Subpoena in U.S. Names 35 in China: Firms Return More Cash To Shareholders

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IN DEPTH Pages 12-13
ASIA EDITION
VOL. XXXIX NO. 188
OPINION:
China Becomes
An Abnormal
Great Power
Page 11
(India facsimile Vol. 6 No. 247)
THURSDAY, MAY 28, 2015
WSJ.com
Subpoena in
U.S. Names
35 in China
BY NED LEVIN
EUROPEAN PRESSPHOTO AGENCY
SK. MENPEN R.I. NO: 01/SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998
Australia: A$6.00(Incl GST), Brunei: B$8.00, China: RMB28.00, Hong Kong: HK$23.00(Incl Macau), India: Rs100.00, Indonesia: Rp25,000(Incl PPN), Japan: Yen620(Incl JCT), Korea: Won4,000,
MCI (P) NO. 124/10/2014
Malaysia: RM7.50, Pakistan: Rs140.00, Philippines: Peso100.00, Singapore: S$5.00(Incl GST), Sri Lanka: Slrs500(Incl VAT), Taiwan: NT$110.00, Thailand: Baht80.00, Vietnam: US$4.50
KDN PP 9315/10/2012 (031275)
Firms Return More

Cash to Shareholders
Walter De Gregorio, spokesman of the worlds governing body for soccer, answers journalists questions in Zurich on Wednesday after
seven officials of the organization were arrested on U.S. corruption charges ahead of its annual congress at its Swiss headquarters.
Corruption Charges Blast FIFA
ZURICHSwiss police arrested seven FIFA officials

here early Wednesday, as
Swiss and U.S. authorities unveiled separate, sweeping
probes of alleged corruption
over more than two decades
at the worlds top governing
body for soccer.
The U.S. Justice Department said it charged nine cur-
Inside
By Aruna Viswanatha,
Joshua Robinson,
Andrew Morse
and Christopher M.
Matthews
rent and former FIFA officials
and five others on broad corruption charges, accusing
them of various schemes over
Sony purchases an
optical-data-storage
startup from a former
Facebook executive.
Business..................17
abroad.
In a sweeping, 161-page indictment that lists 25 co-conspirators in addition to the 14
named defendants, prosecutors describe a wide-ranging
scheme that spanned decades
and involved increasingly
large payments as soccer
grew more commercially valuPlease turn to page 14
Hoteliers Daring Letter

To Premier Li Hits Home
BY ALYSSA ABKOWITZ
An EU proposal to
resettle tens of
thousands of refugees
from Syria and Eritrea
across Europe meets
with strong resistance
from some
governments.
World News...............4
24 years to enrich themselves

through FIFA.
Attorney General Loretta
Lynch said the individuals indicted had corrupted the
business of world-wide soccer
to serve their interests and to
enrich themselves, describing the alleged scheme as
rampant, systemic, and deeprooted in the U.S. and
BEIJINGTwo
months
ago, a frustrated Chinese hotelier named Wu Hai posted
online a letter to the countrys prime minister comparing private companies to
slaves and entrepreneurs like
him to the forgotten offspring
of prostitutes.
China, Mr. Wu wrote, is a
country dominated by big
brothersmeaning powerful
government officials and
bloated state-owned enterprises that get preferential
treatment. After our left
cheek has been slapped by the
big brothers, we sons of
bitches can only turn our
right cheek for another slap,
the letter said. When the letter when viral, he feared his
company would be shut down.

Instead, Mr. Wu has become an unlikely poster boy
for Beijings efforts to overhaul its economy in the face
of slowing growth. He has received glowing portrayals in
Chinas state-run media, and
earlier this month he was invited to the Chinese leaderships tightly controlled
Zhongnanhai compound in
Beijing to participate in a
panel among top economic officials on streamlining bureaucracy. He has since become an Internet celebrity in
China and fields requests to
speak at various gatherings.
The most important thing
is changing the mind-set of
the government, Mr. Wu
said. Mind-set change is
harder than concrete solu-
tions, added the 46-year-old,

whose hotels are known for
offbeat themes, with entrances based on Star Wars
and guest room dcor evoking
the 2010 thriller Inception.
Mr. Wus letter to Premier
Li Keqiang landed amid a
push by the government to
encourage entrepreneurs as it
looks to wean the country
away from its dependence on
state spending and government control.
Economists say China
needs to give greater clout to
private capital and companies
if it wants to ensure continued growth in coming years.
Underscoring the urgency,
Chinas economy last year
grew at its slowest rate since
the global financial crisis six
Please turn to page 14
U.S. government investigators are seeking information

about Wang Qishan, the powerful official leading Chinas
anticorruption campaign, in
connection with their probe
of J.P. Morgan Chase & Co.s
hiring of relatives and associates of Chinese government
officials.
The U.S. Securities and Exchange Commission issued a
subpoena in late April to the
bank requesting all of its
communications related to 35
mostly high-ranking Chinese
government officials. Mr.
Wangs name was first on the
list in the subpoena, a copy of
which was reviewed by The
Wall Street Journal. Prosecutors at the U.S. Department of
Justice also have requested
information about Mr. Wang,
according to people familiar
with the matter.
The request for information regarding some of
Chinas highest-ranking offi-
cials could strain U.S.-China

relations. Previous U.S. requests have unearthed accounts of Chinese government
officials lobbying J.P. Morgan
to employ relatives and
friends. According to people
familiar with the probe, investigators already have focused
on the banks employment of
the son of Chinas commerce
minister, Gao Hucheng, who
offered to help the bank if it
let his son hold onto his job at
J.P. Morgan, according to
emails between J.P. Morgan
bankers. Mr. Gao also is on
the list.
Authorities are carrying
out a criminal investigation
into J.P. Morgan and other
banks regarding a law that
bans companies from bribing
foreign government officials.
Regulators arent investigating the Chinese officials
themselves, and there is no
evidence of wrongdoing by
Mr. Wang, Mr. Gao or others
on the list. Neither official rePlease turn to page 22
Oracle Cloud
Applications
HCM
Human Capital
Recruiting
Talent
CRM
Sales
Service
Marketing
ERP
Financials
Procurement
Projects
Supply Chain
More Enterprise SaaS Applications

Than Any Other Cloud Services Provider
Copyright 2015, Oracle and/or its affiliates. All rights reserved.
2 | Thursday, May 28, 2015
HK JP ID
MU
KO
ML PH SI
TL
TW
* *
IN
THE WALL STREET JOURNAL.
PAGE TWO
Whats News
Inside
World News: Syrian

offshoot of al Qaeda
shifts tactics. 4
AGENCE FRANCE-PRESSE/GETTY IMAGES
Iraqi soldiers take part in a training exercise led by the Spanish army and under the guidance of the U.S. military at the Basmaya camp in Baghdad on Wednesday.
Business & Finance
brand, hoping to attract investment or a higher valuation. 16
n Japan is loosening rules on

pensions, luring U.S. investment
managers who want to oversee a
slice of the countrys trillions of
dollars of retirement money. 15
n Broadcom is in talks to be
bought by Avago Technologies, in
what would be the latest in a recent string of mergers in the
semiconductor industry. WSJ.com
n Michael Kors posted its first

sales decline as a public company,
helping send the accessories
brands stock down 23% in afternoon trading in New York, even as
its profit increased. 16
n Samsung Groups maneuvers

to tighten the corporate grip of
heir apparent Jay Y. Lee risk inflaming concerns about corporate
governance in South Korea. 17
n An Airbus jet flown by Singapore

Airlines temporarily lost power in
both engines Saturday on a flight
to Shanghai from Singapore. 18
n British car maker Aston Martin
wants to be perceived as a luxury
n Apple will likely issue about

$1.6 billion of the companys first
yen-denominated bonds in June. 20
n USJ Co., operator of the Universal Studios Japan theme park in
Osaka, plans to list in Tokyo as
early as September. 22
n A senior Bank of England official received emails tied to an alleged campaign to rig benchmark
interest rates, according to evidence at a London trial. 22
n McDonalds CEO said his turnaround plan will hinge on many
small things, and the company
plans to stop disclosing monthly
sales figures beginning July 1. 16
World-Wide
n Saudi Arabia sanctioned two
Hezbollah commanders allegedly
involved in regional terrorist operations, in a sign of the kingdoms growing coordination with
the U.S. Treasury Department.
n Express Scripts is seeking

deals with pharmaceutical companies that would set pricing for
some cancer drugs based on how
well they work. 15
n Jens Stoltenberg, NATOs secretary-general, said in a speech

that he is deeply troubled by Russias escalating rhetoric about its
nuclear weapons as well as
stepped-up flights by its nuclearcapable bombers. WSJ.com/World
n Investors are pouring money

into upscale youth hostels, betting
that the next big market in hospitality will be the cost-conscious
backpacking crowd. 21
n The Internal Revenue Service

said identity thieves used one of
its online services to obtain prioryear tax-return information for
about 100,000 U.S. households. 6
ONLINE TODAY
Video
live.wsj.com
Two daughters of
blues legend B.B.
King say they
believe he was
poisoned and are
seeking a formal
inquiry.
China Real Time
wsj.com/chinarealtime
Photos of the Day
China has to
contend with
concerns about its
legal system in its
battle to bring
corrupt fugitives
back to face trial.
Japan Real Time
wsj.com/japanrealtime
The completion of
Japans $90 billion
maglev train is still
more than a decade
away, but the toy
version is available
now for $300.
Images behind the stories

making news world-wide
wsj.com/photosoftheday
Capital Account:
Negative quarters
likely in U.S. 6
Personal Technology:
Why LGs Android
watch trails Apple. 7
THE WALL STREET JOURNAL
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Thursday, May 28, 2015 | 3
WORLD NEWS: ASIA
China Tests Neighbors
BY TREFOR MOSS
AND GORDON LUBOLD
Chinas promise to beef up its

navy to prevent further meddling
and provocative actions by rivals
in the South China Sea threatens to
fuel deeper mistrust among many of
its neighbors.
The Philippines contests some of
Chinas claims in the South China
Sea, but it has virtually no modern
military equipment with which to
defend its maritime
ANALYSIS territory.
Vietnam, another
rival claimant, is in better shape: It
is already investing in some advanced capabilities, including modern fighter jets, submarines and
land-attack cruise missiles, all from
Russia. But even after these new
weapon systems are in place several
years from now, Beijing would still
enjoy overwhelming superiority in
any confrontation with Hanoi.
But Chinas ability to overcome
its larger potential rivalsnotably
Japan and the U.S.is debatable.
The Peoples Liberation Army has
around 2,100 fighter or bomber aircraft in its hangars, according to the
U.S. Department of Defense, but only
a few hundred of those are considered modern aircraft. The countrys
only aircraft carrierwhile a huge
leap forward for the Chinese navy
is still seen mainly as a practice
platform for a future carrier fleet.
Beijings plan, announced Tuesday, stirred little reaction out of officials in Washington.
I dont think there were any
surprises for us in the latest white
paper, a senior U.S. defense official
said. The trends described in that
paper are trends that weve been
following for some years.
Security experts said the plan reflects Beijings increasing comfort in
projecting power in the South China
Sea.
Still, both Chinas air and naval
forces are still learning how to operate and project power far away from
Power Projections
China aims to boost its maritime forces, but it already has an edge over its rivals
in terms of the sheer size of its air and naval eets.
Aircraft carriers
China
Japan
U.S. Carrier
Strike Group Vietnam
73
47
58
16
0 to 2
2,100
353
54
217
Philippines
=1
Destroyers/
frigates
=1
Submarines
=1
Fighter/
bomber aircraft
= 10
Sources: U.S. Department of Defense, World Air Forces 2015 report,

Japan Self-Defense Force (Japan ghter)
their own coast. The airstrips China

is building in the South China Sea
would help the PLA air force to sustain operations hundreds of miles
from the mainland.
A recent Pentagon review of
Chinas military modernization
noted, however, China is investing
in capabilities designed to defeat
adversary power projection and
counter
third-partyincluding
U.S.intervention during a crisis or
conflict.
In practice, that means hundreds
of ballistic and cruise missiles positioned near the coast to deter Japanese or American warships from
coming anywhere near Chinese territory. China has a substantial submarine fleet as well, piling on more
risk for enemy ships.
The U.S. Navys Carrier Strike
Group 5, based in Yokosuka, Japan,

is still way ahead of the competition
when it comes to projecting power
across the Asia-Pacific region. And
Japans navy, with a fast-growing
submarine force of its own, is still a
match for Chinas.
Asked about Chinas white paper
and its island construction at a Chinese Foreign Ministry briefing on
Wednesday, spokeswoman Hua Chunying stressed the countrys longstated position that its claims in the
South China Sea have adequate historical and legal bases.
The cause of tensions in the
South China Sea isnt Chinas island
construction, she said. As we have
repeatedly said, China is conducting
legitimate, reasonable and lawful
construction work within its own
territory.
Burmese Lash Out

Over Migrant Crisis
BY SHIBANI MAHTANI
AND MYO MYO
YANGONMore than three hundred people, including dozens of

monks, took to the streets of Yangon
Wednesday to protest growing international pressure on Myanmar to
improve the way it treats the stateless Rohingya minority at the center
of Southeast Asias migrant crisis.
The protestvociferous though
smallillustrates a swelling backlash among some Burmese against
what they view as foreign meddling
in the countrys affairs in the run-up
to national elections later this year.
Over 3,500 Rohingya refugees
and migrants from Bangladesh have
washed up on the shores of Malaysia and Indonesia in recent weeks,
many of them abandoned by humantrafficking gangs. The United Nations says thousands more might
still be at sea and top diplomats
from the U.S. and elsewhere have
pointed to Myanmars treatment of
its Muslim Rohingya population as
one of the main factors encouraging
many of them to attempt the dangerous voyage to Malaysia.
In a news conference in Yangon
last week, U.S. Deputy Secretary of
State Antony Blinken spoke for
many countries in the region when
he said Myanmar should shoulder
some blame for the crisis and work
toward providing full citizenship to
the countrys Rohingya. Its government will likely come under further
pressure at an international meeting
on how to tackle the problem in
Bangkok on Friday.
Demonstrators marching through
Yangon, Myanmars largest city,
however, wore shirts saying Boat
People are not Myanmar, Stop Blaming Myanmar. Some accused the
U.N. and international media of exaggerating the plight of the migrants.
Ashin Wilartha, a monk from
Dala township south of Yangon said

he believed the protest to be of
concern to our national affairs and
had encouraged others from his
monastery to take part. Another
protester, Ma Sandy, said the issue
of the migrants should be a global
one. If they say it is about human
rights, why is it only us who are responsible? The international community should not blame Myanmar
alone, she said.
The Rohingya issue is a thorny
one for Myanmars government,
which gradually began introducing
democratic reforms after the military ceded its half-century-long hold
on power in 2011.
Since the gradual transition to
democracy began, anti-Muslim and
especially anti-Rohingya sentiment
in the country has flared. Many in
the majority Buddhist country regard Rohingya as illegal immigrants
from Bangladesh, arguing that they
should continue to be denied citizenship, despite many tracing their
ancestry in Myanmar back generations. Scores of Rohingya were
killed in sectarian clashes in western Myanmar in 2012 and 140,000
others lost their homes and remain
confined to squalid camps.
Buddhist activists are now attempting to push Rohingya and
other Muslims further to the sidelines ahead of national elections due
November, and many political analysts say neither President Thein
Seins government nor opposition
leader and Nobel laureate Aung San
Suu Kyi has stood up to their rising
influence ahead of the vote.
Last week, the president signed a
population-control law that humanrights groups say could be used to
curb Rohingya population growth.
The law gives regional governments
the right to enforce birth spacing
and mandate some communities to
only have a child once every three
years.
In Hong Kong, Tiananmen Vigil Highlights a Rift

HONG KONGEvery year for a
quarter-century, large Hong Kong
crowds have commemorated the
1989 crackdown on student protesters in Beijings Tiananmen Square.
This June 4, some young Hong
Kongers say they wont join in.
Much like in Beijing in 1989, student groups were at the forefront of
the monthslong pro-democracy protests that paralyzed much of Hong
Kong last year and that challenged
Beijing on how Hong Kong should
elect its leader.
Unlike in Beijing, the Hong Kong
protests ended peacefully, though
with no visible concession from the
Chinese government. What the rallies also did was lay bare a growing chasm between old and young
over Hong Kongs identity and relationship with Beijing. That rift is
now playing out over the annual
Tiananmen vigil, with some student groups saying Hong Kongers
should focus on democratic rights
in the territory rather than on the
mainland.
The University of Hong Kongs
student union will organize its own
June 4 event to reflect on the future of democracy in Hong Kong.
Separately, the Hong Kong Federation of Students, the main group
leading last years protests, said that

for the first time it wont participate
in the vigil as an organization.
The student groups decision is
baffling to many democracy supporters in the city, who see the annual candlelight vigil in Hong Kongs
Victoria Park to remember the Tiananmen victims as an important
civic dutynot least because its the
only mass commemoration of the
event in the Greater China universe.
I cannot understand [the students] thinking, said Jack Choi, a
36-year-old who works in finance
and has been going to the vigil on
and off since 2000. Its two separate issues. Our mother is China, if
the mother is not free, how can the
child be?
I feel very sad, said Claudia
Mo, an opposition lawmaker and
former journalist who was in Beijing
during the 1989 crackdown. Its a
watershed year in my life, she said.
To call the ocean of candlelight
ceremonial or perfunctory, its just
not fair.
But to Cameron Chan, 20, a social-sciences student at the University of Hong Kong, it is precisely
that the annual vigil has become
such a fixture that is the problem.
Every year its the same, we
sing the same songs and watch the
same videos. For some people, going
to the vigil is a bit like clocking in,

Mr. Chan said. Should we continue
looking back on a historical event,
or focus on the more urgent situation here now?
The sense of a local Hong Kong
identity has gathered traction since
last years protests, which erupted
after Beijing said only prescreened
candidates could run to be the citys
chief executive. The election plan
will be put to a vote in Hong Kongs
legislature in late June and is expected to be rejected by pro-democ-
racy lawmakers.
The organizer of the annual vigil,
the Hong Kong Alliance in Support
of Patriotic Democratic Movements
in China, has responded to criticisms by publishing a 40-page pamphlet last week with answers to
questions such as, What has the Alliance achieved in these 26 years?
and Why do we need to build a
democratic China?
Does supporting building a
democratic China get in the way of
building a democratic Hong Kong? It
PHILIPPE LOPEZ/AGENCE FRANCE-PRESSE/GETTY IMAGES
BY ISABELLA STEGER
Hong Kongers have gathered in the citys Victoria Park for a quarter-century to
mark the Tiananmen crackdown. Above, the vigil on June 4, 2013.
doesnt, said Lee Cheuk-yan, a lawmaker and former chairman of the

group.
But marking a separation with
the mainland is fundamental to the
identity of young Hong Kongers,
said Sam Crane, who teaches Chinese politics at Williams College in
Williamstown, Mass. He compared it
to students in Taiwans Sunflower
Movement, who have opposed
closer ties with Beijing.
Young people in Taiwan and
Hong Kong feel they are ethnically
Chinese but politically something
else, Mr. Crane said. They are signaling, We have to take care of our
own business.
A poll by the University of Hong
Kong released in December found
that of around 1,000 people surveyed, 67% identified themselves as
Hong Kongers or Hong Kongers in
China, compared with 33% who
identified themselves as Chinese or
Chinese in Hong Kong. The poll said
that those who identified as Chinese
or as citizens of China were at their
lowest point since 2008.
Tiananmen exile Zhou Fengsuo,
47 years old, who now lives in San
Francisco, said in his mind the June
4 vigil is part of Hong Kongs identity. But I understand if young people may not want to carry [that burden] anymore.
WORLD NEWS
Europe Plans for Migrants Under Fire

BRUSSELSA European Union
proposal to resettle tens of thousands of refugees from Syria and Eritrea across Europe met with strong
resistance from some governments,
raising doubt about its prospects.
At the same time, another EU
plan for dealing with its refugee crisisa naval operation in the Mediterranean Sea to destroy the vessels
that smuggling gangs use to transport migrantscame in for criticism
from United Nations Secretary-General Ban Ki-moon.
During a visit Wednesday to the
headquarters of the European Commission, the blocs executive, Mr.
Ban said he was skeptical about any
military response to Europes refugee problem.
But he did call the commissions
plans to resettle 40,000 Syrians and
Eritreans arriving in Italy and
Greece in other EU countries, and to
take in a further 20,000 refugees, a
step in the right direction.
Mr. Ban said that I encourage
EU member states to show compassion as they consider this important
proposal to share their resettlement
responsibilities. This can enable the
European Union to address the dramatically increasing flows of people
while setting an example for other
regions of the world facing similar
challenges.
The plans are subject to approval
by national capitals, however, many
of which face growing anti-immigrant sentiment among voters and
see the proposals as encroaching on
their sovereignty.
Countries would absorb a certain
number of refugees, calculated
based on factors such as population
and gross domestic product.
According to three European dip-
ASSOCIATED PRESS
BY VALENTINA POP
Migrants gather outside an abandoned hotel in Kos, Greece, on Wednesday.

lomats, Francewhose support will
be crucial for the proposal to pass
opposes the plans, mainly due to a
domestic backlash against migration
stoked by the far-right National Front.
Czech Prime Minister Bohuslav
Sobotka said that his country rejects the setting of mandatory quotas, and noted that it has already
accepted many refugees from
Ukraine, where the war has forced
1.5 million people to leave their
homes.
We support the right of countries to freely choose the scope of
their solidarity, which we have also
demonstrated by our decision to
provide a home for a number of Syrian families, Mr. Sobotka said.
Several other governments, including Spain, Poland, the Baltic
states and Hungary, have also spoken against national quotas in the
past. The U.K., Ireland and Denmark
have special arrangements exempting them from such policies.

The commission denied the proposed mechanism would result in
quotas and stressed that the granting of asylum remains a sovereign
right of each member state.
We never used the word quota.
All it is about is solidarity. It is then
up to member states to decide to
how many people they grant refugee
status, EU Migration Commissioner
Dimitris Avramopoulos said.
To sweeten the deal, the commission proposes that receiving countries get 6,000 ($6,550) per refugee
accepted.
Interior ministers from all EU
countries will vote on the plans June
16. Unanimity isnt required. If
France and Germany support it, it
will fly, another European diplomat
said.
The plans also include guidelines
to reassure countries such as Sweden and Germany, preferred destinations for asylum seekers, that Italy
and Greece will register and fingerprint all migrants arriving on their
shores.
Under EU law, migrants who seek
asylum have to be fingerprinted and
registered in the first European
country of arrival. But in recent
years, Italy and Greece have allowed
people to move to other EU countries without being registered.
In parallel, the EUs border
agency, Frontex, said that it had expanded the zone of operations of its
Mediterranean mission, Triton, to
220 kilometers south of Sicily. According to Mr. Avramopoulos, Triton
is now covering what Italys searchand-rescue mission Mare Nostrum
covered last year, before it was shut
down due to budgetary reasons.
Human traffickers have been taking advantage of the lawlessness in
Libya to launch overcrowded boats
full of desperate migrants on perilous journeys across the Mediterranean.
Italy alone expects to see as
many as 200,000 migrants reach its
shores this year. More than 1,600
people have perished already this
year, according to aid groups.
The EU is seeking U.N. Security
Council and Libyan backing for its
plan to search, capture and destroy
vessels used by the smuggling
gangs.
Speaking in Brussels alongside European Commission President JeanClaude Juncker, Mr. Ban said any military action would have limited
effectiveness and that destroying vessels could deprive migrants of one of
the limited options for survival.
Mr. Ban said he has urged governments to tackle the migration
challenge in a comprehensive way,
including providing legal channels

for migration and action to tackle
the reasons people flee their countries.
Of course I support...strengthening the military capacity in searching and rescuing the people, he
said. Our priority should be given
to lifesaving.
He added there may be some
other ways to tackle the smuggling
gangs.
The commission is also looking
at increasing the rate of return to
home countries of people who have
been refused asylum or other legal
forms of residence.
Only 40% of the people who
should be returned are currently being sent back, according to the commission. Frontex will be involved
more in organizing such returns.
The commission also seeks to
sign readmission agreements with
sub-Saharan countries such as Mali
and Senegal by the end of 2015, to
increase the return rate. That could
spur North African countries, notably Morocco, to follow suit.
The commission for the past 15
years has tried to sign a readmission
agreement with the government
there.
The commission proposed that
24,000 refugees be moved from Italy
and 16,000 from Greece. It limited
the program to people from Syria or
Eritrea because people from those
countries had a high rate of winning
asylum across the EU last year.
Human Rights Watch researcher
Judith Sunderland called the relocation proposal positive, adding that it
was disheartening to see so many
governments come out against it.
But she said that the numbers being
considered are far too low.
Laurence Norman
contributed to this article.
Al Qaedas Syrian Offshoot Shifts Tactics in Fight

ANTAKYA, TurkeyWhen a Muslim cleric criticized the Nusra Front
last year for taking over his Syrian
city and raising its menacing black
flags, a representative of the jihadist
group took to Facebook to send him
an ominous message.
Oh secularist, oh infidel, the
note read. Sit quietly or your time
will come.
Yet when wider protests over
Nusras draconian practices and rigid
religious views soon followed in
cleric Murhaf Shaarawis home city of
Maraat Numan and elsewhere in Idlib
province, the group took note. It
curbed its threats to clerics and its
attempts to spread its brand of Islam,
said Mr. Shaarawi and other current
and former residents of the province.
The response to public pressure
underscores how Nusra, the al Qaeda
affiliate in Syria that is designated a
terrorist group by the U.S., the U.K.
and Turkey, in recent months has introduced a measure of constraint and
conciliation into areas of Syria where
it operates, the residents said. It is
even sometimes doing so alongside
Western-backed rebel factions.
That has put it at odds with its
main jihadist rival, Islamic State.
While both groups seek to establish
a state governed by a strict reading
of Islam, Islamic State has relied on
violence or the threat of violence to
achieve that goal. Nusra, on the other
hand, is seeking to win a degree of
consent from those it rules and has
voiced an interest in governing with
other rebel groups.

Nusra, one of the strongest rebel
factions fighting President Bashar alAssad, hasnt lost its reputation for
brutality.
Syrian rights groups accuse it of a
litany of abuses against civilians
since Nusra was formed more than
three years ago, including disappearances and summary executions for
alleged blasphemy and collaboration.
Still, the group appears to have
started easing some its most unpopular religious edicts, not least its ban
on the sale and smoking of cigarettesan especially reviled measure
in a country where a majority of men
smoke.
It has also stopped requiring
women to cover their faces and wear
floor-length robes, and has moved to
punish some fighters for harassing or
assaulting civilians, a resident of
Maraat Numan said.
It tried [to impose control] and
failed, thank God, said the man, who
declined to give his name for fear he
might still be targeted for retaliation
despite the letup. Frankly, Nusra is
trying to fix the mistakes it made.
There is an extremist faction within
Nusra, and it was the one that caused
all the problems. Now they are attempting reconciliation with the
public.
It is unclear how far-reaching or
lasting Nusras turnabout will prove
and what its aim is. Yet in the ebb
and flow of a war now in it fifth year,
the apparent shift by al Qaedas Syrian branch underscores its differences with its main jihadist adver-
sary, said Charles Lister, a fellow at

the Brookings Doha Center.
Islamic State is in a rush to success and a rush to impress, Mr.
Lister said. Al Qaeda has always
played a longer strategic game.
Nusra has fighters throughout
Syria, but its forces are heavily concentrated in the northwestern province of Idlib. After Nusra and other
Islamist rebel factions seized the
provinces capital from government
forces in late March, Abu Muhammad
al-Golani, Nusras leader, said his faction had no interest in running it
alone.
We as the Nusra Front affirm
our lack of interest in ruling the city
or monopolizing it without others,
he said in an audio recording distrib-
uted on the Internet. Our interest is

that the city is in trusted hands that
can mete out justice, stamp out oppression and rule with Gods law and
seek counsel.
Since then, Nusra and other rebel
factions together have re-established
municipal services in the city of Idlib
and are forming a civilian administration. The main obstacles have
been government airstrikes and lack
of qualified city workers to replace
those who have fled, not any withholding of cooperation from Nusra,
said Baraa Halaq, a spokesman for
Ahrar Al-Sham, another Islamist
rebel group.
Nusra is like any of the other
factionsit hasnt differentiated itself, Mr. Halaq said. Every faction
FADI AL-HALABI/AGENCE FRANCE-PRESSE/GETTY IMAGES
BY RAJA ABDULRAHIM
Nusra Front fighters brandish Islamist flags in Aleppo, Syria, on Tuesday.
has a role and has a vote, but the

general decision is taken by consensus.
Before its apparent shift, Nusra
sought for months to quash the influence of other rebel factions and dominate all aspects of life in some opposition-controlled
areas
of
northwestern Syria.
After largely refraining from interfering in the lives of civilians, it
seemed driven to mimic Islamic State
as it attacked other rebel groups,
consolidated control over opposition
territory by force and established itself as the sole local power. Some of
its critics took to calling it the new
ISISanother name for Islamic
Stateas it took such steps as imposing taxes and forcing shops to
close during prayer times.
The Syrian Network for Human
Rights said Nusra is responsible for
the deaths of 282 civilians, including
60 women and 32 under age 18, and
for the disappearances of 44 others.
Some of the dead were executed for
alleged blasphemy or working with
the Assad government, the opposition monitoring group said.
Against this history of ruthlessness, longtime observers of Syrias
rebel factions are taking a wait-andsee attitude toward Nusras apparent
shift in direction.
Is this retreat because of the
battles, or because of the peoples
outrage and wanting to gain ground
support? asked Rami Abdelrahman,
head of the opposition monitoring
group Syrian Observatory for Human
Rights. That is the question.
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BY GREG IP
AGENCE FRANCE-PRESSE/GETTY IMAGES
Data later this

week could show
the U.S. economy
shrank earlier this
year, something
that usually
happens only during recessions. As
the advisory firm Oxford Economics
recently asked, Did the U.S.
recovery just die without warning?
The answer is very likely no,
not with all the contrary evidence
out there, from buoyant stock
prices to strong hiring.
Yet the economys lackluster
performance speaks to deeperseated problems.
Germany and Japan have shown
over the past decade how a
countrys growth can easily slip
into negative territory when the
underlying trend is so close to
zero. The U.S. is fitter than either
country but, like them, is grappling
with cyclical and structural
headwinds that could make
negative quartersand recessions,
too, if policy makers arent careful
more commonplace.
That a recession would be under
way in the U.S. isnt that far-fetched
a notion. At nearly six years, the
current expansion has already
outlasted the postwar average.
With unemployment approaching
5%, a level usually associated with
full employment, the cyclical boost
that comes from using up idle
capacity and labor is fading.
On the other hand, business
cycles dont typically die of old
age. They are usually killed off, by
higher interest rates, a financial
crisis or some other shocksuch
as higher oil pricesthat saps
demand, which leads to a fall in
production and employment and
then feeds back to demand.
Few, if any, of the usual signs
of incipient recession are present
today. Inflation is too low, not too
high. Oil prices are down. There is
plenty of spare labor when
involuntary part-time workers are
factored in. For all these reasons,
the Federal Reserve has yet to
raise interest rates, which have
been near zero since 2008.
Most important, the
unemployment rate continues to
decline. Historically, falling
unemployment and an expanding
economy go hand in hand.
Yet the link between gross
domestic product, the broadest
gauge of economic output, and
unemployment isnt ironclad. As a
population ages, the labor force

may shrink, so a loss of output
that leads to fewer jobs is less
likely to translate into a higher
unemployment rate. If productivity
output per workeris also flat,
it is even easier for output to
decline without translating into
higher unemployment.
This is a condition in which a
growing number of countries find
themselves. Most developed
countries are aging, and as the
Conference Board, a business
research group, notes in a recent
report, their productivity growth
has been sliding for years.
In Japan, poor productivity and
a shrinking labor force have
combined to produce a trend
growth rate of just 0.5%,
according to the Bank of Japan.
Since 2009, unemployment has
steadily declined, yet in that time
Japans GDP has shrunk for two or
more consecutive quartersa
popular rule of thumb for a
recessionthree times, most
recently following a tax increase
last year. Given its low trend
growth rate, Japan will have lots
more recessions during the 21st
century, predicts Scott Sumner,
an economist at the Mercatus
Center, a think tank.
U.S. GDP is estimated to have
grown 0.2% in the first quarter,
but economists expect that to be
revised into negative territory on
Friday. If so, that would be the
third negative quarter of the
current expansion. In the prior
three expansions, from 1982-1990,
from 1991-2000 and from 20012007, there were none.
The recent negatives can be
traced to bad luck and odd data.
The recent winter, like last years,
was unusually harsh. A
dockworkers strike and drop in
oil drilling took a toll. And the
data may be affected by recurrent,
seasonal dips in activity that are
supposed to be filtered out.
But as in Japan and Germany,
policy developments also played a
part. Because Fed officials have
repeatedly predicted they will
tighten monetary policy by raising
interest rates this year even as
the eurozone loosens, the dollar
has shot up, hitting exports.
Such shocks leave more of a
mark when underlying growth is
weak.
In a low-growth world, policy
makers need not treat every
negative quarter as proof of
recession. But they must also be
careful to avoid the sorts of policy
errors that can turn a negative
quarter into a recession.
Strong stock prices point to strength even if GDP turns negative; here, the NYSE.
ASSOCIATED PRESS
In Low-Growth Economy,
Negative Quarters Likely
The IRS said it will provide credit-monitoring services for the roughly 100,000 taxpayers whose accounts were accessed.
Breach at IRS Exposes

Personal Taxpayer Data
BY JOHN D. MCKINNON
AND LAURA SAUNDERS
The Internal Revenue Service

said Tuesday that identity thieves
used one of its online services to
obtain prior-year tax-return information for about 100,000 U.S.
households, a major breach of the
agency charged with safeguarding
taxpayers privacy.
The agency said cybercrooks used
stolen Social Security numbers and
other data acquired from elsewhere to
gain unauthorized access to the taxagency accounts, beginning in February and continuing through mid-May.
About 104,000 attempts successfully accessed earlier returns, IRS
Commissioner John Koskinen said.
An additional 100,000 attempts
were unsuccessful, the agency said.
The incident, which echoes similar problems earlier this year in
some states, highlights the growing
risks from cybersecurity breaches to
both individuals and the government. It particularly reflects crooks
ability to carefully aggregate vast
amounts of personal data from multiple sources and plan and execute
highly sophisticated schemes.
The agency believes fewer than
15,000 refunds were paid as a result
of the frauds, and the total paid out
was less than $50 million, Mr. Koskinen said. But in a statement, the
IRS said it is possible that some of
the stolen tax transcripts were being stockpiled, with an eye toward
using them for identity theft for
next years tax season.
The IRS said that to access the information, crooks had to clear a multistep authentication process that required prior personal knowledge
about the taxpayer, including Social
Security information, date of birth,
tax-filing status and street address before accessing IRS systems. The process also involved answering personal
identity-verification questions, such as
What was your high school mascot?
Mr. Koskinen, when asked how
impostors obtained answers to
these so-called out-of-wallet questions, suggested social media might
have played a role.
This is not a hack or data
breach. These are impostors pretending to be someone who has
enough information to get more,
said Mr. Koskinen, who said thieves

might be using sophisticated programs to aggregate and mine data.
Thieves hope access to full tax
returns could give them key information for future fraudulent efforts
that wouldnt be detected by IRS filters, he added.
Five years of all kinds of data
breaches are coming home to roost,
said Neal OFarrell, founder of the
Identity Theft Council in Walnut
Creek, Calif., who has been involved in
cybersecurity for more than 30 years.
Thieves have so much data about so
many consumers that they are now
able to join the dots and fill in the
blanks. They have big, undetectable
malware that breaks in, finds the best
information, analyzes and bypasses
security.
The information was obtained
from an IRS application known as
Get Transcript that allows taxpayers to access prior-year returns. The
thieves then used the data to fashion a fake return for 2014 and requested the IRS send a tax refund to
a hard-to-trace debit card.
Vicki Niesen, of Houston, said she
and her husband learned last week
that they had been victims of fraudsters using Get Transcript when an
IRS check for $26,424 arrived at
their homeeven though the couple
paid tax due on April 15. When we
tried to get a transcript, my husband
was blocked, but I could see the
fraudulent return, Ms. Niesen said.
At least the IRS refused to do direct
deposit and sent us the check instead. She said she returned the
check, as instructed by the IRS.
Mr. Koskinen stressed that the
penetration was the result of an organized crime, not one-off hacking.
The agency said the matter is under
review by the IRS inspector general as
well as its Criminal Investigation unit.
In addition, the Get Transcript application has been shut down temporarily.
The IRS said it would provide
free credit-monitoring services for
the approximately 100,000 taxpayers
whose accounts were accessed, and
it said it would notify the 100,000 or
so other taxpayers about the unsuccessful attempts to access their data.
The agencys top leaders sought to
emphasize that the breach didnt involve the IRSs core accounts, such as
its filing system, which remain secure.
They said the incident wasnt technically a data breach but instead represented a successful exploitation of an
IRS application.
But some lawmakers were irate,
and the long-term impact of the incident on the tax agencyalready under fire from Republicans for alleged
targeting of tea-party and other conservative groupscould be significant. IRS officials have denied any political motivations behind scrutiny of
groups seeking tax-exempt status.
Sen. Orrin Hatch (R., Utah),
chairman of the Senate Finance
Committee, termed the breach devastating in a statement.
That the IRShome to highly
sensitive information on every single American and every single company doing business here at home
was vulnerable to this attack is
simply unacceptable, Mr. Hatch
said. Whats more, this agency has
been repeatedly warned by top government watchdogs that its data security systems are inadequate
against the growing threat of international hackers and data thieves.
Rep. Paul Ryan (R., Wis.), the
House Ways and Means Committee
chairman, added that the incident
was deeply concerning.
The IRS has said in recent months
that funding cuts have hampered its
ability to improve fraud detection.
Congress has cut the agencys budget
to less than $11 billion for fiscal 2015
from more than $12 billion five years
earlier. The Obama administration is
seeking almost $13 billion for 2016.
The troubles with the Get Transcript application echo problems
that surfaced this year with some
state tax systems. In February, Utah
tax officials found that a few fraudulent 2014 state returns closely resembled 2013 returns. The similarities made the fraud harder to detect
and suggested that scammers had
access to the taxpayers 2013 returns.
The newly disclosed IRS incident
shows that refund fraud is a challenge shared by the federal government, state governments and taxpreparation professionals, said
Verenda Smith, a spokeswoman for
the Federation of Tax Administrators.
The good news here is that we already recognized that our individual
efforts to combat refund fraud cant
be as good as our combined efforts.
Smartphone Home in the Car

THE FUTURE OF IN-DASH NAVIGATION TECHNOLOGY PAGE 8
Thursday, May 28, 2015
asia.WSJ.com
Why Android Trails Apple
LG Watch Urbane Has Clunky Interface and Design, Plus Too Many Alerts
[ Personal Technology ]
The Apple Watch
is, despite its many
talents, a watch
first and foremost.
Rival Android
Wear watches,
which made a debut last year, are
still frustrating wrist-top computers that happen to tell the time.
For more than a week, Ive
been that geek wearing a smartwatch on each wrist: On the right,
theres the $350 LG Watch Urbane, the first gadget to get
Googles most substantial Android
Wear update yet. On the left,
theres the $350 (and up, way up)
Apple Watch.
Anyone who buys a smartwatch
today is a pioneer in the hinterland
of technology. The Urbane and the
Apple Watch both suffer from sluggish performance, require some socially awkward behavior like talking to your wrist and will likely be
obsolete in a year.
The Urbane may be an improvement over earlier Android
watches, but its too bothersome
to keep on my wrist. I cant yet
recommend it to the Android users who ask if they should get a
smartwatch. The Apple Watch is
already much more refined.
The difference isnt so much
the hardware. They both have batteries that need nightly charging
and include decent heart rate and
activity trackers. Each looks like a
real watch. The Urbane has a circular screen embedded in a
chunkyon some wrists, monstroussteel frame that doesnt
quite live up to its name. The Apple Watch is hardly petite, but its
rounded rectangle pairs equally
well with a suit and sweats. (This
isnt entirely a compliment.)
The Urbanes look is more open
to customization, with dozens of
downloadable virtual watch faces
and standard 22mm replaceable
straps. Its also able to join Wi-Fi
networks on its own, while the
Apple Watch requires your phone
to be on the same network. The
Apple Watchs main hardware advantage is NFC wireless for Apple
Pay and (hopefully) future things
like unlocking doors.
The Urbane falls behind in its
approach to the fundamental
smartwatch problem: When technology is attached to our bodies,
theres a thin line between help and
nuisance. Android Wear is the annoying little brother of operating
systems. It really wants your attention, and to keep you swipe-swipeswiping away on its little screen.
A smartwatchs purpose is to
keep you plugged in so you dont
JASON HENRY FOR THE WALL STREET JOURNAL (2)
BY GEOFFREY A. FOWLER
The LG Watch Urbane includes the

most substantial update yet to the
Android Wear operating system.
Right, the smartwatch can transform
finger sketches into emoji icons.
have to be glued to your phone.
Since I started wearing an Apple
Watch two months ago, I check
my phone roughly 25% less, according to Moment, an app that
monitors my habits. Ideally, a
smartwatch should give you just
enough information to keep your
smartphone anxiety in check, but
not so much that youre tempted
to keep looking at your wrist.
The Urbanes default settings
do the opposite. When I just want
to check the time, the Urbane often teases me with a notification
card on the bottom of its screen.
Youve got four new emails! Its 68
degrees today! You can quickly
swipe it away, but after that ones
gone, theres usually another card
waiting.
Android Wear tries to predict
what you want to see, but it isnt
clairvoyant. The stream of cards is
a combination of phone-app notifications and suggestions from
Google Now, which picks tidbits of
info from your Gmail, calendar
and searches. Unlike on the Apple
Watch, you cant order or prioritize items.
Friends who store their whole
digital lives in the search giants
services enjoy Google Now, but
the information it sends me is too
random to deserve a spot on my
wrist. My Urbane reminds me
when Jeopardy! will be on TV, I
think because I once searched for
it. It likes to remind me about the
birthdays of long-forgotten colleagues. At random points in the

day, it tells me how long it will
take to get home.
Android lets you turn off the
watch-face previews, notifications
from individual apps and, if you dig
around enough, even Google Now.
But these are all on by default, because the know-it-all stream is actually the watchs main function.
I want to get alertsbut only
what matters. Id like to know every time I receive an email from
my editor. But the system for singling them out works with the
Gmail app. Like most people I
know, I dont use Gmail for work,
so my choice is no email
alertsor, good grief, getting an
alert every time I get an email.
Over on the other wrist, taming the Apple Watchs alerts and
notifications requires a significant
amount of setupperhaps too
much. But its possible.
Apple put helpful info from

apps, dubbed Glances, in its own
drawer. Unlike Google Now, you get
to decide what youd like to see
headlines, your heart rate, stock
prices, etc.and in what order.
The Apple Watch also has subtler ways to get your attention, including silently tapping your
wrist. The Urbanes equivalent is a
less graceful audible vibration,
like on your phone.
Beyond distractions, the big
smartwatch design challenge is
how to operate the thing when
theres so little space to work
with. The Urbane has a touch
screen for all that swiping, and
exactly one buttonnot nearly
enough for quick navigation.
The Apple Watch comes with
two buttons (one of which both
taps and scrolls) and a screen that
knows the difference between a
light and more forceful touch.
Theres a learning curve to operat-
ing all these knobs, but ultimately

its a much more efficient route to
get what youre looking for.
The latest Android software
provides new ways to interact with
the Urbane. You can swipe into the
screen from the right or press and
hold the watchs button to get a
list of favorite contacts and an (unhelpfully) alphabetical list of your
apps. You can switch between
cards by aggressively flicking your
wrist, an action that looks just as
awkward as it sounds.
Theres this cute idea, too: You
can send emojis in text messages
by sketching out the icons with
your finger, which the Apple
Watch cant do.
Other than taps and swipes,
Android Wear watches respond to
voice commands. The Urbane consistently hears me more quickly
than the Apple Watch does, but it
still takes too long to use, particularly in noisy places. By the time
it hears and transcribes my commands, I usually could have just
used my phone. Also, people look
at you funny when you talk to
your watch.
Android Wears rough edges are,
in some ways, a symptom of
Googles approach to releasing software that isnt totally finished and
then improving it out in public.
Theres much potential in
Google Now and voice commands,
but those dont work well enough
yet to serve as the main functions
of a watch.
This week at Googles annual
I/O developer conference, I hope
the company will lay out a future
for Android Wear that draws on a
core strength of Android phones:
the apps. Apps get second billing
today on all smartwatches, but the
most recent version of Android
Wear allows apps to stay on
screen for long stretches. Googles
Maps and note-taking app, Keep,
are among the few apps that take
advantage of it; I like it for keeping my grocery list out when Im
at the store.
It would be a mistake to assume
that the ubiquity of Android in
smartphones guarantees that Android Wear can do the same in
wearable devices. But thats not
necessarily bad news for Android
phone lovers, who can connect to
watches running a variety of systems. Even the company that made
the Urbane, LG, has a version of
that watch running another operating system, WebOS. And smartwatch pioneer Pebble will soon
ship its lower-price alternative.
While Apple has taken an early
lead in usability, the future of the
smartwatch remains wide open.
Write to Geoffrey A. Fowler at
Geoffrey.Fowler@wsj.com or on
Twitter @geoffreyfowler.
LIFE & STYLE
The Smartphone Finds Its Home in the Car
BY JOANNA STERN
Moving from a cars built-in

navigation system to Google Maps
is like being upgraded from a Motel
6 to a Four Seasons. Its far cleaner
and the information is faster and
more trustworthy. The great maps,
the multiple route options, the
quick load and rerouting times, the
easy on-screen directionsthere
are just so many things to love
about Google Maps riding shotgun.
The best part really is how familiar the interface is. No hidden
Googles navigation and entertainment system comes to the dashboard of the 2015 Hyundai Sonata, above. Below left,
the Android Auto home screen; right, the Google Maps interface. Watch Joanna Sterns video at wsj.com/ptech.
menus, excessive taps, multiple

address input fields. It feels like
the phone app on a big screen
you even get the clean Android 5.0
keyboard. Unfortunately, thats because Android Auto requires a
phone running the Android 5.0
software, which less than 10% of
Android users now have.
But I rarely used the keyboard.
Lets go to the closest pet store,
I said aloud while pressing the
voice button on the Sonatas
steering wheel. Here are the closest pet stores, Googles robot
voice responded, with an onscreen list of stores, operating
hours and drive times. Google has
never given this helpful voice a
name, but I took to calling her Flo.
With a couple of taps, I could
call a store to see if they had my
type of dog food. I used voice
search for street addresses and
points of interest, and not once
did Flo misunderstand me.
Much of the time, though, I
didnt have to tell her where I was
goingshe just knew. Thanks to
Android Autos integration with
Google Now, the next appointment
in my Google calendar or the ad-
dress of a recent search automatically popped up on the Android

Auto home screen when I got into
the car. I was amazed at just how
well the system kept predicting
where I was going next. One
morning, when I got in the car, I
got a notice that the nail salon I
had located earlier on my laptop
was just 10 minutes away.
En route, Flo delivered clear,
audible turn-by-turn directions
alongside clean on-screen prompts.
My fathers in-dash system butchers our local street names, but Flo
got most right. (In my short time
testing CarPlay, I noticed Siri
sounds more robotic and has a
tougher time with street names.)
Google Maps wasnt always
tops. When fighting Memorial Day
traffic, my phones Waze app provided more up-to-date traffic information. Google, which owns
Waze, incorporates its data into
Google Maps, but theres no Waze
dashboard app, so you miss the
real time reports. Google hasnt
announced Waze for Android
Auto, but its a possibility.
Apples CarPlay only works
with Apple Maps; you cant use
A Car Fit for a Duke

[ My Ride ]
Kenny Wayne Shepherd, 37,
rock and blues guitarist, on his
Xtreme Lee, as told to A.J. Baime:
I grew up watching The Dukes
of Hazzard, primarily because of
the car featured on the show, the
General Lee. It was as much a
hero as the main characters.
Years ago, I was at Kid Rocks
house. He had a General Lee rep-
lica in his garage. I realized: You

can own one of these! I located an
original car from the TV show. But
I thought: If I get in an accident,
Id be ruining television history. I
decided to build my own instead.
I bought a 1969 Dodge Charger
from an old lady for $11,000. I built
it out with the paint job and all the
comforts and performance of a
modern car: 5.1 surround sound,
touch-screen navigation, the same
carpet used in Rolls-Royces. The
engine puts out close to 600 horse-
power, and the horn plays the first

notes of I Wish I Was in Dixies
Land, just like the TV car.
The confederate flag can be
controversial, but not in this case.
I get thumbs up from everybody,
regardless of race. The AfricanAmerican community created the
music that I play; racism certainly
isnt part of my DNA.
You cant be incognito when
you drive this car. Youd feel like a
rock star driving it, even if you
werent one.
Google Maps (let alone Waze) on

the in-dash display.
Songs in the Fast Lane
Google and Apples car systems

do support third-party music apps.
Since much of the Android Auto experience is powered by your phone,
youre really just controlling whats
on your phone. One exception: Both
CarPlay and Android Auto use the
cars GPS, which can be more accurate than your phones.
All week Ive been listening to
Spotify and Google Play Music,
controlling them with my voice or
the in-dash touch screen. Play
Little Red Corvette, was all that
was needed for Google Play Music
to start Princes best song. Spotify
failed to return voice searches
during my testing, a bug that
Google says will be fixed. Other
apps, including Rdio, Beats and
Audiobooks, are missing for now.
You can still listen to AM or
FM, satellite radio or a CD while
using Android Auto navigation, but
you have to jump back and forth
from the Android Auto app to the
cars home screen, which gets annoying fast. The Android Auto app
Im convinced this is the safest

way to drive with your smartphone, at least with maps and music. But I have considerable safety
doubts about Android Autos textmessage integration.
Plugging in an Android phone
routes message notifications to
the car. A chime signals youve got
a text, and the senders name appears on the screen. Tap the alert,
and Flo reads out the message.
You can respond with your
voice, and it worked well for the
most part. Flo is very good at dictationI can even name an emoji
and shell insert it. Punctuation
isnt her specialty, and she struggles with the beginnings of messages. But shell read you back the
message before you fire it off.
Accuracy isnt my problem, distraction is. You cant disable text
messaging in Android Auto. You
cant even disable messages from
supported apps, including Google
Hangouts, Skype and WhatsApp,
from coming through.
While this may be safer than
fiddling with a buzzing phone, it
seems like the lesser of two evils.
Hands-free phone calls and texting are still a cognitive distraction. It is the fact that your brain
is distracted, says Deborah Hersman, president of the National
Safety Council. If hands were the
problem, we would have outlawed
stick shifts.
Driving in New York City, I got
a rash of text messages and had to
force myself not to tap the screen.
If my phone were stashed in my
bag, I would have just waited. Andrew Brenner, Android Autos lead
product manager, says Google
takes my request for a messagedisabling option seriously.
Despite this, youre going to
want Android Auto. But its the
latest play in the Apple vs. Google
ecosystem trap. Unless you have
an Android phone, you cant get
Android Auto, and CarPlay will
only work with an iPhone.
You will also need the right car.
Hyundais 2015 Sonatas with Android Auto will get CarPlay in the
coming months. Nearly 30 other
car makers have said they plan to
bring Android Auto to 2015 or
2016 models, but they havent provided exact timing. This leaves out
my dad, who has an iPhone and
only bought his car last year.
The future of driving is here,
but not even the best navigation
system can say when it will pull
into your driveway.
DAVE LAURIDSEN FOR THE WALL STREET JOURNAL
Google Maps Hits the Road
Text and Drive
ARABY WILLIAMS FOR THE WALL STREET JOURNAL (3)
I am petrified
when my dad is
behind the wheel.
His cars $1,500
in-dash navigation
system is riddled
with menus so complex and unintuitive they should require a pilots
license. So instead of keeping his
eyes on the road, he splits his time
between fidgeting with the screen
and fighting with the robotic
womans voice emanating from the
dashboard. (She usually wins.)
It gets worse. Lately, he has
taken to driving around with his
smartphone in his lap instead.
Google Maps and Waze are easier
and more up-to-date and accurate
than his fancy system, he tells me.
As if I didnt know.
But this isnt just about my
dad. Its about how a safer, better
system is hitting the road for the
70% of drivers who use their
smartphones maps and other features while driving, according to a
new study by AT&T. Its about
how I wish they would all be able
to get Android Auto in their cars.
Starting this week, the 2015
Hyundai Sonata will be the first
car to include Googles new in-car
software. When you plug your Android smartphone into the cars
USB port, the vehicles center
screen is taken over by an interface with your phones maps, music and other street-legal features.
Apples CarPlay, hitting mainstream cars this year, does something similar for iPhone users. (I
spent some time with it, but will
write an in-depth review only after
I can drive with it for a few days.)
After a week cruising around
with Android Auto, Im convinced
this is the future of in-dash technology. Taking the software design out of the hands of car makers and putting it in the hands of
phone makers should have happened long ago.
Googles mobile talentsmaps,
speech recognition, Google Now
are great behind the wheel. I do
have some frustrations with the
system, but the biggest is that you
need the right phone and right car.
loaded fast when using Googles

Nexus 5, but was sluggish to start
with the Samsung Galaxy S6 Edge.
Google says a coming update will
address the Samsung performance.
Kenny Wayne Shepherd, a rock and blues guitarist who grew up a fan of The
Dukes of Hazzard, near his Los Angeles home with his Xtreme Lee.
OPINION: REVIEW & OUTLOOK
Obamas Remedial Legal Education
mericas most powerful former

law professor is getting a reeducation in the Constitution, and
on present course President Obama
might flunk out. Witness Tuesdays federal appeals-court rebuke of his 2014 immigration order, including language that
suggests the Administration will also
lose on the legal and policy merits.
Mr. Obama caused a furor in November when he suddenly claimed powers he
had previously said he didnt have to
award legal status and work permits to
millions of illegal immigrants. Texas and
25 other states sued, claiming injury and
a violation of their sovereign powers under the Constitution. Federal Judge Andrew Hanen issued a preliminary injunction for the states in February, and on
Tuesday the Fifth Circuit Court of Appeals shot down the Administrations request to lift the injunction.
The 2-1 ruling by a three-judge panel
found that the Administration had failed
to make its case that Texas and the other
states suffered no injury if Mr. Obamas
rule was implemented. Texas cited the
fact that it would have to issue drivers egation of authority to implement the
licenses to the newly legal immigrants, Obama rulea program that makes 4.3
and the court agreed this was a cost. million otherwise removable aliens eligiEven if Texas raised its license fees to ble for lawful presence, work authorizacover the costs, the fact that it had to tion, and associated benefitsbut no
change its law to accommodate the fed- such provision exists. (Our emphasis.)
eral rule was also an injury.
In summary, said the court, the
This matters for the merits down the United States has not made a strong
road because it means the judges agree showing that it is likely to succeed on
that Texas has the standthe merits.
A federal appeals
ing, or legal basis, to
The ruling means that
sue. The Administration
Mr.
Obamas order will recourt rebukes his
claims that under the
main in abeyanceperimmigration order.
Constitution the feds are
haps into the final days of
supreme on immigration
his Presidency. The Adlaw. This is true when
ministration may seek a
Congress passes a statute. But such su- hearing of the full Fifth Circuit, though
premacy is suspect when the executive it will probably be denied given the carebranch unilaterally rewrites the law and ful legal reasoning of the two-judge maimposes new burdens on the states in il- jority. The Administration will then no
legal fashion.
doubt appeal the injunction to the SuThe Administration claims it is merely preme Court, even as Judge Hanen proallowing immigration officers to apply ceeds to consider the merits of the Texas
routine prosecutorial discretion on a claims.
case-by-case basis not to deport illegals.
The Fifth Circuit decision vindicates
But the court noted that if this were true the rule of law and shows again how Mr.
we would expect to find an explicit del- Obama is exceeding his legal authority.
But it is also a tragedy for immigrants

who Mr. Obama teased with his illegal legalization. After last years election,
many GOP leaders believed they had a
chance to pass reform that addressed
specific immigration problemsfor farm
or high-tech workers, for example.
But by acting on his own Mr. Obama
poisoned the politics of immigration reform for the rest of his tenure. Republicans who favor reform have no chance to
bring along angry back-benchers who
have zero trust in the President to follow
any immigration reform that Congress
passes. This may have been part of Mr.
Obamas plan, letting him take sole political credit among Hispanic voters for legalizing 4.3 million while causing Republicans to again seem anti-immigrant.
Mr. Obama could have avoided this
mess if he had recalled his law classes on
the separation of powers. Thats where
he should have learned that the federal
government cant run roughshod over
states and that the courts are an independent branch of government that can
call out a President for breaking the law.
Department of Deal-Killing
harter Communications announced

agreements on Tuesday to pay $57
billion in cash and stock for Time
Warner Cable, plus another $10 billion
for cable operator Bright House Networks. This means that Charter investor
John Malone may now be able to act on
his view that the cable industry should
consolidate in the face of satellite, telephone and Internet competitors with nationwide footprints. But the deal also
raises the question of why lawmakers
continue to allow the U.S. Federal Communications Commission to judge such
transactions.
FCC Chairman Tom Wheeler released
a short statement Tuesday saying that
his agency would, as usual with communications mergers, seek to determine if
the deal is in the public interest. Added
Mr. Wheeler: In applying the public interest test, an absence of harm is not
sufficient. The Commission will look to

The FCC will now rigorously examine
see how American consumers would ben- this proposed combination of cable comefit if the deal were to be approved.
panies that would have no presence at all
How is it that a Beltway bureaucracy in 16 of the top 25 markets in the U.S.
can confidently assert the power to break The combination of Charter, Time Warup a business combination
ner Cable and Bright
in the absence of any eviHouse would serve fewer
Why does the FCC
dence of harm to even a
than a third of the number
get to decide
single customer?
of video subscribers curThe FCC was created
rently served by Netflix.
if Charter can buy
by the Communications
Mr. Wheeler wants
Time Warner Cable? proof
Act of 1934 and was inthat customers will
tended to nurture and
be better off as a result
manage a monopoly teleof the transaction. But
phone system and the broadcasters to like all cable companies, the aspiring
which it gave slices of the airwaves. As merger partners have been struggling
the years have gone by competition has merely to hold on to those customers.
increased, yet the FCC continues to go They have to persuade customers not to
about its work as if it is still overseeing use broadband connections to get video
monopolies and only the commissions programming from the likes of Googles
intervention can protect consumers from YouTube, or to cut the cable cord altoall-powerful cable behemoths.
gether and merely consume media
through their smartphones.

The National Cable & Telecommunications Association, the industrys main
trade group, reports that from 1992
through 2013 cables share of the U.S.
pay-TV market shrank to 53% from 98%.
On Tuesday while the FCC was preparing
to conduct an exhaustive assessment of
whether the combined companies might
be able to abuse consumers, assorted
media pundits were wondering aloud
about the long-term survival prospects
for the merging cable dinosaurs.
Mr. Malone clearly thinks there is a
bullish case for cable, which in many
markets offers the fastest broadband
connections, and far be it from us to suggest hes wrong. But then hes betting his
money. How can anyone be bullish about
a Beltway regulatory system that still insists on treating 21st-century communications like 1930s telephones?
Poland Votes for a Populist Conservative
s political earthquakes go, Sundays presidential election in Poland wasnt exactly San Francisco
1906. In choosing Andrzej Duda of the
Law and Justice party for a largely ceremonial post, Poles sent a signal about
the kind of leadership they want when
they elect a new Parliament later this
year. But the 51.5% to 48.5% margin was
close enough to suggest some wariness
about Mr. Dudas breed of populism.
Mr. Duda triumphed over incumbent
Bronislaw Komorowski of the centerright Civic Platform by playing to the
concerns of Poles who worry that they
arent seeing the benefits of the countrys economic growth. Poland under
Civic Platform was the only European
Union economy to avoid a recession after
the 2008 financial panic, and it grew
3.5% on an annual basis in the first quarter of 2015. Impressive results by any
measure, especially when the comparable worker earning around 500 a month
rate for neighboring Germany is 0.3%.
should take out a loan to afford housThat success is due largely to leaders ing.
such as Mr. Komorowski and former
Much of Mr. Dudas economic
Prime Minister Donald Tusk. Over the agendaincluding promises to reduce
past decade they implemented reforms the retirement age to its prereform level
such as an increase in the
and boost taxes on foreign
Poles narrowly vote
retirement age to 67 from
retailerswould hurt or65 for men and 60 for
dinary Poles and damage
for
change
and
elect
women, and other penthe countrys long-term
a euro skeptic.
sion reforms to put govgrowth. Mr. Duda also
ernment finances on a
proposes an indefinite demore stable footing.
lay on Polands entry into
But per-capita income still lags that of the euro, a more appealing argument to
Western neighbors, and young Poles are voters unsure of the eurozones prosemigrating in search of better job oppor- pects and mindful of its malaise.
tunities. Voters rejected a ruling party
Poles also responded favorably to Mr.
that failed to explain its successes or Dudas promise to take a harder line on
propose new plans to build on past Russia, another nonsurprise given Rusgains. Mr. Komorowski seemed aloof in sias invasion of Ukraine and its power
the face of kitchen-table worries; in the plays in other former Soviet republics.
worst gaffe of the campaign he said one But here the difference with his political
opponents is mainly of degree: Both parties support hosting a permanent NATO

base in Poland.
The biggest impact of Mr. Dudas election could come if his party wins Octobers Parliamentary vote and joins with
Britains Prime Minister David Cameron
in renegotiating the terms of their respective memberships in the EU. If Poland and Britain can form a caucus in favor of less regulation and greater
accountability from Brusselsalong with
a tougher European stand against Moscowso much the better.
Comments? The Journal welcomes

readers responses to
all articles and editorials. It is important to
include your full name, address and
telephone number. Please send letters to
the editor to: Letters@WSJ.com
OPINION
BY MICHAEL AUSLIN
Last week, Malaysias Prime
Minister Najib Razak ordered his
navy and coast guard to rescue
Asias latest boat people, thousands of Rohingyas fleeing Burma.
He may have already known about
the discovery of 139 graves of migrants on Malaysian territory, a
horrific discovery the government
announced this week.
Mr. Najibs action, taken after
weeks of ignoring the refugees
plight, is but a small step towards
solving the problem of this mass
exodus. In a broader sense, it displays just how divided Southeast
Asia remains and how unprepared
it is to deal with crises.
Asias newest boat people

highlight the regional
associations inability to
solve its regional problems.
The Rohingya saga parallels
that of other migrants fleeing oppression or seeking better opportunities abroad. The government
of Burmas President Thein Sein
has increased its repression in the
past several years, including denying Rohingyas the right to vote,
restricting their movements and
denying them basic social services.
While the Rohingyas say they
are a distinct Muslim ethnic
group, the Burmese government
claims they are Bengali immigrants illegally in the country. The

United Nations reports that more
than 120,000 Rohingyans have fled
Burma, most by boat, since 2012.
The majority have been trafficked
into Thailand, a majority Buddhist
country, or Muslim Malaysia.
However, since the discovery of
mass graves of Rohingyan and
Bangladeshi refugees in remote
border areas of Thailand several
weeks ago, Bangkok has clamped
down on the smuggling operation.
It is estimated that between 6,000
and 8,000 Rohingyans are currently stranded at sea, leading to
the current crisis. Those floating
in the Bay of Bengal or Andaman
Sea for months not only need
medical and food supplies but are
at risk of being captured by human traffickers and slave traders.
While the plight of North African boat people trying to reach
Europe gained world-wide attention, the Rohingyas had been
largely ignored by the media and
governments alike. Until last week,
their Southeast Asian neighbors
had all but forsaken them.
Muslim Indonesia refused them
asylum, joining Malaysia and Thailand in turning away refugee
boats. Australia also has no plans
to accept any boat refugees. Bangladesh, meanwhile, hosts around
200,000 Rohingyans in primitive
and unsanitary refugee camps.
The Southeast Asian response
to the Rohingyas derives from a
number of factors, but it highlights many of the regions limita-
S. YULINNAS/ASSOCIATED PRESS
The Rohingyan Crisis and Asean Disunity
SET ADRIFT Its estimated that up to 8,000 Rohingyans are currently stranded at sea.
tions. Despite the presence of the
Association of Southeast Asian Nations, there has been no coordinated response to, or even discussion of, the Rohingya problem.
Given Aseans longtime goal of regional-crisis resolution, a humanitarian emergency of this magnitude might be considered a
natural problem for it to address.
However, the response of
Burmas neighbors indicate the degree to which Southeast Asia remains a divided region, despite
nearly 50 years of Asean community building. The principle of nonintervention in member states internal affairs means that Jakarta,
Kuala Lumpur, Singapore and others have refrained from pressuring
Burma to ease its repression of the
Rohingyas. Ending such discrimination might also end the exodus
and thus the regional emergency.
Compared to the more dramatic tension in the South China

Sea over maritime territorial disputes, the Andaman Seas refugee
crisis may appear pedestrian. Yet
while the world is beginning to
pay attention to the danger of
armed confrontation in the
Spratlys, the lack of political community in Southeast Asia carries
its own risks. The inability to deal
with a slow-moving humanitarian
disaster over a period of months
or years reveals the degree to
which Southeast Asia remains a
region still trying to figure out effective ways of recognizing and responding to regional problems.
The Rohingyas may push
Southeast Asia to begin reforming
itself, if slowly. On the heels of
Prime Minister Najibs announcement, Jakarta announced that Indonesia would also accept refugee
boats, while Singapore pledged a

modest $200,000 to countries that
help with the migrants. Perhaps
more significantly, Thailand will
host a regional conference on the
Rohingya emergency this week.
It is also past due for larger nations to get involved in the crisis,
in particular by pressuring their
Southeast Asian partners to do
more. The U.S. has proposed maritime patrols to help spot refugees,
but has run into opposition from
Thailand, which does not want to
encourage more asylum seekers.
Given its possessions in the Andaman Sea, India could use its naval
vessels to find and track Rohingya
boats, and Japan could provide
both coast-guard assistance and
medical aid to those both in refugee camps and on the boats.
Ultimately, Burma must change
its internal policies, and Asean or
any collection of Southeast Asian
nations must put quiet, steady
pressure on the Thein Sein government. Overt policies to punish
Burma could result in the country
swinging back towards China, thus
making long-term liberalization
even more difficult to achieve.
There is no easy solution in
sight for Asias newest boat people. The lack of an effective political community in the region only
ensures that their suffering will
continue.
Mr. Auslin, a resident scholar at

the American Enterprise Institute
and a columnist for wsj.com, is
writing a book on risk in Asia.
Economic Growth Is a U.S. Security Issue

BY MICHLE FLOURNOY
AND RICHARD FONTAINE
From the polls, one might think
that a stark partisan divide has developed about which issue is of
greatest importance to the nation.
Take The Wall Street Journal/NBC
News survey released earlier this
month, which asked likely primary
voters to name their top two priorities for the federal government
from seven options.
The top choice among Republicans was national security and
terrorism, picked by 54%. That
option placed only fourth with
Democrats, who instead chose job
creation and economic growth
which placed third with
Republicans.
Paul Beckett, Asia Editor

Miguel Gonzalez Jr., Senior Editor
David Holland, News Editor
Hugo Restall, Editorial Page Editor
Tomasz Rustowski, Institutional Sales
Anjali Kapoor, Marketing
Simon Wan, IT
Mark Rogers, Advertising Sales
Jacky Lo, Circulation Sales
Stuart Wood, Operations
Mark Pope, Publisher
Published since 1889 by
Dow Jones and Company

2015 Dow Jones & Company. All Rights Reserved
The truth is that national security and economic strength are inextricably linked, and Washington
needs to pursue both. In siloed
government agencies, though, they
are too often considered in isolation. Americas economy is the
foundation of its military and political power, and boosting growth
helps relieve the downward pressure on defense and foreign-affairs
budgets that reduces Washingtons
ability to shape international
events. With the world aflame
from Syria to Ukraine, and tensions with China rising, the
demand for U.S. power is higher
than it has been in decades. The
challenge today is supplying it.
Perceptions of American retrenchment in recent years stem
partly from Obama administration
policies and congressional dysfunctionthe sequester cuts, remember, were supposed to be so
onerous that lawmakers would
never let them take effect. But
equally important is that in the
wake of the financial crisis, the
country turned inward to focus on
creating jobs and reducing income
inequality at home rather than
sending aid and personnel abroad.
Until the rise of Islamic State in
the Middle East and aggression
from Russia in Ukraine, the percentage of Americans saying that
the country should mind its own
business internationally was 52%.
This figure, from a December 2013
poll, was the highest ever recorded. The sentiment was driven
by pervasive war-weariness and
the middle classs increased focus
on its pocketbook. Throughout U.S.

history, periods of economic strife
have coincided with Americas
trimming its national sails overseas. An internationally engaged
U.S. must be an economically prosperous and confident one.
A bright economic outlook is a
powerful counter to the narrative
of U.S. decline. It boosts perceptions of U.S. leadership and thus
Washingtons ability to shape and
enforce the international rules of
the road, in domains as diverse as
trade, maritime security and
cyberspace.
Policies on trade and energy

that foster prosperity
also strengthen Americas
military and political power.
Hence the need for a bold and
bipartisan international economic
agenda, one that will enhance national security in a world of growing turmoil. Such an agenda
should include several elements:
Trade and investment. The bipartisan bill, now making its way
through Congress, to grant the
president trade-promotion authority is critical to unlocking new and
important trade deals. Lawmakers
should pass the bill and, upon its
completion, the Trans-Pacific Partnership free-trade agreement,
which would produce unambiguous economic and strategic gains
for the U.S. Success would also
pave the way toward an eventual

Transatlantic Trade and Investment Partnership trade agreement
with the European Union.
More modest but still important, Washington should pursue a
bilateral investment treaty with India. It should further reform export-control regulations, which
block overseas sales of sensitive
technology, to streamline the process for American manufacturers
and ensure that remaining controls
keep pace with technological advances. Congress should also reauthorize the African Growth and
Opportunity Act, which expires in
September and provides for dutyfree importation of goods from
sub-Saharan African countries that
are making progress toward free
trade, free-market economies and
the rule of law. The Generalized
System of Preferences, which eliminates duties on thousands of
goods from the worlds poorest
countries, should be reauthorized
as well.
Energy. The ban on exports of
crude oil dates back to the energy
crises of the 1970s and is both outdated and counterproductive. Congress should lift the ban, and as a
result boost employment and
strengthen international trading
relationships. Similarly, the Obama
administration should speed the
issuance of permits for the export
of liquefied natural gas to American allies in Asia and to European
countries seeking to move away
from Russian supplies.
International institutions. The
Obama administrations failure to
dissuade even the closest U.S. allies from joining the China-led
Asian Infrastructure Investment
Bank has showed how not to respond to the rise of new economic
institutions, even ones that rightly
give U.S. policy makers pause.
Washington should more aggressively try to shape the rules and
membership of future institutions
like the AIIB. Trying to improve
their governance and lending standards is more productive than futile opposition to their existence.
Similarly, Congress should stop
holding up reapportionment of
voting power at the International
Monetary Fund. Giving developing
countries more say could increase
their buy-in to the IMF and reduce
the attractiveness of alternative financing mechanisms that lack the
IMFs lending standards and transparency.
Over the past 70 years, the U.S.
has pursued a free and open economic system that enhanced
American prosperity and helped
generate the power necessary to
preserve it. The circle has been exceedingly virtuous. Now is the
time to set an ambitious international economic agenda for the future. Americas future prosperity
and security demand it.
Ms. Flournoy is chief executive of

the Center for a New American
Security and former undersecretary of defense for policy in the
Obama administration. Mr. Fontaine is president of the center
and former foreign-policy adviser
to Sen. John McCain (R., Ariz.).
OPINION
BY YUKON HUANG
Markets continue to fret over
how much further Chinas economy
will fall. On the foreign policy
front, Chinas more aggressive posture has leaders across the world
on edge. These twin worries mean
that Beijing is becoming a more
normal economy but an abnormal
great power.
In the economic context, normal
means that Chinas double-digit
growth rates are moderating to
something more typical of a middleincome country. With the increasing
dominance of the private sector, it
is no longer immune to market
forces and ever-rising debt ratios.
Few now expect Beijing

to be a passive ruletaker. Already its more
assertive in challenging
the existing regime.
Part of the cost of becoming a
more normal economy is increased
vulnerability to global economic
cycles and the Keynesian risk of
lack of demand. Corporate profits
are being squeezed by years of
double-digit wage increases and
high real interest rates.
Increasing efficiency needs to
displace increasing capacity as the
priority since Beijing can no longer
count on ratcheting up activity with
massive state-led investments. Nor
can it ensure stability by controlling interest and exchange rates as
bands are widened or eliminated.
Internationalizing the yuan may

convey prestige, but it will also restrict macro policy options as
cross-border capital flows are liberalized. In a normal economy, the
states role is not to manage everything but to establish marketfriendly regulatory institutions. Beijing still has much to learn about
the running of such institutions.
Meanwhile, President Xi Jinping
has broken with the more passive
foreign-policy characteristic of past
leaders collective decision making.
This signals the advent of a more
assertive China.
Yet Beijings ability to exercise
influence on the global stage is limited. Chinas experience in dealing
with sensitive issues lags well behind its economic achievements,
placing it at a disadvantage in negotiating with other major powers.
China will be an abnormal great
power compared with the historic
rise of Europe, the U.S. and Japan.
Unlike the others, whose ascendancy represented a broadly continuous yet lengthy process, China
is unique in being a returning great
powerone that accounted for 30%
of global production two centuries
ago but saw its share fall to less
than 5% by 1950. Even today, after
three decades of double-digit
growth, its share is only half of
what it once was.
Chinas ability to make it to high
income levels is not a foregone
conclusion. None of the others had
Chinas handicap of becoming old
before it becomes rich. China may
be the worlds second-largest economy, but it is still relatively poor,
with a per capita income ranking
around 90th internationally.
GETTY IMAGES/IKON IMAGES
China Becomes an Abnormal Great Power
With a proud history to live up

to and domestic problems to overcome, tensions have arisen as Beijing attempts to balance its internal struggles with an evolving
international order. To the outside
world, China is seen as more
threatening with its demonstrative
acts in the East and South China
Seas.
Years ago, Washingtons selfserving hope was that China would
become a responsible global
stakeholder. Few now believe that
China will be a passive rule-taker
in a system that was largely established by the West and has shown
little willingness to accommodate
its rise. It is more likely to be a
rule challenger, maneuvering
through grey areas and reshaping
the balance of power with respect
to its expanded core interests
within the Asian region.
Chinas formerly reactive approach was to allay apprehensions

so that others would not constrain
Chinas potential to develop. The
concept of peaceful development
is no longer tenable in a world
where Americas Asian pivot is
viewed by the Chinese as a containment strategy. The rhetoric currently used in Washington to secure support for the Trans-Pacific
Partnership and its earlier campaign against the Asian Infrastructure Investment Bank only solidify
such sentiments.
That China has been willing to
act more forcefully does not make
it any different from other great
powers. China may be dissatisfied
with the global status quo, but it
will push for change in a manner
that does not destabilize a system
that it has benefited from.
But China does differ from the
other major powers in distinctive

ways. Unlike other great powers, it
is not clearly aligned with any one
group or set of issues. Beijings
choice of partners, structure of alliance and intentions varies depending on the issue at hand and the
governance structures available.
First, China sees itself as a developing country with little in common with the political liberalism of
the West. Second, it is an emerging
power that shares concerns with
the other BRICS countries in pushing for more influence. Third,
Chinas position at the United Nations and G-20 gives it a stake in
the existing global power structures with its expectations of responsible behavior. Finally, it is
seen as potentially part of a G-2,
although realistically it will be
more active as a regional power.
This is a world of overlapping,
shifting and often issue-specific
partnerships. Chinas aim is to reform the system, not to oust it. Mr.
Xis Asia for Asians and Silk
Road initiatives are more about
finding pragmatic solutions rather
than establishing a comprehensive
strategy.
This process creates the political space for China to maneuver.
But as a regional power that feels
constrained by the U.S. pivot, a
more confident China with expanded core interests will continue
to generate tensions and uncertainties that define it as an abnormal
great power.
Mr. Huang is a senior associate at

the Carnegie Endowment and a
former World Bank country director for China.
How to Prevent the Fall of Baghdad

BY KEVIN CARROLL
Islamic State has seized control
of Ramadi, the capital of Anbar
province just 70 highway miles from
Baghdad. Fallujah, located between,
is already a terror stronghold.
There is little doubt that Islamic
State leader Abu Bakr al-Baghdadi
plans to capture the city whose
name he bears. A man who declared
himself a caliph, Baghdadi knows
his home was the seat of the Abbasid caliphate, founded in the
eighth century, to which Islamic
State would like to return.
It would be a mistake for the
Obama administration to continue
to underestimate Islamic State as
the junior varsity. Islamic State
demonstrated operational capability
recently, attacking in opposite directions to occupy both Ramadi and
Palmyra, deep inside Syria.
Its Ramadi assault mixed terrorism with conventional tactics.
At least 30 huge truck bombs,
some reportedly as large as the
one used in the 1995 Oklahoma
City bombing, obliterated the citys
defenses, and Islamic State forces
poured through the breach. A similar attack could be in store for
Baghdad. It is assumed that Islamic State operatives are in the
capitals Sunni enclaves, with more
en route disguised as refugees.
The fall of Baghdad to Islamic
State would harm U.S. strategic interests as the fall of Saigon did in
1975. The blow to U.S. credibility
and the enhancement of Islamic

States prestige, of its black flag
rising over an evacuated U.S. Embassy, would be incalculable. To
prevent this outcome, President
Obama should consider taking the
following actions.
Use strategic air power. Americas unrivaled air forces can hit Islamic State from anywhere: neighboring countries, the sea and the
continental U.S. Yet the sorties
flown so far have been minimal, and
damage inflicted still less, even as
Islamic State held a parade in broad
daylight in Rutba, Iraq, last week.
That is the kind of target our
aviators dream of. Rules of engagement need to be loosened, U.S. air
controllers sent to the front to call
in strikes, and more combat aircraft put into the fight.
Launch ruthless special operations. Recent raids into Syria were
daring and skillful. But a handful
of missions do not resemble the
operations led by U.S. Army Gens.
Stanley McChrystal and Michael
Flynn in 2006-07 that eventually
broke the back of Islamic States
predecessor, al Qaeda in Iraq, and
drove it abroad.
At that campaigns height,
commandos conducted multiple
missions every night. They analyzed intelligence collected on one
objective to find and fix targets
they finished on successive raids.
The rhythm, persistence and sheer
number of those operations
crushed the enemy. Emulate them
now, starting near Baghdad.

Capture and interrogate Islamic State leaders. Much of the intelligence exploited on those missions came from documents and
electronics found in terrorist safe
houses. But the best came from interrogations, some conducted on
the battlefield as the smoke cleared.
Interrogators acted within the
bounds of decency against evil men
who deserved no quarter. Yet neither were military and CIA personnel constrained by the rules of evidence and criminal procedure,
Islamic State is likely to use

the tactics that worked
in Ramadi. The U.S. can do
much to change the outcome.
because their goal wasnt a courtroom conviction, but the location of
the next high-value target. A robust
program of capturing and roughly
interrogating terrorists abroad
should resume, first focused on the
whereabouts of Islamic State operatives in and around Baghdad.
There is also a role for police
work. Islamic State has devotees in
all 50 U.S. states; hundreds of
Americans traveled abroad to fight
for them, and some number have
returned. The FBI and state and local law enforcement should make
aggressive use of antiterror statutes
to questionand perhaps flip into

informantssuspects who may be
in contact with terror leaders with
details of Islamic State plans regarding Baghdad. Congress should
reauthorize the National Security
Agencys signals intelligence programs identifying such communications between Americans and
known terrorists abroad.
Send ground combat forces.
Despite U.S. efforts to retrain
them, the Iraqi army is now unable
or unwilling to stand and fight Islamic State alone. Its commanders
have shamefully thrown down
their weapons, discarded their uniforms and abandoned their men
and posts when Islamic State
threatens. The Iraqi army needs a
backbone transplant.
U.S. airborne units can arrive
quickly to secure Baghdads airport
and the long and vital road from
the city to that airfield. More Marines can better defend the U.S.
Embassy in Baghdad. Americans
can stiffen Iraqi lines around the
city, and provide artillery and engineer units needed in urban combat. U.S. cavalry units can launch
what imperial Britain called punitive expeditions to destroy Islamic State lairs further afield.
The arrival of thousands more
American fighting men will improve the Iraqi armys performance. It was no accident that the
Sunni Awakening and U.S. surge
succeeded at the same time in
2006-07. As U.S. troops poured in,
Sunni sheiks cast their lot with

what Bing West memorialized as
the The Strongest Tribe in his
book of the same name.
There are natural advantages to
defending Baghdad, which the
Iraqis can exploit if steeled by U.S.
troops. To seize the capital, Islamic
States lines of communication
would expand, a logistical challenge
that would leave them more vulnerable to counterattack. The Iraqi
armys lines of communication
would helpfully contract.
The Tigris River is a significant
obstacle, and a defensible one. Urban combat favors prepared defenders. And Baghdad is a dense
city, its population having swelled
to more than seven million,
crammed into a place the size of
Baltimore or Boston.
Most important, the predominantly Shiite Iraqi army would be
fighting to protect its brethren,
unlike previous battles in mostly
Sunni cities where they broke and
ran.
This fight is winnable. But if
the administration whistles past
the graveyard and insists its policy
is working even as Islamic State
nears Baghdad and U.S. diplomats
there, the White House may face a
debacle that makes Benghazi seem
minor in comparison.
Mr. Carroll served as a U.S. Army

officer in Iraq and Afghanistan,
and as a CIA case officer in a Middle Eastern war zone.
FROM LEFT: VICTOR J. BLUE/BLOOMBERG NEWS; SAM KANG LI/BLOOMBERG NEWS
IN DEPTH
With many, many exceptions,

this economy today is being dragged down
by too many mediocre CEOs.
While delivering immediate shareholder returns, executives are

underinvesting in innovation, skilled workforces or essential capital
expenditures necessary to sustain long-term growth.
CARL ICAHN, ACTIVIST INVESTOR
LAURENCE FINK, CEO, BLACKROCK INC.
Firms Send More Cash

Back to Their Shareholders
U
.S. businesses, feeling heat from activist investors, are slashing longterm spending and returning billions
of dollars to shareholders, a fundamental
shift in the way they are deploying capital.
By Vipal Monga,
David Benoit
and Theo Francis
Data show a broad array of companies

have been plowing more cash into dividends and stock buybacks, while spending
less on investments such as new factories
and research and development.
Activist investors have been pushing for
such changes, but it isnt just their target
companies that are shifting gears. More
businesses sitting on large piles of extra
cash are deciding to satisfy investors by
giving some of it back. Rock-bottom interest rates have made it cheap to borrow to
buy back shares, which can boost a companys stock price. And technology-driven
productivity gains are enabling some businesses to do more with less.
As the trend picks up steam, so too has
debate about whether activist investors
who take sizable stakes in companies, then
agitate for changes they think will boost
share priceshave caused companies to
tilt too far toward short-term rewards.
Laurence Fink, chief executive of BlackRock Inc., the worlds largest money manager, argued as much in a March 31 letter
to S&P 500 CEOs. More and more corporate leaders have responded with actions
that can deliver immediate returns to
shareholders, such as buybacks or dividend
increases, while underinvesting in innovation, skilled workforces or essential capital
expenditures necessary to sustain longterm growth.
An analysis conducted for The Wall
Street Journal by S&P Capital IQ shows
that companies in the S&P 500 index
sharply increased their spending on dividends and buybacks to a median 36% of

operating cash flow in 2013, from 18% in
2003. Over that same decade, those companies cut spending on plants and equipment to 29% of operating cash flow, from
33% in 2003.
At S&P 500 companies targeted by activists, the spending cuts were more dramatic. Targeted companies reduced capital
expenditures in the five years after activists bought their shares to 29% of operating cash flow, from 42% the year before,
the Capital IQ analysis shows. Those companies boosted spending on dividends and
buybacks to 37% of operating cash flow in
the first year after being approached, from
22% in the year before.
While billion-dollar stock buybacks
draw headlines, dividend increases also are
a big factor, according to data from
Moodys Investors Service. At the 400 nonfinancial U.S. companies that Moodys
rates as investment grade, the median percentage of cash spent on dividends rose to
11.9% of earnings before interest, taxes, depreciation and amortization, or Ebitda, in
the third quarter of last year, from 9.4% in
2013, to the highest percentage since at
least 2005.
Companies ranging from the industrial
conglomerate DuPont Co. to Apple Inc. are
sending more of their cash to their shareholders after coming under pressure from
activists. General Motors Co. announced a
$5 billion stock buyback in March after investor Harry Wilson and four hedge funds
called on the company to return cash to
shareholders.
It is it too early to know howor
whetherthe shift will affect the overall
economy.
Some economists predict an investment
reduction will mean less growth and fewer
jobs. If investment falls, then youre losing demand in the economy, youre losing
expenditures, youre losing economic stimulus, says Steven Fazzari, an economist at

Washington University. Thats hurting
jobs.
Other economists say it is appropriate
for companies to focus on enriching shareholders, who can then decide where to deploy the money. To the extent buybacks
and higher dividends push up stock prices,
they can contribute to what economists
call the wealth effect, where rising asset
prices make consumers feel wealthier and
more confident about spending their
money.
Hedge funds run by activist investors
contend companies waste a lot of money
that they should send to shareholders instead. One such investor, Carl Icahn, says
activism with a long-term focus improves
the economy by promoting efficient use of
capital. With many, many exceptions, this
economy today is being dragged down by
too many mediocre CEOs, and its dangerous if profitability is going down despite
interest rates being at zero, he says.
Business investment ticked up in April
but remains sluggish and uneven. In recent
years, corporate investment in capital
goods, beyond replacing and maintaining
existing assets, has grown slowly. While
falling technology costs may account for
some of the trend, companies have been
slow to return to higher investment levels
since the financial crisis. One could argue
that this has not been a good recovery for
investment, says Christopher Probyn,
chief economist for State Street Global Advisors.
Capital spending by businesses accounts
for about one-eighth of all spending in the
U.S. economy. Historically, it has been an
important driver of long-term growth, as
upgrades make workers and companies
more productive, says Michael Feroli, chief
U.S. economist at J.P. Morgan Chase & Co.
Money plowed into dividends and buy-
backs doesnt disappear from the economy.

Its recipients can spend it, too.
But Washington Universitys Mr. Fazzari
says that most stock is owned by the
wealthy, who tend to save more of their income. By contrast, he says, many kinds of
business investmentfrom building construction to equipment maintenance and
purchasesinvolve payments to contractors and suppliers who pay wages to middle- and low-income workers.
Many companies have made changes
while under no direct threat from activists.
General Electric Co.s institutional investors had long urged the conglomerate to
scale down its large lending business. In
April, GE said it would sell off that business and buy back $50 billion of its stock.
The company said it chose to plow the
proceeds into buybacks because it already
had made substantial acquisitions and has
invested sufficiently in its existing businesses.
U.S. Steel Corp. isnt buying back stock.
But Chief Executive Mario Longhi has imposed a new analytical framework under
which every proposed project must be
linked to the value it could create for
shareholders. The more disciplined approach sets a higher bar for R&D, which
used to get a green light if it could simply
boost production, says Mr. Longhi.
U.S. Steel is under pressure from
cheaper imported steel and has a high cost
structure because its blast furnaces are expensive to turn on and off, says Mr.
Longhi. The need to keep the company
lean and viable, he says, led to the
changes.
Keeping activists at bay, he says, is a
side benefit. If an activist decides to look
at our company, I dont think theyre going
to find a lot of room, he says.
Years of uncertain global demand and
revenue growth, combined with corporategovernance changes that have made it eas-
HUY MACH/ST. LOUIS POST-DISPATCH/ASSOCIATED PRESS
IN DEPTH
U.S. Steel CEO Mario Longhi has imposed a new analytical framework under which every proposed project must be linked to the value it could create for shareholders. The companys Granite City, Ill., plant, above.
ier for dissident shareholders to campaign
for board seats, have opened the door to
investors with ideas for boosting stock
prices.
eThe number of activist campaigns annually has risen 60% since 2010. Last year
there were 348, the most since 2008, according to data provider FactSet. An additional 108 were launched in this years first
quarter. Activist funds now control nearly
$130 billion in assets, more than double
the amount they had in 2011, according to
hedge-fund tracker HFR, giving them the
war chests to target even the biggest
American corporations.
Activists say they are strengthening
companies that tend to overspend and
holding managers responsible to their ultimate owners, the shareholders.
Network-equipment maker Juniper Networks Inc. came under pressure last year
from Elliott Management Corp., a New
York-based hedge fund. The fund criticized
Juniper for spending $7 billion on acquisitions and nearly $8 billion on R&D when
its stock price had underperformed the
Nasdaq Composite Index by 63 percentage
points between the companys 1999 initial
public offering and Nov. 4, 2013.
In February 2014, in an agreement with
Elliott that avoided a potential board fight,
Juniper appointed two new directors and
announced a plan to repurchase stock and
cut costs. The company reduced its head
count by 7% and repurchased $2.25 billion
of stock last year. This year it appointed
two more directors after a joint search,
and it plans to buy back almost $2 billion
more in stock through 2016. The company
paid its first-ever dividend last year. It has
borrowed money to fund some of the buybacks and dividends.
In early 2012, New York investment
firm Clinton Group Inc. took a stake in
teen-fashion retailer Wet Seal Inc. and began urging a share buyback. In February
Cash Shift
S&P 500 companies are plowing more of their cash ow into dividends and stock buybacks,
and less into capital expenditures.
Percentage of operating cash ow
50%
40
36.1%
Capital spending
33.3%
30
20
10
28.7%
Capital returns
17.7%
Note: Data are median of S&P 500 companies, as of June 1 of each year.
0
2003
04
05
06
07
Source: S&P Capital IQ
2013, the company disclosed it was cutting

jobs and expenses and would repurchase
$25 million of stock after appointing four
Clinton representatives to its board.
This January, Wet Seal closed twothirds of its stores and filed for bankruptcy protection. In court documents, executives cited a broader drag on teen
retailers as well as missteps that alienated
core customers.
Others contend the buyback ultimately
hurt the company. If we had rewound
andthey hadnt done the buyback, that
would have given them substantially more
flexibility, says Jeff Van Sinderen, an analyst at B. Riley & Co. In those situations,
$25 million can go a long way.
08
09
10
11
12
13
The debate over R&D spending flared

up at chemicals maker DuPont amid pressure from activist Nelson Peltz and his
Trian Fund Management LP.
On May 13, DuPont won a proxy fight
for board seats, in part by arguing that
Trians suggestions to cut costs and break
up the company would get in the way of
scientific breakthroughs, a concern that
struck a chord with some shareholders and
academic commentators. Trian had questioned whether DuPonts current system of
R&D can be successful, but said it wouldnt
eliminate such spending entirely.
Among other moves, DuPont increased
its quarterly dividend in April and has
pledged to repurchase about $4 billion in
stock after a planned spinoff of its performance-chemicals business.

The choice between investments and
shareholder returns isnt simple. Apple, for
example, has paid out more than $64 billion to shareholders through dividends and
stock buybacks since mid-2013, when Mr.
Icahn began pressing the company to stop
sitting on so much of its cash. Last month,
the company boosted its dividend by 11%
and increased its buyback plan by $50 billion, to $140 billion.
But Apple also has long pursued a disciplined approach to R&D that has yielded
much bigger payoffs than companies that
spent far more. Nokia Corp. outspent the
iPhone maker on R&D by a 4-to-1 ratio
over the decade starting in 2001 but still
ended up an also-ran in the cellphone market it once dominated.
The history of corporate America is littered with a long line of companies that
relinquished their leading industry position and spent enormous resources attempting to reinvent themselves and ultimately failed, activist fund Starboard
Value LP wrote in a letter to Yahoo Inc. in
March as it pushed for a multibillion-dollar
buyback at the technology company.
Yahoo later decided to buy back $2 billion in stock.
The surge of activism has sharpened
the debate about the fundamental purpose
of a company. Does it exist to satisfy
shareholders or does it have an imperative
also to try to build for the long term?
The answer is far from settled. If the
activists are right, they are stopping companies from throwing good money after
bad.
If they arent, then we have to worry
about the impact, says Yvan Allaire, the
executive chairman of the Institute for
Governance of Private and Public Organizations. It has to be a fairly significant impact on the economy.
FROM PAGE ONE
Clockwise from top left: Arrested FIFA officials Jeffrey Webb, Eduardo Li, Jack
Warner, Eugenio Figueredo, Nicols Leoz, Jos Maria Marin and Rafael Esquivel.
intermediaries involved in related
schemes similarly used currency
dealers, a numbered account at a
Swiss bank, and reference to a consulting contract to evade financial
institutions anti-money-laundering
controls, prosecutors said.
In 1991, for example, the Brazilian sports marketing firm Traffic
Group entered into a $6.6 million
contract for the exclusive rights to
three years of the Copa America
tournament, but Mr. Leoz refused to
sign it unless he got a bribe, the indictment alleges. In a private meeting, Mr. Leoz told a Traffic executive that he would make a lot of
money from the rights he was acquiring, and that [Leoz] did not
think it was fair that he [Leoz] did
not also make money, the indictment said. The executive wired a
six-figure U.S. dollar payment to
Mr. Leoz and continued to make
payments for subsequent rights,
reaching seven-figure payments,
prosecutors said.
Both Messrs. Warner and Leoz
resigned amid corruption scandals
in 2011 and 2013, but according to
the indictment, the change in leadership didnt result in a change in
practice.
U.S. authorities also charged Jeffrey Webb, the head of Concacaf
since 2012 and a FIFA vice president, saying an intermediary negotiated a bribe payment on his behalf
that led to the awarding of the 2013
Gold Cup rights. Mr. Webb didnt respond to a request to comment.
The indictment paints a picture
of growing popularity of the tournaments in the U.S. and South America
over the years, making the marketing rights increasingly valuable. One
2007 contract for Grupo Santander
to become the title sponsor of the
Copa Libertadores tournament between 2008 through 2012 was valued at $40 million, for example. In
2012, Bridgestone entered into a
similar contract for $57 million.
FIFA earned $5.7 billion in revenue in 2011 through 2014, 70% of
which came from the sale of television and marketing rights to the
2014 World Cup.
Beginning in 2012, prosecutors
said some of the conspirators tried
to persuade others not to divulge
information to law enforcement.
One defendant, Aaron Davidson,
told others they might be recorded
making admissions of their crimes.
The company at which Mr. Davidson
is president, Traffic Sports USA Inc.,
pleaded guilty in connection with
the scheme.
Bribe
requests
continued
through 2014, according to the indictment. In April 2014, a co-conspirator asked former Brazil soccer
federation President Jos Maria
Marin during a trip to Miami

whether continued payments that
had been made to his predecessor
were necessary. Mr. Marin responded: [I]ts about time toto
have it coming our way. True or
not? Mr. Marin was arrested
Wednesday morning in Switzerland.
Meanwhile, the Office of the Attorney General of Switzerland
opened criminal proceedings against
10 unnamed individuals on suspicion of criminal mismanagement
and of money laundering in connection with the controversial allocation of the 2018 and 2022 World
Cups, awarded to Russia and Qatar,
respectively.
FIFA, a Switzerland-based nonprofit that acts as custodian and organizer of the World Cup, was in
the midst Wednesday of its annual
meeting and elections, which were
widely expected to result in the reelection of Mr. Blatter as president.
FIFA spokesman Walter de Gregorio
didnt comment specifically on the
U.S. allegations or the Swiss probe,
but said Mr. Blatter remained focused on his bid for a fifth consecutive term. Mr. Blatter, a 79-year-old
Swiss citizen, has worked for FIFA
since 1975 and presided over the organization since 1998.
He is very calm, Mr. de Gregorio said of Mr. Blatter, who hasnt
commented publicly on Wednesdays actions. He is not dancing in
his office. Hes not a happy man today.
Mr. de Gregorio said the timing
may not be the best but that the
organization welcomed the process
and was cooperating fully with the
authorities. He said FIFA had no advance warning of the arrests.
Authorities said they have already obtained six guilty pleas, including from Jack Warners son, Daryll, and Charles Chuck Blazer, a
former general secretary of Concacaf and the former U.S. member of
the FIFA Executive Committee.
U.S. officials allege bribes affected the awarding of rights around
World Cup qualifiers and other Concacaf tournaments, including in Brazil. Prosecutors said it also affected
the selection of the host country for
the 2010 World Cup, which took
place in South Africa.
At the request of the U.S., Swiss
authorities arrested seven officials,
including Mr. Webb. Agents in the
U.S. executed a search warrant at
Concacaf headquarters in Miami.
The others arrested in the sweep
were Eduardo Li, Julio Rocha, Costas Takkas, Eugenio Figueredo, Rafael Esquivel and Jos Maria Marin,
according to Swiss authorities.
Those named as having been arrested werent available to comment.
Hoteliers Daring Letter

To Premier Li Hits Home
Continued from first page

years ago, and economists say this
years growth could be slower still.
Standing in the way of greater
entrepreneurship is Chinas notorious red tapea target of Mr. Lis for
the past two years and one he has
sounded increasingly frustrated
about. In April, Mr. Li lambasted the
countrys bureaucrats for policies
that he called ridiculous. Mocking
the difficulties of getting a permit,
he said local officials were asking
applicants to prove your mother is
your mother. He has rescinded the
need for some central government
approvals and called on departments to ax the number of administrative authorizations needed to
start businesses.
Government officials cite figures
that suggest progress. In 2014, the
number of new companies in China
grew nearly 46% to 3.65 million
from a year earlier, according to
state-run news agency Xinhua.
Mr. Wu, who controls Crystal
Orange Hotel Group, a 65-hotel
chain in more than 15 Chinese cities
including Beijing and Shanghai, said
his inspiration for writing the letter
came after he saw news that Premier Li had discussed giving more
power to local governments. I was
worried because most businesses
deal with the local-level government, and the local government
didnt do well with [more power] in
the past, Mr. Wu said. I was concerned so I raised my voice.
Inefficiencies are hard to root
out, said Trey McArver, a Londonbased China consultant and author
of newsletter China Politics Weekly.
The problem is theres a lot of resistance from people who benefit
from the current system, he said.
In particular for the people who
get to issue licenses, investment approvals and collect fees from businesses, its very lucrative.
While much of Chinas red tape
occurs at local levels, the problem
begins with vague central government directives that leave local governments to interpret what Beijing
wants, says Zhai Jiguang, a professor at China University of Political
Science and Law.
The mentality of governing by
approvals
hasnt
completely
shifted, says Charles Horne, research manager at China Policy, a
research and advisory firm. But
you have a lot of positive inducements, including Wu Hais letter.
As he built his hotel business,
Mr. Wu grew increasingly frustrated
with local officials. He said it was
common practice for government in-
dividuals to pop by his hotels before

big holidays and subtly remind hotel
managers that a gift would be appreciated.
You definitely can turn them
down, but they wont make your life
easier, he said.
Mr. Wu grew up in Jiangsu province and moved to Beijing in 1987 to
attend college. He worked as an accountant and in travel, and in 1997
he created his own company, Smart
Travel, which focused on hotelbooking services. The company
eventually became part of online
travel agency Ctrip.com International Ltd., and Mr. Wu worked as
the senior vice president there before branching out to start the predecessor to Crystal Orange Hotel
Group in 2006.
His hotels offer midrange accommodationaverage room rates run
between 400 yuan and 600 yuan
(US$64 to US$97) per night. According to STR Global, a hotel consultancy, the average daily rate in
China in March was 559.74 yuan.
In some, he likes to tailor to certain lifestyles, like installing putting
greens in some rooms. He puts a
goldfish in guest rooms next to a
card that reads, for example, My
name is Lucy. I wont be feeling
lonely as long as youre around.
By the end of the year, rooms in
his hotels will feature a morning
alarm system that guests can prerecord with the voices of their
spouses or children. One coming
video ad for his hotel depicts a
guest waking up to the sound of his
wifes voice only to be slapped by
the female companion sharing his
bed. The tagline reads, No one else
will sleep by his side.
Mr. Wu posted his letter on his
public WeChat social-media account.
With its salty metaphorshe compared government officials to the
children of a mans wife, state companies to the children of his concubine and private enterprises to the
children of a prostitutehe expected trouble. I got a lot of feedback from businessmen, he said.
Some of them said they cried.
Some of them said youre so brave.
If it was 30 or 40 years ago you
probably would have been put in
jail.
Instead, he says, local officials
now call and tell him they support
his efforts. They include the head of
his city districts Central Communist
Party Congress, of which he is a delegate. Said Mr. Wu, Im kind of relieved.
Lilian Lin
JAMES WASSERMAN FOR THE WALL STREET JOURNAL

able in South America and the U.S.
The Justice Department alleged
those involved in the scheme included soccer officials, sports media
and marketing company executives,
and other intermediaries who laundered illicit payments.
The U.S. is seeking the extradition of the seven FIFA officials arrested in Zurich. Six of the seven
are opposing their extradition to the
U.S., the Swiss Federal Office of Justice said.
Swiss authorities said they
opened a separate criminal probe
related specifically to the selection
of Russia and Qatar as future World
Cup hosts.
FIFA, a multibillion-dollar, selffunded nonprofit organization, appeared blindsided by the disclosure
of the probes and the arrests. Police
arrested seven FIFA officials, including some at the five-star Baur au
Lac Hotel in central Zurich, in the
early-morning hours on Wednesday,
just 48 hours before the body was
expected to re-elect its longtime
president, Joseph Sepp Blatter.
Mr. Blatter wasnt named in the
disclosures of the U.S. indictments
or the Swiss probe. He has presided
over FIFA for 17 years, during much
of the period U.S. officials say illegal
activity took place in the organization. Long a controversial leader of
the group, he has for years defended
FIFA, and himself, against accusations of corruption.
The U.S. and Swiss probes detail
by far the most far-reaching accusations against the group, formally
known as the International Federation of Association Football. The 47count indictment released by the
Justice Department accuses two
generations of soccer officials of
working with sports marketing executives to shut out competitors
and keep lucrative contracts for
themselves. Prosecutors allege U.S.
and South American sports marketing executives paid more than $150
million in bribes and kickbacks to
FIFA officials to obtain media and
marketing rights to international
soccer tournaments.
The indictment alleges that Jack
Warner, who held the top spot of
the Caribbean Football Union since
the early 1990s and went on to run
Concacaf, the soccer confederation
of North and Central America and
the Caribbean, solicited and accepted bribes, including for his vote
on FIFAs executive committee to
pick the 1998 and 2010 World Cup
hosts. Mr. Warner, who was among
those indicted by a Brooklyn grand
jury but who hasnt been arrested,
allegedly diverted soccer funds to
pay for a Miami condo in 2005, according to the indictment.
A statement issued by his political party in Trinidad and Tobago
cited Mr. Warner as saying he had
been afforded no due process in
the probe. I have not even been
questioned in this matter, he is
cited as saying. I reiterate that I
am innocent of any charges.
The indictment also alleges that
beginning in the early 1990s, the
president of the South American
confederation, Nicols Leoz, began
soliciting bribe payments to renew
commercial contracts, which were
funneled through offshore corporations that held accounts at U.S. financial institutions. Mr. Leoz
couldnt be reached to comment.
A middleman who helped facilitate the payments regularly shredded documents and told officials not
to use accounts in their own names,
according to the indictment. Other
GETTY/AFP/EPA
FIFA Officials Arrested
The hotels of Chinese entrepreneur Wu Hai are known for their offbeat themes.
As of 12 p.m. ET
Euro 1.0886 0.11%
Yen/US$ 123.87 0.62%
Yen/A$ 95.50 0.30%
Oil 57.98 g 0.09%
Gold 1187.40 0.02%
New Generation of Youth Hostels:

Fashionable Rather Than Dingy
MARKETS 21
Thursday, May 28, 2015
10-year Treasury g 9/32 yield 2.167%
3-month Libor 0.28350
Toshiba Could Shine

If Mess Is Cleared Away
HEARD ON THE STREET 28
THE WA L L STR E ET JOU RNAL.
asia.WSJ.com
U.S. Fund Firms Target Japanese Cash
BY KOSAKU NARIOKA
which workers regularly set aside a

fixed amount of investment money,
while receiving tax benefits. The
change aims to encourage the use of
individual retirement accounts similar to those popular in the U.S.
Currently, these IRA-type plans
are available only to the self-employed and workers who dont have
corporate-sponsored pension plans.
Under the proposed change, eligibility is extended to public servants,
employees covered by corporate
plans and their spouses.
If approved by Parliament, as is
likely because the coalition Mr. Abe
leads controls both houses of the
legislature, the new regulation
would take effect in 2017. Virtually
all workersmore than 65 million
peoplewould have access to these
plans.
Its not an exaggeration to say
[Japan] is one of the most appealing markets in the world, said
Takashi Takamura, head of sales
and distribution for Japan at Capital Group Cos., the Los Angeles firm
that runs American Funds, one of
the largest mutual-fund families in
the U.S.
TOKYOJapan is loosening
rules on pensions, drawing interest
from U.S. investment managers who
want to look after a slice of the
countrys trillions of dollars of retirement money.
Making more people eligible to
use individual retirement accounts
is the latest in a series of steps that
Prime Minister Shinzo Abes administration is taking to reinvigorate financial markets, while giving workers more responsibility for
preparing to retire. Other moves
Tokyo has made in recent years include promoting better corporate
governance and increasing equity
investments by public pension
funds.
Those efforts, fund managers
say, have helped Japanese stocks
rise to 15-year highs, furthering a
broader push to spur growth by
making people feel wealthier, and
more willing to spend.
Last month, the government
proposed a bill to make 27 million
more people eligible to join definedcontribution retirement plans, in
In Their Own Hands
As more Japanese use individual retirement accounts, foreign asset managers see
room for growth.
Participants in dened-contribution
plans as of March 31
6 million
Japan
(March 31)
$83 billion**
3
2
1
0
2011
12
13
14
15*
**Estimate
*As of Feb. 28
Sources: Japanese Ministry of Health, Labour and Welfare (participants); Investment Company Institute (U.S.
market); AllianceBernstein (Japanese market)
Assets earmarked for retirement

in Japan amount to about $3 trillion, but a further $7 trillion of
household assets is held in cash or
bank deposits. Mutual-fund companies hope some of that money will
flow into investment accounts.
is seeking indication-specific pricing. The company has begun approaching drug makers about arranging such deals, which could go
into effect for 2016, he said.
A spokeswoman for Roches Genentech unit said that when Tarceva
was approved to treat pancreatic cancer in 2005, it was the first medicine
approved for the disease in more than
a decade. She said the drug is now
rarely used to treat pancreatic cancer
because other drugs have since been
approved for the disease. She said Genentech would welcome a system of
pricing a medicine based on how it
performs in different indicationsand
has one in place in Italybut there
are challenges to doing so in the U.S.,
including fragmented patient-record
systems.
Express Scripts has in recent
Cancer Costs
U.S. spending on therapeutic

oncology drugs and oncology
supportive care drugs
$50 billion
2014
$42.4B
40
30
JB REED/BLOOMBERG NEWS
Express Scripts Holding Co., a

large manager of prescription-drug
benefits for U.S. employers and insurers, is seeking deals with pharmaceutical companies that would
set pricing for some cancer drugs
based on how well they work.
The effort is part of a growing
push for so-called pay-for-performance deals amid complaints about
the rising price of medications,
some of which cost more than
$100,000 per patient a year.
Some insurers and prescriptionbenefit managers are pushing back
by arguing that they should pay less
or nothing at all when drugs dont
work well in certain patients. Drug
companies are countering with pricing models of their own, such as offering free doses during a trial period.
Express Scripts this month told
clients it is seeking deals with drug
makers for differentiated pricing for
certain cancer drugs based on how
well they work against different types
of tumors, Express Scripts Chief Medical Officer Steve Miller said in an interview. Currently, Express Scripts
and most insurers pay the same perunit rate for a cancer drug regardless
of the type of cancer it is being used
to treat.
Dr. Miller pointed to Tarceva, a
drug co-marketed by Roche Holding
AG and Astellas Pharma Inc., which
has shown a smaller benefit in pancreatic cancer than in lung cancer. In
one clinical trial, Tarceva extended the
median survival of pancreatic cancer
patients by less than two weeks versus placebo. In a separate trial, it pro-
longed survival among lung cancer patients by about 3 months versus

chemotherapy.
In an indication-specific pricing model, the per-pill cost of Tarceva would be lower for pancreaticcancer patients than for lung-cancer
patients, given the reduced efficacy,
Dr. Miller said. Tarceva currently
costs about $6,850 a month per patient, according to GoodRx, a website that tracks drug prices.
One of the big frustrations has
always been people paying top dollar for drugs that arent always giving them the best response, Dr.
Miller said. If pharma is truly sincere about wanting value-based reimbursement, we now have the sophistication to do that.
Although Dr. Miller used Tarceva
as an example, he wouldnt identify
the drugs for which Express Scripts
20
10
0
2010
Tarceva has shown smaller benefit in

pancreatic cancer than in lung cancer.
U.S.
(Dec. 31, 2014)
$14.2 trillion
Linking Drug Prices to Efficacy
BY PETER LOFTUS
Assets in dened contribution plans
11
12
Source: IMS Health
13
14
Mr. Takamura said that the establishment of programs like defined-contribution plans offers opportunities for more people to
experience investing. Capital Group
hopes to team up with Japanese
firms to sell its products.
Governments and companies

around the world feel the growing
pain of paying for the retirement of
workers. In Japan, the pension system is under particular stress because the population is shrinking
and aging fast, leaving fewer working people to finance benefits for
retirees. Corporations are growing
reluctant to promise fixed pension
payments. Many have switched to
defined-contribution plans similar
to 401(k) plans in the U.S.
Japan has had versions of IRAs
and 401(k) programs since 2001,
but the offerings have grown more
popular in recent years. The number of participants has increased by
more than 20,000 each year for individually managed accounts and by
roughly 300,000 a year for corporate-sponsored plans.
Still, the market is small. Total
assets held under such programs
are about 10 trillion ($83 billion),
according to an estimate by AllianceBernstein LP, a U.S. asset manager. That compares to more than
$14 trillion in total assets invested
in IRAs, 401(k) and other definedPlease turn to page 20
Silicon Valley Grits Teeth

Over Activist Investors
BY SHIRA OVIDE
AND DON CLARK
When it comes to activist investors, Silicon Valley is still developing ways to defend itself.
Activists like Carl Icahn and
Jana Partners have rattled tech giants including Apple Inc., Microsoft Corp. and Qualcomm Inc. in
recent years, urging strategy shifts
or financial moves to boost share
prices. Their biggest complaints:
excessive spending on pet technology projects and unproductive acquisitions.
Activists rarely win all they
seek, but they have gained seats in
the boardrooms of Microsoft, eBay
Inc. and others, as well as tens of
billions of dollars in additional
share buybacks at Apple and elsewhere.
Some tech companies have just
surrendered. Since 2013, at least 11
midsize technology firms have
agreed to be sold or taken private
after activists invested, including
Tibco Software Inc. and Riverbed
Technology Inc.
Earlier this month, Micrel Inc.,
where Starboard Value LP had
been agitating since last summer,
agreed to be acquired by Microchip
Technology Inc.
To some in Silicon Valley, the
wave of activism imperils the innovation machine that made Silicon
Valley the envy of the world. Venture-capitalist Marc Andreessen, a
director at Facebook Inc. and Hewlett-Packard Co., has been particularly outspoken.
Public companies are being basically forced by pressure from activists and their investors to give
back huge amounts of cash instead
of investing it in their business, he
said at a Fortune magazine conference in April.
Scott Kupor, a colleague of Mr.
Andreessens at Andreessen Horowitz, says that some tech executives, fearful of being ousted by
shareholders, are making shortterm moves to boost share prices
while neglecting broader technology shifts.
The danger, Mr. Kupor says, is
that shareholders are left with a
company that is a shell of its former self.
To forestall such outcomes, Mr.
Andreessen urges startups to mimic
Facebook and Google Inc. by granting founders special types of stock
that give them control over key decisions. He says that tactic will insulate the companies from outside
pressures after they are public.
Many entrepreneurs are heeding
the call. Seven of the 10 mosthighly-valued, venture-backed private tech companies have multiple
classes of stock, according to Fenwick & West LLP. The law firm says
it agreed not to disclose the companies names as a condition of
gathering the data.
Not long ago, tech was anathema to activists. Results were considered too volatile and unpredictable, making it hard for activists to
bank on a steady stream of cash.
But that has changed. Today, with
BUSINESS & FINANCE
Rare Sales Slip for Michael Kors McDonalds

To Put a Veil
the companys fiscal fourth-quarter
profit grew to $183 million from
$161 million a year earlier.
The stock has lost more than a
third of its value over the past 12
months as investors have worried
the company risks overexposure
that could turn off shoppers as it
aggressively opens new retail stores
and distributes its products through
more department stores.
Investors were also spooked by
Korss outlook for the current quarter and full business year. For the
current quarter, the company predicted revenue of $930 million to
$950 million, well below the $1.1 billion in sales expected by analysts.
For the year, it projected revenue of
$4.7 billion to $4.8 billion, short of
analysts call for $5.05 billion.
Part of the decline in North
BY SUZANNE KAPNER
Michael Korss brand of luxury

populism may be hitting some limits.
The accessories brand, which
grew rapidly by offering luxury to
the masses, said sales at existing
stores fell 5.8% in the three months
ended March 28, driven by a 6.7%
decline in North America and a 5.6%
drop in Europe. The drop was partly
due to a slowdown in spending by
tourists because of the strong dollar
and weak euro, but also reflected a
sharp falloff in the companys watch
business.
The decline was the first for Michael Kors Holdings Ltd. as a public
company and helped send the stock
down 23% to $46.42 in early afternoon trading in New York, even as
America was the result of fewer

tourists as the dollar strengthened
against the euro and the yen. Excluding those currency moves, however, sales at existing stores still
would have fallen 1.7% globally and
5.8% in North America.
Total quarterly revenue grew
18% to $1.1 billion. Japan was the
only region to expand sales at existing stores, which increased 12.4% including currency moves.
Kors will begin reporting existing sales on a global basis and including e-commerce sales in the mix
in its current business year.
Companies from Macys Inc. to
Tiffany & Co., which rely on a
steady stream of tourists to the U.S.,
have struggled as the dollar has
strengthened. On Wednesday, Tiffany said it was able to offset a de-
cline in tourists with stronger sales

to U.S. customers. That shift helped
sales at existing stores in North
America grow 1% in the three
months to April 30, excluding currency fluctuations.
Fewer tourists werent the only
problem for Kors. Chief Executive
John Idol said the company saw a
significant downtrend in its watch
business, particularly in North
America, and experienced delays in
getting goods to its stores.
Mr. Idol said shoppers were curtailing watch purchases to buy jewelry, but that the average amount
spent on jewelry was less than half
what they had been spending on
watches. Kors plans to add new textures and styles to its watch business in time for next spring to try to
boost sales.
Can Aston Martin Brand Sell Couture?

GAYDON, ENGLANDAston Martin Lagonda Ltd., the maker of cars
known for their role in James Bond
spy films, aims to reposition itself as
a luxury lifestyle brand with greater
appeal to women.
Andrew Palmer, a former Nissan
Motor Co. executive who became
chief executive of the British company in October, said he wants the
102-year-old sports-car maker to become a luxury brand with products
ranging from luggage, watches and
clothing to boats and perhaps hotels.
We characterize ourselves as the
Herms of automobiles, Mr. Palmer
said in an interview, referring to Herms International SCA, the French
luxury-goods group best known for
its handbags and scarves. Whereas
perhaps historically weve made
beautiful sports cars, as we move forward, we see ourselves much more in
the luxury space than in the pure automotive space, he said.
Mr. Palmer declined to identify
any ch companies Aston Martin is
talking to about new products.
The new CEO said appealing to a
broader customer base is central to
his plans. With men accounting for
95% of the 70,000 Aston Martins that
have been sold, the company is especially eager to attract more women
buyers, he said.
The companys managers talk
about a model female customer: an
American woman named Charlotte
who is a professional working
mother. An all-female advisory board
ASSOCIATED PRESS
BY SIMON CLARK
Aston Martin hopes to widen its appeal and valuation by expanding its brand.
Above, Prince William with one of the companys cars in Tokyo in February.
is assisting in the design of the new
DBX model.
Mr. Palmer said Aston Martins
planned luxury expansion is targeting
a valuation for the company at a
higher earnings multiple than auto
makers reach. He said Aston Martin
could eventually be floated or sold to
a luxury group.
Would I object to be owned by a
luxury company? No, he said. In my
mind it would fit better than being
part of a car company, because we
are in the luxury space.
Aston Martin cars are certainly
luxury items, starting at around
$135,000 for the cheapest model to
more than $2 million for the Vulcan
super car.
Mr. Palmers plan echoes an effort
by Fiat Chrysler Automobiles NV CEO
Sergio Marchionne as he prepares to
spin off the groups Ferrari business.

Mr. Marchionne has said that Ferrari
is capable of being a fully-fledged
luxury brand and as such it would occupy a space in the luxury goods sector.
At the same time, auto making remains a capital-intensive business
with high fixed costs. Exane BNP
Paribas luxury goods analyst Luca
Solca said it doesnt make much
sense for a luxury company to invest
in autos because car makers have a
lower return on invested capital than
traditional luxury-goods groups. It
would likely destroy value for the
luxury goods group shareholders,
Mr. Solca said.
Still, other luxury auto makers
have taken tentative steps to appeal
more to women. Porsche AG hired
tennis player Maria Sharapova in
2013 as its so-called brand ambassador, while pop singer Victoria Beckham helped design a Range Rover
model. More spacious models such as
Aston Martins DBX or Porsches Cayenne sport-utility vehicle are also
meant to give the brands broader appeal.
SUVs are seen as family vehicles
because of the space, utility and perception of safety, said IHS automotive analyst Ian Fletcher. This might
add more women to their customer
base.
Aston Martin of late has earned a
profit in only two years, largely because of its high development costs
and limited production. In 2014, Aston Martins revenue fell 10% to 468
million ($717 million). Sales in China
in particular were down sharply after
the companys import license was
suspended for five months following
a product recall, Mr. Palmer said. The
Chinese import restrictions have now
been lifted, he added.
The company made about 4,000
cars in 2014, down from a peak of
7,200 in 2007.
Aston Martins controlling shareholders are Italian private-equity
firm Investindustriala previous
owner of Ducati motorcycles and
investor in a Ferrari-themed
amusement park in Spainand
Kuwaiti investment company Tejara
Capital Ltd.
In April, they committed 200
million to finance projects including
a new factory for the DBX. Mr.
Palmer declined to say where the
new factory will be built.
On Monthly
Sales Data
BY JULIE JARGON
Steve Easterbrook, the new chief

executive of McDonalds Corp., on
Wednesday said the success of his
plan to revive the fast-food giant
will hinge on many small things
like how long its restaurants toast
the burger buns.
But investors will have to wait
until the end of each quarter to determine whether those small things
are making an impact, as
McDonalds also said it plans to stop
disclosing monthly sales figures beginning July 1.
Speaking at an investor conference in New York, Mr. Easterbrook
and Chief Administrative Officer
Pete Bensen said McDonalds is
toasting its buns longer and changing the way it sears its beef so that
its burger patties are juicier. Restaurant operators also will build more
side-by-side drive-through lanes to
speed up service, and they will train
employees to increase the accuracy
of orders. They offered few other
fresh details of the turnaround plan.
The company has been struggling
in its critical U.S. market, where Mr.
Easterbrook said it has failed to
keep pace with shifting consumer
tastes. He has rolled out several major initiatives, including structural
changes aimed at reorganizing the
business along geographic lines, selling more company-owned restaurants to franchisees and eliminating
management layers.
Mr. Bensen said at Wednesdays
conference that customers increasingly expect higher-quality food, but
McDonalds cant stray too far from
its roots, since 40% of sales come
from such core menu items as Big
Macs and Chicken McNuggets.
Still, he added, McDonalds can
improve the quality of food for
which it is known. Mr. Bensen said
the milk in its childrens Happy
Meals will be free of artificial
growth hormones starting this summer. That follows other moves to appeal to consumers seeking options
perceived as healthier. In March,
McDonalds said it would stop selling chicken in the U.S. made from
birds raised with antibiotics that are
important to human health.
The company plans to offer a
new value promotion this summer,
but didnt disclose details.
INDEX TO BUSINESSES AND PEOPLE

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.
Acorda Therapeutics .... 19
Aetna.............................19
AirAsia..........................18
Airbnb............................21
Airbus Group N.V..........18
AllianceBernstein
Holding.......................21
Alnylam
Pharmaceuticals...........19
Altice........................18,28
Amgen...........................28
Archer Daniels
Midland......................20
Asiana Airlines.............18
Astellas Pharma...........15
Aston Martin Lagonda.16
AstraZeneca..................28
Bank of England...........22
BlackRock......................12
Bluebird Bio..................19
Cablevision Systems....28
CBRE Group .................. 21
Charter
Communications...18,28
Cheil Industries ............ 17
China Construction
Bank...........................22
Clinton Group................13
Cofco ............................. 22
Comcast ................... 18,28
Cosco Group..................22
Crystal Orange Hotel
Group..........................14
CVS Health ................... 19

Dewey & LeBoeuf.........17
Duff & Phelps...............21
DuPont .......................... 12
eBay .............................. 15
Ecolab............................21
ED&F Man Capital
Markets......................20
Elliott Management.....13
European Union............21
Express Scripts
Holding.......................15
FedEx.............................21
General Electric............12
General Motors........12,21
Gibson, Dunn &
Crutcher.....................21
Greenhill........................21
Groupe Norbert
Dentressangle............21
Invesco..........................21
J.P. Morgan Chase..........1
Juniper Networks.........13
Kimberly-Clark..............21
Leucadia National.........20
Liberty Broadband........28
Macquarie Group..........20
Mayo Clinic...................19
MBK Partners...............22
McDonald's ................... 16
Mevion Medical
Systems.....................19
Michael Kors
Holdings................16,23
Micrel............................15
Microsoft.......................15
Nissan Motor................16
Nokia.............................13
Patron Capital
Partners.....................21
Pfizer.............................28
Polaris Industries.........21
Praxair...........................21
ProCure Treatment
Centers.......................19
ProTom International...19
Qualcomm.....................15
Revere Digital...............18
Riverbed Technology .... 15

R.J. O'Brien &
Associates ................. 20
Rolls-Royce Holdings ... 18
Samsung C&T ............... 17
Samsung Electronics....17
Samsung Group............17
Singapore Airlines........18
Socit Gnrale .......... 20
Sony .............................. 17
Starboard Value.......13,15
Suddenlink....................28
3M.................................21
Tibco Software.............15
Tiffany &.......................23
Time Warner Cable . 18,28
TNT Express ................. 21
Toshiba..........................28
TransAsia Airways.......18
Trian Fund
Management..............13
UnitedHealth Group ..... 19
U.S. Steel......................12
Varian Medical
Systems.....................19
Vox Media.....................18
Wet Seal.......................13
Windsor Media.............18
XPO Logistics ............... 21
Yahoo.............................13
Yucaipa Companies.......21
People
This index lists the

names of businesspeople and government
regulators who receive
significant mention in
Todays Journal.
Altorelli, John...............17
Baker, Doug .................. 21
Bartell, Bob...................21
Begley, Neil...................18
Bekelman, Justin..........19
Bok, Scott.....................21
Burkle, Ronald..............21
Canellas, Francis...........17
Chandra, Amitabh.........19
Chawla, Mukul..............22
Crouch, Bert..................21
Davis, Steven................17
DiCarmine, Stephen ..... 17
Dimon, James...............22
Duch, Matthew.............18
Easterbrook, Steve.......16
Fink, Laurence .............. 12
Frankovsky, Frank.........17
Fu Chengyu...................22
Gao Hucheng...................1
Glover, Stephen............21
Goto, Junichiro ............. 20
Guo Shengkun .............. 22
Hayes, Tom...................22
Horne, Charles..............14
Icahn, Carl................12,15
Jachinowski, Joseph.....19
Jacobs, Bradley.............21
Keole, Sameer .............. 19
Kupor, Scott..................15
Lee, Jay Y.....................17
Leschly, Nick.................19
Longhi, Mario................12
Mallett, Martin.............22
Malone, John................28
Marcus, Rob..................18
Miller, Steve.................15
Ning Gaoning................22
Palmer, Andrew............16
Pan Gongsheng.............22
Peltz, Nelson ................ 13
Savage, Robert.............21
Shepherd, Kenny Wayne8
Simon, Matt..................20
Stevens, Schott............20
Sun Jiakang..................22
Takamura, Takashi........15
Waldron, Greg...............18
Wang Qishan..................1
Warren, Zachary...........17
Warwick, Scott.............19
Wilson, Harry ............... 12
Wu Hai............................1
Wyatt, Josh..................21
Xiang Junbo..................22
Zhou Yongkang.............22
Zobler, Andrew.............21
BUSINESS & FINANCE
BY DON CLARK
Sony Corp., known more for selling to consumers than companies, is

taking a step outside its comfort
zone by backing an effort by a former Facebook Inc. executive to
bring optical data storage to corporate data centers.
The Japanese electronics giant
said it purchased the startup Optical
Archive Inc. from Frank Frankovsky
and would combine its technology
with Sonys established optical media offeringslike Blu-ray discs and
playersto market new products to
business customers.
The companies announced the
deal Wednesday without disclosing
financial terms.
Mr. Frankovsky led Facebooks
hardware design and supply-chain
operations for about five years before leaving the social network in
March 2014 to found Optical Archive. He is equally well known as
head of the Open Compute Project, a
multicompany effort that promotes
open-source designs for computer
servers and network switches of the
sort used by Facebook and other
Web companies.
The startup never formally disclosed its product plans, which Mr.
Frankovsky said would be unveiled
soon. We never came out of stealth
mode, he said in an interview. But
he previously discussed his underlying goalto provide an alternative
to tape for long-term data storage
that doesnt have to be used frequently. Mr. Frankovsky argued that
optical discs are the best option because of their lower cost, faster
data-transfer speeds and durability.
One of the startups goals is
boosting data-storage capacity.
Where Blu-ray discs typically store
about 50 gigabytes, Mr. Frankovsky
said, the company expects to market
versions that will store 300 gigabytes. Another goal is developing
jukebox-like hardware that can hold
discs, fetch them and insert them in
drives so data can be retrieved, Mr.
Frankovsky said.
Many companies use tape-cartridge storage systems that do much
the same thing. But they often keep
the devices in special repositories
outside their data centers because of
their size, Mr. Frankovsky said. As a
result, retrieving archived information can take hours or days, he said.
Optical Archives hardware will
be compact enough to store tens of
thousands of discs in a row of cabinets in a data center, allowing data
to be retrieved much more quickly,
Mr. Frankovsky said. Over time, he
predicted, many companies would
phase out hard disk drives in favor
of devices that use flash memory
chips, which are faster and have no
moving parts to break down, while
backing up data for long-term storage on optical discs.
As part of Sony, Optical Archive
would have greater financial resources to hire more people, set up
distribution channels and collaborate with Sony engineers, he said.
Sony, meanwhile, said it planned
to expand its existing optical disc
product lines to accommodate corporate demand for such technology.
This acquisition marks the beginning of our commitment to this
growing market, said Terushi Shimizu, a Sony senior vice president.
Samsungs Critics Are Bristling
BY JONATHAN CHENG
AND MIN-JEONG LEE
SEOULSamsungs maneuvers to
increase heir apparent Jay Y. Lees
stake in the family-run conglomerates crown jewel, Samsung Electronics Co., underscore corporategovernance concerns that critics say
continue to plague South Korea.
On Tuesday, Samsung Group
said its de facto holding company,
Cheil Industries Inc., would buy
construction and trading company
Samsung C&T Corp. in an all-stock
deal. The deal would further consolidate Mr. Lees control over Samsung Electronics and streamline the
conglomerates convoluted ownership system, which binds some 70
Samsung affiliates through a web of
cross-shareholdings.
Mr. Lees father, Chairman Lee
Kun-hee, remains incapacitated by a
heart attack he suffered last May.
His only son has taken up the reins
in recent months, making decisions
on matters such as the sale of affiliates and assuming the chairmanship
of a pair of charitable foundations.
But as the younger Mr. Lee tightens his grip, he risks inflaming concerns about corporate governance in
a country that has grown more sensitive to the actions of its wealthiest
families.
While Samsung has touted the
deals synergies, analysts and investors have taken a colder-eyed view.
This is clearly a power move,
says Mark Newman, a Bernstein Research analyst who dismisses the official rationale for the deal as mak-
SCOTT EELLS/BLOOMBERG NEWS
Sony Looks
To Supply
Corporate
DataCenters
Jay Y. Lees bigger Samsung Electronics stake is raising governance concerns.

ing no sense.
Theyre ensuring ownership and
control of key parts of the Samsung
empire, especially and particularly
Samsung Electronics, he says.
That would be accomplished by
tightening control of Samsung C&T,
which owns a stake in Samsung
Electronics but in which the Lee
family has only a 1.4% stake. By using Cheil Industries shares as currency for the deal, the Lee family is
making full use of the rich premium
that investors have placed on the
stock, priced at roughly 120 times
future projected earnings.
Samsung C&T shares, in contrast, were by some measures undervalued, selling at a price that before Tuesdays announcement was
flirting with five-year lows. Nearly
all of its pre-announcement market

capitalization of 8.6 trillion won
($7.8 billion) was accounted for by
its 4.06% stake in Samsung Electronics, valued at 8.1 trillion won.
There is no guarantee the deal
will go through, says Shaun Cochran, South Korea country head for
brokerage CLSA. While about threefourths of Cheil Industries shares
are held by the Lee family or
friendly parties, the vote at Samsung C&T could be closer, he says.
Signs of discontent can be seen
in the reaction of domestic watchdog groups. We know that this is
all about succession, says Kim
Sang-jo, an economics professor at
Hansung University and director for
Solidarity for Economic Reform, a
vocal civic group tracking South Ko-
reas conglomerates.
Mr. Kim argues that Samsung
C&T shares are undervalued in the
proposed deal, which could lead to
its ending up like the failed merger
last November between Samsungs
shipbuilding and engineering units.
That was scrapped after the companies were faced with having to buy
back shares from shareholders opposed to the deal.
Kyobo Securities analyst Baek
Kwang-jae wrote in a note to clients
on Wednesday that the offer for
Samsung C&T could be seen as unsatisfactory by some of its shareholders, though he added that a
share-price surge since the announcement would likely assuage
some of those concerns.
So far, investors seem to be willing to follow the Lee familys lead.
On Tuesday, shares in Cheil Industries and Samsung C&T each surged
by the daily limit of 15%; they
tacked on a further 1.3% and 3.5%,
respectively, on Wednesday.
The younger Mr. Lee gained the
Cheil Industries shares through a
deal in 1996, when Cheil was called
Samsung Everland. Mr. Lee, a grandson of Samsungs founder and a
Samsung Electronics vice chairman,
purchased convertible bonds in unlisted Samsung Everland for far less
than what critics said would have
been market value.
Two Samsung Everland officials
were convicted over that bond sale,
though the Supreme Court eventually overturned the convictions and
concluded that there was no breach
of trust.
Prosecutor:LawFirmsBooksWereCooked
BY SARA RANDAZZO
With the financial crisis in full

swing, a top executive at Dewey &
LeBoeuf LLP and two of the law
firms finance-department employees met over dinner in Manhattan to
figure out how to stay on good
terms with the now-defunct law
firms lenders.
The result of that 2008 meeting,
a prosecutor told jurors on Tuesday,
was a document called the Master
Plan. It spelled out the accounting
adjustments that could help the firm
to appear to meet crucial covenants
on its bank debt.
Prosecutors say that document
led to falsely reducing expenses,
falsely increasing revenue, and falsifying invoices, among other improper adjustments.
Prosecutors allege that former
Chief Financial Officer Joel Sanders,
who they said attended that dinner
at Del Friscos Steakhouse, worked
together with former Chairman Steven Davis and former Executive Director Stephen DiCarmine to oversee a yearslong ploy to mask the
true nature of the now-defunct law
firms finances.
Rather than accusing the leaders
of manipulating the firms books directly, prosecutors alleged the trio
directed lower-level employees to
make tens of millions of dollars in
false accounting adjustments.
Messrs. Davis, DiCarmine and
Sanders schemed to make it appear
to those inside the firm and outside
the firm that Dewey & LeBoeufs financial performance was far better
than reality, Assistant District Attorney Steve Pilnyak told jurors in
his two-hour opening arguments.
The defendants engaged in this
scheme year after year after year af-
ter year, he said.

His comments kicked off what is
likely to be a four-to-six-month trial
in which Manhattan District Attorney Cyrus Vance Jr.s office will seek
to show that Deweys former leaders
deceived banks and insurance companies into lending more than $250
million that ultimately didnt prevent Deweys 2012 collapse.
The prosecution gave few

potential reasons behind
the alleged conspiracy.
Deweys bankruptcy filing, which
marked the largest law-firm failure
in U.S. history, showed that creditors, including those banks and insurance companies, were owed hundreds of millions of dollars.
The fraud started in full force after that Dec. 30, 2008, dinner, Mr.
Pilnyak told jurors. One of the other
attendees, Francis Canellas, will be
one of seven cooperating witnesses
expected to testify at trial on behalf
of the government.
The third person at the dinner,
former client-relations manager
Zachary Warren, was indicted by
prosecutors but is expected to face
a separate trial. Mr. Warren has denied any wrongdoing.
Messrs. Davis, DiCarmine and
Sanders deny the charges, which include grand larceny, falsifying business records, scheme to defraud,
conspiracy and securities fraud. If
convicted, they could face between
eight and 25 years in prison.
The prosecutors openings laid
out more than a dozen examples of
false accounting adjustments alleg-
edly made, such as using a new

partners equity contribution to pay
a client bill and reclassifying money
paid to terminate office leases to
make expenses appear lower.
The prosecution gave few potential reasons behind the alleged conspiracy apart from mentioning that
Mr. Davis, the architect of a 2007
merger that created Dewey & LeBoeuf, worked to keep his vision of
running a global law firm alive.
Attorneys for Messrs. Davis and
DiCarmine countered in separate
opening arguments that their clients
didnt know about any manipulation
of the firms books and that such accounting adjustments had nothing
to do with the firms downfall.
The reality, according to Mr. Daviss counsel, Elkan Abramowitz, is
that the firm was crippled by the financial crisis and by a group of
greedy partners who left as the
firm faced financial setbacks. They
left these defendants holding the
bag, Mr. Abramowitz said.
Mr. Abramowitz said that Mr.
Davis is being prosecuted for who

he was at the firm and not for what
he did.
Mr. DiCarmine, meanwhile, went
from living the American dream to
being in a nightmare, his lawyer,
Austin Campriello, said. Steve is
the victim of an ill-conceived quest.
An attorney for Mr. Sanders told
the jury Wednesday that if the former chief financial officer intended
to commit fraud, he would have
known better than to send allegedly
incriminating emails on the law
firms servers. Joel Sanders had no
intent to defraud, only intent to do
his job, counsel Andrew Frisch said
during his opening statements.
Rather than trying to deceive
Deweys banks into thinking the
firm was in compliance with its loan
covenants, Mr. Frisch said, his client
openly went to the banks when the
firm ran into financial trouble.
What person intending to defraud
banks goes to the banks and tells
them there are problems with the
covenants? Mr. Frisch asked.
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CORPORATE NEWS
BY LUKAS I. ALPERT
Vox Media on Tuesday said it

is acquiring Revere Digital, parent company of the technologynews website and conference business Re/code, less than 18 months
after the sites launch.
Vox said Re/code will continue as
its own entity under the companys
umbrella, complementing the Verge,
its existing technology site. Vox also
said it would focus on growing Re/
codes conference business, eventually expanding it to its other properties.
Tech is in an important category and we already hold the leading spot in the space, so we view
this as only solidifying our position, said Jim Bankoff, Voxs chief
executive.
The deal is the latest development in the crowded technology
media space.
In March, the nine-year-old site
Gigaom ceased publishing after
announcing it was unable to pay
its creditors. Earlier this month,
Verizon Communications Inc.
agreed to buy AOL Inc., parent of

tech sites TechCrunch and Engadget, for $4.4 billion.
In total, Vox Medias seven sites
average more than 50 million
unique visitors a month, with the
Verge among its biggest traffic drivers, according to comScore Inc. Re/
code, in April, had 1.5 million unique
visitors, the analytic firm said.
Late last year, Vox Media secured
a $46.8 million investment from General Atlantic, valuing the company at
$380 million. Vox Media took in $60
million in revenue in 2014 and was
profitable, according to people familiar with the situation.
Re/code was launched in January
2014 by tech reporters Kara Swisher
and Walt Mossberg, with investment
coming from Comcast Corp.s NBCUniversal News Group and Windsor
Media. Those companies would now
take a stake in Vox.
Re/code emerged after an end to
a partnership called All Things D between Mr. Mossberg and Ms.
Swisher and The Wall Street Journal. The Journal has continued its
digital coverage and conference
DAVID A.GROGAN/CNBC/NBCU PHOTO BANK/GETTY IMAGES
Vox Media to Acquire Re/code
Kara Swisher of the website Re/code

business under the name WSJD.
Re/code said it would be able to
rely on Vox Medias larger production, marketing and communications
resources, as well as its advertising
and creative-services departments.
This combination will give us
access to the new tools and talent
we need and want to make Re/
code stronger and better, Ms.

Swisher said in a statement.
Analysts said it had become increasingly difficult for smaller players to make a go of it in the tech
media field.
The expression that small is
beautiful doesnt apply so well to
business or tech journalism. Advertising, distribution and editorial talent are all attracted to size and
scale, said Jim Friedlich, head of
Empirical Media, a consultancy that
advises media companies on digital
strategies.
The terms of Voxs deal for Re/
code werent disclosed, but a person
familiar with the situation said it
was an all-stock transaction.
The deal represents another step
in Vox Medias fast growth. In late
2013, it purchased the Curbed.com
LLCthree sites focused on food,
real estate and fashionand merged
it into its existing group of three
sites that cover sports, technology
and gaming. Last summer the company launched vox.com, a site focusing on politics run by Washington,
D.C.-based journalist Ezra Klein.
At Time Warner Cable, Debt Fears Arise

BY GILLIAN TAN
Shareholders cheered Tuesdays

news that Time Warner Cable Inc.
and Charter Communications Inc.
would combine, sending the shares
of both cable companies higher. But
some Time Warner Cable bondholders, wary of the debt load the combined company will shoulder, were
less enthusiastic.
Charter unveiled a roughly $55
billion agreement to acquire Time
Warner Cable for about $195 a
share, as well as a separate purchase of Bright House Networks LLC
for $10.4 billion. In response, Time
Warner Cable shares rose 7.3% to
$183.60 on Tuesday, while Charters
stock gained 2.5% to $179.78. Time
Warner Cable was trading at
$182.94 on Wednesday afternoon
and Charter was off 1.8% at $176.44.
Time Warner Cable bonds also
rose Tuesday, but debt investors said
that largely reflected relief that
Charter won out over European telecommunications group Altice SA,
which had been eyeing Time Warner
Cable and was viewed as potentially
saddling it with even more debt.
Time Warner Cables 30-year
bonds due in September 2042 rose
12% Tuesday to about 87.9 cents on
the dollar, according to MarketAxess. But they are still down about
16% from where they traded before
Getting Leverage
A combined Charter-Time Warner Cable would have twice the level of debt-toearnings* as Comcast.
Comcast
Time Warner Cable
Charter Communications
Post Deal (TWC/Charter)
Cablevision
Mediacom
2.20x
2.97x
4.67x
4.79x
4.87x
4.98x
Assumes shareholders opt for $100 in cash and remainder in Charter shares
*Before interest, taxes, depreciation and amortization for the 12 months ended March 31, 2015
Source: Moodys Investors Service
it became clear last month that

Time Warner Cables prior agreement to sell itself to industry giant
Comcast Corp. was in serious peril.
The reason for bond investors
anxiety over Tuesdays deals: They
will cause debt to balloon from
Time Warner Cables current level
of about $23 billion to between
$61.5 billion and $65.7 billion, depending on how much cash the companys investors choose in the cashand-stock deal. That increase
reflects the companies existing debt
and as much as $29.3 billion in new
borrowings that Charter says will
help pay for the two takeovers.

Time Warner Cables ratio of
debt to last-12-months earnings before interest, taxes, depreciation and
amortization, or Ebitdaa measure
of cash flowwas 2.97 at the end of
March, according to Moodys Investors Service. Once the three companies are combined, that ratio is expected to rise to 4.79assuming
Time Warner Cable investors opt for
the lowest amount of cash. Comcasts debt-to-Ebitda ratio, meanwhile, was just 2.20.
Moodys rates Time Warner Cable
Baa2, the second-lowest investment-
grade rating, and the transaction will

likely push it into junk territory,
the ratings service said Tuesday.
Moodys placed Time Warner Cable
bonds on review after the announcement and said they could end up
with a rating two levels lower, at Ba1,
at the conclusion of the deals. Standard & Poors, by contrast, said it
thinks Time Warner Cable can maintain its investment-grade rating.
Investors and analysts say the
combined companies debt could become too burdensome if, for example, rivals aggressively price bundles of cable-television and Internet
services to lure customers away.
This seems like a deal that
Charter was set on regardless of the
price, as long as the market would
fund it for them, said Matthew
Duch, a portfolio manager at Calvert
Investments Inc., which owns Time
Warner Cable bonds.
Time Warner Cable Chief Executive Rob Marcus said in an interview
Tuesday: We believe that we have
structured this in such a way that
the credit rating of the Time Warner
Cable bonds is either maintained or
at least the downgrade is mitigated
as a result of the transaction.
Shalini Ramachandran
Heard on the Street: Time Warner
Cable is a pricey bundle.................... 28
Singapore Airlines Plane Loses Power in Each Engine

BY GAURAV RAGHUVANSHI
SINGAPOREThe temporary loss

of power in both engines of a barely
weeks-old Airbus Group NV jet flown
by Singapore Airlines Ltd. on Saturday underscores the significance of
pilot training, aviation experts said.
Singapore Airlines said on
Wednesday that the incident occurred Saturday when Flight SQ836
en route to Shanghai encountered
bad weather at an altitude of 39,000
feet, about 3 hours after departure
from Singapore.
Both engines experienced a temporary loss of power, although one
engine returned to normal operations almost immediately. The pilots
followed operational procedures to

restore normal operation of the second engine by putting the aircraft
into a controlled descent, before
climbing again, the airline said.
The Singapore Airlines aircraft,
an Airbus A330-300 twin-engine jet,
descended 13,000 feet, according to
flight-data
tracking
website
Flightradar24. Singapore Airlines
didnt confirm the extent of the loss
of altitude but stressed that the descent wasnt uncontrolled.
It is uncommon to have power
loss in both engines. You dont hear
about it too often, said Greg Waldron, the Asia managing editor of
Flightglobal, an industry publication. Fortunately, pilots are trained
to deal with it in a routine manner.

Aviation safety and pilot training
have been under scrutiny in Asia after a series of safety problems.
These include an Asiana Airlines
Inc. plane that skidded off a runway
after landing in Hiroshima, Japan,
last month; a TransAsia Airways
Corp. flight that crashed in a river in
Taipei after hitting a highway overpass in February; and the Dec. 28
crash of an AirAsia plane in the Java
Sea that killed all 162 on board.
The Singapore Airlines aircraft,
the carriers newest plane, was delivered to the company on March 30, according to the airline. The jets Trent
700 engines were manufactured by
Rolls-Royce Holdings PLC.
Singapore Airlines said the flight

continued to Shanghai and touched
down uneventfully at 10:56 p.m. local time. There were 182 passengers
and 12 crew on board.
The engines were inspected and
tested upon arrival in Shanghai and
no anomalies were detected, Singapore Airlines said, adding that it is
reviewing the incident with RollsRoyce and Airbus. The aircraft returned to Singapore with passengers
and was inspected again in Singapore. The plane hasnt been
grounded, Singapore Airlines said.
Airbus and Rolls-Royce said they
were aware of the incident and were
assisting Singapore Airlines with its
investigation into likely causes.
Silicon Valley
Grits Teeth
Over Activist
Investors
Continued from page 15

its hefty cash hoards and small dividend payouts, tech looks like an inviting target. Meanwhile, slowing
growth and sagging stock prices
have painted a bull's-eye on old-line
companies. And activists have benefited from a flow of new capital from
investors seeking bigger returns.
In 2014, tech companies accounted for 20% of the firms that
activists targeted, more than any
other
nonfinancial
industry,
Moodys Investors Service says. The
second-most-targeted industry, retail, accounted for 13% of public activist campaigns last year.
The success of activists at such
companies as Microsoft and eBay is
changing the way tech-company
boards and the industry operate,
says Ken King, who advises companies as head of the Silicon Valley
office of the Skadden, Arps, Slate,
Meagher & Flom LLP law firm
Among other things, Silicon Valley insiders say activists have had a
chilling effect on acquisitions amid
complaints that past deals havent
paid off.
Activists have changed the
shape of the M&A market, says a
veteran banker.
That banker and others say that
tech firms are still shopping for big
deals or fledgling startups, but
there are fewer deals valued at $1
billion to $5 billion. Its creating a
kind of vacuum, says Dave Wright,
chief executive of SolidFire, a datastorage startup.
Activists have changed

the shape of the M&A
market, says a banker.
Others in Silicon Valley have
learned to live with activists. Last
year, eBay Chief Executive John Donahoe resisted pressure from Mr.
Icahn to spin off the PayPal payments business. But eBay later
changed course, agreeing to the
split and placing an associate of
Mr. Icahn on the board.
In todays reality you have to
engage with them, Mr. Donahoe
says of the activists. It just raises
the bar on the need for you to
make the case as to why your investments make sense.
Other companies take a harder
line. EMC Corp. and Qualcomm, for
instance, have so far resisted suggestions that they divide their companies.
At the other extreme, a string of
midsize technology vendors has essentially thrown in the towel as
public companies in the wake of activist pressures.
The list of technology companies reaching deals with financial
firms to go private includes Compuware Corp., BMC Software Inc.
and Integrated Silicon Solution Inc.
Meanwhile, business is good for
advisers. Mr. King, the Skadden
Arps lawyer, estimates he spends
about 30% of his time advising tech
companies on activism, up from
about 5% three years ago.
His tactics include writing mock
letters from potential activists to
help prepare tech-company boards
for future fights.
CORPORATE NEWS
MakingtheCaseforProton-BeamTherapy
Six new proton-beam centers are

set to start delivering state-of-theart radiation to cancer patients
around the U.S. by years end. Ten
more are expected by 2018, bringing
the U.S. total to 30many the size
of a football field and costing between $100 million and $200 million to build.
The projects, long in the works,
will enter an uncertain market.
Proton-beam therapy, a highly
precise form of radiation, has been
dogged by a lack of evidence that it
is better than traditional radiation
despite costing significantly more.
Many insurers including UnitedHealth Group Inc. and Aetna Inc.
have stopped covering it for prostate
cancer, once seen as a main source of
patients. One center closed last year
and several others have racked up
millions of dollars in losses.
But proponents say the new
business models are different. Five
of the six proton centers opening
this year are compact versions only
a fraction the size and cost of the
behemoths to build and operate.
Proton therapy was ridiculously
expensivethere had to be a way to
make it more accessible, said Joseph
Jachinowski, chief executive of
Mevion Medical Systems Inc. The
closely held Littleton, Mass., company makes proton systems costing
between $25 million and $30 million
with single treatment rooms instead
of the usual four or five. Last month,
a Mevion-equipped cancer center in
Jacksonville, Fla., became the first
proton-therapy facility owned by a
private physicians group.
Other proton manufacturers, including Ion Beam Applications SA,
Hitachi Ltd., and Varian Medical
Systems Inc., also are building compact systems in centers in the U.S.,
Europe, Asia and the Mideast.
Officials at many centers say
HOWARD LIPIN/U-T SAN DIEGO/ZUMA PRESS
BY MELINDA BECK
New and costly proton-radiation therapy centers are scheduled to open in the U.S. in the next few years..
they arent relying on prostate patients to fill treatment rooms. Some
are treating breast, lung and other
cancers and experimenting with alternative payment models while
they generate more data.
The University of Pennsylvania
Health System is accepting the same
rate for proton therapy that it does
for regular intensity-modulated radiation, known as IMRT, from two
insurers while it tracks patient outcomes. Its very important that
providers have skin in the game as
well as payers, said radiation oncologist Justin Bekelman.
Some hospitals have turned to
private donations, rather than private equity, to finance proton operations. Next month, the Mayo Clinic
in Rochester, Minn., plans to start

treating patients at its $180 million
proton center, one of two built with
the help of a $100 million gift.
With no investors to pay back,
Mayo officials also say they will
charge the same rates for proton
therapy as for IMRT.
Were basically telling the insurance companies and our critics
were not in this for the money. We
think this is the best thing for our
patients, said Sameer Keole, medical director of proton-beam therapy
at the Mayo Clinic in Phoenix,
scheduled to open next year.
Health systems large and small
see proton therapy as a way to attract patients and top clinicians and
offer cutting-edge care. All of the
top 10 cancer centers in the U.S.

have proton therapy or are developing a center, which shows they believe in it, said Scott Warwick,
chair of the National Association for
Proton Therapy, an industry group.
Many radiation oncologists remain enthusiastic about the technology, in which positively charged
particles are accelerated to 60% of
the speed of light, then shaped into
a powerful beam that can be programmed to deposit most of its energy directly onto a tumor,
minimizing radiation exposure to
surrounding healthy tissues. While
proton therapy isnt necessarily
better
at
halting
cancers,
proponents say it sharply cuts side
effects that can add substantial
costs.
The benefits are undisputed for
rare pediatric brain cancers, adult
eye tumors and cancers at the base
of the skull, which insurers generally cover. Some oncologists say
proton therapy can reduce harmful
side effects in many other localized
cancers as well.
But some insurers are balking at
paying premium rates for proton
therapy for such common cancers
without more evidence that it does
improve patient outcomesideally
from randomized controlled trials.
Most Medicare regions cover
proton therapy for prostateat
about $1,100 per treatment session,
compared with $600 for IMRT. But
several major insurers stopped after
a 2012 study found it has no added
long-term benefit.
Men with prostate cancer had
made up 70% of patients at some
proton centers; now they are less
than half the facilities customers
nationwide.
That decline has taken a toll.
Last year, Indiana University closed
its
money-losing
facility
in
Bloomington, citing the high cost to
upgrade it and changing patterns of
prostate care.
In 2013, ProCure Treatment
Centers Inc., a private-equity
backed operator of proton facilities,
sold its share in a struggling center
near Chicago, after missing a $3.5
million loan payment. ProCure declined to comment.
Proponents have high hopes that
hypofractionation, or delivering
higher doses of radiation in fewer
treatment sessions, will help bring
the cost of proton therapy more in
line with IMRT. Studies testing that
are under way.
Meanwhile, manufacturers say
the smaller proton centers can be
more selective with patients and
still be profitable because their
costs are so low.
New Push Ties Cost of Drugs to How Well They Work

years been a vocal critic of high drug
prices, which the company has used
to promote its services to potential
customers as it competes against
CVS Health Corp. and others to administer drug benefits for health insurers and large employers. Pharmacy-benefit
managers
also
sometimes keep a portion of the rebates and discounts they negotiate
from pharmaceutical companies.
Express Scripts approach would
be similar to that proposed by Peter
Bach, director of the Center for
Health Policy and Outcomes at Memorial Sloan Kettering Cancer Center.
In an article published last year
in the Journal of the American Medical Association, he suggested that
in an indication-specific arrangement, the monthly price for Eli Lilly
& Co.s cancer drug Erbitux would
plummet from $10,320 a patient to
about $470 a patient for its least effective use, treating recurrent or
metastatic head and neck cancer.
The drug also is used to treat locally
advanced head and neck cancer, as
well as colorectal cancer.
A Lilly spokeswoman said Erbitux is recommended by the National Comprehensive Cancer Network, a nonprofit that develops
treatment guidelines, for the treatment of recurrent or metastatic
head and neck cancer. Lilly supports
efforts to make cancer drug reimbursement better reflect treatment
value for different patient populations, and it is exploring alternative options to accurately represent
the value our medicines offer across
multiple indications.
Drug pricing has been very hard
for the payers to do anything
about, said Steven Pearson, president of the Institute for Clinical and
Economic Review, a Boston nonprofit that evaluates cost-effectiveness in medicine. Now theyre
starting to think very hard about it,
to look for practical ways to have
more of an influence on pricing.
It can be difficult for drug companies and payers to agree on terms
of alternative payment dealsand
to actually administer the deals.
Pay-for-performance contracts
often involve tracking certain health
measures and outcomes in specific
patients, such as changes in bloodsugar levels for diabetes patients.
The cost and complexity of such
tracking can offset the benefits, and
the number of such deals in the U.S.
to date has been relatively small.
Theyre very data intensive to
administer and track these, says
Larry Blandford, executive vice
president and managing partner at
Precision for Medicine, a consulting
firm advising drug makers on dealing with payers.
An Express Scripts spokesman
said patients and doctors can appeal
decisions on which drugs it will pay
for.
U.S. insurers and pharmacy-benefit

managers also push for simple price
cuts, and sometimes win them in the
form of rebates paid by manufacturers. But drug makers have been able
to avoid big, across-the-board price
cuts in the U.S. because the market is
so fragmented, with multiple public
and private payers, and because rebate contracts are typically confidential. That allows drug companies to
minimize or avoid discounting certain
drugs for some payers.
It can be difficult for drug

firms and payers to agree
on terms of alternative
payment dealsand to
administer the deals.
Some drug companies have explored their own variations of alternative pricing, such as annuity-style
payments for very expensive drugs.
This involves an upfront payment
and then ongoing payments
stretched out over several years
based on how well the drug works
in individual patients.
One example is Bluebird Bio
Inc., which is developing an experimental gene therapy for rare diseases. At a health-care conference in
February, Chief Executive Nick Le-
schly said that if the therapy makes

it to market, he would consider asking insurers to make an upfront
payment to cover costs and risk of
development, plus additional ongoing payments if it works for a patient.
Other drug makers are trying
different models. Since 2011, Acorda
Therapeutics Inc. has provided its
drug Ampyra, which can help multiple-sclerosis patients improve their
walking, free for the first two
months.
The reason: Studies have shown it
only works in about 40% of patients,
but there is no way to predict before
starting therapy who will benefit.
The two-months free program gives
patients time to figure out if the
drug is workingthey usually know
within several weeks, says Acorda
Chief Executive Ron Cohen. If the
drug works, the company begins
charging the regular price, or about
$21,000 a year per patient.
Acorda implemented the twomonths free policy partly because
some insurers were restricting its
use. The two-months free program
isnt part of any contracts with insurers, but Dr. Cohen believes it
sows goodwill among doctors and
insurers.
We saw that as a risk-sharing
arrangement, said Dr. Cohen.
He says a significantly wider
swath of the drug industry is exploring alternative-pricing models
than in the past. A lot of the pressure emerges simply from the ongoing issues around the increasing
cost of medicine, he says.
Alnylam Pharmaceuticals Inc.
would consider performance-based
pricing if its experimental rare-disease drugs reach the market, CEO
John Maraganore said in an interview. The companys lead drug in
development is a treatment for a
rare disease called TTR-mediated
amyloidosis. Regulators havent yet
approved the drug for sale and Alnylam hasnt set a price.
Mr. Maraganore said blood tests
can measure the effectiveness of its
experimental drug. I think there
are many opportunities for our
medicines to be evaluated and potentially reimbursed on a performance basis, he said. We certainly
would be open to that type of approach.
The drug industry has made various stabs at alternative-pricing before. Several European state-run
health systems have implemented
pay-for-performance and indicationspecific pricing arrangements with
drug makers over the past decade.
In the U.S., health insurer Cigna
Corp. has signed deals that tie reimbursement for EMD Seronos MS
drug Rebif and Merck & Co.s diabetes drug Januvia to certain patient
outcomes.
Joseph Walker
MARKETS
Apple Plans Yen-Denominated Bonds

Company is taking advantage of low yields in Japan; cash will be used for payments to shareholders
BY TAKASHI MOCHIZUKI
AND ELEANOR WARNOCK
and pricing of the issuance arent

fixed yet and could change depending on demand among investors, the
person said.
An Apple spokesman declined to
comment.
Japanese bond yields and issuance costs are some of the lowest in
the world as the central bank keeps
interest rates low with its monetary-easing program. Foreign issuers of yen bonds generally are looking to diversify funding and to tap
an investor base hungry for yield,
though the bonds come with a currency risk. The yen hit a nearly
eight-year low against the dollar on
Tuesday.
TOKYOApple Inc. will likely issue the companys first yen-denominated bonds in June, people familiar
with the issuance said Wednesday,
in the latest of several moves to
take advantage of rock-bottom interest rates in some markets outside
the U.S.
The U.S. tech giant will issue
around 200 billion ($1.6 billion) of
yen-denominated bonds and use the
proceeds for shareholder returns
and possibly also to expand Japanese operations, one person familiar
with the matter said. The amount
Bond-market participants say

that the Apple issuance will likely
draw strong interest from domestic
investors if it offers an attractive
yield.
Underwriters will include Goldman Sachs Group Inc., two people
familiar with the matter said.
A Goldman Sachs spokeswoman
declined to comment.
Apple has several flagship stores
in Japan and its iPhone has the
leading share of the local smartphone market. The U.S. brand has
eclipsed domestic handset providers
such as Sony Corp. and Sharp Corp.,
as well as international rivals such
as Samsung Electronics Co.
In December, Apple said it would

open a new research site near Yokohama, after Prime Minister Shinzo
Abe disclosed the companys plans
to invest in Japan during a campaign rally. Apple said it would take
over part of a former Panasonic
Corp. factory and erect a four-story
building on the site. Work is set to
begin by the end of the year.
Apple has opened research and
development sites in a number of
countries around the world, in addition to its headquarters in Cupertino, Calif.
The companys likely move to
sell bonds in Japan isnt its first
move to raise cash abroad. In Feb-
ruary, the company completed a

sale of bonds denominated in Swiss
francs, taking advantage of low
borrowing costs in Switzerland.
Last year, Apple also raised debt in
euros.
The company has been using
proceeds from debt sales to fund
payments of dividends and to buy
back shares. It has been using newly
raised funds for these purposes
rather than using its overseas holdings of cash from foreign earnings,
which would be taxed if brought
back to the U.S.
Moodys Investors Service has
assigned an Aa1 rating to Apple
debt, its second-highest ranking.
Bache Sale Shows Commodity-Trading Troubles

Socit Gnrale SA is picking
apart Bachea commodities house
and the last link to a historic Wall
Street namein another sign of
how trading in raw materials has
fallen on hard times.
Disappointed in Baches poor
performance, executives at Jefferies LLC put the unit on the block,
eliciting interest from the French
bank. But SocGen is taking only
some pieces of the business for a
nominal sum, setting off a scramble
among Jefferies Baches employees
and clients, people familiar with
the situation said.
SocGen anticipates taking more
than 300 of Baches top clients by
revenue, which include producers
and end users of everything ranging from crude oil to aluminum and
wheat, said a person familiar with
the French banks plans. On the list
as well are other financial institutions that act as counterparties.
Many brokers on Jefferies
Baches energy team are moving to
U.K. brokerage ED&F Man Capital
Markets after SocGen decided to
absorb just a third of client assets,
the people said. Metals brokers
have approached Australian bank
Macquarie Group Ltd. and R.J.
OBrien & Associates LLC, a brokerage based in Chicago, these people said. A group that caters mostly
to financial clients has made overtures to ADM Investor Services, a
unit of Archer Daniels Midland
Co., these people said.
The disintegration of Bache, one
of the first New York investment
banks to make a foray into raw-materials markets, is the latest example of how commodities trading is
on the decline on Wall Street amid
shrinking profits and heightened
regulation. J.P. Morgan Chase &
CHARLES PLATIAU/REUTERS
BY CHRISTIAN BERTHELSEN
AND TATYANA SHUMSKY
Socit Gnrale is expanding its commodities business by purchasing some pieces of Bache for a nominal sum.
Co., Goldman Sachs Group Inc. and
Morgan Stanley have shed commodity assets in the last year.
This year has been a reality
check for the industry, said Matt
Simon, head of futures research at
consulting firm TABB Group LLC.
Its a simple case of what the
profitability is going to be. Theres
lower commissions, fewer instruments you can profit on, stronger
capital commitments and growing
pressure on the business. That
leaves an ugly picture for seniorlevel executive management.
Founded in 1879, Bache became
publicly traded in 1971, and Prudential Financial Inc. bought it 10

years later. Over the years, Bache
was whittled down to a brokerage
specializing in commodity and financial derivatives. It was sold to
Jefferies for $430 million in 2011.
Bache posted operating losses
for its four years under Jefferies
ownership, said people familiar
with the units performance. In
2014, the brokerage took a $50 million hit when a client, ship-fuel
supplier OW Bunker, suffered
losses on a bet on fuel prices, according to filings and current and
former employees familiar with the

loss. OW Bunker filed for bankruptcy protection in November
amid an alleged internal fraud unrelated to the bet and couldnt
come up with the money to pay off
its losing position, leaving Jefferies
on the hook.
Jefferies, a unit of Leucadia National Corp., began seeking buyers
for the unit in December and laid
off several employees earlier this
year. Macquarie, which has grown
aggressively in commodities as
Wall Street banks have pulled back,
made an early offer but later with-
drew the bid, said people familiar

with the talks.
SocGen is expanding its commodities business. In May 2014, it
bought out Crdit Agricole SAs
50% stake in a joint venture for derivatives brokerage Newedge.
In its April 9 news release announcing the deal to acquire Bache
from Jefferies, SocGen said it
would take selected assets. In its
own release, Jefferies said SocGen
would acquire most of the business.
Jefferies also said it would wind
down any remaining Bache operations through the transactions
close at the end of the second
quarter.
The New York bank filed a notice with New York state saying it
intends to lay off 120 employees by
July 8.
Although the roughly 300 clients chosen by SocGen make up a
majority of the units revenue, they
constitute a fraction of the units
thousands of clients, said people
familiar with the matter.
SocGen has been allowed to review accounts and reach out to clients it wants, according to people
familiar with the process. Accounts
are being transferred to SocGen
within 30 days unless clients object. Clients passed over by SocGen
have been told to find new firms to
handle their business.
SocGen has made job offers to
only some Jefferies Bache brokers.
SocGen interviewed about a third
of the 40-member metals team, and
even fewer got offers to join, according to a Jefferies Bache broker.
They thought they could just
press a button and make all the accounts go away, said a senior Jefferies broker. But theres thousands of accounts, its not going to
be that simple and its all taking a
lot more time.
U.S. Firms See Green as Japan Eases Rules on Pensions

contribution plans in the U.S., according to the Investment Company
Institute, a Washington-based association for U.S. mutual-fund companies.
Japanese financial institutions
are the main providers of access to
defined-contribution plans for both
companies and individuals, industry
analysts say. Funds run by foreign
managers are available, but investment in those offerings probably
accounts for less than 10% of the total, they say.

There are challenges ahead for
both Japanese and foreign asset
managers: Expanding eligibility to
use the funds wont guarantee
workers take part. Of the roughly
40 million people eligible today,
only five million or so actually participate, according to Japans welfare ministry. And about 60% of the
trillions of yen held under such defined-contribution plans is in cash
or near-cash products, where the

principal is guaranteed, the ministry says.
In the past, the government encouraged the use of such low-risk
products, seen for years as a good
investment because deflation was
increasing the purchasing power of
cash. Pension-service providers
were required to offer the guaranteed funds.
Now, the government is proposing to remove that obligation. As
mild inflation returns, analysts say,

investing in safe assets is a lesssound strategy, since such holdings
are likely to grow slowly over the
long run.
Riskier, professionally managed
funds are a better option, the reasoning goes, even if the fees
charged to investors are higher.
Junichiro Goto, head of definedcontribution planning and promotions at AllianceBernstein Japan,
said setting up clear government
guidelines that lay out the fiduciary

responsibilities of those in the industryand improved financial literacywould encourage investors
to use the plans.
Japanese people are among the
thriftiest in the world, but simply
electing to hold savings in cash isnt
ideal, said Paul Schott Stevens,
chief executive of the ICI. Youve
got to invest them in such a way as
to achieve a longer-term return
over time, he said.
MARKETS
Boutique Bohemia: Hostels Go High-End

BY CRAIG KARMIN
Some investors are betting the
next big market in hospitality will
be the scruffy, cost-conscious backpacking crowd.
AllianceBernstein LP, Invesco
Ltd. and billionaire Ronald Burkles
Yucaipa Cos. all are pouring money
into upscale youth hostels, a new
kind of lodging that has been growing in Europe and is starting to
crack the U.S. market.
These accommodations look
nothing like what traveling college
students of years ago are likely to
remember. Back then, a youth-hostel
stay usually meant sharing dingy,
cramped quarters with a dozen
strangers and waiting to use a communal restroom.
The modern hostel still offers
the social lubricant of shared rooms,
though generally for fewer people.
But in other respects it more closely
resembles a fashionable boutique
hotel. Such properties feature private bathrooms, vibrant bars with
specialty cocktails, yoga classes on
rooftops, and mahogany-filled
rooms from interior designers like
Roman & Williams. Most also offer
the option of private rooms with
one or two beds.
This month, Freehand, one of the
first of these brands based in the
U.S., is opening a Chicago hostel. It
is its second U.S. property, following
one in Miami Beach that has 278
beds and opened in 2012. Generator
Hostels, the operator of nine Euro-
pean hostels with 6,200 beds, is

close to a deal to acquire a building
on Collins Avenue in Miami Beach
for its first U.S. hostel, say people
familiar with the matter.
Josh Wyatt, a partner at Patron
Capital Partners, the London-based
private-equity firm that is the majority owner of Generator, says the
high-end hostel concept represented
a new niche. We looked at the boutique space and said, No one really
does this with hostels, he says.
The budding interest in a sector
historically dominated by modest
mom-and-pop operations shows
how well the hospitality market is
doing, but also how crowded the
more-traditional segments of the
market have become.
It also shows how any business
model that attracts the much-coveted millennial generation, often defined as the group born between
1980 and 2000, holds a particular
investor appeal.
A recent report from real-estate
broker CBRE Group Inc. says this
generation of travelers has about
200 billion ($220 billion) in annual
spending power, stays longer when
traveling than other age groups, and
didnt much slow its traveling during the recession.
The millennials want something
cheap, but they want it to be cool,
says Bert Crouch, a portfolio manager
at Invesco, which last year paid 60
million for a 23% stake in Generator.
The hostel model typically relies
on high per-room occupancy and
GENERATOR HOSTELS
Investors target millennials with new kind of lodging that has grown in Europe; out with dingy, in with cool
Generator Hostels operates this Paris hostel and eight others in Europe, with
6,200 beds. It hopes to buy a building in Miami Beach, Fla., for its first U.S. site.
lower costs, such as providing only
light housekeeping in the shared
rooms. It also counts on strong food
and beverage sales. Mr. Wyatt says
Generators average bed rate is 25
and that guests typically spend at
least half that amount at the bar or
restaurant or on travel items sold at
the hostel.
Hostel owners say their products
attract budget-minded travelers to
cities they might otherwise not be
able to afford. A spot in an eight-bed
room at the Freehand Miami has
rented on average in 2015 for about
$42 a night, Freehand says. By contrast, a hotel room in Miami this year
charged on average $242 a night, ac-
cording to data tracker STR Inc.

Some analysts caution that the
track record for these modern hostels
is short and predicting the future
tastes of the younger generation can
be difficult. In the U.S., there also
could be a perception problem to
overcome, since hostels still are often
associated with concerns about
safety, noise and cleanliness.
Wed be naive to think the concept will be accepted right off, Invescos Mr. Crouch says. But it
wont take long with social media
for the word to spread about the experience.
Hostels have to compete with
other low-cost options, including
Dollar Packs a Punch in Deals Abroad
BY LIZ HOFFMAN
AND VIPAL MONGA
American companies looking to

do deals abroad are finding a welcome tailwind: a strong U.S. dollar.
After some time in the doldrums,
the greenback had gained 25.5%
against the euro, 20.8% against the
Japanese yen and 9.5% against the
British pound over the past year, as
of Tuesday.
The moves make it cheaper for
U.S. companies to buy foreign ones,
and is among several factors amid an
overall boom in mergers and acquisitionsincluding inexpensive debt, big
overseas cash reserves, strong performance of U.S. companies relative to
peers abroad and CEO confidence
that are encouraging U.S. buyers to
set their sights on foreign rivals.
$250 billion
Amount U.S. firms

committed to overseas
acquisitions last year
The rising dollar is good news

for companies on the hunt, and for
bankers and lawyers who advise
themespecially in Europe, where
M&A activity has trailed behind a
U.S. rally.
I think well continue to see an
increase in U.S. companies looking
to acquire abroad, taking advantage
of the dramatic moves weve seen in
the dollar, said Scott Bok, chief executive of M&A advisory boutique
Greenhill & Co.
U.S. companies committed $250

billion to overseas acquisitions last
year, the most on record, according
to FactSet data going back to 1995.
That is a 136% rise from 2013, far
outpacing the overall increase of
about 66% in global merger activity.
So far, 2015 is on pace to log more
than $350 billion in U.S. outbound
deals.
Delivery company FedEx Corp.
cited the stronger dollar in its pending $4.8 billion takeover of Dutch
carrier TNT Express NV, announced
April 7, as did XPO Logistics Inc. in
its $3.5 billion deal for Frances
Norbert Dentressangle SA, announced three weeks later. And deal
advisers, often quick to tell their clients why now is the time to strike,
are citing the dollars relative buying power.
This deal would have cost us
20% more in dollar terms had we
done it a year or so ago, XPOs
chief executive, Bradley Jacobs, said
in a conference call announcing the
Norbert Dentressangle transaction.
He also emphasized the deals strategic rationale and said XPO was
not speculating in currency.
Still, for U.S. companies looking
abroad, a strong dollar can also
complicate things. U.S. buyers must
convert the foreign acquisitions
earnings into dollars for accounting
purposes, which can drag down
companywide earnings, at least on
paper.
The dollars rise during the first
quarter, for example, hit earnings at
companies such as 3M Co., Kimberly-Clark Corp. and General Motors Co. as their overseas businesses contributed less in dollar
terms.
And by no means is the take-
Buying Foreign
Amid the dollars rise, U.S. companies

are aggressively buying rivals
overseas.
U.S. takeovers of foreign companies,
by dollar value
Global deal volume
$2.5 trillion
2.0
1.5
YTD
1.0
0.5
0
2010
11
12
13
14
15
Source: FactSet
over activity one-way: Foreign

companies, especially those with
strong balance sheets, are actively
investing in the U.S., where the
economy is growing more rapidly
than in many other parts of the
world.
Some are taking advantage of
tax-rate differentials that make U.S.
companies attractive targets, as
they can use their lower foreign tax
rates to wring more profit from
higher-taxed U.S. companies.
But for U.S. companies looking to
buy, a robust dollarcombined with
continued depressed asset prices in
parts of Europeis a good reason to
do so now, executives and advisers
say.
We have an opportunity right
now to capitalize on the strong dollar. We are going to see if we can
make that happen, Douglas Baker
Jr., CEO of Ecolab Inc., a $34 billion

maker of cleaning chemicals and
equipment, told investors earlier this
year.
Similar comments have come in
recent weeks from executives at
companies including industrial gas
supplier Praxair Inc. and Polaris
Industries Inc., a $10 billion maker
of motorcycles and off-road vehicles.
People are looking at more
cross-border opportunities than
they were, said Stephen Glover, cochairman of the M&A practice at
law firm Gibson, Dunn & Crutcher
LLP.
A pickup would be welcome
news for M&A in Europe, where the
deals market has been slower to recover from the financial crisis.
A few big European takeovers
struck in recent months have
sparked hopes of a revival that a robust dollar could support, said Bob
Bartell, global head of corporate finance at investment bank Duff &
Phelps Corp.
He cautioned, however, that risk
remains in Europe. The potential of
a Greece exit from the euro currency
zone or a U.K. exit from the European Union continue to hang over
the Continents economy, which is
growing slowly. Its a bit of question mark, Mr. Bartell said.
And currency is, at best, a secondary reason to go shopping, far
less important than long-term
growth prospects and strategic fit,
executives and advisers say.
Companies are going to buy
where they see an opportunity, Mr.
Bok said. A favorable foreign-exchange rate doesnt turn an otherwise bad transaction into a good
one.
budget hotels and home-rental companies like Airbnb Inc. Operators

looking to open hostels in New York
also face potential legal issues. A local law limits the number of people
who arent traveling together that
can stay in a room at the same time.
We have the capital ready to go
and a few sites in mind, but we need
to be legal to be ready to operate,
says Robert Savage, spokesman for
Beds & Bars, a U.K.-based hostel
company that operates in 10 European cities. He says the company is
avoiding the U.S. until it can start
with a foothold in New York.
Not everyone is deterred. Andrew
Zobler, chief executive of hotel developer Sydell Group, which owns Freehand with Yucaipa and AllianceBernstein, says he plans to open a
downtown Manhattan property
within three years, tweaking his formula to focus more on private rooms.
Freehand also expects to open a
Los Angeles hostel in about 18
months. Mr. Zobler says he and his
partners are spending $250 million
on the four projects.
Generator got its start in 2007
when Patron bought hostels in London and Berlin, with part of the 40
million Patron allotted to this investment idea. The company expects to
have 13 hostels open by the end of
2016, and it is looking in Los Angeles,
Washington and other U.S. cities.
It may be a few years for the
U.S. to fully embrace hostels, Mr.
Wyatt says. But there is momentum building.
Yuan Push
Pays Off
For Beijing
BY ANJANI TRIVEDI
The yuan is now Asias leading

currency for doing business with
China, trumping the yen and the
Hong Kong dollar as Beijing aggressively pushes it through international trade channels.
The currency now accounts for
31% of payments exchanged with
China, up from 7% just three years
ago, according to the latest data
from the Society for World Interbank Financial Telecommunication,
a provider of payments services.
The data from Swift excludes payments by central banks.
As Asian countries increasingly
trade directly with mainland China
and Hong Kong, the yuan is playing
a bigger role. Its ascent comes as
China opens clearing centers across
the world, signs bilateral currencyswap deals and grants investment
quotas to foreign investors.
Data from Swift shows that the
yuan accounts for more than 50% of
payments exchanged between China
and Singapore, Taiwan, South Korea
and the Philippines.
In 2012, 19 of the 26 Asian countries using the yuan for direct payments with China and Hong Kong
were considered low users, relying
on the currency for less than 10% of
their payments. The current total is
nine countries, according to Swift.
The Chinese currency remains
the fifth-most-used currency for
global payments, accounting for just
over 2% of payments across the
world.
MARKETS
BOE Official Received Emails
In London trial, evidence shows brokers made suggestions on where banks should set Libor
BY DAVID ENRICH
LONDONA senior Bank of England official received emails that
were part of an alleged campaign to
rig benchmark interest rates, according to evidence presented in a
London trial Wednesday.
Martin Mallett, who at the time
was the chief currencies dealer at
the Bank of England, was among a
couple of dozen recipients of emails
sent in 2007 by brokers allegedly
working at the behest of former
bank trader Tom Hayes. The recipients were blind carbon-copied on
the messages.
In the emails, the brokers sent
out daily suggestions for where a
variety of banks should set the London interbank offered rate, or Libor.
Mukul Chawla, the prosecutor trying
Mr. Hayes, said those emails were
used in an attempt to skew interest
rates for the benefit of Mr. Hayes, at
the time a trader in Tokyo at UBS
AG.
Mr. Mallett, nicknamed The
Hammer, was sent the emails at his
hammer@bankofengland.co.uk ad-
dress. He left the Bank of England

amid a probe into attempted manipulation of foreign-exchange markets.
He was fired for what the central
bank described as serious misconduct, although the bank said his
departure wasnt directly related to
the currencies-rigging investigation.
Mr. Mallett, who couldnt immediately be reached Wednesday, hasnt
previously commented.
Martin Mallett was one of

dozens of recipients of
the emails sent in 2007.
A Bank of England spokesman
said: In line with convention followed by public bodies, where precedence to criminal trials is afforded wherever possible, it would
be inappropriate for the Bank to
comment on an active criminal proceeding.
It is unclear why Mr. Mallett was
receiving the emails. There is no in-
dication that Mr. Mallett was involved in the alleged Libor manipulation by Mr. Hayes and his brokers.
The development is the latest in
a series of embarrassing revelations
for the Bank of England. Last week,
the banks plans to examine the effect on Britains financial sector of a
possible U.K. exit from the European
Union were accidentally leaked to
the press.
And Mr. Malletts receipt of the
emails is the latest connection between the Bank of England and the
Libor scandal. In 2012, after Barclays admitted trying to manipulate
the widely used financial benchmark, Barclays released documents
showing that senior executives were
under the impression that Paul
Tucker, at the time one of the central banks top officials, had instructed Barclays to skew its Libor
data. Mr. Tucker denied giving any
such instructions, but the allegations led some British lawmakers to
criticize the Bank of England.
Documents released by the British Parliament in 2012 showed that
other officials at the Bank of Eng-
land were aware of concerns about

the integrity of Libor, long before
the manipulation scandal erupted in
public view. But the central bank
and other financial authorities rebuffed suggestions that they take
responsibility for formally regulating Libora decision that years
later would elicit criticism of the
Bank of England for missing an opportunity to defuse a brewing crisis.
Mr. Chawla said Wednesday that
Mr. Hayess employer, UBS, arranged
special paymentsor kickbacks
to the brokers for their assistance.
UBS pleaded guilty to Libor manipulation in 2012.
The trial of Mr. Hayes began
Tuesday. The prosecutor described
Mr. Hayes as the ringmaster and
the epicenter of an alleged
scheme to manipulate Libor.
Mr. Hayes pleaded not guilty to
the criminal charges, but hasnt had
the chance to present his defense to
the jury. He previously told The Wall
Street Journal that this goes much,
much higher than me.
Jason Douglas
USJ Makes
Plan to List
In Tokyo
BY YVONNE LEE
AND ATSUKO FUKASE
HONG KONGThe operator of

the Universal Studios Japan theme
park in Osaka plans to list on the
Tokyo Stock Exchange as early as
September, people with direct
knowledge of the deal said, in a listing that would give the company a
valuation of more than $5 billion.
USJ Co., which was backed by
Goldman Sachs Group Inc. and Asian
private-equity firm MBK Partners,
could be valued at up to $6 billion
when it lists in the third quarter,
several of the people said.
The possible size of the deal is
unclear and depends on market conditions when the IPO launches, one
person said.
The companys valuation has
soared since the theme-park operator opened a new attraction last
year dedicated to Harry Potter, the
world-wide childrens book phenomenon about a boy wizard.
A spokesman for USJ declined to
comment.

sponded to requests for comment.
Mr. Wang is leading the biggest
anticorruption campaign in China in
a generation, investigating Communist Party leaders including former
security head Zhou Yongkang. His
role as one of the seven members of
the Politburo Standing Committee,
the Communist Partys top decisionmaking body, and as secretary of
the Central Commission for Discipline Inspection, its anticorruption
body, would make any suggestion of
improper behavior politically sensitive.
Efforts by U.S. government agencies to find communications related
to Mr. Wang, even in service of an
investigation into a U.S. bank, could
be viewed by the Chinese government as an unfriendly act and add
to tensions in the bilateral relationship.
Mr. Wangs name hasnt been
previously mentioned in media reports as part of the investigation
into whether J.P. Morgan hired relatives of top Chinese government officials in an effort to win business
for the bank. The subpoena is a request for potential evidence rather
than evidence itself.
The list of Chinese government
officials on the subpoena represents
a broad spectrum of the countrys
powerful government and corporate
officials. Other officials on the list
include Minister of Public Security
Guo Shengkun; Peoples Bank of
China Vice Governor Pan Gongsheng; chairman of state-owned grain
trader Cofco Corp., Frank Ning
Gaoning; and a senior executive at
state-owned shipping giant Cosco
Group, Sun Jiakang. The list also
names officials of the State-owned
Assets Supervision and Administration Commission, which manages
Chinas state-owned companies, and
regulators for the insurance, banking and securities industries.
Some people named on the subpoena already have been publicly
connected in media reports to the
probe, including: Mr. Gao, the commerce minister; Fu Chengyu, retiring chairman of oil refiner Sinopec,
PETE SOUZA/THE WHITE HOUSE
Subpoena of J.P. Morgan Names 35 Chinese Officials
Chinas Wang Qishan holds a basketball given to him by President Barack Obama following their meeting in July 2009.
who referred Mr. Gaos son to J.P.
Morgan, emails indicate; and Xiang
Junbo, an insurance regulator who
urged J.P. Morgans chief executive,
James Dimon, to hire a young associate of his, according to people familiar with the matter.
The officials, none of whom are
accused of any wrongdoing, didnt
respond to requests for comment. A
spokesman for Sinopec previously
said that Mr. Fu didnt recognize Mr.
Gaos sons name.
None of the Chinese officials
connected in media reports to bank
hires have faced censure in China,
and it is unclear whether the Chinese government views the type of
bank hiring under investigation in
the U.S. to be a problem. In a meeting of the Commerce Ministrys
Communist Party Committee in late
March, more than a month after The
Wall Street Journal published a report on Mr. Gaos son, Mr. Gao
urged officials to manage families
and familial affection, resolutely op-
pose a sense of entitlement, and

have strict standards toward
spouses, children and employees,
according to a summary of the
meeting posted to the Commerce
Ministrys website.
The probe has focused broadly
on a period starting around 2006
and ending in 2013, when J.P. Morgan ended a program for referred
hires that some at the bank called
Sons and Daughters. Investigators
also are looking into the China hiring practices of global banks besides
J.P. Morgan.
Renowned in Chinese officialdom
as a problem solver, Mr. Wang
headed China Construction Bank in
the 1990s, then served as mayor of
Beijing and organizer of the 2008
Olympics. As one of Chinas four vice
premiers from 2008 to 2013, Mr.
Wang advised then-Premier Wen Jiabao on finance and the economy. Mr.
Wang led the Chinese side of the
U.S.-China Strategic and Economic
Dialogue, high-level talks between
senior officials in both countries.

Actions taken by U.S. and Chinese law enforcement have had an
impact on diplomacy between the
two countries in the past. Last year,
China suspended cybersecurity discussions with the U.S. after the Justice Department charged five members of the Peoples Liberation Army
with hacking into computers to steal
technology. A Chinese Ministry of
Defense spokesman disputed the
charges, which he said severely
damaged mutual trust between the
countries. Last week, the U.S.
charged six Chinese citizens with
stealing sensitive technology from
U.S. companies. A Chinese university employing three of the accused
expressed its indignation and firm
denial, in response to the charges,
state media reported.
The SEC document issued to J.P.
Morgan, dated April 29, is the latest
in a string of subpoenas issued in
connection with the investigation,
which was disclosed by the bank in
August 2013. The subpoena requested a response by May 15, although extensions have been
granted in the past, a person familiar with the investigation said. It
wasnt clear how J.P. Morgan, which
has been cooperating in the investigation, has responded to the subpoena.
Early this year, Chinese officials
suggested to U.S. counterparts that
Mr. Wang might visit the U.S. in the
next few months, but never formally
proposed the idea and had dropped
it by April without explaining why,
according to people familiar with
the matter.
A person familiar with the investigation said the SECs approach to
collecting evidence was very broad
and that the agency has been subpoenaing everything under the
sun related to referred Chinese
hires at J.P. Morgan. Despite this,
any potential penalty in the case
isnt expected to be large compared
with other fines levied on banks recently for financial improprieties,
that person noted. You wouldnt
care if it wasnt J.P. [Morgan], the
person said.
Spokesmen for the SEC and the
Justice Department declined to
comment.
The SEC subpoena also requires
J.P. Morgan to produce a list of any
officials at six Chinese government
agencies who asked the bank to hire
job candidates, provide all communications between the officials and
the bank and then give details of interactions between the official and
the bank for a year after any such
job request.
The agencies flagged by the SEC
are the State-owned Assets Supervision and Administration Commission, the China Insurance Regulatory Commission, the China Banking
Regulatory Commission, the China
Securities Regulatory Commission,
the Ministry of Finance and the
Ministry of Commerce. None of the
agencies responded to requests for
comment.
Christopher M. Matthews
and Emily Glazer
INTERNATIONAL INVESTOR
U.S. Shares Bounce

Back From Selloff
BY CORRIE DRIEBUSCH
increase in 2015 who periodically

gets spooked, and thats what we
saw yesterday, said Tim Knepp,
chief wealth officer for LPL Financial.
As trading for the month of May
winds down this week, investors
will have even more data to focus
on, including Fridays revised reading of first-quarter gross domestic
product. The initial reading of firstquarter GDP showed the U.S. economy slowed sharply, growing at a
sluggish 0.2%.
Economists surveyed by The
Wall Street Journal expect that to
be revised downward to a 1% contraction in Fridays revised reading.
Shares of Michael Kors Holdings tumbled 23% after the retailer
warned that current-quarter results
would fall short of expectations.
Tiffany shares jumped 12%, lifted
by earnings and revenue that declined less than expected in its first
quarter. The jeweler reported a key
sales metric grew across nearly every region despite the impact of a
strong U.S. dollar.
European stocks leapt following
reports that Greece is in the final
stages of reaching a deal with its international creditors.
The Stoxx Europe 600 gained
1.3% to 408.88, breaking a three-session losing streak, following comments from Greek Prime Minister
Alexis Tsipras that suggested Athens may be closer to a deal that
would end the countrys monthslong
deadlock with international creditors. In Athens, the Athex Composite jumped 2.6%.
U.S. stocks rose Wednesday, as

major benchmarks recovered ground
one day after their biggest losses in
weeks.
The Dow Jones Industrial Average gained 111 points, or 0.6%, to
18153 at midday, rebounding from a
tumble of 1% on Tuesday, its biggest
one-day rout since
ABREAST OF April 30.
THE MARKET
The S&P 500
added 15 points,
or 0.7%, to 2119, while the Nasdaq
Composite Index gained 47 points,
or 0.9%, to 5080. Both benchmarks
on Tuesday sustained their sharpest
loss since May 5.
Technology stocks in the S&P
500, which recorded some of the
worst losses Tuesday, rose 1.1%.
Tuesdays selloff marked a sharp
divergence from recent stock-trading sessions. Last week, both the
Dow industrials and the S&P 500 hit
fresh record highs despite anemic
trading volume. On Tuesday, volumes picked up but remained below
average.
Investors blamed Tuesdays rout
in part on economic reports. Some
data indicated that the U.S. economy may be improving after hitting
a soft patch in the first quarter.
Though that is good news for the
economy, it helps solidify expectations for the Federal Reserve to
raise interest rates later this year,
which some investors worry may
hurt stock performance.
There is the marginal buyer
who thinks there will not be a rate
Data as shown is for information purposes only. No offer is being made by

Morningstar, Ltd. or this publication. Funds shown arent registered with the
U.S. Securities and Exchange Commission and arent available for sale to United
States citizens and/or residents except as noted. Prices are in local currencies.
All performance figures are calculated using the most recent prices available.
FUND NAME
NAV
GF AT LB DATE CR
n AHW CAPITAL MANAGEMENT

Tel (+49) 1805 - 23 82 82
www.ahw-capital.com
AHW Top-Div.Int.
GL
EQ LUX 07/29 EUR
NAV
46.59
%RETURN
YTD 12-MO 2-YR
-8.9
-8.2
-2.7
n ALLIANZ GLOBAL INVESTORS KAPITALANLAGEGESELLSCHAFT

Concentra AE
Industria AE
InternRent AE
EU EQ DEU 05/26 EUR

EU EQ DEU 05/26 EUR
EU BD DEU 05/26 EUR
113.57
113.91
47.32
21.7
20.5
8.2
23.7
20.9
16.7
18.8
17.6
7.2
n CHARTERED ASSET MANAGEMENT PTE LTD - TEL NO: 65-6835-8866

Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: cam@cam.com.sg
CAM-GTF Limited
OT
OT MUS 05/22 USD 336864.69
-0.9
-0.6
-8.4
FUND NAME
NAV
GF AT LB DATE CR
American Growth Fund AA

American Growth Fund AA (HKD)
Asia Total Return Fund AA Inc
Asia Total Return Fund AA
Asia Total Return Fund AA (HKD) Inc
Asia Value Dividend Equity Fund AA
Asia Value Dividend Equity Fund AA Inc
Asian Equity Fund A
Asian Equity Fund AA
Asian Sm Cap Equity Fund AA
Asian Small Cap Equity Fund AA (HKD)
China Value Fund A
China Value Fund AA
Dragon Growth Fund A
Dragon Growth Fund AA (HKD)
Emg Eastrn Europe Fund A
Emg Eastrn Europe Fund AA
European Growth Fund A
European Growth Fund AA
Global Contrarain Fund AA
Global Property Fund AA
Global Property Fund AA (HKD)
Global Resources Fund AA
Greater China Opportunities Fund AA
Healthcare Fund AA
India Equity Fund AA
International Growth Fund A
International Growth Fund AA
Japanese Growth Fund A
Japanese Growth Fund AA
Latin America Equity Fund AA
Russia Equity Fund AA
Strategic Income Fund AA
Taiwan Equity Fund AA
Turkey Equity Fund AA
U.S. Bond Fund AA
U.S. Bond Fund AA (HKD)
U.S. Bond Fund AA (HKD) Inc
U.S. Bond Fund AA Inc
U.S. Sm Cap Equity Fund AA
U.S. Special Opportunities Fund AA
U.S. Special Opportunities Fund AA (HKD)
U.S. Special Opportunities Fund AA Inc
U.S. Tsy Inf-ProtSec Fund AA
US
US
AS
AS
AS
OT
OT
OT
OT
AS
AS
AS
AS
AS
AS
EU
EU
EU
EU
GL
OT
OT
GL
AS
OT
EA
GL
GL
JP
JP
GL
EE
OT
AS
OT
US
US
US
US
US
US
US
US
OT
EQ
EQ
BD
BD
BD
OT
OT
OT
OT
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
OT
EQ
OT
BD
BD
BD
BD
EQ
BD
BD
BD
OT
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
Japan and
China Buck
Downtrend
Indonesian Grth Fund
CP Global Alpha Fund

OT
CP Multi-Strategy Currency Fund OT
CPS-Master Priv Fund
GL
OT WSM 05/27 USD

OT CYM 05/12 USD
OT WSM 05/27 USD
n HSBC Trinkaus Investment Managers SA

E-Mail: funds@hsbctrinkaus.lu
Telephone: 352 - 47 18471
Prosperity Return Fund A
Prosperity Return Fund B
Prosperity Return Fund C
Prosperity Return Fund D
Renaissance Hgh Grade Bd A
Renaissance Hgh Grade Bd B
Renaissance Hgh Grade Bd C
Renaissance Hgh Grade Bd D
JP
EU
EU
EU
EU
EU
EU
EU
BD
BA
BA
BA
BA
BA
BA
BA
LUX
LUX
LUX
LUX
LUX
LUX
LUX
LUX
12/06
12/06
12/06
12/06
12/06
12/06
12/06
12/06
JPY
JPY
USD
EUR
JPY
JPY
USD
EUR
125.51
113.88
152.75
13.5
NS
4.3
17.7
31.6
17.4
NS
14.6
12.7
Advertisement
FUND NAME
8577.68
9032.12
79.01
121.37
10807.34
11130.39
96.94
102.83
-9.3
4.6
-12.2
-9.0
3.5
17.9
-0.9
-4.6
-8.4
11.0
-11.1
-8.8
5.1
25.6
0.7
-4.1
0.3
13.2
-1.0
8.1
11.3
23.9
8.4
6.9
GL
NAV
1.71
10.72
0.96
1.00
10.03
1.91
1.17
3.59
1.16
2.53
10.23
10.72
3.36
2.49
12.08
3.55
1.53
11.32
0.82
0.98
1.05
9.86
0.83
1.22
2.01
1.40
4.90
1.12
3.57
0.92
0.89
0.49
1.09
1.75
0.83
1.22
9.97
9.92
1.00
1.16
0.93
9.60
0.93
1.29
158.77
American Growth Fund A
US
EQ LUX 05/26 USD
30.14
3.9
12.2
14.2
Leading 10 Performers
FUND FUND
RATING * NAME
%RETURN
YTD 12-MO 2-YR
3.8
3.5
0.6
0.6
NS
16.2
17.5
15.8
15.7
19.9
19.8
25.9
25.8
27.1
26.9
11.2
11.1
8.5
8.4
4.5
3.2
NS
2.1
22.4
7.7
3.4
5.7
5.6
17.0
16.9
-6.9
32.5
0.9
15.7
-12.1
1.1
NS
1.0
1.1
3.1
2.7
2.4
2.7
0.4
11.9
NS
0.5
NS
NS
22.2
NS
13.3
13.0
7.5
NS
40.7
40.4
36.0
35.7
-22.5
-22.7
-4.4
-4.6
2.6
9.9
NS
-19.3
NS
21.3
14.0
7.0
6.8
13.4
13.2
-21.2
-17.0
0.2
13.0
-14.9
2.1
NS
NS
NS
4.9
-3.0
NS
NS
-1.8
13.9
NS
-0.4
NS
NS
12.7
NS
10.6
10.3
8.0
NS
20.0
19.7
23.6
23.2
-13.4
-13.5
6.4
6.1
6.3
6.4
NS
-6.7
NS
19.5
15.6
12.0
11.7
4.5
4.2
-13.4
-10.3
0.3
12.2
-17.4
1.9
NS
NS
NS
9.1
1.3
NS
NS
-2.5
-6.2
-9.8
-9.9
FUND NAME
5
3
NS
3
4
4
3
4
4
3
FUND MGM'T CO.
NAV
GF AT LB DATE CR
NAV
n ALEXANDRA INVESTMENT MANAGEMENT

Tel: +1 212 301 1800 Fax: +1 212 301 1810
AlexandraConvertibleBondFundI,Ltd.(ClassA) OT OT VGB 08/31 USD
2155.22
%RETURN
YTD 12-MO 2-YR
NS
NS
NS
to the Wall Street selloff, said Chris

McGuire, chief executive at Phalanx
Capital Management. The yen will
continue to weaken. The Bank of Japan will make sure of it. It will be a
slower grind for Japan shares to
keep rising, but the direction is
clear.
The Shanghai Composite Index
finished up 0.6% at 4941.71, while
the Shenzhen Composite Index
surged 1.2% to 3053.60. Daily turnover in the two markets surpassed
NAV
%RETURN
YTD 12-MO 2-YR
n THE NATIONAL INVESTOR

TNI Tower | Zayed 1st Street Khalidia| Web:www.tni.ae
OT BMU 04/30 USD
OT IRL 05/25 USD
OT ARE 05/26 AED
994.16
1384.80
11.28
2.9
5.2
9.0
-10.5
-5.8
-7.2
-4.5
9.6
24.6
OT OT CYM 04/30 USD

OT OT USA 10/31 USD
OT OT CYM 01/31 USD
NS
129.92
102.66
4.5
2.4
11.3
6.5
3.2
11.3
6.0
3.8
0.7
% Return in $US **
1-YR 2-YR 5-YR
USDUSA
3.68
7.59 11.38
6.49
USDBHR
0.59
7.08 -0.20
NS
USDSWE
2.30
6.91
4.32
4.95
USDCYM
2.92
6.72
4.01
1.65
USDUSA
4.32
6.49
5.85
4.34
USDLUX
3.13
5.78
6.61
4.89
USDCYM
3.66
5.21
4.83
3.74
CHFCYM
9.02
4.79
7.87
9.49
USDUSA
3.74
4.79
4.50
3.20
USDLUX
2.18
4.61
3.79
2.73
Source: Morningstar, Ltd

1 Olivers Yard, 55-71 City Road
London EC1Y 1HQ United Kingdom
www.morningstar.co.uk; Email: mediaservice@morningstar.com
Phone: +44 (0)203 107 0038; Fax: +44 (0)203 107 0001
two trillion yuan (US$322 billion)

for a second day, reflecting the stillincreasing amount of interest from
Chinese locals. The number of newly
opened A-share accounts grew 10.1%
last week.
The Shenzhen benchmark, which
has sped ahead of that of its larger
mainland rival in recent weeks, is
headed for its best month since
April 2007. The index is up 29% with
two full trading days remaining in
May.
NAV
GF AT LB DATE CR
FUND NAME
GC Hi Yield Inc-Cls P USD MDIs sh
GC Hi Yield Inc-ClsA MDIs EUR H
Hi-Div Stk Cls A1
Hi-Div Stk Cls A2 MDIs
Hi-Div Stk Cls A2 MDIs AUD H
Hi-Div Stk Cls A2 MDIs CAD H
Hi-Div Stk Cls A2 MDIs GBP H
Hi-Div Stk Cls A2 MDIs HKD
Hi-Div Stk Cls A2 MDIs NZD H
Intel-China Converg Fund-A Units
Intel-Chinese Mainland Foc Fund
VP Classic-A Units
VP Classic-B Units
VP Classic-C Units
VP Classic-C Units AUD H
VP Classic-C Units CAD H
VP Classic-C Units NZD H
VP Taiwan Fund
OT
OT
OT
OT
OT
OT
OT
OT
OT
AS
AS
AS
AS
AS
AS
AS
AS
AS
OT
OT
OT
OT
OT
OT
OT
OT
OT
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
EQ
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
05/26 USD
05/26 EUR
05/26 USD
05/26 USD
05/26 AUD
05/26 CAD
05/26 GBP
05/26 HKD
05/26 NZD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 AUD
05/26 CAD
05/26 NZD
05/26 USD
NAV
9.41
10.51
86.86
13.23
12.12
12.14
11.55
12.10
12.17
205.40
55.78
340.88
154.65
19.63
16.08
15.95
16.03
16.42
%RETURN
YTD 12-MO 2-YR
8.4
NS
16.4
16.4
17.5
16.6
NS
16.5
17.8
39.8
37.3
27.7
27.4
28.2
29.5
30.3
30.5
6.5
8.6
NS
25.4
25.5
28.3
26.4
NS
25.4
28.7
73.2
67.4
54.9
54.1
55.5
61.4
60.5
60.9
0.1
4.2
NS
13.2
13.0
NS
NS
NS
NS
NS
29.8
27.4
24.6
24.0
24.7
NS
NS
NS
9.5
n WEBSITE: WWW.VALUEPARTNERS.COM.HK, TEL: (852) 2880 9263

China A-Share Fund Cls A AUD H
China A-Share Fund Cls A AUD UnH
China A-Share Fund Cls A CAD H
China A-Share Fund Cls A EUR H
China A-Share Fund Cls A GBP H
China A-Share Fund Cls A GBP UnH
China A-Share Fund Cls A HKD H
China A-Share Fund Cls A HKD UnH
China A-Share Fund Cls A NZD H
China A-Share Fund Cls A NZD UnH
China A-Share Fund Cls A RMB (CNH)
China A-Share Fund Cls A USD
China A-Share Fund Cls A USD H
China Greenchip-A Units
China Greenchip-A Units AUD H
China Greenchip-A Units CAD H
China Greenchip-A Units NZD H
China Greenchip-A Units USD
China Greenchip-A2 QDIs Units
GC Hi Yield Inc - Cls A MDIs GBP H
GC Hi Yield Inc-Cls A MDIs AUD H
GC Hi Yield Inc-Cls A MDIs CAD H
GC Hi Yield Inc-Cls A MDIs NZD H
GC Hi Yield Inc-Cls P HKD Acc sh
GC Hi Yield Inc-Cls P HKD MDIs sh
GC Hi Yield Inc-Cls P MDIs SGD H
GC Hi Yield Inc-Cls P USD Acc sh
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
AS
AS
AS
AS
AS
AS
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
OT
EQ
EQ
EQ
EQ
EQ
EQ
OT
OT
OT
OT
OT
OT
OT
OT
HKG
HKG
HKG
HKG
HKG
HKG
HKG
HKG
HKG
HKG
HKG
HKG
HKG
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
CYM
05/26 AUD
05/26 AUD
05/26 CAD
05/26 EUR
05/22 GBP
05/26 GBP
05/26 HKD
05/26 HKD
05/26 NZD
05/26 NZD
05/26 CNH
05/22 USD
05/26 USD
05/26 HKD
05/26 AUD
05/26 CAD
05/26 NZD
05/26 USD
05/26 HKD
05/26 GBP
05/26 AUD
05/26 CAD
05/26 NZD
05/26 HKD
05/26 HKD
05/26 SGD
05/26 USD
15.48
14.53
14.64
15.32
14.38
15.21
15.47
15.70
15.10
13.50
15.95
15.02
15.43
73.59
12.60
12.44
12.73
12.41
13.60
10.09
9.61
9.64
9.78
12.41
9.35
10.07
12.51
FUND NAME
NAV
GF AT LB DATE CR
Platinm-Emancipation
Platinm-Equity Plus
Platinm-Gbl Dividend
Platinm-Nordic
Platinm-Premier
Platinm-Turnberry
OT
OT
GL
OT
OT
OT
EQ
OT
EQ
OT
OT
BD
CYM
USA
CYM
CYM
CYM
USA
05/31
05/29
04/30
10/31
12/31
02/28
USD
USD
USD
SEK
USD
USD
NAV
105.47
35.02
60.96
NS
NS
60.14
n WINTON CAPITAL MANAGEMENT LTD

Tel: +44 (0)20 7610 5350 Fax: +44 (0)20 7610 5301
Platinm-All Star
Platinm-All Weather
Platinm-Dynasty
YTD
NOTE: Changes in currency rates will affect performance and rankings.

KEY: ** 2YR and 5YR performance is annualized
NA-not available due to incomplete data;
NS-fund not in existence for entire period
NAV
GF AT LB DATE CR
TNI MENA Special Sits Fund OT

TNI MENA UCITS Fund
OT
TNI UAE Blue Chip Fund
OT
LEGAL
CURR. BASE
Yankee
Yankee Advisers
Multi-Manager Fund LP LLC
Global The
Global Investment
Zenith Fund
House
Merrant
Merrant Fonder AB
Alpha Select USD
Vasco da
BPI Strategies Ltd
GamaStrategiesClassBShares
TAG Relative
TAG Associates LLC
Value Client Fund, L.P. A
Multi
Notz Stucki Cie
StrategySICAVPendulumclsIUSD
Tag Relative
TAG Associates LLC
ValueOffshoreFund,LtdAA
Albatross
Longitude (Cayman)
ArbitrageOpportunity-CHF Ltd.
TAG Relative
TAG Associates LLC
Value Client Fund, L.P. B
OYSTER
Banque Syz Co
MULTI-MgrLOWVOLATILITYUSDCL.B
28.2
NS
28.5
27.9
24.7
35.2
27.7
30.8
25.8
NS
29.6
31.0
27.9
20.8
21.5
20.2
22.5
21.0
20.9
NS
9.3
8.6
10.1
8.3
8.2
8.5
8.3
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
24.9
26.0
24.4
27.3
24.1
25.2
NS
10.8
9.0
12.4
8.5
8.5
NS
8.5
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
NS
15.5
NS
NS
NS
NS
NS
NS
NS
NS
NS
4.1
4.1
NS
4.2
[ALTERNATIVE INVESTMENT FUNDS www.WSJ.com] Advertisement
n PLATINUM CAPITAL MANAGEMENT

Tel: +44 207 024 9840, www.platinumfunds.net
n MANULIFE GLOBAL FUND TEL:(852)2108 1110
Internet:http://www.manulifefunds.com.hk
These funds can invest in any hedge fund strategy and any asset class. Funds opt for absolute returns,
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Weaker-than-expected economic
data in the U.S. shook investors
confidence in a recovery there and
added to pressures on Asian markets, particularly in
ASIA-PACIFIC the Philippines and
STOCKS
South Korea.
The Philippines
PSE fell 1.7% to 7598.70 on Wednesday, a four-month low, after the
government revised downward its
economic-growth figure for last
years fourth quarter.
South Koreas Kospi Composite
Index also finished down 1.7%, at
2107.50, while Australias S&P/ASX
200 declined 0.8% to 5725.30 and
Hong Kongs Hang Seng Index fell
0.6% to 28081.21.
The losses were in part a reaction to the U.S., where stocks overnight suffered their largest one-day
loss in weeks after the release of reports showing weaker-than-expected home prices and demand for
manufactured goods.
Japans Nikkei Stock Average
bucked the trend, finishing up 0.2%
at 20472.58, for its ninth straight
session of gains.
Traders said a weaker yen has
kept shares of Japanese exporters
attractive and the market at 15-year
highs. By the close of Tokyo Stock
Exchange trading, the U.S. dollar
was changing hands at 122.97, after hitting a nearly eight-year high
of 123.32 Tuesday.
I expect Japan shares to go
higher after any knee-jerk reaction
05/26 USD
05/26 HKD
05/26 USD
05/26 USD
05/26 HKD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 HKD
05/26 USD
05/26 USD
05/26 USD
05/26 HKD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 HKD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 USD
05/26 HKD
05/26 HKD
05/26 USD
05/26 USD
05/26 USD
04/09 HKD
05/26 USD
05/26 USD
EQ BMU 05/20 USD
Fund of Funds - Relative Value
BY CHAO DENG
n PT CIPTADANA ASSET MANAGEMENT

Tel: +62 21 25574 883 Fax: +62 21 25574 893 Website: www.ciptadana.com
n CP CAPITAL ASSET MANAGEMENT LIMITED
www.cpgbl.com
Fund Scorecard
Winton Evolution EUR Cls H

Winton Evolution GBP Cls G
Winton Evolution USD Cls F
Winton Futures EUR Cls C
Winton Futures GBP Cls D
Winton Futures JPY Cls E
Winton Futures USD Cls B
GL
GL
GL
GL
GL
GL
GL
OT
OT
OT
OT
OT
OT
OT
CYM
CYM
CYM
VGB
VGB
VGB
VGB
04/30
04/30
04/30
04/30
04/30
04/30
04/30
EUR 1386.04
GBP 1408.28
USD 1758.24
EUR
288.90
GBP
315.73
JPY 20173.05
USD 1027.49
For information about listing your funds, please contact: Freda Fung tel: +852 2831 2504; email: freda.fung@wsj.com
%RETURN
YTD 12-MO 2-YR
0.2
-18.2
-3.0
2.6
-55.9
-1.2
-8.5
-63.7
-8.2
4.7
-66.0
-3.0
5.7
-45.6
-1.8
1.2
-44.3
NS
0.5
0.5
0.1
0.8
0.9
0.3
0.5
18.2
18.6
17.6
14.7
15.1
14.4
14.3
8.9
9.2
8.8
7.2
7.6
7.2
7.2
LIST YOUR
FUNDS
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BLUE CHIPS & BONDS

Dow Jones Asia Titans: Wednesday's best and worst...
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
Giants around the world

Dow Jones Country Titans
Previous session
INDEX PERFORMANCE
Year-to-date
52-week
33.1%
126.0%
China 88
-1.17%
Italy
2.36
France
2.07
21.5
15.7
Netherlands
1.49
20.8
29.9
Germany
25.4
11.6
1.28
17.5
-0.73
15.6
13.6
Sweden
1.48
14.5
20.2
Spain
1.73
13.1
10.7
U.K.
1.36
7.2
2.0
Switzerland
1.29
4.9
6.8
Hong Kong
South Korea
-1.73
2.5
Singapore
-0.92
1.9
Turkey
0.89
Brazil
-0.93
Company
Country
Industry
Mizuho Financial Group
Japan
Banks
Fanuc
Japan
-1.20
Asian 50
-0.93
YTD
256.00
2.40%
29.9%
26.4%
Industrial Machinery
1.18
26,690
2.24
52.2
33.8
Japan
Electronic Office Equipment
5.82
4,323
1.60
29.9
12.6
Japan
Commercial Vehicles Trucks
5.32
2,615
1.59
17.0
-2.6
Nippon Steel Sumitomo Metal
Japan
Iron Steel
85.00
341.10
1.58
19.3
13.4
$0.35
1,314,000
0.37
241,500
39.48
39.10
Samsung Electronics
Korea
Semiconductors
POSCO
Korea
Iron Steel
China Life Insurance
Hong Kong
Life Insurance
Woolworths
Australia
Food Retailers Wholesalers
3.24
27.94
Hyundai Motor
Korea
Automobiles
0.81
157,000
-8.3
-1.0
-19.2
-12.3
-2.13
86.6
29.0
-2.07
-25.4
-8.9
-1.88
-31.7
-7.1
-3.52%
-2.82
...And the rest of Asia's blue chips

Company/Country (Industry)
2.8
-28.8
13.0%
14.3
10.1
4.1
9.1
-4.6
Auto & Parts
0.60
8.8
3.1
Health Care
1.07
8.7
16.4
Retail
0.57
7.4
17.9
Pers H'hold Gds
0.42
7.0
7.5
Chemicals
0.51
6.6
0.7
Telecomm
-0.10
5.4
1.4
Media
0.59
5.2
12.4
Fincl Svcs
0.43
5.1
16.5
Global 50
0.64
3.0
2.2
Technology
0.63
2.4
10.8
-15.7
-5.0%
Volume
in millions
Sumitomo Mitsui Financial Group

11.36
Japan (Banks)
Hitachi
23.56
Japan (Electronic Equipment)
Nissan Motor
12.49
Japan (Automobiles)
Honda Motor
4.08
Japan (Automobiles)
Seven I Holdings
2.11
Japan (Broadline Retailers)
Toyota Motor
8.12
Japan (Automobiles)
China Construction Bank
337.42
Hong Kong (Banks)
Nomura Holdings
23.07
Japan (Investment Services)
Mitsui Co.
8.22
Japan (Industrial Suppliers)
Tokio Marine Holdings
2.16
Japan (Property Casualty Insurance)
Hon Hai Precision Industry
30.32
Taiwan (Electrical Components Equipment)
Woodside Petroleum
3.55
Australia (Exploration Production)
SoftBank
4.05
Japan (Mobile Telecommunications)
East Japan Railway
0.80
Japan (Travel Tourism)
Reliance Industries GDR
0.11
United Kingdom (Exploration Production)
Shin-Etsu Chemical
1.48
Japan (Specialty Chemicals)
Bank of China
335.04
Hong Kong (Banks)
PetroChina
83.83
Hong Kong (Integrated Oil Gas)
Industrial Commercial Bank of China 267.43
Hong Kong (Banks)
Mitsubishi UFJ Financial Group
84.94
Japan (Banks)
7.0
-2.8%
1.04
-0.95
52-week
$306.54
15.8
Constructn Mat
Arab 50
STOCK PERFORMANCE
Previous session
Canon
Dow Jones Regional Sector Titans

Tiger 50*
Previous
close, in
local currency
Komatsu
-7.1
-10.9
Volume
in millions
*Asia excluding Japan

Source: SIX Financial Information
Latest,
in local
currency
STOCK PERFORMANCE
Latest 52-week
YTD
5,522
Company/Country (Industry)
1.41%
34.9%
26.2%
845.20
1.19
23.0
-6.2
1,281
0.87
41.0
21.1
4,211
0.63
19.4
19.4
5,221
0.54
27.5
19.8
8,496
0.53
51.4
12.4
7.94
0.38
39.8
25.0
824.80
0.38
21.8
19.5
1,745
0.37
9.9
7.6
5,057
0.08
61.8
28.6
97.40
...
16.8
10.8
36.65
-0.03
-13.0
-3.6
7,404
-0.04
2.9
2.7
11,475
-0.13
50.6
25.8
27.80
-0.18
-24.2
-1.4
7,559
-0.30
23.8
-3.9
5.39
-0.37
48.1
23.3
9.60
-0.41
3.4
11.9
6.92
-0.43
37.6
22.3
896.60
-0.47
56.5
34.9
Latest,
in local
currency
Volume
in millions
CNOOC
58.12
Hong Kong (Exploration Production)
Mitsubishi
5.77
Australia New Zeald Bkg
6.45
Australia (Banks)
Tencent Holdings
16.38
Hong Kong (Internet)
Commonwealth Bk Australia
2.22
Australia (Banks)
NTT DoCoMo
3.49
China Mobile
16.73
Hong Kong (Mobile Telecommunications)
Japan Tobacco
3.48
Japan (Tobacco)
Takeda Pharmaceutical
3.17
Japan (Pharmaceuticals)
Taiwan Semiconductor Manufacturing 24.26
Taiwan (Semiconductors)
Sun Hung Kai Properties
5.74
Hong Kong (Real Estate Holding Development)
KDDI
5.79
National Australia Bank
5.91
Australia (Banks)
Westpac Banking
8.88
Australia (Banks)
Wesfarmers
2.47
Australia (Home Improvement Retailers)
AIA Group
24.48
Hong Kong (Life Insurance)
BHP Billiton
7.67
Australia (General Mining)
Nippon Telegraph Telephone
2.26
Japan (Fixed Line Telecommunications)
Rio Tinto
1.91
Australia (General Mining)
Itochu
11.63
STOCK PERFORMANCE
Latest 52-week
YTD
12.68
-0.47%
-8.2%
21.5%
2,811
-0.50
39.6
26.8
32.52
-0.52
-3.5
1.3
157.90
-0.57
39.4
40.4
84.13
-0.60
2.7
-1.8
2,234
-0.71
32.1
26.4
105.50
-0.85
39.5
16.3
4,652
-0.91
36.4
39.8
5,953
-0.96
28.8
19.1
145.00
-1.02
16.9
2.8
135.00
-1.03
29.8
14.1
2,843
-1.08
45.0
11.7
33.56
-1.29
0.1
-0.1
33.20
-1.34
-3.8
0.1
43.40
-1.54
-1.4
4.0
52.30
-1.60
36.6
21.6
29.34
-1.61
-17.4
6.9
8,557
-1.65
42.1
37.8
57.31
-1.68
-6.7
-1.2
1,698
-1.85
40.4
31.4
Sources: SIX Financial Information; WSJ Market Data Group
Tracking
credit
markets &
dealmakers
Credit derivatives
At its most basic, the pricing of credit-default swaps measures how much a buyer has to pay to purchase-and
how much a seller demands to sell-protection from default on an issuer's debt. The snapshot below gives a
sense which way the market was moving yesterday.
Markit iTraxx Indexes
Showing the biggest improvement...
Index: series/version
Mid-spread,
in pct. pts.
Mid-price
Europe: 23/1
Eur. High Volatility: 20/1
Europe Crossover: 23/1
Asia ex-Japan IG: 23/1
Japan: 23/1
Coupon
SPREAD RANGE, in pct. pts.

since most recent roll
Maximum Minimum
Average
101.82%
0.01%
0.64
0.53
0.59
0.52
101.73
0.01
0.67
0.48
0.56
TOSHIBA
2.85
109.73
0.05
2.86
2.43
2.68
1.06
99.73
0.01
1.15
1.04
0.52
102.41
0.01
0.60
0.48
19
11
56
Sony
58
1.08
Takashimaya
33
0.53
Kintetsu Group Hldgs
73
Panasonic
37
Ricoh
38
...
Mitsui OSK Lines
96
CNOOC
91
SANYO Elec
37
Honda Mtr
21
2.00
1.50
Asia ex-Japan IG
t
1.00
Spreads on
ve-year swaps
for corporate
debt; based on
Markit iTraxx
indexes.
Index roll
CHANGE, in basis points
Yesterday Yesterday Five-day 28-day

100
In percentage points
Spreads
And the most deterioration
CHANGE, in basis points
0.64
Note: Data as of May 26
NOTICE TO READERS
All statistics published in
The Wall Street Journal
Asia from markets outside
the Asian-Pacific region
reflect preliminary data.
Credit-default swaps: Asian companies
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.
Yesterday Yesterday Five-day 28-day

SMBC Consumer Fin
25
...
MTR
42
SHARP
766
14
159
337
PCCW HKT Tel
129
...
OBAYASHI
37
...
...
Mitsubishi Estate
24
...
...
Ptt
90
MISC
112
17
...
...
TAISEI
39
...
...
Asahi Glass
23
...
...
Source: Markit Group
0.50
Australia
0
Dec. Jan. Feb. Mar. April May
2015
2014
Source: Markit Group
WSJ.com>>
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stock quotes, news and commentary at WSJ.com/Email.
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Behind Asia's deals: Bank revenue rankings, Asia

Behind every IPO, bond offering, merger deal or syndicated loan is one or more investment banks. Here are
investment banks ranked by year-to-date revenues from recent deals.
PERCENTAGE OF TOTAL REVENUE
Debt
Mergers &
capital markets
acquisitions
Revenue,
in millions
share
Equity
capital markets
Nomura
$212
4.8%
63%
21%
Mizuho
189
4.3
30
34
Morgan Stanley
183
4.2
51
35
14
...
Sumitomo Mitsui Financial Group
162
3.7
45
21
20
13
JPMorgan
151
3.4
49
25
22
UBS
149
3.4
73
19
...
Goldman Sachs
142
3.2
37
15
47
CITIC Securities
133
3.0
74
21
...
Citi
123
2.8
24
40
34
Loans
16%
...
27%
3
Source: Dealogic
GLOBAL MARKETS LINEUP

Commodities
Currencies
Prices of futures contracts with the most open interest
EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; NYBOT: New York Board of Trade; MDEX: Bursa Malaysia
Derivatives Berhad; MATIF: Marche a Terme International de France; LME: London Metal Exchange; NYMEX: New York Mercantile Exchange;
ICE: IntercontinentalExchange *Data as of 5/26/2015.
Year
ONE-DAY CHANGE
Commodity
Exchange
Last price
Net
Percentage
high
Corn (cents/bu.)
Soybeans (cents/bu.)
Wheat (cents/bu.)
Live cattle (cents/lb.)
Cocoa ($/ton)
Coffee (cents/lb.)
Sugar (cents/lb.)
Cotton (cents/lb.)
Rapeseed (euro/ton)
Cocoa (pounds/ton)
Robusta coffee ($/ton)
CBOT
CBOT
CBOT
CME
ICE-US
ICE-US
ICE-US
ICE-US
MATIF
ICE-EU
ICE-EU
Copper ($/lb.)
Gold ($/troy oz.)
Silver ($/troy oz.)
Aluminum ($/ton)*
Tin ($/ton)*
Copper ($/ton)*
Lead ($/ton)*
Zinc ($/ton)*
Nickel ($/ton)*
COMEX
COMEX
COMEX
LME
LME
LME
LME
LME
LME
Crude oil ($/bbl.)

Heating oil ($/gal.)
RBOB gasoline ($/gal.)
Natural gas ($/mmBtu)
Brent crude ($/bbl.)
Gas oil ($/ton)
351.50
925.25
488.25
151.150
3,130
124.80
11.86
63.31
361.50
2125.00
1616.00
-3.50
2.75
-5.25
0.525
-20
0.75
-0.22
unch.
-1.50
6.00
41.00
2.7630
1187.70
16.685
1,752.00
15,705.00
6,132.00
1,944.00
2,185.00
12,680
-0.0150
-0.10
-0.061
-13.00
-120.00
-69.00
-13.00
8.00
-80
58.07
1.8806
1.9543
2.837
63.01
576.00
0.04
-0.0236
-0.0296
-0.012
-0.71
-9.50
NYMEX
NYMEX
NYMEX
NYMEX
ICE-EU
ICE-EU
424.50
1,070.75
609.00
156.300
3,181
189.80
16.40
68.13
366
2,128
2,099
-0.99%
0.30%
-1.06
0.35
-0.63
0.60
-1.82
unch.
-0.41
0.28
2.60
AMERICAS
Year
low
351.00
920.50
460.75
137.950
2,671
123.55
11.83
58.87
328
1,857
1,566
0.37
-0.63
63.61
2.0622
2.0842
3.1850
70.36
628.50
0.07
-1.24
-1.49
-0.42
-1.11
-1.62
Per euro
9.7775
0.1023
8.9813
0.1113
0.2900
3.1676
0.3157
Canada dollar
1.3585
0.7361
1.2481
0.8012
Chile peso
670.94
0.001490
616.30
0.001623
2767.00
0.0003614
Ecuador US dollar-f
1.0886
0.9187
Mexico peso-a
16.7130
0.0598
15.3520
0.0651
Peru sol
3.4341
0.2912
3.1545
0.3170
29.252
0.0342
26.870
0.0372
U.S. dollar
1.0886
0.9187
6.86
0.145773
6.30
0.158696
Australia dollar
1.4120
0.7081
1.2972
0.7709
China yuan
6.7522
0.1481
6.2024
0.1612
Hong Kong dollar

India rupee
Indonesia rupiah
47.46
1.5830
1.5270
2.5400
51.27
474.50
Follow the markets throughout the day with updated stock quotes, news and commentary at at
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PERFORMANCE
Percentage change
Yr.-to-date
PREVIOUS SESSION
Index
Close
ASIA-PACIFIC
DJ Asia-Pacific TSM
1574.41
-10.93
-0.69%
10.4%
8.2%
Australia
SPX/ASX 200
5725.30
-48.10
-0.83
5.8
3.6
China
Shanghai Composite
4941.71
30.82
52.8
141.0
Net change
Hong Kong
Hang Seng
28081.21
-168.65
India
S&P BSE Sensex
27564.66
33.25
Nikkei Stock Average
5253.39
-67.51
20472.58
35.10
0.63%
-0.60
0.12
-1.27
0.17
Topix
1661.33
1.76
Malaysia
Kuala Lumpur Composite
1755.05
-9.02
New Zealand
NZSX-50
5757.94
-37.92
Pakistan
KSE 100
32842.59
332.24
Philippines
PSEi
7598.70
-129.80
Singapore
Straits Times
3424.94
-35.04
South Korea
Kospi
2107.50
-36.00
Taiwan
Weighted
9693.54
24.13
0.25
Thailand
SET
1500.84
2.86
0.19
EUROPE
Stoxx Europe 600
408.88
5.27
Stoxx Europe 50
3524.55
45.35
S&P Dow Jones Indices
Price-toDividend earnings
yield*
ratio* S&P Dow Jones Index
2.83% 20.98
2.63 19.05
2.77 17.20
2.15 17.01
2.10 17.41
2.90 23.20
4.36 16.72
2.87 12.71
9.24 12.47
2.04 14.65
2.30 13.00
1.16 25.35
Last
Global TSM
Global DOW
Global Titans 50
Asia/Pacific TSM
S&P BMI Asia Pac Emg Mkts
Dev Europe TSM
S&P BMI Emg Markets
Asian Titans 50
BRIC 50
S&P BMI China
China Offshore 50
Shanghai -c
U.S.
Australia
Britain
Canada
China
Euro
Hong Kong
India
Indonesia
Japan
New Zealand
South Korea
Malaysia
Philippines
Singapore
Switzerland
Taiwan
Thailand
US$
0.771
1.533
0.801
0.1612
1.089
0.129
0.0156
0.0001
0.008
0.722
0.0009
0.274
0.022
0.739
1.052
0.033
0.030
0.1184
7.7592
0.1289
0.0144
63.9374
0.0156
14373 0.0000696
Japan yen
134.84
0.007416
123.87
0.008073
201.83
0.004956
185.82
0.005382
Macau pataca
8.6873
0.1152
7.9806
0.1253
Malaysia ringgit-c
3.9767
0.2515
3.6529
0.2738
New Zealand dollar
1.5069
0.6636
1.3843
0.7224
Pakistan rupee
110.966
0.0090
101.930
0.0098
Philippines peso
48.644
0.0206
44.693
0.0224
Singapore dollar
1.4731
0.6788
1.3531
0.7390
South Korea won
1207.18 0.0008284
134.06
0.0074593
Taiwan dollar
33.369
0.02997
30.652
0.03262
Thailand baht
36.764
0.02720
33.770
0.02961
Net
change
3466.25
9.03
2604.35 10.61
245.45
1.41
1575.51 -9.83
183.85 -1.45
3340.63 23.84
266.93 -1.05
156.77
-1.31
548.38 -2.61
577.79 -2.12
5293.49 -21.98
675.00
1.75
1.988
1.039
0.209
1.412
0.167
0.0203
0.0001
0.010
0.937
0.0012
0.355
0.029
0.959
1.364
0.042
0.038
0.652
0.503
0.523
0.105
0.710
0.084
0.0102
0.00005
0.005
0.471
0.0006
0.179
0.015
0.482
0.686
0.021
0.019
C$
1.248
0.962
1.913
0.201
1.359
0.161
0.0195
0.0001
0.010
0.902
0.0011
0.342
0.028
0.922
1.313
0.041
0.037
0.5112
1.7969
7.580
0.1319
6.962
0.5565
0.1436
0.9187
1.0886
0.0397
Czech Rep. koruna-b
27.423
0.0365
25.190
Denmark krone
7.4561
0.1341
6.8498
0.1460
Hungary forint
309.20
0.003234
284.02
0.003521
0.007377
Iceland krona
147.58
0.006776
135.56
Norway krone
8.4467
0.1184
7.7598
0.1289
Poland zloty
4.1282
0.2422
3.7921
0.2637
Russia ruble-d
56.420
0.01772
51.825
0.01930
Sweden krona
9.2574
0.1080
8.5042
0.1176
Switzerland franc
1.0352
0.9660
0.9508
1.0517
Turkey lira
2.8798
0.3472
2.6453
0.3780
Ukraine hryvnia
23.3951
0.0427
21.5395
0.0464
0.7103
1.4081
0.6524
1.5327
2.6528
MIDDLE EAST/AFRICA
Bahrain dinar
0.4104
2.4369
0.3770
Egypt pound-a
8.3078
0.1204
7.6313
0.1310
Israel shekel
4.2251
0.2367
3.8810
0.2577
Kuwait dinar
0.3301
3.0294
0.3032
3.2984
Oman sul rial
0.4190
2.3867
0.3849
2.5980
0.2749
3.961
0.2525
3.638
Saudi Arabia riyal
Qatar rial
4.0824
0.2450
3.7500
0.2667
South Africa rand
13.1348
0.0761
12.0678
0.0829
United Arab dirham
3.9986
0.2501
3.6730
0.2723
a-floating rate b-commercial rate c-government rate c-commercial rate d-Russian Central Bank rate.
Source: Tullett Prebon
0.26%
0.41
0.58
-0.62
-0.78
0.72
-0.39
-0.83
-0.47
-0.37
-0.41
0.26
Index
Close
Euro Zone
Euro Stoxx
Euro Stoxx 50
YUAN
6.202
4.781
9.506
4.969
6.752
0.799
0.0970
0.0005
0.050
4.481
0.0056
1.698
0.139
4.584
6.523
0.202
0.184
EURO
0.919
0.708
1.408
0.736
0.148
0.118
0.0144
0.0001
0.007
0.664
0.0008
0.252
0.021
0.679
0.966
0.030
0.027
1.61%
18.9%
15.4%
3682.87
63.57
1.76
17.0
13.5
Denmark
OMX Copenhagen
892.51
8.18
OMX Helsinki
8776.80
79.33
19.0
21.7
Finland
0.2
12.3
France
CAC-40
5182.53
98.99
Germany
DAX
11771.13
146.00
23861.07
534.12
7.17
0.5
5.4
17.3
39.5
Italy
FTSE MIB
Netherlands
AEX
503.52
-6.2
Russia
RTSI
1012.21
-12.95
-0.65
11.1
Spain
IBEX 35
11431.1
190.80
2.2
13.3
Switzerland
SMI
9396.24
123.56
-1.01
0.1214
0.0006
0.063
5.605
0.0070
2.124
0.174
5.734
8.161
0.253
0.230
6.02
3.4
-1.68
13.7%
13.9
11.7
11.3
10.9
14.1
5.3
10.0
5.5
17.3
15.1
32.2
5.1
11.9
Turkey
BIST 100
84292.05
642.63
1.8
4.7
U.K.
FTSE 100
7033.33
84.34
10.0
4.5
AMERICAS
DJ Americas
520.03
2.92
4.2
6.3
Brazil
Bovespa
53493.06
-136.72
0.2
7.0
Argentina
Merval
10942.92
104.78
Mexico
IPC
44571.17
169.77
1.31
19.4
18.7
1.30
17.3
15.9
1.97 21.63
2.29 19.19
1.93 13.63
3.64 29.28
RUPEE
63.937
49.289
97.997
51.250
10.309
69.605
8.240
0.0048
0.516
46.188
0.0577
17.503
1.431
47.253
67.246
2.086
1.895
RUPIAH
13203.00
10178.19
20236.24
10578.90
2128.69
14373.45
1701.60
206.40
106.59
9537.80
11.90
3614.39
295.42
9757.59
13886.20
438.10
390.97
YEN
123.869
95.500
189.870
99.240
19.971
134.840
15.964
1.9373
0.0094
Last
Shenzhen -c
U.S. TSM
Global Select Div
Asia/Pacific Select Div
Hong Kong Select Div -c
U.S. Select Dividend -d
Islamic Market
Islamic Market 100
Islamic China/HK Titans 30
Sustainability Korea -c
Brookfield Infrastructure
DJ Commodity
89.460
0.1117
33.910
2.772
91.536
130.270
4.041
3.668
NZ$
1.384
1.067
2.122
1.109
0.223
1.507
0.178
0.0216
0.0001
0.011
0.0012
0.379
0.031
1.023
1.456
0.045
0.041
WON
1108.88
854.84
1699.58
888.42
178.78
1207.18
142.91
17.34
0.08
8.95
801.06
303.56
24.82
819.51
1166.26
36.18
32.84
0.93
32.2
35.1
0.91
13.1
14.7
1.95
1.26
2.29
1.44
-1.26%
1.70
1.33
0.77
21.3
14.4
20.0
18.4
25.5
11.5
18.6
23.8
28.0
-22.0
11.2
6.7
4.6
7.9
-1.7
8.7
7.1
2.8
2.6
8.0
1.21
0.56
-0.25
0.97
0.38
7.0
2.5
27.6
44.5
3.3
6.2
European and Americas index data are as of 12:00 p.m. ET. Sources: SIX Financial Information; WSJ Market Data Group
yield*
ratio* S&P Dow Jones Index
0.66%44.12
1.91 22.46
5.86 15.80
6.81 14.07
52-wk.
379.94
38.7
1.02
HK$
7.759
5.982
11.892
6.217
1.251
8.447
Net change
-0.4
-1.68
PERFORMANCE
Percentage change
Yr.-to-date
PREVIOUS SESSION
18.0
0.11
5.1%
4.3%
4.1
1.7
2.9
2.3
10.5
7.8
10.2
5.1
7.1
-5.1
7.0
1.2
10.2
4.0
11.2
6.1
24.7
34.6
17.5
30.4
57.0 153.3
Region/Country
-0.51
PERFORMANCE
YearThree-yr.,
to-date
52-wk. annualized
Daily
52-wk.
807.96
22117.14
241.29
311.99
208.19
1426.68
2997.56
3315.64
2023.11
1461.07
3580.41
557.70
Net
change
5.25
112.18
-0.12
-2.98
-1.22
4.43
12.35
22.16
-7.12
-26.27
5.88
-0.62
Daily
PERFORMANCE
YearThree-yr.,
to-date
52-wk. annualized
0.65% 85.3% 154.3%

0.51
3.2
10.8
-0.05
0.8
-9.0
-0.95
0.7 -12.4
-0.58
6.8
7.4
0.31
-0.1
8.9
0.41
4.7
5.7
0.67
4.2
6.4
-0.35
16.8
18.2
-1.77
6.1
0.2
0.16
0.1
2.5
-0.11
-0.5 -23.2
35.5%
17.4
7.7
2.9
5.9
16.9
12.9
13.9
11.3
1.5
12.4
-7.5
Source: S&P Dow Jones Indices
U.S.-dollar and euro foreign-exchange rates in global trading

A$
1.297
1.956
Croatia kuna
U.K. pound
1108.88 0.0009018
145.93 0.0068526
Per euro
Bulgaria lev
Euro zone euro
13203 0.0000757
Kazakhstan tenge
*Fundamentals are based on data in U.S. dollar. Footnotes: c-in local currency. d-dividends reinvested. p-previous day. Note: All data as of 11:30 a.m. ET.
Cross rates
8.4470
69.6050
In euros
Stock indexes from around the world, grouped by region. Shown in local-currency terms.
Region/Country
Jakarta Composite
EUROPE
2542.11 0.0003934
Uruguay peso-e
Per
In
U.S. dollar
U.S. dollars
Per
In
In euros
U.S. dollar
U.S. dollars
Per euro
ASIA-PACIFIC
WSJ.com>>
Japan
In
U.S. dollars
3.4484
Sri Lanka rupee
Indonesia
Per
U.S. dollar
Argentina peso-a
Venezuela bolivar
Sources: SIX Financial Information; WSJ Market Data Group
Major stock market indexes
In euros
Brazil real
Colombia peso
2.9560
2.4245
1,309.00 1,143.80
18.515
15.310
1,937.50 1,746.50
19,750.00 14,760.00
6,445.00 5,369.00
2,137.00 1,698.00
2,377.00 2,005.00
15,540
12,320
-0.54
-0.01
-0.36
-0.74
-0.76
-1.11
-0.66
London close on May 27
RINGGIT PH. PESO

3.653
44.693
2.816
34.453
5.599
68.486
2.927
35.807
0.589
7.204
3.977
48.644
0.471
5.759
0.0571
0.6987
0.0003
0.0034
0.029
0.361
2.639
32.286
0.0033
0.0403
12.232
0.082
2.700
33.023
3.842
47.005
0.119
1.458
0.108
1.323
S$ S FRANC
1.353
0.951
1.043
0.733
2.074
1.457
1.084
0.762
0.218
0.153
1.473
1.035
0.174
0.123
0.0212
0.0149
0.0001
0.0001
0.011
0.0077
0.977
0.687
0.0012
0.0009
0.370
0.260
0.030
0.021
0.703
1.423
0.044
0.031
0.040
0.028
TW$
30.652
23.630
46.980
24.558
4.942
33.369
3.950
0.4794
0.0023
0.248
22.143
0.0276
8.391
0.686
22.653
32.238
0.908
BAHT
33.770
26.033
51.759
27.056
5.445
36.764
4.352
0.5278
0.0026
0.273
24.395
0.0305
9.245
0.756
24.958
35.507
1.101
Source: Tullett Prebon
MSCI indexes
Developed and emerging-market regional and country indexes
from MSCI as of May. 27, 2015
yield
ratio MSCI Index
2.40% 18
MSCI ACWI
LOCAL-CURRENCY
Last
435.93
PERFORMANCE
Daily
YTD
1.23%
4.5%
52-wk.
5.3%
2.40
19
World (Developed Markets) 1,781.14
1.27
4.2
5.5
1.80
25
World Small Cap
1.18
6.2
6.0
2.40
19
Kokusai (World ex-Japan) 1,788.64
1.27
3.3
4.4
2.90
18
EAFE
1,906.44
1.57
7.4
-1.6
340.29
2.50
14
Emerging Markets (EM)
1,026.45
0.86
7.3
3.1
2.80
14
AC ASIA PACIFIC EX-JAPAN 508.09
-0.01
8.7
7.1
2.40
14
AC Far East ex-Japan
595.20
-0.15
12.4
14.3
1.70
17
Japan
1,020.16
0.05
17.7
42.9
2.40
13
China
83.24
1.72
26.0
43.5
1.10
24
China A (China Domestic)
5,245.65
2.23
55.2
144.7
2.50
15
Hong Kong
15,905.24
0.61
16.6
20.8
1.40
19
India
1,035.06
-0.56
1.8
21.8
1.40
12
Korea
575.97
-0.26
7.4
1.2
3.10
17
Malaysia
616.48
-0.23
-0.0
-7.2
3.30
14
Singapore
2.70
14
Taiwan
1,800.91 -0.08
1.7
4.7
360.44
0.23
5.0
14.9
4.8
2.80
17
Thailand
521.86
-0.52
-0.1
4.40
16
Australia
1,173.52
0.98
6.1
4.3
4.40
20
New Zealand
112.15
0.11
-1.2
-5.8
1.90
21
US BROAD MARKET
3.10
19
EUROPE
2,391.84
1.03
2.8
11.9
136.94
-0.78
17.3
18.7
Source: MSCI
SCANNING THE GLOBE

Dow Jones Industrial Average
LAST: 18153.04
YEAR TO DATE:
OVER 52 WEEKS
Nasdaq Composite Index
P/E: 16
s 111.50, or 0.62%
s 329.97, or 1.9%
s 1,519.86, or 9.1%
S&P 500 Index
P/E: 23*
LAST: 5080.53
YEAR TO DATE:
OVER 52 WEEKS
s 47.78, or 0.95%
P/E: 22
LAST: 2119.22
YEAR TO DATE:
OVER 52 WEEKS
s 344.48, or 7.3%
s 855.46, or 20.2%
s 15.02, or 0.71%
s 60.32, or 2.9%
s 209.44, or 11.0%
High
Close
Low
19000
5250
2300
18500
5100
2200
18000
4950
2100
17500
4800
2000
17000
4650
1900
50day
moving average
16500
Mar.
13
20
27
2
Apr.
10
17
24
1
8
May
15
4500
22
Mar.
13
20
27
2
Apr.
10
17
24
1
8
May
15
1800
22
Mar.
13
20
27
2
Apr.
10
17
*Price-to-earnings ratio for the Nasdaq 100 Note: Price-to-earnings ratios are for trailing 12 months
Stock
Symbol
Volume,
in millions
Latest
CHANGE
Points
Percentage
AmExpress
Apple
Boeing
Caterpillar
Chevron
CiscoSys
CocaCola
Disney
DuPont
ExxonMobil
GenElec
GoldmanSachs
HomeDpt
Intel
IBM
JPMorgChas
JohnsJohns
McDonalds
Merck
Microsoft
Nike B
Pfizer
ProctGamb
3M
TravelersCos
UnitedTech
UtdHlthGp
Verizon
VISA ClA
AXP
AAPL
BA
CAT
CVX
CSCO
KO
DIS
DD
XOM
GE
GS
HD
INTC
IBM
JPM
JNJ
MCD
MRK
MSFT
NKE
PFE
PG
MMM
TRV
UTX
UNH
VZ
V
2.4
25.5
1.3
1.2
2.8
8.2
3.9
1.7
2.2
4.6
10.7
1.2
1.9
9.3
1.5
4.8
2.7
2.7
4.4
11.4
1.3
6.0
4.1
1.0
0.6
1.3
1.2
6.3
3.9
$80.01
131.74
142.66
87.87
103.26
29.39
41.06
110.30
70.63
85.18
27.52
208.55
112.24
33.49
171.64
66.49
101.12
98.55
59.65
47.37
103.44
34.38
79.48
160.88
102.18
117.31
119.62
49.44
69.31
0.18
2.12
0.14
0.03
0.03
0.44
0.07
0.86
0.12
0.17
...
2.17
1.31
0.39
1.51
0.76
0.30
0.09
0.68
0.78
0.02
0.27
0.34
1.28
0.58
0.44
1.38
0.02
0.77
0.22%
1.63
0.10
0.03
0.03
1.50
0.17
0.79
0.17
0.20
...
1.05
1.18
1.17
0.89
1.16
0.30
0.09
1.15
1.67
0.02
0.79
0.44
0.81
0.57
0.38
1.17
0.04
1.12
WalMart
WMT
3.4
75.32
0.42
0.56
1
8
May
15
22
Sources: WSJ Market Data Group; Birinyi Associates
U.S. stocks: most active...
DJIA component stocks
24
Stock
Volume,
Symbol in millions
MichaelKorsHldgs
SPDR S&P 500
BankAm
VelocityShares3x
Apple
BrcliPathVIX ShFut
PetrlBra ADS
FrontierComms
iShMSCIEmgMarkets
Lorillard
iShRussell2000ETF
SophirisBio
PwrShrs QQQ
ItauUnibancoADS
AT&T
KORS
SPY
BAC
UWTI
AAPL
VXX
PBR
FTR
EEM
LO
IWM
SPHS
QQQ
ITUB
T
ADRs of Asian companies*

CHANGE
Points
Percentage
Latest
48.1
39.8
31.9
27.1
25.5
21.2
20.2
19.0
18.4
17.4
16.1
15.3
14.7
13.7
13.3
$46.56
212.20
16.67
3.17
131.74
18.76
8.54
5.23
41.88
72.94
123.85
1.24
110.36
11.07
34.82
14.03
1.50
0.17
0.07
2.12
0.63
0.03
0.31
0.18
0.82
0.61
0.35
1.16
...
0.15
23.16%
0.71
1.03
2.16
1.63
3.25
0.35
6.30
0.42
1.14
0.49
40.10
1.06
...
0.43
ATRM
25.4
GBSN 8,646.8
HYGS
473.4
EOX 6,855.0
CLLS 1,009.6
$3.83
3.96
11.05
6.11
42.05
1.15
1.04
2.03
0.90
5.60
42.91%
35.62
22.51
17.27
15.36
$4.00
46.56
1.95
1.93
5.12
4.24
14.03
0.29
0.27
0.66
51.46%
23.16
12.95
12.44
11.42
52-WEEK
High
Low
$25.77 $19.39
13.24
9.36
6.03
3.73
87.62 40.74
51.80
37.11
37.27 25.03
251.99 160.80
34.12
15.99
8.12
5.68
69.26 40.22
11.88
2.80
150.30
69.13
32.95
15.96
7.62
5.13
1.67
0.64
2.94
1.07
17.59 12.84
18.43
12.98
26.29 13.02
36.44
28.61
75.52 47.59
63.97 44.84
9.17
6.30
23.12 18.04
60.85 39.01
11.00
1.04
31.84
23.51
27.25
12.76
86.99
53.14
36.04 25.07
Biggest gainers...
ATRMHoldings
GreatBasinScien
Hydrogenics
EmeraldOil
CellectisADS
...Biggest losers
GlobeImmune
MichaelKorsHldgs
ChinaHousngDev
HarvardApparatus
NexvetBiopharma
GBIM
918.4
KORS 48,141.5
CHLN
16.5
HART
93.3
NVET
27.5
Volume,
Symbol in OOOs
Stock
TaiwanSemi
ICICI Bk ADS
AUOptronicsADS
CtripInt ADS
TataMtrs ADS
InfosysADS
Baidu ADS
SiliconMotionADS
AdvSemiEnggADS
BHPBillitonADS
ChinaFinOnADS
NeteaseADS
SonyADS
MitsuUFJ ADS
Ku6Media
PranaBiotech
KT Crp ADS
LGDisplayADS
ChinaLfIns ADS
HondaMtr ADS
ChinaMobile
HDFC Bnk
SiliconwareADS
KoreaElecPwr
DrReddysLabADS
GeneticTechsADS
SKTelecomADS
eLong ADS
POSCOADS
Nippon ADS
TSM
IBN
AUO
CTRP
TTM
INFY
BIDU
SIMO
ASX
BHP
JRJC
NTES
SNE
MTU
KUTV
PRAN
KT
LPL
LFC
HMC
CHL
HDB
SPIL
KEP
RDY
GENE
SKM
LONG
PKX
NTT
CHANGE
Latest Points Percentage
5,675.9 $24.55 0.28

2,403.2 10.36 0.04
2,094.9
5.74 0.31
1,553.3 81.55 0.44
1,286.2 37.94 0.10
1,127.3
31.15 0.17
1,033.5 200.60 0.41
716.5 33.50
1.78
707.5
7.07 0.07
661.0 45.13 0.05
644.5
5.80 0.49
563.6 143.84 0.55
550.3
31.13 0.50
468.8
7.31 0.01
356.0
1.29 0.04
334.1
1.25 0.03
299.2 13.35 0.06
262.0 13.70 0.08
230.4 25.40 0.38
230.4 34.26 0.28
217.3 67.85 0.35
214.8 59.24 0.47
200.5
8.21 0.02
177.5 20.69 0.48
168.7 55.75 0.70
164.8
3.96 0.01
163.8 26.21 0.16
152.7 21.05 0.66
142.1 54.85 0.83
128.1 34.88 0.38
1.17%
0.34
5.71
0.54
0.26
0.54
0.21
5.61
1.06
0.11
7.79
0.38
1.58
0.15
3.19
2.34
0.45
0.58
1.49
0.82
0.51
0.80
0.24
2.27
1.27
0.25
0.62
3.04
1.49
1.09
*Most active American depositary receipts tracked by Dow Jones

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/
Maturity, in years
Yield
4.250
Australia 2
2.006
136.1
140.3
136.4
3.250
10
2.847
68.9
78.7
58.7
Coupon
SPREAD OVER TREASURYS, in basis points

Latest
Previous
Month Ago
Year ago
Previous
YIELD
Month ago
223.0
2.018
1.903
2.621
124.4
2.929
2.510
3.760
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.
Year ago
Belgium 2
-0.184
-82.8
-79.2
-74.6
-24.3
-0.178
-0.207
0.147
10
0.858
-130.1
-127.4
-158.0
-59.0
0.868
0.343
1.926
France 2
-0.163
-80.8
-78.2
-72.5
-26.0
-0.167
-0.186
0.131
10
0.848
-131.0
-128.2
-149.8
-72.5
0.860
0.425
1.791
0.500
Germany 2
-0.220
-86.4
-83.6
-79.9
-32.8
-0.222
-0.259
0.063
0.500
10
0.550
-160.8
-158.8
-175.9
-112.5
0.553
0.164
1.392
4.750
Italy 2
0.133
-51.2
-49.0
-42.7
40.3
0.125
0.113
0.794
1.500
10
1.866
-29.3
-20.1
-57.5
48.3
1.941
1.348
2.999
0.100
Japan 2
0.000
-64.5
-61.4
-54.0
-30.5
0.000
-0.001
0.086
0.400
10
0.388
-177.0
-172.0
-161.7
-192.2
0.421
0.306
0.594
0.500
Netherlands 2
-0.200
-84.5
-82.0
-75.5
-26.9
-0.206
-0.216
0.121
0.250
10
0.742
-141.6
-138.9
-169.1
-86.2
0.752
0.232
1.654
4.200
Portugal 2
0.098
-54.7
-58.1
-48.6
71.3
0.033
0.053
1.104
One year ago
3
2
1
Tuesday
3.750
0.500
4
s
3.500
0.800
5%
month(s)
2 3 5 710
years
maturity
30
Ryan Index
Yield to
maturity
Modified
duration
30-year Treasury
10-year Treasury
7 Year Treasury
Five-year Treasury
Ryan Index
3 Year Treasury
Two-year Treasury
1 Year Treasury
Six-month Treasury
Ryan Cash Index-a
Three-month bill
2.891%
2.135
1.893
1.522
1.678
0.981
0.649
0.224
0.086
0.084
0.015
19.79
8.94
6.48
4.74
7.48
2.92
1.98
0.92
0.50
0.43
0.25
One-month bill
0.010
0.06
Month
to-date
TOTAL RETURN
Quarter
to-date
2.93 %
0.68
0.44
0.28
0.73
0.07
0.04
0.02
0.01
0.01
...
6.88 %
1.54
0.89
0.48
1.63
...
...
0.09
0.09
0.05
0.02
...
a-Performance of a cash investment
...
Year
to-date 12-month
2.06 %
1.08
1.46
1.34
0.63
1.04
0.55
0.26
0.16
0.12
0.05
13.21 %
6.06
4.27
2.51
4.77
1.51
0.83
0.42
0.26
0.19
0.06
0.01
0.02
Source: Ryan ALM
Key money rates

Latest
Latest
52 wks ago
Prime rates
Euro Libor
One month
52 wks ago
U.S.
3.25%
3.25%
-0.06857%
0.23500%
2.85
3.00
Three month
-0.01286
0.28786
Offer
Eurodollars
One month
Bid
0.2500%
0.1500%
Three month
0.3300
0.2300
2.875
10
2.477
31.8
37.8
-0.3
114.6
2.520
1.920
3.662
Canada
3.800
Spain 2
0.033
-61.1
-58.6
-50.7
32.7
0.029
0.032
0.717
Japan
1.475
1.475
Six month
0.05286
0.35857
Six month
0.4500
0.3500
Britain
0.50
0.50
One year
0.17214
0.52171
One year
0.7200
0.6200
1.600
10
1.829
-32.9
-26.8
-60.4
36.7
1.874
1.319
2.883
ECB
0.05
0.25
3.750
Sweden 2
-0.277
-92.1
-88.4
-87.9
7.0
-0.269
-0.340
0.460
Switzerland
0.50
0.50
Euribor
One month
-0.05400%
0.25700%
Australia
2.00
2.50
Three month
-0.01300
0.31600
U.S. discount
0.75%
0.75%
2.500
10
0.743
-141.6
-137.8
-158.2
-67.8
0.764
0.341
1.838
Hong Kong
5.00
5.00
Six month
0.05200
0.40000
Fed-funds target
0.00
0.00
1.000
U.K. 2
0.690
4.5
5.9
12.4
31.4
0.673
0.663
0.704
One year
0.16100
0.57300
Call money
2.00
2.00
2.750
10
1.895
-26.4
-25.3
-20.5
12.8
1.889
1.718
2.644
0.625
U.S. 2
0.645
...
...
...
...
0.614
0.539
0.391
2.125
10
2.158
...
...
...
...
2.142
1.923
2.516
Libor
One month
Hibor
One month
0.24043%
0.21071%
0.18630%
0.15050%
Three month
0.28585
0.22985
Three month
0.38957
0.37500
Six month
0.42500
0.32390
Six month
0.54214
0.55071
One year
0.75685
0.53540
One year
0.84186
0.86714
Latest
Overnight repurchase rates

U.S.
0.13%
Euro zone
n.a.
52 wks ago
n.a.
n.a.
Sources: WSJ Market Data Group, SIX Financial Information, Tullett
MARKETS LINEUP
Moving the
markets
Asian index movers
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
show the 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.
Nikkei Stock Average
Japan
20472.58
0.17% or 35.10
Weakness in the yen continued to lend

support to shares of Japanese exporters, helping the index to rise for a ninth
consecutive session.
WSJ.com>>
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day, with updated stock quotes, news
and commentary at WSJ.com.
Also, receive emails that summarize
the days trading in Europe and Asia.
To sign up, go to WSJ.com/Email.
Change
Net
5725.30
0.83% or 48.10
Losses on Wall Street linked to downbeat U.S. economic news appeared to

rattle investors. Banks and mining companies declined.
China
4941.71
0.63% or 30.82
The market benchmark gained ground

for a seventh trading session as retail
investors piled in. The Shanghai market
is up 53% this year.
Hang Seng
Hong Kong
28081.21
0.60% or 168.65
Stocks fell despite positive news about

Chinas industrial production. Hope that
Beijing will let more cash enter markets
outside the mainland limited the losses.
7500
5400
36000
20000
6250
4500
30000
16000
5000
3600
24000
12000
3750
2700
18000
Volume
in millions
Close
Mizuho Fin
306.54
256
2.40
Tokyo Electric
Stock
Australia
Shanghai Composite
24000
8000
J J A S O N D J F M A M
2015
2014
ASX 200
2015
2014
Volume
in millions
Close
FortescueMetalsGrp
18.44
2.35
0.05
Stock
2500
2015
2014
Change
Net
Volume
in millions
Close
2.08
GDPowerDevelopment 1221.43
7.12
Stock
Change
Net
0.11
1800
Volume
in millions
Close
ChinaConstructnBk
337.42
7.94
0.03
Stock
1.52
12000
2015
2014
Change
Net
0.38
192.44
666
21
3.26
Telstra
12.46
6.22
0.08
1.19
ChnPetro&Chem 859.66
8.10
0.16
2.02
BankofChina
335.04
5.39
-0.02
0.37
NipponStl&SmtmoMtl
85.00
341
1.58
MirvacGroup
12.23
2.01
0.02
1.01
InnerMongoliaBaot 847.92
7.14
0.03
0.42
Ind&Comml
267.43
6.92
-0.03
0.43
MitsuUFJFin
84.94
897
-4
0.47
Alumina
10.72
1.70
0.01
0.59
ChinaUtdNtwkComms 709.40
8.89
0.25
2.74
ChinaPetro&Chem
123.37
7.11
-0.06
0.84
Sojitz
66.72
320
14
4.58
FederationCentres
10.37
3.03
0.05
1.62
HainanAirlinesA
6.03
0.16
2.73
83.83
9.60
-0.04
0.41
679.73
PetroChina
Asian stocks in the news

Fubon Financial Holding
Bumi Resources
TW$64.70 Indonesia
Taiwan
s 2.1% or TW$1.30
90 rupiah
s 3.4% or 3 rupiah
Fuji Heavy Industries Ltd. CTBC Financial Holding Co. Ltd. Sumitomo Electric Industries Ltd.
Japan
4,689.50
s 4.3% or 195
Taiwan
TW$23.95 Japan
s 4.6% or TW$1.05
1,985
s 5.1% or 97
Positive sentiment from deals between

CTBC and China Citic carried over to
other financial shares.
Three of its Singapore subsidiaries were

granted extensions from legal action by
creditors.
Shares of exporters, which benefit from

a weaker yen, traded largely higher.
China Citic Bank Corp. will acquire a 3.8%

stake in the Taiwanese financial
company.
UBS raised its target price on the stock

after the company announced a midterm business plan.
In Taiwan dollars
In rupiah
In yen
In Taiwan dollars
In yen
100
2015
2014
Price-to-earnings ratio
Earnings per share, past four quarters
Dividend yield
200
24
2400
60
120
3600
18
1800
40
80
2400
12
1200
20
2015
2014
Dividend yield
11.5%
53.7%
40
N.A.
N.A.
N.A.
1,314,000 won
t 3.5% or 48,000 won
2015
2014
Dividend yield
PERCENTAGE CHANGE
Daily
1 wk. 52 wks
Basic Materials
Bumi Resources
... -0.8%
3.4%
...
-1.7%
-57.5%
Samsung Electronics Co. Ltd. NCsoft Corp.
Korea
3000
4800
11
N.A.
2.3
-0.4% -0.3%
2.1% 0.5%
30
160
PERCENTAGE CHANGE
Daily
1 wk. 52 wks
Financials
Fubon Financial Holding
6000
80
Korea
201,500 won
t 3.8% or 8,000 won
1200
14
N.A.
1.3
J J
2014
A S O N D
Dividend yield
PERCENTAGE CHANGE
Daily
1 wk. 52 wks
Consumer Goods
Fuji Heavy Industries Ltd.
-0.2%
4.3%
-1.5%
5.9%
12.8%
76.2%
Lotte Shopping Co. Ltd.
Korea
257,000 won
t 4.6% or 12,500 won
J F M A M
2015
9
N.A.
1.2
2015
2014
Dividend yield
PERCENTAGE CHANGE
Daily
1 wk. 52 wks
Financials
CTBC Financial Holding Co. Ltd.
-0.4% -0.3%
4.6% 3.9%
11.5%
72.7%
600
13
N.A.
1.2
PERCENTAGE CHANGE
Daily
1 wk. 52 wks
Consumer Goods
Sumitomo Electric Industries Ltd.
-0.2%
5.1%
-1.5%
6.2%
12.8%
40.7%
Tata Motors Ltd.
CK Hutchison Holdings Ltd.
India
471.75 rupee Hong Kong

HK$118.20
t 5.4% or 25.85 rupee
t 28.4% or HK$46.90
The conglomerate's restructuring plan

doesn't guarantee family control, an
analyst at CLSA said.
The stock is trading above both it 20-day

and 50-day moving averages.
Sales at top South Korean department

stores rose 1.3% in April, slightly weaker
than a recent estimate.
Consolidated net profit last quarter more

than halved and Edelweiss Securities cut
its target price 16%.
The stock has dropped 31% over the past

three sessions to a level not seen since
February 2014.
In won
In won
In won
In rupee
In Hong Kong dollars
2500000
500000
1000
250
2000000
240000
400000
800
200
1500000
180000
300000
600
150
1000000
120000
200000
400
100
2015
2014
Dividend yield
500000
10
N.A.
3.0
2015
2014
Dividend yield
PERCENTAGE CHANGE
Daily
1 wk. 52 wks
Technology
Samsung Electronics Co. Ltd.
300000
-0.5% -1.1%
-3.5% -3.8%
4.7%
-6.6%
60000
18
N.A.
1.7
2015
2014
Dividend yield
PERCENTAGE CHANGE
Daily
1 wk. 52 wks
Consumer Goods
NCsoft Corp.
-0.2% -1.5%
-3.8% -7.8%
12.8%
16.5%
100000
17
N.A.
0.8
2015
2014
Dividend yield
PERCENTAGE CHANGE
Daily
1 wk. 52 wks
Consumer Services
Lotte Shopping Co. Ltd.
-0.5% -1.3%
-4.6% -3.8%
2.8%
-15.0%
200
9
N.A.
0.4
PERCENTAGE CHANGE
Daily
1 wk. 52 wks
Industrials
Tata Motors Ltd.
-0.1% -0.4%
-5.4% -6.7%
10.6%
7.8%
2015
2014
Dividend yield
50
5
N.A.
N.A.
PERCENTAGE CHANGE
Daily
1 wk. 52 wks
Financials
-0.4% -0.3%
CK Hutchison Holdings Ltd. -28.4% -29.5%
11.5%
-11.8%
Email: heard@wsj.com
HEARD ON THE STREET

FINANCIAL ANALYSIS & COMMENTARY
Toshiba Could Shine if Mess Is Cleared
Cable Stakes
Time Warner Cable's ratio of enterprise

value to forward Ebitda*
10
8
6
4
2
2007
10
*Earnings before interest, taxes,

depreciation and amortization
Sources: FactSet; Reuters (photo)
Time Warner Cable

Is a Pricey Bundle
Think your cable bill is expensive? Take a look at what John Malone is paying. The Liberty Broadband
chairmans
vision
of
spearheading cable consolidation
via his firms investment in Charter
Communications may finally be
coming to fruition. Charter said
Tuesday it would buy Time Warner
Cable for $195.71 a share in cash
and stock.
The expectation that Charter
would swoop in after regulatory
concerns stymied Comcasts own
deal for Time Warner Cable meant
the latters stock price already reflected bid speculation. Yet Charters bid represents a 14% premium,
valuing Time Warner Cable at $78.7
billion, including debt. That equates
to nearly nine times 2016 earnings
before interest, taxes, depreciation
and amortization. Charter also said
it was buying closely held Bright
House Networks for $10.4 billion.
Charters decision to pay up
owes something to the fact that
shareholders have bid up its own
stock, largely in anticipation of a
deal. Meanwhile, Amsterdam-listed
Altice emerged last week as a potential rival bidder for Time Warner
Cable. Altice, which said May 20 it
would buy a 70% stake in Suddenlink, aims to eventually get 50% of
its revenue from the U.S. Time Warner Cable would have been the
quickest route to that.
Charters offer likely puts Time
Warner Cable out of reach for Altice. But the high price also raises
the risk level.
Charter should benefit when it
comes to purchasing content from

media companies. Costs for each of
its own subscribers and those of
Bright House should fall toward the
lower rates paid by Time Warner
Cable. Still, even counting the $800
million in annual synergies Charter
claims, it is paying 8.3 times Ebitda
for Time Warner Cable, according to
MoffettNathanson. That is 26%
higher than the companys five-year
average.
Indeed, excitement about deals
has pushed up prices across the
board for cable assets. Beyond the
two Charter deals, Altices Suddenlink deal valued that company at
nearly 10 times 2014 Ebitda. Even
Cablevision, which is for sale but
has yet to find a buyer, trades at 8.3
times next years Ebitda.
Such multiples ignore structural
challenges, including the rise of
video delivered directly via the Internet and heightened regulatory
oversight of broadband through new
net neutrality rules.
Granted, Time Warner Cable has
improved its results somewhat of
late, adding video subscribers in the
first quarter for the first time since
the first quarter of 2009.
But the last time cable firms
traded at these levels, Ebitda was
growing at double-digit rates as
consumers upgraded to high-speed
broadband. With this trend largely
played out, the path to growth now
is far less clear: Time Warner Cables Ebitda, for example, rose by
just 3.1% in 2014. For Charter, consolidation may have come at too
steep a cost.
Miriam Gottfried
Toshiba shares have been

slammed by revelations of accounting problems. If the crisis prods
management to finally go all-in on
restructuring, investors could be rewarded for sticking around.
The Japanese technology group,
which produces everything from elevators to memory chips, said earlier this month it discovered accounting irregularities in three units
of the company, mostly related to
several infrastructure projects.
The company estimated it would
have to revise down operating profit
in three previous years by around
50 billion ($406 million), or about
7% of operating profit over that period.
Last week, Toshiba said it would
expand its probe to look at accounting problems at the company as a
whole, underscoring for investors
that there could be more shoes to
drop. Toshiba was already a serial
underperformer even before the accounting scare, missing out on the
Japan rally of the past two years.
Shares have fallen another 15% since
the accounting issues first came to
light.
Toshiba has been a laggard generally as rivals have moved more
quickly to shed struggling businesses. Sony sold its personal-computer division last year and is focus-
ing on games and imaging sensors,

while Panasonic has shifted its focus
to industrial electronics.
Over the past two years, Toshiba
has announced two halfhearted restructurings each for its television
and personal-computer divisions,
when it probably should have shed
them completely. The focus of both
businesses has been progressively
hacked back, with the PC business
now mainly aimed at corporate clients in Japan, and the TV business
at Japan and a few emerging markets.
This piecemeal approach has
been tortuous for investors. The division that produces TVs and PCs
was still unprofitable in the nine
months to December, even after excluding one-time restructuring
costs.
Toshiba does have some excellent businesses to fall back on, notably flash memory chips, or NAND.
Once highly volatile, the NAND market has been consolidated into a
handful of profitable players, including Toshiba and Samsung Electronics.
The smartphone boom has
driven demand, and a new wave of
growth is coming as computers and
servers increasingly switch to solidstate hard drives that use the technology. Bernstein Research esti-
mates that Toshiba supplies around

half the NAND chips for the iPhone
6.
It cant be ruled out that accounting irregularities extend to
this business as well. But Toshibas
NAND profit margins dont look suspicious, as they are in line with industry peers. The replacement value
of Toshibas NAND plant and equipment alone is equivalent to 500
per Toshiba share, according to
Bernstein analyst Mark Newman.
That is a 21% premium to the current share price for the entire company, though Toshiba has substantial debt.
The potential damage from accounting irregularities is always
hard to calculate before the dust
clears. It would be risky to wade
into the shares until investors have
clarity on how bad things may get.
But Japanese businesses of this size
are rarely left to fail. And ones with
good assets even less so. Olympus,
which had terrible accounting problems but a thriving medical-imaging
business, has more than recovered
from a 2011 scandal.
If Toshiba management cleans up
the accounting mess, it should then
turn to cleaning up the rest of its
business. Then investors might
clean up themselves.
Aaron Back
INDEPENDENT
SPIRIT
OVERHEARD
How times change.
AstraZeneca shares fell Tuesday
after U.S. partner Amgen unexpectedly pulled out of their shared development of a psoriasis drug. Some
patients had reported suicidal
thoughts in studies. In the 2012 alliance, struck under previous chief David Brennan, Astra paid $50 million
and shouldered two-thirds of research-and-development spending
until 2014 on five drug candidates.
That was when Astra was desperately trying to bolster its ailing pipeline. Astra, as part of its defense
against Pfizer, last year said ana-
WSJ.com/Heard
lysts saw nonrisk-adjusted peak

sales of $500 million to $1.5 billion
for the psoriasis drug. Its possible
demise will hit earnings expectations.
But Astra now arguably has the
opposite problem. Its oncology pipeline is generating excitement. The
company needs partners for its other
pipeline drugs to help manage the
burden of development costs. Astra
said it would review the psoriasis
drugs data before deciding how to
proceed. It may shy away from taking on all the spending, given concerns. Unlike three years ago, it has
other places to put that cash.
cara delevingne
cara delevingne,
poised for stardom
with the wall street journal
tomorrow.
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Published by Dow Jones Publishing Company (Asia). Printed in Hong Kong by Euron Limited, 2/F., Block 1, Tai Ping Industrial Centre, 57 Ting Kok Road, Tai Po, Hong Kong. Printed in Indonesia by PT Gramedia Printing Group, Jalan Palmerah Selatan 22-28, Jakarta 10270. Printed in Japan by The Mainichi Newspapers Co., Ltd., 1-1-1 Hitotsubashi, Chiyoda-ku, Tokyo, 100-8051. Printed in Korea by JoongAng Ilbo. 7, Soonwha-Dong, Chung-Ku, Seoul 100-130. 1997 June 04 Registration no.: SeoulKA00020 (Daily Newspaper), Publisher/Editor/Printer: Song, Pil-Ho.
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As of 12 p.m. ET DJIA 18153.04 0.62% FTSE 100 7033.33 1.21% Nikkei 225 20472.58 0.17% Shanghai Comp. 4941.

IN DEPTH Pages 12-13

VOL. XXXIX NO. 188

(India facsimile Vol. 6 No. 247)

THURSDAY, MAY 28, 2015

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SK. MENPEN R.I. NO: 01/SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998

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Firms Return More

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ZURICHSwiss police arrested seven FIFA officials

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24 years to enrich themselves

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tions, added the 46-year-old,

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Business & Finance

brand, hoping to attract investment or a higher valuation. 16

n Japan is loosening rules on

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n Apple will likely issue about

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