VCO 6.9 39.01 3.24 7.67
ADRs of Asiancompanies*
52-WEEK Volume, CHANGE
High Low Stock Symbol in OOOs Latest Points Percentage
$14.05 $10.75 TaiwanSemi TSM 4,863.3 $13.15 0.21 1.62%
10.83 1.70 SuntechPwr STP 2,695.8 2.73 0.13 5.00
165.96 94.33 BaiduADS BIDU 2,056.7 129.21 2.04 1.55
13.98 2.46 ChMedTechADS CMED 1,714.7 3.09 0.52 20.23
104.59 62.54 BHPBiltonADS BHP 1,576.4 75.48 0.63 0.83
50.57 23.56 CtripInt ADS CTRP 1,362.8 24.93 0.22 0.86
51.51 27.21 ICICI BkADS IBN 1,224.1 29.86 0.38 1.26
20.29 13.35 SKTele ADS SKM 1,214.0 14.58 0.10 0.69
77.92 46.12 InfosysADS INFY 1,139.7 52.46 0.29 0.55
7.27 3.92 Slcnwr ADS SPIL 807.7 4.38 ... ...
36.97 16.16 SonyCpADS SNE 771.3 18.49 0.81 4.58
37.58 8.79 FocusMediaHldg FMCN 693.1 20.56 0.22 1.08
3.52 1.77 UtdMicroADS UMC 558.7 2.19 ... 0.23
21.70 14.39 KTCrpADS KT 546.0 16.59 0.19 1.16
37.70 25.07 HDFCBnk HDB 436.0 28.33 0.46 1.60
31.04 14.33 TataMtrs ADS TTM 432.2 18.23 0.04 0.22
10.54 3.75 AUOptrncs AUO 346.5 4.75 0.10 2.15
22.50 13.49 ChinaUnicomHK CHU 335.7 21.24 0.07 0.33
55.00 35.20 Netease.com NTES 284.6 46.59 0.58 1.23
5.68 4.01 MitsuUFJ ADS MTU 279.7 4.43 0.01 0.23
64.82 32.77 ChinaLfIns ADS LFC 278.6 41.54 0.77 1.89
44.56 27.52 HondaMtr ADS HMC 261.5 31.66 ... ...
118.00 70.47 Posco PKX 216.9 87.03 0.25 0.29
51.98 43.51 ChinaMobile CHL 212.7 48.51 0.18 0.37
5.97 4.00 AdSemEgADS ASX 205.1 4.60 0.02 0.43
93.90 60.37 ToyotaMtr ADS TM 189.5 68.03 0.92 1.37
37.46 28.85 ChunghwaTel CHT 188.9 33.32 0.10 0.30
15.25 8.22 KoreaElecPwr KEP 182.9 11.48 0.30 2.68
20.49 3.87 SilicnMotnTch SIMO 179.0 19.25 0.53 2.83
41.80 28.75 DrRdyLabADS RDY 172.5 30.03 0.27 0.89
*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 1.098 84.4 86.6 n.a. 46.3 1.128 n.a. 1.003
3.500 10 3.205 114.0 116.5 n.a. 22.8 3.224 n.a. 3.367
4.250 Belgium 2 3.224 297.0 298.7 n.a. 97.7 3.249 n.a. 1.517
4.250 10 4.505 244.0 228.9 n.a. 86.1 4.348 n.a. 4.000
5.375 Finland 2 0.461 20.7 22.8 n.a. 36.0 0.490 n.a. 0.900
3.500 10 2.652 58.7 65.4 n.a. 1.3 2.713 n.a. 3.152
4.500 France 2 0.877 62.3 65.8 n.a. 44.7 0.920 n.a. 0.987
3.250 10 3.252 118.7 119.2 n.a. 10.5 3.251 n.a. 3.244
0.250 Germany 2 0.312 5.8 7.4 n.a. 28.7 0.336 n.a. 0.827
2.250 10 2.022 -4.3 2.4 n.a. -24.7 2.083 n.a. 2.892
n.a. Greece 2 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
n.a. 10 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a.
2.250 Italy 2 5.693 543.9 545.0 n.a. 174.4 5.712 n.a. 2.284
4.750 10 6.024 395.9 389.9 n.a. 127.3 5.958 n.a. 4.412
4.250 Netherlands 2 0.420 16.6 18.9 n.a. 22.3 0.451 n.a. 0.763
3.250 10 2.532 46.7 53.4 n.a. 0.3 2.593 n.a. 3.142
5.450 Portugal 2 16.616 1636.2 1634.5 n.a. 331.9 16.607 n.a. 3.859
3.850 10 12.748 1068.3 1079.3 n.a. 282.6 12.852 n.a. 5.965
2.500 Spain 2 4.317 406.3 375.2 n.a. 253.2 4.014 n.a. 3.072
5.500 10 5.401 333.6 303.9 n.a. 204.8 5.098 n.a. 5.187
2.250 U.K. 2 0.362 10.8 8.5 n.a. 19.0 0.347 n.a. 0.730
3.750 10 2.024 -4.1 -1.6 n.a. 31.7 2.043 n.a. 3.456
0.250 U.S. 2 0.254 ... ... ... ... 0.262 n.a. 0.540
2.000 10 2.065 ... ... ... ... 2.059 n.a. 3.139
Source: ICAPplc
Keymoneyrates
Latest 52 wks ago
Prime rates
U.S. 3.25% 3.25%
Canada 3.00 3.00
Japan 1.475 1.475
Britain 0.50 0.50
ECB 1.25 1.00
Switzerland 0.51 0.57
Australia 4.50 4.75
Hong Kong 5.00 5.25
Libor
One month 0.27505% 0.26375%
Three month 0.53775 0.30219
Six month 0.75825 0.45719
One year 1.07890 0.78125
Latest 52 wks ago
EuroLibor
One month 1.13000% 0.76625%
Three month 1.40071 0.97250
Six month 1.64929 1.20500
One year 2.00643 1.48875
Euribor
One month 1.20500% 0.82100%
Three month 1.47200 1.02900
Six month 1.70500 1.25800
One year 2.04000 1.52500
Hibor
One month 0.26000% 0.21071%
Three month 0.33000 0.28000
Six month 0.48000 0.40000
One year 0.80143 0.73000
Offer Bid
Eurodollars
One month 0.1100% 0.2500%
Three month 0.3900 0.2900
Six month 0.5900 0.4900
One year 0.9000 0.8000
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. 0.09% 0.15%
U.K. (BBA) 0.500 0.550
Euro zone 0.48 0.68
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
sTuesday
TOTAL RETURN
Yield to Modified Month Quarter Year
Ryan Index maturity duration to-date to-date to-date 12-month
30-year Treasury 3.106% 19.34 0.87 % 2.31 % 29.91 % 28.39 %
10-year Treasury 2.091 8.96 0.20 0.14 15.53 12.25
7 Year Treasury 1.526 6.63 ... 0.27 12.50 9.68
Five-year Treasury 0.944 4.86 0.04 0.76 9.00 6.76
Ryan Index 1.387 7.45 0.17 0.09 11.86 10.10
3 Year Treasury 0.394 2.92 0.02 0.37 3.62 2.89
Two-year Treasury 0.258 1.98 ... 0.15 1.44 1.21
1 Year Treasury 0.097 0.87 0.01 ... 0.63 0.65
Six-month Treasury 0.046 0.50 0.01 0.06 0.35 0.38
Ryan Cash Index-a 0.037 0.42 0.01 0.02 0.30 0.33
Three-month bill 0.005 0.25 ... 0.01 0.16 0.20
One-month bill ... 0.08 ... ... 0.06 0.07
a-Performance of a cash investment
Source: Ryan ALM
SCANNING THE GLOBE
Asian stocks in the news
China Life Insurance Co. Ltd.
Hong Kong HK$21.75
s 4.3% or HK$0.90
Banks, insurers and property developers
outperformed on expectations of more policy
loosening.
D
2011
J F M A M J J A S O N
10
20
30
40
50 In Hong Kong dollars
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
Insurance 1.8% 5.4% -17.2%
China Life Insurance Co. Ltd. 4.3% 12.9% -34.7%
Samsung SDI Co. Ltd.
Korea 139,500won
s 4.5% or 6,000won
The stock recovered much of Tuesdays losses
that came on the back of earnings concerns.
D
2011
50000
100000
150000
200000
250000 In won
Dividend yield 0.5
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Indus Gds &Svcs 1.5% 3.5% -13.8%
Samsung SDI Co. Ltd. 4.5% 4.5% -21.0%
Sony Corp.
Japan 1,452
s 5.9% or 81
Arespite in the yen's appreciation against the
euro helped lift sentiment for exporter shares.
D
2011
750
1500
2250
3000
3750 In yen
Earnings per share, past four quarters -274.87
Dividend yield 1.7
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Personal &Hshld Gds 1.3% 2.1% -12.1%
Sony Corp. 5.9% 5.8% -51.3%
Orient Overseas (International) Ltd.
Hong Kong HK$39.15
s 9.8% or HK$3.50
Deutsche Bank said it expects container
shipping stocks to bottomout in the first
quarter of 2012.
D
2011
20
40
60
80
100 In Hong Kong dollars
Dividend yield N.A.
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Indus Gds &Svcs 1.5% 3.5% -13.8%
Orient Overseas (International) Ltd. 9.8% 14.5% -48.3%
Mitsui O.S.K. Lines Ltd.
Japan 288
s 11.2% or 29
The company announced plans late Tuesday
to jointly operate large tankers with four other
firms.
D
2011
150
300
450
600
750 In yen
Price-to-earnings ratio 63
Dividend yield 3.5
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Indus Gds &Svcs 1.5% 3.5% -13.8%
Mitsui O.S.K. Lines Ltd. 11.2% 20.5% -50.4%
Inpex Corp.
Japan 518,000
t 2.4% or 13,000
Shares retreated after first rising on news of a
deal to sell gas fromthe firms Ichthys project.
D
2011
200000
400000
600000
800000
1000000 In yen
Price-to-earnings ratio 14
Earnings per share, past four quarters 37840.47
Dividend yield 1.2
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Oil &Gas 0.7% 4.6% -11.2%
Inpex Corp. -2.4% 2.8% 17.7%
TPKHolding Co. Ltd.
Taiwan TW$385.50
t 3.9% or TW$15.50
Profit-taking took over after the shares rose
on the back of strong November revenue.
D
2011
250
500
750
1000
1250 In Taiwan dollars
Dividend yield N.A.
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Indus Gds &Svcs 1.5% 3.5% -13.8%
TPK Holding Co. Ltd. -3.9% -3.3% -43.5%
Olympus Corp.
Japan 1,128
t 5.2% or 62
An independent panel said a cover-up of $1.7
billion in losses spanned the tenures of three
CEOs.
D
2011
300
900
1500
2100
2700
In yen
Dividend yield 2.7
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Health Care 0.8% 2.6% -7.3%
Olympus Corp. -5.2% 10.0% -53.9%
LGChemLtd.
Korea 328,500won
t 5.6% or 19,500won
The company disputed market chatter that it
may spin off its battery business.
D
2011
150000
300000
450000
600000
750000 In won
Dividend yield 0.7
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Chemicals 1.3% 3.2% -8.1%
LGChemLtd. -5.6% 1.9% -15.4%
HTC Corp.
Taiwan TW$428.00
t 6.6% or TW$30.00
The handset maker said sales fell 30%in
November fromOctober and 20%froma year
earlier.
D
2011
350
700
1050
1400
1750 In Taiwan dollars
Dividend yield 8.6
PERCENTAGE CHANGE
Daily 1 wk. 52 wks
Technology 1.1% 2.9% -12.9%
HTC Corp. -6.6% -10.3% -50.6%
Movingthe
markets
At right, Japans benchmark stock index and
the biggest movers among the larger Asian
stocks indexes and stocks Wednesday. 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 8722.17
s 1.71% or 147.01
D
2011
5000
7500
10000
12500
15000
Volume Change
Stock in millions Close Net %
Mizuho Fin 137.81 106 3 2.91
MitsuUFJFin 54.42 348 4 1.16
Toshiba 38.98 343 3 0.88
Mitsui O.S.K. 37.23 288 29 11.20
NomuraHldgs 34.73 262 5 1.95
HangSeng
Hong Kong 19240.58
s 1.58% or 298.35
D
2011
12000
18000
24000
30000
36000
Volume Change
BankofChina 541.35 2.86 0.10 3.62
ChinaConstructnBk 330.51 5.71 0.06 1.06
Ind&Comml 323.01 4.91 0.14 2.94
PetroChina 94.96 10.04 0.06 0.60
ChinaPetro&Chem 74.31 8.19 0.05 0.61
Straits-Times
Singapore 2782.55
s 1.21% or 33.31
D
2011
1500
2250
3000
3750
4500
Volume Change
GoldenAgriRes 90.09 0.72 0.02 2.13
NobleGroupLtd 44.49 1.22 0.005 0.41
GentingSingapore 39.42 1.55 0.02 0.98
SingTel 20.74 3.19 0.07 2.24
NeptuneOrient 15.45 1.16 0.06 5.94
ASX200
Australia 4292.50
s 0.72% or 30.50
D
2011
2000
3000
4000
5000
6000
Volume Change
GoodmanGp 27.43 0.61 0.01 2.02
BlueScopeSteel 26.77 0.40 -0.01 1.25
Telstra 19.31 3.25 0.04 1.09
LynasCorp 18.54 1.34 0.08 6.35
InvestaOfficeFund 16.29 0.62 0.01 1.65
Increased risk tolerance and a respite in the
yen's appreciation against the euro helped
beaten-down technology and chip-related
shares.
The index rose for the fourth time in five
sessions. Banks, insurers and property devel-
opers outperformed amid expectations of
more policy-loosening from Beijing.
Neptune Orient Lines lead the gains with a
5.9% rise on hopes that possible market-
boosting measures in Europe will help con-
tainer companies customers.
Shares rose for the seventh time in eight
sessions, but some thought gains wouldve
been stronger if banks hadnt held back on
passing on Tuesdays interest-rate cut.
MARKETS LINEUP
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HEARD ON THE STREET
Email: heard@wsj.com FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard
Chinas Gray Budget
Colors Growth Picture
Chinas solid fiscal position is
enough to make debt-ridden Euro-
pean and U.S. governments green
with envy. But turning strong public
finances into a pro-growth fiscal
policy wont be straightforward.
Economists focus on the budget
balancethe difference between
government revenue and expendi-
tureas the main measure of the
impact of fiscal policy on growth. In
2012, many expect Chinas Ministry
of Finance to spend more than it
takes in, run a budget deficit and
buoy domestic demand. Wang Tao,
China economist at UBS, expects a
fiscal deficit of 2.5% of gross domes-
tic product in 2012, up from an esti-
mated 2% in 2011.
But in China, the budget balance
doesnt tell the entire story on the
governments impact on growth.
An enormous volume of gray rev-
enue raised by local governments
isnt included in the numbers. The
most important omission is revenue
from land saleseffectively a tax on
real-estate developers and home
buyers. Land revenue of 2.9 trillion
yuan ($457.3 billion) in 2010 was
equal to 7.3% of GDP.
Land isnt the only joker in
Chinas fiscal pack. Local officials
rake in revenue by inventing new
fines and administrative charge.
Zhou Tianyong, a researcher at
Chinas Central Party School, esti-
mated that in 2007 fines and fees
added one trillion yuan to the tax
bill for Chinas enterprises, the
equivalent of 4% of GDP that year. In
the absence of reforms, that number
is unlikely to have changed much.
In 2010, the Ministry of Finance
said off-budget funds registered a
320 billion-yuan surplus, undoing al-
most a third of the one trillion yuan
budget deficit.
Looking at the stated budget
numbers, the fiscal stimulus was
2.5% of GDP. Incorporating the off-
budget numbers it was just 1.7%.
When the budget for 2012 is
rolled out in the new year, the Min-
istry of Finance will likely promise
bigger deficit-increasing spending to
support growth. But with so much
action off the books, the full impact
is harder to predict. Tom Orlik
Australia on the Verge
Of Big Natural-Gas Pains
The rush to tap Australias re-
serves of liquefied natural gas has
gathered steam in the past year.
Now for some serious growing
pains.
Seven LNG projects under con-
struction are expected to cost 140
billion Australian dollars (US$143
billion). By 2020, Australia could
produce one-fourth of the worlds
LNG, up from less than a tenth to-
day, making it one of the worlds top
two producers alongside Qatar.
The price, though, will be high.
Resource workers are expensive and
will become more so as the market
for labor remains tight. Woodside
Petroleum has seen cost overruns of
US$3 billion at its Pluto LNG project
in Western Australia, partly because
of labor shortages.
The soaring Australian dollar, up
65% against the U.S. dollar since the
worst of the financial crisis, is also
pushing up the cost of business.
Australia-listed Oil Search said
last month the dollars rise had
pushed up the budget on its Papua
New Guinea project, operated by
Exxon Mobil, by US$700 million, or
nearly 5%. BernsteinResearch says
the cost per ton of Australian LNG
could average as much as US$4,000,
compared with about US$1,000 at
Apaches Kitimat project in western
Canada.
For Australias LNG projects, poli-
tics are an unwelcome obstacle.
There are moves at federal and state
levels that could limit gas extraction
on land deemed critical to the coun-
trys agricultural production. That
shouldnt affect existing projects, al-
though it could temper expansion
which actually could help Australia
avoid the worst labor shortages.
Meanwhile, pressure is building
to get the Australian projects up and
running soon.
Qatar, which produces some of
the worlds lowest-cost LNG, has a
moratorium on further development
of its North field in order to pre-
serve its longevity. But the ban ends
in 2013. Discoveries in Africa and
the Mediterranean will also affect
supply over time. In China, theres
more shale gas than in the U.S., ac-
cording to the U.S. Energy Informa-
tion Administration. Thats a lot of
supply, though there are questions
on how quickly China can develop
the resources.
Still, brokerage Jefferies says
that at the low end of LNG demand
forecasts, there could be an over-
supply starting in 2015. With the
prospect of more, cheaper gas only
a few years away, Australias LNG
producers are in a costly race
against time.
Cynthia Koons
Tough Comparison
Government revenue as
a percentage of GDP in 2010
Sources: International Monetary Fund; Caijing
50
0
10
20
30
40
%
F
r
a
n
c
e
U
.
S
.
S
o
u
t
h
K
o
r
e
a
I
n
d
i
a
W
o
r
l
d
C
h
i
n
a
a: Including land and
other off-budget revenue
b: Excluding land and
other off-budget revenue
a
b
ECBs Potential
For Radical Action
The European Central Bank may
be headed toward uncharted terri-
tory Thursdaybut not in terms of
bond purchases. Given Fridays cru-
cial euro-zone summit, President
Mario Draghi seems unlikely to take
any action that will reduce the
bond-market pressure on politicians
to act to stem the crisis. A rate cut
and more liquidity for banks seem
more likely outcomes, but could be
radical in their own way.
The markets expect a quarter-
point cut to 1%, the level the ECB
held at from May 2009 to April
2011, fully unwinding the ill-advised
increases of earlier this year. But
given a seemingly more proactive
ECB under Mr. Draghis leadership,
ongoing market turbulence and poor
economic data, some argue there is
a chance of a half-point reduction to
0.75%a record low. That, however,
raises some complications.
In addition to the headline refi-
nancing rate, the ECB also sets rates
for banks to deposit and borrow
cash overnight, currently at 0.5%
and 2%, respectively. A quarter-
point cut would reduce the deposit
rate to 0.25% and the lending rate to
1.75%. The ECB has been unwilling
to cut deposit rates further, arguing
that it could damage the functioning
of the interbank market, a key part
of the monetary transmission mech-
anism. A half-point cut would likely
require the corridor between the
three rates to narrow, potentially re-
ducing the penalty cost for banks to
deposit cash with the ECB rather
than lend it out.
Still, that would only recognize
the reality that the interbank mar-
ket is now all but frozen. Banks have
a massive 324.5 billion ($434.86
billion) stashed in the overnight fa-
cility and borrowed $50.1 billion for
three months Wednesday, much
more than expected, after the cost
of official dollar funding was cut
last week.
Markets would welcome more
radical ECB action. But neither of
these decisions will reduce the pres-
sure on governments to develop the
new fiscal compact that Mr.
Draghi has made clear is the price
to be paid for ECB support. Given
government backsliding in the past,
that would be a concession too far.
Richard Barley
Woodside has faced cost overruns.
P
u
b
lis
h
e
d
b
y
D
o
w
J
o
n
e
s
P
u
b
lis
h
in
g
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o
m
p
a
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y
(
A
s
ia
)
.
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r
in
t
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d
in
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o
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g
K
o
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b
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u
p
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r
fla
g
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r
in
t
in
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a
n
d
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o
m
m
u
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ic
a
t
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t
d
.,
1
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,
8
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h
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in
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t
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s
t
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T
s
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w
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r
in
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d
in
In
d
o
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s
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b
y
P
T
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ra
m
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d
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in
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ro
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p
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a
la
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ra
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e
la
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a
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d
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p
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0
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d
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o
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Ilb
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7
,
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a
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1
9
9
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u
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is
t
ra
t
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o
.:
S
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lK
A
0
0
0
2
0
(
D
a
ily
N
e
w
s
p
a
p
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r
)
,
P
u
b
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h
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r
/
E
d
it
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:
S
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,
P
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.
P
r
in
t
e
d
in
M
a
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s
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b
y
K
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L
P
r
in
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in
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o
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d
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.
B
h
d
.
(
R
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o
:
2
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5
0
6
0
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A
)
L
o
t
1
0
&
1
2
,
J
a
la
n
M
o
d
a
l
2
3
/
2
,
S
e
k
s
y
e
n
2
3
K
a
w
a
s
a
n
M
ie
l
P
h
a
s
e
8
,
4
0
0
0
0
S
h
a
h
A
la
m
,
S
e
la
n
g
o
r,
M
a
la
y
s
ia
.
P
r
in
t
e
d
in
P
h
ilip
p
in
e
s
b
y
F
E
P
P
r
in
t
in
g
C
o
r
p
o
ra
t
io
n
,
3
8
1
7
M
a
s
c
a
r
d
o
S
t
.,
C
o
r
n
e
r
M
e
t
ro
p
o
lit
a
n
A
v
e
.,
P
a
s
o
n
g
T
a
m
o
,
M
a
k
a
t
i
C
it
y
.
P
r
in
t
e
d
in
S
in
g
a
p
o
re
b
y
K
H
L
P
r
in
t
in
g
C
o
.
P
t
e
L
t
d
.,
5
7
L
o
y
a
n
g
D
r
iv
e
,
S
in
g
a
p
o
re
5
0
8
9
6
8
.
P
r
in
t
e
d
a
n
d
d
is
t
r
ib
u
t
e
d
in
T
a
iw
a
n
b
y
T
h
e
C
h
in
a
P
o
s
t
,
8
F
u
S
h
u
n
S
t
re
e
t
,
T
a
ip
e
i
1
0
4
.
P
r
in
t
e
d
in
T
h
a
ila
n
d
b
y
N
a
t
io
n
M
u
lt
im
e
d
ia
G
ro
u
p
P
u
b
lic
C
o
.,
L
t
d
.,
1
8
5
4
B
a
n
g
n
a
-
T
ra
d
R
o
a
d
,
(
K
.M
.
4
.5
)
,
P
ra
k
a
n
o
n
g
,
B
a
n
g
k
o
k
1
0
2
6
0
.
P
u
b
lis
h
e
d
a
n
d
p
r
in
t
e
d
o
n
b
e
h
a
lf
o
f
t
h
e
W
a
ll
S
t
re
e
t
J
o
u
r
n
a
l
In
d
ia
P
u
b
lis
h
in
g
P
v
t
L
t
d
,
5
1
7
B
W
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ld
T
ra
d
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C
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re
,
B
a
ra
k
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0
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b
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t
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c
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7
,
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a
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a
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,
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ia
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re
a
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p
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i
M
u
m
b
a
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0
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7
1
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(
M
a
h
a
ra
s
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ra
)
,
In
d
ia
,
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d
it
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:
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D
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:
+
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(
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/
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re
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F
A
C
S
IM
IL
E
E
D
IT
IO
N
.
B
l
o
o
m
b
e
r
g
N
e
w
s
The world's highest concentration of
millionaire households is in
Whether it's for accumulation of wealth, sustained economic
development or flourishing tourism, Southeast Asia continues to
establish itself as one of the most dynamic regions in the world.
For breaking news, new features and expanded coverage of
Southeast Asia's business, finance, real estate, culture and travel,
visit the new Southeast Asia section of WSJ.com today.
SINGAPORE
WSJ.com/SEA
S O U T H E A S T A S I A S E C T I O N F R O M
2
0
1
1
D
o
w
J
o
n
e
s
&
C
o
m
p
a
n
y
,
I
n
c
.
A
l
l
r
i
g
h
t
s
r
e
s
e
r
v
e
d
.

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