WORLD NEWS - English Language Learning
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WORLD NEWS - English Language Learning
As of 12 p.m. ET DJIA 12881.79 À 0.35% FTSE 100 5859.73 À 1.18% Nikkei 225 9768.96 À 2.01% Shanghai Comp. 2420.28 À 1.06% Hang Seng 20900.73 À 1.32% Sensex 17145.52 (Closed) S&P/ASX 200 4171.00 À 0.66% THE BEST SEAT IN THE HOUSE State-of-the-Art Screening Rooms VOL. XXXVI NO. 133 (India facsimile Vol. 3 No. 194) FRIDAY - SUNDAY, MARCH 9 - 11, 2012 * * asia.WSJ.com Japan City Sees Light In Sendai, Money for Rebuilding Means 17 Jobs for Each Job Seeker BY YUKA HAYASHI AND JURO OSAWA SENDAI, Japan—A year after this city in Japan’s northeast was slammed by a gigantic earthquake and tsunami, it is experiencing a boom reminiscent of the c o u n t r y ’s bubble economy a quarter century ago. D u m p JAPAN trucks from as far away ONE Okinawa YEAR ON as r u m b l e through snowy streets, lights are back on in its once-deserted entertainment district, and sales of German cars and Italian handbags are brisk. The region now is getting projects such as a $4.3 billion plan for giant incinerators to process debris left by the tsunami. Wages for some jobs are doubling, according to local business owners. At the public employment office in Sendai, 17 jobs are available for each job seeker hoping to work as a traffic controller at a construction Inside Henry Tang says he is open to adjusting the Hong Kong dollar’s trading band against the U.S. dollar if he is elected as the city’s next chief executive. World News ............ 3 European investors are taking a bigger bite out of dim sum bonds issued by a growing variety of companies. Markets ................. 15 Debt Swap Gets Closer For Greece ATHENS—More than 75% of private-sector creditors have pledged to take part in Greece’s planned €200 billion ($262.98 billion) debt swap, a Greek government official said late Thursday, as Athens prepared to announce early Friday the participation level in the largest-ever such debt restructuring. Agence France-Presse/Getty Images SK. MENPEN R.I. NO: 01/SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998 Australia: A$6.00(Incl GST), Brunei: B$7.00, China: RMB25.00, Hong Kong: HK$20.00(Incl Macau), India: Rs30.00, Indonesia: Rp18,000(Incl PPN), Japan: Yen500(Incl JCT), Korea: Won2,500, MICA (P) NO. 030/10/2011 Malaysia: RM7.00, Pakistan: Rs140.00, Philippines: Peso80.00, Singapore: S$4.50(Incl GST), Sri Lanka: Slrs180(Incl VAT), Taiwan: NT$60.00, Thailand: Baht50.00, Vietnam: US$2.50 KDN PP 9315/10/2012 (031275) WEEKEND JOURNAL W1 By Nektaria Stamouli, Costas Paris and Alkman Granitsas A 330-ton fishing vessel swept up by the March 11, 2011, tsunami remains where it was left by the giant waves, near traffic in Miyagi prefecture. site, while 11 jobs are offered to each iron-beam worker in need of work. But the growth, fueled by government reconstruction spending, also shows the short-term nature—and long-term limits—of postdi- saster expansion. Builders are struggling to keep up with orders, the result of a labor-shortage intensified by a sharp exodus of young residents. “It’s mostly the peak working-age people who are leaving,” said Seiichi Otaki, an economics professor at Tohoku University here. “This really limits the scope Please turn to page 13 Amid the turmoil, some see a chance for change............12 Economic Engines Falter In Emerging Markets Fresh signs of economic weakness in Brazil are adding to a growing worry for the global economy: that the emerging markets that have boosted growth in recent years are slowing. By John Lyons in São Paulo and Bob Davis in Beijing That is a big concern amid the drag of the European debt crisis and a sluggish U.S. recovery. Brazil, China, Russia, India and South Africa are among the dynamic economies that helped the world bounce back from the 2008 financial crisis. This time around, they seem less likely to provide the same boost as they deal with problems such as strong currencies, inflation, deficits and real-estate bubbles. Earlier this week, Brazil said its economy grew around 2.7% in 2011, less than half the rate the government predicted a year ago. And Wednesday, Brazil said industrial production fell 2.1% in January, the most since the 2008 crisis. Later, Brazil’s central bank slashed its benchmark interest rate by three-quarters of a percentage point, a bigger cut than expected, to spur growth. “The strain of carrying the weight of world growth on their backs has started to wear on the emerging market economies,” said Cornell University economist Eswar Prasad, who has advised India and other emerging nations on economic policy. “The ability of emerging-market economies to contribute to a global recovery is being tested.” Growth forecasts are falling across the developing world. On Monday, China’s Premier Wen Jiabao reduced the country’s annual growth target to 7.5% after keeping it at 8% since 2005. Last week, India said its economy grew 6.1% in the final quarter of 2011, its slowest pace in two years. Economists expect South Africa’s growth to slow to 2.5% this year, a far cry from the 7% rate its centralbank governor, Gill Marcus, spoke of chasing just a year ago in order to dent high unPlease turn to page 6 “The participation rate exceeded 75%” Wednesday evening, a government official said. “At the moment, it appears that we will exceed even the optimistic scenario.” The results of the so-called private-sector involvement were to be published Friday at 6 a.m. GMT on the official website for the exchange, said a person in the finance ministry. The deadline for bids was Thursday at 8 p.m. GMT. “The participation will be quite substantial. The target is to hit 80%,” said a person involved in the process. Charles Dallara, managing director of the Institute of International Finance, a lobby group for the world’s largest banks, said he was “quite optimistic” that the Greek debtrestructuring deal would come together in the final hours. Speaking in Rio de Janeiro, he expressed optimism that participation would be “very, very high.” Growing optimism about the Greek debt restructuring buoyed some of the weaker euro-zone government bond markets, where the specter of a Greek default had been weighing on sentiment for months. Italian government bond yields fell to their lowest levels since mid-2011, and Spanish yields declined sharply in early trading Thursday, before later recovering part of their losses. Please turn to page 7 ECB expects euro-zone economy to shrink.................... 7 SPARC SuperCluster Runs Oracle & Java Twice as Fast as IBM’s Fastest Computer SSC T4-4 $1.2M IBM P795 $4.5M* *Building planets is expensive 8x Better Price/Performance oracle.com/sunbeatsibm Copyright © 2011, Oracle and/or its affiliates. All rights reserved. 2 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. * * PAGE TWO What’s News— Inside Associated Press On Other Fronts: For shear thrills, a contest in New Zealand. 14 India on Thursday celebrated Holi, the Hindu festival of colors that marks the advent of spring. The festival involves people throwing colored powder, or ‘gulaal,’ on each other. Many believe that the Hindu god Krishna once smeared color on his companion Radha’s face because he was envious of her fair complexion. i i i Business & Finance n The ECB said the euro-zone’s economy is likely to contract this year, and inflation will exceed the bank’s medium-term target. ECB President Draghi also played down evidence of a rift between the bank and Germany. 7 n The restructuring of Europe’s banking industry may continue to move at a slow pace thanks to the ECB’s recent wave of cheap lending to the Continent’s banks. 15 n Swedish auto maker Volvo is expected to sign a technologysharing pact with its Chinese owner as early as Friday that could determine how they will position their auto brands. 15 n EADS’s CEO accused EU officials of sparking a fight with China over aircraft emissions that could cost the parent of Airbus $12 billion in jetliner orders. 3 n The U.S. Justice Department warned Apple and five U.S. publishers that it plans to sue them for allegedly colluding to raise the price of electronic books. 18 n Rabobank of the Netherlands plans to expand lending to China’s food producers and processors, both in yuan and in foreign currencies. 20 n The U.S. Treasury sold 206.9 million of shares in AIG for $29 each, further reducing its stake. 22 i i i World-Wide n China’s securities regulator is pushing for a system where companies disclose essential information so investors can judge IPOs for themselves. 20 n China unveiled legislation that restricts police powers to detain people at undisclosed locations without telling their families. 4 n Huawei is beefing up its design team, as the Chinese maker of mobile devices and telecom gear aims to raise its profile in the global smartphone market. 17 n The intrigue deepened surrounding Bo Xilai, Communist Party chief of the southwestern city of Chongqing, after he missed a major parliament meeting. 4 Marketplace: A plain old name for new iPad puzzles experts. 14 n China would likely mount a cyberattack on the U.S. in the event of a conflict, and the U.S. has no clear policy on how to respond, a congressional advisory panel was set to warn Thursday. 4 n Syria’s deputy oil minister announced his defection, while former U.N. chief Kofi Annan said his priority as special envoy to Syria is to end violence and deliver aid. n Nuclear envoys from North and South Korea have a chance for informal talks at a New York conference as diplomacy on Pyongyang’s atomic program gathers pace. Business & Finance: Hong Kong airline bets on business class. 16 n Flooding worsened in Australia’s New South Wales state, with heavy rains threatening coastal areas, including the city of Sydney. ONLINE TODAY Most read in Asia 1. Apple Tries to Keep Edge 2. Big Solar Storm to Hit Earth 3. Australia’s Sydney Coast Threatened By Floods 4. U.S. Warns Apple, Publishers on E-Books 5. Furniture Does Double Duty Scene Asia wsj.com/scene Sports ‘Travelers to Canton in the 19th century described these banquets at great length. They were...astonished.’ Where are America’s multimillionaires? The Internal Revenue Service says California is the state with the most. Amitav Ghosh offers insight into his research for the novel ‘River of Smoke’ Most emailed in Asia 1. Apple Tries to Keep Edge 2. ‘Sterilized’ Bond Buying an Option in Fed Arsenal 3. Spiders Battle Flooding in Australia 4. Australia’s Sydney Coast Threatened by Floods 5. The Most Exclusive House in America? Wealth Report wsj.com/wealth Singapore: Boxing’s next big draw? Two world-title bouts are coming up. wsj.com/sea Heard on the Street: Japan statistics aren’t what they appear. 28 THE WALL STREET JOURNAL ASIA Dow Jones Publishing Company (Asia) 25/F, Central Plaza, 18 Harbour Road, Hong Kong Tel 852-2573 7121 Fax 852-2834 5291 www.wsj-asia.com SUBSCRIPTIONS and Address Changes, please telephone our local customer service hotline, Hong Kong/Taiwan: 852-2831 2555; Beijing: 86-10 6581 4090; Shanghai: 86-21 5836 8228; Indonesia: 62-21 527 7592; Japan: 81-3 6269-2760; Korea: 82-2 3700 1925; Malaysia: 60-3 2026 4061; Philippines: 63-2 848 5873; Singapore: 65-6415 4000; Thailand: 66-2 690 4222 to 7; India: 91-11 6462 0215. Or email: [email protected] ADVERTISING SALES worldwide through Dow Jones International. Hong Kong: 852-2831 2504; Singapore: 656415 4300; Tokyo: 81-3 6269-2701; Frankfurt: 49 69 29725390; London: 44 207 842 9600; Paris: 33 1 40 17 17 01; New York: 1-212 659 2176. Or email: [email protected] Trademarks appearing herein are used under license from Dow Jones & Company. USPS 337-350ISSN 0377-9920 THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | 3 WORLD NEWS: ASIA BY JEFFREY NG AND TE-PING CHEN HONG KONG—Former Hong Kong Financial Secretary Henry Tang, a contender in the race to be the city’s next chief executive, didn’t rule out adjusting the Hong Kong dollar’s trading band against the U.S. dollar if he is elected, but affirmed the need to maintain the U.S. currency peg. “The peg with the U.S. dollar has actually served Hong Kong well for nearly 30 years. We have had the stability…that [has] facilitated many of our exporters so that they don’t have to account for exchange risks,” Mr. Tang said in an interview with The Wall Street Journal. Many lawmakers have recently criticized the currency peg for contributing to rising inflation in the city, as food imports from mainland China, which account for the bulk of Hong Kong’s food supplies, have become much more expensive amid an appreciating yuan and a weaker U.S. dollar. Rock-bottom interest rates, even while the city’s economy continued to soar, have also fueled asset prices in Hong Kong, particularly in the property market. Hong Kong’s government pegged the local currency at 7.80 Hong Kong dollars per U.S. dollar in 1983, partly as a bid to boost confidence amid mounting uncertainties about the city’s 1997 handover to Chinese rule. Now, about 15 years since the change in sovereignty, some analysts are suggesting that it may be time for Hong Kong to consider modifying the peg or abandoning it altogether. The currency regime was last overhauled in 2005 when the Hong Kong dollar was allowed to trade in a tight band between HK$7.75 and HK$7.85. The Hong Kong Monetary Authority said Thursday it sees no need to adjust the trading band and added it has no plans to do so. As finance chief, Mr. Tang helped oversee the implementation of the trading band in 2005. “Putting in this band actually introduced a mechanism where we could have more wiggle room when we want to,” he said. “That band was put in place for a reason. I would not speculate or comment on whether this is the right moment to expand the band so that we will have more wiggle room, but I think by putting in a mechanism, one can make use of the mechanism to the best interest of Hong Kong when necessary.” Mr. Tang’s poll numbers have languished, and his chances of becoming the city’s chief executive are looking increasingly dim. Once seen as Beijing’s favored candidate, he now trails his opponent Leung Chun-ying by 26 percentage points in most recent polls. A series of scandals have dogged his campaign, including an extramarital affair and public fury over an illegal basement addition to his luxury home. Sporting a colorful aqua tie with a fish theme, Mr. Tang, 59 years old, seemed unfazed by his campaign’s unpopularity. He spoke ebulliently about how Hong Kong’s current Darren Hayward/The Wall Street Journal Henry Tang: Don’t Scrap Currency Peg Henry Tang didn’t rule out adjusting the Hong Kong dollar’s trading band. chief executive race is the last one before the city’s leader will be chosen via universal suffrage in 2017. The winning candidate of the March 25 elections will be chosen by a 1,200-member election committee composed largely of political and business elites. Despite his flagging poll numbers, Mr. Tang said he was betterequipped to shepherd Hong Kong along its path to democracy than Mr. Leung, a former cabinet member, saying the city needs someone who is able to “build consensus” across parties to enact political reform. A spokesman for Mr. Leung didn’t return calls seeking comment. Specifically, Mr. Tang endorsed the idea of lowering barriers to entry for future chief executive candidates. To run for chief executive, candidates currently must receive nominations from one-eighth of the city’s election committee. Mr. Tang on Thursday supported the idea of reducing that threshold down to one-tenth, or even one-twelfth. The rules for choosing candidates in the 2017 election haven’t yet been set. On Hong Kong’s development as an offshore yuan hub, Mr. Tang said he believes more channels need to be created to allow yuan funds raised in the city to be remitted to mainland China. He said that while sizable amounts of yuan-denominated bonds have been sold, the market has still fallen short of its potential. “Until they open up more of these channels, I believe the constraints will put a cap on the development of that particular sector,” said Mr. Tang, who pledged to work closely with Chinese regulators to boost the channels for yuan fund flows into China. He argued that Hong Kong can continue to build on its reputation for “brand quality,” especially when it comes to consumers from mainland China, who know that “when you buy soy sauce [in Hong Kong], you get real soy sauce.” Makeup, skin-care products, pharmaceuticals and cooking sauces are manufacturing areas Hong Kong could further explore, he said. When it comes to the scandals that have engulfed his campaign, Mr. Tang said he was surprised at the public outcry that followed revelations of his illicit basement, which local media outlets likened to an “underground palace.” “In retrospect,” he said, “I could have handled it better by coming clean on it earlier.” Online>> See a video with Mr. Tang discussing Hong Kong’s economic strengths and the media circus surrounding his campaign for chief executive at asiaWSJ.com. EADS Says China Is Blocking Sales BY DANIEL MICHAELS AND DAVID PEARSON PARIS—The chief executive of Airbus parent EADS accused European Union officials of sparking a fight with China over aircraft emissions that threatens to cost the plane maker $12 billion in jetliner orders. Louis Gallois said that European Aeronautic Defence & Space Co. is a “hostage” to the dispute between Beijing and Brussels, which has put the fate of 45 unbuilt large planes in question. “China is putting on hold orders already agreed with airlines but not approved” by industry overseers in Beijing, Mr. Gallois said. “We are worried that this conflict is becoming a commercial war.” The EADS chief executive blamed Chinese officials’ anger at the EU’s levies on emissions of carbon dioxide, which this year were extended to include aviation. Any airline operating at a European airport must have special credits to offset its carbon-dioxide emission through a program known as the emissions-trading system, or ETS. Airlines have said the system will cost them billions of dollars. Governments outside the EU charge that the 27-country bloc is exerting extraterritorial authority by charging for emissions that occur outside the EU. Officials at the European Commission, the EU’s executive arm, have said the system is legal. A top EU court last year backed that position. Talks that might resolve the dispute are now continuing in the United Nations’ International Civil Aviation Organization, but their prospects for success remain unclear. China is one of more than 25 countries that have vocally opposed the EU program. Staff at the Chinese embassy to the EU declined to comment on the situation and officials in Beijing weren’t available for comment. A spokesman for EU climate commissioner Connie Hedegaard, the top official overseeing the ETS program, declined to comment on “possible commercial decisions.” The involvement of Airbus in China’s dispute with the EU emerged in June, when the announcement of an order for 10 Airbus A380 superjumbo jetliners by Hong Kong Airlines Ltd. was put on hold. Airbus officials have said the freeze was due to Beijing’s anger over the ETS. More recently, 35 smaller Airbus A330s have also been put on hold, Mr. Gallois said. China hasn’t explicitly forbidden its airlines from buying Airbus planes. Air China Corp. spokeswoman Joyce Zhang said she didn’t believe China had banned airlines from ordering Airbus aircraft, adding Air China has no plans to cancel existing orders. China Eastern Airlines Corp. and China Southern Airlines Co. couldn’t be immediately reached for comment. Instead, EADS officials say Beijing isn’t signing off on permission for commercial deals that require government approval. —Andrew Galbraith in Shanghai contributed to this article. BENTLEY GMT BREITLING for BENTLEY.COM 4 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. WORLD NEWS: ASIA ChinaTargetsDetentionPractices Washington To Warn BEIJING—China’s parliament unveiled legislation that restricts police powers to detain people at undisclosed locations without informing their families—a move hailed as a small victory for legal reformers who led a public outcry last year against legalizing the practice. The revisions to the Criminal Procedure Law presented Thursday during an annual parliament session still allow police to hold suspects in certain serious crimes under “residential surveillance” outside their homes or state-run detention centers. But even in those cases, the new revisions require police to inform suspects’ relatives within 24 hours, according to draft legislation that the National People’s Congress—a rubber-stamp parliament that essentially affirms the decisions of China’s Communist Party leadership—is expected to approve during the ongoing session. China’s security forces have routinely detained dissidents, humanrights lawyers and other activists at undisclosed locations without informing their relatives, especially since online appeals appeared last year for a Chinese version of the uprisings in the Arab world. The increasing use of such detentions without charges or court hearings last year raised concerns among Chinese lawyers and liberal academics that China was sacrificing three decades of efforts toward building a legal system for the sake of maintaining political stability. In a case that sparked an international outcry, Ai Weiwei, China’s most famous contemporary artist and an outspoken critic of the government, was detained in such a way for 81 days last year, before being released and fined on tax-evasion charges that he disputes. Chen Guangcheng, a blind lawyer who served more than four years in prison for campaigning against forced abortions, is still being con- Associated Press BY JEREMY PAGE Blind activist Chen Guangcheng, in an undated photo, is being confined at home. fined at home in a form of detention that lawyers say is technically illegal but condoned by the government. And Liu Xia, the wife of Liu Xiaobo, who won the Nobel Peace Prize in 2010, is still under effective house arrest at her apartment in Beijing despite never having been formally arrested or charged, let alone convicted of any crime, according to her friends. Mr. Ai and other activists say Chinese police rarely observe legal procedure, and the new revisions in- clude many loopholes that would still allow police to make people “disappear” in politically sensitive cases. “Police behavior is violating the law every day,” Mr. Ai said in an interview. “In my case I still don’t know why I was detained, or why I was released. I can’t sue anybody because the courts won’t accept the case. You can’t argue with their power because it is too unified. There is no structure or system to limit it.” But many legal experts said the revisions marked an improvement over the last version of the law, approved in 1996, and a draft revision circulated in August last year that proposed allowing police to hold dissidents and terror suspects under residential surveillance without informing their families. That provision was branded “the KGB clause” by activist Hu Jia, himself living under a form of house arrest, and prompted a wave of criticism from Chinese Internet users, academics and journalists last year. The revised law says that when suspects or defendants are “involved in crimes concerning state security, terrorism or especially serious corruption and notification of where they are residing could obstruct investigations,” they can be held in residential surveillance, but their families must be told within 24 hours. Wang Zhaoguo, the vice chairman of the NPC, told parliament as he introduced the revisions: “It is necessary to strictly limit exceptions to the provision of notifying family members after a coercive measure is adopted.” Other revisions that have been welcomed by legal experts are designed to improve lawyers’ access to suspects and defendants, and to prevent the use of evidence obtained through torture and other illegal means. Legal experts said the revisions represented a rare example of public and expert legal opinion pushing back against China’s increasingly powerful law-enforcement agencies. But many expressed concern that the revisions still didn’t go far enough. “On paper, there are a lot of good things that have been introduced in this legislation,” said Joshua Rosenzweig, a human-rights researcher based in Hong Kong. “The problem is how well will they be enforced, and how well can they be enforced when there are very few remedies or sanctions in the law itself in case of noncompliance.” Chongqing Party Chief Intrigue Thickens BY JEREMY PAGE BEIJING—The intrigue surrounding Bo Xilai, Communist Party chief of the southwestern megacity of Chongqing, deepened on Thursday after he missed a major parliament meeting and his police detained a local businessman who claimed to have fresh details about China’s biggest political scandal. A lawyer for the detained businessman, Zhang Mingyu, a former property developer and member of Chongqing’s local legislature, said Mr. Zhang had a compromising voice recording of Wang Lijun, the former Chongqing police chief at the center of the scandal. Mr. Wang was taken away by Chinese security forces after spending a night in the U.S. Consulate in the nearby city of Chengdu last month. Mr. Bo is usually one of the stars of the annual parliament meeting, and was until recently considered a front-runner for promotion to the party’s Politburo Standing Committee—the top decision-making body— in a once-a-decade leadership change this fall. He won plaudits from fellow leaders for a high-profile crackdown on organized crime and a campaign to get residents to sing Maoist revolutionary songs—two elements of what was dubbed the “Chongqing model” of government. But his political prospects appear to have been severely compromised by Mr. Wang, who led the fight against gangsters in Chongqing, but is now himself under investigation, according to Chinese officials. Many analysts believe he could be in a position to provide evidence that Mr. Bo’s opponents in the party could use to thwart his leadership ambitions. Critics of Mr. Bo say his policies in Chongqing were used to target uncooperative business leaders, and to discredit his predecessor, Wang Yang, who is now the party chief of the southern province of Guangdong and a potential rival for promotion in the fall. A Chongqing government spokesman played down the significance of Mr. Bo’s unusual absence at Thursday’s meeting of the National People’s Congress, the parliament, which is halfway through its annual meeting, which usually lasts around 10 days. All the other members of the party’s 25-strong Politburo were at the meeting, and Mr. Bo’s absence triggered a flurry of speculation among political observers in Beijing as well as Chinese Internet users. State television cameras filming the parliament meeting panned across every Politburo member but stopped just before reaching Mr. Bo’s empty seat. The Chongqing spokesman said Mr. Bo would definitely attend a meeting of the Chongqing delegation, and a news conference, on Friday morning—which could be the first time he faces direct questioning in public about the scandal surrounding him. Among Mr. Bo’s many critics are at least two local property developers who have publicly alleged that they were forced to hand over their businesses to allies of the Chongqing Party chief during the campaign against organized crime. One of those property developers, Zhang Mingyu, hinted that he had fresh details about the Wang Lijun case Wednesday when he wrote a cryptic message on Sina Weibo, a microblogging service that works a bit like Twitter. “The jigsaw puzzle of Wang Lijun should all become clear,” he wrote. Mr. Zhang, who has been living in Beijing since fleeing Chongqing, had a voice recording of Wang Lijun warning him not repeat those allegations, according to his lawyer, Pu Zhiqiang. Chongqing police visited Mr. Zhang’s apartment in Beijing on Wednesday and told him to return to Chongqing and to stop writing about Mr. Wang on Weibo, according to Mr. Pu. He said he didn’t know his client’s current whereabouts. Mr. Zhang also posted a message on Weibo on Wednesday afternoon saying he was being held in his flat by four people from Chongqing. His last post on Wednesday evening said: “Zhang Mingyu is not yet out of danger.” Another lawyer for Mr. Zhang said he had received a text message from his client on Thursday saying: “I have a family emergency. I’m already back in Chongqing. This afternoon’s press conference is canceled. Pass this on.” Mr. Zhang’s mobile phone appeared to be switched off. A Chongqing police spokesman said he had seen reports of Mr Zhang’s detention online, but had no additional information. Of Chinese Cyber Tactic BY SIOBHAN GORMAN WASHINGTON—China almost certainly would mount a cyberattack on the U.S. in the event of a conflict, and the U.S. has no clear policy to determine how to respond appropriately, a congressional advisory panel is set to warn on Thursday. In a lengthy report analyzing Chinese cyber-capabilities and the threat facing the U.S., the U.S.-China Economic and Security Review Commission found that the U.S. telecommunications supply chain is particularly vulnerable to cyber-tampering and an attack could result in a “catastrophic failure” of U.S. critical infrastructure. The report was written for the commission by analysts at defense firm Northrop Grumman Corp. The commission’s findings are likely to stoke a fight on Capitol Hill over competing cybersecurity proposals, which are likely to reach the Senate floor in the coming weeks. Supporters of a White House-backed cybersecurity bill have clashed with Republicans over whether the government should require critical infrastructure companies to meet new standards. Late Wednesday, the White House pressed its case for new standards with a classified administration briefing that pointed to the inadequacy of current cybersecurity authorities of the U.S. government, an administration official said. The briefing for senators from top intelligence and national security officials focused on how the U.S. would respond to a cyberattack on its infrastructure. While the congressional proposals aim to improve U.S. cyberdefenses, they wouldn’t address the key policy gap the commission identified: In the event of a cyberattack during a conflict with China, there is no standard U.S. policy for responding proportionally, when it can’t clearly prove who carried out the attack. China’s military, the People’s Liberation Army, has been intensifying its focus on cyberwarfare, the report concluded. Chinese military leaders appear to have reached agreement on the importance of developing tactics and techniques to pursue “information confrontation” against its adversaries in concert with traditional military means, according to the commission report. The PLA now regularly incorporates cyberattack and defensive techniques into its national military exercises, as it has done for the past three years, the report says. The Chinese government regularly denies allegations of cyberspying and has called the U.S.-China commission a “product of Cold War mentality.” The commission report warns that Chinese telecommunications companies receive support from the Chinese government and maintain relationships with the PLA, so they could be used to assist the Chinese government with cyber-warfare research, training, and cyber-surveillance. Some of those companies, including Huawei Technologies Co., have denied any link to the Chinese government. THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | 5 WORLD NEWS: U.S. Delegate Math Challenges Romney Foes BY NEIL KING JR. AND PATRICK O’CONNOR BOSTON—Mitt Romney didn’t deliver a knockout blow in winning six of the 10 states up for grabs on Super Tuesday, but he did expand his delegate lead in ways that his rivals will find increasingly hard to bridge. The Romney campaign tried to make the case Wednesday to fellow Republicans that it now has an allbut-insurmountable advantage in delegates to the August nominating convention. After contests in 23 states, Mr. Romney leads the field with 415 delegates, according to an Associated Press tally that includes socalled unbound delegates, who aren’t required to support him. Former Sen. Rick Santorum has 176 delegates, former House Speaker Newt Gingrich has 105 and Texas Rep. Ron Paul has 47 in the AP tally. Figures from Mr. Romney’s campaign put the totals a bit higher, counting 430 for Mr. Romney. It takes 1,144 delegates to win the nomination. Given his lead, Mr. Romney needs 48% of the remaining delegates to clinch the nomination, according an analysis offered by his campaign. It also estimates that Mr. Santorum needs to win 65% and Mr. Gingrich 70% of the outstanding delegates to cross the threshold. Romney political director Rich Beeson drove the point home in a memo to reporters, saying, “Super Tuesday dramatically reduced the likelihood that any of Gov. Romney’s opponents can obtain the Republican nomination.” The Romney campaign’s message: Math—not passion or political posturing—will deliver the nomination for a candidate whose wellsynchronized campaign has planned for every eventuality in a wildly fluctuating race. Mr. Romney’s opponents rejected that conclusion, arguing that just over a third of the delegates have been distributed so far, allowing plenty of chances for a comeback. The Gingrich campaign acknowledges it needs to make up ground quickly. It canceled an end-of-theweek trip to Kansas, which holds its caucus on Saturday, in order to focus its attention on Alabama and Mississippi, both of which hold primaries next Tuesday. The challenge is that even a win won’t do him or Mr. Santorum much good at this point because all but four states spread their delegate bounty among at least the top two finishers and, in some cases, top three. Oklahoma’s results on Tuesday help illustrate the long road that any challenger now faces. Mr. Santorum won the state by nearly six percentage points, but he ended up with just 14 of the state’s 43 delegates. Mr. Romney and Mr. Gingrich, as the second- and third-place finishers, each got 13. There are other problems with the Gingrich comeback plan. His campaign believes it can make up ground with several late-voting states that use a winner-take-all delegate system. But they are in places where Mr. Romney appears to be the better fit, including New Jersey, Delaware and Utah. The Romney campaign also points out that from now on, there are few big single-day delegate hauls left. Five contests on April 24 will put 231 delegates in play, while another five on June 5 will offer 299. But the pickings are few beyond that, and many of the big states still to vote—New York, for example—distribute their delegates on a proportional basis, eliminating the potential for a big, delegate-rich victory. In scrambling to make up ground, the Gingrich and Santorum campaigns face another obvious hurdle: each other. The two Republicans continue to split conservatives’ votes, prompting conservative activist Richard Viguerie to call on Mr. Gingrich to leave the race to give Mr. Santorum a fighting chance at the nomination. Mr. Romney is likely to suffer some delegate slippage in the weeks ahead. The nine contests re- maining in March—in Kansas, Alabama, Mississippi, American Samoa, the U.S. Virgin Islands, Missouri, Puerto Rico, Illinois and Louisiana—will distribute 346 delegates. And while Mr. Romney likely will win some delegates, he isn’t favored to win many of them outright. While aides argued that Mr. Romney’s victory was inevitable, the campaign was taking steps to form more solid connections with voters—particularly those at the lower end of the income scale. In Ohio, where Mr. Romney won a narrow victory in the most competitive Super Tuesday state, he The Romney campaign is arguing that his rivals are helping Democrats by prolonging the competition. Mr. Romney’s campaign said Wednesday that it had raised $11.5 million in February, but it didn’t disclose its expenditures. Finance reports from January showed a campaign that was far outspending the $6.5 million it had raised that month. trailed Mr. Santorum among voters earning less than $50,000 annually, according to exit polls. In Tennessee, a state Mr. Romney lost by a wider margin than his campaign expected, Mr. Santorum trounced him among lower-earning voters. Mr. Romney altered his tone in his victory speech in Massachusetts Tuesday evening as he attempted to strike a more emotional chord and sympathize with Americans’ economic struggles. “To the millions of Americans who look around and can only see jobs they can’t get and bills that they can’t pay, I have a message: You have not failed. You have a president that’s failed you,” Mr. Romney said. The Romney campaign is pointing to the math to argue that their rivals are only doing the Democrats a favor by prolonging the competition. “As Gov. Romney’s opponents attempt to ignore the basic principles of math, the only person’s odds of winning they are increasing are President Obama’s,” Mr. Beeson wrote in his memo. —Sara Murray contributed to this article. 6 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. WORLD NEWS Continued from first page employment. To be sure, most of the world’s developing economies are still cruising faster than the U.S., Europe and Japan. Foreign investment in the regions is recovering, and rising commodity prices should help growth in resource-rich nations like mining giant South Africa and Brazil, a major exporter of iron ore, soy, beef and other goods. “The emerging markets are still at the front of the train, but it’s a slower-moving train,” said Mohamed El-Erian, chief executive of Pacific Investment Management Co., which manages some $1.3 trillion in bonds. In 2009, he helped coin the term “new normal” to describe a global economy where emerging markets would consistently outpace developed world growth. Mr. El-Erian said his theory holds, though the onus is on European policy makers to resolve the region’s debt crisis to prevent it from feeding into other regions. But an important shift in the global growth mix has already happened. In 2010, economists spoke of a “two-speed recovery,” where emerging-market economies zoomed ahead while rich ones stagnated. Now, both the haves and the have-nots are slowing. In January, the International Monetary Fund reduced its 2012 emerging-market forecasts from just three months earlier by 0.7% to 5.4%. The bloc grew 6.2% in 2011. A collection of factors explains Agence France-Presse/Getty Images; Reuters Emerging Markets’ Economic Engines Falter Emerging markets are seeing slower economic growth. A Chinese steel mill, left, and soy being harvested in Brazil the slowdown. China is purposefully decelerating to a more sustainable growth rate. Export flows to Europe, and the U.S. are slowing, as are flows of commodities to China. In some poor nations, muchneeded economic reforms stalled amid an expectation permanently higher growth rates had already been achieved. A slowdown in China—the biggest trade partner for Brazil, South Africa and other commodity exporters—will be felt across the globe. China buys iron ore and soy from Brazil; more iron ore plus magnesium, copper and other metals from South Africa, and ash and copper from India. Not to mention cars and luxury goods from the rich world. China’s economy grew at an average rate of 10% for 30 years— something no other country has ever accomplished. But the growth model relied heavily on three pillars that are each now under pressure: exports, investment in capital-intensive industries and realestate appreciation. The Japanese investment bank Nomura estimates China’s February exports fell 15.2% compared with a year ago as markets in the U.S., Europe and Japan wobble. Apartment prices in China’s biggest cities soared so much they are now out of reach for much of the population, undermining the boom and creating policy headaches for leaders. Now, China’s leaders are making clear that the years of 10%-plus growth are coming to a close. The idea is to shift to growth that depends more on domestic consumer demand. That could give China a sturdier foundation for growth well into the future. But managing the transition while still creating new jobs is tricky. In Brazil, the government officials blame the U.S. and Europe for lowering interest rates, and sending a wave of speculative cash its way, overvaluing its currency and hurting its competitiveness. But many of the country’s problems are home-grown. High tax rates, poor roads, a sprawling bureaucracy and endemic corruption make Brazil one of the most expensive places in the world to produce things. The result is that Brazil’s increasingly uncompetitive industrial sector is dying a slow death while its commodity exporters and service providers such as restaurants and movie theaters are doing well. This is a troubling trend because manufacturing is where the good jobs are created in a poor, undereducated population like Brazil’s. Brazil’s biggest manufacturing group, the National Industry Confederation, issued a statement calling Brazil’s economic outlook “alarming” this week. Brazil’s industrial base is contracting: Production of durable goods fell 7.6% in January from a year ago. The slowdown carries enormous political stakes for the government of President Dilma Rousseff, who campaigned on job creation through fast growth. In a Feb. 22 interview, Finance Minister Guido Mantega promised a range of measures to spur growth, from more lending to infrastructure spending and lower interest rates. The 5.5% annual growth rates Mr. Mantega forecast for the future are no longer in the cards, many economists say. The consensus for 2012 is 3.3%. “Our goal is still between 4% and 5%.” Mr. Mantega said. India is also wrestling with the fallout from slower-than-predicted growth. Some analysts say it was caught off guard by its slowdown, which made expensive promises of social spending and fuel subsidies harder to afford. A year ago, India predicted it would notch 9% growth for the year ending March 2012, its fiscal year. Recently it cut the forecast to 7%. The government will be hard pressed to pay for the subsidies without opening up wider budget deficits. But the government may be forced to go deeper into the red to fund more subsidy programs to maintain popularity. “Here’s a country that has potential to do a lot more, but because of government myopia and inaction it is suffering,” said Rajeev Malik, senior economist at CLSA Asia-Pacific Markets. Brazil blames Europe and the U.S. for cutting rates, which sent speculative cash its way, overvaluing its currency and hurting its competitiveness. South Africa is also slipping below its government’s more optimistic forecasts of 4% annual growth made last year, hurt by its heavy reliance on Chinese commodity purchases. Mining production shrank by 13% in 2011, crimping growth to 3%. The declines complicate the nation’s bid to provide jobs to a population facing a 24% unemployment rate. “The immediate challenge we face is ensuring the current situation does not deteriorate,” South Africa’s Finance Minister Pravin Gordhan wrote in an op-ed in Wednesday’s Business Day newspaper. —Patrick McGroarty in Johannesburg and Amol Sharma in New Delhi contributed to this article. Cooling Off The International Monetary Fund has lowered its growth forecasts from just a few months ago for big emerging markets that have driven the global economy. 2011 growth SUNG-JOO KIM CHAIRPERSON, MCM HOLDING & SUNGJOO GROUP South Korea’s Sung-joo Kim bought over struggling German luxury brand MCM and turned it around. CNBC’s Christine Tan catches up with the retail force about the craft behind her turnaround strategy, and how tough beginnings drove her to build her fashion empire. FRI 6:30PM SAT 6PM SUN 5PM (SIN/HK) SAT 6:30PM SUN 7:30PM (AEDT) managingasia.cnbc.com Forecast in September 2011 Forecast in January 2012 RUSSIA CHINA INDIA BRAZIL 2011 ’12 2011 ’12 2011 ’12 2011 ’12 10% SOUTH AFRICA 8 6 4 2 0 Source: IMF 2011 ’12 The Wall Street Journal THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | 7 * * WORLD NEWS: EUROPE ECB Forecasts Economic Contraction LONDON—The European Central Bank said Thursday that the eurozone’s economy is likely to contract this year and that inflation will exceed the bank’s medium-term target. It was the third quarter in a row that the ECB cut its growth estimate for this year—a testament to the protracted damage caused by the region’s sovereign-debt crisis and the fiscal adjustments caused by it. In his monthly news conference, ECB President Mario Draghi also played down increasing evidence of a rift between the ECB and Germany, whose officials have been critical of many of the emergency actions the ECB has taken to avert a credit crunch in the region. Mr. Draghi said fears of the increased risks to the Eurosystem from the recent operations were “vastly overblown,” and he stressed that more than 400 small German banks had made use of last week’s controversial long-term refinancing operation. The operation was the largest in the ECB’s history, injecting €530 billion ($697 billion) into the system. He said last week’s operation, and another like it in December, had “great success” in stabilizing financial markets, saying the sovereigndebt markets, as well as the market for banks’ covered bonds “and even the interbank market,” had reopened as a result of them. Mr. Draghi said banks had made only modest use of the ECB’s relaxation of its collateral framework for the second operation, posting €53 billion in credit claims as collateral. He said that in most cases, the banks that did this already had excess collateral posted against their loans from the ECB. The loosening of the credit rules led to Bundesbank President Jens Associated Press BY GEOFFREY T. SMITH European Central Bank President Mario Draghi played down evidence of a rift between the ECB and Germany. Weidmann, via a leaked letter, expressing concern at the accumulation of risks on the ECB’s balance sheet, but Mr. Draghi denied that there was a rift, and he said the Bundesbank had never been “isolated.” Mr. Draghi said he had an “excellent” personal and professional relationship with Mr. Weidmann, and said everyone on the ECB’s governing council “shared the same ideals” of stability. “We are all custodians of stability,” Mr. Draghi said, adding there was “nothing to gain from fighting publicly.” Mr. Draghi also denied that the swelling of the ECB’s balance sheet to more than €3 trillion represented in itself bigger risks. Even so, the bank said in a statement separately it had added another €1.166 billion to its provisions in 2011 to protect it against “foreign exchange rate, interest rate, credit and gold price risks, which are monitored on an ongoing basis.” Mr. Draghi said the central assumption of the Eurosystem’s forecasters is now that the economy will shrink by 0.1% this year, that being the midpoint in a range between minus-0.5% and 0.3%. For 2013, the ECB now expects growth of 1.1%, versus a prior forecast of 1.3%. Mr. Draghi said however that “the economic outlook is still subject to downside risks,” notably the risk of renewed tension in financial markets and spillovers into the real economy. He also mentioned the risk of higher commodity prices. On the price front, Mr. Draghi said that higher-than-expected energy prices, along with increases in various state-administered prices, meant that “inflation is expected to remain above 2% in 2012, with upside risks prevailing.” The central inflation forecast for 2012 is now 2.4%, up from 2.0% three months ago, Mr. Draghi said, while the central forecast for 2013 is now 1.6%, up from 1.5%. Mr. Draghi also gave credit to political reforms enacted by the euro zone’s governments, notably the “fiscal compact” signed at last week’s EU summit. He said he was “absolutely confident” that governments would stick to what they agreed on, despite signs that Spain, for one, is unwilling to impose any more budget cuts for fear of causing irreparable damage to its economy. “It’s quite clear, that if countries don’t release some…of their fiscal sovereignty…they can’t be together,” Mr. Draghi said, adding that it was intolerable that some countries should be asked to finance other countries’ spending over the long term. He played down suggestions that greater transparency in reporting the ECB’s internal discussions and voting patterns would improve the bank’s communications, and stressed that the ECB was different from the Federal Reserve and the Bank of England in not representing a single country. Mr. Weidmann’s letter had expressed concern at the Bundesbank’s own exposure to the rest of the Eurosystem, expressed through its assets in the so-called Target2 payment system. Analysts have said that these assets would be at risk only in the event of a breakup of the euro zone, and Mr. Draghi said that the ECB’s governing council isn’t making any provisions to that end. “To have a Plan B is to admit defeat, and we don’t want to be defeated,” Mr. Draghi said. The ECB’s governing council left its key interest rate unchanged at 1% at its monthly meeting earlier Thursday, in line with expectations. Mr. Draghi said the council hadn’t even discussed changing interest rates at Thursday’s meeting. Greek Debt-Swap Deal Nears as More Creditors Sign On The deal aims to reduce Greece’s debt burden from more than 165% of gross domestic product to a more sustainable 120.5% by 2020. Greece’s European partners, which helped bail out the country two years ago, have demanded that Athens proceed with the debt write-down as a precondition for its receiving a second bailout valued at €130 billion. The International Monetary Fund, which has also been participating in the bailouts, said on Thursday that its board of directors European Pressphoto Agency Continued from first page In late February, Greece formally launched the debt deal, which aims to cut the amount of debt the country owes private-sector creditors roughly in half. Under the terms, which were negotiated with the Washington-based IIF, Greek bond investors would give up 53.5% of the principle by swapping their existing Greek government bonds with new ones with less than half the face value and paying a sharply lower interest rate. People pass a branch of the National Bank of Greece in Athens on Thursday. would meet on March 15 to decide on approving its portion of the second loan. The deal is being billed as a “voluntary” debt exchange, but Athens has said it is prepared to invoke socalled collective-action clauses that are designed to strong-arm any holdouts into the deal. Asked if Athens would activate those clauses, a person close to the process said: “We will have to see the final number, and we will then decide in agreement with our partners in the euro zone.” However, another person close to the process said activating the clauses “is almost certain.” The bonds involved in the restructuring fall into two distinct categories: those issued under Greek law, representing 85% of the total, and those issued under foreign, mainly U.K., law. Greece wants participation to be as high as 90%, but analysts say it will be difficult to hit that target. One reason is that Greece is aiming for 90% participation for all debt subject to the restructuring, not just the Greek-law bonds, and may face greater resistance from investors holding those foreign-law bonds. Another reason is that creditors who have insured their holdings with credit-default swaps—contracts that pay off in case of default—need Greece to force the exchange on investors in order to trigger terms of the CDS contracts. Thus, bondholders who also hold CDS are likely to hold out from the exchange, but at the same time vote to give Greece the authority to force them into the deal. If participation falls well below 90%, Greek Finance Minister Evangelos Venizelos has indicated Greece won’t hesitate to bind reluctant creditors to the deal through the use of the collective-action clauses. The clauses are legal tools that allow the will of a majority of creditors to be binding for all creditors. They aren’t considered a marketfriendly approach and likely would trigger the CDS, which, in turn, would see banks and hedge funds moving to settle billions of euros of those insurance contracts. The final decision on whether the CDS is triggered ultimately will depend on a ruling by the International Swaps and Derivatives Association, which will decide whether the debt swap was voluntary or coerced. Following a Greek cabinet meeting on Thursday, one government official who attended said there has been “no unexpected events, in general everything is going well.” —Diana Kinch in Rio de Janeiro and Tommy Stubbington in London contributed to this article. 8 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. * * WORLD NEWS Afghan Air Force Probed in Drug Trade April Shooting Incident Draws New Scrutiny; ‘In a Landlocked Country, Moving Goods by Air Is Everything’ BY MARIA ABI-HABIB KABUL—The U.S. is investigating allegations that some officials in the Afghan Air Force, which was established largely with American funds, have been using aircraft to ferry narcotics and illegal weapons around the country, American officials told The Wall Street Journal. Two probes of the Afghan Air Force, or AAF, are under way—one led by the U.S. military coalition and another by the U.S. Drug Enforcement Administration, officials said. “The nature of the allegations is fairly dramatic and indicated that [AAF officials] were transporting drugs on aircraft and transported weapons not owned by the government of Afghanistan for the use of private groups,” said U.S. Army Lt. Gen. Daniel Bolger, commander of the North Atlantic Treaty Organization Training Mission-Afghanistan, the command that is establishing and financing Afghan security forces, including the AAF. Gen. Bolger cautioned that the investigation was still preliminary and the allegations couldn’t be proved at this stage. As part of the inquiry, the military also is looking into whether the alleged transporting of illegal drugs and weapons was linked to an April incident in which an AAF colonel gunned down eight U.S. Air Force officers at Kabul Airport. In a 436page report released by the U.S. Air Force in January about the killings, several American officials are quoted as mentioning that the shooter, Col. Ahmed Gul, was likely involved in the transportation of illicit cargo and wanted to shut down a probe into it. The April shooting, for which the Taliban claimed responsibility, was the deadliest attack by Afghan troops on coalition personnel in the 10 years of war. The majority of the victims were involved in an early inquiry into the misuse of AAF aircraft. Col. Gul, the Afghan officer who killed them, coordinated AAF’s cargo movement. Lt. Col. John Dorrian, an Air Force spokesman said: “There are a number of factors that were turned up as a part of the investigation. To call any of them a definitive motive would be speculation at best.” An AAF spokesman, Lt. Col. Mohammed Bahadur, denied the allegations and said he was unaware of any investigations into the air force. Afghanistan’s Minister of Defense, Gen. Abdul Rahim Wardak, said he hadn’t been informed of any inquiry. Western officials say preliminary findings of the investigation suggest Your Business is our Business. Visit asia.WSJ.com/subscribe to start your subscription today. asia.WSJ.com asia.WSJ asia. WSJ.com WSJ .com TAJIK. UZBEK. Illicit Harvest BADAKHSHAN Opium production increased in 2011 over the previous year. KUNAR 100 miles BAGHLAN FARYAB 100 km Afghanistan's estimated opium production KAPISA BADGHIS AFGHANISTAN HERAT 9,000 metric tons KABUL LAGHMAN DAYKUNDI NANGARHAR 6,000 URUZGAN FARAH IRAN ZABUL NIMROZ HELMAND PAKISTAN 3,000 KANDAHAR Provinces where opium poppy was cultivated in 2010 Additional poppy-growing provinces in 2011 Source: United Nations Office on Drugs and Crime certain senior officials in the AAF and other parts of the Afghan government may have been involved in the alleged drugs and weapons transporting, or have turned a blind eye to the activity. The probe of alleged drugs and weapons transport is still in its early stages, and Afghan investigators aren’t involved in it. The allegations have come from “credible” Afghan officers inside and outside the AAF, the investigators say, and from coalition personnel working with the AAF. The NATO Training Mission-Afghanistan has provided roughly $20 billion, almost all of it from the U.S., this year and last to build up Afghan forces, with $1.9 billion going to the AAF. Future funding for the Afghan security forces is slated to be discussed at a NATO summit in Chicago in May. The U.S. had hoped to reach by then a deal on long-term American military presence in Afghanistan. But the talks have stalled because of President Hamid Karzai’s insistence that the coalition end night raids and transfer all of its detainees to Afghan custody, U.S. and Afghan sources say. Afghanistan accounts for some 90% of the world’s illicit opium production, according to the United Nations. Before the 2001 U.S.-led invasion of Afghanistan, opium revenue enabled commanders of the Northern Alliance—the anti-Taliban fighters who would later aid the U.S. in toppling the regime—to finance their war effort. Many of these commanders now occupy senior positions in the Af- 0 2005 ’07 ’09 ’11 The Wall Street Journal ghan security forces or government. American investigators say they believe some of these former commanders are now selling drugs again to buy weapons. Their aim: to rearm loyal militias in northern Afghanistan in case civil war erupts after most foreign forces withdraw from the country in 2014. The U.S.-led coalition is looking at specific senior Afghan officials in its current investigation into the misuse of the air force. The investigating officials say they haven’t yet found any proof that Afghan officials met with international drug networks or any other hard proof of likely criminal activity. “We found some circumstantial evidence and a few guys willing to give us statements,” Gen. Bolger said. The DEA said it couldn’t confirm or deny its role in the investigation, and declined to comment further. U.S. Air Force Lt. Col. Frank Bryant, a coalition adviser at AAF, spearheaded an initial, informal investigation after months of watching Afghan “helicopters just disappearing without flight plans,” said an American military officer who worked closely with him. Early last year, Col. Bryant decided to impose U.S. control over the scheduling of Afghan military flights and suggested cutting off fuel to the AAF until it improved transparency about flight destinations and cargo, according to interviews with officials and the U.S. Air Force report on the shooting in April at Kabul International Airport. Of particular concern was cargo ramp No. 5 at the airport, where un- scheduled aircraft were landing late at night and cargo was being unloaded in a hurry, several Western officials with knowledge of Col. Bryant’s probe said. The airport is a joint civilian-military facility. Unlike in most of the airport, the U.S.-led coalition has no oversight role at ramp No. 5. A Western official called that cargoloading area the “Grand Central station of illicit activities” in Afghanistan. That initial probe was cut short on April 27, when Col. Gul burst into a meeting room at the military side of Kabul airport and shot Col. Bryant, seven other U.S. service members and a U.S. contractor. Col. Gul killed himself later that day. A U.S. Air Force investigation into the shooting, released in January, didn’t establish a conclusive motive for the attack, but said Col. Gul had “self-radicalized,” possibly during a stay in Pakistan. Now, senior American military officers in Kabul are pushing for that probe into the April killings to be reopened, saying Col. Gul may have been trying to derail the inquiry into a high-powered network of organized crime. “These guys didn’t die because of some nut job that radicalized overnight. They died because they took a stand to not let a criminality expand,” one of the officials said. “It’s not just Afghans profiting from Afghans but includes international mafias. In a landlocked country, moving goods by air is everything.” The U.S. Air Force investigation report quotes Col. Gul’s friends and family as denying he had become religious, and as saying he had financial problems and a dispute with the U.S. mentors. A U.S. sergeant major quoted in the report wrote that imposing U.S. control over scheduling flights, something Col. Bryant wanted, “could impact [Col. Gul’s] income if he took payments for arranging flight and cargo movements.” Col. Gul likely paid for his colonel’s position, and needed the illicit traffic to pay off his superiors, two Western officials told the Journal. Family members had a different take on Col. Gul’s actions. “He wasn’t a radical or a terrorist,” a family member of Col. Gul said. “He was stressed from financial problems,” he said. The family member denied that Col. Gul was involved in any corrupt activity. Another witness, a U.S. lieutenant colonel, was cited in the report as saying some senior Afghan officials see the AAF aircraft as a source of income. They “want to continue these nefarious and profitable activities with the billions of dollars worth of aircraft we’re buying them and the hundreds of millions we spend every year on maintenance and fuel,” he told investigators. In April, a coalition spokesman couldn’t give a conclusive answer about why Col. Gul opened fire, but suggested it was because of a disagreement with coalition forces. About half of all incidents where Afghan servicemen turn on their coalition counterparts are the result of personal disputes, NATO Training Mission-Afghanistan said shortly after the April shooting, challenging the Taliban claim of having planted Col. Gul. The current probe into alleged drugs and weapons transport continues to look into ramp No. 5. Investigators are also looking into movements at other military airfields used by the AAF, especially those near northern border areas. Northern Afghanistan is a major route for the transport of opium and heroin to consumers in Russia and Western Europe. Opium is mostly grown in southern Afghanistan, and is smuggled to the north to be moved on to the rest of the world, Western officials say. Suspicions that AAF aircraft have been used to ferry money, weapons and drugs throughout the country first surfaced in late 2010, Western officials say. —Yaroslav Trofimov, Habib Khan Totakhil, Ziaulhaq Sultani and Julian E. Barnes contributed to this article. U.S., Afghanistan Near Agreement on Bagram Prison BY CHARLES LEVINSON AND DION NISSENBAUM KABUL—The U.S. and Afghan governments are close to an agreement on the hand-over of a U.S.-run detention center in Bagram to Afghan control, the spokesman for the Afghan president said. Such a deal, if reached, would remove one of two main obstacles holding up a U.S.-Afghan strategicpartnership pact outlining U.S. military presence here after most international forces withdraw in 2014. “Both sides are close to reaching an agreement and signing a memo- randum of understanding by which the authority over Bagram prison will be transferred to an Afghan high-ranking official from our Ministry of Defense,” President Hamid Karzai’s spokesman Aimal Faizi said in an email. Bagram prison, known officially as the Parwan Detention Center, is the main U.S.-run prison facility in Afghanistan. It is located on the Bagram Air Base, one of the largest U.S. military bases in the country, northeast of Kabul. U.S. officials in Afghanistan said they couldn’t comment on the status of the negotiations with the Afghan government until a deal was completed. “It’s premature. Negotiations are still ongoing,” said Lt. Col. Jimmie Cummings, a spokesman for the U.S. military in Kabul. The strategic-partnership agreement, which U.S. and Afghan officials have been negotiating for over a year, has snagged over two issues: the transfer of U.S.-run prisons to Afghan control and Afghan demands that the U.S. halt night raids to nab suspected insurgents. U.S. officials hope to conclude the partnership agreement ahead of a May North Atlantic Treaty Organi- zation summit in Chicago, where alliance leaders are expected to hash out an agreement to support Afghanistan for years to come. Mr. Karzai has long demanded the prison’s hand-over, arguing that continuing U.S. detentions of Afghan citizens represent a violation of Afghanistan’s national sovereignty and provide a rallying cry to insurgents looking to recruit new fighters. U.S. officials have twice postponed plans to hand over authority for Bagram prison. In the past they have said they believe the Afghan justice system remains ill-equipped to manage the facility. THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | 9 OPINION: REVIEW & OUTLOOK Beijing at 7.5% C hinese Premier Wen Jiabao set off a firecracker on Monday when he announced the government is targeting only 7.5% growth for 2012. This is being presented in many quarters as a sign that Beijing is willing to tolerate slower growth in the name of better growth—more balanced, socially harmonious and less prone to bubble formation. If only it were so. A lot is riding on this announcement, especially among those who hope that China will be able to contribute to global “rebalancing” by shifting away from export- and investment dependence and toward domestic consumption. And at first blush this looks exactly like what Beijing is trying to do. “[B]y setting [this target] we will guide all localities to focus their work on restructuring the economy, transforming its development pattern, and improving the quality and effect of its growth,” the powerful National Development and Reform Commission (NDRC) notes in its 2012 work plan, also released Monday. To that end, Beijing lists a lot of things it plans to do: “[We will] formulate and promulgate a guiding list for key products and services of strategic that China is nearing the end of the emerging industries”; “We will promul- line for its current strategy. All develgate and implement the plan for allo- oping countries can achieve high cation of the productive forces and re- growth rates simply by importing (or structuring in key [heavy] industries”; copying) technologies available else“We will formulate the list for encour- where. Eventually, however, the tactic aging the development of emerging in- no longer works. Upon reaching the dustries and new busitechnology frontier, the ness models in the only way to grow is to Doing less of the service sector.” stretch the frontier itwrong thing is not All of this will surely self. China is fast reachproduce a slower growth ing that point. the same as doing rate—it’s harder going Beijing presumably the right thing. than simply dumping bilagrees with this. But one lions of yuan into roads refreshing conclusion of and bridges. The problem the report is the warning is the “we” in the NDRC report. Rather that only private enterprise can lead than allowing the market to allocate advanced growth. “The role of the priresources, Beijing proposes to have the vate sector is critical because innovagovernment continue stage-managing tion at the technology frontier is quite development, only in a supposedly bet- different in nature from simply catchter way. ing up technologically,” the report For reasons why this approach says. “The process becomes essentially won’t work, look no further than a ma- one of trial and error, with the chances jor report released last month by the of success highly uncertain. Innovation World Bank and the Development Re- is not something that can be achieved search Center of China’s State Council, through government planning.” which assesses China’s prospects over It’s a good bet that Communist the next two decades. The report of- Party leaders understand that the old fers the not-so-surprising conclusion investment-dependent model is failing in a politically significant way: It is not spreading the returns from growth sufficiently widely. Yet this week’s dogand-pony show in Beijing constitutes another reminder that Beijing has made a political calculation not to undertake a genuine transformation. Doing so would cede too much Party control of the economy. The alternative would require empowering individual entrepreneurs and consumers in ways that cut against the Party grain. Which leads to a different interpretation of that new 7.5% target. Michael Kurtz of Nomura argued in a research note this week that a benefit of a lower number is that Beijing will feel less compelled to over-goose the economy to meet or exceed its desired growth rate. An extrapolation from this surmise is that perhaps Beijing hopes scaling back some of its most distorting policies, and especially its reliance on cheap credit as stimulus, will constitute sufficient “reform.” Maybe so. But doing less of the wrong thing is not the same as doing the right thing. That’s a point to keep in mind as Beijing touts its latest commitment to rebalancing. From Obama With Love W hen U.S. Secretary of State Hillary Clinton in December criticized fraudulent parliamentary elections in Russia, Vladimir Putin accused her of sending a “signal” to prodemocracy protestors. He can be forgiven for thinking his attack worked. This week, after Mr. Putin claimed a first round victory in similarly suspect presidential elections, Washington’s response has been muted and accommodating. State put out a tongue-tied statement to “congratulate the Russian people on the completion of the elections” and “note” (three times) the concerns of independent election monitors and “urge” (twice) the Kremlin to try harder next call for Congress to repeal Jacksontime. There was not a word of criticism, Vanik, which puts restrictions on trade much less condemnation, about the ex- with Russia. Making the repeal of an clusion of any credible opposition from amendment passed in 1974 a Presidenthe airwaves and ballot tial priority the week afand other obvious manipter a shady election sends Steal an election, ulations of the vote, unmistakable signal to get U.S. concessions. an which has become the Puthe Kremlin that its antitin standard for 12 years. Americanism will be rePresident Obama, who warded. made “reset” with Russia a hallmark of So does Tuesday’s disclosure on Capihis foreign policy, avoided the subject tol Hill that the Administration wants to altogether. At least he didn’t call to con- share classified U.S. data about missilegratulate the Russian leader on extend- defense tests. Brad Roberts, a deputy asing his term in office. But in his first sistant secretary of defense, told a mention of Russia since Sunday’s elec- House committee that the U.S. hopes to tion, Mr. Obama on Tuesday repeated his press ahead with talks on cooperation to overcome Russian opposition to a Europe-based missile-defense system. Never mind the Kremlin’s blistering attacks on the West in recent weeks, including threats to target NATO allies with Russian nukes. Administration officials say the U.S. needs to work with any Russian ruler on a range of issues. That’s true. Yet even on the realpolitik terms favored by this White House, this week’s overeager show of re-engagement seems unlikely to help U.S. interests. Mr. Putin gets policy concessions and the U.S. blessing he wants to legitimize his form of democracy, while the U.S. gets nothing. Welcome to Russian “reset,” round two. China’s Debate Over Rights B eijing’s rubber-stamp legislature have stretched the meaning of the was presented with a revised term to justify holding dissidents such Criminal Procedure Law yester- as the artist Ai Weiwei and human day, giving the public its first look at rights lawyers such as Gao Zhisheng what is almost guaranteed to be the fi- for months on end without even notinal wording of this controversial legis- fying their family members or lawyers lation. Missing from the law was a pro- that they are in custody. vision found in earlier Such cavalier violadrafts that would have tions of the law are part A proposed law to allowed the police to of a longstanding pheallow “enforced hold suspects incommunomenon that Jerome nicado and in secret loCohen, a law professor disappearances” cations. That represents New York University sparked a backlash. at progress, but it’s hard to and authority on the say how significant the Chinese legal system, change will be. has dubbed China’s “two That’s because the existing Criminal criminal processes.” The majority of Procedure Law also doesn’t allow au- defendants are tried in accordance thorities to “disappear” suspects, yet with the law. Yet when it comes to the practice is common. The current prosecuting political cases, authorities law does provide for “residential sur- throw the law out the window. veillance,” meaning house arrest, The new Criminal Procedure Law ofwhich is supposedly a less severe form fers some glimmer of hope. The govof detention than jail. But authorities ernment released 99 draft amendments to the law last August, many of which offer new procedural safeguards that, if followed, will protect defendants’ rights. More importantly, the proposed revision of Article 73, allowing “residential surveillance,” instantly sparked public debate. Legal experts, human rights experts and journalists criticized the draft for legalizing the kidnapping of dissidents. And for the first time, public consultation on a proposed criminal law made a significant difference, forcing the government to backtrack yesterday. This reflects the emergence of what some call “rights consciousness,” which is just a fancy term for the public demanding that the government abide by its own laws. The Chinese Communist Party says it wants to move toward “rule by law”—the use of laws rather than reliance on fiat—but it still won’t accept the concept of “rule of law,” which would subordinate the Party to an independent judiciary. Public opinion will have to drag it kicking and screaming toward this goal. The real test of whether this fight makes a difference will come the first time the police disappear somebody under the new law. It’s unlikely that the authorities will stop abusing the law without a fight. Now, at least, human-rights lawyers can argue that it’s illegal by pointing to the fact that the government backed down from legalizing it. 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: [email protected] 10 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. OPINION American Crisis, Chinese Opportunity Forget Mao, the Chinese are channeling Rahm Emmanuel. President Obama’s first chief of staff popularized the dictum that “you never want a serious crisis to go to waste” back in 2008. And it has been taken to heart by China’s leadership, which sees America’s deficit crisis as a perfect opportunity to further shrink the military gap between Beijing and Washington. Beijing hikes military spending as the U.S. cuts. At stake is no less than the liberal international order. For the first time, China’s official military budget this year will top $100 billion, even though many observers believe that the real number is more than double that amount. China’s increase of at least 11% at a time when America is cutting its own military budget by nearly $500 billion over the next decade should put to rest any doubt that Beijing plans to supplant American supremacy in Asia. Now the question is whether the combination of China’s rise and America’s weakness presages the breakdown of the post-World War II global order. True, this year’s increase in the military budget is less than in 2011, when it jumped 12.7%, but annual growth has been in the double digits for well over a decade. The Institute for International Strategic Studies now estimates that China accounts for more than 30% of all defense spending in Asia, and that Asia this year will spend more on its military than the West for the first time in centuries. Some might argue that it’s simply catching up from a very low base. Until the 1990s, China had a 1950s-style army, only a coastal navy and no real air force to speak of. But those days are long gone. Despite some remaining weaknesses, the military is increasingly fielding sophisticated weapons systems, including intercontinental ballistic missiles, nuclear submarines, advanced jet fighters and even modernized bombers. In addition, China appears to be trying to innovate in the military sphere. It’s producing an anti-ship ballistic missile, developing its own stealth jet fighter and pursuing (it is suspected) cyberwarfare capabilities. What remains unclear is why China is building the world’s second-largest military. Beijing would argue that America has done the same thing over the past 70 years, only cloaked in hypocritical rhetoric about freedom and opportunity. Now, as America weakens, it is only natural that the world’s fastest-growing econ- disruptive regimes such as North Korea, Iran and Sudan, while continuing to repress its own people. So it seems less likely to merge with global liberal trends and more interested in trying to reorder the international status quo in its favor. Thus, the Obama administration, and whoever follows it, needs to reverse course on military cuts that speed up our decline in Asia and around the world. Those cuts do almost nothing to reduce America’s deficit, but they will hamper the one role only we can play in the world. It’s irrelevant that the U.S. spends more on its military than the next 10 nations combined—none of them have anything remotely like America’s global responsibilities. Our aging planes and ships and overworked military personnel are now going to be asked to do more with less. Something has to give, and at this rate it likely will be America’s ability to remain a credible global stabilizer. The liberal international order has been the most beneficial one in recent history. If it weakens and cracks, the costs of avoiding war or containing aggression will be far greater than the billions of dollars we are trying to save now and which the Chinese are willing to spend. Associated Press BY MICHAEL AUSLIN A Chinese Navy nuclear-powered submarine sails near Qingdao. omy begins to take its place in the sun, just as America supplanted Great Britain in the 20th century. Yet there is a great gulf between China’s vision of the world and America’s. America’s hegemony for the past three-quarters of a century has been strikingly benign, by historical standards. Indeed, it has sought to set a new norm for great powers, even while protecting its interests and upholding its commitments to allies and friends. It has further evolved Great Britain’s uneven experiment in international liberalism. The U.S. has extended this approach to China. For the past four decades, the United States has actively sought to bring China into the world community, and its Navy has protected the sea lanes used by China’s export machine. Whether under Republican or Democratic administrations, Washington has largely hesitated to confront Beijing over its human rights abuses or bullying of neighboring nations. Beijing may worry about America’s alliances in Asia, but all those long predate China’s rise. The Obama administration’s “pivot” now focuses on China only because of the country’s dramatic military buildup, which began in the Clinton years. There is little reason so far to believe that China shares any of these values or that it would act for the common global good in the same way. It openly bullies its neighbors. It chafes at the open trading system even as it benefits from it. And it routinely supports Mr. Auslin is a resident scholar in Asian studies at the American Enterprise Institute and a columnist for wsj.com. Theater, Life and the Afterlife: Tomb Decor of the Jin Dynasty From Shanxi China Institute Through June 17 BY LEE LAWRENCE New York In the jigsaw puzzle of China’s rulers and ethnic groups, the 12thcentury Jurchen Jin dynasty (1115-1234) is one of the least known, particularly outside China. Sweeping down from the steppes of Manchuria, these “people of the forest” carved out a kingdom that has in many history books been upstaged by the Northern Song (960-1127), who preceded them, and the Yuan dynasty (1206-1368), who defeated them. A small but rich show at the China Institute Gallery, “Theater, ASI A Almar Latour, Editor in Chief, Asia Dean Napolitano, Senior Editor Hugo Restall, Editorial Page Editor Shawn Hiltz, Vice President, Marketing Charlotte Lee, Circulation Director Alice Chai, Research Director Oliver Temple, Operations Director Simon Wan, IT Director Chad Tendler, Communications Christine Brendle, Publisher Published since 1889 by Dow Jones and Company © 2012 Dow Jones & Company. All Rights Reserved Life, and the After Life,” aims to correct that with a selection of 80 pieces culled from 11 tombs excavated in southern Shanxi—an area some 500 miles southwest of Beijing. On loan from the Shanxi Museum in Taiyuan, almost all are reliefs on brick slabs in a variety of sizes and styles, chosen to illustrate the range of popular motifs. As a result, the exhibition unfolds across the gallery’s two rooms like a 3-D catalog of funerary décor, complete with demonstration tomb. We see reliefs of musicians blowing into flutes or beating drums, dancers caught midstride, and a wonderful series of scenes plucked from folk performances in which actors used horses and other props made of bamboo and paper. On a more sober note, there are vignettes from Confucian stories of filial piety, depictions of Taoist deities known as the Eight Immortals, and a motif in tomb art that became popular under the Han (206 B.C.-A.D. 220): a set of double doors with one slightly ajar revealing a woman who stands half-in, half-out. Although there is some argument about just what this signifies, the most commonly accepted interpretation is that the woman symbolizes the threshold between life and death. Though the labeling does not explain how the works are made, some reliefs appear to be molded, others incised, then painted by applying pigment directly onto the clay or on a base coat of lime or other material. Some are therefore more labor-intensive than others, just as the workmanship in some is of higher quality. The Eight Immortals, for example, are almost crude compared with some of the musicians or with a scene from daily life showing a muscular horse pulling on its tether. It seems safe to assume that the Immortals might have hailed from a less expensive workshop, a reminder that one’s choice of tomb décor was as much a function of one’s pocketbook as an expression of one’s preferences. Did the Jurchen people of China’s Jin dynasty believe in an afterlife? By Chinese standards, Jin tombs were modest. Almost all of the 100 or so tombs unearthed to date are single chambers, often small, always made of brick. On the outside, they are plain; inside, the wall decorations emulate architectural features of Shanxi houses and display the deceased’s choice of motifs. We see this in a tomb excavated in 2009 and reassembled in the gallery where, ingeniously, director Willow Weilan Hai Chang repositioned the south wall to allow visitors inside the space. It is about 48 square feet, enough for a funerary bed and a few household objects (removed for the show) with little room to spare. The far wall features carved doors, this time tightly shut and flanked by deeply carved reliefs of a man and woman. These stand-ins for the tomb’s occupants look on without expression, hands clasped. Opposite them, four other figures look back. They sport hats and clothes that identify them as the principal characters in a popular form of Jin theater: the leading man; the foil or straight man, here wearing an orange robe with white polka dots; the jester; and the court official. Along the side walls, bricks are carved to resemble lattice windows, beneath which peonies bloom in pots, auspicious lions prance and guardians who look like miniature Sumo wrestlers keep watch. What comes through loud and clear is that the Jin adopted Chinese beliefs and customs and that they loved their entertainment. But at least one scholar finds it puzzling that, for all this emphasis on theater, the actors never seem to be enacting a particular play. The effigies of actors placed in the tomb appear stiff and generic. Did the deceased avoid one set script because they wanted the actors to vary their repertoire throughout eternity? “Maybe,” says Nancy S. Steinhardt, a professor of East Asian art at the University of Pennsylvania and contributor to the show’s catalog. “Or,” she speculates, “maybe they don’t really believe there is an afterlife,” in which case they include actors as a nod to their love of theater, not because they believe they will need entertaining. Shanxi Museum A Dynasty Without the Hereafter? Figure of a musician playing a waist drum, from the Jin dynasty (11151234). This would also explain the scaleddown tombs and the lack, so far, of any sign that the Jin tried to preserve corpses. There are no jade suits, no embalming, no wire-metal encasements as are found at other times and places. This is a theory Ms. Steinhardt is still testing. If it pans out, then Jin tombs could point to a significant shift in thinking in 12th-century China and provide one more reason to pay attention to this little-known dynasty. Ms. Lawrence is a writer in Brooklyn, N.Y. THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | 11 OPINION BY JOHN BOLTON In the transition from an old dictator to a new one, some observers were losing faith in the Democratic People’s Republic of Korea, believing it had lost its magic touch in the arts of dissembling. Others had deeper faith, though, and they were rewarded last week when the State Department proudly announced the umpteenth breakthrough toward the goal of denuclearizing North Korea. The two sides agreed that Pyongyang would suspend uranium enrichment and other “nuclear activities” at its Yongbyon facility, allow very limited Diplomacy has costs. Tehran’s mullahs will be watching. international inspection, and implement a moratorium on longrange missile launches. In State’s telling on Feb. 29, we gave nothing in return for the North’s (apparently) unilateral concessions, “designed to improve the atmosphere for dialogue and demonstrate its commitment to denuclearization.” How sweet. Unfortunately, the Leap Day deal is worse than just another failed effort to chitchat North Korea out of its nuclear weapons. It provides a political and economic lifeline to Kim Jong Eun’s uncertain new regime, and it schools him on how to outwit America. Tehran’s mullahs will take careful note of the Obama administration’s desperation to announce a deal, any deal, that can be described as “progress” on the nuclear-proliferation front. State’s pronouncement is extraordinarily limited in scope and verification. It contains nothing new or different from a long string of past “commitments” North Korea has broken and lied about with impunity. Pyongyang has repeatedly violated Security Council resolutions requiring it to cease nuclear and missile activities, a point conspicuously absent from our U.N.-centric administration’s publicity about the latest deal. There’s no mention, for instance, of the North’s role, possibly financed or otherwise aided by Iran, in constructing a reactor in Syria, destroyed in 2007 by Israel, for which duplicity neither North Korea nor Syria nor Iran ever paid a price. International Atomic Energy Agency inspectors will be limited to the Yongbyon facility, which is like looking at North Korea through a straw—and at the wrong place no less. The overwhelming mass of the North’s important nuclear-weapons activities have long been deeply buried in hidden locations, unknown even to U.S. intelligence, let alone IAEA inspectors. Regarding ballistic missiles, there was a similar moratorium in 1998, after a North Korean Taepodong missile panicked Japan by flying over it and landing to its east. That moratorium also covered only launch testing, and not the countless other critical aspects of ballistic-missile development. In response, Pyongyang simply shifted to deeper cooperation with Iran, which uses the same Sovietera Scud-missile technology, the ban thus driving the two rogue states closer. Most objectionable morally, despite U.S. denials of a quid pro Associated PRess Obama’s Sweet Deal for North Korea North Koreans attend a large assembly at Kim Il Sung Square in Pyongyang. quo: We are providing 240,000 tons of food aid that will almost certainly be diverted to the DPRK military and other favored recipients. It is a strict canon of U.S. humanitarian assistance that such aid be closely monitored, but there is no reason to believe that monitoring will be any more effective than in the past. Make no mistake, we are simply feeding young Kim’s dictatorship. This agreement is a sham, pure and simple—which the North’s separate communiqué highlights. Pyongyang emphasizes that the deal with Washington is a prelude to resuming the six-party talks (including South Korea, China, Russia and Japan), which will focus on “the lifting of sanctions on the DPRK and provision of light water reactors.” Those are hallmarks of the failed 1994 Agreed Framework that the North never honored. If Pyongyang’s version of the deal is even vaguely true, it (plus the food aid we know about) flatly violates pledges like Secretary of State Hill- ary Clinton’s last year that “we do not intend to reward the North just for returning to the table. We will not give them anything new for actions they have already agreed to take.” With such predicates, why did the Obama administration proceed? Most likely, it followed ideology and habit. The diplomacy here is entirely faith-based, as in: “There’s nothing to lose, so why not try negotiation? Maybe this time it will work.” But diplomacy, like all human activity, is never cost-free. There is always something to lose. In this instance, Washington’s declaration that it has no “hostile intent” toward North Korea reduces pressure on the undeniably vulnerable new regime, providing it at least a partial get-out-of-jail-free card for coming misbehavior. What we should have done is concentrate on finding ways to exploit the North’s leadership transition in order to hasten Korean reunification. Unfortunately, last week’s deal is visible proof that President Obama never seriously contemplated undertaking this arduous but vital effort, which is now a lost opportunity. Instead, we have strengthened the DPRK’s confidence, sustained its nuclearweapons and missile programs, and prolonged the agony of its people. Iran, meanwhile, must be relishing this latest display of U.S. weakness and memory loss. Even as the acute threat of military force against Iran has been rising, Tehran sees with laser-sharp clarity that when the going gets tough, Team Obama gets negotiating. The critical elements of the Leap Day deal are available for Tehran to use to its advantage: unverifiable moratoria, the resumption of long-failed negotiations that will buy it time, and the expectation of reduced economic pressure. Iran can even count on Mr. Obama to try to restrain Israel, its strongest and most determined regional opponent. Undoubtedly, a campaigning President Obama, fearing that his much-touted foreign-policy successes are less than meet the eye, is looking for quick diplomatic triumphs. He certainly does not want inconvenient crises in Iran and North Korea erupting simultaneously later this year. But whatever the electoral impact of the North Korea deal may be, its national-security consequences are all too painful. Let’s hope a new president can reverse them. Mr. Bolton, a senior fellow at the American Enterprise Institute, is the author of “Surrender Is Not an Option: Defending America at the United Nations” (Simon & Schuster, 2007). Midwifing a Burmese Peace BY EVA KUSUMA SUNDARI The government of President Thein Sein has had considerable success in wooing Western countries with a flurry of reforms. A transition to peaceful democracy, however, will be simply impossible without overcoming decades of mistrust and acrimony between the state and armed ethnic groups. Third-party mediation, whether through the U.N. or the Association of Southeast Asian Nations (Asean), is the way forward. Representatives of the government recently signed agreements with the United Wa State Army, the National Democratic Alliance Army, the Democratic Karen Buddhist Army, the Restoration Council of Shan State, the Chin National Front, the Karen National Union, the Shan State Progress Party and the New Mon State Party. Despite these agreements, and promises by the regime to follow up with development projects and parliamentary discussion, some groups refuse to negotiate and violence continues. Kachin state is currently experiencing its worst fighting in decades in some areas, with continuing reports of gross human rights abuses by the military against ethnic minorities. In fact the government’s strategy to improve relations with armed ethnic groups is in serious need of repair. The recent ceasefires are questionable in their validity as steps toward lasting peace, and in many cases have fomented further distrust. Some ethnic leaders claim they were hoodwinked and misled into joining the talks by a government that A third party is needed in the peace talks between the regime and minorities. has no sincere intention of peace, but only to use them in the public relations offensive to woo foreign observers. As such, these talks should not yet be taken as serious progress toward national reconciliation. Many ceasefires have been signed and broken over the years. Many ethnic groups do not recognize the legitimacy of the military government’s 2008 Constitution, which essentially renders redundant the 1947 Panglong Agreement and 1948 Union Constitution, signed between the myriad ethnic groups and General Aung Sang. The Panglong Agreement secured certain autonomy for the ethnic areas under a federal system. It is this agreement that they wish to re-enact under any future national peace process. For national-level peace talks to be effective and binding, they need to be held in a neutral environment and with the benefit of a neutral third party as host. Burma is opening up—enough so that allowing a third party to organize peace talks follows naturally. Mediation could be arranged regionally, through Asean, or internationally through a U.N.-authorized team involving the EU, U.S. and Asean. Alternatively, an individual host nation, such as Indonesia, could take the lead. The key is to bring neutrality and legitimacy to a difficult process. Third-party mediation is tested, and has shown results in Aceh in Indonesia, Cambodia and many African countries. If the Burmese regime truly wants peace, and to join the world community on equal footing, inviting a foreign organization to oversee talks will demonstrate its sincerity. This will, in turn, increase trust in the Burmese regime abroad and speed the removal of foreign sanctions and other investment barriers— the regime’s ultimate goal. It is to the advantage of ethnic groups to publically pressure Nay- pyidaw for third-party talks. The United Nationalities Federal Council, an umbrella organization that incorporates most of the ethnic groups, has already complained that the regime has been using military might in suppressing some groups, while luring those who have signed ceasefires with the incentive of regional development in a deceitful attempt to unhinge their struggle for political equality. As third-party talks work to unite Burma’s factions from the ground up, the parliamentary process can work from the top down. The country’s laws and Constitution do not yet match the dream of a united, federal Union of Burma. They do not incorporate the views and visions of all parties, especially ethnic groups. When opposition National League for Democracy members hold parliamentary seats again after the April by-elections, this goal can become a top priority. Burma is a nation poised at one of the most important junctures of its short but often tragic history. Its future as a strong and united democracy is reliant on peace. Now is the time for all concerned parties to take the first step toward that end and push for thirdparty mediated peace talks. Hope is descending on this conflict-ravaged country of enormous potential; but its government, its Parliament, its people and the international community can ensure this hope is not lost, as it has been so many times in the past. Ms. Sundari is the president of the Asean Inter-Parliamentary Myanmar Caucus, an Indonesian member of parliament for the Democratic Party for Struggle and member of several parliamentary commissions, including the Parliamentary Commission on Law and Human Rights. Pepper . . . and Salt THE WALL STREET JOURNAL “We’re top management, Don, we can’t stage a coup.” 12 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. JAPAN: ONE YEAR ON Amid Upheaval in Japan Signs of Progress, Charity Tomoko Akiha, from left, her son, Lennon, and volunteer worker Anri Ishihara, in front of the Akiha home in Ryozen, Fukushima prefecture. ful local leaders, such as the mayors of Tokyo and Osaka, who may field their own legislative candidates in the next national election. Mr. Kamei says he may join them. “We have to build something new amid the waves swelling throughout Japan,’’ he says. Building something new is the goal of the marine-products division of the Miyagi prefectural government, in the northeast. Even before the tsunami hit, Miyagi’s fisheries were in decline, says Yuji Izumi, a government official overseeing the industry. The prefecture has proposed issuing fishery licenses—now largely reserved for local fishermen—to joint ventures between locals and larger commercial concerns. But it’s a tough sell. “We’re telling them we have to build something that can survive even in a very competitive market,” says Mr. Izumi. The Japanese government is trying to woo businesses to the northeast with a range of tax breaks and subsidies. Yukon Kaname, head of the Japan branch of Ontario-based solar-panel maker Canadian Solar Inc., hopes to build power-generating solar farms in areas where farmland has become too salt-soaked for crops. He says he Faces of The Disaster One Year On Online>> Read more profiles on asia.WSJ.com. is even readying a proposal for a solar facility inside the contaminated no-go zone around the Fukushima Daiichi nuclear plant. “They lost a lot of their main industries—fishing, forestry, farming,’’ says Mr. Kaname. “A lot of that isn’t coming back, especially in Fukushima.” The fallout from Fukushima is driving Ms. Akiha, the Fukushima mother, out of her hometown of Date, about 56 kilometers northwest of the Daiichi plant. Ms. Akiha, like other mothers in Date, kept her children indoors after the radiation plume moved toward them, refusing her 12-year-old son’s pleas to let him play baseball outside. Fearful of radiation, she packed lunches for her children rather than letting them eat at the school cafeteria. The in August, she sent them to a summer camp, arranged by Aichikara, based in the central Japan city of Nagoya, far from their home. Anri Ishihara, 28 years old, founded the group last April and arranged the summer camp. She also organized visits for Aichikara members to Date. Ms. Ishihara had never participated in volunteer activities before. “I thought they were uncool,” says Ms. Ishihara, an energetic political secretary. But after the disaster, she went north to deliver relief supplies, and came back transformed, she says. The group now has 30 core members. During another camp organized by Aichikara in December, Ms. Akiha listened with distress while the Date children read out questions they had composed for a time capsule to be opened 10 years later. “What will the radiation levels be?’’ went one question. “Will I still be alive?” went another. “I couldn’t stop crying,” Ms. Akiha recalls. Soon after, she decided to move with her children away from Fukushima prefecture. Ms. Ishihara helped the Akiha family find an apartment in an area where many Aichikara members live. She also helped Ms. Akiha get free furniture from the Red Cross, and took her to city hall to complete paperwork. Ms. Akiha’s husband, a home builder, will stay behind to tend to his business. Ms. Akiha says she is apprehensive about the move, but grateful. “I’ll be able to live as an ordinary person again,’’ she says. Evacuee Turned Activist BY YUKA HAYASHI Yuka Hayashi/The Wall Street Journal At the end of the month, Tomoko Akiha finally is moving. A group called Aichikara has come to the aid of Ms. Akiha, finding her an apartment in central Japan—far from her Fukushima home, which was contaminated by last year’s nuclear disaster. It also found schools for Ms. Akiha’s children and arranged meetings with the principals. The March 2011 disasters, in which some 19,000 were killed and hundreds of thousands were displaced, upended her life. But amid the turmoil that continues to change the landscape, she has forged new friendships and connections. “Despite the awful things that happened, there is hope as well,’’ she says. On the northeast coast, where whole towns were swept away by the tsunami, communities are struggling not just to rebuild what was lost, but also seek new kinds of businesses, such as solar-power farms, call centers and commercial fisheries that could eventually bring growth to the long-stagnant region. In many cases, the good is tightly allied with the bad. New businesses are moving into the northeast because the old ones were lost in the floodwaters. Companies are casting about for new sources of energy after the loss—at least for now—of the country’s nuclear reactors. Public debate has focused on how to reform a utility sector long criticized as inefficient and hidebound, following the meltdowns at the Fukushima Daiichi complex. Japan also has seen a renaissance in activism and volunteer work. Throughout the country, local leaders and organizations have stepped up to fill the void left by a confused and slow-moving national government. Still, plenty of things haven’t changed. Japan is mired in the same political paralysis that gripped it before the accident, with the country’s two biggest parties quarreling over passage of a proposed tax law, even though both agree it needs to be passed. Both the ruling and main opposition parties have seen support ratings tumble to less than 15% amid charges they mismanaged disaster response and dragged their feet on reconstruction, according to polls from the Mainichi newspaper. Ruling coalition member Shizuka Kamei says Japanese voters are flocking to force- Ko Sasaki for The Wall Street Journal BY PHRED DVORAK Kenta Sato, a resident of Iitate. Kenta Sato has traveled a long way since a nuclear accident forced him to leave a small mountain village in Fukushima. Hundreds of Twitter dispatches he sent after Iitate became a radioactive hot spot brought attention from media and lawmakers. Soon, the well-spoken young man—who until then had helped his father run a small family business— found himself deep in activism, advocating for hundreds of thousands of Fukushima residents like himself subjected to varying degrees of radiation exposure. Since last summer, Mr. Sato has spoken at the National Cancer Center in Tokyo and organized an inter- national conference. He has also visited villages contaminated by the Chernobyl accident in Ukraine. “We saw places densely covered with trees,” he said. “It was hard to imagine flowers had once bloomed and people had lives there.” His efforts have yielded some results. Mr. Sato persuaded village officials to send booklets to Iitate residents who have left, in which to record their activities since March 11 so there would be details on their radiation exposure. He is working with artists and doctors to set up a fund to help underprivileged families cope with radiation-related health problems that may emerge. THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | 13 JAPAN: ONE YEAR ON Sendai Sees Light at End of Tunnel Continued from first page of reconstruction efforts.” Japan’s economy was mired in a long slump before the historic natural disasters hit, and the blow was exacerbated by the Fukushima nuclear accident, which crimped the country’s electricity supply, raised questions about food safety, and undermined a nascent tourism promotion effort. The triple-whammy pushed the slow-growing nation back into recession, with gross domestic product contracting at an annualized pace of 6.8% during the first quarter of 2011. The disasters left scars on Japan’s economy, darkening the outlook for the already beleaguered nation. Reconstruction spending is adding to the nation’s huge debt burden. The OECD projected in November that Japan’s government debt would grow to 227% of its economy by 2013, compared with 200% in 2010. Boom or Bust | Reconstruction spending is bolstering Japan’s economy, Gross public debt GDP growth March 11, 2011 Percentage of GDP 250% 150 16000 Japan 3 50 0 ’08 Daily close 4% Greece Italy U.S. 100 Nikkei Average Annual figures Japan 200 but also expanding its debt burden U.S. U.K. 2 12000 1 10000 0 ’09 ‘ ’10 ’11 8000 Forecasts –1 ’12 Forecast ’10 ’12 ’10 ’12 ’10 ’ Ratio of jobs to job seeker In millions In Tohuku and nationwide 15 1.0 0 1980 '90 2000 '10 Yes 69% 45 Miyagi Iwate Fukushima National average 40 35 30 0.2 The disasters also have given Japan’s manufacturers more incentives to move production overseas, a setback for an economy reliant on exports for growth. In a survey conducted late last year by the Japan External Trade Organization, a government trade and foreign-investment promotion bureau, about 30% of large companies said March 11 made them consider setting up new facilities overseas or expanding existing ones. “We are seeing positive effects of reconstruction on the economy right now but they won’t last for a long time,” said Takahide Kiuchi, chief economist for Nomura Securities, who thinks the spending boost will peak in the April-June quarter. “Japan’s economy could well be in worse shape than before the disasters, once reconstruction demand dissipates.” But for now at least, Japan’s economy is doing well, considering the setbacks of the past year. Adding to the disasters, Japan also faced a strong yen crimping exporters and flooding in Thailand, which temporarily crippled a regional manufacturing hub for many leading Japanese companies. The Organization for Economic Cooperation and Development estimates Japan’s econ- ’12 Consumer-sentiment index 0.4 5 ’11 No reponse 9% Manufacturing jobs 0.6 ’10 Others 9% NOTE: The survey was sent to 216 large manufacturers in May, answered by 163 0.8 ’09 Not really 18% Will a move to shift production in the supply chain overseas accelerate following the disaster? 10 6000 2008 ’12 METI survey on ‘hollowing out’ after the 3/11 disaster ‘For a while, I thought Sendai was done for. I was convinced my business would go under,’ said Kentaro Mihara, a 47-year-old owner of a luxury-watch shop in the city’s shopping district. ‘I never thought things would turn around so quickly.’ 14000 0.0 March 2011 25 2010 January 2012 ’11 ’12 Sources: OECD (debt and GDP forecasts); the governments (actual GDP); FactSet (Nikkei); Ministry of Internal Affairs and Communications (jobs); The Ministry of Health, Labor and Welfare (job ratio); Cabinet Office (sentiment index) The Wall Street Journal omy will grow 2% this year after shrinking 0.7% last year. That equals the projected pace for the U.S. and far outpaces the euro zone’s 0.2% forecast. The government’s monthly consumer-sentiment index, after plunging in the wake of the disasters, is now nearing preMarch 11 levels. The Nikkei Average Index has rallied 14% year-to-date, beating the 6.8% rise for the Standard & Poor’s 500 Index. That itself, for many Japanese looking back to the despair of last year, is a remarkable achievement. “For a while, I thought Sendai was done for. I was convinced my business would go under,” said Kentaro Mihara, a 47-year-old owner of a luxury-watch shop in the city’s shopping district. “I never thought things would turn around so quickly.” Sales in his stores are up 30% from pre-3/11 levels, he said. A big source of Japan’s recovery is government reconstruction spending. Tokyo plans to spend ¥20.9 trillion ($258 billion) on the northeastern Tohoku region during the first two years after the disaster, providing housing for hundreds of thousands of people made homeless, rebuilding infrastructure such as ports and roads, and cleaning up the vast area in Fukushima contaminated by the nuclear accident. That mammoth budget is roughly equal to the GDP of Portugal or Chile. The gush of money is creating what some see as a minibubble in a region that had suffered from declines in agriculture and fishery, an exodus of young people to big cities and shrinking public-works spending by the government. But some analysts see the labor shortage as a sign of trouble awaiting Tohoku once the reconstruction boom ends, and symbolizes what many other regions in Japan face over the coming decades. Damage from the tsunami and nuclear accident prompted many to leave towns and villages for big cities, sapping energy out of communities. Onagawa, a tsunami-ravaged town, has lost 20% of its population since 3/11. “After so many years of shrinking, we are having a hard time catching up with the orders flying in,” says Hirohide Ito, secretarygeneral of the Miyagi General Construction Association, a local trade group. The labor shortage is met in part by workers brought in from other parts of Japan, who have filled up the area’s hotels and apartments. BY DAISUKE WAKABAYASHI BY JURO OSAWA In a few weeks, more than one year after the tsunami washed away his family sweets shop in Rikuzentakata, Masayuki Kimura says the store will reopen—at last. It has been a long struggle for Mr. Kimura, who had originally thought he would be able to restart the business in October. In recent months, he moved out of an old railcar where he had started baking into a kitchen on a hillside away from the destroyed central part of the city. This location, which he is borrowing from a mushroom farmer, has more space so he can make more desserts at one time. He is working on some new creations including doughnuts made from different vegetables. He has also been busy planning the look and feel of his new store. Working with designers, the stores are trying to replicate the feel of Last summer, cattle shipped from prefectures around Fukushima Daiichi were found to have been contaminated with radioactive cesium exceeding the government-set provisional limit. The government suspended beef shipments from the areas until late August, when it implemented a new, stricter screening system. The controversy over contaminated beef seriously damaged the lives of local cattle farmers. Toshimi Fukazawa said in July that he had little hope his business could survive. He said he had savings that would last only a month. Mr. Fukazawa’s farm, about 70 kilometers southwest of Fukushima Daiichi, is still alive and shipments have resumed. They are only about half preaccident levels. “I keep hearing from wholesalers that consumers still avoid Fukushima beef, even when it’s really Masayuki Kimura’s store will reopen soon. shops in a rural English village, rather than in a boxy prefab building. Construction crews have nearly completed the building and Mr. Kimura hopes to open the shop in early April. Juro Osawa/The Wall Street Journal Compensation Fund Is Only Hope Hisashi Murayama for The Wall Street Journal New Vegetables, New Doughnuts Toshimi Fukazawa, 62, and his wife, Natsu, 56. cheap”—and radioactivity tests have shown his cattle weren’t contaminated, Mr. Fukazawa says. “It’s really painful.” He said the government loans and payments to date from Tokyo Electric Power Co., the Fukushima operator, were far from enough to make up price drops. “If we can’t get enough money from Tepco, that would be the end for us.” 14 | Friday - Sunday, March 9 - 11, 2012 * * THE WALL STREET JOURNAL. ON OTHER FRONTS For Shear Thrills, Nothing Beats This Competition In New Zealand, 600 Sheep Handlers Test Skills; Now Some Fans Even Have Olympic Dreams BY LUCY CRAMER Masterton, New Zealand Pete Nikolaison C had Furlong, a 23-year-old from Springfield, Ore., has a secret. He shears sheep for a living. Journeying thousands of kilometers to New Zealand, Mr. Furlong is one of a hard-core group of U.S. sheep handlers who competed in the recent Golden Shears World Championships. In a converted basketball court in this small town in a prime farming region, he tested his speed and dexterity with a pair of electric clippers, and strength in controlling a wriggling sheep, against 600 shearers from 25 other nations. “In the states you don’t really mention you are a shearer because they’d laugh at you,” says Mr. Furlong, a former cowboy. At stake in New Zealand—the spiritual home of shearing and a country where sheep outnumber people about seven to one—is a prize of $2,000 and the title of world’s best shearer. Thousands of dollars are bet on the outcome. The country’s Prime Minister John Key had a front-row seat for the final day of the contest last weekend. Now some fans even have Olympic aspirations. New Zealand’s farm lobby group wants the International Olympic Committee to include shearing as a demonstration event. “Time has come to elevate shearing’s sporting status to the ultimate world stage,” said Federated Farmers Meat & Fibre chairwoman Jeannette Maxwell. “It has competitors racing against each other, the clock and in our case, sheep.” In the U.S., sheep shearing as a spectator sport is still in its infancy. The American Sheep Shearers Council was set up two years ago and is part of the world governing body that regulates shearing. It has around 500 members and fielded a team of four shearers and two wool handlers, who sort the oily fleece and are scored Emily Chamelin competing in the World Hand Shearing Championship. Fellow shearers gave her tips on technique. for efficiency at the sheep-fest here. To win in New Zealand, shearers were scrutinized by judges, facing penalties if they don’t take the fleece off in one go, if they leave wool on the animal or if they nick or cut the sheep. Speed counts, making up about a third of the competitors’ eventual score. Top clippers can finish the job with a pair of high-powered electric shears—a more powerful version of those found in barber shops—in about 45 seconds. But for purists like U.S. team member Emily Chamelin—winner of the U.S. National Blade Shearing Contest in Baltimore—the true test of a shearer’s skill is in the dying art of cutting off a fleece with hand shears, which look like giant scissors. Ms. Chamelin, 28, fell into shearing by accident. She had two pet sheep as a teen in her small town of Westminster, Md., and couldn’t find anyone to shear them, so she did it. Now she works as a full-time shearer and decided to compete in New Zealand. “When I told people back home I was coming, it just blew their mind,” said Ms. Chamelin, sporting her U.S. shearing team hoodie, emblazoned with the image of a pair of shears straddling the globe over the U.S. and New Zealand flags. After spending two months in New Zealand preparing by shearing 4,000 sheep, she was disappointed she didn’t win. But fellow shearers were “extremely supportive,” giving tips on gear and technique, “so I really have benefited from doing this,” she said. “It’s like a martial art,” said Angus Moore, 27, and New Zealand national champion, who was taking his third shot at the ultimate title. “Everything has got to be perfect. Your harmony with the animals makes you the best or not the best.” Each round lasts about 14 min- utes for the electric-powered machine shearers, but longer for divisions where cutting is done by hand. By the end, competitors are dripping with sweat and there are always a couple of injuries to contend with. Bad backs are par for the course and bangs and bruises are to be expected. “It takes the same amount of energy to work in a shearing shed for eight hours as it does to run a marathon twice,” said Leann Brimmer, 38, of Biddle, Mont. Not only was she in New Zealand competing as a wool handler, but she travels the world following the shearing season each year sorting the fleeces as they come off the animals. As the final approached, six shearers waited nervously in the changing rooms. Winning the trophy is a serious business, and there are few jokes between competitors. Instead, they blankly stared ahead to summon the concentration required to take on the sheep. Only one person can win, and one clumsy nick or frisky sheep can be the difference between glory, or failure and a long trip home. Kiwis, as New Zealanders are known, find shearing makes a fun bet. TAB, New Zealand’s official betting agency, which set up a large tent across the road from the competition, expanded the number and types of shearing-related bets to meet demand, taking wagers in different divisions. Betting at the event was up 30% from last year, with large bets, including two 10,000 New Zealand dollars (US$8,200) wagers on one former champ to win, according to a spokesman for the agency. In the end, New Zealander John Kirkpatrick, 41, took away the Golden Shears Open Shearing Final, which is open to all shearers whether they made their national team or not. Gavin Mutch, 32, who represented Scotland, won the World Open Machine Shearing event, for those on national teams. Winning was “surreal,” he said. He had been battling injury and hadn’t been sure he would be up to competing. “I’d normally do a lot of training but this year, it’s been the complete opposite,” he said. “Fitness is a huge part of it.” Some think shearing should be recognized as a sport like rodeo. “If bowling is a sport then sheep shearing definitely is,” said Alex Moser, 31, a shearer from Lester, Iowa. Mr. Furlong, of Oregon, is hoping for more recognition of the skill back home in the U.S. “If they saw it in the Olympics on TV, and it was advertised more, I think people would see it is a good sport, and that it’s not something to be laughed at,” he said. Online>> See a video about the world shearing competition in New Zealand at WSJ.com/Ahed. MARKETPLACE BY SUZANNE VRANICA AND JESSICA E. VASCELLARO Apple Inc.’s introduction of the latest iPad has left Madison Avenue, and Silicon Valley, scratching their heads. While some pundits predicted the device announced Wednesday would be called the iPad 3—and others said iPad HD—Apple threw a curveball and didn’t use a specific moniker for its latest upgrade. Rather, the company simply called it “the new iPad.” The company didn’t provide a detailed explanation. Phil Schiller, Apple’s senior vice president of world-wide marketing, simply said that Apple broke from the convention “because we don’t want to be predictable.” Branding experts said the lack of a new name is potentially confusing, given the fact that Apple has given new names or tweaks to line extensions before. “It does seem to be a bit confus- ing, when you have a product evolution, naming is a way to differentiate,” said Charles Rashall, president and founder of Brandadvisors, a branding firm in San Francisco. The new name is “communicating that they are going backwards.” Some attendees at the device’s San Francisco unveiling, hosted by Chief Executive Tim Cook, seemed confused, too. For years, Apple has named new iPhones with new model numbers. The initial iPad gave way to the iPad 2, which will remain on sale at a lower price following the arrival of the new model. It has used subnames, not numbers, for its iPod product line, which has different size hardware. It currently sells an iPod nano and iPod touch. The Wall Street Journal earlier reported that Apple is working with suppliers to test a tablet with a smaller screen. Apple declined to comment at the time. An Apple spokeswoman didn’t respond to request to comment about the possibility of naming con- fusion. The company also surprised customers last fall by naming its latest iPhone the 4S instead of iPhone 5. The lack of a new name quickly became a hotly debated topic on the Twitter website. “Let’s be honest, the name “The New iPad” is already a $10 billion mistake, black eye on the Tim Cook era, and it’s an hour old,” read one typical post. Even Silicon Valley CEOs weighed in on the name choice. Salesforce.com Chief Executive Marc Benioff tweeted: “Lame name of ipad3 “The New iPad”. Where is the zen? Ipad3? Ipads? Ipad retina? Ipadx?” Ad experts predict that consumers will eventually call the product the iPad 3. There is plenty of evidence that odd or confusing names haven’t hurt Apple sales in the past. When Apple first launched the iPad in 2010, the name immediately become a viral joke. Much of the comedy revolved around the name’s suggest- Reuters A Plain Old Name Puzzles Experts Apple CEO Tim Cook at the unveiling in San Francisco of ‘the new iPad.’ ing of a feminine-hygiene product. A headline on the Winnipeg Free Press at the time read: “The iPad Is a Really Bad Name. Period.” Back then many experts believed that there would be confusion be- cause of the one-letter difference between Apple’s iPad and its digital music player, the iPod. But neither product has appeared to suffer. —Ian Sherr contributed to this article. As of 12 p.m. ET Euro 1.3256 À 0.82% Yen/US$ ¥81.49 À 0.54% Yen/A$ ¥86.52 À 0.87% Oil 106.83 À 0.63% Gold 1694.40 À 0.66% 10-year Treasury g 15/32 yield 2.023% U.S. Warns Apple, Publishers It Will Sue Over E-Book Pricing American LNG Isn’t A Panacea for Japan CORPORATE NEWS 18 HEARD ON THE STREET 28 Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. ** Geely, Volvo to Discuss Projects Executives Weigh Use of Swedish Technology in New China Brand and in Small Cars BY NORIHIKO SHIROUZU BEIJING—Volvo is expected to sign a technology-sharing pact with its Chinese owner as early as Friday, a move that raises delicate issues of potential brand dilution and alienating senior executives of the Swedish car maker even as it gives the China side a lift. Top leaders from Volvo and Chinese owner Zhejiang Geely Holdings Group Co. are expected to sign an agreement on Friday that would start discussions over specific ways Geely can tap technology that the Swedish arm plans to phase out over the next couple of years, according to people familiar with the matter. Such a move could provide a lift to Geely’s car-making abilities and help the combined company cut costs and tap synergies. The talks will include to what degree Volvo technology will be used in a planned China-only joint brand, the people said. The companies also are putting finishing touches to a separate agreement that might allow Volvo and Geely to jointly develop electric-vehicle and small-car technologies, the people said. Such arrangements typically are a given between a parent company and its unit. But the Geely-Volvo agreement carries special risks for the Volvo side because close ties to a Chinese auto maker could be seen as weakening the Swedish brand. Paired Up A look at the two companies Car sales, 2011: 449,255 (Up 20.3% from 2010) 432,000 (Up 4.9% from 2010) 2010 revenue: $16.8 billion $3.2 billion Employees: 21,512 17,000 Head office: Gothenburg, Sweden Hangzhou, China Chairman: Li Shufu Li Shufu CEO: Stefan Jacoby An Conghui Note: Revenue converted at current rates Sources: the companies The Wall Street Journal The two have to be careful because Ford Motor Co., from which Geely acquired Volvo in 2010, has intellectual-property rights on some of Volvo technology, according to a person familiar with the matter. Executives “are fully aware that it is easy to talk about technologysharing, but it is difficult to execute correctly,” said one person familiar with the matter. “Benefits are immediate and obvious for Geely, but we want to make sure we don’t dilute the Volvo brand through a careless execution.” The discussions by a parent and subsidiary show how Geely is respecting Volvo’s independence. Citing the China-only brand, another person said Geely is “going to make sure those new brand cars occupy a market segment that is separate from Volvo’s.” The sensitivities underscore the difficulties Chinese companies face in their push to accumulate global brands and move up the manufacturing value chain. Lenovo Group Ltd. struggled to maintain market share for years after its 2005 purchase of International Business Machines Corp.’s personal-computer business. SAIC Motor Corp. purchased roughly half of South Korea’s Ssangyong Motor Co. in 2004 but sold its stake in 2010 after Ssangyong’s business slumped in the wake of the 2008 financial crisis. Auto alliances in general can be difficult, as shown by Daimler AG’s previous ownership of Chrysler. “This is precisely why Geely bought Volvo—to capture advanced technology and benefit from association with a prestigious brand,” said Michael Dunne, head of Hong Kong consulting firm Dunne & Co. “Whether it is workable depends a lot on how the company cultures connect—or fail to connect.” If successful, the tie-up could offer lessons to other Chinese companies looking to buy big-name business abroad. Volvo Chief Executive Stefan Jacoby was expected to arrive in China on Thursday for meetings in Shanghai with Geely Chairman Li Shufu and other executives. The agreement is the result of yearlong discussions by executives from the two auto makers in a group called the Geely Volvo Dialogue Committee. According to one of the people familiar with the matter, Geely would first use older Volvo technology on existing brands, then eventually in a new, more upscale China-only brand Geely hopes to create as part of a 50-50 Geely-Volvo joint venture. The Volvo technology that Geely is seeking includes vehicle underpinnings, Please turn to page 19 Dim Sum Bonds Get a Western Flavor BY ALISON TUDOR HONG KONG—European investors are taking a bigger bite out of dim sum bonds issued by a growing variety of companies, giving a fillip to the swelling offshore market in China’s currency. Dim sum bonds, named after the lunch staple of small items popular in Cantonese cuisine, are denominated in yuan and represent one of the few ways in which China’s currency is gradually circulating beyond its borders. As a result of growing investor appetite from Europe, Chinese companies are starting to ramp up their marketing efforts in London. Chinese policy banks China Development Bank Corp. and Export-Import Bank of China are planning roadshows in London to court investors for their dim sum bonds, said people familiar with the matter. While the vast bulk of yuan for investment in dim sum bonds still sits in Hong Kong, the growing interest and infrastructure to handle yuan products outside Asia is a boost for the City of London, which is vying for a slice of the offshore trade in the yuan, also known as renminbi, with other financial cen- 3-month Libor 0.47355 Acquired Taste Geographical allocation of recent dim sum deals Asia Europe Hong Kong Singapore Tesco BP PLC China Development Bank On Aug. 25, 2011 On Sept. 7, 2011 On Jan. 12, 2012 19% 53% Total value: $114 18% million 32% 48% 9% 91% Total value: $110 million Total value: $238 million 19% Source: Dealogic ters across the world. As yuan funds build up in London, European companies will also find it easier to raise yuan to finance their Chinese operations and Chinese companies could lessen their foreign-currency exposure. Bankers are vying for the prestige that comes with advising on landmark deals. “Hong Kong is still the major center, but this has gone beyond Asia,” said Augusto King, Royal Bank of Scotland’s co-head of debt capital markets in Asia, talking about investors’ interest in dim sum The Wall Street Journal bonds. Britain’s Schroders PLC and Stratton Street Capital LLP are among asset managers that have set up dedicated dim sum bond funds. In recent deals, Germany’s Lanxess AG sold 44% of a dim sum bond to Europeans, France’s Alstom SA sold 25% and Britain’s BP PLC sold 19%, according to data provider Dealogic. Some Chinese companies are also selling their bonds to Europeans, but the percentages of the deals tend to be smaller. European investors bought about 9% of a China Development Bank dim sum bond and 8% of one sold by Beijing Enterprises Group, Dealogic said. As a result, bankers are pushing Chinese companies to market themselves beyond their home turf. But some companies are balking at the extra time and expense needed to reach out to Europeans when they can issue bonds relatively cheaply in Hong Kong. One executive at a mainland Chinese bank said bankers are constantly urging him to tap demand in London, but he was concerned Europeans would demand higher yields and the market would be far less liquid. The yuan clearly remains small in a global context. It was used for just 0.29% of all global payments by the end of last year, according to data from financial network Swift. By comparison, the euro’s share is around 43%. But London is growing faster than other financial centers, such as Singapore, as a hub for offshore yuan payments, including payments for currency trading, imports and exports and dim sum bond settlements. The U.K. accounted for 30% of global yuan payments outside Hong Kong, up from 22.1% in the first quarter of 2011, Swift said. Bankers are also creating the inPlease turn to page 21 asia.WSJ.com Banks Creep Ahead With Revamping BY DAVID ENRICH AND SARA SCHAEFER MUÑOZ LONDON—The long-awaited restructuring of Europe’s banking industry is slowing creaking into motion, and may move at an even more leisurely pace, thanks to the European Central Bank’s recent wave of cheap lending to the Continent’s banks. On Thursday, top French bank BNP Paribas SA agreed to sell a stake in a French property company to U.S. shopping-mall giant Simon Property Group, and Banco Bilbao Vizcaya Argentaria SA, Spain’s second-largest lender, agreed on Wednesday to buy nationalized Catalonian savings bank Unnim. The deals are the latest in a recent flurry of mostly small transactions as the industry consolidates and lenders look to thicken their capital cushions by dumping assets. Some banks and outside experts say they expect the volume of such transactions to continue growing in coming months. The impetus is that a group of about 30 banks has until the end of June to satisfy regulatory requirements to come up with a total of €106 billion ($139 billion) of capital. “We expect to see a surge” in asset and business-line sales, as well as mergers between banks, assuming European regulators don’t postpone the June 30 deadline, as some banks are advocating, said João Soares, a partner at Bain & Co. who focuses on European financial services. But experts say the process of slimming down Europe’s beleaguered banks is moving slower than expected. The banks have been defying many predictions of a flood of asset sales, divestitures and mergers amid an industrywide cleanup. One reason for the relatively sluggish pace is the European Central Bank’s recent infusions of cheap three-year loans into the banking sector, according to bankers and outside experts. Through two batches of 1% loans, in which at least 800 lenders received a total of more than €1 trillion, the ECB relieved some of the urgent pressure on the industry, allowing struggling banks to delay their deleveraging plans. “It isn’t as important now,” said the chairman of a major European bank. His bank has temporarily shelved plans to sell certain portfolios of real-estate assets, figuring that the bank can afford to wait until prices bounce back from their current lows. The ECB loan program “has bought time,” said Richard Barnes, a credit analyst at Standard & Poor’s. As a result, “it’s more likely to be a gradual and organic process rather than there being large volumes of Please turn to page 21 16 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. BUSINESS & FINANCE Risky Bet on London BY JOANNE CHIU HONG KONG—The launch this week of Hong Kong Airlines Ltd.’s business-class flights to London reflects a risky attempt to break the dominance of Cathay Pacific Airways Ltd. and other international airlines in Hong Kong’s highly competitive aviation market. The foray by the fledgling carrier, in which Chinese aviation-and-leisure conglomerate HNA Group Co. holds a controlling stake, is part of a drive to expand its fleet and route map. The goal is to get investors on board for a Hong Kong Airlines initial public offering of stock later this year that is expected to raise as much as US$300 million. Hong Kong Airlines President Yang Jianhong said he expects the route to break even in its first six months with a load factor—a measure of how much seat capacity is used—of 75%. Celebrities and investment bankers have expressed interest in the London flight, he said in an interview. Mr. Yang estimated that the new route will account for around 10% of the carrier’s total passenger revenue after a year. The airline reported revenue of 2.84 billion yuan (US$449.7 million) for January through September, more than double its 2010 full-year revenue of 1.08 billion yuan. Mr. Yang said the airline is considering introducing similar service to Paris later this year. The airline on Wednesday inaugurated once-a-day service from Hong Kong to London’s Gatwick airport using Airbus A330 planes configured to capture business and premium leisure traffic between the international financial hubs by charging lower prices than its rivals. Hong Kong Airlines charges 16,640 Hong Kong dollars (US$2,140) for each Club Classic seat and HK$33,640 for each Club Premier flat-bed seat on the LondonHong Kong flight. The latter is most comparable with Cathay Pacific’s business-class seat, which costs about HK$51,370, according to its website, more than seven times the average economy fare. By selling tickets at a steep discount to traditional business-class fares, Hong Kong Airlines hopes to tap a potentially large market for customers who are able to spend more than the average economy fare for a better seat but are unwilling to fork out the huge difference for typical premium travel. Since it started up in 2006, Hong Kong Airlines has struggled to compete effectively on its home turf against the much bigger and financially sound Cathay Pacific. The smaller airline resorted to flying short-distance routes between Hong Kong and Asian leisure destinations. Hong Kong Airlines last week began flights to Taipei from Hong Kong—one of the world’s most prof- itable commercial air routes—and unveiled plans to hire hundreds of flight attendants to increase its cabin staff by nearly 60% by year end and meet the needs of an expanding fleet. Hong Kong’s high costs—including for wages and airport fees—prevented the carrier from pursuing a low-cost business model, which has been hugely successful in other parts of the region with brands like Malaysia’s AirAsia. The move to start the business-class flights underscores the pressing need to carve out a niche for itself. Dozens of companies in past decades have tried and mostly failed to sustain profitable all-premium flights as they grappled with surging costs and inconsistent demand. Short-lived European and U.S. luxury carriers such as Silverjet, Maxjet Airways Inc. and Eos Airlines Inc. went bust around the 2008 financial crisis. Analysts and industry executives say Hong Kong Airlines faces similar challenges, especially as fuel prices continue to soar. Competition on the route is rife, with five airlines currently operating nine daily nonstop flights to London from Hong Kong. Australia’s Qantas Airways Ltd. plans to discontinue its daily Hong Kong-London flight from late March. Yet unlike the earlier unsuccessful ventures, Hong Kong Airlines has the backing of a financially robust parent. HNA Group, which also con- Agence France-Presse/Getty Images Hong Kong Air Challenges Larger Rivals With Cheaper Business Fare Hong Kong Airlines uses Airbus A330s, like the one above, on its London flights. trols China’s fourth-biggest airline, Hainan Airlines Co., in recent months has emerged as one of the most active Chinese companies seeking overseas investment opportunities. Hainan Airlines in December bought a 19.02% stake in Hong Kong Airlines for 842 million yuan. “With strong Chinese backing, the carrier should have sufficient funds to cope with its expansion plan in the near term, but if the macroeconomic conditions go against its capacity boost in the longer run, its business might be hurt because of excess supply,” said Kelvin Lau, an aviation analyst at Daiwa Capital Markets. A person familiar with the airline said Hong Kong Airlines’ inaugural London flight, which included VIPs and other guests, was around 70% to 80% full. The person said bookings for the first month of flights remain under 50% of capacity, however, highlighting the difficulties to fill all 116 business class seats on each flight. Reliability and flight frequency remain key concerns for business travelers, with price playing just one part in the equation. Many corporate travelers with membership of mileage clubs won’t easily switch to other carriers. “Many business travelers couldn’t afford to use an airline [with limited schedules] no matter how cost-effective and comfortable the offering might be. So that favors the incumbents,” said Martin Craigs, chief executive at Pacific Asia Travel Association, which represents airlines, hotels and other travel-related firms in the Asia-Pacific region. Cathay Pacific, for example, runs several flights a day between Hong Kong and London. And because Hong Kong Airlines has just two aircraft equipped for the flight, it is subject to delays if mechanical difficulties arise. Hong Kong Airlines said it plans to take delivery in the middle of this year of another plane for the route, which will increase reliability. AirFranceChiefAimsforGrowthasChallengesPersist BY DANIEL MICHAELS PARIS—Air France-KLM SA will succeed in cutting costs and return to profitable growth despite posting a big loss last year and facing further discussions with labor unions, Chief Executive Jean-Cyril Spinetta said in an interview. The French-Dutch airline group on Thursday posted a net loss of €809 million ($1.06 billion) for 2011, compared with a net profit of €289 million for the year earlier. Revenue rose 4.5% to €24.36 billion. Mr. Spinetta blamed the loss largely on a combination of rising fuel prices and increased competition that squeezed ticket prices. He said the company launched a costcutting program in January, which aims to reduce nonfuel unit costs 10% by 2014. A large part of the turnaround plan entails boosting staff efficiency and flexibility by changing the terms under which employees work, particularly in France. The company has begun labor negotiations in France and the Netherlands and aims to reach new pacts by the end of June. “It is urgent that we make progress, and the majority of staff understand this,” Mr. Spinetta said, predicting success. Negotiations in France could prove challenging because the process is “cumbersome” and the timetable “is aggressive,” Mr. Spinetta acknowledged. The group’s costs in France are higher than those of rivals, and France has labor laws that tend to favor workers. But Mr. Spinetta said the French system can produce results that let companies remain globally competitive, citing French car makers as a successful example. Mr. Spinetta declined to say whether the group is considering layoffs. “We seek improvements in efficiency,” he said. “We are talking about how to achieve that.” French labor union CGT, one of the largest at Air France, issued a statement on Thursday with the title “The situation is deteriorating and so is the labor climate.” The statement criticized some of the planned cuts in the company’s unprofitable cargo operation. France holds presidential elections this spring, and the campaign has prompted many companies to delay announcing job cuts. INDEX TO BUSINESSES AND PEOPLE Businesses This index of businesses mentioned in today’s 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. Agricultural Bank of China..........................23 AIA Group.....................22 Air China.........................3 Air France-KLM.............16 Alstom...........................15 Amazon.com ................. 28 American Intl Group.....22 ANA.............................W6 Anglo American............19 Anheuser-Busch InBev.19 Apple..............14,17,18,28 Australia & New Zealand Banking Group...........20 Bank of America......18,22 Barclays.........................18 Barnes & Noble ............ 18 BP.............................15,21 Canadian Solar..............12 Cathay Pacific Airways 16 CBS................................18 China Development Bank ................................... 15 China Eastern Airlines...3 China Life Insurance .... 23 China Mobile.................28 China Southern Airlines.3 Chinatrust Financial Holding.......................23 Citigroup ............. 18,20,22 Cnooc.............................23 Credit Suisse Group 18,22 Daimler..........................15 Deutsche Bank.........18,22 European Aeronautic Defence & Space.........3 Export-Import Bank of China..........................15 Facebook ....................... 18 Fast Retailing...............23 Ford Motor....................15 Fortescue Metals Group .......................................23 Foxconn Intl Holdings .. 23 Glencore Intl.................19 Goldman Sachs........18,22 Google...........................17 Hainan Airlines.............16 Heng Leong Intl..........W9 HNA Group....................16 Hon Hai Precision Industry ..................... 23 HSBC Holdings ........ 20,21 HTC................................17 Huawei Technologies.4,17 Inpex..............................23 International Business Machines....................15 Jiangxi Boya BioPharmaceutical..........21 Jiangxi Copper..............23 J.P. Morgan Chase...18,22 Kia Motors....................23 Lagardere......................18 Lanxess.........................15 Lenovo Group................15 LG Electronics..........17,23 LVMH...........................W9 Mitsubishi UFJ Financial Group..........................23 Mitsui............................21 Morgan Stanley.......18,22 MTV Networks Intl.....W6 News Corp.....................18 Nikon.............................23 Nokia.............................17 Nomura Holdings..........23 Northrop Grumman........4 Peace River Coal...........19 Pearson.........................18 Ping An Insurance........23 Qantas Airways............16 Rabobank ................. 20,23 RBC Capital Markets....18 Rio Tinto.......................19 Royal Bank of Scotland Group..........................21 SABMiller......................19 SAIC Motor...................15 Samsonite...................W6 Samsung.......................28 Samsung Electronics....17 Schroders......................15 Shenyang Blue Silver Industry Automatic Equipment ................. 21 Singapore Airlines......W6 South African Airways .....................................W6 Ssangyong Motor.........15 Standard Chartered......20 Stratton Street Capital15 Talisman Energy...........19 Toyota Motor................23 Verlagsgruppe Georg von Holtzbrinck ................ 18 Visa ............................... 18 Wells Fargo Securities.18 Woodside Petroleum....23 Xstrata..........................19 Zhejiang Geely Holdings Group..........................15 ZTE................................17 People This index lists the names of businesspeople and government regulators who receive significant mention in Today’s Journal. Allen, Paul...................W2 Azoff, Irving................W2 Benioff, Marc................14 Benmosche, Robert H..22 Bentz, Tom....................22 Caruso, Rick ................ W2 Chan, Justin..................21 Cook, Tim.................14,28 Craigs, Martin...............16 Dallara, Charles..............1 Daly, Bob.....................W2 Dunne, Michael.............15 Dutra, Felipe.................19 Eisner, Michael ........... W2 Ellison, David..............W2 Esho, Peter ................... 23 Evans, Bob...................W2 Fendler, Hagen..............17 Fesharaki, Fereidun......28 Field, Ted.....................W2 Freyberg, Peter.............19 Fu, Johnson...................20 Gallois, Louis..................3 Gartman, Dennis .......... 22 Gates, Bill ................... W2 Geffen, David..............W2 Gersh, Bob...................W2 Gianopulos, Jim..........W2 Gordon, Lawrence.......W2 Grazer, Brian...............W2 Greene, Graham..........W5 Guangcheng, Chen..........4 Guber, Peter................W2 Hefner, Hugh...............W2 Horbury, Peter..............19 Horn, Alan...................W2 Iovine, Jimmy..............W2 Jacoby, Stefan..............15 Jia, Hu.............................4 Kerkorian, Kirk............W2 King, Augusto...............15 Kiuchi, Takahide ........... 13 Koh, Ethan...................W9 Kotick, Bobby..............W2 Ladd Jr, Alan...............W2 Lasseter, John.............W2 Leong, Heng................W9 Lignos, Elsa...................22 Lynch, William..............18 Malik, Rajeev..................6 Malthus, Thomas........W5 Massad, Tim.................22 Mawston, Neil.........17,28 McCourt, Frank............W2 McGuire, Richard..........23 Meyer, Barry...............W2 Meyer, Ron..................W2 Milchan, Arnon ........... W2 Mohn, Jarl...................W2 Moonves, Les..............W2 Moss, Jerry ................. W2 Murdoch, Rupert.........W2 Otaki, Seiichi .................. 1 Ovitz, Michael.............W2 Page, Jeremy..................4 Parkes, Walter............W2 Perelman, Ron.............W2 Perenchio, Jerry..........W2 Rashall, Charles............14 Redstone, Sumner......W2 Rice, Peter...................W2 Rijk, Gerard...................19 Rosen, Fred.................W2 Rosen, Rick..................W2 Rosenzweig, Joshua.......4 Rothman, Tom ............ W2 Saban, Haim................W2 Sassa, Scott................W2 Schat, Sipko..................20 Schiller, Phil..................14 Schwarzman, StephenW2 Semel, Terry................W2 Shufu, Li ....................... 15 Silver, Joel...................W2 Smith, Adam...............W5 Snider, Stacey.............W2 Spinetta, Jean-Cyril......16 Tak, Kai........................W6 Tisch, Steve ................ W2 Tutor, Ron ................... W2 Weintraub, Jerry.........W2 Xia, Liu............................4 Xiaobo, Liu......................4 Yang Jianhong .............. 16 Zhang, Joyce...................3 Zhaoguo, Wang .............. 4 Corrections Amplifications Chinese Premier Wen Jiabao said China would finish five million low-income apartments in 2012 as part of its socialhousing project. A Tuesday front-page article about the nation’s economy incorrectly said Mr. Wen put the number at two million apartments. THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | 17 BUSINESS & FINANCE Huawei to Develop Pricier Smartphones Chinese Company Will Broaden Product Lineup in Push to Expand Global Market Share; Design Team to Grow HONG KONG—Huawei Technologies Co. is beefing up its design team, as the Chinese maker of mobile devices and telecommunications gear aims to raise its profile in the competitive and fast-growing global smartphone market. Shenzhen-based Huawei plans to introduce a series of midprice to high-end smartphones later this year in a bid to capture a bigger share of the category, said Hagen Fendler, the company’s chief design director for handsets. “We want to be the top three player within the next five years, and in order to do that, we have to broaden out our portfolio,” Mr. Fendler said in a recent interview. Huawei held a 4% share of the global smartphone market in the fourth quarter, making the company the world’s sixth-largest smartphone vendor, according to market-research firm Strategy Analytics. “It is quietly creeping up the rankings, as it expands distribution Reuters BY YUN-HEE KIM Huawei held 4% of the global smartphone market in the fourth quarter. and product ranges,” said Neil Mawston, executive director at Strategy Analytics. Huawei faces a steep climb. U.S.based Apple Inc. ranked first in the global smartphone market in the fourth quarter, with a 23.9% share. Samsung Electronics Co. of South Korea and Nokia Corp. of Finland followed with shares of 23.5% and 12.6%, respectively. Huawei’s design operations currently employ nearly 300 people at studios in mainland China, the U.S., Japan and Europe. Mr. Fendler said Huawei will add employees, although the company didn’t elaborate on its specific hiring plans. A focus on expensive mobile phones would be a strategic change for privately owned Huawei, founded in 1987 by Ren Zhengfei, who previously served in the People’s Liberation Army of China. Huawei began as a supplier of low-cost telecom equipment to carriers. It has branched out into the devices business, first supplying data cards and eventually offering handsets to carriers on an originaldesign-manufacturer basis. And since last year, Huawei has been building up its own-brand mobile devices, including smartphones and tablet computers, as these markets take off. Revenue totaled US$15.2 billion in the first half of 2011. Raising Huawei’s handset profile might be critical, given that the company’s equipment business has faced stumbling blocks. In the U.S., the House Intelligence Committee is investigating whether the expansion into the U.S. by Huawei and rival ZTE Corp. is a security threat. Last month, at the Mobile World Congress in Barcelona, Huawei unveiled a high-end smartphone called Ascend D Quad, based on Google Inc.’s Android operating software. The phone comes with a 4.5-inch high-definition touch screen, a speedier processor and full-HD video-capturing capability. The phone is expected to be on the market in the second half of this year, Mr. Fendler said. He declined to comment on the phone’s price or give a more specific time frame for its release. Typically, midprice to high-end phones cost about US$300-US$500. Generally, low-cost phones are priced between US$100 and US$200. Huawei’s foray into the midprice to high-end smartphone market isn’t likely to be an easy transition. Strong Asian competitors—such as Samsung and LG Electronics Inc. of South Korea, as well as HTC Corp. of Taiwan—already have worked for years building their brands. Huawei also needs to contend with Apple, which is seeking to expand in China. Apple shipped 93 million handsets world-wide last year, nearly doubling its previous year’s volume, according to Strategy Analytics. 18 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. CORPORATE NEWS E-Book Pricing Prompts U.S. Warning Apple and Five Major Publishers Face Threat of Lawsuit as Justice Department Examines Possible Collusion The U.S. Justice Department has warned Apple Inc. and five of the biggest U.S. publishers that it plans to sue them for allegedly colluding to raise the price of electronic books, according to people familiar with the matter. Several of the parties have held talks to settle the antitrust case and head off a potentially damaging court battle, these people said. If successful, such a settlement could have wide-ranging repercussions for the industry, potentially leading to cheaper e-books for consumers. However, not every publisher is in settlement discussions. The five publishers facing a potential suit are CBS Corp.’s Simon & Schuster Inc.; Lagardere SCA’s Hachette Book Group; Pearson PLC’s Penguin Group (USA); Macmillan, a unit of Verlagsgruppe Georg von Holtzbrinck GmbH; and HarperCollins Publishers Inc., a unit of News Corp., which also owns The Wall Street Journal. Representatives for the five publishers and the Justice Department declined to comment. Apple, which introduced a new version of its iPad tablet Wednesday, declined to comment. The case centers on Apple’s move to change the way that publishers charged for e-books as it prepared to introduce its first iPad in early 2010. Traditionally, publishers sold books to retailers for roughly half of the recommended cover price. Under that “wholesale model,” booksellers were then free to offer those books to customers for less than the cover price if they wished. Most physical books are sold using this model. To build its early lead in e-books, Amazon Inc. sold many new best sellers at $9.99 to encourage consumers to buy its Kindle electronic readers. But publishers deeply disliked the strategy, fearing consumers would grow accustomed to inexpensive e-books and limit publishers’ ability to sell pricier titles. Publishers also worried that retailers such as Barnes & Noble Inc. would be unable to compete with Amazon’s steep discounting, leaving just one big buyer able to dictate prices in the industry. In essence, they feared suffering the same fate as record companies at Apple’s hands, when the computer maker’s Bloomberg News, left; Associated Press BY THOMAS CATAN AND JEFFREY A. TRACHTENBERG Apple persuaded publishers about pricing before then-CEO Steve Jobs unveiled the iPad. Right, Amazon’s Kindle e-reader. iTunes service became the dominant player by selling songs for 99 cents. As Apple prepared to introduce its first iPad, the late Steve Jobs, then its chief executive, suggested moving to an “agency model,” under which the publishers would set the price of the book and Apple would take a 30% cut. Apple also stipulated that publishers couldn’t let rival retailers sell the same book at a lower price. “We told the publishers, ‘We’ll go to the agency model, where you set the price, and we get our 30%, and yes, the customer pays a little more, but that’s what you want anyway,’” Mr. Jobs was quoted as saying by his biographer, Walter Isaacson. The publishers were then able to impose the same model across the industry, Mr. Jobs told Mr. Isaacson. “They went to Amazon and said, ‘You’re going to sign an agency contract or we’re not going to give you the books,’ ” Mr. Jobs said. The Justice Department believes that Apple and the publishers acted in concert to raise prices across the industry, and is prepared to sue them for violating federal antitrust laws, the people familiar with the matter said. The publishers have denied acting jointly to raise prices. They have told investigators that the shift to agency pricing enhanced competition in the industry by allowing more electronic booksellers to thrive. William Lynch, chief executive of Barnes & Noble, gave a deposition to the Justice Department in which he testified that abandoning the agency pricing model would effectively result in a single player gaining even more market share than it has today, according to people familiar with the testimony. A spokeswoman for Barnes & Noble declined to comment. Prior to agency pricing, Amazon often sold best-selling digital books for less than it paid for them, a marketing stance that some publishers worried would make the emerging digital-books marketplace less appealing for other potential retailers. The publishers’ argument that agency pricing increased competition hasn’t persuaded the Justice Department, a person familiar with the matter said. Government lawyers have questioned how competition could have increased when prices went up. Amazon declined to comment. It isn’t clear if the talks will lead to a settlement or how many of the parties would sign on. One publishing executive familiar with the situation said that the talks have been going on for some time and “negotiations have taken many turns.” A second publishing executive said that “a settlement is being considered for pragmatic reasons but by no means are we close.” This person said that there are significant legal costs associated with the probe. “You have to consider a settlement, whether you think it’s fair or not,” the person said. Contracts such as Apple’s prevent publishers from selling books to other buyers at a cheaper rate. Such terms, known as “most favored nation” clauses, have drawn the scrutiny of the Justice Department in recent years in the health-care industry because they can sometimes be used to hamper competition. One idea floated by publishers to settle the case is to preserve the agency model but allow some discounts by booksellers, according to the people familiar with the matter. Among the issues that the Justice Department has examined is the effort by three publishers involved in the probe to “window” e-books in late 2009, according to people familiar with the matter. That December, Simon & Schuster, HarperCollins and Hachette said they would delay the electronic publication of a certain number of titles for a limited time after the publication of the hardcover edition. At the time, the publishers expressed concern that $9.99 digital best sellers represented a long-term threat to the future of the publishing business. The windowing efforts, however, gradually faded away. The European Union has said it is also investigating the allegations. Several class-action lawsuits have been filed and consolidated in a New York federal court. Apple moved to dismiss the case this month, arguing it didn’t coordinate with any publishers. “Apple’s entry created new competition in eBook distribution and a vastly larger pool of eBook consumers,” it wrote in its motion. For publishers, digital-book revenue is still the fastest-growing segment of the business at a time when the sale of physical books is in decline. E-book sales more than doubled to $970 million in 2011, according to a survey of 77 publishers conducted by the Association of American Publishers. As more consumers migrate to dedicated e-readers and tablet reading devices, the number of consumers reading digitally will likely increase. At the same time, there are fewer bookstores in which to sell physical books, highlighted by the liquidation last year of Borders Group Inc., once the country’s second-largest book chain. In addition, the nation’s largest bookstore chain, Barnes & Noble, has increasingly dedicated more of its space to nonbook-related items such as its popular line of educational toys and games. It isn’t the first time the Justice Department has taken action against Apple for allegedly colluding with other companies. In 2010, several technology companies agreed to settle Justice Department allegations that they colluded to hold down wages by improperly agreeing not to poach each other’s employees. The evidence that surfaced in that case, as well as an ongoing private class-action lawsuit that followed, showed Mr. Jobs as a prime mover behind that antipoaching agreement. Apple didn’t admit to any wrongdoing. Facebook Beefs Up Its IPO Roster and Credit Line BY RANDALL SMITH AND SHAYNDI RAICE Facebook Inc.’s march toward its highly anticipated initial public offering of stock is now coming with a lot more help. On Wednesday, the social network said in a new disclosure document that it added 25 underwriters to an original group of six for its IPO, as the company also boosted its financial muscles with a new credit line and bridge loan. In addition, it offered more information on where it derives its revenue. The beefing up comes as Facebook prepares for what is expected to be the biggest U.S. Web IPO to date. The Menlo Park, Calif., com- pany filed to go public in February, and people familiar with the matter have said the company hopes to raise as much as $10 billion at a valuation of as much as $100 billion. Facebook’s new underwriters include five big banks—Citigroup Inc., Credit Suisse Group AG, Deutsche Bank AG, RBC Capital Markets LLC and Wells Fargo Securities LLC—as well as an additional 20 smaller firms which will help sell the stock. The additions increase the number of underwriters to 31, joining existing underwriters such as Morgan Stanley. By comparison, the largest previous U.S. IPO, Visa Inc., had 45 underwriters. Meanwhile, Facebook also doubled the size of its credit line to $5 Facebook added 25 underwriters to an original group of six for its initial public offering. billion and arranged a $3 billion bridge loan to help cover taxes due on employee stock grants that take effect six months after the IPO. While Facebook has said it may sell some of the employees’ 93 million shares to cover the taxes, the bridge loan could be used in case market conditions are unfavorable for a stock sale. At a $100 billion value for Face- book, which is where the company’s shares are currently trading in some private-market sales, the employee shares would be worth $3.7 billion. Facebook said earlier it would withhold taxes at a 45% rate for the sales. Facebook has also indicated its chief executive, Mark Zuckerberg, would sell stock in the IPO to cover taxes on profits from options on 120 million shares. The new credit line was led by J.P. Morgan Chase & Co., with Morgan Stanley, Goldman Sachs Group Inc., the Merrill Lynch unit of Bank of America Corp. and Barclays PLC serving as joint book-runners. The bridge loan was led by J.P. Morgan and Morgan Stanley. Facebook, which made $1 billion in profit amid revenue of $3.71 billion last year, also gave insight into the geographic breakdown of its revenue. The company said in its regulatory filing that over half its revenue—about $1.9 billion—for 2011 was generated by users from the U.S. and Canada. By comparison, Europe accounted for $1.1 billion in revenue. About $365 million in revenue came from Asia. Facebook said that it is experiencing rapid growth in Brazil and India because the number of users in those countries is growing, as are their engagement levels with Facebook. The company also said it is increasing its sales efforts in those markets. THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | 19 CORPORATE NEWS Anheuser Net Rises On Global Growth BY SIMON ZEKARIA LONDON—Anheuser-Busch InBev NV sounded an optimistic tone as the brewing giant’s profit increased sharply in the latest quarter. But volumes fell as weakness in Western Europe and North America offset gains in emerging markets. Net income for the final three months of 2011 jumped 91% to $1.85 billion, beating analysts’ consensus expectations for $1.61 billion. The year-earlier figure had been hit by a high tax bill and several one-time items, including a loss on interestrate swaps. Revenue for the fourth quarter increased 4.2% to $9.87 billion. However, the volume of beer sold fell 0.6%, with North American volume sales down 4.5%. The company is compensating for stagnating volumes, rising commodity costs and a spending slowdown across mature economies by paring costs and raising prices in key beer-drinking markets, such as the U.S. and Brazil, to boost margins. The maker of Budweiser, Stella Artois and Beck’s is benefiting from growing demand for premium beer in Latin America and Asia, where rising incomes are driving consumption. But exposure to the U.S., where high unemployment has hit beerdrinking, remains a concern. Still, Anheuser said Thursday that U.S. beer volumes in the first two months have been “encouraging,” boosted by favorable weather, early signs of a recovery in consumer confidence and better-thanexpected results from the rollout of Bud Light Platinum. Chief Financial Officer Felipe Dutra said the company is “very bullish” on trading in Brazil, as it eyes the soccer World Cup in 2014 and the Olympic Games in 2016. Volumes there will resume growth in 2012 after stagnating this year, helped by a 7.5% increase in the minimum wage, he said. The company proposed a fullyear dividend of €1.20 a share, up from 80 European cents. Mr. Dutra said the company targets growing dividend payouts in future. Xstrata Buys Coal Deposit In Canada for $500 Million BY ALEX MACDONALD AND BENOIT FAUCON LONDON—A unit of Swiss mining giant Xstrata PLC said Thursday it had agreed to acquire a Canadian coal deposit from Talisman Energy Inc. for $500 million in cash. The acquisition comes as Xstrata is in the midst of a merger with commodities-trading company Glencore International PLC to create the world’s fourth-largest diversified-mining company, with a market capitalization of about $90 billion. The deposit, called Sukunka, is located in the Peace River coal field in British Columbia. It is contiguous with other properties Xstrata Coal acquired in the province last year. There has been a surge in demand for hard coking coal as China, the world’s largest steel producer, became a net importer of the steelmaking raw ingredient and as other emerging economies rapidly industrialize and urban populations swell. Miners have scurried to secure more of the high-quality coal in different parts of the world. Last year Rio Tinto PLC acquired Mozambique-focused coking-coal company Riversdale for about $4 billion, while Anglo American PLC decided to retain rather than sell its Peace River Coal Ltd. venture. Sukunka has coal resources of 236 million tons. “Based on our due diligence and technical analysis, Sukunka has the potential to be a high quality metallurgical coal mine,” Xstrata Coal Chief Executive Peter Freyberg said in a statement. “Once developed, Sukunka would meaningfully increase our exposure to hard coking coal, while unlocking synergies with our neighboring assets in the Peace River coal field and providing additional regional scale.” Geely, Volvo Discuss Sharing Continued from page 15 engines and safety technologies, two of the people said. For Geely, a maker of low-cost cars, the possibility of using technology from an advanced Western car maker gives it hope to better compete in China, where foreign brands are popular. Mr. Li, who is also chairman of Volvo, “wants to be aggressive,” one of the knowledgeable people said. “He wants to see progress.” Another one of the people familiar with the matter said the two companies are “ready to push ahead” with technology-sharing, though it isn’t clear exactly what they will be sharing yet. “That still needs to be worked out,” the person said. The deal to jointly develop new technologies could benefit Volvo by spreading the cost of developing key future technologies for electric vehicles and fuel-efficient small engines. Those new technologies the two companies might develop jointly include primary electric-vehicle components, small engines and smallcar underpinnings. Still, a perception of Volvo cars carrying the same technologies and components Geely cars use would hurt Volvo’s brand image, especially in more advanced markets such as Europe and the U.S. “Some technologies may be too old for a luxury car maker, but they could still be very good for a mainstream car maker,” said one person close to the matter. “In other words, there are many possibilities for technology sharing for Volvo and Geely, but we need to make sure both parties get benefits.” Geely is likely to appoint Peter Horbury, a former Volvo design chief whom Geely last year shifted from its Volvo arm to work in China, as chief of the new brand, a person familiar with the matter said. 20 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. MARKETS Beijing Aims to Step Back on IPO Role Regulator Wants Disclosure to Play Bigger Part in Determining Which Deals Go Ahead; Doubts in the Market HONG KONG—Individual investors who buy most Chinese initial public offerings have become used to the idea that prices jump on the first day of trading, but as markets have weakened in recent months that is true less often. As a result, China’s securities regulator, whom investors have come to count on to approve highquality deals, has become a target of frustration. In response, the China Securities Regulatory Commission is pushing for a more market-based system, in which it takes a back seat and companies disclose essential information so investors can judge deals for themselves. But China isn’t ready, according to bankers and lawyers active in the market. Moving to a disclosurebased system will take years, said Fang Fang, vice chairman of Asia investment banking and chief executive of China investment banking at J.P. Morgan Chase & Co. China’s “system is an ecosystem that consists of several key parts— the issuer, the investor, the regulator, the intermediary and the overriding legal system,” said Mr. Fang. “You cannot move one part without moving the others.” In recent interviews with staterun media, commission Chairman Guo Shuqing, who has set cleaning up the mispricing of IPOs as a goal, has said the “key is to ensure full, comprehensive and accurate information disclosure from enterprises.” The intention is that requiring a Bloomberg News BY PRUDENCE HO AND NISHA GOPALAN Guo Shuqing, above, chairman of the China Securities Regulatory Commission, has targeted the mispricing of IPOs. higher level of disclosure, as the U.S. system does, would force the parties involved in a company’s listing, including underwriters, lawyers and auditors, to take more responsibility for the quality of deals. Small changes to boost transparency have been made, but the goal, according to people familiar with the process, is for the commission to rely more on vetting by other parties. That could lead to a reduction in the backlog of IPOs. The regulator recently released for the first time a list of companies that have applied for IPOs. More than 500 are on the list, including some that have been waiting more than three years for approval. Some market participants warn that a disclosure-based system with no implicit commission guarantee of a company’s quality will discourage institutional investors from participating in the IPO market. The market is prone, as CLSA noted in a February report, to “gambling on IPO stocks.” Moreover, a system based solely on disclosure depends on legal rem- LEGAL NOTICES BANKRUPTCIES !" #$% &'$$& (% & && )*% + , ! - - !"# $%& '('&)&*' ++%#,(" %-&%." %-&%." /$& 0 (1*2% * 3 0* $$2 3 4 51 ! -#$%' -#$%' #$%'." ." 6& ! && )*% + , !$2*&$7 8$$ - !"# $%& '('&)&*'." 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Such suits are far more difficult in China. “Without active civil litigation, a heavier burden falls on the securities regulator not only to enforce disclosure laws postlisting, but also to screen out unsuitable listing candidates before they list,” said Steven Winegar, corporate partner at international law firm Paul Hastings in Hong Kong. If the commission moves toward a disclosure-based system, banks that underwrite deals will likely bear increasing responsibility for ensuring the companies they bring to market provide the information investors need to make decisions. “It is a system that will add more responsibilities for sponsoring banks,” said Mr. Fang. Under the current system, individuals designated as sponsors within investment banks act as gatekeepers for IPOs. These individuals, rather than the banks, risk losing their licenses to sponsor deals, as well as public censure, if there is a misstatement in the IPO prospectus. “With investors who tend to be less well-informed, we cannot rely on listed companies alone for timely and accurate disclosure,” said Ronald Wan, head of investment banking at China Merchants Securities. “We need active involvement from the regulator.” Given the “multiyear evolution” that is required of China’s IPO system and the dominance of individual investors, J.P. Morgan’s Mr. Fang said that a good model for China is Hong Kong’s Securities & Futures Commission and the Hong Kong Stock Exchange’s shared role as gatekeepers and watchdogs. Backlogs to list are much shorter than in China because most of the due diligence already is done by bankers ahead of an application, and the exchange vets companies without regard for economic, market and political considerations. —Amy Li and Dinny McMahon contributed to this article. Rabobank Targets China Agribusiness BY LINGLING WEI AND DINNY MCMAHON BEIJING—Rabobank Groep NV, known as a bank for farmers, plans to expand lending—both in the yuan and in foreign currencies—to China’s food producers and processors, making it the latest foreign lender to embrace the country’s vast agricultural sector. The Netherlands-based bank will focus on providing financing to Chinese food and agricultural companies to make purchases or acquisitions abroad, said Sipko Schat, a member of Rabobank’s executive board and chairman of its international wholesale division, ahead of the Friday opening of the bank’s first branch in Beijing. Rabobank already has a branch in Shanghai, its first in China. Mr. Schat said the bank intends to make loans both in the Chinese and foreign currencies. “It’s our expectation that the use of the yuan will increase in global trade and investment over time,” Mr. Schat said in an interview on Thursday. Rabobank’s planned expansion in China’s food and agricultural markets comes as foreign banks—including HSBC Holdings PLC, Citigroup Inc., Standard Chartered PLC, and the Australia & New Zealand Banking Group Ltd.— have flocked to China to set up rural operations, aiming to capitalize on Beijing’s drive to boost incomes in the countryside. Chinese regulators also have made the rural-banking sector one of the few areas in the country’s financial-services industry open to foreign competition. They have been encouraging foreign banks to invest in rural and agricultural finance as part of an effort to channel credit to the sectors that have been poorly served by China’s state-owned banks. “It’s a heavily regulated market, but it is opening up,” Mr. Schat said, referring to China’s banking sector. But unlike some of its foreign rivals, Rabobank doesn’t plan to set up banks in China’s rural areas to provide financing to individual farmers, Mr. Schat said. Rather, it will focus on lending to food- and agriculture-related businesses through its branches in Beijing and Shanghai. With branches in a broad range of countries, Rabobank has become a major lender for the food and agricultural sectors in the past decades. Currently, profits generated in Asia represent 10% of the bank’s wholesale banking income. Rabobank executives plan to bump up that level to 25% in the next five years. “We certainly hope China will be a big part” of the increase, said Johnson Fu, head of China for Rabobank, in the same interview. THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | 21 * * MARKETS Shenzhen Tightens Curbs on New Issues SHANGHAI—The Shenzhen Stock Exchange temporarily suspended trading in two companies as rules intended to rein in speculation on newly listed shares took effect. Trading in Shenyang Blue Silver Industry Automatic Equipment Co. and Jiangxi Boya Bio-Pharmaceutical Co. was halted on the Growth Enterprise Market for smaller companies after more than 50% of their shares changed hands, violating one of the rules introduced Thursday. The measures, designed to protect smaller investors, also require a trading halt if a newly listed company’s shares rise or fall more than 10% from the opening price. In either situation, trading of the stock can be halted until three minutes before the market closes. Speculative trading “has distorted the pricing mechanism, aided illegal behavior and damaged the fundamental interests of investors,” the exchange said on its website. The exchange noted that speculative activity involving new stock offers has been on the rise, with eight new issues since mid-February seeing average gains of 63% on their first trading day in the Shenzhen and Shanghai markets. Such speculation has also led to steep falls in prices after the initial day of trading. ’It’s a reasonable rule in a crazy market,’ says Li Bin, an analyst with Guolian Securities. The exchange said that 34 stocks had risen more than 100% on their debuts in Shenzhen since the start of 2010 to end-February, and 33 had later fallen an average of 23%. Stocks in China may not rise or fall more than 10% in daily trading, but until now the curbs on prices on a stock’s first day of trading had been fairly loose. In the past, Shenzhen stocks were suspended from trading for 30 Banks’ Revamps Plod Along Continued from page 15 sales…Maybe the market’s expectations [of a huge volume of deals] were too high.” Prospective investors, many of which are from the U.S., include private-equity firms, hedge funds, sovereign-wealth funds, insurance companies and even some banks, according to bankers and investors. Some would-be asset-buyers say they are hopeful that the recent trickle of transactions will soon intensify. David Rubenstein, the founder and managing director of privateequity firm Carlyle Group, told an industry conference in Berlin last week that Europe was the “single best opportunity in the world at the moment” for buyout firms. But he said it will take time for prices to come down as banks off-load assets to meet capital requirements. “Many [assets] were overpriced, making returns more difficult,” Mr. Rubenstein said. “Going forward, in- vestment opportunities will be better.” Thus far, the recent activity has been mostly clustered around a relatively small group of banks, such as BNP, that have been hustling to drum up capital. Last month, it agreed to sell its North American energy-lending business, composed of $9.5 billion in loans, to Wells Fargo & Co. And on Thursday, it announced the sale of a 29% stake in Klepierre SA to Simon Property Group, generating a €1.5 billion capital gain. Spain, where a bursting property bubble has wounded a broad swath of the banking industry, has been the busiest location for asset sales and other transactions. In Wednesday’s transaction, BBVA agreed to buy Unnim for the symbolic sum of €1, and the government is largely protecting BBVA from any losses on Unnim’s assets. —Marietta Cauchi contributed to this article. West Tastes Dim Sum Debt Continued from page 15 frastructure in London to stimulate the circulation of yuan in the city. HSBC Holdings PLC and Royal Bank of Scotland Group PLC, which are among the banks taking yuan deposits, have recently set up teams dedicated to developing offshore yuan services and can now issue dim sum bonds in London. The buildup has political backing. Britain and Hong Kong set up a forum this year to discuss working more closely in yuan trade clearing and settlement. Hong Kong is also extending the operating hours of its yuan payments systems, making it easier for yuan transactions to be settled in London. HSBC recently listed the first yuan debt deals in London for Japan’s Mitsui & Co. and BP PLC in London, although the bulk of the deals were still placed in Hong Kong, according to Dealogic. “Could we issue a dim sum bond in London or not? Technically yes. There should also be sufficient de- mand to absorb the whole of a 300 million to 500 million [yuan] bond for the right name,” said Justin Chan, HSBC’s deputy head of global markets, Asia Pacific, and head of Hong Kong trading. Some bankers are concerned that even if bonds are issued in London, trading in the secondary market would gradually seep back into the hands of Asian investors more familiar with Chinese companies. Also, since Beijing loosened its tight grip on its currency more than two years ago, investors’ confidence that the yuan will appreciate has cooled. But others argue that with growing awareness of dim sum bonds and London-based deal teams, the market will grow. “If a bond is issued in London, then we can assume that the majority will be distributed to European investors and will create a critical mass of trading in London’s time zone,” said HSBC’s Mr. Chan. —Fiona Law and Lingling Wei contributed to this article. minutes if they rose or fell by more than 20% from their opening price, with a further 30-minute suspension if the price change exceeded 50% once trading resumed. Shares would be suspended until three minutes before the market closed if they rose or fell more than 80%. Guo Shuqing, who took over as China’s top stock regulator in October, has been pushing for tighter controls on prices for initial public offers, hoping to make trade less speculative and more suitable for long-term investment. The Shenzhen exchange also said that if 50% or more of a company’s shares change hands in preopen trading, the stock will be suspended three minutes after the opening. Although the new rules could restrict trading of a newly listed company, analysts are generally positive. “It’s a reasonable rule in a crazy market. If a stock has potential to rise, it can rise on its second or third day of trading,” said Li Bin, an analyst with Guolian Securities. —Wynne Wang Bloomberg News Trading in Two Companies Halted as Volume Restriction Kicks In; Move Aims to Mitigate Pops and Drops The Shenzhen Stock Exchange, shown in 2010, is ramping up efforts to curb speculative trading in new stock issues. THE MART BUSINESS OPPORTUNITIES INVESTMENT PROPERTIES ! " #$#%#&'' (#) *! AUCTIONS BUSINESS SERVICES BORROW BG/SBLC/LC TO ENHANCE YOUR BUSINESS ! "# $ %! ! 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Shares of McDonald’s weighed on blue chips after it reported that global same-store sales grew 7.5% in February, just below expectations. U.S. same-store sales exceeded forecasts, but sales in Europe were less than expected. McDonald’s fell 3%. In U.S. economic data, the number of workers filing for new unemployment benefits rose 8,000 to a seasonally adjusted 362,000 last week, more than forecasts for a rise of 2,000. Also, outplacement firm Challenger, Gray & Christmas said planned layoffs announced by U.S. employers fell 3.3% in February. Thursday’s news from the labor market precedes Friday’s closely watched monthly employment re- NEW YORK—U.S. stocks rose despite mixed news about employment, as optimism increased that Greece will complete a debt-swap deal. The Dow Jones Industrial Average was up 54 points, or 0.4%, to 12891 in midday ABREAST OF trading. The StanTHE MARKET dard & Poor’s 500stock index advanced 11 points, or 0.8%, to 1363 and the Nasdaq Composite tacked on 28 points, or 1%, to 2964. The Dow rose 78.18 points on Wednesday to snap a three-session losing streak, posting the largest point and percentage gain in nearly three weeks on the heels of Tuesday’s decline of more than 200 points. All sectors traded higher Thurs- port. Economists are forecasting the unemployment rate will hold steady at 8.3% for February and that the economy added 213,000 jobs. “People are expecting a decent jobs number, and for Greece’s bond swap to be successful, so we’re getting a second day of a recovery after Tuesday’s correction,” said Peter Tuz, president of Chase Investment Counsel, an independent money manager in Charlottesville, Va. Crude futures gained 0.6% to $106.73 a barrel, while gold futures tacked on 0.7% to $1,695.70 a troy ounce. The U.S. dollar was mixed, losing ground against the euro but rising against the yen. The yield on the 10-year Treasury rose to 2.019%. In corporate news, the U.S. Treasury said it was launching a sale of up to $6 billion of American International Group’s common stock. The stock was down 3.1% in late morning trading. Amylin Pharmaceuticals indicated it was offering 13 million shares of common stock for sale to the public. The biopharmaceutical company’s stock lost 1%. Williams-Sonoma reported fiscal fourth-quarter earnings and revenue that were slightly above expectations. The high-end homefurnishing retailer also said its chief financial officer, Sharon McCollam, plans to retire on March 16, and named its current treasurer and controller, Julie Whalen, as acting finance chief. Its shares fell 6.2%. Apple was warned by the U.S. Justice Department that the company and five of the largest U.S. publishers may be sued for allegedly colluding to raise prices of electronic books. Apple’s stock edged up 1.2%; the company unveiled its latest iPad tablet on Wednesday. European Stocks European markets were higher, buoyed by the belief that the participation rate of private-sector creditors in the Greek debt-swap will be high enough for Greece to receive another round of bailout funds. The Stoxx Europe 600 index closed 1.6% higher at 264.16. One sign of investor confidence was the yield on 10-year Italian government bonds, which fell to the lowest level since last June. Spanish yields also fell sharply. Separately, the European Central Bank and Bank of England left key lending rates unchanged, as was widely expected. Anheuser-Busch InBev ended up 3.6% after releasing upbeat results. Carrefour finished 0.5% higher. The retailer said it will reduce its costs in 2012 following a decrease in 2011 net profit. U.S. Treasury Reduces Stake In AIG, Selling Stock at $29 Optimism Over Debt Deal In Greece Boosts Crude Oil BY ERIK HOLM AND SERENA NG NEW YORK—Crude-oil prices gained on optimism that the Greek debt-swap deal will be approved, keeping a bailout plan on track. Major Greek and European banks have signaled support of the plan, smoothing its approval. The euro was buoyed by the developments on Thursday, rising against the dollar. The lower greenback, in turn, sparked bargain-buying in oil futures by investors using other currencies. Gains in the European benchmark, North Sea Brent crude, were larger than those registered in the U.S. benchmark crude amid signs that physical supplies of North Sea crude will be tighter in April than in March. Meanwhile, Asian buyers are showing stepped-up interest in North Sea barrels, underpinning prices, as the U.S.-led push for sanctions on Iran has some buyers limit- AIG agreed to buy back 103.5 million of the 206.9 million shares the U.S. Treasury sold. The sale reduces the government’s stake to about 70%. ing purchases from that nation, which is the second-biggest oil producer in the Organization of Petroleum Exporting Countries. “We are getting closer to a deal in Greece and the euro is climbing, so we are looking at an up day today,” said Tom Bentz, director at BNP Paribas Prime Brokerage. Light, sweet crude oil for April delivery on the New York Mercantile Exchange was up 67 cents, at $106.83 a barrel. ICE North Sea Brent crude for April was $1.01 higher, at $125.14 a barrel. The spread between the two benchmarks hit its widest level in a month. Rising prices, which have hit highs each month since October, are steering a sharp drop in gasoline use. U.S. data released Wednesday showed demand in the last four weeks posted a 7.8% decline from the same period last year. That is the biggest year-on-year decline in any four-week period since 1991. Japanese Current Account Puts Yen Under Pressure Bloomberg News (top); Agence France-Presse/Getty Images The U.S. Treasury Department sold a chunk of its shares in American International Group Inc. for $29 each Thursday morning, further reducing the government’s holding in the insurer more than three years after it was rescued during the financial crisis. The sale of 206.9 million shares is expected to bring the Treasury about $6 billion. AIG, which has bounced back from the brink of collapse and expects steady profits in coming years, has agreed to purchase 103.5 million shares worth about $3 billion. That buyback could help prevent the Treasury’s sale from weighing on AIG’s share price. But shares were trading lower late Thursday morning, down 3.1% at $28.54. Shares had climbed 40 cents on Wednesday to $29.45 in New York Stock Exchange composite trading, a gain of 54% from the 52week low last October. The U.S. had been wanting to sell off more of its holdings in late 2011, but the sale was delayed when the shares fell in the second half of 2011 and traded below $28.73, the price taxpayers effectively paid for the government’s stake. AIG’s rescue in 2008 was part of the government’s Troubled Assed Relief Program. “We’re continuing to move forward to wind down TARP and exit our stakes in private companies as soon as practicable,” said assistant Treasury Secretary for financial stability Tim Massad. “Today is another important step in our efforts to recover the taxpayer’s investment in AIG.” The sale should reduce the Treasury’s common stake from 77% to about 70%. The U.S. last sold AIG shares in May 2011 at $29 apiece. AIG shares have climbed 27% this year. Last month, the company reported fourth-quarter earnings that included a large tax benefit, reflecting expectations the company will generate billions of dollars in profits in the coming years. AIG will also fully repay the government’s remaining $8.5 billion preferred interest in another bailout-era vehicle that was collateralized by AIG’s minority portion of Asian life insurer AIA Group Ltd. BY DAVID BIRD BY JESSICA MEAD and other assets. The majority of the funds AIG will use in the transaction will come from the sale of a portion of its stake in AIA scheduled to close Thursday. The U.S. government bailed out AIG in 2008 with a record bailout that required up to $182.3 billion in taxpayer support. A chunk of the money has been repaid, and the Treasury needs to recoup $41.8 billion from selling its majority stake in AIG. “The people of AIG have achieved another significant milestone in our progress toward our goal that American taxpayers re- coup their entire investment in AIG at a profit,” AIG Chief Executive Robert Benmosche said Wednesday. The Treasury appointed units of Citigroup Inc., Credit Suisse Group AG and Morgan Stanley to jointly coordinate the offering. The last offering in May, which didn’t go as well as AIG and Treasury officials had hoped, was led by Bank of America Corp., Deutsche Bank AG, Goldman Sachs Group Inc. and J.P. Morgan Chase & Co. In the months following that sale, Mr. Benmosche said there would likely be changes to the lineup of top underwriters. The euro firmed against the yen and dollar Thursday, as currency traders grew more confident about a successful Greek debt-swap. The yen came under pressure after Japan posted a record currentaccount deficit in January amid flagging exports CURRENCY and soaring energy MARKETS imports. “In its race to destroy its nuclear-power generation programs,” the Japanese government “is putting itself in very real jeopardy as it has no choice but to import more and more energy from abroad in relentless fashion,” said Dennis Gartman in his daily investment letter. The euro extended gains as European Central Bank President Mario Draghi pointed to progress in the euro zone’s economy and financial markets, relieving some worries that the region’s sovereign-debt crisis may spread further. In midday trading in New York, the euro was at $1.363, up from $1.3149 late Wednesday in New York. The dollar was at ¥81.53, compared with ¥81.09, while the euro was at ¥108.20 from ¥106.62. Meanwhile, the pound was trading at $1.5820 from $1.5742, and the dollar was buying 0.9089 Swiss franc from 0.9166 franc. The ICE dollar index, which measures the greenback against a basket of six currencies, fell to 79.193, from 79.692. “As we move closer to the final Greek deadline, markets are— rightly—optimistic that we will avoid the worst-case scenario where Greece doesn’t even meet the threshold for introducing collective action clauses,” said Elsa Lignos, senior currency strategist at RBC Capital Markets in London. A much stronger-than-expected German industrial-production figure for January also boosted the common currency. The pound was unmoved after the Bank of England chose to keep the key interest rate at 0.5% and the central bank’s asset-purchase target at £325 billion ($512 billion). THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | 23 INTERNATIONAL INVESTOR Greek Hopes, Data Lift Asian Markets Treasurys Decline on Optimism BY VIRGINIA HARRISON AND V. PHANI KUMAR BY CYNTHIA LIN NEW YORK—U.S. Treasury prices declined Thursday even though the U.S. reported a third-straight weekly rise in the number of workers filing for jobless benefits. Investors were awaiting the results of Greece’s debt-swap offer, expected early Friday in London. “Markets are U.S. CREDIT trading with a MARKETS glass-half-full view about the Greece restructuring,” said Richard McGuire, senior fixed-income strategist at Rabobank. “Signs are positive that Greece will have sufficient participants, at least enough for it to employ the collective-action clauses so it can strong-arm the remaining holdouts.” As of late Wednesday, owners of a bit more than half of the eligible Greek debt had pledged to take part in the deal. In midday trading, benchmark 10-year Treasury notes were down 11/32 in price to yield 2.018%, climbing above the 2% mark that has become a tipping point between selling and buying in the market. Uncertainty about Friday’s U.S. jobs report is keeping investors hesitant about placing bold bets. Asian stock markets ended higher Thursday, with Tokyo, Shanghai and Hong Kong snapping threeday losing streaks as optimism grew about Greece’s debt restructuring and strong U.S. economic data supported regional exporters and resource shares. “It’s looking more than likely that the Greek debt deal will go through, which is reducing ASIA-PACIFIC some concerns in STOCKS the market right across a region,” said Peter Esho, chief market analyst at City Index in Sydney. “Stocks that were sold off yesterday are rebounding as [Asia joins] a global bounce.” Japan’s Nikkei Stock Average jumped 2% to 9768.96, Hong Kong’s Hang Seng Index rose 1.3% to 20900.73 and China’s Shanghai Composite Index climbed 1.1% to 2420.28, all three rising for the first time this week. Also snapping this week’s string of losses, South Korea’s Kospi added 0.9% to 2000.76, Australia’s S&P/ASX 200 gained 0.7% to 4171.00 and Taiwan’s Taiex advanced 1% to 7984.56. Indian markets were closed for a holiday. The rally came after gains on Data as shown is for information purposes only. No offer is being made by Morningstar, Ltd. or this publication. Funds shown aren’t registered with the U.S. Securities and Exchange Commission and aren’t 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 NAV FUND NAME NAV GF AT LB DATE CR 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 OT OT JP JP JP JP OT OT BD BD BD BD LUX LUX LUX LUX LUX LUX 03/05 03/05 03/05 03/05 03/05 03/05 USD EUR JPY JPY USD EUR Europe Long/Short Equity These funds primarily take long/short positions in European equities. At least 60% of assets are invested in Developed Greater Europe equities. Ranked on % total return (dividends reinvested) in U.S. dollars for one year ending March 08, 2012 Wall Street Wednesday, following upbeat jobs data and a report pointing to the possibility the Federal Reserve could take more steps to boost the economy if needed. Signs of progress on Greek’s debt-swap deal also aided confidence that Athens will secure the required support by Thursday’s deadline. Exporters and companies with global business interests benefited. Toyota Motor climbed 2.6% and Nikon jumped 4.3% in Tokyo. Fast Retailing, a heavyweight constituent in the Nikkei, gained 3.6%. Elsewhere, LG Electronics added 3.9% and Kia Motors advanced 2.1% in Seoul, Foxconn International Holdings jumped 5.2% in Hong Kong, and Hon Hai Precision Industry climbed 2.2% in Taipei. Resource firms recovered some of their recent losses, as commodity prices strengthened. Jiangxi Copper rose 1.7% in Hong Kong and 1.9% in Shanghai, while in Sydney, Fortescue Metals Group rose 3.8%. Among energy plays, Woodside Petroleum gained 1.9% in Sydney, Inpex rose 1.6% in Tokyo and Cnooc climbed 1.1% in Hong Kong. Financials also rebounded. Nomura Holdings rose 4.7% and Mitsubishi UFJ Financial Group added 2.7% in Tokyo, and Chinatrust Fi- INTERNATIONAL INVESTMENT FUNDS Advertisement Fund Scorecard NAV 90.62 124.75 10024.60 8602.11 94.34 104.82 -5.3 13.8 -1.0 -5.1 -4.0 0.5 FUND FUND RATING * NAME 5 5 4 5 3 4 NS 3 3 NS -0.4 13.6 1.0 -3.0 2.0 3.7 TradeWind TradeWind Capital EURNLD Equity Fund Melchior Dalton Strategic USDCYM European Fund USD Partnership LLP Nordic Nordic Fund SEKIRL Absolute Return Fund Management Ltd Abaco PCE Investors USDCYM Financials Fund – USD Adapto Adapto Advisors AB SEKLUX Nordic A Sierra Sierra Global USDVGB Europe Offshore - Euro B Management LLC Eclectica Eclectica Asset EURCYM Fund C EUR Management LLP Rhine Alpha RBR Capital AG EURCYM Class C EUR Marshall Marshall Wace EURIRL Wace–MWEurekaFund-A2EUR Asset Management Ltd Mercer UK Mercer Global GBPIRL Credit Fund M-5£ Investments Management Ltd 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 nancial Holding climbed 2.4% in Taipei. Ping An Insurance (Group) Co. of China jumped 5.1%, Agricultural FUND NAME NAV GF AT LB DATE CR Russia Equity AA Taiwan Equity AA Turkey Equity AA U.S. Bond AA U.S. Sm Cap Equity AA U.S. Special Opportunities U.S. Tsy Inf-ProtSec AA EE EQ LUX 03/07 USD AS EQ LUX 03/07 USD OT OT LUX 03/07 USD US BD LUX 03/07 USD US EQ LUX 03/07 USD US BD LUX 03/07 USD OT OT LUX 03/07 USD NAV —%RETURN— YTD 12-MO 2-YR 0.70 1.28 0.80 1.22 0.92 0.83 1.34 20.8 15.6 20.5 2.7 13.6 13.5 0.9 -21.9 2.0 -8.2 6.8 -15.8 -12.9 12.6 1.3 13.2 4.7 7.3 1.4 1.5 9.2 Indonesian Grth Fund GL EQ BMU 02/29 USD 189.45 5.3 12.4 GL EQ LUX 07/29 EUR 46.59 -8.9 -8.2 -2.7 n ALLIANZ GLOBAL INVESTORS KAPITALANLAGEGESELLSCHAFT Concentra AE Industria AE InternRent AE EU EQ DEU 03/07 EUR EU EQ DEU 03/07 EUR EU BD DEU 03/07 EUR 61.98 73.24 42.92 14.6 8.6 -1.1 -2.5 -2.5 12.8 10.4 1.8 8.5 n CHARTERED ASSET MANAGEMENT PTE LTD - TEL NO: 65-6835-8866 Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: [email protected] CAM-GTF Limited OT OT MUS 02/29 USD 368607.01 20.0 -3.8 12.4 10.5 17.3 -1.5 -6.6 -1.1 -5.4 n HSBC Trinkaus Investment Managers SA E-Mail: [email protected] Telephone: 352 - 47 18471 Prosperity Return Fund A Prosperity Return Fund B Advertisement FUND NAME JP BD LUX 03/05 JPY OT OT LUX 03/05 JPY 9603.33 8193.72 American Growth American Growth AA Asian Equity Asian Equity AA Asian Sm Cap Equity AA China Value A China Value AA Dragon Growth Dragon Growth AA Emerging Mkt Infrastructure Emg Eastrn Europe A Emg Eastrn Europe AA European Growth European Growth AA Global Contrarain AA Global Property AA Global Resources AA Healthcare AA India Equity AA International Growth International Growth AA Japanese Growth Japanese Growth AA Latin America Equity AA Manulife GF Strategic Income Fund AA Manulife Glbl Fund Asia Total Return AA MGF Asia Value Dividend Equity Fund US EQ LUX US EQ LUX OT OT LUX OT OT LUX OT OT LUX AS EQ LUX AS EQ LUX AS EQ LUX AS EQ LUX OT OT LUX EU EQ LUX EU EQ LUX EU EQ LUX EU EQ LUX GL EQ LUX OT EQ LUX GL EQ LUX OT EQ LUX EA EQ LUX GL EQ LUX GL EQ LUX JP EQ LUX JP EQ LUX GL EQ LUX OT OT LUX AS BD LUX OT OT LUX 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 HKD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 03/07 USD 18.62 1.07 2.57 0.83 1.53 7.25 2.27 1.50 7.30 0.97 4.69 2.01 8.56 0.61 0.94 0.79 1.11 1.08 0.99 3.27 0.76 2.64 0.68 1.27 1.12 0.98 1.26 6.7 6.7 10.1 10.0 13.2 11.3 11.2 12.5 12.4 NS 21.5 21.4 11.3 11.2 19.1 12.1 3.3 6.7 17.4 7.6 7.5 4.8 4.7 13.0 3.3 4.5 10.8 2.1 1.8 -10.2 -10.4 -1.4 -11.8 -12.1 -15.2 -15.8 NS -17.1 -17.1 -16.8 -17.0 -20.3 -3.0 -18.1 1.1 -14.7 -4.3 -4.5 -16.0 -16.3 -10.1 4.1 NS -6.8 10.6 10.3 4.6 4.3 15.0 4.0 3.7 -1.7 -2.1 NS 0.8 0.7 0.0 -0.2 1.2 9.1 2.1 4.7 -4.4 4.0 3.8 -3.0 -4.1 1.2 7.7 NS 6.3 [ALTERNATIVE INVESTMENT FUNDS www.WSJ.com] Advertisement NAV GF AT LB DATE CR NAV —%RETURN— YTD 12-MO 2-YR 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 1.2 -22.0 1.6 FUND NAME NAV GF AT LB DATE CR Platinm-Gbl Dividend Platinm-Nordic Platinm-Premier Platinm-Turnberry GL OT OT OT EQ OT OT BD CYM CYM CYM USA 02/29 02/29 12/31 02/28 USD SEK USD USD NAV NS NS NS 60.14 Asia Value Formula Fd-B NS 18.5 17.7 6.2 12.8 -55.9 -1.2 -22.0 -10.7 -66.0 -3.0 -1.8 -3.9 -44.3 NS OT OT OT OT OT OT OT OT EQ OT CYM USA CYM CYM USA 02/29 10/31 02/29 02/29 05/29 USD USD USD USD USD NS 129.92 NS NS 35.02 OT OT OT OT OT CYM LUX CYM CYM AUT 03/06 03/06 03/06 03/06 03/06 USD USD USD USD EUR 38.99 1834.00 1226.64 1102.03 6183.00 1.6 -1.1 6.1 11.1 0.1 -32.7 -31.4 -9.8 -2.7 -19.1 2.8 -4.6 13.9 4.8 0.4 n WINTON CAPITAL MANAGEMENT LTD Tel: +44 (0)20 7610 5350 Fax: +44 (0)20 7610 5301 n PLATINUM CAPITAL MANAGEMENT Tel: +44 207 024 9840, www.platinumfunds.net Platinm-All Star Platinm-All Weather Platinm-Dynasty Platinm-Emancipation Platinm-Equity Plus GL GL GL GL GL 3.6 2.4 -0.2 6.8 -18.2 -4.4 3.2 -12.6 -4.3 -63.7 0.5 3.8 -4.7 9.0 -45.6 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 01/31 01/31 01/31 01/31 01/31 01/31 01/31 EUR NS GBP NS USD NS EUR 241.14 GBP 260.75 JPY 16854.25 USD 856.27 10.08 15.7 -2.7 12.5 NS 15.23 14.23 8.00 10.04 14.20 17.80 7.99 1.90 12.77 8.88 9.18 7.78 7.00 6.42 4.13 1.23 6.79 1.01 5.73 -0.57 6.72 NS NS 10.52 6.55 11.30 4.70 4.60 5.77 8.03 5.13 4.69 5.54 NS NS Source: Morningstar, Ltd 1 Oliver’s Yard, 55-71 City Road London EC1Y 1HQ United Kingdom www.morningstar.co.uk; Email: [email protected] Phone: +44 (0)203 107 0038; Fax: +44 (0)203 107 0001 Bank of China added 2.5% and China Life Insurance added 1.4% in Hong Kong; in Shanghai, they added 2%, 0.7% and 1.4%, respectively. NAV GF AT LB DATE CR FUND NAME Yuki Mizuho Jpn Gro Yuki Mizuho Jpn Inc Yuki Mizuho Jpn Lg Cap Yuki Mizuho Jpn LowP Yuki Mizuho Jpn PGth Yuki Mizuho Jpn SmCp Yuki Mizuho Jpn Val Sel JP JP JP JP JP JP AS EQ EQ EQ EQ EQ EQ EQ IRL IRL IRL IRL IRL IRL IRL 03/08 03/08 03/08 03/08 03/08 03/08 03/08 JPY JPY JPY JPY JPY JPY JPY NAV 5313.00 6866.00 4408.00 10446.00 6047.00 6323.00 4772.00 —%RETURN— YTD 12-MO 2-YR 8.5 11.0 13.5 12.0 7.5 10.5 10.7 OT BMU 01/31 USD OT IRL 02/23 USD OT ARE 02/23 AED 990.72 1006.20 4.82 Intel-Chin Mainlnd Foc Intel-China Converg* VP Classic - A VP CLassic - B VP High Dividend Stk AS AS AS AS OT EQ EQ EQ EQ OT CYM CYM CYM CYM CYM 03/07 03/07 03/07 03/07 03/07 USD USD USD USD USD 33.46 119.27 204.69 94.37 55.48 -1.9 -1.9 -1.9 0.6 0.6 0.7 0.6 1.1 0.7 0.6 7.2 6.9 6.2 6.9 9.6 9.5 9.4 12.2 12.2 11.6 12.1 JF ASEAN Eq (SGD)A(acc) JF ASEAN Eq (USD)A(acc) JF Asia Pac ex-Jap Eq(SGD)A(acc) JF Asia Pac ex-Jp (USD)A(acc) JF China (SGD)A(acc) JF China (USD)A(dist) JF Greater China (SGD)A(acc) JF Greater China (USD)A(dist) JF India (SGD)A(acc) JF India (USD)A(acc) JF Korea Equity (SGD) A (Acc) JF Korea Equity (USD) A (acc) JF Pacific Tech (USD) A (acc) JF Singapore (SGD)A(acc) JF Singapore (USD)A(dist) JF US Technology A (dist) - USD JPM Africa (USD) A (acc) JPM Amer Large Cap (USD)A(Dist) JPM America Large Cap A (acc) - SGD JPM Asia Pac Bond (USD)A(acc) JPM Brazil Eq (SGD)A(acc) JPM Brazil Eq (USD)A(acc) JPM East Eur (EUR)A(dist)(JF) JPM Emerg EMEA (SGD)A(acc) JPM Emerg EMEA (USD)A(dist) JPM Emerg Mid East Eq(SGD)A(acc) JPM Emerg Mid East(USD)A(acc) JPM Emerg Mid East(USD)A(dist) JPM Emerg Mkt Eq (SGD)A(acc) JPM Emerg Mkt Eq (USD)A(acc) JPM Emerg Mkt Eq (USD)A(dist) JPM Emerg Mkt Infra(SGD)A(acc) JPM Emerg Mkt Infra(USD)A(acc) JPM Emerg Mkt LC Debt(SGD)A(acc) JPM Emerg Mkt LC Debt(USD)A(acc) JPM Emerg Mkt LC Debt(USD)A(mth) JPMEmergingMarketsDebtA(mth)-USD JPM Glb Dyn (SGD)A(acc) JPM Glb Dyn (SGD)A(acc)(Hedged) JPM Glb Dyn (USD)A(dist)(JF) JPM Glb Nat Res (EUR)A(dist) JPM Glb Nat Res (SGD)A(acc) JPM Glb Nat Res (USD)A(acc) JPM Glbl Consumer Trends (SGD)A(Acc) JPM Glbl Consumer Trends (USD)A(Acc) JPM Glbl Mining (SGD)A(Acc) JPM Glbl Mining (USD)A(Acc) JPMGlobalCorporateBondFundA(mth)-USD JPM Latin Amer Eq(SGD)A(acc) JPM Latin Amer Eq(USD)A(dist)JF JPM Russia (USD) A (dist) JPMUSAggregateBondA(mth)-SGD(Hedged) JPM US Aggregate Bond A (mth) - SGD JPM US Aggregate Bond A (mth) - USD JPM US Sm Cap Grwth (USD)A(Dist) JPM US Technology A (acc) - SGD JPMIFGlobalConvertibles-USDClassA(acc) JPMIFGlobalFinancials-SGDClassA(acc) JPMIFGlobalFinancials-USDClassA(acc) JPMIF Global Select Eq USD Class A (acc) JPMIFIncomeOpportunityUSDClassA(acc) AS AS AS AS AS AS AS AS EA EA AS AS OT AS AS OT OT US US AS OT OT EU OT OT OT OT OT GL GL GL OT OT OT OT OT GL GL GL GL GL GL GL OT OT GL GL US GL GL EE US US US US OT OT OT OT GL OT EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ OT EQ EQ BD OT OT EQ OT OT OT OT OT EQ EQ EQ OT OT OT OT OT BD EQ EQ EQ EQ EQ EQ EQ EQ EQ EQ BD EQ EQ EQ BD BD BD EQ EQ OT EQ EQ EQ 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 LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX LUX 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 03/07 SGD USD SGD USD SGD USD SGD USD SGD USD SGD USD USD SGD USD USD USD USD SGD USD SGD USD EUR SGD USD SGD USD USD SGD USD USD SGD USD SGD USD USD USD SGD SGD USD EUR SGD USD SGD USD SGD USD USD SGD USD USD SGD SGD USD USD SGD USD SGD USD USD USD 15.55 16.18 12.53 17.59 10.83 41.61 12.83 25.17 12.90 23.11 14.41 10.43 15.01 15.01 31.36 2.13 10.17 10.97 13.14 11.46 13.58 11.24 28.78 13.09 55.85 11.56 14.86 19.93 13.64 21.65 30.26 15.00 8.01 18.43 18.64 15.69 15.49 13.84 11.22 12.85 18.05 20.60 16.84 19.19 16.97 18.97 108.70 102.00 14.01 43.91 12.71 12.86 12.68 10.74 100.63 13.80 110.40 14.63 86.50 149.85 168.66 7.8 10.7 8.5 11.5 8.3 11.3 9.9 12.9 14.5 17.6 12.2 15.9 10.1 11.0 14.1 13.3 9.8 7.4 NS 5.0 14.7 18.4 19.4 12.0 15.0 7.7 11.1 11.2 8.4 11.4 11.4 13.1 16.3 6.2 9.1 9.1 5.7 5.2 7.5 8.1 9.6 7.7 10.7 8.1 11.1 5.7 8.6 3.5 12.9 16.6 22.6 NS NS 1.2 7.5 NS 6.4 10.7 13.7 9.6 1.9 FUNDS 0.4 8.4 11.5 -9.1 -3.5 -2.2 -4.7 NS -0.7 10.1 11.1 10.3 10.2 10.1 -6.4 -10.1 -8.5 -9.0 -4.0 8.0 4.3 5.6 5.1 10.2 -19.5 -12.0 -15.0 -14.9 -21.0 -17.3 -18.8 -7.6 -5.6 -7.7 -5.5 -10.9 -2.4 -8.4 4.2 4.4 -13.5 -13.3 -16.8 -16.6 -11.5 -11.5 -11.0 -10.8 NS -4.7 -12.8 -2.9 -2.7 -4.5 -7.5 0.5 NS 6.1 -1.9 -1.6 -15.1 -10.9 -10.7 -5.2 -5.0 -5.2 -6.3 -6.2 -6.1 NS -8.6 NS 4.1 4.1 10.1 -8.9 NS -8.7 -18.4 -23.7 -23.6 NS -6.6 NS NS 8.5 -2.7 -2.4 -26.3 NS NS 8.5 -2.6 NS -6.4 NS -18.2 -8.4 0.1 In print & online. Contact: NS 19.3 NS -0.6 -8.8 -3.9 -2.3 2.7 -5.8 -0.9 NS 11.2 0.4 3.6 9.1 16.1 5.4 8.4 NS NS NS 4.4 0.2 NS 3.4 NS 0.8 0.7 -1.5 3.6 3.6 NS 4.8 NS 8.4 8.4 11.5 -1.0 NS 4.2 5.2 -1.7 3.4 NS 3.1 NS NS NS NS 5.7 -3.4 NS NS NS 14.1 NS 0.9 NS -4.9 3.1 2.7 [email protected] —%RETURN— YTD 12-MO 2-YR n SUPERFUND ASSET MANAGEMENT GMBH For info about open funds, contact [email protected] and www.superfund.com *Closed for New Investments Superfund Cayman* Superfund GCT USD* Superfund Green Gold A (SPC) Superfund Green Gold B (SPC) Superfund Q-AG* OT CYM 03/07 USD n WEBSITE: WWW.VALUEPARTNERS.COM.HK, TEL: (852) 2880 9263, FAX: (852) 2564 8487 *formerly known as China ABH Shares Fund n YUKI MANAGEMENT & RESEARCH Yuki 77 General Yuki 77 Growth 103.20 OT TNI MENA Special Sits Fund OT TNI MENA UCITS Fund OT TNI UAE Blue Chip Fund OT YMR-N Growth Fund GL OT WSM 03/07 USD -0.93 15.56 27.99 LIST YOUR n THE NATIONAL INVESTOR TNI Tower | Zayed 1st Street Khalidia| Web:www.tni.ae n Yuki 77 Series CPS-Master Priv Fund 2.45 n J.P. MORGAN ASSET MANAGEMENT For additional fund prices, please visit www.jpmorganam.com.sg Tel: +65 6882 1328 n SENSIBLE ASSET MANAGEMENT LIMITED www.samfund.com.hk Tel: (852) 2868 6848 Fax: (852) 2810 9948 n YMR-N Series n CREDIT PACIFIC ASSET MANAGMENT www.creditpacific.com % Return in $US ** 1-YR 2-YR 5-YR 21.0 n MANULIFE ASSET MANAGEMENT TEL:(852)2108 1110 Internet:http://www.manulife.com.hk 47/F Manulife Plaza, Causeway Bay, Hong Kong AHW Top-Div.Int. YTD n PT CIPTADANA ASSET MANAGEMENT Tel: +62 21 25574 883 Fax: +62 21 25574 893 Website: www.ciptadana.com —%RETURN— YTD 12-MO 2-YR n AHW CAPITAL MANAGEMENT Tel (+49) 1805 - 23 82 82 www.ahw-capital.com LEGAL CURR. BASE FUND MGM'T CO. [ Search by company, category or country at asia.WSJ.com/funds ] —%RETURN— YTD 12-MO 2-YR 11.7 15.3 12.3 19.2 13.4 11.2 Leading 10 Performers JP EQ IRL 03/08 JPY 8484.00 10.4 -15.2 -4.4 JP JP EQ IRL 03/08 JPY EQ IRL 04/27 JPY 5162.00 5230.34 11.1 -7.3 -15.9 -5.4 -7.0 -27.3 EQ IRL 03/08 JPY 9049.00 11.6 NS NS EQ IRL 03/08 JPY EQ IRL 03/08 JPY 5963.00 7066.00 10.3 13.0 -15.2 -17.1 -6.2 -5.3 n Yuki Asia Umbrella Series Yuki Rebounding Gro Fd JP n Yuki Chugoku Series Yuki Chugoku Jpn Gen Yuki Chugoku JpnLowP JP JP n Yuki Hokuyo Japan Series Yuki Hokuyo Jpn Gen Yuki Hokuyo Jpn Inc Yuki Hokuyo Jpn Sm Cap n Yuki Mizuho Series Yuki Mizuho Gen Jpn III Yuki Mizuho Jpn Dyn Gro Yuki Mizuho Jpn Exc 100 Yuki Mizuho Jpn Gen JP JP JP EQ IRL 03/08 JPY EQ IRL 03/08 JPY EQ IRL 03/08 JPY 4023.00 4545.00 4622.00 12.7 9.2 11.5 -12.4 -13.4 -13.4 -7.0 -7.6 -2.0 JP JP JP JP EQ EQ EQ EQ 3773.00 3647.00 6018.00 7691.00 12.7 9.4 13.0 11.0 -12.6 -20.8 -11.6 -15.7 -6.4 -10.4 -5.8 -4.9 IRL IRL IRL IRL 03/08 03/08 03/08 03/08 JPY JPY JPY JPY For information about listing your funds, please email [email protected] or call +852 2573-7121 asia.WSJ.com 24 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. BLUE CHIPS & BONDS Dow Jones Asia Titans: Thursday'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 In U.S.-dollar terms. Dow Jones Country Titans Year-to-date Property Casualty Insurance $20.6 Japan Tobacco Japan Tobacco 52.5 445,500 Mitsubishi Japan Industrial Suppliers 39.1 1,938 Cheung Kong Hong Kong Real Estate Holding Development 32.3 Mitsubishi UFJ Finl Japan Banks 72.0 -13.0 25.7 -0.28 -7.5 -3.5 Westfield Grp Australia Retail 21.2 8.65 -0.23 -11.6 20.4 NTT DoCoMo Japan Mobile Telecommunications 71.9 140,300 -8.6 -1.1 1.40 Hong Kong 1.45 13.1 -9.9 Singapore 1.89 12.9 -4.9 Italy 0.99 12.0 -25.0 China 88 1.22 11.8 -15.2 Sweden 1.66 10.3 -4.1 South Korea 1.07 9.9 -1.3 France 1.36 Netherlands 0.99 6.6 -12.1 Switzerland 0.42 5.4 -7.5 U.K. 0.85 4.9 -0.3 South Africa 0.44 4.5 12.3 Canada 0.35 3.6 -10.7 Shin-Etsu Chml 23.1 Japan (Specialty Chemicals) Toyota Motor 131.5 Japan (Automobiles) Shinhan Financial Grp 18.2 South Korea (Banks) Sumitomo Mitsui Finl 46.9 Japan (Banks) Mitsui 30.7 Japan (Industrial Suppliers) Mizuho Financial Grp 39.6 Japan (Banks) East Japan Railway 26.4 Japan (Travel Tourism) Reliance Industries 50.9 India (Exploration Production) Hon Hai Precision Ind 36.4 Taiwan (Electrical Components Equipment) Canon 54.8 Japan (Electronic Office Equipment) Nissan Motor 41.9 Japan (Automobiles) Honda Motor 67.1 Japan (Automobiles) China Construction Bank 194.0 Hong Kong (Banks) Woodside Petroleum 30.5 Australia (Exploration Production) Bank of China 35.0 Hong Kong (Banks) Nintendo 17.9 Japan (Toys) Seven I Hldgs 25.0 Japan (Broadline Retailers) China Mobile (HK) 209.4 Hong Kong (Mobile Telecommunications) China Life Insurance 20.2 Hong Kong (Life Insurance) PetroChina 31.0 Hong Kong (Integrated Oil Gas) -11.5 Dow Jones Regional Sector Titans -4.0% 17.7% 15.9 -2.4 Banks 1.54 15.0 -17.7 Constructn Mat 1.83 14.1 -12.1 Tiger 50* 1.36 13.5 -5.8 Technology 0.65 13.1 9.5 Global 50 0.54 -13.4 9.3 -9.1 -7.2 2.7 7.2 Market value, in billions (U.S) Company/Country (Industry) -16.6 0.40 0.07% ...And the rest of Asia's blue chips -14.4 Arab 50 -1.13% -7.4 14.4 11.6 11.0 -0.50 Germany 10.6 -2.4 25.08 -5.0 1.15 3.5 401,500 15.5 1.28 84.8 -6.3 27.7 1.19 Insurance -14.2 2.72 32.6 Brazil Asian 50 2.86 415.00 Food Retailers Wholesalers -5.6 1.79% 108.00 Steel 15.8 1.07 72.9 Australia 1.82 Auto Parts 100.1 -14.3 South Korea Russia Fincl Svcs 34.0 3.03 Woolworths -3.7 1.6 4.21 *Asia excluding Japan Latest, in local currency STOCK PERFORMANCE Latest 52-week Three-year 4,440 2.66% 3,330 2.62 -10.0 14.8 42,900 2.51 -14.7 109.3 2,735 2.47 -8.5 -1.1 1,383 2.44 -7.1 64.3 135.00 2.27 -18.7 -23.3 5,440 2.26 -4.4 -0.2 31.13 2.23 -28.5 36.2 101.00 2.23 -12.9 50.0 3,715 2.20 -3.1 69.6 1.0% Company/Country (Industry) Nippon Steel 17.2 Japan (Steel) National Australia Bk 54.6 Australia (Banks) CNOOC 96.4 Hong Kong (Exploration Production) Panasonic 20.2 Japan (Consumer Electronics) Indl Comm Bk China 58.7 Hong Kong (Banks) Sun Hung Kai Prop 38.5 Hong Kong (Real Estate Holding Development) Hitachi Ltd. 25.8 Japan (Electronic Equipment) Commonwlth Bk of Aus 80.3 Australia (Banks) Taiwan Smcndtr Mfg 69.9 Taiwan (Semiconductors) BHP Billiton 116.8 Australia (General Mining) Kansai Elec Power 15.6 Japan (Electricity) Samsung Electronics 136.9 South Korea (Semiconductors) Sony 20.1 Japan (Consumer Electronics) Westpac Bking 65.6 Australia (Banks) Nippon T&T 59.5 Japan (Fixed Line Telecommunications) Rio Tinto Ltd. 29.0 Australia (General Mining) Softbank Corp. 31.9 Japan (Mobile Telecommunications) Takeda Pharm 35.5 Japan (Pharmaceuticals) Wesfarmers Ltd. 30.4 Australia (Home Improvement Retailers) Aus NZ Bk 60.8 Australia (Banks) 3.7% 817.00 2.13 -0.2 150.6 3,035 2.02 -11.4 41.2 6.26 1.95 -11.3 58.6 35.70 1.88 -16.4 0.4 3.25 1.88 -22.6 53.4 11,380 1.79 -50.4 -56.2 2,307 1.72 2.2 18.4 80.95 1.57 7.4 24.5 21.10 1.44 -30.8 -0.9 11.38 1.43 2.5 122.3 Market value, in billions (U.S) NOTICE TO READERS All statistics published in The Wall Street Journal Asia from markets outside the Asian-Pacific region reflect preliminary data. Latest, in local currency STOCK PERFORMANCE Latest 52-week Three-year 223.00 1.36% 1.34 23.38 -21.8% -10.4% -7.6 39.2 16.74 1.09 -8.9 175.3 710.00 1.00 -34.8 -34.9 5.25 0.96 -15.2 72.6 116.40 0.95 -8.6 106.0 470.00 0.86 -8.6 91.8 48.04 0.80 -7.3 77.9 79.70 0.76 11.5 64.3 34.30 0.73 -26.4 24.1 1,409 0.71 -33.8 -37.5 1,180,000 0.68 31.3 134.6 1,648 0.61 -43.3 -3.9 20.41 0.54 -13.1 30.0 3,835 0.39 -4.7 0.9 62.66 0.38 -25.3 37.1 2,351 0.34 -31.0 98.2 3,665 0.27 -9.6 -4.1 28.65 0.24 -13.0 68.0 21.79 0.18 -8.3 76.3 Sources: Dow Jones Indexes; WSJ Market Data Group Source: Dow Jones Indexes Tracking credit markets & dealmakers 13.0% POSCO 16.8 -4.0% Three-year -16.5% -13.8% 0.61 8.5 52-week 4.24% 2,189 526,000 Turkey 0.54 Japan STOCK PERFORMANCE Previous session Mobile Telecommunications $27.4 17.0% 0.66 Tokio Marine Hldgs Previous close, in local currency Japan 2.05% Spain Industry KDDI Japan Australia Country 52-week INDEX PERFORMANCE Previous session Market value, in billions of US$ Company Credit derivatives 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 maximum—and vice versa. Indexes below are for five-year swaps. 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: 16/1 Eur. High Volatility: 16/1 Europe Crossover: 16/1 Asia ex-Japan IG: 16/1 Japan: 16/1 Spreads Spreads on fiveyear swaps for corporate debt; based on Markit iTraxx indexes. Coupon SPREAD RANGE, in pct. pts. since most recent roll Maximum Minimum Average And the most deterioration CHANGE, in basis points CHANGE, in basis points 1.36 98.40% 0.01% 2.08 1.27 1.68 1.97 95.79 0.01 3.16 1.87 2.52 Nankai Elec Rwy 119 –7 –5 –7 5.89 96.65 0.05 8.74 5.50 7.12 CASIO COMPUTER 72 –2 ... 1 1.67 97.02 0.01 2.78 1.56 1.99 Cr Saison 154 –3 5 2 1.46 97.91 0.01 2.32 1.37 1.79 KT&G Co 132 –2 –3 –1 Sun Hung Kai Pptys Yesterday Yesterday Five-day 28-day Note: Data as of March 7 Singapore Telecom In percentage points Daiwa Secs Index roll Europe Sub Financials t 6.40 4.80 3.20 Europe t 69 –1 2 –5 255 –3 –3 –10 Yesterday Yesterday Five-day 28-day Philippine Long Distance 128 9 3 2 Kobe 150 9 12 2 SHARP 209 12 38 51 Kawasaki Kisen Kaisha 474 24 55 19 180 9 14 1 66 3 4 6 Tokio Marine Nichido Fire Ins Kawasaki Heavy Inds 115 –1 1 –19 Shinsei 359 –4 12 55 NEC 230 10 17 27 Teijin 61 –1 1 –3 Nippon Yusen Kabushiki Kaisha 190 7 9 19 Nikon 55 –1 –4 –3 Mitsui OSK Lines 189 7 9 16 49 2 ... –1 Japan Tob 1.60 0 Sept. Oct. Nov. Dec. Jan. Feb. Mar. 2011 2012 Source: Markit Group WSJ.com>> Follow the markets throughout the day, with updated stock quotes, news and commentary at WSJ.com/Email. Also, receive emails that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com. Source: Markit Group Europe: Asia’s Bank revenues equity capital markets Behind deals:from Bank revenues from equity capital markets Behind every IPO, follow-on or convertible equity offering is one or more investment banks. At right, investment banks historical and yearto-date revenues from global equitycapital-market (ECM) deals n Equity capital markets n Debt capital markets (both in billions, left axis) ECM as a percentage of total 6 60% (right axis) t 4 40 2 20 0 2005 2006 2007 2008 2009 2010 2011 0 2012 Source: Dealogic THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | 25 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; LIFFE: London International Financial Futures Exchange; LME: London Mercantile Exchange; NYMEX: New York Mercantile Exchange; ICE: IntercontinentalExchange 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) 642.00 1335.25 641.50 126.175 2,378 186.70 24.19 90.17 468.50 1,500 2,054 2.00 8.50 2.25 0.600 101 -1.90 0.27 0.05 1.25 48 23 3.7940 1695.80 33.635 2,214.50 22,950.00 8,390.00 2,115.50 2,037.50 19,105 0.0270 11.90 0.050 -6.00 495.00 129.50 41.50 34.00 210 108.63 3.2652 3.3148 2.359 125.86 1,032.00 0.70 0.0458 0.0274 -0.041 1.74 22.25 CBOT CBOT CBOT CME ICE-US ICE-US ICE-US ICE-US LIFFE LIFFE LIFFE 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) NYMEX NYMEX NYMEX NYMEX ICE-EU ICE-EU 679.00 1,339.00 696.00 131.500 2,499 241.10 25.81 99.54 470 1,612 2,070 0.31% 0.64 0.35 0.48 4.44 -1.01% 1.13 0.06 0.27 3.31 1.13 AMERICAS Year low 604.00 1,160.00 612.50 124.150 2,030 186.05 22.43 87.80 423 1,321 1,743 -0.27 2.20 1.57 2.00 1.70 1.11 110.25 3.3165 3.3868 3.2590 128.40 1,043.25 0.65 1.42 0.83 -1.71 1.40 2.20 Per euro Major stock market indexes PREVIOUS SESSION Close Net change PERFORMANCE Percentage change Yr.-to-date ASIA-PACIFIC DJ Asia-Pacific Australia SPX/ASX 200 4171.00 27.30 2.8 -11.2 China CBN 600 21987.89 284.85 1.31 13.0 Hong Kong Hang Seng 20900.73 272.95 1.32 13.4 130.63 Sensex 17145.52 Jakarta Composite 3967.669 25.152 Japan Nikkei Stock Average 9768.96 192.90 Malaysia Kuala Lumpur Composite 0.2306 Euro zone euro 1 1 0.7544 1.3256 1.7755 0.5632 1-mo. forward 0.9998 1.0002 0.7542 1.3258 1.3263 Canada dollar 1.3150 0.7605 0.9920 1.0081 3-mos. forward 0.9995 1.0005 0.7540 Chile peso 642.39 0.001557 484.60 0.002064 6-mos. forward 0.9988 1.0012 0.7535 1.3272 Czech Rep. koruna-b 24.797 0.0403 18.706 0.0535 2339.38 0.0004275 New Zealand NZSX-50 South Korea 1.3256 0.7544 1 1 Denmark krone 7.4342 0.1345 5.6081 0.1783 Mexico peso-a 16.9417 0.0590 12.7803 0.0782 Hungary forint 293.12 0.003412 221.12 0.004522 Peru sol 3.5453 0.2821 2.6745 0.3739 Norway krone 7.4127 0.1349 5.5919 0.1788 Uruguay peso-e 25.916 0.0386 19.551 0.0511 Poland zloty 4.1044 0.2436 3.0962 0.3230 U.S. dollar 1.3256 0.7544 1 1 Russia ruble-d 38.933 0.02569 29.370 0.03405 0.229885 Sweden krona 8.8931 0.1124 6.7087 0.1491 Switzerland franc 1.2053 0.8297 0.9093 1.0998 1.1002 5.77 0.173417 4.35 ASIA-PACIFIC Australia dollar 1.2486 0.8009 0.9419 1.0617 1-mo. forward 1.2049 0.8299 0.9089 1-mo. forward 1.2531 0.7981 0.9453 1.0579 3-mos. forward 1.2040 0.8306 0.9082 1.1010 3-mos. forward 1.2617 0.7926 0.9518 1.0507 6-mos. forward 1.2023 0.8318 0.9069 1.1026 1.2744 0.7847 0.9614 1.0402 Turkey lira 2.3576 0.4242 1.7785 0.5623 China yuan 8.3746 0.1194 6.3176 0.1583 U.K. pound 0.8380 1.1933 0.6321 1.5819 Hong Kong dollar 10.2812 0.0973 7.7558 0.1289 1-mo. forward 0.8381 1.1931 0.6323 1.5816 India rupee 66.1813 0.0151 49.9250 0.0200 3-mos. forward 0.8385 1.1926 0.6325 1.5809 6-mos. forward 1.5797 12113 0.0000826 9138 0.0001094 Egypt pound-a 6-mos. forward 107.81 0.009276 81.33 0.012296 Israel shekel 5.0109 0.1996 3.7801 Malaysia ringgit-c 3.9908 0.2506 3.0106 0.3322 Jordan dinar 0.9402 1.0636 0.7093 1.4099 New Zealand dollar 1.6085 0.6217 1.2134 0.8241 Kuwait dinar 0.3683 2.7148 0.2779 3.5988 Pakistan rupee 120.591 0.0083 90.970 0.0110 Lebanon pound 1993.00 0.0005018 1503.45 0.0006651 Philippines peso 56.437 0.0177 42.575 0.0235 Saudi Arabia riyal 4.9715 0.2011 3.7504 0.2666 Singapore dollar 1.6613 0.6019 1.2532 0.7979 South Africa rand 9.9708 0.1003 7.5216 0.1330 United Arab dirham 4.8690 0.2054 3.6730 0.2723 1481.44 0.0006750 1117.55 0.0008948 Taiwan dollar 39.092 0.02558 29.490 0.03391 Thailand baht 40.529 0.02467 30.574 0.03271 a-floating rate b-commercial rate c-government rate c-commercial rate d-Russian Central Bank rate. Source: ICAP Plc. Region/Country Index Euro Zone Euro Stoxx -21.2 Denmark OMX Copenhagen -11.5 Finland OMX Helsinki -6.3% 0.66 0.64 2.01 1.63 Close Euro Stoxx 50 Net change 248.71 5.44 2514.22 53.45 411.06 1.35 6098.89 93.51 86.03 2.54 10.1 163.43 2.45 15.9 -3.2 15.5 -6.4 Italy FTSE MIB 16664.25 265.36 10.4 -24.5 Netherlands AEX 325.11 5.47 Russia RTSI 1677.21 Spain IBEX 35 8307.4 145.60 9.4 Switzerland SMI 6153.93 51.39 25.2 Turkey ISE National 100 59673.75 194.02 -3.4 U.K. FTSE 100 5859.73 68.32 AMERICAS DJ Americas 359.76 3.71 Bovespa 67114.68 1097.92 17.0 13.4 12.2 9.6 1.0 7984.56 81.48 1.03 12.9 -7.6 1168.31 15.15 1.31 13.9 14.6 Argentina Merval 2705.25 17.28 EUROPE Stoxx Europe 600 264.16 4.05 8.0 -4.9 Mexico IPC 37634.12 85.58 Stoxx Europe 50 2477.11 31.10 4.5 -5.2 Dow Jones Indexes Net change Global TSM 2570.45 25.99 Global DOW 1965.99 23.43 Global Titans 50 186.99 1.01 Asia/Pacific TSM 1290.11 14.37 Asia/Pacific ex-Japan TSM 3274.52 43.44 Europe TSM 2577.94 46.56 Emerging Markets TSM 4302.23 53.35 Asian Titans 50 131.93 1.67 BRIC 50 581.77 4.85 CBN China 600 -c 21987.89 284.86 China Offshore 50 3982.82 66.50 Shanghai -c 299.77 3.98 1.27 PERFORMANCE YearThree-yr., to-date 52-wk. annualized Daily 1.02% 1.21 0.54 1.13 1.34 1.84 1.26 1.28 0.84 1.31 1.70 1.35 9.7% -3.1% 9.0 -8.2 7.2 2.7 11.0 -7.2 13.0 -6.4 9.8 -9.5 15.5 -6.9 10.6 -9.1 17.1 -10.1 13.0 -21.2 12.6 -8.9 13.1 -20.3 24.3% 19.3 19.8 21.5 30.2 20.4 30.3 17.4 27.3 5.4 20.5 6.0 Price-toDividend earnings yield* ratio* Dows Jones Index 1.08% 23 1.90 21 5.37 15 5.50 11 4.99 8 4.02 19 1.66 20 1.88 18 2.67 15 1.38 14 3.05 25 European and Americas index data are as of 12:00 p.m. ET. Last Shenzhen -c 338.36 U.S. TSM 14128.58 Global Select Div -d 214.03 Asia/Pacific Select Div -d 310.92 Hong Kong Select Div -d 199.57 U.S. Select Dividend -d 394.12 Islamic Market 2261.31 Islamic Market 100 2388.03 Islamic China/HK Titans 30 1612.57 Sustainability Korea 1467.84 Brookfield Infrastructure 2603.47 DJ-UBS Commodity -p 144.33 Net change 4.39 68.32 2.80 2.87 2.09 1.18 21.30 18.13 26.79 27.42 11.81 0.63 *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. U.S. Australia Britain Canada China Euro Hong Kong India Indonesia Japan New Zealand South Korea Malaysia Philippines Singapore Switzerland Taiwan Thailand 1.062 1.582 1.008 0.1583 1.326 0.129 0.0200 0.0001 0.012 0.824 0.0009 0.332 0.023 0.798 1.100 0.034 0.033 PERFORMANCE YearThree-yr., to-date 52-wk. annualized Daily 1.31% 0.49 1.33 0.93 1.06 0.30 0.95 0.76 1.69 1.90 0.46 0.44 14.6% -24.9% 8.5 4.5 6.3 -3.3 11.6 6.3 15.8 -9.1 1.9 7.6 9.3 0.5 7.3 5.1 14.8 -5.6 15.2 -1.6 3.8 11.7 2.6 -12.2 10.8% 27.1 31.6 38.3 20.4 27.8 23.2 19.4 22.4 38.6 27.6 10.9 Source: DowJones Indexes U.S.-dollar and euro foreign-exchange rates in global trading 1.490 0.949 0.149 1.249 0.121 0.0189 0.0001 0.012 0.776 0.0008 0.313 0.022 0.752 1.036 0.032 0.031 0.637 0.100 0.838 0.082 0.0127 0.0001 0.008 0.521 0.0006 0.210 0.015 0.504 0.695 0.021 0.021 C$ 0.992 1.053 1.569 0.157 1.315 0.128 0.0199 0.0001 0.012 0.818 0.0009 0.330 0.023 0.792 1.091 0.034 0.032 YUAN 6.318 6.707 9.994 6.369 8.375 0.815 0.1265 0.0007 0.078 5.206 0.0057 2.098 0.148 5.041 6.948 0.214 0.207 EURO 0.754 0.801 1.193 0.760 0.119 0.097 0.0151 0.0001 0.009 0.622 0.0007 0.251 0.018 0.602 0.830 0.026 0.025 HK$ 7.756 8.234 12.269 7.818 1.228 10.281 0.1553 0.0008 0.095 6.392 0.0069 2.576 0.182 6.189 8.530 0.263 0.254 RUPEE 49.925 53.006 78.977 50.329 7.903 66.181 6.437 0.0055 0.613 41.144 0.0447 16.583 1.173 39.837 54.908 1.693 1.633 RUPIAH 9137.95 9701.84 14455.47 9211.85 1446.44 12113.42 1178.21 183.03 112.13 7530.76 8.18 3035.31 214.63 7291.48 10049.94 309.87 298.88 YEN 81.492 86.521 128.914 82.151 12.899 108.027 10.507 1.6323 0.0089 67.159 0.0729 27.069 1.914 65.025 89.625 2.763 2.665 NZ$ 1.213 1.288 1.920 1.223 0.192 1.609 0.156 0.0243 0.0001 0.015 0.0011 0.403 0.029 0.968 1.335 0.041 0.040 WON 1117.55 1186.51 1767.86 1126.58 176.90 1481.44 144.09 22.38 0.12 13.71 920.99 371.21 26.25 891.73 1229.08 37.90 36.55 RINGGIT PH. PESO 3.011 42.575 3.196 45.202 4.762 67.349 3.035 42.919 0.477 6.739 3.991 56.437 0.388 5.489 0.0603 0.8528 0.0003 0.0047 0.037 0.522 2.481 35.086 0.0027 0.0381 14.142 0.071 2.402 33.972 3.311 46.824 0.102 1.444 0.098 1.393 S$ S FRANC 1.253 0.909 1.331 0.965 1.983 1.438 1.263 0.917 0.198 0.144 1.661 1.205 0.162 0.117 0.0251 0.0182 0.0001 0.0001 0.015 0.011 1.033 0.749 0.0011 0.0008 0.416 0.302 0.029 0.021 0.726 1.378 0.042 0.031 0.041 0.030 TW$ 29.490 31.309 46.650 29.728 4.668 39.092 3.802 0.5907 0.0032 0.362 24.303 0.0264 9.795 0.693 23.531 32.433 BAHT 30.574 32.460 48.365 30.821 4.839 40.529 3.942 0.6124 0.0033 0.375 25.196 0.0274 10.155 0.718 24.396 33.625 1.037 0.965 Source: ICAP Plc. 1.62 1.71 4.0 -10.2 21.4 -14.0 -3.0 -20.4 3.7 -3.9 16.4 -5.5 1.18 5.2 0.2 1.04 9.3 3.0 Closed Weighted 1.56 -12.3 3478.36 6834.54 0.2 0.94 -17.7 CAC-40 4.2 18.61 -5.1 13.9 DAX 0.32 1.96 -13.6 France 10.733 57.22 8.5 15.2 Germany 3413.788 0.71 1.56 52-wk. -12.4% -7.2 4.1 34.83 2.17 0.33 10.2% 10.6 -10.2 0.20 2.24% 3.8 3.1 26.44 PERFORMANCE Percentage change Yr.-to-date 10.9 14.8 2970.38 £ 0.632 0.671 0.2645 0.012282 0.22 2000.76 A$ 0.942 0.1657 0.012275 81.42 SET US$ 2.6531 6.0333 81.47 0.009265 Taiwan Cross rates 0.3769 0.1250 0.009259 107.93 0.012271 3.53 1956.19 Last 2.0014 7.9978 108.00 81.49 Thailand 19 23 17 20 17 19 13 18 14 15 15 15 0.6330 3-mos. forward 0.009257 Brazil 2.38% 2.25 2.29 2.67 2.96 3.04 2.47 3.04 2.84 1.44 2.62 1.44 1.1917 1-mo. forward 108.03 13.45 Manila Composite Price-toDividend earnings yield* ratio* Dows Jones Index 0.8391 MIDDLE EAST/AFRICA Bahrain dinar 0.4996 Japan yen 836.16 13271.39 Kospi 1764.75 0.0005667 1578.36 Topix Straits Times In U.S. dollars 4.3374 Indonesia rupiah 52-wk. 10.9% Closed India Singapore 1.15% 1.48 Indonesia Philippines Per U.S. dollar 0.1739 PREVIOUS SESSION Index KSE 100 In euros Stock indexes from around the world, grouped by region. Shown in local-currency terms. Region/Country Pakistan Per euro 0.4249 South Korea won Follow the markets throughout the day with updated stock quotes, news and commentary at at WSJ.com. Also, receive email alerts that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com/Email EUROPE 2.3536 6-mos. forward WSJ.com>> In U.S. dollars 5.7497 Venezuela bolivar Sources: SIX Telekurs; WSJ Market Data Group Per U.S. dollar Brazil real Ecuador US dollar-f 98.11 2.9152 2.7919 2.3410 107.67 913.50 In euros Argentina peso-a Colombia peso 4.00 3.40 1,792.70 1,572.30 37.58 28.17 2,349.00 2,028.50 25,700.00 19,450.00 8,647.00 7,485.50 2,318.00 1,963.50 2,195.50 1,843.00 21,880 18,425 0.72 0.71 0.15 London close on March 8 1.78 0.84 0.33 1.66 0.64 18.3 1.6 9.9 -20.6 1.5 4.9 0.23 Sources: SIX Telekurs; WSJ Market Data Group MSCI indexes Developed and emerging-market regional and country indexes from MSCI Barra as of March. 08, 2012 Price-toDividend earnings yield ratio Morgan Stanley Index LOCAL-CURRENCY PERFORMANCE Last Daily YTD 52-wk. 2.70% 14 ALL COUNTRY (AC) WORLD* 324.02 -0.32% 8.2% -6.0% 2.80 14 World (Developed Markets) 1,270.77 -0.42 7.5 -6.0 2.10 21 World Small Cap 232.08 -0.81 9.7 -6.4 2.80 13 Kokusai (World ex-Japan) 1,269.30 -0.54 7.4 -5.1 3.60 14 EAFE 1,515.10 -0.08 7.3 -13.4 2.60 12 Emerging Markets (EM) 1,037.71 0.34 13.2 -6.3 3.10 12 AC ASIA PACIFIC EX-JAPAN 433.17 0.90 10.3 -6.5 2.70 12 AC Far East ex-Japan 487.85 0.78 11.7 -3.5 2.30 27 Japan 505.06 -0.71 13.2 -14.9 2.70 11 China 58.87 -0.93 11.3 -9.5 1.40 14 China A (China Domestic) 2,502.34 -0.71 11.2 -21.5 2.70 12 Hong Kong 11,342.72 0.02 13.9 -5.7 1.30 16 India 677.48 -0.04 13.4 -3.3 1.20 11 Korea 565.78 -0.97 8.9 1.5 2.80 17 Malaysia 575.03 -1.02 2.8 5.0 3.40 12 Singapore 1,563.44 -0.75 11.3 -5.2 4.20 15 Taiwan 279.77 -0.58 10.0 -8.7 3.10 12 Thailand 464.98 0.00 14.4 15.8 4.90 13 Australia 834.96 -1.39 1.5 -15.4 3.9 5.20 16 New Zealand 2.00 15 US BROAD MARKET 4.00 12 EUROPE 90.20 0.47 6.3 1,524.83 -0.76 8.0 1.4 89.95 0.59 5.9 -9.3 *Twenty-three developed and 26 emerging markets Source: MSCI Barra 26 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. SCANNING THE GLOBE DowJones JonesIndustrial IndustrialAverage Average Dow NasdaqComposite CompositeIndex Index Nasdaq P/E: 14 s 44.46, or 0.35% LAST: 12881.79 YEAR TO DATE: OVER 52 WEEKS s 24.52, or 0.84% LAST: 2960.21 YEAR TO DATE: OVER 52 WEEKS s 664.23, or 5.4% s 668.70, or 7.5% Index S&P 500 Index P/E: 12* P/E: 16 s 9.61, or 0.71% LAST: 1362.24 YEAR TO DATE: OVER 52 WEEKS s 355.06, or 13.6% s 208.49, or 9.6% s 104.64, or 8.3% s 42.22, or 5.2% High Close Low 13500 3025 1375 13000 2900 1300 12500 2775 1225 12000 2650 1150 11500 2525 1075 t 50–day moving average 11000 9 16 23 30 6 Jan. 13 20 27 3 Feb. 10 17 24 2400 2 Mar. 9 16 23 30 6 Jan. 13 20 27 3 Feb. 10 17 24 1000 2 Mar. 9 16 23 30 6 Jan. 13 20 27 U.S. stocks: most active... Symbol Volume, in millions Latest AT&T Alcoa AmExpress BankAm Boeing Caterpillar Chevron CiscoSys CocaCola Disney DuPont ExxonMobil GenElec HewlettPk HomeDpt Intel IBM JPMorgChas JohnsJohns KftFoods McDonalds Merck Microsoft Pfizer ProctGamb 3M TravelersCos UnitedTech Verizon T AA AXP BAC BA CAT CVX CSCO KO DIS DD XOM GE HPQ HD INTC IBM JPM JNJ KFT MCD MRK MSFT PFE PG MMM TRV UTX VZ 7.6 9.6 2.1 78.1 1.9 3.1 2.7 14.6 2.6 2.5 1.6 9.3 16.0 4.9 4.6 14.3 1.3 10.2 5.6 3.2 10.5 5.5 19.2 14.7 2.2 1.1 1.0 0.9 6.8 $30.97 9.73 52.78 8.07 74.09 109.66 109.71 19.70 69.37 42.08 50.93 84.87 18.98 24.56 47.93 26.83 199.08 40.52 64.91 37.94 97.17 37.48 32.09 21.55 67.00 86.48 56.83 83.31 39.24 0.09 0.18 0.51 0.05 0.58 1.38 0.25 0.29 0.58 0.33 0.70 –0.96 0.21 0.20 0.54 –0.08 1.31 0.57 0.61 0.11 –3.01 0.17 0.25 0.18 0.42 1.01 –0.04 0.74 0.37 WalMart WMT 3.1 59.59 0.13 Stock CHANGE Points Percentage 0.28% 1.88 0.97 0.62 0.78 1.27 0.23 1.49 0.84 0.79 1.39 –1.12 1.12 0.82 1.14 –0.30 0.66 1.43 0.95 0.29 –3.00 0.47 0.79 0.84 0.63 1.19 –0.07 0.90 0.95 17 24 2 Mar. ADRs of Asian companies* Stock Volume, Symbol in millions Latest CHANGE Points Percentage BankAm SPDR S&P 500 AmeriCapAg SPDR FnclSelSct AmIntlGp Dendreon AnnalyCap iShrMSCI Jpn SprintNextel PwrShrs QQQ iShrRu2000 Microsoft FordMotor iShrMSCIEmrgMkt OracleCp BAC SPY AGNC XLF AIG DNDN NLY EWJ S QQQ IWM MSFT F EEM ORCL 78.1 50.1 45.1 38.8 38.0 21.9 21.8 20.6 20.3 19.8 19.3 19.2 18.2 17.2 16.6 $8.07 136.79 29.50 14.76 28.63 9.72 16.16 10.04 2.59 64.63 80.18 32.09 12.49 43.60 30.13 0.05 1.10 –0.77 0.13 –0.82 –1.15 –0.30 0.17 0.16 0.57 0.70 0.25 0.25 0.69 –0.09 0.62% 0.81 –2.55 0.89 –2.78 –10.58 –1.85 1.69 6.38 0.89 0.88 0.79 2.03 1.61 –0.30 TEAR 266.8 STLY 162.5 MWA 4,082.6 SQNM 5,545.3 OCLR 1,302.3 $2.76 4.37 3.37 4.24 4.49 0.50 0.79 0.52 0.58 0.60 22.12% 22.07 18.25 15.85 15.42 $2.23 20.49 9.72 4.91 29.03 –0.28 –2.51 –1.15 –0.56 –3.03 –11.12% –10.91 –10.58 –10.24 –9.45 52-WEEK High Low TearLab StanlyFurn MuellerWater Sequenom Oclaro ...Biggest losers CLNT 30.7 CLVS 26.4 DNDN 21,866.9 SIGM 760.1 UGAZ 11.5 CleantechSolnsIntl ClovisOncology Dendreon SigmaDsgn VelocityShares3xLg Volume, Symbol in OOOs Stock $50.57 $22.02 35.08 16.16 14.80 10.75 9.98 1.70 165.96 100.95 53.34 43.51 104.59 62.54 37.58 8.79 20.29 12.89 29.06 14.33 74.25 46.12 22.50 15.30 2.89 1.77 9.24 3.75 5.40 4.01 51.50 24.14 21.14 14.18 5.69 4.00 8.12 0.75 36.96 29.86 37.46 29.28 55.00 35.74 36.80 24.47 67.50 46.08 24.98 7.10 58.99 32.77 5.78 2.12 26.32 21.25 271.94 141.27 125.36 82.50 Biggest gainers... 0.21 10 Sources: WSJ Market Data Group; Birinyi Associates *Price-to-earnings ratio for the Nasdaq 100 Note: Price-to-earnings ratios are for trailing 12 months DJIA component stocks 3 Feb. CtripInt ADS SonyCpADS TaiwanSemi SuntechPwr Baidu ADS ChinaMobile BHPBilton ADS FocusMediaHldg SK Tele ADS TataMtrs ADS InfosysADS ChinaUnicomHK UtdMicro ADS AU Optrncs MitsuUFJ ADS ICICI Bk ADS KT Crp ADS AdSemEg ADS Ku6Media TelkomIndo ChunghwaTel Netease.com HDFC Bnk PhlpLngDst SilicnMotnTch ChinaLfIns ADS SemiMfgInt ADS Nippon ADS Cnooc ADS ChinaPete ADS CTRP SNE TSM STP BIDU CHL BHP FMCN SKM TTM INFY CHU UMC AUO MTU IBN KT ASX KUTV TLK CHT NTES HDB PHI SIMO LFC SMI NTT CEO SNP CHANGE Latest Points Percentage 3,374.6 $24.20 –0.33 2,642.9 20.38 –0.04 2,503.7 14.53 0.13 2,032.5 2.90 –0.04 1,954.1 137.55 2.61 1,351.1 52.55 0.91 1,268.6 73.68 0.76 855.8 24.75 0.16 743.5 13.79 –0.15 655.1 27.37 0.32 529.9 57.76 0.70 513.7 18.50 0.44 497.9 2.59 0.02 435.9 5.26 0.11 404.5 5.09 0.10 386.5 35.05 0.36 372.4 14.48 –0.09 275.4 4.87 0.12 260.6 2.19 –0.17 260.4 30.54 0.13 250.0 30.77 –0.20 233.0 52.02 1.17 220.0 33.75 0.55 197.6 64.14 0.07 196.8 17.98 –0.03 196.4 40.83 0.40 181.3 2.64 0.14 173.5 23.51 –0.11 44.3 215.97 2.27 39.5 114.47 0.83 –1.35% –0.20 0.89 –1.19 1.93 1.77 1.04 0.65 –1.08 1.18 1.23 2.44 0.77 2.14 2.00 1.04 –0.62 2.53 –7.20 0.42 –0.66 2.30 1.66 0.11 –0.17 0.99 5.60 –0.47 1.06 0.73 *Most active American depositary receipts tracked by Dow Jones Source: WSJ Market Data Group U.S. Treasury yield curve 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 Coupon 4.300 Maturity, in years Austria* 2 SPREAD OVER TREASURYS, in basis points Yield Latest 0.721 41.1 TOTAL RETURN 5% YIELD Previous Month Ago Year ago Previous Month ago Year ago 43.5 55.7 85.9 0.732 0.819 1.588 10 2.808 79.3 85.9 93.8 9.9 2.835 2.970 3.654 Belgium 2 0.886 57.7 59.0 107.7 199.5 0.887 1.339 2.724 4.000 10 3.417 140.2 151.5 151.3 78.0 3.491 3.545 4.335 3.125 Finland* 2 0.379 7.0 10.0 25.7 90.5 0.398 0.519 1.634 3.500 10 2.208 19.3 24.0 36.8 -4.2 2.216 2.400 3.513 2.000 France 2 0.456 14.7 19.3 30.7 106.8 0.491 0.569 1.796 3.250 10 2.787 77.2 85.2 86.8 10.9 2.828 2.900 3.664 0.250 Germany 2 0.134 -17.6 -16.0 -0.9 103.3 0.138 0.253 1.762 2.000 10 1.795 -22.0 -20.0 -4.6 -24.4 1.776 1.986 3.312 n.a. Greece 2 n.a. ... ... ... ... ... ... ... One year ago s 3.650 4.250 4 3 2 1 s Country/ The curve shows the yield to maturity of current bills, notes and bonds; all data as of 3 p.m. ET. Wednesday 0 1 3 6 month(s) 1 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 3.114% 1.970 1.366 0.848 1.335 0.413 0.301 0.183 0.142 0.115 0.081 19.33 8.97 6.63 4.86 7.45 2.93 1.97 1.00 0.50 0.46 0.25 One-month bill 0.056 0.08 Month to-date Quarter to-date –0.22 % 0.19 0.31 0.17 0.09 0.04 0.01 –0.01 –0.01 ... ... Year to-date 12-month –3.49 % 0.47 0.37 0.45 –0.35 –0.06 0.08 –0.04 –0.03 –0.02 ... –3.49 % 0.47 0.37 0.45 –0.35 –0.06 0.08 –0.04 –0.03 –0.02 ... 35.85 % 19.67 15.62 10.37 14.26 4.01 1.63 0.47 0.25 0.22 0.12 0.01 0.01 0.04 ... a-Performance of a cash investment Source: Ryan ALM n.a. 10 n.a. ... ... ... ... ... ... ... 2.250 Italy 2 1.831 152.2 150.6 268.9 197.0 1.803 2.950 2.699 5.000 10 4.788 277.3 294.9 346.2 133.8 4.925 5.494 4.893 1.000 Netherlands 2 0.304 -0.6 3.2 3.6 81.8 0.330 0.298 1.547 U.S. 3.25% 3.25% 0.44321% 0.85813% 2.250 10 2.260 24.5 27.8 26.6 4.1 2.254 2.298 3.597 Canada 3.00 3.00 Three month 0.83843 1.12438 Three month 5.450 Portugal* 2 11.539 1123.0 1137.3 1393.3 381.8 11.671 14.195 4.547 Japan 1.475 1.475 Six month 1.18929 1.43438 Six month 0.5900 0.4900 Britain 0.50 0.50 One year 1.54714 1.87563 One year 0.9000 0.8000 3.850 10 13.557 1154.1 1157.4 1100.8 399.4 13.550 13.040 7.549 ECB 1.00 1.00 6.750 Spain 2 2.267 195.7 203.0 214.2 251.4 2.328 2.404 3.243 Switzerland 0.51 0.55 Euribor One month 303.4 311.2 291.1 191.3 5.088 4.943 5.468 4.75 0.92000 U.S. discount 0.75% 0.75% 5.049 4.25 1.17200 10 Australia Three month 3.500 Hong Kong 5.00 5.25 Six month 1.22900 1.48700 Fed-funds target 0.00 0.00 2.250 U.K. 2 0.424 11.5 14.0 16.2 65.0 0.437 0.424 1.379 One year 1.56100 1.93800 Call money 2.00 2.00 3.750 10 2.066 5.0 8.3 15.5 11.7 2.058 2.187 3.672 0.310 ... ... ... ... 0.298 0.262 0.729 0.30214% 0.16929% U.S. 2 0.24275% 0.25900% 0.250 Three month 0.47455 0.30950 Three month 0.40143 0.23893 Overnight repurchase rates U.S. 0.17% 2.000 10 2.015 ... ... ... ... 1.976 2.032 3.555 Six month 0.74320 0.46250 Six month 0.54143 0.30000 One year 1.05440 0.78650 One year 0.83214 0.63143 Key money rates Latest Source: Tullett Prebon, except * marked countries from ICAP plc 52 wks ago Prime rates Libor One month Latest Euro Libor One month Hibor One month 0.51100% 52 wks ago Offer Eurodollars One month 0.90400% Bid 0.1100% 0.2500% 0.3900 0.2900 Latest 52 wks ago 0.14% U.K. (BBA) 0.495 0.537 Euro zone 0.13 0.77 Sources: WSJ Market Data Group, SIX Telekurs, ICAP THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | 27 MARKETS LINEUP Moving the markets Asian index movers… At right, Japan’s benchmark stock index and the biggest movers among the larger Asian stocks indexes and stocks Thursday. Below each index are its most actively traded stocks. The charts show the percentage change in each index’s or stock’s 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 Hang Seng Japan Hong Kong s 9768.96 2.01% or 192.90 Stocks snapped a three-day losing streak, as exporters got a boost from a drop in the yen, driven by progress in Greece’s debt plan. Nikon rose 4.3%. Also, receive emails that summarize the day’s trading in Europe and Asia. To sign up, go to WSJ.com/Email. Stock Mizuho Fin Volume in millions Close 144.27 135 Change Net s 21987.89 1.31% or 284.85 Stocks rose for the first time in four days. Metal stocks gained on rises in metals prices. Jiangxi Copper climbed 1.9%; Zijin Mining advanced 0.9%. South Korea s 2000.76 0.94% or 18.61 Financials, shipbuilders and construction firms gained after being battered in recent sessions on growth fears. Hyundai Engineering & Construction rose 2.7%. 30000 36000 3000 12500 25000 30000 2500 10000 20000 24000 2000 7500 15000 18000 1500 5000 Follow the markets throughout the day, with updated stock quotes, news and commentary at WSJ.com. Optimism over Greece’s debt swap lifted stocks. Developers gained on bargain hunting. Cheung Kong rose 2.9% after dropping 6% since Monday. Kospi China 15000 M A M J J A S O N D J F 2011 2012 WSJ.com>> s CBN 600 20900.73 1.32% or 272.95 % 10000 M A M J J A S O N D J F 2011 2012 Stock Volume in millions Close 5.25 3 2.27 Ind&Comml 291.90 12000 M A M J J A S O N D J F 2011 2012 Change Net % Stock Volume in millions Close 0.05 0.96 TCL 206.68 2.42 Change Net Stock % … 1000 M A M J J A S O N D J F 2011 2012 … SsangyongMaterials Volume in millions Close Change Net 41.20 3,045.00 -535.00 % –14.94 MitsuUFJFin 88.31 415 11 2.72 BankofChina 240.02 3.25 0.06 1.88 FounderSecurities 181.19 5.05 0.19 3.91 WooridulPharm 36.21 1,650.00 90.00 5.77 NomuraHldgs 63.88 378 17 4.71 ChinaConstructnBk 236.43 6.26 0.12 1.95 SuningApplianceA 153.67 10.18 0.08 0.79 WooridulLifeSci 24.46 2,125.00 -70.00 –3.19 TEC&Co 23.15 215.00 -6.00 –2.71 ShinilIndustrial 18.15 1,060.00 -75.00 –6.61 MazdaMtr 60.91 128 2 1.59 AIAGroup 75.80 27.40 –0.10 –0.36 ChinaUtdNtwkComms 134.85 4.63 … … NipponSheetGlass 34.42 128 1 0.79 ChinaPetro&Chem 64.27 8.90 0.10 1.14 ChinaStateConstrA 131.69 3.26 0.03 0.93 Asian stocks in the news LG Electronics Inc. Korea Nikon Corp. Want Want China Holdings Ltd. Ping An Insurance (Group) Esprit Holdings Ltd. 90,700 won Japan ¥2,241 s 3.9% or 3,400 won Hong Kong s 4.3% or ¥93 HK$8.76 Hong Kong s 4.7% or HK$0.39 HK$62.35 Hong Kong s 5.1% or HK$3.05 Hopes for strong first-quarter results on robust smart-phone sales lifted shares. The yen’s decline amid progress in Greek debt talks boosted Japanese exporters. The stock is up 16% in three session on a better-than-expected earnings report. Asian financial shares bounced back after losses earlier in the week. In won In yen In Hong Kong dollars In Hong Kong dollars 150000 3500 120000 2800 60000 1400 4 40 N.A. N.A. 1.5 -8.3% -17.2% Transurban Group 82 32.49 1.3 Personal & Hshld Gds Nikon Corp. 0.9% -0.7% 4.3% 2.6% In Australian dollars In yen 1.3% -0.9% Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Food & Beverage Want Want China Holdings Ltd. 1.0% 0.1% 4.7% 16.8% 3.3% 36.9% Korea 1000000 23,650 won 6 M A M J 2011 N.A. N.A. N.A. J A S O N D J F 2012 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Insurance Ping An Insurance (Group) 2.1% -3.4% 5.1% -5.2% -17.2% -27.4% Korea t 1.7% or 400 won PERCENTAGE CHANGE Daily 1 wk. 52 wks Retail Esprit Holdings Ltd. 0.8% -0.5% 5.6% -0.7% 4.0% -51.7% Sharp Corp. 72,200 won Japan ¥520 t 2.2% or 1,600 won t 4.8% or ¥26 Defensive shares like utilities weakened on an upbeat day for the market. The tobacco maker fell as investors sold defensive shares on optimism about Greece’s debt deal. The stock is down 21% this year. In won In won In yen 50000 N.A. N.A. N.A. 125000 1250 100000 1000 6 600000 30000 75000 750 4 400000 20000 50000 500 200000 M A M J J A S O N D J F 2011 2012 62 0.09 5.1 -1.2% 0.2% A S O N D J F 2012 40000 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Indus Gds & Svcs Transurban Group N.A. N.A. N.A. J 800000 S O N D J F 2012 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield 20 M A M J 2011 8 2 A -8.3% 17.9% ¥526,000 The stock is up 6.3% this year. J Price-to-earnings ratio Earnings per share, past four quarters Dividend yield t 1.1% or ¥6,000 Domestically exposed companies fell as disappointing Australian jobs data followed weak GDP figures. M A M J 2011 A S O N D J F 2012 Korea Electric Power Corp. KT&G Corp. Japan t 0.9% or A$0.05 10 J PERCENTAGE CHANGE Daily 1 wk. 52 wks KDDI Corp. A$5.56 2 M A M J 2011 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield 42 30 18 700 J A S O N D J F 2012 54 In Hong Kong dollars 80 60 PERCENTAGE CHANGE Daily 1 wk. 52 wks Australia 8 6 M A M J 2011 0.9% -0.7% 3.9% 6.2% 100 2100 30000 Personal & Hshld Gds LG Electronics Inc. The stock had lost 10% from Monday to Wednesday. 90000 M A M J J A S O N D J F 2011 2012 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield 10 HK$18.24 s 5.6% or HK$0.96 -8.6% 5.9% 10000 M A M J J A S O N D J F 2011 2012 11 58537.60 2.5 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Telecommunications KDDI Corp. 0.5% -1.1% -1.2% 0.8% 2.3% -5.2% 25000 M A M J J A S O N D J F 2011 2012 N.A. N.A. N.A. Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Utilities Korea Electric Power Corp. 0.5% ... -1.7% -5.8% -21.0% -13.8% 250 M A M J 2011 N.A. N.A. 4.8 J A S O N D J F 2012 Price-to-earnings ratio Earnings per share, past four quarters Dividend yield PERCENTAGE CHANGE Daily 1 wk. 52 wks Personal & Hshld Gds KT&G Corp. 0.9% -0.7% -2.2% -1.4% -8.3% 23.4% 50 11.32 3.9 PERCENTAGE CHANGE Daily 1 wk. 52 wks Personal & Hshld Gds Sharp Corp. 0.9% -0.7% -4.8% -6.1% -8.3% -36.3% THE WALL STREET JOURNAL. HEARD ON THE STREET FINANCIAL ANALYSIS & COMMENTARY Email: [email protected] A Leaky LNG Plank Perhaps one good thing to come out of last year’s disasters in Japan was a newfound drive to take a serious look at cutting costs in the nation’s gold-plated power-generation system. But one plank of that—a plan to import liquefied natural gas from the U.S. over the long term— may not be the panacea to lower costs that its proponents argue. At present, the Japanese government, utilities and trading companies are trying to secure U.S. LNG, while changing the pricing model that ties LNG prices to crude-oil costs. The current formula makes Japan’s LNG imports about five times more expensive than domestic U.S. natural-gas prices, based on the Henry Hub benchmark. That expense and the cost-plusprofit pricing used by power monopolies have added to the litany of burdens—including the strong yen— facing Japanese corporations. Indeed, commercial electricity rates are at least double those of South Korea, Taiwan and the U.S., says the International Energy Agency. So why is the scenario less rosy than at first glance, even though LNG accounts for about one-fourth of Japan’s electricity needs? First, there is a concern in Tokyo Gas Hubbub Prices of three energy sources Oil Japanese liquefied natural gas U.S. natural gas* $20 per million BTU 15 10 5 0 2001 ’02 ’04 ’06 ’08 ’10 *Henry Hub Source: BP Statistical Review of World Energy 2011 The Wall Street Journal that Washington may not approve more exports—or later would interrupt the LNG flow—because of national-security concerns or for ecological reasons. Already, some members of Congress and LNG customers are arguing that expanded exports of natural gas could reduce domestic supplies and send prices higher for U.S. users. Another issue is that Japan, which doesn’t have a free-trade agreement with the U.S., must undergo a stricter authorization process to get LNG shipments than do free-trade signatories. Moreover, even when the U.S. is able to export LNG to Japan, beginning in 2018, imports could account for only 10% to 20% of Japan’s LNG needs, says Fereidun Fesharaki, chairman of oil-and-gas consultancy Facts Global Energy. At best, only half of the imports would be based on the U.S. Henry Hub price, he said. For Japan, the world’s No. 1 LNG importer, the lure is understandable. Even adding the expense of supercooling the natural gas, liquefying and shipping, the landed cost in Japan of that Henry Hub-based price model could still be about one-third less than the current pricing system. Still, diversifying LNG sources and trying to gain some leverage on pricing and input costs at utilities more than makes sense. Energy policy clearly isn’t something that changes overnight, but Tokyo is on the right track—at least for LNG. Japan needs to try to negotiate cheaper contracts now and overcome any obstacles so that one day LNG also means “lower natural gas” prices. —James Simms WSJ.com/Heard Japan’s GDP Shows Ephemeral Flavor Once again, Japan’s economic statistics aren’t quite what they appear to be. A closer look at the nation’s fourth-quarter growth indicates that the jump in capital expenditures, which usually accounts for about 15% of the economy, is out of line with other statistics, such as shipments of factory equipment and machinery orders. As such, Japan’s gross domestic product for the year could be overstated because of the higher jumping-off point. That factor could lift 2012’s GDP by 0.3 percentage point, says Morgan Stanley MUFG. The continuing differences between the preliminary and revised data could also do some damage to corporate and investor confidence in the GDP data. Uncertainty regarding the nation’s overall statistics also make it difficult for policy makers when deciding how to adjust economic policy. As released Thursday, Japan’s price-adjusted GDP shrank at an annualized rate of 0.7% in the Octoberto-December period versus the previous quarter, a much better performance than the initial 2.3% contraction. The upgrade was mainly because capital expenditures were revised upward to a 4.8% jump from a preliminary 1.9% increase. But fourth-quarter figures for capital-goods shipments show only a 1% increase from the previous period and a fall of 0.7% when excluding transportation equipment. In addition, core machinery orders, an indicator of spending on plants and equipment in the following quarters, posted a 2.5% increase in the second quarter versus the prior period and a 1.5% rise in the third. Both of those are more in line with Japan’s initial GDP capex figure. Despite this, Japan’s economy appears on a recovery track—and could expand faster than other developed economies in coming quarters—because of postearthquake reconstruction spending and state incentives for buying fuel-efficient cars. With all the recent disasters, Japan’s statistics need to provide a clearer picture of the economy more than ever. —James Simms Apple iPads Its Portfolio, With More in the Pipeline The name is odd, but the product should get the job done. Apple Chief Executive Tim Cook on Wednesday delivered a workmanlike upgrade to the company’s tablet franchise, with a product curiously called “the new iPad” instead of, perhaps, iPad 3. The “new” version has better screen resolution, a more powerful camera, a faster chip and the ability to connect to faster fourth-generation wireless networks. That should keep Apple well ahead of rival tablet makers. Analyst Neil Mawston of Strategy Analytics estimates Apple will sell 50 million iPads this year, up 23% from the prior year. Nearest competitor Samsung is expected to sell just eight million. Mr. Mawston says growth will be even higher if new “ultrabook” PCs don’t eat into the tablet business. For all of the hoopla around the latest product upgrade, though, other, forthcoming devices should have investors more excited. Later this year, Apple is expected to deliver the next version of the iPhone. It may come with a chip that is compatible with China Mobile’s network. That could mean Apple’s flagship device will soon be officially available at the largest wireless carrier in the world. In tablets, Apple is working with Asian component suppliers to test a tablet with a smaller screen. An “iPad Mini,” if Apple releases one, could compete with Amazon.com’s Kindle Fire. Still, Apple didn’t get where it is through iterations of existing products—it conquers new frontiers. As good as the new iPad may be, Mr. Cook has yet to show he can do that. Apple’s existing set-top box aside, TV awaits. —Rolfe Winkler Getty Images Apple CEO Tim Cook unveils ‘the new iPad’ in San Francisco. Technology helps create the world that we dream of. Hyundai Heavy Industries pursues the happiness of the global community with its advanced technology. In the realm of heavy industries, our technology is everywhere, improving the quality of life and happiness of everyone. We are building a world of shared dreams. LNG Carrier Drillship Containership Published by Dow Jones Publishing Company (Asia). Printed in Hong Kong by Superflag Printing and Communication Ltd., 1/F, 8 Chun Ying St., Tseung Kwan O Ind. Est., Tseung Kwan O, NT. Printed in Indonesia by PT Gramedia Printing Group, Jalan Palmerah Selatan 22-28, Jakarta 10270. Printed in Japan by Yomiuri Shimbun, 1-7-1, Otemachi, Chiyoda-ku, Tokyo 100-8055. 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Published and printed on behalf of the Wall Street Journal India Publishing Pvt Ltd, 517B World Trade Centre, Barakhamba Lane, New Delhi 110001 by Mr Suman Dubey at A-8 Sector 7, Gautam Budh Nagar, Noida -201301 and PLOT No.EL208, TTC Industrial Area, Mahape, Navi Mumbai - 400710 (Maharashtra), India, Editor: Suman Dubey, phone: +91-11-6462 0215. ACP no. F.2 (T/3) Press / 2009 FACSIMILE EDITION. 28 | Friday - Sunday, March 9 - 11, 2012 FASHION | INTERVIEW | WINE | FOOD | TRAVEL | HOMES | BOOKS Friday - Sunday, March 9 - 11, 2012 | ARTS asia.WSJ.com/lifestyle Deluxe screening rooms in private homes are becoming Hollywood’s most exclusive social networks. BY LAUREN A. E. SCHUKER W Top, the screening room of Jarl and Pamela Mohn, who hold a film festival every year. Michal Czerwonka for The Wall Street Journal (3) hen Brett Ratner, the director behind the “Rush Hour” franchise, presses a button, the lights in his living room—part of a Beverly Hills estate once owned by Ingrid Bergman—go dim. Shades creep across the windows, shrouding a Rodin sculpture in darkness. As an 18-footwide screen descends from the wood-paneled vaulted ceiling, part of the dark wood floor falls away, revealing an enormous speaker that rises from the basement below. Mr. Ratner, who regularly watches movies with pals Brian Grazer, Edward Norton and Eddie Murphy, spent six months digging through his home’s concrete foundation for the speaker elevator alone. In all, he sank about half a million dollars into renovating his tricked-out private screening room, an increasingly important fixture in Hollywood. Steven Spielberg recently finished building his new screening facility at his Pacific Palisades home. With a touch of his iPad, he can unlock a hidden door that opens onto a corridor leading to the projectionist booth and lobby. In his 1940s Art Deco-styled screening room, with frosted-glass sconces, cherry-wood ribbing and fluted bronze panels, Mr. Spielberg sits in the back, on the highest tier of the stadium seats, directing the entire experience with his remote. Jarl Mohn, who created E! Entertainment Television, and his wife have held their own film festival every year at their Brentwood home between Christmas and New Year’s. Dubbed “MohnDance,” it screens a new firstrun film for about 10 people each night for seven nights. This holiday season, the roster included “Tinker Tailor Soldier Spy,” “Mission: Impossible—Ghost Protocol,” “Hugo” and “Young Adult.” “Our screening room is the centerpiece of our social life,” says Mr. Mohn. People familiar with the room say Mr. Mohn spent more than $2 million furnishing and equipping it. The first private screening rooms were built in the 1930 and 1940s for the original movie moguls to watch films they and their competitors made. But in recent years, as digital projection has replaced the need to hire a projectionist and run 35-millimeter film, there has been a screening-room building boom. As DVDs, video on demand and movies on the Web proliferate, the idea of watching a new movie the old-fashioned way has taken on new allure. Exclusive private screenings have become an increasingly essential component of both the social and business culture of Hollywood. Please turn to next page [ INSIDE ] FASHION & STYLE A portrait of the painter as a sartorialist W8 GOLF JOURNAL Not at home on the range W3 AUTOS Why less is more with the new BMWs W16 W2 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. WEEKEND JOURNAL Hollywood’s Most Exclusive Cinemas Hollywood’s Secret Screener List Bill Gates is a member, as are Tom Cruise and Derek Jeter. In Hollywood, one coveted prize is a spot on the “Bel-Air circuit,” a list of VIPs who are allowed to borrow prints of movies the weekend they hit theaters (and sometimes earlier). Each of the six major Hollywood studios has one, and the lists are highly similar with some small variations. Below is a sampling of the “circuit,” compiled from several lists supplied by people close to the studios. Michal Czerwonka for The Wall Street Journal (4) Ben Affleck, actor Prince Saud al-Faisal, son of late King Faisal Paul Allen, Microsoft co-founder Woody Allen, director Marc Andreessen, Netscape co-founder Judd Apatow, director Irving Azoff, chairman, Live Nation Warren Beatty, actor Ron Burkle, businessman James Cameron, director George Clooney, actor Robert De Niro, actor Dr. Dre/Andre Young, rapper/producer Petra Ecclestone, British heiress Michael Eisner, former Disney chief Ari Emanuel, super agent Roy Furman, vice chairman of Jefferies & Co. Larry Gagosian, superstar art dealer Bill Gates, Microsoft co-founder David Geffen, entertainment mogul Samuel Goldwyn Jr., producer, son of movie mogul Samuel Goldwyn Brad Grey, CEO of Paramount Pictures Tom Hanks, actor Hugh Hefner, Playboy magnate Dustin Hoffman, actor Alan Horn, ex-president of Warner Bros. Jimmy Iovine, music executive Derek Jeter, New York Yankee Jeffrey Katzenberg, CEO of DreamWorks Animation Kirk Kerkorian, casino magnate Nicole Kidman, actress Calvin Klein, fashion designer Sherry Lansing, former CEO of Paramount Pictures John Lasseter, Pixar and Disney Animation chief creative officer David Lynch, filmmaker Barry Manilow, singer/songwriter Frank McCourt, owner of the Los Angeles Dodgers Ron Meyer, Universal Studios president Barry Meyer, CEO of Warner Bros. Les Moonves, CEO of CBS Corp. Tommy Mottola, music executive Rupert Murdoch, CEO of News Corp. (which owns The Wall Street Journal) Eddie Murphy, actor/comedian Michael Ovitz, co-founder of CAA Amy Pascal, Co-Chairman Sony Pictures Entertainment Ron Perelman, businessman Sumner Redstone, founder, Viacom Stephen Schwarzman, CEO of privateequity firm Blackstone Group Martin Scorsese, director Ryan Seacrest, host of “American Idol” Sylvester Stallone, actor Barbra Streisand, singer, actress Harvey Weinstein, producer/founder, Weinstein Co. Continued from previous page For people in the entertainment world, having an elaborate private screening room can be a tool for entertaining business associates, building buzz and ginning up awards support. The ability to show a film at home before or when it comes out in theaters requires getting on an exclusive list, often referred to as the “Bel-Air circuit.” Each of the six major Hollywood studios has its own list, but their rosters include mostly the same cast of characters, with a few variations. They spell out the roughly 300 to 500 power brokers, mostly in Los Angeles—from Mr. Spielberg and actor George Clooney to rapper Dr. Dre and businessman Ron Burkle— who are eligible to receive films from the studios on, or before, opening weekend. For inclusion, one needs a strong track record in the entertainment business. Movie stars have an automatic entrée. The occasional sports superstar is included: New York Yankees shortstop Derek Jeter was recently added to the lists at some studios. Studios refer to New Yorkers on their lists (Woody Allen, Harvey Weinstein) as the “subway circuit”; the Florida crew is the “gator circuit.” Once on the list, members can make requests to borrow a print or, increasingly, a digital copy; each weekend, a top studio official approves each request. At Paramount, for example, Chief Executive Brad Grey and Vice Chairman Rob Moore—the studio’s two highest-ranking executives—personally handle each one. At Weinstein Co., the Weinstein brothers approve requests. The cost of a top-of-the-line screening room averages $500,000 but can run up to $2 million or more with all the bells and whistles, according to Joseph Cali, a highend home-theater designer and installer who built the screening rooms for George Clooney, Matt Damon and Tom Cruise. In Hollywood, few on the circuit have a screen smaller than 14 feet in width, says Mr. Cali. Most are 16 to 18 feet. Standard screening room accoutrements are stadium-style seating, cutting-edge acoustics, ergonomic couches and automated shade coverings as well as fancy candy offer- ings. The room of restaurateur Michael Chow, best known for his eponymous restaurant chain Mr. Chow, shares a wall with his pool to create an aquarium effect. Often, the same companies that build screening rooms for the major studios are constructing these spaces. The screening-room designer most in demand is Jeff Cooper, an MIT-educated architect and acoustic engineer who has built facilities for George Lucas, Martin Scorsese, Francis Ford Coppola, Robert Zemeckis and, most recently, Mr. Spielberg. Mr. Cooper is currently building a 49-seat screening room for “Transformers” franchise director Michael Bay in Bel-Air. To create a starry sky that appealed to Mr. Bay’s love of special effects, Mr. Cooper is topping the theater with an elliptical dome and fiber-optic stars. ‘If you want people in town to chat up a movie, this is the best way to do it,’ says one studio marketing executive. To extend the Bel-Air circuit to a larger group and possibly profit from it, a start-up called Prima Cinema is working with the studios to roll out a service that will make firstrun studio films available the day they hit the big screen. Available in a few months, the service will allow homeowners with a highend digital-projection screening room (who also pay $35,000 to install Prima’s highly secure digital delivery system) to watch firstrun films for an additional $500 each. The service won’t deliver movies before their opening date. Most owners of screening rooms tend not to visit other people’s spaces. The most coveted screening rooms to get into are often the most private; few have seen Mr. Spielberg’s space, widely considered one of the most beautiful. Tom Cruise’s sitting room in his Beverly Hills home, which his interior decorators Alexandra and Michael Misczynski designed, transforms into another sought-after screening room. Mr. Cruise screens films most weekends, but few outsiders are invited, according to people close to Mr. Cruise who have visited the space. With the touch of a button, the room—which overlooks Mr. Cruise’s garden—turns dark, a screen falls in front of French doors and about 20 different speakers and subwoofers hidden behind fabric walls turn on. Invitations can be strategic; the owner wants a business associate to see a particular film or is doing a favor by promoting a film for a studio. Some studios will ask prominent screening-room owners to host so-called tastemaker screenings, where the owners invite influential friends to come see a particular film. “The Artist,” which won several Oscars, including best picture, was also screened in rooms across town this year, these people add. “If you want people in town to chat up a movie, this is the best way to do it,” explains one studio marketing executive, referring to tastemaker screenings. Food is one of the rare polarizing issues. Some strictly forbid it; Mr. Scorsese, who maintains a private screening room in his New York office, allows guests to bring in only water, according to a person close to the director. Sherry Lansing, who built a room in her home after leaving her post as chief executive of Paramount Pictures, says she allows both water and candy. Phil Rosenthal, the creator of “Everybody Loves Raymond” whose new film “Exporting Raymond” just hit HBO, started hosting Sunday night screenings in the 1970s for his high-school buddies with a 19-inch color television and take-out pizza. Since then he has upgraded: Five years ago, when he installed a screening room at his Hancock Park home, he also built a wood-burning pizza oven. A professional chef cooks the pizza before the movie. “It’s like programming your own movie theater—you choose the movie, the food, the time,” Mr. Rosenthal says. “But you also get to choose everyone in the audience.” Mitch O’Connell Top left, Brett Ratner and his personal screening room; above, Mr. Chow and his aquarium-like space. THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | W3 SPORTS The Wrong Way to Improve Your Game Why Much of the Work That Golfers Do Doesn’t Help Them Get Better; ‘the Illusion of Competence’ [ Golf Journal ] You’re on the range, pounding balls, and suddenly golf seems easy. All the parts of your swing sync and you start striping one career-best drive after another. “By golly, I’ve got it,” you say to yourself. You can’t wait to get to the course. Science has a name for this exalted state, but unfortunately it’s not “flow” or “in the zone.” It’s “the illusion of competence,” and the odds are it’s doing your golf game more harm than good. You may think you’ve got it, but you haven’t. More than most people realize, the range has little to do with actual golf. “After most sessions on the range or even lessons, golfers haven’t really learned anything, if by learning you mean making a skill usable, durable and automatic in other contexts,” said Fran Pirozzolo, a Ph.D. in neuropsychology who has worked on performance training with PGA Tour pros, elite athletes from football and baseball, Navy SEALs and NASA astronauts. By “other contexts” he means playing in the pressure of competition, but also driving off the first tee in front of friends and hitting off a downhill lie. We golfers, it turns out, are bad at assessing the state of our skills. We are even worse at understanding how our brains work when we try to make changes, and most instructors aren’t much help, either. “Our golf culture is set up to pass along knowledge in halfhour or one-hour lessons. In that time, a teacher can fix a shank or get somebody to slice the ball less, and everyone leaves the lesson happy. But there’s not much of a system in place to transfer that knowledge onto the course,” Pirozzolo said. Elite athletes know themselves better. “That’s why Tour pros talk about needing months or even a year to integrate a swing change. Eighteen-handicappers almost never understand that,” he said. Drawing heavily on the latest research in neuroscience, Pirozzolo is working with Steven Levitt, a professor of economics at the University of Chicago and the co-author of “Freakonomics,” on a golf research project to determine which transfer techniques work and which don’t. One technique that clearly doesn’t work is “massing”—that irresistible urge most golfers have to hit interminable balls at the range until, maybe, they get it right for a short spell. “Massing can be useful for introducing new skills because you have to create a basis. But fairly quickly, if you want to progress and retain what you’ve learned, you need more advanced techniques,” Pirozzolo said. A lot of these can be uncomfortable, since they involve frequent failure. The good news is they can take less time than the random ball-whacking many golfers are already doing. Some can be adapted into games against other players, especially short-game drills. John Fraser BY JOHN PAUL NEWPORT “Interleaving” is one example. That’s neuroscience-speak for constantly alternating clubs, drills and targets. In one experiment that Levitt and Pirozzolo conducted, the goal was to increase proficiency on 110-yard wedge shots. One group of participants hit 90 shots to targets exactly that far away. A second group hit 30 shots to 70-yard targets, 30 shots to 110-yard targets and 30 shots to 120-yard targets. In the end, the second group substantially outperformed the first group in hitting to 110-yard targets, even though they had hit only a third as many shots to that distance. Generally speaking, the best practice techniques are those that lay down multiple, vivid memory patterns in the brain. Sometimes that entails introducing “desirable difficulties” such as simulated pressure, hitting in strong winds and from bad lies. Practicing in short sessions across many days is more effective than “cramming” the same work into a single session, opening more avenues for recall. Not all golfers are willing to put themselves through such grief, of course, even though they’d ultimately enjoy the game more if they did. (A recent study by the golf research firm Pellucid determined that for each stroke lower a midhandicap golfer scores, he or she will play, on average, 10% more rounds because of increased enthusiasm.) A major reason for players’ reluctance to make the effort is their frustration with previous lessons, when what they learned on the practice tee (or thought they learned) didn’t stick. “Golfers are being sold a lie when they’re told they’ll get better with 30 minutes of swing analysis,” said Rick Jensen, a sports psychologist who argued in his book “Easier Said Than Done” that simple lessons aren’t enough. “Golfers need coaches like in other sports, someone to give them drills, monitor their progress, send them out to scrimmage and give them feedback,” he said. The intensive coaching model that works for Tour pros is too expensive for most amateurs, but Jensen said that if players are better educated about what it really takes to improve, they and their teachers can better decide how to use the time and money that is available. There are signs that this philosophy is gaining steam. Top-50 instructor Michael Hebron now teaches almost entirely in light of the latest brain-science research. “You never hit the same shot twice on a golf course, so why should you on the range?” he said. Golftec, a national chain of teaching centers, sells most of its lessons in multimonth or yearlong packages that include gym-membership-type access to video-enhanced practice facilities. Even for local teaching pros, there’s a better way, said John Kennedy, the director of golf at Westchester Country Club in Rye, N.Y. The starting point is establishing realistic long-term goals that are within the student’s budget and physical limitations. “A 45-year-old 20 handicapper in OK shape, with a lesson every other week or so, should probably be able to get down to a 12 handicap in one season. But he’d have to really commit to his teacher and follow through on drills and proper practice and the short game,” Kennedy said. “It’s doable and enjoyable. But people have to be told the truth. And they have to really want to get better in their heart.” Email John Paul at [email protected]. W4 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. CULTURE & ENTERTAINMENT The Little Olsen Sister Gets Her Close-Up BY RACHEL DODES Someday soon, discussions about one of the hottest actresses in movies won’t start with her tabloid-fodder twin sisters. After a turn as a cult member in last year’s indie hit “Martha Marcy May Marlene,” Elizabeth “Lizzie” Olsen, age 23, has been cast in major roles in several more films, two of which premiered at the Sundance Film Festival in January. She’s reportedly in talks to star in Spike Lee’s coming “Oldboy.” She’s also the younger sibling of Mary-Kate and Ashley Olsen, the child actresses turned gossip subjects who parlayed their TV fame into successful careers in fashion. Their “Elizabeth and James” clothing line is named after her and her older brother. Her latest project may be her most technically challenging yet: “Silent House” was shot in real time, meaning that several long takes were cobbled together to make the finished film, with no editing. “Lizzie had to take us through this arc—what you see is what you get, because you can’t fix it in the cutting room,” says co-director Chris Kentis, whose first film, with partner Laura Lau, was 2003’s “Open Water,” a thriller about a couple stranded in sharkinfested waters. “Silent House” is permeated by different types of predators: ghosts. The film—adapted from a Uruguayan movie called “La Casa Muda”—centers on a young woman who has a psychological breakdown while helping her dad to fix up a haunted summer home. Ms. Olsen is alone in almost every frame and speaks very little throughout. Up next is “Liberal Arts,” in which she co-stars with writer/director Josh Radnor and “Peace, Love and Misunderstanding,” with Jane Fonda. She also co-stars in “Red Lights” with Robert De Niro and Cillian Murphy. Soon she will shoot her first costume drama— “Thérèse Raquin,” from the Émile Zola novel—in which she stars opposite Glenn Close as a woman in 19th-century Paris who becomes embroiled in a messy love affair after she’s forced to marry her cousin. Some of those takes were very long, right? How did that work? They rigged the entire house, so it really was like a haunted house. There were different people hiding in corners to slam doors and drop things. The sound guys could never be seen. You could never see a shadow. It was just very difficult. The Wall Street Journal: You weren’t a child actor like your sisters, right? Not really. I did lots of camps and acting classes. I went on about 10 auditions at most. But I was a dancer and an athlete, so acting didn’t work out with my extracurricular-activity schedule. Growing up, my brother and I would go to the set to visit my sisters, so that all four kids could be in the same place. I was in some of their videos but that’s about it. How did you resist going into acting, being surrounded by it so much? I kind of overcompensated by trying to prove myself. I cared a lot about academics and being a good athlete and dancer and rehearsing a lot for whatever scene work I had in class. Everything I did I tried to make sure it was based on my own merit. I think it’s led me to be where I am now. I don’t think I have as much of a complex about it as I used to. I just wanted to build up my own confidence and do as much as I could, so in case anybody wanted to destroy me in the press, I would have something that makes me unique. What have you learned from your sisters about media gossip? We don’t directly talk about it in our family. We just know success is all about the work you do, and it has nothing to do with anything else. It has nothing to do with what people are saying on blogs. Your “Silent House” character—much like the one in “Martha”—becomes mentally unstable. Are they similar? I think the two characters are so different. In “Silent House,” the whole thing is that she’s not How did you make yourself cry? I feel like I blocked it out. I think everyone just pulls from different things, and sometimes towards the end of filming, like the last week it would be really helpful to have the makeup lady help out with your eyes. Then once you start to feel a little emotion come on—your actual eyes or your nose starts to get stuffed up—everything else follows somehow. So if I was too exhausted to actually pull something emotionally, the physical helped too. You had bad dreams while you were shooting? I had the worst nightmares. The most vivid one was where I was watching this family through an open door to their house, and there was a 5-year-old girl whose floral dress was hanging off her shoulder and there was a father, who was really short with a pot belly, was walking around in boxers. So I watched him about to rape his daughter—and I came in and intervened. Contour/Getty Images [ The Interview ] She resisted acting at first: ‘I just wanted to build up my own confidence...in case anybody wanted to destroy me in the press.’ aware of anything. She doesn’t act outwardly tormented. It’s only at the last moments of the film when you start to understand her past. Martha is someone who’s trying to work things out in the present, while through most of “Silent House,” Sarah is completely oblivious to what is going on psychologically. There were some scenes where there would be a reflective aluminum thing that the director of photography was holding, and you had to move your flashlight in a specific way for it to reflect onto your face. The DP and I—we felt like we were doing a ballet together the whole time. And he would tell me while we were filming to walk faster or slower, or raise my light higher. All of that dialogue is happening during that film, but we just cut it out. It was really a cool thing to get to do because I was so part of this technical aspect of the movie. You never saw “Open Water”? I will not see it. I am terrified of sharks and the ocean. My brother, however, has seen it and he loves the movie. I know exactly what happens, but I will not sit through it. What do you think about being characterized as an “it” girl? I have a sense of humor about it. I don’t think anyone wants to be the “it” whatever at any moment in time because it’s so ephemeral. It just goes away so fast. I am in it for the long run. Film, Dance, Theater: The Moving Whitney Biennial BY ELLEN GAMERMAN at age 57 and never saw this work exhibited in its entirety, though parts of it were screened in Detroit. The Biennial is showcasing three videos of Mr. Kelley’s project. (There are plans for the home to be installed near the Museum of Contemporary Art Detroit.) A Werner Herzog © Mike Kelley; Corine Vermuelen (photo) child mannequin heaves its robotic chest while a voiceover intones, “Is this death?” A performer in a horse mask appears in a dance. A projection displays a giant housefly. The Whitney Biennial, one of the art world’s most high-profile showcases, strives to explore the strange and inventive. The contemporary art survey—a mix of performance, film, photography, sculpture, painting and other work—runs through May 27 at the Whitney Museum of American Art in New York. The exhibition features 51 artists, the smallest number in the event’s history. It’s designed to allow more breathing room between galleries and afford audiences a deeper look at individual artists. Some performances will rotate, and some work will be fleeting, created live before viewers. Cinema is at the forefront this year, with timed screenings of features and experimental shorts. Nearly an entire floor is a stage for music, dance and theater, with a see-through dressing room that re- ‘The Mobile Homestead in front of the abandoned Detroit Central Train Station,’ 2010, by Mike Kelley, is featured in the Biennial. veals behind-the-scenes action. Here is a look at some exhibition highlights. Mike Kelley In “Mobile Homestead,” Mike Kelley created a facade of his Detroit-area childhood home, put it on a truck and sent it through Detroit with a film crew, creating an urban portrait that includes interviews with strip-club dancers, motorcyclegang members and car-company executives. Mr. Kelley, an artist known for a punk aesthetic, died earlier this year After hearing several young artists cite Mr. Herzog as a major influence, curators approached the filmmaker, known for documentaries such as “Grizzly Man,” and asked him to create a Biennial work. Mr. Herzog responded with a multimedia rumination on an artist who inspired him, 17th-century Dutch painter and printmaker Hercules Segers. Images depicting craggy 1630s landscapes flash on screens to music by Dutch performer-composer Ernst Reijseger. The piece includes film footage of Mr. Reijseger in a trance-like state while playing cello for the score of Mr. Herzog’s movie “Cave of Forgotten Dreams.” Mr. Herzog’s work is set in a gallery that’s accessed through black plastic sheets that dangle to the floor. Get- ting to the work feels a little like walking through a car wash. Dawn Kasper The Los Angeles artist has moved nearly everything she owns into the Whitney for the threemonth exhibition, turning a gallery into her studio—what the museum calls a “living sculpture.” The overstuffed room is strewn with personal effects as well as her art, like a warped tennis racket spinning on a motor and a photograph of her carving a geometric tattoo into her leg in a performance. The 35-year-old artist isn’t sleeping at the gallery, but she is spending five days a week talking with museum visitors, performing music and creating other works. She came up with the idea a few years ago: After finishing a job as an assistant to Mr. Kelley, she went on unemployment and lost her studio. She felt unmoored, she said, “as if I wasn’t taken seriously if I didn’t have a studio.” She takes some time off from the exhibition at an apartment in Brooklyn. “I’ve been told by a spiritual healer that I need at least one hour by myself,” she said. THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | W5 CULTURE & ENTERTAINMENT How a Novelist Recreates History A Universal Theme: Ungrateful Children Amitav Ghosh on Bringing to Life the Lost Canton of the 1820s and 1830s In South Korea she is a bestselling author, but in the U.S., Kyung-sook Shin is experiencing the giddy anticipation of a writer’s debut all over again. The author of seven novels, seven short-story collections and three books of essays, Ms. Shin, 49 years old, is well-established in Korea—but her novel “Please Look After Mom” is the first to be translated into English. Published last April, the translation has sold an estimated 33,000 copies in the U.S., according to Nielsen BookScan, and is being distributed in 18 other countries. (The original is a millionseller in Korea.) “This whole process has brought back what it felt like when I published my first book,” she said. “There were a few times when I was anxious, but for the most part, the experience has been enjoyable.” “Please Look After Mom’s” sales got a considerable boost in the English-speaking world when it was shortlisted for the Man Asian Literary Prize, given each year to the best novel in English by an Asian writer. Ms. Shin is the first Korean writer to make the shortlist. The book’s cross-cultural appeal lies in its universal themes, she said: motherhood and a child’s guilt over whether he did enough to show his appreciation for his family. As “Please Look After Mom” begins, Park So-nyo, the mother of four grown children, has gone missing from a local train station. The story is told from four perspectives, as family members come to terms with losing her and begin to realize how they failed to take time from their busy urban lives to express gratitude for her generosity and devotion. Ms. Shin said she wrote the book as a reflection on the itinerant nature of contemporary professional life, both in Korea and abroad, whereby young people leave their families and hometowns in search of faraway opportunities. “These people are the new nomads,” she said. “Regardless of where they are from, I think people’s feelings about their families have become all the more acute.” Awards and book sales aside, Ms. Shin’s own measure of the book’s success is set at a more intimate register. “I hope that my readers will be seized by the longing to remember and see again that someone they’ve forgotten,” she said. “If anyone wants to call his or her mother after reading this book, it would please me very much.” Her latest book, “I’ll Be Right There” (published in Korea in 2010) is being translated and prepared for international release by Alfred A. Knopf. She’s at work on her eighth novel. The most striking aspect of the “Ibis Trilogy” so far is the richness of languages, cultures and customs from the pre-Opium War period.How did you bring it to life? In some sense, Guangzhou itself is a protagonist in the second book. So it was very important for me to be able to, as it were, recreate it. But the specific place I was recreating was the small foreign enclave in Canton, and that doesn’t exist anymore—it was burnt down in 1856. So even though I spent a lot of time in Guangzhou, it was completely an extrapolation, and I had to depend mainly on all kinds of source material. Fortunately, the source material on Canton in the 19th century is very abundant. On top of my travel to China, I spent some time in the Greenwich Maritime Museum in London, where I found many memoirs, journals and collections of letters that described the place. There’s a wonderful visual archive of Canton too, because the artists of the day made an incredible number of paintings and drawings of the foreign enclave. How did you go about rediscovering the sensory details: the food, smells and sounds? There’s so much of that in the book. This highlights a big difference between the way novelists and historians approach history. As a nov- ‘River of Smoke,’ Amitav Ghosh’s latest book, is volume two of a trilogy set in the years before the first Opium War. elist, my interest when I’m researching and writing about a place is what was it like to be there. Walking down the street in Canton, what would you wear, what would you smell, what would you see? These are questions that historians don’t often ask or answer. It’s just not what interests them. But for me as a novelist, it’s very exciting to seek these things out. But you do sort of have to piece it together. For example, many of the menus from the banquets are actually described in the memoirs of people who went to them. And by reading the back issues of the Canton Register, the newspaper of the time, you can actually find out what the weather was like on any given day. Are there records of meals like the 88-course one (hosted by a great Cantonese Mandarin) in the book? All the details of that scene are taken directly from a memoir. I added a couple of things here and there, of course, but it’s very authentic. Many travelers to Canton in the 19th century described these banquets at great length. They were sort of astonished and amazed by them. But you have to remember, although there were 88 of them, most of the dishes were quite small. “River of Smoke’s” themes resonate today: the virtues of the free market versus the greater social good, China’s trade relationships, and cultural exchange between its Asian neighbors and the West. Did you have contemporary affairs in mind? I can see perfectly well why you would think that. But in fact, these same discussions and arguments were going on right then and there in the Canton of the period. A lot of the words that are spoken in the book come directly from the sources. They’re in the letters and written about in the newspapers of the time. You have to remember that a lot of the people who were in Canton in the 1820s and 1830s were Scotsmen and were Adam Smith and Thomas Malthus’s first students. Malthus himself worked in the East India office. So they were very much exposed to these ideas and they were the first generation of people to discuss them. What’s astonishing is how little the discussion has changed. In another sense, it’s amazing how people talk so much about the principle of free trade today without anyone ever bringing up the fact that the central commodity at issue in the original free-trade dispute was a drug, opium. Chinese authors have won the Man Asian Literary Prize three of its first four years. Is India due for a win? I can’t say that I’ve looked into the matter [laughs]. A win would be good for Indian literature, but I’m a great admirer of Chinese literature as well. You can’t decide these things by a quota system. Since you split time between the U.S. and India, in broad strokes, what would you say distinguishes their literary cultures? I don’t know if I would draw such a broad line of distinction. Indians read a lot of American literature, and I’ve always had a deep interest in American writing. That said, our writing is often very much built upon narrative. There are so many amazing untold stories in India. There’s so much happening in India. It’s a society in a circumstance of such incredible change. I sometimes look around me, and I think, even if I lived to be 150 years old, I wouldn’t be able to tell half the stories I’d like to tell about this place. In the United States, even though there’s a lot of technological change and so on, it’s not a society in upheaval in the same way as India, and I think that’s reflected in the writing. It’s a very exciting moment in Indian writing. You’re now at work on the third and final installment in the “Ibis” series. Anything you can share with us about where the story goes next? Oh, no. Like some of my characters, I’m a bit superstitious. I think it’s very bad luck to talk about a book before it’s finished. When you have a novel underway, as you do now, what is a regular day of work like for you? I usually spend the first half of the day writing and the latter half reading. The two go hand in hand, really. But there are no rules. Some days I’ll write all day long. It’s a very unpredictable process, you know? All my life I’ve tried to make it a sort of routine thing, but still no two days are the same. Graham Greene used to write 500 words a day and then promptly stop—no more and no less. If I tried to do that, the work would just collapse. I think the anxiety would kill me. My wife is an author as well, and you know, we’re constantly reading and writing. We do other things too, but books are the central axis of our lives. — Edited from an interview by Patrick Brzeski Online>> Read more of this interview on WSJ.com/scene. Lee Byungryul In “River of Smoke,” Amitav Ghosh puts his background in journalism and social anthropology to good use, evoking 19th-century Chinese opulence in scenes such as one banquet where a dish called “Buddha Jumps Over the Wall” is served: “It had taken two days to prepare and included some 30 condiments—crisp shoots of bamboo and slippery sea-cucumbers; chewy tendons of pork and juicy sea scallops; taro root and abalone; fishlips and mushrooms…reputed to have lured many a monk into breaking his vows.” “River of Smoke,” Mr. Ghosh’s latest book, is the second in his “Ibis Trilogy,” the story of wayfarers cast aboard the ship Ibis during the years preceding the outbreak of the first Opium War. The first book in the series, “Sea of Poppies,” was shortlisted for the Man Booker Prize in 2008. “River of Smoke” has been shortlisted for the Man Asian Literary Prize, the winner of which will be announced next week in Hong Kong, not far from where much of the book’s action takes place—although in a harbor much transformed by the intervening years. Born in Calcutta, Mr. Ghosh, 55 years old, spent his youth in Bengal, Bangladesh, Sri Lanka and New Delhi, before going on to study in England and later teach comparative literature in the U.S. He is married to the biographer and essayist Deborah Baker, with whom he has two grown children. Today, the couple split time between homes in Brooklyn and Goa. The Wall Street Journal spoke with Mr. Ghosh about the splendor of old Canton, 88-course meals, and opium’s central role in the history of free-market capitalism. Agence France-Presse [ The Moment ] Kyung-sook Shin W6 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. TRAVEL The Miracle of the Airline Meal turbulence situation or air-travel scare imaginable—landing on ice and sliding down the runway in Moscow or once being ushered onto a plane in Russia that was entirely empty except for me. I find that when you’re in these uncomfortable positions, you can somehow endure them better with a soundtrack. Bill Roedy retired from MTV Networks International as chairman and chief executive last January after 22 years with the company. But as chairman, envoy or board member of seven global health initiatives—including UNAIDS, Global Business Initiative, and the Bill & Melinda Gates Foundation’s Global Alliance for Vaccinations and Immunizations—he continues to travel the globe regularly. The 63-year-old, who now lives in London with his wife and four children, spoke to The Wall Street Journal about why he loves airplane food, his favorite line from “The Godfather” and landing in Mumbai in the dead of night. How often are you up in the air? I can still travel about once a week. It’s been pretty much nonstop for the past 30 or 40 years. During my time with MTV I would occasionally do some unfortunate itineraries. My record was six cities in one day. Where do you go most in the region? Over the years, Singapore has been my most-visited Asian city.…But I get everywhere. What frequent-flier plans do you use? All of them. It’s nice how they’re all so connected now. But I’m a member of everything, from South African Airways to Emirates to ANA. Which Asian carrier offers the best travel experience? Anybody who says they’d rather fly private probably hasn’t flown first-class with Singapore Airlines on the A380. That’s the height of air-travel luxury as far as I’m concerned. And by now it’s legendary, but when you fly into Changi Airport on Singapore Airlines, your luggage actually beats you to the baggage claim. Bill Roedy favorites is Narita to Tokyo, because it’s so long and you can’t see anything. How do you beat jet lag? You just have to accept that you’re going to be tired a lot. That’s the nature of global business. To quote my favorite line from “The Godfather:” “This is the life you’ve chosen.” Preferred luggage? When Samsonite invented these four-wheelers, that was it for me. After back surgery, there’s nothing that beats those. Which airline serves the best food? We all complain, but think about it: You’re flying in this steel contraption at 36,000 feet, going from continent to content at an unbelievable speed, and yet they still have the capability of serving you a warm meal? I’m pretty thankful for whatever I get in that context. How do you keep up with exercise while on the road? I actually exercise less on the road because my time is so limited. I like to convert my gym time into walking. If it’s doable—say, 45 minutes to an hour—I’ll walk back to my hotel from my meetings. This does two things: it gives you more of a vertical connection to the local culture—which I firmly believe is an important part of doing global business—and you get your exercise. Essential travel gadgets? My iPod is critical. I’ve encountered every What city has the best taxis? London still beats everybody. The cars are classic and comfortable, and the drivers have to take a twoyear course, so they’ll never get baffled. Tokyo is a close second. How long does it take you to pack? I can do it in about 15 minutes. You’ve got to be methodical. Ninety percent of people take too much. I actually try to under pack and leave space for gifts and accumulated paperwork that’s going to be too heavy to carry it in my briefcase. Other than music, what does a retired MTV exec do for in-flight entertainment? When I’m on the way there, I tend to focus on reading and preparing for the visit, whether it’s cultural prep with travel guides and the local newspaper, or getting things clear on the business side. Coming back, it’s the exact opposite: I dig into the in-flight entertainment. I avoid the big action movies—because you want to see those in the cinema— go for the smaller films that I’ve missed, which are often the most meaningful. Takeaway travel tip? I find my best ideas come to me on the airplane. I try to sit by the window. When you have those views, combined with that solitude, it can be so inspiring. So, make sure you always have a piece of paper and a pen—in my case, it’s a favorite green ink pen—to jot down ideas before they float away. —Edited from an interview with Patrick Brzeski Favorite airport in the region? I got to see the new airport in Beijing, Bangkok and Terminal 3 in Singapore all in the same week. I’d put those three at the very top. I loved affectionately Kai Tak, the old Hong Kong airport, because there was no city approach like it. Favorite airport-to-city journey? It’s hard to beat the beauty of the ride from Changi in Singapore. But what’s actually more interesting for me are those airport-to-city trips where you can look out the window and see the diversity of the local street culture. I like to get a real taste of the place where I’ve just landed. So I just love Mumbai, especially when you land in the dead of night and have to travel across town. I just came from Dhaka and that was pretty extraordinary, too. One of my least Agence France-Presse/Getty Images; Jonas Karlsson (Roedy) Best hotel in Asia? For those with the budget, the Ritz-Carltons in Hong Kong and Tokyo are pretty stunning. But my favorite hotel anywhere is the Four Seasons in Singapore.…And everyone has to put the Okura in Japan on their list. It’s like a microcosm of Tokyo—tiny rooms that are an intricate mosaic of everything fitting together and working perfectly. A jet on its final, hair-raising approach to Hong Kong’s old Kai Tak airport On a ski run in Alta Ski Area, Utah At the Ski to Live Camp, It’s Mind Over Mountain BY BRIGID MANDER ‘I t is ungraspable,” she said. “You can’t understand it.” Kristen Ulmer, extremesports pioneer and former U.S. Ski Team member, was teaching us how to ski. Sort of. “You can only be the concept,” she said to the retired physician, one of the more exasperated of the 17 skiers, ranging in age across almost five decades, gathered in a sparse room at the base of Alta Ski Area, near Salt Lake City. For nine years, Ms. Ulmer has been running Ski to Live, a threenight, two-day ski camp that promises to be transformative with almost no technical instruction. The all-in-your-head program is supposed to make skiers, snowboarders and telemarkers into better athletes, but also better people. During the first session, Ms. Ulmer proclaimed: “By the end of the camp, you’ll feel freer than you ever have.” It wasn’t the life-changiness that had attracted me to the idea, though. Half of me wanted to ski Alta’s famous steeps and chutes; the other half just wanted to meet the teacher. Ms. Ulmer was famous for skiing you-fall-you-die Alaskan faces, hucking front flips off 21-meter cliffs and pushing the limits of extreme skiing. Then, in 2003, in the middle of a flourishing career, she told her sponsors she was quitting. She wanted something more, she said. “I was an egotistical hedonist,” Ms. Ulmer told me. Believing that mindset had been crucial to her skiing success, she decided to start camps that focused on the mental game. The first one, which involved a sports psychologist, didn’t feel quite right. On a whim she invited Zen teacher Dennis Merzel to her second, and everything clicked. When the first session began, I was a little in awe. But there was little talk of her ski stardom. Instead, she delved into the basics of Mr. Merzel’s Big Mind Zen: a blend of Buddhist concepts of self with a Western psychological approach called “voice dialogue.” Her approach was fairly straightforward, peppered with humor and anecdotes. Big Mind Zen posits that there are many facets, or “voices,” in every personality. Some we nurture, some we repress. By recognizing the voices we are squashing, and simplifying our thoughts, we can change our patterns for the better. So far, so good. Then Ms. Ulmer asked to “speak” to certain voices— first, the “gatekeeper,” our wall. “My job is to protect, and keep the world out, so she doesn’t get hurt!” one student yelled out. It was unnerving—and not just because my voices didn’t have as much to say. Re Wikstrom (2) ROA D WA R R I OR The writer at the top of a chute. There was a palpable air of apprehension about our first day on Alta’s advanced terrain. We started by practicing to ski in each voice— doing a run as if one feeling ruled our world. We began with fear. I picked the most advanced of our three groups for more challenging runs, and tried to ski around feeling afraid of everything. We moved on to control, arrogance, the analytical mind, the show-off and anger. I tried my best to play the game—and was eventually amazed at how different each run felt. Skiing in the analytical mind taught us that overthinking skiing is not fun. A few runs later, I furiously smashed my skis into the snow, finding that anger pairs excellently with big moguls. As the know-it-all, I thought about all the skiing I’ve done, and the terrain fell away behind me. I finished the day exhilarated. I was experiencing the hill in a new way. I was also exhausted from all the exertion—and all the thinking. The evening was another three hours of anecdotes, voice dialogue and Zen wisdoms, followed by yoga, which I skipped in favor of bed. The next day I decided I was really enjoying ski camp. Even the doctor was getting it. But then a mother of four who wanted to write a book tearfully broke down during a lesson. Everyone looked around understandingly, but I felt awkward and clueless again. I got on the lift, crankily mulling my failure to grasp what had just happened. But a few minutes into the ride, I realized that maybe I did understand what we were doing—I just couldn’t explain it. It all seemed OK. Which is, actually, very Zen. By the final day, some of us decided we were ready for some of Alta’s most challenging terrain—a steep, bumpy, double-black. Fear was given a nod, then let go as we found different voices to replace it with. And we dropped one by one, for a perfect descent. THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | W7 FOOD & DRINK There’s an Art—and a Science—to the Swirl Release Those Esters (Aromatic Compounds), Soften Those Tannins… and Flatten That Champagne? [ On Wine ] After decades of wine drinking, there are certain things that I do almost automatically: Check the alcohol level on the wine label, examine the cork upon removing it from the bottle and swirl the wine around in my glass. The latter is an absolute among oenophiles—an action as necessary as tasting, perhaps even more so considering the importance of a wine’s aroma. Swirling releases the wine’s aromatic compounds, known as esters, into the air. Every wine has these volatile aroma compounds, although some wines have more than others, depending on the structure and character of the grape. Swirling can also affect the wine’s flavor. The oxygen introduced by the act of swirling binds with the tannin molecules to make the wine seem softer, more accessible. I began thinking more seriously about swirling after watching a YouTube video a few weeks ago. (Isn’t that where most of today’s obsessions begin?) Created by a group of physics professors and students from the Swiss Federal Institute of Technology in Lausanne, the video, titled “Modelling the swirling of a glass of wine,” depicted research team member and Ph.D. candidate Martino Reclari (unaccountably attired in a Guinness T-shirt) swirling a glass of wine and explaining that his team had studied the “shape of the wave” of a swirled glass of wine in the belief that it could be applied to their study of cellular cultures. While the Swiss researchers found wine swirling worthy of scientific analysis, the wine professionals I talked with seemed a bit more blasé. “Swirling?” Alexander LaPratt repeated when I told him the reason for my call. I thought Mr. LaPratt, the sommelier of New York’s DB Bistro Moderne and the reigning Best Sommelier in America (as the winner of the biannual competition hosted by the American Sommelier Association) might have some deeper insight into the subject of swirling—perhaps he’d even taken a few swirling tests in his title quest? He had not, but he did, in fact, swirl all the time. “I do it automatically. It’s a reflex,” he said. What did Mr. LaPratt consider the greatest benefit of swirling? That was easy. “Oxygenation,” he said. “Swirling is like a kind of miniature decanting.” What about Champagne? There are conflicting theories about this: Some wine drinkers believe Champagne should be swirled like any wine, others believe the act is deleterious to the bubbles in the glass. Then of course, there is the practical challenge—it’s hard to swirl a Champagne flute or detect much aroma from the narrow bowl of the glass. “It’s funny how controversial things get when you add bubbles,” laughed Mr. LaPratt, who does swirl his Champagne, which he drinks out of a regular Serge Bloch BY LETTIE TEAGUE glass. “But I’m fine with drinking flat Champagne,” he said. The glass is of great importance when it comes to swirling. So is the volume of wine: The glass should be no more than onethird full. This allows the aromas enough room to circulate—and gives the swirler sufficient space to fit his or her nose into the glass. The glass itself should be generously proportioned; the glasses that Mr. LaPratt employs at his restaurant are large enough to fit the contents of an entire bottle of wine. Is there an optimum swirling glass? I put the question to Maximilian Riedel, scion of Riedel glass. “The glass must be lead crystal,” Mr. Riedel said. “When you swirl a wine in lead crystal, the aromas are easier to identify—the wine rubs the inside wall of the glass.” Lead crystal is rougher than regular glass—it agitates the surface of the wine, thereby increasing the oxygen flow. Though Riedel makes hundreds of types of wine glasses, seemingly one for each grape—and Mr. Riedel strongly recommends having multiple sets of glasses for different varietals—I decided I’d use one type of glass for my swirl- ing exercises. After all, most people can’t afford that many sets of glassware. And in his book “The Taste of Wine,” famed Bordeaux oenologist and researcher Émile Peynaud recommended using a single glass for tastings: “Otherwise a wine’s odor cannot be analyzed exactly the same way.” The glass should be no more than one-third full, to provide the aromas enough room to circulate. I decided on a Riedel Vinum Burgundy glass—the bulbous shape and large bowl of the Burgundy stem is designed to allow the accumulation of aromas. I gathered a group of friends and an eclectic group of wines, some overtly aromatic and others not: Pinot Noir, Gamay, Zinfandel, Cabernet, Sauvignon Blanc and Gewürztraminer, as well as less famous grapes like Falanghina, Greco di Tufo, Torrontés and Frappato. I chose only young wines. Many older wines may not benefit from a vigorous swirl—for exam- ple, a fragile old Burgundy is best left unswirled. It’s also important to smell the wine before swirling to note the difference. In most cases, we didn’t find much in the way of aromas preswirl, save for the Cloudy Bay Sauvignon Blanc, whose grassy character practically jumped out of the glass. Then we swirled. For how long? No one seemed to know the ideal, but four or five seconds seemed like the right amount of time. Some wines were aromatically reticent even after a vigorous swirl, so for those, I put my hand over the top of the glass and reswirled. This helps to concentrate the aromas—or, in some cases, amplify a wine’s problems. I noticed that we were all swirling in the same direction: counterclockwise. Why? “Because I’m right-handed,” offered one friend. “Because I live in the Northern Hemisphere,” suggested another, positing that people in the Southern Hemisphere swirled their wines clockwise, just as their water went down the drain in a different direction. (I checked with a couple of Southern Hemisphere winemakers, Peter Gago, chief winemaker of Penfolds in Australia and Susana Balbo of Crios in Argentina, and found that both swirled counterclockwise, though Ms. Balbo said sometimes she went the other way, too.) Could the direction of the swirl make a difference? For example, did a clockwise turn emphasize fruit, while counterclockwise produced more notes of oak? I had read that some winemakers believed that direction made a difference, but when my friends and I tried swirling both ways, opinions were decidedly mixed. Some thought the fruit was more vibrant in a counterclockwise direction, while others disputed there was a difference at all. There is clearly much more to know about swirling, which for all its simplicity and benefits is an act whose particulars—direction and duration of the swirl and optimal glass—are unknown. Perhaps the Swiss physicists knew more? I emailed Mr. Reclari, who replied that he was in the middle of additional research but the results would not be available for several months. Meantime, I’ll keep swirling. After all, as Prof. Peynaud said, “The study of aroma requires considerable application and many repeated attempts.” W8 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. FASHION & STYLE Clockwise from above, artist David Hockney sitting for a portrait by Lucian Freud, who’s wearing his trademark jacquard scarf and unlaced paint-spattered boots, and four Freud portraits with notable outfits: ‘Woman in a Portrait Painter as Sartorialist [ Style ] BY TINA GAUDOIN To say that Lucian Freud liked clothes is a slightly odd contention to make about a portrait painter who once said, “When I paint clothes I am really painting naked people who are covered in clothes.” But take a look at either of the two Freud exhibitions now in London—the blockbuster National Portrait Gallery show, “Lucian Freud Portraits” (until May 27), and the more intimate show of his drawings at Blain/Southern (until April 5)—and it becomes clear that while he eschewed clothes on some of his subjects and often in self-portraits, Freud had a fashion designer’s eye for detail and a deep appreciation for the clothes his subjects wore. “He was always trying to capture the essence of someone, not by which clothes you wore but sometimes by whether you wore them at all,” says Jeremy King, coowner of London’s Wolseley restaurant, who sat for Freud in 2006 and 2007, wearing a suit by British tailor Timothy Everest that Freud had mentioned he liked, with a Volpe shirt and a pocket handkerchief and geometric tie by Turnbull & Asser. “It was very frayed by the time he finished,” he says of the tie. “I sat well over 100 times.” Freud, who died last July, had a keen interest in accessories. “He was brilliant on pocket handkerchiefs and the minute detailing on rings and watches,” says Sarah Howgate, curator of the National Portrait Gallery exhibition. She points to “Guy and Speck” (198081, in which a slimline watch peeps out beneath a pale-gray Savile Row cuff, while a dark-blue tie and pocket handkerchief accent Guy’s gray-brown cashmere suit, and “Two Irishmen in W11” (1984-85), in which a man in a dark, buttoned-up suit stands nervously behind his seated father, in a three-piece suit, the last button on his waistcoat undone, a signet ring on his right ring finger. “Clothes were a technicality to him in terms of his work, but that doesn’t mean he didn’t appreciate them,” says art critic Martin Gayford, whose book “The Man with the Blue Scarf” recounts his experience with Freud. “He was alive to the intimate connection between an individual and what they were wearing.” Leaving a Ray Charles concert, Freud said Mr. Gayford, “Now he really knows how to wear clothes.” “He was sartorially aware,” Mr. King says. “He had some wonderful clothes himself, many of which had engaged with the paint, which added to the overall effect.” Freud’s daughter Bella, a fashion designer, says her father’s dress sense was inspiring. “I remember him looking dazzlingly understated,” she says. “When he was younger, he used to go to [Savile Row tailor] Huntsman and experiment with different jackets, with and without vents and pockets.” Freud was particular about his trademark neck scarves, too. “They were ’40s jacquard scarves, which he always wore in place of a tie. You can’t find them anymore,” she adds. And the boots? Paint-spattered and always worn without laces, as featured in his naked 1992-93 self-portrait “Painter Working, Reflection.” Getting the paisley right in one painting ‘nearly sent him over the edge,’ curator Sarah Howgate says. “He wore them everywhere,” Bella says. “I once bought him a pair of trainers in pale blue with stripes as a change, but he thought they took over, so he took them off, saying they were ‘too much of a look.’” Freud was just as particular when it came to the clothes of his subjects. “He wanted his sitters to be comfortable,” Ms. Howgate says, “but he insisted that if they were wearing clothes, they never deviated from the original outfit” because clothes throw tones on the skin. Mr. Gayford recalls unwittingly turning up for a sitting for his 2005 portrait in a blue scarf “a quarter shade of blue different” from his usual. “He was upset, he kept saying to me, ‘There must be something wrong with me; I don’t know why I can’t mix this blue color today,’” Mr. Gayford says. “It was only when I returned home that my wife pointed out to me that I had the wrong scarf on.” Many of Freud’s paintings include clothing in their title as if its a metaphor for the subject. “Girl in a Dark Jacket” (1947), an early portrait of his first wife, is an intense study not only of her deep gaze but also of her inkyblack jacket. In “Girl with a Beret” (1951-52), the beautiful girl with short, cropped hair, gold loop earrings and black round-necked sweater could be a model for the French designer Vanessa Bruno. In another, “Woman in a Fur Coat” (1967-68), the fur—likely real—almost slinks off the canvas with feline insouciance. “I’m inclined to think of them naked, or if they’re dressed as animals dressed up,” Freud said of his subjects in art critic William Feaver’s book “Lucian Freud.” “There’s a definite sense that clothes for Lucian were almost like a human being’s pelt,” says Ms. Howgate. In one of his most famous early paintings, “Girl with a White Dog” (1950-51), the detailing on the lemon-yellow dressing gown on the Madonna-like figure of his pregnant wife is so acute as to make one feel that the cord (and the gown) needs a good wash. The dog has a pristine white, silky-smooth coat that matches his wife’s alabaster skin. “The picture was unposed and the dressing gown was almost incidental,” says Ms. Howgate, pointing out similarities between the lines of Freud’s early work and Ingres’s “smooth, linear approach.” With his departure in 1958 from his original style—from sitting and using fine sable brushes to standing and using rougher hog’s hair brushes—Freud’s painting became more vigorous. And the artist appears to have become more fascinated by the contours and contrasts of naked skin. “As far as I’m concerned the paint is the person,” he said. “I want it to work for me just as flesh does.” The clothes on his subjects became more textured, though no less precise. In “Red Haired Man on a Chair” (1962-63), Freud’s apparent ease at painting even shoes is represented in a pair of brown brogues that look at once comfortable and stylish. “His painting was timeless, but also very much of its time,” says Ms. Howgate. Today, even the outfits from his ’60s portraits appear contemporary. “Michael Andrews and June” (1965-66)—she in her red shift and he in his mushroom vest and white shirt—look for all the world like a couple one might see today in the Wolseley, where Freud dined regularly. In his “Reflection with Two Children (Self Portrait)” from 1965, the artist stares down at the viewer in what U.K. paint makers Farrow & Ball would probably describe as an “elephant gray” flannel suit, likely Savile Row (minus the shirt—a Freud trademark). And in a por- THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | W9 FASHION & STYLE TOP FIVE a Fur Coat’ (1967-68); ‘The Painter’s Mother Resting I’ (1976); ‘Guy and Speck’ (1980-81); ‘Michael Andrews and June’ (1965-66) trait of the Dowager Duchess of Devonshire, “Woman in a White Shirt” (1956-57), painted during the artist’s transitional period, the collar on the duchess’s smooth, cotton shirt sits proudly in pristine contrast to the heavily contoured shades on her face. During the 1960s, what Ms. Howgate calls “Freud blue”—a light, almost denim color—begins to appear. “He was very good at blue,” she says. “He had a particular penchant for it.” In “Man in a Blue Shirt” (1965), George Dyer, Francis Bacon’s lover, wears an open-necked shirt that could be denim but is more likely cotton with a sheen. Later, in portraits of David Hockney and Mr. Gayford, the subject’s blue shirt and scarf, respectively, form part of the essential construct. In “Triple Portrait” (1986-87), “Annabel Sleeping” (1987-88) and “Flora with Blue Toenails” (2000-01), various permutations of blue appear, all sensual feminine adaptations of a traditional “male” color. “I want the person looking to see not, ‘Who’s that in a blue shirt?’ but, ‘Who’s that? Oh, they’re wearing a shirt.’ Which is different isn’t it?’” Freud said to Mr. Feaver. Mr. Gayford remembers the artist as a man who was “endlessly interested in people.” “He had this extraordinary ability to erect a force field around him so that he didn’t get bothersome levels of attention,” he says. “He always said he didn’t want attention for himself but for his paintings.” At the Wolseley, Freud would famously look around for someone to fix upon. “Those that interested him were not necessarily beautiful or well-dressed, and it would be hard to predict what would catch his attention,” says Mr. Howgate. Indeed, one could be “too famous” in Freud’s eyes. “Madonna wanted to meet him,” recalls Bella, “but he didn’t want to meet her because of her level of fame, which is a shame because they would probably have got along.” Freud used the act of painting to get closer to his family, most notably his late mother. “Doing her portrait allowed me to be with her,” he told Modern Art Museum of Fort Worth curator Michael Auping. “I suppose I felt I needed her to forgive me. I tried to be unavailable to her when I was young.” In one 1976 portrait, “The Painter’s Mother Resting I,” she lies in repose in a paisley outfit that could almost be from the Jil Sander spring 2012 collection. “He told me that paisley pattern nearly sent him over the edge,” laughs Ms. Howgate. She adds that a later portrait, “The Painter’s Mother” (1982-84), shows his mother in white—suggesting a peace both in their relationship and in his mother’s attitude to her life’s nearing its end. In “Large Interior, W11 (after Watteau)” (1981-83), Freud by his own admission was ambitious, “partly because it is quite large, and also because I had to gather family.” The group certainly had a unique dynamic. Bella poses with two of her father’s lovers, Celia Paul and Suzy Boyt; Boyt’s son Kai; and another young girl. “I hated the dress I wore in that painting, but he was very particular about it,” Bella says. “We picked it out together from a market. It was a hot and prickly process, that painting.” “He gave the same attention to everything,” she adds. Indeed, some of his most famous paintings of “Big Sue,” U.K. benefits supervisor Sue Tilley, involve a shabby-chic-looking chesterfield armchair, with tumbling roses lovingly painted, the stuffing softly falling from an arm; in other pictures, rumpled sheets, old mattresses and junk-shop carpets receive the same careful treatment. Freud attended all of his daughter’s runway shows. “He was very interested in what I was doing as a designer,” she says. He even designed a logo, a line drawing of a dog’s head. “It was very unusual because he didn’t normally do things spontaneously, but he got out a drawing book at the kitchen table and just drew it,” Bella says. “It was perfect and had the playfulness that I wanted to pursue with my own clothes.” “He always noticed clothes,” she says. “And I was always conscious that when I was sitting for him I wanted to wear something he’d like in colors he’d appreciate.” He continued to notice even in his final days. “I had bought an old army shirt in khaki,” she says, recalling that he told her, “I like that. The green is awfully good.” Given that he grew up with a tannery in his backyard, it’s not surprising that Ethan Koh has made a career out of leather. “Exotic skins have always been my passion,” says the 25-year-old. Mr. Koh is the fourth generation of a family that has been working with leather since his great-grandfather learned exotic-skin tanning from the British, who then ruled Singapore. Last October, French luxury conglomerate LVMH paid about 160.8 million Singapore dollars (about US$126 million at the time) for a controlling stake in Heng Long International, the tannery his family owns. Heng Long provides skins to the likes of Hermes and Prada. Mr. Koh is also the founder of Ethan K, a range of leather accessories sold in upscale department stores such as London’s Harrods and L’Eclaireur in Paris. His latest collection, launched in November, is Wildlife Odyssey. The handbags and minaudières (small bags treated as accessories) were finished in Italy and Switzerland and sell for upwards of £1,790 (about $2,800). He spoke to the Journal about the five influences behind Wildlife Odyssey. Crocodiles: While the clasps of his latest bags feature different animals, Mr. Koh said the most important one is the crocodile. “The crocodile is a very formidable creature,” he says, yet “they are an endangered species, and their skins are [rare] like diamonds.” Feng shui: Another animal featured on the clasp of his bag is the frog, which Mr. Koh said brings harmony. “In many cultures, the frog is said to bring luck. Many of my clients have statues of frogs outside their houses,” he says. “For us Asian designers, elements in harmony are very important.” Asian forests: “I was very inspired by flora and fauna of tropical rain forests in Asia,” he said. “This is reflected by the colors of the exotic skins. They are in rich purple and [many shades of] green. “ Colonial Singapore: “We have a very short history but an exciting one,” says Mr. Koh. “Imagine in the past, how many people were immigrants from different countries. It makes us very cultural in a sense. [This is somewhat] reflected in the old British architecture in Singapore.” Georgian architecture: “People say London is a very cool and chic city, but there is a lost heritage,” he says. “In Mayfair, where I live, there is beautiful Georgian architecture, so there is a little Georgian mirror inside all my bags. It is inspired by a mirror in the first floor of [the hotel] Claridge’s.” — Kristiano Ang Harry Harrison Clockwise from left: David Dawson, courtesy of Hazlitt Holland-Hibbert; The Lucian Freud Archive (3); Tate, London 2012 Beauty Is Only Skin-Deep, But That May Be Enough W10 | Friday - Sunday, March 9 - 11, 2012 ) * + , - + THE WALL STREET JOURNAL. ) * + , - + ! 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" "" # "$ %& !# '( )# * $( !& !+ "% " (! !$! & !" #$$"% $% !" &" #$$"% # #$ % '( " ) "% * !" * + ) * ) *" * $$% $ ,% , * $", ) " ) ,"% $% *% ) "% * ) * )") $ $ ) $$$ $* THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 |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| Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. HOMES & DECORATING Crime (Writing) Pays With Desert Retreat The Four Homes of Best-Selling Novelists Jonathan and Faye Kellerman Include Santa Fe Compound BY NANCY KEATES Santa Fe, N.M. Jesse Chehak for The Wall Street Journal (4) ‘R Clockwise from top: On 2.4 hectares, the compound overlooks Santa Fe; the fireplace in the casita, or small house; the living room in the main house. ! " # $" %&"' $( ( ) age,” “Victims” and “Twisted” are some of the titles of the gory, graphically detailed best sellers written by Jonathan Kellerman. The corpsefilled novels by his wife, Faye Kellerman, have titles like “Gun Games” and “Stalker.” The couple spend most of their time in Beverly Hills, Calif., and also have places in Malibu, Calif., and New York. But when they want to write without distractions, they retreat to their adobe-style compound in the serene hills overlooking this artsy town. The couple said they’re inspired by the openness and nature here. “It’s so quiet all the time. Just look at these views,” said Mr. Kellerman, 62, pointing out the four mountain ranges he can see from his livingroom windows. “It’s almost like Switzerland.” Buying their first home here in 2000 for $935,000, the Kellermans kept adding on, and now own four buildings on 2.4 hectares. Next to their 4,300-square-foot, two-bedroom main home, in 2004 they built a “casita,” a smaller home next door, as an office for Mr. Kellerman and guesthouse, for $350,000. In 2008 they bought a 5,500-square-foot main home with its 700-square-foot guesthouse from a neighbor for $1.7 million. They bought the last two homes because wanted to keep their own house private and thought the homes could be a good spot for when their four children and three grandchildren visit. The properties are now unified by flagstone paths and flanked by small trees and adobe walls that snake along the ridge of the 7,500-foot-high cliff that slopes into a canyon. All four buildings are typical of the area, with low slung, geometric shaped exteriors made of thick, beige clay walls and flanked by covered outdoor porches called “portals.” Inside the main house, a pink stone-floored entry hall has a large iron chandelier with yellow glass shades that hangs from a 3.9-meter ceiling. In the living room, with floor-to-ceiling glass doors and large windows that overlook the mountains, a stone fireplace is topped by a white mantle and a round mirror. On one side of the main house is a den where Mr. Kellerman plays guitar. A big, light, open kitchen leads to the office of Mrs. Kellerman, 59. There an old-fashioned wood desk faces a window that looks out on to the mountains. The flagstone path outside leads to the 1,200-square-foot casita. Its main room has a large bronze antelope head on a white adobe wall that tops a curved fireplace. There’s a separate bedroom for guests and a portal (the outdoor covered porch) where Mr. Kellerman takes writing breaks, peering down at the canyon below and the mountains beyond. A path going the other direction leads to the second guesthouse, with a home gym and two guest bedrooms and Mr. Kellerman’s painting studio. The largest house is the least used and is rented out much of the year. A four-bedroom, four-bathroom 4,500-square-foot house nearby is for sale for $2 million. Santa Fe and its locals sometimes appear in the couple’s work. Half of “Double Homicide,” a book they wrote together, takes place here. And a recurring character in Jonathan and Faye Kellerman Mrs. Kellerman’s novels—a peripatetic pianist—is based on friend Marc Neikrug, a composer and pianist who lives in Santa Fe. “Their house is in an area of incredible physical beauty,” said Mr. Neikrug, who added that unlike most second-home owners, the Kellermans are friends with many locals in Santa Fe. He said he hardly recognizes the couple in their work; they never talk about crime or dark subjects with him. With their laid-back, casual style, their 40 years of marriage and their large family, the Kellermans seem like a conventional American couple. They work out in their home gym together every morning. Mr. Kellerman said most crime writers are nice people—they get their dark thoughts out in their writing. It is mostly incidents he saw in his training in psychology that are the source for his novels. Mr. Kellerman, who has a doctorate in clinical psychology from the University of Southern California, got his big writing break in 1985, when his first published novel, “When the Bough Breaks,” became a best seller and a TV movie. Since then he has written a book or two a year; more than 75 million copies are in print internationally. He’s best known for his psychologist hero Alex Delaware, who appears for the 27th time in the recently released “Victims.” Mrs. Kellerman also started out in another profession: She has a doctorate in dentistry from UCLA. Her first novel, “The Ritual Bath,” in 1986, was a hit. Her books have more than 20 million copies in print internationally. She’s best known for her detectives Peter Decker and Rina Lazarus. The novelty and variety in their lives comes from their real estate, said Mr. Kellerman. There’s the big Beverly Hills home with a pool, tennis court, koi pond and lots of art. When they need a break from that, they head to their glass-and-wood house on the beach in Malibu or to their 1,700-square-foot apartment in an Art Deco building on Fifth Avenue in New York. “I love going from the rush of New York to the dead quiet of Santa Fe,” said Mr. Kellerman. Santa Fe has some action—the animal kind. The Kellermans hear coyotes howling, see rattlesnakes and bears—and occasionally run away from bobcats they bump into on walks around the neighborhood. They like seeing the lights from homes on the hills across the canyon. “It can get spooky at night,” said Mrs. Kellerman. THE WALL STREET JOURNAL. Friday - Sunday, March 9 - 11, 2012 | W15 HOMES & DECORATING Thinking From the Outdoors In BY ALASTAIR GORDON L andscape architects are usually the last ones called into a building project, brought in only after a house is completed. When the owners of an island property on Miami’s Biscayne Bay dreamed of giving their 1950s home a treehouse effect, they took an unlikely route. They consulted local landscape architect Raymond Jungles first, before the structural remodeling. The aptly named Mr. Jungles— working with a boxy 5,000-squarefoot house situated on a nondescript 14,240-square-foot corner plot—began with the idea of an adult-size aerie, tethered to the ground. And, in the process, he went on to transform the space into a tropical paradise. “I wanted to unify the exterior and interior and make it feel like a single environment,” said Mr. Jungles, who has become one of the most celebrated landscape architects in the U.S. Some of his recent projects include a swamp-like environment for a pedestrian concourse in front of a Herzog & de Meuron building on Miami Beach’s Lincoln Road; the Miami Beach Botanical Garden; and the “Brazilian Modern” exhibition at the New York Botanical Garden’s 2009 Orchid Show. For the Biscayne house, architectural consultants and interior designers were summoned at a later stage, while Mr. Jungles was the lead designer throughout the project—an unusual backward approach. In a sense, it’s an “inside-out” house that started outdoors and worked its way in. Steven Brooke (4) How a 1950s Miami Box Was Turned Into an Edenic Retreat Worthy of Gauguin; Adult-Size Aerie THE TERRACE The master bedroom was extended with a grid-like overhang and raised terrace that can be closed off for privacy with sliding panels. The hanging basket seat and a massive Hugo Franca chair made from a gnarly species of Brazilian hardwood serve as sculptural accent pieces. The terrace was further delineated with a narrow fire pit of river stones and a slit waterfall that pours into the infinity swimming pool below. UNITED STATES THE LIVING ROOM The entryway leads into a long living room that hardly feels like an “interior” space at all. The eye is immediately drawn outside again through floor-to-ceiling glass that spills out toward the central courtyard. Wall panels by Joaquim Tenreiro, reclaimed from a midcentury house in São Paulo, Brazil, dominate one end of the room. THE ENTRANCE The entry was transformed from a standard driveway and front stoop into an elegant arrival sequence. Two columns rise from a garden pool that contains silver Juncus grass, Nymphaea (water lily) and exotic fish, shaded by silver buttonwoods. (The stone columns—testigos (silent witnesses)—were carved by Colombian sculptor Hugo Zapata.) The outer shell of the original house was preserved but transformed, using hidden pumps and drainage systems, to feel as if it had been lifted above a river that flows underneath and cascades into the entry pool. THE COURTYARD The most magical part of the house is the central courtyard. Spanish moss hangs from Simpson Stoppers and Senna trees; air plants, orchids and bromeliads sprout mysteriously from forks in the branches. The sculptural settee and table were carved by Hugo Franca from wood rescued from the Amazon Basin. UNITED STATES UNITED STATES ! " #$ %& ' ()!$$$$$ !" ! !" # #$ !$%& ##&!%' W16 | Friday - Sunday, March 9 - 11, 2012 THE WALL STREET JOURNAL. AUTOS Complacency Dogs Excellence of BMW’s 3 In Many Ways Impeccable, the New Generation Suffers a Bit From an Air of Privileged Incumbency [ Rumble Seat ] When in the course of human events someone asks you which fresh-off-the-boat BMW 3-series you want to drive for the week, you say, “The fast one,” naturally. And so I did. But I was wrong. The correct answer was, the slow one. I hereby invoke air quotes. The “slow” one is the 2012 328i, the base model for the new generation of the legendary 3-series (the F30 chassis, in nerdspeak, replacing the E90). How about some numbers? The F30 is longer (3.7 inches) than its predecessor on a 1.9-inch longer wheelbase, with wider front and rear tracks (1.5 inches and 2 inches, respectively) and is most readily identified by new LED headlamp assemblies that reside on the face of the car like Poirot’s pince-nez. The marquee hardware in this, the company’s most consequential automobile, is a new twin-scroll turbo four-cylinder engine, codenamed the N20 because, well, BMW engineers code-name everything. I’d like you to meet my daughter, the Alpha-Heidi-5. The high-pressure turbo 2.0-liter puts out a stout 240 horsepower and 260 pound-feet of torque in a vast swath of tachometer—anywhere from 1,250 rpm to in excess of 5,000 rpm. BMW puts the 328i’s 0-60 mph acceleration at 5.9 seconds, which is pretty darn snappy for a 3,461-pound four-door. Paired with the standard eight-speed automatic transmission and the auto stop/start feature, as well as a driver-selected fuel-saving program called “Eco Pro”—are there “Eco Amateurs,” I wonder?—the N20 also posts an astonishing 36 miles per gallon on the highway. Look for that number to be blazed across the advertising firmament in months to come. I do so wish this story were about that car. The fast one, the 335i delivered to my hotel in Los Angeles, is a more familiar construct, with BMW’s excellent N55 singleturbo’ed 3.0-liter in-line six held over from the previous generation (300 hp/300 pound-feet). This engine is likewise wondrously free of stiction and internal inertia and is smoother than hot-buttered sin. With the same eight-speeder, the 3,594-pound car sprints to 60 mph in about 5.4 seconds—i.e., a half-second quicker than the 328i—but its fuel economy is a little less mind-blowing: 33 mpg on the highway. There’s also the notinconsiderable $7,500 delta between the price of the four- and six-cylinder models, or $3,750 per cylinder. So that’s the showroom calculus: $7,500, 0.5 seconds to 60, 3 mpg on the highway, and about 133 pounds of curb weight. Realworld car buyers should prefer the four-cylinder car, reasoning that the fractional loss of horsepower is more than compensated by the 328i’s price, the fuel econ- Dan Neil/The Wall Street Journal (2) BY DAN NEIL omy and the comparative lightness. As an enlightened car guy, I should have been among them. But no. In that moment when the functionary at BMW offered me any 3-series I wanted, I succumbed to maximalism. Maximalism is the mostly male mind-set that assumes “more” is better. Spare me your relativism on matters of weight/price/performance/ fuel economy. I will not measure out my life in coffee spoons. I want wider tires, bigger brakes, harder suspension, faster windshield wipers. I want the El Presidente, the Venti, the subzero sleeping bag, the full-frame CMOS, the triple-core processor. This is straight out of Thorstein Veblen, the University of Chicago economist who coined the phrase “invidious comparison.” Take care not to confuse Veblen with his contemporary Max Weber, inventor of the carburetor. How was the 335i? I have to say, a little disappointing. Let’s take styling. The F30’s enlarged headlamp openings are pointless, functionally and aesthetically, and because the familiar glowing irises of the instruments appear unchanged, the car looks like it’s flaring its eyes in haughty, Joan Crawford-like insanity. The owner’s manual recommends no wire hangers. This mild revision of the sheet metal is altogether timid and unaffecting: The side light-line has been pulled up from the rocker panel into the doors; the Graf Zeppelin-like sculpting on the hood has been toned down. A bore, in other words. Frankly, I like the old body style, and headlamps, better. Also annoying: The F30’s sweeping interior redesign leaves the 6.5-inch LCD display clumsily thrust through the top of the dash, like an electronic Pop-Tart leaving the toaster. New for 2012 are three trim packages: Sport, Luxury and Modern. Being the very model, I chose the Modern trim level—think Scandinavian hotel lobby—with the strikingly weird “Fineline Pure” textured wood trim. It means to suggest driftwood. It suggests topsoil erosion. If you want leather seats with that, it’s a punishing $3,600. Porsche and BMW are currently competing to see which can better rake consumers over the coals on optional upgrades. On the 3-series, the navigation and multicolor heads-up display is $2,550. You’ll pay $3,600 for the Premium package (basically moonroof and leather seats). The Sport Line package (adaptive M suspension, some trim and nice steering wheel) is $2,500. Oh you want the leather Sport seats? That’s another $1,450. The good Harman Kardon sound system? $950. Oof. BMW appears to be getting procurement lessons from the Pentagon. Of course, dynamics are the 3series stock in trade, and here the car delivers. The test 335i—with 18-inch all-season radials gripped in the fender wells—practically glided over the crumbly asphalt in the Malibu canyonland with a deeply settled stance that largely quelled bounding and oscillation. The struts-and-multilinks suspension is largely carry-over, but the elastomerics have been tuned to greater ride compliance and better NVH. There’s a small trade-off in play here. In hasty corner-tocorner transitions, the car rolled and pitched more than I had expected. Yet the BMW-patented liveliness is still there, that sweet connectedness with the driver. The revised speed-sensitive electric steering offers excellent feel and feedback. The fixed four-pot front brakes are also impeccable. And, as usual, the bounteous torque in first through sixth gears and at any rpm gives the car a hugely willing and enthusiastic character. Love that. I would like to drive this car with a proper set of sport tires on it, though. I frequently found less turn-in bite and more understeering in corners than I’d like, and when I’d try to get the car to rotate with the throttle it balked, even though I had it in the most liberal performance setting, Sport+, which allows quicker yaw rates and less traction intervention. Over and over again, the car seems to be waiting on the tires to regain purchase. The 3-series is still, and again, an excellent car: state-of-the-art driver-assist technologies, great switchgear and materials, flawless dynamics, stellar fuel economy, even with the six-cylinder. Heck, even the trunk is bigger. And yet the F30 project still manages to convey a certain privileged incumbency and laurel-resting about it, if not raw profit-taking. The pace of excellence definitely has slowed with the F30. Unfortunately for BMW, it’s happening just as the competition is speeding up.