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The Wall Street Journal - 5 November 2012 (Asia)

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Hyundai and Kia
overstated the fuel
economy for more than
a third of the vehicles
they sold in the
the past two years.
Berkshire Hathaway
secures deal to buy toy
and novelty retailer
Oriental Trading.
Obama and
Romney Make
Their Cases
Page 15
An Enclave
Turned Prison
INDEPTH Pages 16-17
An Enclave
Turned Prison
INDEPTH Pages 16-17
As of 4p.m.ET DJIA 13093.16 g 1.05% FTSE100 5868.55 À 0.11% Nikkei 225 9051.22 À 1.17% Shanghai Comp.2117.05 À 0.60% HangSeng 22111.33 À 1.33% Sensex 18755.45 À 1.04% S&P/ASX200 4460.10 À 0.06%
(India facsimile Vol.4 No.107)
Seeking to Change More Than Just Their Names
i i i
Looking for Better Luck,Some Thais Try New Monikers
BANGKOK—Google Inc.’s
Executive Chairman Eric
Schmidt once predicted that
in the future people around
the world will change their
names to escape all the em-
barrassing things they did on-
line in the past.In Thailand,
people already are doing it—
for good luck.
Baramee Thammabandan,
46 years old,had a run of
misfortune a decade ago when
he was still known as Teer-
apol Lilitjirawat.His business
trading garments in Bangkok’s
mazelike markets slumped,
his eyesight began to fail and
he could no longer properly
manage his affairs.Worse,he
says his former wife left him.
So,Mr.Baramee did what
many Thais do when faced
with a patch of bad luck:He
changed his name.“I wanted
to become a new person,”
says the slim,clean-shaven
Mr.Baramee,whose new
name means “Charisma” and
which he chose to
bring himwealth and
It seems to have
Though almost
entirely blind,Mr.
Baramee now is at
the forefront of a
booming new indus-
try advising other
Thais how to choose
newnames for them-
selves.A long list of
Thai celebrities and
business tycoons parade into
his office in one of Bangkok’s
busiest shopping malls,asking
for advice on new monikers,
while his team fields more
than 250 calls from anxious
others wanting a consultation.
In just five years,he says,his
business has doubled,enough
for him to create four new
websites,and prompting a
horde of competitors
with names like thai- and to
jump into the pecu-
liar niche.
“People are like
cars,and changing
names is like chang-
ing a flat tire.It can
take you further,and
give you a smoother
ride,” Mr.Baramee
says,as a pair of old
Nokia cellphones
chirp on a desk in front of
him and incense sticks burn
before a collection of Buddha
Please turn to page 5
Race Down
To the Wire
President Barack Obama and
Mitt Romney enter the final
sprint before Election Day es-
sentially deadlocked nationally
in what looks set to be one of
the closest presidential elec-
tions in U.S.history.
A Wall Street Journal/NBC
News poll of likely voters re-
leased Sunday found Mr.Obama
leading his rival by a nose,48%
to 47%,as the two men criss-
cross the country to rally sup-
porters in the states most likely
to decide the outcome.
Final polls in many of those
states,from Virginia and Ohio
to New Hampshire,Colorado
and Wisconsin,also find the
race too close to call.
In the last stretch,Mr.
Obama implored voters to stick
with himfor another four years,
while rival Mitt Romney said
Americans have a clear choice
between a tired incumbent and
a businessman who can work
with both parties.
Mr.Obama asked voters in
Mentor,Ohio,on Saturday to
reject what he said was the
false change being offered by
his opponent.
“When I talk about change
I know what real change looks
like.I fought for it.I’ve got
the scars to prove it,” he told
about 4,000 people at a rally
at Mentor High School.“And
you fought for change too.Af-
ter all we’ve been through to-
gether we can’t turn back,we
can’t give up on it now.”
He said that Mr.Romney
was now trying to run as a
change candidate but ques-
tioned the economic policies
Please turn to page 18
By Neil King Jr.,
Laura Meckler
and Sara Murray
U.S.Firms Woo China Investment
MADISON,Wis.—Sun Wen-
bin and his colleagues from
China got the red-carpet
treatment on a recent trip to
the U.S.
Over 10 days,Mr.Sun and
60 other Chinese entrepre-
neurs and executives were
welcomed by former Presi-
dent George W.Bush,and
courted by businesses ranging
from a shrimp breeder in Or-
lando to a real-estate devel-
oper in Dallas and an alterna-
tive-fuel company in Madison.
The wooing was part of an ef-
fort by local governments to
attract more investment from
the Chinese,who despite their
newfound wealth have the
reputation in some quarters
as window-shoppers rather
than deal-makers.
Mr.Sun—a 50-year old
who owns 11 electronics
stores in Handan,a city three
hours by train south of Bei-
jing—said he was impressed
with some of the technology
he saw,and his travel com-
panions gushed about the
hospitality and clean environ-
ment.But,as with many Chi-
nese entrepreneurs who made
their fortunes during the
country’s economic boom of
the last decade,he worried it
would take a long time to
earn a profit on some of the
investment opportunities pre-
“Life is short.I just want
to make a few big deals,” said
Mr.Sun,over lunch in Madi-
Please turn to page 18
Gasoline shortages across the New York region began to ease over the weekend,but continued blackouts in the wake of last week’s
superstorm kept many filling stations from pumping gas even if they had it.Above,residents line up at a gas station in Brooklyn.Page 8
In Sandy Recovery,Fuel Begins to Flowbut Long Lines Remain
European Pressphoto Agency
Vote holds high stakes for
Referendums on gay
marriage in several states...7
Final jobs report frames
closing arguments.....................7
Salesforce +
Salesforce helps Dunkin’ Brands
keep the conversation going
with its 7 million Facebook fans
©2012,inc.All rights reserved.Salesforce,the Salesforce Corporate logo,andothers
are trademarks of,inc.Other trademarks may be heldby their respective owners.
| Monday,November 5,2012 THE WALL STREET JOURNAL.
Most Read in Asia
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3.IPad Mini Tests Crowded
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i i i
Business & Finance
nThe latest report
showed the economy has gained
momentum but is still growing far
below its potential,helping both
presidential candidates frame
closing arguments to voters.7,34
nAn Obama election win could
bring buying of haven assets,and
selling in stocks,as investors pre-
pare for a fight over taxes.Stocks
could rally if Romney wins.19
nAn Indian government board
revoked Roche’s patent for an ex-
pensive drug for an infectious
liver disease,in the latest blow to
multinational drug companies.22
nVisa will partner with three
banks in Myanmar,allowing its
credit cards to be issued and ac-
cepted in the country.26
nNathaniel Rothschild is consid-
ering a bid for some of the coal
assets of Bumi,to counter last
month’s more than $1.2 billion of-
fer by Indonesia’s Bakrie Group.21
nRegulators sought a new fine
against Japan Advisory,alleging
that the firm traded on inside in-
formation gleaned from a Nomura
research report.26
nJapan Airlines reported a mod-
est rise in net profit in its first re-
porting period since it relisted its
shares in an IPO.21 companies report-
ing earnings this week will attract
a spotlight following warning
signs from several big advertising
firms last month about a signifi-
cant slowdown in ad spending.23
nMicrosoft is working with
Asian suppliers to test its smart-
phone design,suggesting it is in-
creasingly adopting a similar busi-
ness model to that of Apple.20
nGlobal Logistic Properties is
looking to raise as much as $1.5
billion by listing some of its prop-
erties in Japan.26
i i i
nChina’s Communist Party con-
cluded a generational shake-up of
its military top brass,with the ap-
pointment of an army general and
a former air-force commander as
the two new vice chairmen of its
Central Military Commission.4
nThe Coptic Christian church in
Egypt named a new pope,who
was chosen in an elaborate cere-
mony in which a blindfolded boy
drew the name of the next patri-
arch from a crystal chalice.11
nSyrian rebels captured an oil
field in the country’s east after
three days of fighting with gov-
ernment troops protecting the fa-
cility,activists said.
nA higher court in the Maldives
ordered the suspension of a legal
hearing for ex-President Nasheed,
accused of illegally ordering the
detention of a senior judge.
nThousands rallied in Tokyo
against U.S.deployment of Osprey
aircraft on Okinawa amid escalat-
ing anti-U.S.military sentiment
following recent crimes.
Chinese police clear snow on the Badaling section of the Beijing-Tibet expressway.Beijing received snow and sleet as cold weather swept northern China.
World News:Afghan
power broker steeped
in graft,U.S.says.10
Corporate News:
Apple’s new iPad tests
crowded market.20
Management:A peek
at the M.B.A.‘bible.’ 35
What’s News—
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THE WALL STREET JOURNAL.Monday,November 5,2012 |
Laos Summit to Open
Asian,European Leaders Will Meet as Region Regains Momentum
Asian and European leaders are
gathering in the world’s most eco-
nomically vibrant region just as it
shows signs of regaining momen-
tum,possibly taking up some of the
slack for Western nations.
Government heads and senior
deputies from 49 countries in Eu-
rope and the Asian-Pacific region
open a two-day summit Monday in
the tiny Southeast Asian nation of
Laos,seeking to strengthen trade
and investment ties and promote
peaceful development.
But topping the agenda at the
Asia-Europe summit,in the corri-
dors of the capital Vientiane if not
in the formal meetings,will be Eu-
rope’s seemingly inexorable debt
woes.Asian officials say they want
the European leaders,including
French President François Hollande
and Italian Prime Minister Mario
Monti,to explain how they plan to
resolve the crisis engulfing Greece,
Spain and other nations in one of
Asia’s top export markets.
The leaders are expected largely
to duck Asia’s long-standing territo-
rial issues,which have recently wors-
ened relations,especially Japan’s ties
with China and South Korea.China’s
premier,Wen Jiabao,has no plans to
meet separately with Japanese Prime
Minister Yoshihiko Noda,Beijing
says.These once-customary bilateral
summits have been on hold at global
meetings in recent months because
of the row over disputed islands.
Mr.Noda in September national-
ized the Japan-controlled islands—
which Japan calls the Senkaku and
China calls the Diaoyu—sparking
sometimes-violent protests across
China and boycotts of Japanese
products,notably cars.
The furor has eased in the past
few weeks,and Mr.Noda,keen to
move beyond the disputes,said last
week he won’t make an issue of the
Senkaku in Vientiane.But prospects
are dimfor any Beijing-Tokyo prog-
ress soon:Mr.Wen is a lame duck,as
the Chinese Communist Party begins
a once-a-decade leadership change
Thursday,while Mr.Noda,far behind
in the polls,is under pressure to call
a general election soon by a resur-
gent opposition.
Reflecting the concerns over-
hanging the Asia-Europe meeting as
well as the likely lack of concrete
progress on major issues at the
summit,the Chinese government
said only that Mr.Wen will talk in
Vientiane about “China’s view on
current global economic and finan-
cial situations and policy sugges-
tions to strengthen cooperation be-
tween Asia and Europe.”
Mr.Noda,for his part,wants to
press Europe to move ahead with
free-trade talks,but little progress
is expected there either,as individ-
ual European Union member coun-
tries haven’t given negotiators the
go-ahead and the EU remains un-
happy with Japan’s tariffs on agri-
cultural products and cars,Japanese
officials say.
Europe’s financial markets have
been calmrecently,as the European
Central Bank’s offer of an unlimited
backstop has curbed bond yields in
Spain and other weak economies.
But Greece’s fragmented Parliament
is to vote this week on €13.5 billion
($17.3 billion) of austerity measures
and a budget that Athens must pass
to secure fresh aid and avoid run-
ning out of money within weeks.
Euro-zone finance ministers are to
discuss the crisis Thursday,but no
decisions are expected.
By contrast,data last week of-
fered hope that Asia is pulling out
of an economic slowdown.Even
though Japan appears to be relaps-
ing with Europe into recession and
Asia’s improvement is patchy,manu-
facturing in China expanded for the
first time in three months in Octo-
ber,suggesting it remains on track
to hit the government’s 7.5% growth
target this year.Exports fromSouth
Korea and Indonesia also picked up.
Southeast Asia—where Laos is
attracting attention for its impres-
sive growth and expanding integra-
tion with the global economy—re-
mains robust,as domestic demand
supplements uneven exports.
“Part of the reason why South-
east Asia has been more resilient in
weathering the global slowdown is
because this region is now more in-
tegrated than before,” said Indone-
sian Vice Finance Minister Mahen-
dra Siregar.
The region must build on this
through greater economic and fi-
nancial cooperation,strengthening
the region’s financial safety net and
improving surveillance and social-
security provisions,Mr.Siregar said
in an interview recently.
The 10 members of the Associa-
tion of Southeast Asian Nations “are
some of the most dynamic and fast-
est-growing in the world,and this is
likely to be the case for the next de-
cade and more,” said Jayant Menon,
lead economist for trade and re-
gional cooperation in the Asian De-
velopment Bank’s office of regional
economic integration.
Asean’s newer members—Cam-
bodia,Laos,Myanmar and Viet-
nam—are set to become increas-
ingly open and export-oriented,with
a larger share of manufacturing,
while the older members focus their
economies more on domestic de-
mand and become more reliant on
services,Mr.Menon said.
—Toko Sekiguchi
contributed to this article.
Representatives from 49 countries are holding a two-day meeting in Vientiane.
| Monday,November 5,2012 THE WALL STREET JOURNAL.
China Party Fills Top Two Military Posts
Appointment of First Air-Force General to Key Role Reflects Importance of Projecting Air Power in Joint Operations
BEIJING—China’s Communist
Party concluded a generational
shake-up of its military top brass
Sunday when state media announced
the appointment of an army general
and a former air-force commander
as vice chairmen of its Central Mili-
tary Commission—the body that
controls the armed forces.
Gen.Xu Qiliang is the first air-
force general to be given the post—a
reflection,analysts say,of the esca-
lating ambitions and capabilities of
China’s military,which is rapidly de-
veloping the air and naval power
needed to challenge U.S.military
dominance in the Asian-Pacific re-
The promotion of Gen.Xu and
army Gen.Fan Changlong to the
most powerful uniformed posts in
the country was announced at the
conclusion of the final four-day
meeting of the Party’s current Cen-
tral Committee—its top 370 lead-
ers—according to the state-run Xin-
hua news agency.
But Xinhua gave no indication of
whether Hu Jintao,the current party
chief and China’s president,would
step down from his position as
chairman of the commission when
he and other top leaders retire at
the conclusion of the 18th Party
Congress,which begins Thursday.
Xinhua also gave no other clues
about the agenda for the Congress.
But it did say the Central Committee
approved a work report and changes
to the party’s constitution that are
to be presented to the Congress for
final approval and that analysts say
could set the policy direction for the
next decade.
The party is facing mounting
calls from influential voices inside
China to accelerate economic and
political liberalization,with the lat-
est such appeal coming over the
weekend from the son of Hu Yao-
bang,a reformist party chief who
was ousted by conservatives in 1987.
“Reforms cannot be abandoned,
promises cannot be discarded,”
wrote Hu Deping in the Saturday
edition of the Economic Observer,a
Chinese-language newspaper.He
said the party needed in particular
to strengthen the rule of law and to
break up state monopolies.
Mr.Hu,who has a seat on a con-
sultative body to Parliament,is a
well-known liberal but is still an in-
fluential figure in the party because
of his ancestry and his personal re-
lations with the offspring of other
former leaders,including Xi Jinping,
the man expected to take over as
party chief this month and as presi-
dent in March.
Whether Mr.Xi has the political
authority to change the status quo
will depend to a large extent on
whether he has control over the
armed forces,which have under-
pinned the party’s grip on power
since the revolution in 1949,analysts
Mr.Xi is currently the only civil-
ian vice chairman of the 12-member
Military Commission,but party in-
siders say he may have to wait up to
two years to take over from Mr.Hu
as head of the body,and would have
to defer to himduring that time on
defense issues and the appointment
of new generals.
The military shuffle comes at a
transformational moment for
China’s military,as it is seeks to pro-
tect China’s perceived national inter-
ests beyond its own shores,even as
the U.S.responds by bolstering de-
fense ties with Asian countries and
realigning its forces in the region.
Gen.Xu,62 years old,is a former
pilot who was appointed commander
of the air force in 2007 and has long
advocated enhancing capability to
conduct joint operations involving
the navy,air force and ground
He is considered close to both
President Hu and Jiang Zemin,who
retired as party chief in 2002 but
still has considerable political influ-
ence and has been playing a key role
in negotiations over the leadership
change,according to party insiders
and analysts.
Gen.Fan,65,is an army general
who has commanded the eastern Ji-
nan military region since 2004.His
appointment as a vice chairman sur-
prised some analysts because he was
promoted over the head of another
army general,Chang Wanquan,who
is already on the Central Military
Commission and is considered close
to President Hu.
“Gen Fan was supposed to be
heading toward retirement,” said
Willy Lam,an expert on Chinese pol-
itics and senior fellow at the
Jamestown Foundation.He said for-
mer President Jiang and Gen.Xu
Caihou,who is due to retire as a
Central Military Commission vice
chairman this month,had insisted
on Gen.Fan’s promotion.“It’s un-
usual for themto pick the new vice-
chairmen so soon,” Mr.Lam added.
The appointments mean that
Gen.Fan and Gen.Xu are almost
certain to be the only military offic-
ers promoted to the party’s Polit-
buro—its top 25 leaders—at the con-
clusion of the Congress,giving them
a say in decision-making on domes-
tic and foreign-policy issues.
Gen.Chang is now likely to take
over as defense minister,a position
that normally doesn’t come with an
automatic seat on the Politburo,ac-
cording to military experts.
Almost all of the remaining seats
on the new Central Military Com-
mission have now been decided fol-
lowing the promotion of six generals
last month to the most important
military posts.
Xinhua also announced Sunday
that the Central Committee had en-
dorsed the expulsion fromthe party
of Liu Zhijun,a former railways min-
ister,and Bo Xilai,the onetime party
highflier whose wife was convicted
in August of murdering a British
Neither man has been reachable
for comment since his removal.
Roll Call
China’s current military leadership and possible coming changes.
(As of Oct.25,2012)
Vice Chairman
Vice Chairman
Vice Chairman
Defense Minister
Chief of General Staff
Dir.of General Political Dept.
Dir.of General Logistics Dept.
Commander of Second Artillery Corps
Dir.of General Armaments Dept.
Navy commander
Air force commander
Hu Jintao
Xi Jinping
Gen.Guo Boxiong
Gen.Xu Caihou
Gen.Liang Guanglie
Gen.Chen Bingde
Gen.Li Jinai
Gen.Liao Xilong
Gen.Jing Zhiyuan
Gen.Chang Wanquan
Adm.Wu Shengli
Gen.Xu Qiliang
R (possibly)
69 R
72 R
71 R
70 R
72 R
68 R
Currently in job Possible replacement Age in 2012Age in 2012
Sources:China’s Defense Ministry,news reports,‘China’s Coming Central Military Commission,’ by Bo Zhiyue The Wall Street Journal
= Retiring = Confirmed
Hu Jintao
Xi Jinping
Gen.Xu Qiliang
Gen.Fan Changlong
Gen.Chang Wanquan
Gen.Fang Fenghui
Gen.Zhang Yang
Gen.Zhao Keshi
Gen.Wei Fenghe
Gen.Zhang Youxia
Adm.Wu Shengli
Gen.Ma Xiaotian
Japan Takes Small Step Back FromIts Fiscal Cliff
TOKYO—Japan inched away from
a fiscal cliff as the main political
parties finally agreed to debate a
bill to raise the debt ceiling,just a
month before a possible suspension
of government payments and halt to
bond auctions.
But political wrangling continued
over the timing of a general elec-
tion,threatening to disrupt spend-
ing plans for the next fiscal year be-
ginning April.
The bill would allow the issuance
of the bonds needed to finance
some 40% of this year’s budget.The
government has warned that if it
isn’t enacted by end of the month,
some spending will halt—perhaps
including pension payments and
support for local governments.
The Liberal Democrats,the larg-
est opposition party,had refused to
discuss the deficit-financing bill,in-
sisting that Prime Minister Yoshi-
hiko Noda first promise dates for
dissolving Parliament and holding
an election.Though Mr.Noda needs
LDP support to enact the legisla-
tion—opposition parties control one
of the two houses of parliament—he
resisted.The tug-of-war has left the
bill up in the air,prompting warn-
ings from credit-ratings companies
on Japan’s creditworthiness.
On Friday,however,the LDP took
part in a parliamentary committee
where the bill will be discussed.“I
amvery grateful,” Finance Minister
Koriki Jojima said of the LDP’s deci-
sion to attend.
The LDP’s change of heart is
seen as a way of forcing an early
election by meeting the conditions
the prime minister has set as pre-
requisites.Leading Mr.Noda’s ruling
party in the polls,the LDP is seeking
an election by the end of December
in hopes of returning to power.A
new poll found support for the Noda
administration at an all-time low of
17.7%,Kyodo News reported Sunday,
down from 29.2% just a month ear-
lier.Mr.Noda is Japan’s sixth prime
minister in as many years,and re-
cent history suggests it is difficult
to hang long onto power when the
approval rating falls below 20%.
“It might be called a sunshine
policy,but we will continue to press
our demands,” LDP President Shinzo
Abe said in an interview with na-
tional broadcaster NHK on Sunday.
Mr.Abe said that the premier must
show in the next week his willing-
ness to call an election within the
year.Mr.Abe declined to say
whether the shift in his party’s tac-
tics extends to supporting the en-
actment of the bill.
“We are allowing Mr.Noda a
chance to keep his end of the prom-
ise,” he said.
Mr.Noda reiterated Friday that
what must be accomplished in the
current parliamentary session:pas-
sage of the bond bill,redistricting
and progress on a planned social-
welfare overhaul.The session runs
to the end of the month.
“They will be factors in deciding
the timing of the lower-house disso-
lution,” Mr.Noda said in a group in-
terview with members of the prime
minister’s press club.He also has
said he stands by a promise made to
the opposition in August—in return
for support on a contentious sales-
tax increase—that the election will
take place in the “near term.”
But senior officials from Mr.
Noda’s ruling Democratic Party of
Japan have said that meeting the
three conditions wouldn’t lead to an
election right away.And some of his
aides say they can’t all be met in
time for a December election.
An election next month “is diffi-
cult schedule-wise,” the DPJ’s Secre-
tary General Azuma Koshiishi said
in a TV interview Sunday.“We’re
not working with [a December elec-
tion] as a premise.”
The Noda aides say that redis-
tricting to resolve disparities in the
weight of a vote will take at least a
couple of months.The LDP’s posi-
tion is that the condition will have
been met if a bill to address redis-
tricting is enacted—even if an elec-
tion is held with the current dis-
tricts.That isn’t Mr.Noda’s take.
The LDP says it is acceptable to ap-
ply the changes later,one of the
aides said,“but the prime minister
has all along believed in doing so
from the next election.”
Another aide said that passage of
the deficit-financing bill would push
up Mr.Noda’s support rating,em-
boldening him to stay in power to
tackle next year’s budget—a move
certain to meet fierce resistance
from the opposition.
An escalation in political ten-
sions could delay passage of the
budget,and result in a repeat of the
uncertainty about government
spending that the bond-issuance bill
has created.On Thursday,Moody’s
Investors Service Inc.called the po-
tential cancellation of bond auctions
due to the political impasse over the
bill “credit negative.”
While the DPJ,with its control
of the more powerful lower house,
can push the budget through parlia-
ment,a clash between parties could
delay enactment and force the gov-
ernment to work by an interimbud-
get,government officials said.Such
a budget would keep spending to a
minimum,they say—hindering ef-
forts to boost an economy many
economists say is on the verge of
recession as global demand slows.
—Mitsuru Obe and Toko Sekiguchi
contributed to this article.
Deeper in the Red
Japan has been borrowing more each year and sinking further into debt.
Source:Japan’s Ministry of Finance The Wall Street Journal
Note:Fiscal year ends March 31 ¥1 trillion=$ 12.48 billion
¥700 trillion
THE WALL STREET JOURNAL.Monday,November 5,2012 |
Myanmar Makeover’s Education Gap
Companies Eager to Pour In Find Dearth of Skilled Workers;Rot at University Embodies Leaders’ Challenge
YANGON—The University of Yan-
gon was once one of Asia’s best.To-
day,abandoned buildings rot away
on its overgrown campus,some
walkways deserted except for dogs.
Its state of affairs embodies a
crucial challenge for leaders as
Myanmar opens to the outside
world.The military junta that domi-
nated the country for five decades all
but destroyed the university system
after a series of student protests
convinced its leaders that schools
were breeding grounds for dissent.
But now that the lifting of most
Western sanctions has paved the
way for an expected wave of invest-
ment,companies are finding a na-
tion largely bereft of skilled work-
ers.Doctors and lawyers often lack
up-to-date training,and other pro-
fessions are desperately short of
qualified staff with even basic criti-
cal-thinking skills,employers say.
The lack of expertise was some-
times used by military leaders as a
justification for handing big busi-
ness contracts to associates of the
regime.Only over the past year,
since the military regime stepped
down,has the government actively
encouraged those educated abroad
to return and share expertise.
“There’s a huge,huge shortage”
of trained workers,“and going for-
ward it will be even more so,” said
Suki Singh,managing director of
Myanmar Hotels International,
which runs several of Yangon’s most
prominent hotels and has been look-
ing to fill human-resources and en-
gineering positions for months.
Parami Energy,an oil and gas firm,
has been trying since July to fill hu-
man-resources jobs and other posts,
but keeps finding applicants can’t
speak English.
“Most of them,I’m sorry to say,
are unqualified,” says Tin Cho,an
adviser to the company.Some com-
puter-science students don’t even
know how to turn computers on,he
Twenty-year-old Zin Nyein Htwe
wants to be an architect “to make
more beautiful buildings.” But she
says her college—the University of
West Yangon—doesn’t normally let
students into its library and only
sometimes allows access to comput-
ers.She complains that some in-
structors can’t explain what they’re
teaching and rarely fail anyone.“I
want a better education,” she says.
The weak education systemalso
means the government lacks enough
trained technocrats to fully imple-
ment reforms.Opposition leader
Aung San Suu Kyi said recently that
Myanmar’s “ruined” education sys-
tem had made it harder to recruit
talented young politicians.
In the decades after Myanmar’s
military regime took over in the
1960s,it closed the University of
Yangon and other campuses repeat-
edly to keep student protesters at
bay,at one point keeping schools
closed for nearly 3½years in the late
1990s.To further prevent students
from congregating in urban areas,
the regime scattered much of the
University of Yangon to remote sites,
while new schools were opened far
fromcity centers.Funding dried up,
with Myanmar spending more on de-
fense than education and health care
combined—the only country in de-
veloping Asia to do so,according to
the Asian Development Bank.In-
structors were told to stick to rote
lesson plans vetted by military lead-
ers,teachers say.Some students
were left with 40-year-old textbooks.
When Kyi May Kaung,now a
Washington-based writer,was a stu-
dent at the University of Yangon,
then known as Rangoon University,
in the early 1960s,students hung
out at poetry readings and teachers
held degrees from places like Har-
vard and M.I.T.But by the time she
became an economics lecturer,pro-
fessors were ordered to stop teach-
ing political science and instead lec-
tured on the “socialist experience”
in the Soviet Union.Teachers had to
borrow light bulbs to ensure there
was enough light during storms.
Foreigners still aren’t allowed to
enter the premises of the University
of Yangon—which now offers classes
mainly just for graduate programs—
without special permission.A recent
visit by a Myanmar national found a
largely deserted campus covered in
lush overgrowth.
Officials at Myanmar’s Ministry of
Education didn’t provide responses
to questions.President Thein Sein
has vowed to improve education,
which he says is necessary to bolster
Myanmar’s human resources.
“The government is quite aware”
of the problems and will make im-
provements,said Nay Zin Latt,a
presidential adviser.The government
“has a strong idea to support re-es-
tablishing the University of Yangon,”
he added,but he was “not in the po-
sition” to disclose details,he said.
Efforts to obtain comment from
the University of West Yangon,Ms.
Zin Nyein Htwe’s school,were unsuc-
cessful.A lecturer there said the
school struggled to keep facilities
open due to funding shortages,
though students could ask permis-
sion to visit the library.Very fewstu-
dents are interested in the library,
though,he said.A degree “is easy to
get,” he said,since teachers coach
students on how to pass exams.
Fixing schools will require huge
investments and a willingness to let
students gather more openly and
potentially debate sensitive political
issues,educators say.
The government has more than
doubled its education budget and in-
creased teacher salaries,and univer-
sities have been ordered to trimen-
rollment to boost standards,
teachers say.Officials have held dis-
cussions with Johns Hopkins Univer-
sity—which had a Southeast Asian
studies center at the University of
Yangon in the 1950s—about working
together to improve university pro-
grams.The government has also
launched a “comprehensive review”
of the education system,expected to
be finished in 2014.
A chemistry lecturer interviewed
by The Wall Street Journal said she
is now more optimistic about pros-
pects for reform than any time in
But many of the old problems re-
main.She said that while each de-
partment at her school has a com-
puter,many of themdon’t work,and
many teachers don’t have permission
to use the Internet,which must be
obtained fromadministrators.“There
is still a military-dictatorship style of
rule in some departments,” she said.
Another pressing question is
whether schools should have inde-
pendence to develop their own cur-
riculums,which could frighten more
conservative elements in the gov-
ernment.Universities “one day will
get full independence as the rest of
the world is practicing,” Mr.Nay Zin
Latt said.But another official said
Myanmar “needs more comprehen-
sive review” before relaxing its grip
on schools.Schools don’t have the
financial means to run themselves,
so must rely on central government
oversight anyway,the official said.
—Celine Fernandez,
Minh Zaw and Swe Min
contributed to this article.
The overgrown entrance gate of the University of Yangon,once one of the best seats of learning in Asia.
Some Thais Change Their Names in Quest for Better Luck
Changing names might seemlike
an extreme remedy for bad luck,but
in Thailand,it is sometimes the first
thing people do to improve their
prospects.Thai parents have long
exercised great care in choosing
names for their children.Often they
consult fortune tellers to help select
names that complement the day and
time at which their children were
born.Mr.Baramee charges people
around 500 baht,or around $17,to
provide several suitable names.
If that doesn’t work,many peo-
ple are willing to change their
names if they think it will give them
a competitive edge now that the
country’s economy is quickly swing-
ing fromits old rice-farming origins
toward the urban,globalized world
of iPhones,shopping malls and mass
manufacturing.“Thailand is chang-
ing very quickly and it is natural to
look for ways to help you prosper,”
said Suchada Jarernsritrakul,a 34-
year-old real-estate consultant who
changed her name two years ago.
The process is quick and
straightforward.Thais simply regis-
Continued from first page ter their new names at local govern-
ment offices and can get new identi-
fication cards printed on the spot.In
the U.S.,name changes often involve
court procedures to be fully recog-
nized,while many European coun-
tries require government approval
for proposed name changes.
How often all this is happening
isn’t known,but there is enough
name-switching to give the police
fits tracking criminals.In one case,
police say they have launched a man-
hunt for a 35-year-old man originally
named Sahachat Kasemthang,who
allegedly changed his name several
times as he opened new bank ac-
counts and used bounced checks to
buy $167,000 of gold from jewelry
stores across the nation.Partly be-
cause of problems like this,the au-
thorities nowfingerprint not only to
identify criminal suspects but also to
handle all sorts of routine processes,
including visa extensions.
“We can’t rely on names and ID
cards to accurately identify people
any more,” said Lt.Gen.Panu Kerd-
larbpol of the Thai Police.
Still,you won’t hear a certain
Olympic athlete questioning the
powers of name changing.At 28,
JunpimKuntatean had won a silver
medal in the world weightlifting
championships but then suffered an
elbow injury a year before the 2008
Beijing Olympics.Hoping to change
her luck,she visited a fortune teller
who suggested a name makeover.
The new one,Prapawadee Jaroen-
rattanatarakoon,which roughly
translates as “Sparkling River-flow
of Brilliant Prosperity,” was a chal-
lenge to TV commentators,but she
did win a gold medal.She wasn’t
reachable for comment now,but
told reporters after winning that
“some people believe in fortune tell-
ers and I am one of them.”
Businesswoman Benyapa Sujira-
pat went to a fortune teller too when,
at age 50,she decided to quit her job
and start her own advertising busi-
ness.She was told her old name,
Sutheera Visetsung,had too many
letters which brought bad luck,so
Ms.Benyapa,decided to select a new
one,which means “Flourish with
Wisdom.” That gave her confidence
to go ahead,said Ms.Benyapa,who
not long afterward met the man she
married—which she also partly attri-
butes to her new identity.
There are all sorts of methods for
choosing new names,and the pro-
cess is growing more sophisticated.
Mathematicians at Naresuan Univer-
sity,about 320 kilometers north of
Bangkok,came up with a novel algo-
rithmfor selecting auspicious names
in 2009 to make the process even
simpler.Based on old beliefs about
how different letters of the alphabet
can influence a person’s fate,the
formula looks at the statistical aus-
piciousness of a name,as calculated
by its perceived attributes such as
wisdomand strength,along with the
number of letters in a name.
Since then,a plethora of Internet
sites have emerged to help people
change their names online without
going through the hassle of seeing
an actual fortune teller or numerol-
ogists.Users simply type in their
names and their birth dates and the
sites will crunch several factors,and
provide some alternative,luckier
names for a fee.At fortune-,five suggestions cost 299
baht,or just under $10,with addi-
tional charges for more names and
advice on how to sign your new
moniker best.There are even
“name-changer” smartphone appli-
cations allowing Thais to ponder a
name-change while stuck in Bang-
kok’s chronic traffic jams.
Not surprisingly,not everything
about all this all name-changing goes
well for people.Ms.Benyapa,the
businesswoman,has to walk around
with a battered cardboard folder of
documents to prove she is who she
says she is.In some cases,she com-
plains,she has had to rebuild busi-
ness relationships fromscratch after
changing her name.Other people
carry laminated,notarized copies of
their old identification cards.
Then there is the matter of her
recent wedding.“I sent out the invi-
tation cards,but nobody knew it
was me because I was using my new
name,” she says.Many of her guests
agreed to attend only after she vis-
ited themin person.“If you change
your name,you should be ready to
face all sorts of problems,” Ms.Be-
nyapa says.
| Monday,November 5,2012 THE WALL STREET JOURNAL.
Vote Holds High Stakes for Business
Owners and Executives Focus on What Each Candidate Would Mean for Taxes and Regulations in the U.S.
The outcome of Tuesday’s presi-
dential election carries enormous
weight for executives of American
businesses,big and small,influenc-
ing everything from the taxes they
are required to pay to the attitudes
of regulators who scrutinize them.
Disappointed by President Ba-
rack Obama and in despair over dys-
function in Washington,business,
for the most part,is investing in
challenger Mitt Romney.
An Obama re-election,many ex-
ecutives figure,would almost surely
mean higher taxes for them,contin-
ued pressure fromaggressive regu-
lators and more years of frustration
with a onetime community orga-
nizer who,they complain,doesn’t
understand the role of business and
is quick to scold them publicly.
A Romney victory,on the other
hand,is more likely to bring tax re-
lief,governmentwide restraint on
regulation and affinity with a pri-
vate-equity pro who describes him-
self as a friend of business.
Of course,Mr.Obama still has fans
in boardrooms fromSilicon Valley to
Detroit to Wall Street.On Thursday,
he won the endorsement of NewYork
City’s billionaire mayor,Michael
Bloomberg.Meanwhile,corporate en-
thusiasmfor Mr.Romney is tempered
by his vowto get tough with China—
the most promising growth market
for many big companies.Also,some
contend that Mr.Romney and his run-
ning mate,Paul Ryan,with their no-
tax-increase vows,haven’t sketched a
realistic plan for attacking the gov-
ernment’s mountain of debt.
With just days until the election,
the candidates are squabbling over
how best to give business,and the
economy,a boost.
Recently,Mr.Obama revived a
proposal to consolidate nine federal
agencies—including the Commerce
Department,Small Business Admin-
istration and U.S.Trade Representa-
tive—under a newcabinet-level Sec-
retary of Business.“There should be
a one-stop shop,” he said on MSNBC.
On Thursday,Mr.Romney criti-
cized the notion that government
reorganization is the key.“We don’t
need a secretary of business to un-
derstand business,” he said on the
campaign trail in Roanoke,Va.“We
need a president who understands
business,and I do.”
Stumping in Green Bay,Wis.,Mr.
Obama emphasized the importance
of government-funded programs on
which the economy depends.“If this
country invests in the skills and ideas
of its people” he said,“then good
jobs and businesses will follow.”
Business has been voting with its
bucks.In the 2008 election,corpo-
rate political action committees and
employees contributed $2 bil-
lion—55% to Democrats and 45% to
Republicans,according to the Center
for Responsive Politics.So far in
this election,60% of the $1.8 billion
in business-related contributions
has gone to Republicans.
Supporters of Mr.Romney hope
the former Massachusetts gover-
nor—who talks of his success as a
Republican dealing with a Demo-
cratic legislature—can break the
logjam in Washington.Another
cadre fears he will be captive to the
Tea Party wing of the Republican
A constellation of issues stands
to impact the way companies do
business.An Obama victory would
probably cement the president’s
health-care law,the merits of which
divide businesses;a Romney win
would mean an attempt to scale it
back.U.S.immigration laws,of keen
interest to many employers,may be
revisited.And the winner of Tues-
day’s vote almost surely will pick a
successor to Federal Reserve Chair-
man Ben Bernanke.
But taxes are high on the busi-
ness worry list.The president and
Congress will have to decide
whether to extend a slew of expiring
tax cuts and weigh the wisdom of
lifting taxes on wealthier Americans
to reduce the deficit.There is also
bipartisan talk of an ambitious over-
haul of the individual and corporate
tax codes—a project that could cre-
ate distinct columns of winners and
losers in business.
Mr.Romney has said that a tax-
code overhaul can reduce rates and
spur economic growth,ultimately
bringing in more tax revenue.More
than 80 chief executives said in a
joint statement that growth alone
won’t suffice,and that both tax-rev-
enue increases and spending cuts
will be needed to reduce the deficit.
Much has changed in the past four
years.The 2008 presidential election
coincided with an enormous threat to
American prosperity.Back then,
American business had a single im-
perative:Save the economy and fi-
nancial system from collapse.Wall
Street turned to Washington for a
lifeline.Executives of most busi-
nesses—even those who were critical
of Mr.Obama—cheered for his eco-
nomic-resuscitation effort to succeed.
The administration says the bail-
outs did their job.The U.S.banking
system is healthier than it was in
2008,and in better shape than Eu-
rope’s.And General Motors and
Chrysler,both of which were res-
cued by Washington,have restruc-
tured,and are making money again.
The mood began to shift with Mr.
Obama’s December 2009 verbal as-
sault on “fat cat bankers” and other
rhetoric that ticked off executives.
Wall Street lobbyists and executives
felt shunned by the White House,
even as liberal Democrats com-
plained the administration was too
soft on them.
The showdown in Washington
over raising the debt ceiling in Au-
gust 2011 brought many executives
off the sidelines.As talks between
the White House and congressional
Republicans broke down,headlines
warned of a possible U.S.Treasury
About 395,000 new private-sec-
tor firms were formed in 2010,the
lowest reading in 33 years,accord-
ing to the latest U.S.Census.The
Small Business Administration
backed a record $30 billion of loans
in its 2011 fiscal year.
Surveys of small-business own-
ers tend to find most in the Romney
camp.For them in particular,a big
issue is the assertiveness of Obama-
appointed regulators.
Although measuring regulation is
imprecise,the White House budget
office counted 192 economically sig-
nificant regulations in Mr.Obama’s
first 3½ years versus 146 in the
same stretch of President George W.
Bush’s first term,based on regula-
tions published by executive-branch
agencies and reviewed by the budget
If he wins,Mr.Romney would be
able to replace top regulators,some
of whomserve at the pleasure of the
president,others of whomfill fixed
terms.But nearly as important is
the vigor with which regulators do
their jobs and enforce the rules.
“I’ve never been audited by more
government agencies in my life than
I have under Obama,” said Lance
Johnson,president of Johnson Brass
& Machine Foundry Inc.,a family-
owned business in Saukville,Wis.,
with 115 employees.He estimates
the company has spent “well into
the six figures” to deal with what he
considers duplicative audits—in-
cluding $50,300 for its latest inspec-
tion by the Occupational Safety and
Health Administration.
“I would have spent that on more
equipment.That would have created
more jobs down the line,” said Mr.
OSHA,in a written response,said
it didn’t duplicate work in recent in-
spections but sometimes follows up
with a company to ensure safety.
Some small businesses see mer-
its in both candidates.“The idea of
having a business guy in the White
House is appealing to me as a busi-
nessman on sort of a fundamental
level,” said Michael Brey,president
of Brey Corp.,a Washington,D.C.-
area chain of toy and hobby shops.
“But I like knowing what’s going to
happen and President Obama has
laid that out clearly.”
Mr.Brey’s company got a Small
Business Administration-backed
loan in 2010 that helped keep it
afloat until it returned to profitabil-
ity in 2011,he said.
Obama administration officials
have been frustrated by the attacks
frombusiness,particularly because
they feel steps taken by Mr.Obama
in 2009,while politically risky,
helped prevent an even worse out-
come than a deep recession.
The breakdown of campaign con-
tributions from two large indus-
tries—Wall Street and the energy
sector—underscores the antipathy
toward the president.In 2008,in-
vestment bankers,hedge-fund man-
agers,private-equity executives and
others on Wall Street sent 57% of
their $170 million in campaign con-
tributions to Mr.Obama and other
Democrats.So far this year,70% of
their $220 million has gone to Mr.
Romney and other Republicans.
Energy interests,never a fan of
Democratic regulatory policies,have
turned particularly hostile to Mr.
Oxbow Corp.,a mining and en-
ergy company based in West Palm
Beach,Fla.,is the single largest con-
tributor to a super PAC founded to
help Mr.Romney.It gave $3.75 mil-
lion to the group,called Restore Our
“We consider Obama and the
government right nowto be our big-
gest concern and the biggest risk in
our business,” said William Koch,
Oxbow’s CEO.“They are pushing
regulations to the point that they
will run us out of business and make
it too costly to operate in the U.S.”
Mr.Koch’s brothers,David and
Charles,are major conservative polit-
ical funders;Williamsold his shares
in their company,Koch Industries,
and isn’t in business with them.
White House spokeswoman Amy
Brundage said Mr.Obama “has insti-
tuted a regulatory policy that is
aimed at protecting the health and
safety of the American people while
at the same time promoting eco-
nomic growth and reducing burdens
to businesses.”
By Damian Paletta,
Brody Mullins
and Melanie Trottman
*Rules with impact of at least $100 million,first 3 ½years of first term
Sources:Office of Management and Budget;George Washington University;Washington University (chart 1);Commerce Department (chart 2);Office of Management and Budget (chart 3);WSJ Market Data Group (chart 4) The Wall Street Journal
ViewFromthe Boardroom
Businesses complain of Obama’s
regulatory vigor…
Number of economically significant rules:
Number of regulatory staffers:
…but pretax corporate profits have
Quarterly pretax corporate profits fromcurrent
production,annual rate
…corporate tax receipts are below
prerecession peak…
Corporate income taxes
…and the stock market is nearly back to
prerecession levels
DowJones Industrial Average,monthly close
George W.Bush Barack Obama
146 192*
249,000 284,000
2008 2012
Q2:$1.92 trillion
$242.29 billion
Chrysler and General Motors are profitable after government bailouts.
THE WALL STREET JOURNAL.Monday,November 5,2012 |
Votes Test Support for Gay Marriage
Geroux recently told a door-to-door
campaigner who approached his
driveway not far from here that he
was undecided about Question 1,a
voter referendum to legalize gay
marriage that will be on the state
ballot Tuesday.
Mr.Geroux,a 52-year-old finan-
cier,previously voted against gay
marriage and said his Baptist church
published a notice in its Sunday bul-
letin saying congregants shouldn’t
“redefine traditional marriage.”
But after talking with the can-
vasser about a close friend who is
gay,he wasn’t so sure.“I’mprobably
going to vote for it now,because
that’s what’s fair,” Mr.Geroux said.
Mr.Geroux’s change of heart re-
flects what gay-marriage backers say
is a turning point in support that
will be put to the test in Maine and
three other states next week.Gay-
rights advocates believe straight
people are more likely to back same-
sex marriage when they know more
gay people,so in Maine,they are
taking their campaign door-to-door
in 250,000 conversations with voters
like Mr.Geroux.
Opponents of gay marriage,who
challenge the assertion that Ameri-
cans’ views on marriage have
shifted,say they have reached Maine
voters through television spots fo-
cused on religious liberties and
through churches.“It is a myth that
somehow because Americans have
brothers and sisters,friends and
family that are gay that somehow
that equates to support for gay mar-
riage,” said Brian Brown,the presi-
dent of the National Organization
for Marriage,which is supporting
the Maine fight with money and
strategy.What does matter,Mr.
Brown said,is people’s traditional
understanding of marriage and the
guidance they receive from clergy.
“We are very strong in the churches,
and will continue to mobilize and
work on that base,” he said.
Gay marriage has been defeated
every time it has been on a ballot in
the U.S.,including in Maine,where
voters in 2009 overturned a law
passed by the state legislature that
permitted it.A further 32 states
have voted in similar fashion.In the
six that allow gay marriage,the
unions were sanctioned by lawmak-
ers or courts,not popular votes.
But in the 2½ years since 1,500
canvassers in Maine began knocking
on doors in support of Question 1,
American support of gay marriage
has,according to polls,grown
sharply.Support in the U.S.reached
48% in July,up from 37% in 2009,
while 44% opposed gay marriage,
according to the nonpartisan Pew
Forum on Religion & Public Life.A
poll by the Wall Street Journal/NBC
News in March found 49% favored
gay marriage,and 40% opposed it.
“Opinion on gay marriage,among
social issues,has been shifting more
dramatically than any other,and
more consistently in one direction,”
said Michael Dimock,associate di-
rector of the Pew Research Center.
Voters in Maryland and Washing-
ton state also will vote Tuesday on
laws allowing gay marriage that
were passed by their state legisla-
tures.Polls in Washington showgay-
marriage support running ahead,
and it is near a dead heat in Mary-
land,although pre-election polls in
the past have underestimated voter
opposition to it.In Minnesota,vot-
ers will decide whether the state
constitution should define marriage
as between a man and a woman.Re-
cent surveys show a slight edge to
people who favor the ban.
Proponents in Maine remain opti-
mistic.Arecent poll commissioned by
the Portland Press Herald found 57%
of voters support Question 1 and 36%
oppose it.Maine’s vote marks a new
approach by gay-rights supporters to
bring marriage to the ballot on their
own terms.Question 1 is the first U.S.
effort to put the legalization of same-
sex marriage—rather than a ban—to a
popular vote.
“Every other place,our oppo-
nents have used the ballot as a
weapon,” said Matt McTighe,a 33-
year-old former policy analyst hired
to lead the effort just months after
gay-marriage proponents lost at the
ballot in 2009.
Many campaigners introduce
themselves as gay;others ask voters
whether they have any gay friends
or co-workers.“There is no magic
number,but the more gay people in
relationships they know,the more
likely they are to be supportive,” Mr.
McTighe said.
Gay-marriage campaigner Danny DiDomenico speaks with Gillian Bavis in front of her Lewiston,Maine,home recently.
Labor-Market Gain
Adds Fuel to Race
The nation’s final employment
report before Tuesday’s presidential
election showed the economy has
gained momentum recently but is
still growing far below its potential,
helping both candidates frame their
closing arguments to voters.
The Labor Department said Fri-
day that employers added a season-
ally adjusted 171,000 jobs in Octo-
ber.Figures for previous months
were revised higher,showing the
economy has added an average
173,000 jobs a month since July—
more than double the pace in the
The unemployment rate rose to
7.9% last month from 7.8% in Sep-
tember,largely because more Amer-
icans began searching for jobs.
Even though the report was bet-
ter than many investors had antici-
pated,the Dow Jones Industrial Av-
erage fell 139.46 points to close at
No president since Franklin Del-
ano Roosevelt has run for re-elec-
tion with unemployment so high.
Since 1948,only four presidents—
Gerald Ford,Jimmy Carter,Ronald
Reagan and George H.W.Bush—have
sought re-election with joblessness
above 7%.Mr.Reagan was the only
one to succeed.
For President Obama,Friday’s
report reinforced his argument that
the job market is on the mend,with
employers adding jobs for 25 con-
secutive months after eliminating
hundreds of thousands a month at
the start of his term.The number of
nonfarm payroll jobs is higher now
than when the president took office
in January 2009.
The report adds another detail to
the broader picture of an economy
picking up.Home sales,prices and
construction are rising.
Consumer confidence is at its
highest level in 4½years,and Amer-
icans are stepping up their spending
at restaurants,shops and other re-
tail establishments.Manufacturing
activity is growing again,albeit very
slowly,after three months of decline
during the summer.
However,unemployment is up
fromits 7.8% level when Mr.Obama
took office.Republican nominee
Mitt Romney cites this as evidence
the president’s policies have failed.
More than 12 million people re-
main out of work—a figure that
rises to 23 million when taking into
account those stuck in part-time
jobs who would prefer to have full-
time ones and those too discouraged
to search for work.
The pace of job growth in 2012 is
roughly the same as it was last year.
The economy grew at an annual rate
of just 2% in the third quarter,be-
low the roughly 3% pace notched
during healthier times.
Mr.Obama,campaigning in cen-
tral Ohio Friday,pointed to the jobs
report as a reason to grant him a
second term.But Mr.Romney por-
trayed the figures as evidence of a
lackluster recovery burdened by the
president’s policies.
—Colleen McCain Nelson,
Jonathan Cheng
and Carol E.Lee
contributed to this article.
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| Monday,November 5,2012 THE WALL STREET JOURNAL.
As Fuel Flows Again,Long Lines Remain
The gasoline shortage across the
New York region began to ease over
the weekend,but the continued
blackouts in the wake of last week’s
superstorm still made it impossible
for many filling stations to pump gas
even if they had it.
Some eight million gallons of fuel
had been delivered as of early Satur-
day morning and another 28 million
gallons were to arrive in New York
City over the next few days.
“Fuel is on its way.You don’t
have to panic,” New York Gov.An-
drew Cuomo said Saturday.“Begin-
ning today you will see an increase
in the supply.”
The gasoline was being trucked
in to gas stations that have electric-
ity,and generators were being deliv-
ered to stations that have gasoline
but no power.The governor also an-
nounced five mobile gas-distribution
centers that were set up Saturday at
armories in the Bronx,Brooklyn,
Queens and Staten Island.They were
to distribute a maximum of 10 gal-
lons of gas per person,free of
But by late afternoon the Na-
tional Guard said in a statement that
it had closed the mobile-fueling sta-
tions to the general public as fuel-
hungry crowds formed long lines for
the free gas.
“The Department of Defense mo-
bile fueling stations are currently
shut down for the public so that
emergency personnel and first re-
sponder vehicles can utilize them.
Members of the public should not go
to these fueling stations,” wrote Eric
Durr,spokesman for the New York
State Division of Military Affairs.“It
is also important to remember that
28 million gallons of fuel are headed
to this area right now and the lines
at stations across the city should
dissipate soon.”
The fuel shortage began after the
U.S.Coast Guard closed the New
York Harbor in the aftermath of
Sandy and fuel tankers were held in
ports.The harbor is now open and
gasoline can begin to be distributed,
the governor said on Saturday.
Another vital gasoline-distribu-
tion terminal,in Linden,N.J.,now
has electricity and will soon be oper-
ational.That will help provide addi-
tional fuel supplies.
Mr.Cuomo also praised the
speedy work of the Metropolitan
Transportation Authority and its
chairman,Joseph Lhota,in bringing
subway service back online.Only
16% of the city’s subways were ex-
pected to be offline as of Monday
morning,he said.
Government officials raced over
the weekend to get gasoline to frus-
trated and frightened motorists
across the New York metropolitan
area,suspending rules and opening
waterways closed by debris from
Sandy’s onslaught.
But there was only limited prog-
ress in dealing with the blackouts
that left more than 3.5 million util-
ity customers without power.
“This continues to be an issue of
electricity generation and not an is-
sue of supply,” said Avery Ash,
spokesman for AAA,which reported
that about half of the gas stations in
New York City and New Jersey were
still without power as of Friday.
Hess stations,many of which had
generators to power their pumps,
reported lines of cars that stretched
for up to three miles.
But there were some signs of
progress in New York.Power was
restored Friday afternoon to parts
of lower Manhattan,causing people
to rejoice on the streets as the
lights flickered on in restaurants,
apartments and office towers.The
Staten Island Ferry resumed service
and the city lifted occupancy re-
strictions on vehicles entering Man-
City officials still face enormous
challenges.Sunday’s New York City
Marathon was canceled amid com-
plaints that resources were being
diverted from hard-hit areas,and
that it was unseemly to hold the
event when neighborhoods still
were reeling.
The Federal Emergency Manage-
ment Agency set up its first mobile
recovery center in New York City,
distributing water and food and tak-
ing applications for disaster assis-
tance.Gasoline shortages emerged
as one of the biggest headaches.The
federal government estimated that
only one-third of gas stations in the
metropolitan area had fuel for sale,
based on a survey that found more
than half were shut down.
Petra Marfil,35,of Newark,N.J.,
had been parked for hours outside
an empty Lukoil Station there,hop-
ing for a delivery to fill up her mini-
van.“I’ve been looking for gas since
Wednesday,” she said,adding that
her house has no power.“I amcold,
hungry.It’s been frustrating.”
Gov.Chris Christie late Friday
ordered odd-even gasoline rationing
in 12 New Jersey counties starting
at noon Saturday.Drivers with li-
cense plates ending with an even
number can only buy gasoline on
even numbered days of each month,
and vice versa.
Late Friday,the White House
said the Defense Logistics Agency
would buy up to 12 million gallons
of unleaded fuel and up to 10 million
gallons of diesel fuel and send it by
tanker trucks to communities af-
fected by the storm.The federal
government also said Friday it will
lend diesel fuel from a strategic
stockpile to emergency agencies to
help keep supply trucks,power gen-
erators and water pumps running.
The Department of Homeland Se-
curity said it was suspending laws so
tankers can move fuel quickly from
Gulf Coast refineries to the North-
east.Two million barrels of gas have
been delivered so far,according to
Rear Admiral Daniel Abel,the re-
gion’s Coast Guard commander.
By Joseph De Avila,,
Dan Strumpf
and AndrewGrossman
Crowds wait for free gasoline on Saturday at the Bedford Avenue Armory in the Brooklyn borough of New York City.
CriticismHelpsHalt Marathon
Amid mounting public pressure,
Mayor Michael Bloomberg on Friday
canceled plans to host the New York
City Marathon this weekend,saying
it had become a divisive issue that
was distracting the city fromefforts
to recover from superstorm Sandy.
Mr.Bloomberg made the after-
noon announcement in a joint state-
ment with New York Road Runners
Chief Executive Mary Wittenberg.
The decision came just hours af-
ter Mr.Bloomberg reiterated a posi-
tion he had held for days:the race
should be held Sunday as a sign of
resilience and because it generates
some $340 million in economic ac-
But that was met with a growing
chorus of dissenters,including top
city officials,who said the marathon
would tax city resources at a crucial
time.The spectacle of the mara-
thon—a celebratory,citywide
event—also struck many as un-
seemly when at least 41 people had
died,including a brother and sister
who were found on Staten Island on
Friday after staying home to protect
their pets,police said.
The race wouldn’t be resched-
uled,Deputy Mayor Howard Wolf-
son said.
Earlier,in an effort to salvage the
race,Ms.Wittenberg had attempted
to recast it as a “Race to Recovery”
highlighted by a fundraising drive to
support relief efforts.Already those
efforts had raised $1.1 million from
the Rudin family,a longtime sponsor
of the marathon,a $1 million com-
mitment from the Road Runners,
$500,000 fromING,the event’s title
sponsor,and what would likely have
been hundreds of thousands more
fromrunners who were asked to do-
nate to recovery efforts.
But shortly after the midday Fri-
day news conference where Mr.
Bloomberg said the marathon would
go on,aides “began having conver-
sations about options” for canceling
the event,a city official said.The
mayor believed the city had the
manpower to host the race without
harming recovery efforts but agreed
the issue had become too divisive,
the official said.
City Hall officials and the mara-
thon’s organizers discussed a num-
ber of alternatives,including hold-
ing a 10-mile run in Manhattan and
moving the traditional start of the
race out of Staten Island.But in the
end,the mayor didn’t believe any of
the options would quash criticism.
One person familiar with the
matter said the mayor was aware of
the criticism.But “it was definitely
his senior staff” telling him the
event couldn’t move forward that
led to the decision.
“The mayor did not believe that
would bring the race back to being
what everyone wants it to be,” said
one person familiar with his think-
“It is with an especially heavy
heart that we’re here to say there
will not be a 2012 New York mara-
thon,” a shaken-looking Ms.Witten-
berg said at an evening news con-
ference.Serious thought was also
given to holding an elite race,said
By MatthewFutterman,
Michael Howard Saul
and AndrewGrossman
Workers take down signs at the
finish line of New York’s marathon.
Slow Recovery
Scan this code
to watch a video
on gas shortages
in the New York
area,or go to
As Storm’s Impact Lingers,
Signs of Life Are Emerging
As Greater New York showed
halting signs of progress on Friday,
a realization began to set in:Megas-
torm Sandy’s effect on daily lives
would linger long after the floodwa-
ters recede.
In New York City,57 schools
were so badly damaged that up to
34,000 schoolchildren and their
teachers could be sent elsewhere,
with no return date in sight,the
schools chancellor said.Even when
the region’s transit system starts
running at something closer to full
capacity in coming days,there will
be stations and train lines that take
weeks to fully bring back.And some
large Lower Manhattan office towers
could remain dark even as neighbor-
ing buildings fill up with tenants.
New Jersey Gov.Chris Christie
spoke Friday of standing in calf-
deep sand in still-deserted shore
towns where rebuilding will take
months,if not years.
“It’s unrecognizable,” he said.
“Everybody,once you’re allowed to
go there,you’re not going to believe
what you see.”
That sentiment resonated,even
as a semblance of normalcy returned
to parts of the region.Lights clicked
on in some previously dark neigh-
borhoods,prompting cheers across
large parts of Manhattan.At the
Bowery Mission,a downtown home-
less shelter,people started singing
hymns when the lights flickered to
life.By 7 p.m.,fewer than 100,000
customers were without power in
Manhattan,according to Consoli-
dated Edison Inc.
At the same time,mandatory
carpooling for motorists headed to
Manhattan ended and New York City
schoolchildren found out that they
would be heading back to school on
Monday after a week off.
New York City schools will re-
open Monday for most of the sys-
tem’s 1.1 million schoolchildren,but
the start date has been pushed back
to Wednesday for an estimated
38,000 children who attend 65
schools in severely damaged build-
ings,schools officials said.Some
schools have damaged roofs,under-
water boilers and oil tanks.
On Wednesday,many students
and staff members in those schools
will be sent elsewhere.“That’s seri-
ously going to be a challenging day,”
schools Chancellor Dennis Walcott
—Ted Mann,Jacob Gershman,
Jennifer Weiss and Laura Kusisto
contributed to this article.
By AndrewGrossman,
Jacob Gershman
and Lisa Fleisher
THE WALL STREET JOURNAL.Monday,November 5,2012 |
| Monday,November 5,2012 THE WALL STREET JOURNAL.
U.S.Details Graft by Afghan Leader
of Afghanistan’s top power brokers
has been freeing suspected insur-
gents,running an open extortion
scheme and traveling with suitcases
of undeclared cash earned from
criminal activity,according to inter-
nal U.S.documents.
A few years ago,the U.S.military
described Gov.Gul Agha Shirzai as
the best hope for securing Nangar-
har province,a critical gateway to
Pakistan.Now,under Gov.Shirzai,
U.S.officials say,Nangarhar has
turned into a center of corruption,
allowing the Taliban and criminal
groups to stage a comeback.
An assessment of Gov.Shirzai
prepared by a top U.S.civilian offi-
cial in eastern Afghanistan—marked
“secret” and viewed by The Wall
Street Journal—details “systemic
corruption” by the governor and
members of his administration,in-
cluding extortion,illegal “land grab-
bing” and narcotics trafficking.
The assessment is a draft diplo-
matic cable that is awaiting final re-
view.A second document,a shorter
U.S.diplomatic cable marked “sensi-
tive” and prepared by civilian U.S.
customs experts,sounds a similar
theme.U.S.officials said the docu-
ments were authentic and didn’t
dispute their contents.
Gov.Shirzai,contacted through
his spokesman and intermediaries
with details on the allegations,
didn’t respond to repeated requests
for comment.
U.S.officials acknowledge that
corruption is a problem in Nangar-
har province.They have long de-
scribed Gov.Shirzai as someone
who could deliver on security and
reconstruction,even while acknowl-
edging he was an autocrat with a
fortune frominsider dealings.Now,
U.S.officials working in Afghanistan
openly question whether that bar-
gain was a miscalculation.
Cmdr.WilliamSpeaks,a Defense
Department spokesman,said the
Pentagon takes corruption allega-
tions “very seriously,” but added:
“It’s also important to remember
that we are not in a position to se-
lect the country’s leaders—that is a
matter for the Afghan people.”
The deterioration in Nangarhar—
home to around 1.4 million people
and eastern Afghanistan’s biggest
city,Jalalabad—underscores the pit-
falls of America’s long-standing
strategy of relying on Afghan war-
lords to bring security.After a de-
cade of nation-building attempts,
U.S.and Afghan officials worry that,
as the U.S.-led coalition withdraws,
the country will be dominated once
again by what they describe as
“criminal patronage networks,” fuel-
ing the insurgency.
The Taliban began their march to
power in the 1990s in the southern
city of Kandahar because of popular
outrage with local warlords’ abuses.
Gov.Shirzai was one of these war-
lords,serving as Kandahar governor
at the time,and once again follow-
ing the 2001 U.S.invasion.
Afghan President Hamid Karzai,
a fellow Kandahari,appointed Gov.
Shirzai to oversee Nangarhar in
2005.Mr.Karzai’s term expires in
2014.Gov.Shirzai has publicly indi-
cated his interest in running for the
The draft U.S.assessment of Gov.
Shirzai,which is based on intelli-
gence reports and other sources,al-
leges that he has amassed a vast
personal fortune fromthe so-called
Shirzai Fund,an unauthorized tax
collected at the Torkham Gate bor-
der crossing with neighboring Paki-
stan.The operation nets the gover-
nor $1.5 million to $4 million per
month,according to the report.
During a trip to Germany in early
July,Gov.Shirzai was detained for
two hours by the German Customs
Police as he tried to enter carrying
three briefcases full of undeclared
cash,the report says.“Because of
his diplomatic passport,he was re-
leased and allowed to enter the
country with his ill-gotten gains,” it
The German Foreign Ministry
wasn’t informed about the gover-
nor’s visit to the country,said a per-
son familiar with the matter.Ger-
man tax law prohibits customs
officials fromrevealing details of in-
dividual cases or incidents,said a
spokeswoman for the Frankfurt Air-
port customs office.
The U.S.document also says offi-
cials in Gov.Shirzai’s administration
“have recently been involved in fa-
cilitating the insurgency by refusing
to detain and prosecute insurgents
caught preparing attacks” on U.S.
and Afghan troops.
The U.S.document also details
Mr.Shirzai’s association with al-
leged local criminals.One passage
describes the governor attending
wedding parties in the company of
an alleged crime boss who had been
recently been released on bail.Ac-
cording to the document,Mr.
Shirzai helped broker the man’s re-
lease.Footage of the events was
carried on local television,the re-
port said.
Gov.Shirzai was once a U.S.fa-
vorite.In interviews with the Jour-
nal in 2009,senior U.S.officials said
he was able to get things done
through “force of personality”—in-
cluding cutting opium production,
boosting security and pushing
through reconstruction projects.It
was the U.S.that installed the for-
mer warlord as governor of Kanda-
har after ousting the Taliban in
2001,and he amassed a consider-
able fortune providing contracting
services to the giant U.S.military
base there.
U.S.civilian and military officials
working in the region these days
openly describe Gov.Shirzai as em-
blematic of the dysfunctional gov-
ernment that Afghanistan will in-
ter most U.S.and
international troops withdraw in
2014.“He is the biggest detriment
to good governance in Nangarhar,”
said Lt.Col.Martin Willmarth,an
Army civil affairs officer in the
province.“I wish we could get rid of
While Gov.Shirzai isn’t a Nan-
garhar native,his revenue-collection
scheme gives him a powerful tool
for winning local loyalties.At a pro-
vincial development committee
meeting at the governor’s palace in
September—chaired by Gov.Shirzai
and observed by a Wall Street Jour-
nal reporter—local officials hashed
out the details of local development
projects:school textbooks to be or-
dered,bridges and canals to be re-
paired,power outages to be dis-
The meeting stalled because U.S.
advisers working with Gov.Shirzai
had put an uncomfortable topic at
the top of the agenda:The prov-
ince’s massive budget shortfall.The
local directors,who report to minis-
tries in Kabul,struggled to under-
stand the detailed budget numbers
that had been prepared for themby
U.S.advisers.With just a few
months left in Afghanistan’s current
fiscal year,the central government
in Kabul had transferred less than
5% of the $48 million earmarked for
development projects in Nangarhar
to the provincial level.
That left a gaping shortfall in
funding for social programs.
Gov.Shirzai intervened by
spreading around the cash.
“I’ll give you $50,000 from the
Shirzai Fund to solve your problem,”
he told the man representing the
Ministry of Labor,Social Affairs,
Martyrs and Disabled.The governor
then doubled his offer to $100,000,
to applause.His fund would also
foot the $30,000 bill for an X-ray
machine at a local hospital,he
“He’s making it rain again,” an
astonished U.S.official said after the
“This is how the sausage gets
made,” said Air Force Lt.Col.Grant
Hargrove,the commander of the
U.S.-led Nangarhar Provincial Re-
construction Team.
Gov.Shirzai’s quick-fix largess
presents a big dilemma for Nangar-
har.According to the previously un-
disclosed report by U.S.government
customs experts,the Shirzai Fund
collects tolls at an unmarked cus-
toms building across fromthe main
complex at the TorkhamGate cross-
ing.At the crossing,Afghan customs
officials levy a lawful fee for vehi-
cles entering the country.But pro-
vincial officials reporting to Gov.
Shirzai collect separate fees—from
200 to 2,500 Afghanis ($4 to $50)
per vehicle,with the tariffs set on a
sliding scale,depending on the size
of the vehicle and the type of cargo.
The secret report describes the tax
as an “ongoing illegal extortion
scheme” at the border.
—Habib Khan Totakhil
and David Crawford
contributed to this article.
Nangarhar province Gov.Shirzai,center,during a September amnesty ceremony for militants.
Taipei November7
HongKong November11
Singapore November17
KualaLumpur November19
HoChiMinh November21
Bangkok November23
Official business newspaper
THE WALL STREET JOURNAL.Monday,November 5,2012 |
Egypt’s Coptic Church
Chooses a New Leader
CAIRO—Egypt’s Coptic Christian
church named a new pope on Sun-
day,chosen in an elaborate cere-
mony in which a blindfolded boy
drew the name of the next patriarch
from a crystal chalice.
Bishop Tawadros will be or-
dained Nov.18 as Pope Tawadros II.
He will be the spiritual leader of a
community that increasingly fears
for its future amid the rise of Isla-
mists to power following the upris-
ing last year that ousted President
Hosni Mubarak.Copts,the Middle
East’s biggest Christian community,
are estimated to make up 10% of the
country’s population of 83 million.
In a ritual steeped in prayer,
chants and incense at Abbasiya ca-
thedral in Cairo,the names of three
papal candidates chosen in an ear-
lier vote were placed in a wax-
sealed bowl before the blindfolded
boy picked out one name.
Copts,who trace their church’s
origins to before the birth of Islam
in the 7th century,believe this long-
established selection process en-
sured worldly influences didn’t de-
termine the successor to Pope
Shenouda III,who led the church for
four decades until his death in
March at the age of 88.
Pope Shenouda had been criti-
cized by some Christians for being
too close to Mr.Mubarak.Church
analysts say he was partly prompted
to take a strong role in the Mubarak
era because many Christians with-
drew from public life,complaining
of discrimination,leaving the pope
their main defender.
Bishop Tawadros,60 years old,
will faces challenges,as the coun-
try’s transition to democracy has
been marked by a deep rift between
increasingly politically powerful Is-
lamist groups,fromwhich the coun-
try’s new president hails,and the
liberal and secularist groups who
were initially behind the revolt that
ousted Mr.Mubarak last year.
“Pope Tawadros faces different
rules of the political game,” said
Youssef Sidhom,editor of the Coptic
newspaper Watani.“Copts are now
encouraged,and even encouraged
by the church,to get out and partic-
ipate in the political arena.”
Coptic Christians have long com-
plained of discrimination by the
state and the country’s Muslimma-
jority.Church construction,land
disputes or Muslim-Christian love
affairs have often sparked clashes
with Muslims.
The prospects of a stronger role
for Islamic law in legislation has in-
creased concerns of further margin-
alization,or that Copts’ rights to
worship could be curtailed.
All three senior clerics whose
names were in the chalice were con-
sidered consensus candidates who
stayed out of disputes within the
church and with other groups,in-
cluding Islamists.
The current government is led by
President Mohammed Morsi of the
Islamist Muslim Brotherhood.Mr.
Morsi,the Brotherhood and its
leader,Mohammed Badie,congratu-
lated the church and Bishop
Tawadros on Sunday.The Brother-
hood has sworn to safe guard the
rights of Christians.
At the center of the political
squabbling in Egypt is the role of Is-
lam in the country’s new constitu-
tion,currently being drafted.The
Christians,along with liberal and
secularists,oppose demands by Isla-
mists to increase the role of Shariah
law.The prospects of a stronger role
for Islamic law in legislation in-
crease the community’s concern of
further marginalization.
The new pope,bishop of a region
in the Nile Delta north of Cairo,was
shown on television praying at Pope
Shenouda’s tomb in a desert monas-
tery in Wadi el-Natrun surrounded
by priests.
Bearded,bespectacled and in
black priestly robes,Tawadros
thanked God,praised his predeces-
sor and said:“I carry love to all our
brothers in Egypt,” in comments
broadcast on television.
AWall Street Journal Roundup
New Pope Tawadros II,shown in the large poster,is named on Sunday in Cairo.
Source:Omniture July 2012 Unique Visitors
| Monday,November 5,2012 THE WALL STREET JOURNAL.
Fixing Greek Debt Remains Elusive
In a string of meetings beginning
this week,European leaders will
again wrestle with how to keep
Greece fromrunning out of cash,but
they almost certainly won’t solve
the far bigger question of how to cut
down the growing pile of debt that
is slowly suffocating the country.
The consequences are stark.
Greece must shoulder a frightful
debt burden while suffering an epic
recession.The euro zone,which had
once hoped to patch Greece up and
move along,now faces the prospect
of dealing with its problems for
years,or engineering a divorce.
Europe has choices for address-
ing the first problem,though none is
appetizing.There is almost no politi-
cal will to decisively attack the latter
problem.One option under consider-
ation is a buyback of some debt.But
that would only nibble at the edges.
Greek debt will be €346 billion
($448 billion) next year,the govern-
ment said Wednesday.At 189% of
gross domestic product,that debt is
nearly twice what the government
thinks next year’s economic output
will be.
The weight of debt erodes confi-
dence in Greece’s government,its fi-
nancial systemand in the economy.
It also scares off investment and
renders ineffective recent palliative
measures fromthe European Central
Bank,which is trying to persuade in-
vestors that stressed countries won’t
quit the euro zone,and so it is safe to
lend to their governments and busi-
nesses.To a degree,this approach
has worked for Spain and Italy.
But the risk of a second Greek
default,after one earlier this year,
and a possible euro exit “hasn’t
been removed fromthe table by the
ECB,” says Ross Pamphilon,co-chief
investment officer of ECM,a Lon-
don-based asset manager specializ-
ing in credit markets.
Substantially reducing that risk
requires cutting Greece’s debt to a
sustainable level.Few European
governments are even willing to talk
about taking such steps.No sur-
prise—they hold most of Greece’s
Euro-zone governments made
€53 billion in loans to Greece in 2010
and 2011.The ECB and other central
banks in the euro zone now have
roughly €45 billion in Greek bonds.
The euro-zone bailout fund has
lent Greece €74 billion and is sched-
uled to lend another €71 billion in
the coming years—much of it in the
coming months.All told,that is
more than two-thirds of Greece’s
debt burden.
By contrast,private bondholders
have a bit more than €60 billion.
Those bonds trade at around 25 Eu-
ropean cents on the euro.So in
theory,euro-zone governments
could engineer a buyback to retire
some of them.
They could lend Greece another
€30 billion,say,to buy themback at
50 cents on the euro,cutting
Greece’s debt by €30 billion,less
than 10% of the total stock.
More drastic measures collide
with political reality.Germany,the
dominant player in all euro-zone ne-
gotiations that involve money,is
among creditors least willing to
countenance forgiving any of
Greece’s debt.
Other frugal Northern European
countries,like the Netherlands and
Finland,also insist Greece make
tough internal reforms.
The International Monetary Fund
wants the euro zone to forgo some
of what Greece owes it.But German
Finance Minister Wolfgang Schäuble
said during the IMF’s October meet-
ing in Tokyo that Greece’s problems
were “caused by Greece,and they
must be solved by Greece.”
Moreover,Chancellor Angela
Merkel faces national elections in
fall 2013 and is loath to risk splits in
her coalition or attacks from euro-
skeptic German media by admitting
Greece mightn’t repay all its debt to
German politicians trust only
that Greek politicians will carry out
painful economic reform under du-
ress.For them,forgiving debt would
remove pressure on Athens to
change its ways.
European policy makers have
discussed forgiving some or all of
the €53 billion in loans euro-zone
governments disbursed to Athens.
But Ms.Merkel and Mr.Schäuble
view the proposal as “absurd,” ac-
cording to a senior German official.
“Northern Europe doesn’t want to
make Greek debt too sustainable.In
their own mind,they need Greece’s
debt to be close to unsustainable so
that it implements reforms,” says Ga-
briel Sterne,economist at London-
based brokerage Exotix Ltd.
Tough austerity policies de-
manded by Germany and its friends
worsen Greece’s debt problem by
shrinking the economy,lessening
the productive base from which
debt can be repaid,many econo-
mists argue.
Greece’s creditors have continu-
ally underestimated the extent of
the economic damage.In their first
bailout of Greece,in 2010,they an-
ticipated that Greece’s GDP would
be €235 billion in 2013.The Greek
government now says it will be €183
Greece’s other problem—its need
for short-term cash—is in many
ways easier to solve.While Germany
and others resist simply writing a
check,there are other tools.
Greece could continue issuing
high levels of short-term Treasury
bills to its banks.The countries
might agree to hand over to Greece
the profits that the ECB will receive
fromits Greek bond holdings,which
are being repaid in full despite the
central bank’s having bought them
at a discount.
Or the euro zone could give
Greece a break on the interest it
owes.As largest creditor,the euro
zone gets the bulk of the €10 billion
Greece will spend next year on in-
© 2012 Dow Jones & Company,Inc.All rights reserved.4DJ515
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THE WALL STREET JOURNAL.Monday,November 5,2012 |
he Ambassador to Libya and three
other Americans were murdered
September 11 in Benghazi.That
we know.But too little else about what
took place before,during and after the
attack on the U.S.diplomatic mission is
The White House says Republicans are
“politicizing” a tragedy.Politicians politi-
cize,yes,but part of their job is to hold
other politicians accountable.The Ad-
ministration has made that difficult by
offering evasive,inconsistent and con-
flicting accounts about one of the most
serious American overseas defeats in re-
cent years.Unresolved questions about
Benghazi loomover this election because
the White House has failed to resolve
Why did the U.S.not heed warnings
about a growing Islamist presence in
Benghazi and better protect the diplo-
matic mission and CIA annex?
From the start of the Libyan uprising
in early 2011,the Central Intelligence
Agency built up an unusually large pres-
ence in Benghazi.By this September,
two dozen or so operatives and contrac-
tors monitored Ansar al-Shariah and
other militant groups.Deteriorating se-
curity after the war was no secret.U.S.
intelligence noted militant camps in the
mountains near Benghazi,
including “al Qaeda lean-
ing” fighters,according
to Tuesday’s New York
Over the summer,the
Red Cross and the U.K.
closed their offices in
Benghazi after attempted
terrorist attacks and assassinations.A
bomb went off outside the U.S.mission
on June 6 but hurt no one.Ambassador
Chris Stevens told his superiors in an Au-
gust cable about a “security vacuum” in
Benghazi.A different classified State ca-
ble sent in August,and obtained by Fox
News last week,noted the growth of al
Qaeda training camps and expressed con-
cern about the Benghazi mission’s ability
to defend against a coordinated attack.It
said it would ask for “additional physical
security upgrades and staffing.”
In a House hearing last month,career
State Department officials said various
requests for security reinforcements to
Libya were turned down.A 16-member
special security team in Tripoli,the Lib-
yan capital,was pulled out in August.
The inability of Libya’s weak central
government to protect American diplo-
mats was overlooked.These revelations
came from the career staff at State.
Mr.Obama and Secretary of State Hill-
ary Clinton have claimed “responsibility”
for Benghazi,without saying precisely
for what.During the second Presidential
debate on October 16,Mr.Obama was
asked:“Who was it that denied enhanced
security and why?” He changed the sub-
What exactly happened on the day
of 9/11?During the over six hours that the
compounds in Benghazi were under siege,
could the U.S.have done more to save
lives?What was President Obama doing
and ordering his subordinates to do in
those fateful hours?
An October 9 State Department brief-
ing offered the first precise timeline,
nearly a month later.There was no dem-
onstration outside the consulate the eve-
ning of the 11th—“nothing unusual dur-
ing the day at all outside,” a State official
That may not be right.Early that
morning,Embassy guards noticed a Lib-
yan police officer in a building across the
street “photographing the inside of the
U.S.special mission,” according to a let-
ter dated September 11 fromthe Embassy
to the Libyan government,calling it
“troubling.” The letter was discovered
late last month at the still unsecured
compound by two journalists and pub-
lished on Foreign Policy’s website Thurs-
At 9:40 p.m.local time (3:40 p.m.
EST),a security officer at the Benghazi
consulate heard “loud noises” outside the
gate and “the camera on the main gate
reveals a large number of people—a large
number of men,armed men,flowing into
the compound,” according to the State
Department timeline.
Within half an hour,the consulate was
on fire.At about 10:45 p.m.,help arrived
from the CIA annex about a mile away.
The CIA offered its first account of that
evening this Thursday night,nearly two
months after the fact.Agency personnel
were dispatched within 25 minutes of the
initial attack on the consulate.By 11:20,
they evacuated the consulate.Stevens
and Sean Smith,a State employee,were
The fortified annex then came under
steady small-arms fire for 90 minutes
starting around midnight,
according to the CIA time-
line,but it was never
breached.The fighting
lulled for four hours.Be-
fore dawn,a sudden mor-
tar attack killed two CIA
security officers on a
rooftop,according to CIA
officials.By then,a Quick Reaction Force
had arrived fromTripoli to evacuate the
annex.The CIA briefers said the agency
did not deny aid to the consulate.But the
Journal reported on Friday that the CIA
and State “weren’t on the same page
about their respective roles on security”
in Benghazi.
The latest account also leaves unan-
swered what other options Mr.Obama
and his security team considered.The
U.S.failed to bring armed drones,gun-
ships or other close air support to de-
fend the annex from the militias who
were outside its gates for over four
hours.The fighting at the consulate may
have taken place too quickly to bring in
outside military support.According to
officials who spoke last week,fighter
jets in Italy would have created too much
collateral damage in a civilian neighbor-
An unarmed U.S.drone was diverted
to Benghazi but had trouble distinguish-
ing between the terrorists and U.S.allies
who came to the compounds’ aid.An
armed drone wasn’t in the area.A large
special operations force fromFort Bragg
arrived in Sicily too late to help,accord-
ing to a National Public Radio report
Mr.Obama was informed of the at-
tacks at around 5 p.m.—11 Libya—
during a previously scheduled meeting
with his military advisers,and he or-
dered military assets moved to the area,
according to ABC News.During the at-
tacks,however,the Administration didn’t
convene the Counterterrorism Security
Group,which was created to coordinate
a response to a terrorist attack,accord-
ing to a CBS News report.
Late last month,Mr.Obama was twice
asked by a local Denver television anchor
whether Americans who asked for help in
Benghazi were turned down by the chain
of command.He didn’t answer.
Lacking “real-time information,” De-
fense Secretary Leon Panetta said last
month,“you don’t deploy forces into
harm’s way without knowing what’s go-
ing on.” Officials last week insisted mili-
tary intervention was either too risky or
impossible to organize in time.
Yet it’s still reasonable to ask why the
U.S.wasn’t prepared for such a contin-
gency.Since 9/11 (of 2001) the U.S.has
been at war with the people who at-
tacked in Benghazi,even though many
liberals don’t like to say so.One of them
is the current Commander in Chief,who
still refuses to talk about his Administra-
tion’s response to his 9/11.
Why has the Administration’s story
about what took place in Benghazi been
so haphazard and unclear?
In his September 12 Rose Garden
statement,Mr.Obama said “no acts of
terror will ever shake the resolve of this
great nation,alter that character,or
eclipse the light of the values that we
stand for.” He said this at the end of his
remarks,well after his specific comments
about Benghazi.
Unnamed Administration officials that
same day told Reuters that an al Qaeda
regional offshoot and members of Ansar
al-Shariah were probably involved.“It
bears the hallmarks of an organized at-
tack,” one U.S.official said.Intelligence
officials briefed Members of Congress
later that week that terrorism was the
likeliest culprit.
Yet by the end of that week,the White
House offered a different account:That
the Benghazi attack grew out of a spon-
taneous demonstration against an anti-
Islam video on YouTube.On September
14,Obama spokesman Jay Carney said,
“We don’t have and did not have concrete
evidence to suggest that this was not in
reaction to the film.”
Two days later,U.N.Ambassador Su-
san Rice went on a tour of the Sunday
talk shows to repeat the video-caused-
the-protest story.On CBS’s “Face the
Nation,” she contradicted Libya’s Presi-
dent Mohamed Magarief,who on the
same show blamed a “preplanned” at-
tack by “foreign” terrorists.The White
House and Ms.Rice have since claimed
they were merely following talking
points provided by the “intelligence
Yet Reuters revealed last month that
government officials saw a possible al
Qaeda connection even as the attacks
were taking place.Emails fromState’s re-
gional security officer to the White
House Situation Room,the Pentagon,the
FBI and others noted that Ansar al-Sha-
riah had taken responsibility.The Daily
Beast’s Eli Lake reported that FBI officers
who interviewed security officers who
worked at the consulate knew as early as
September 14 that the attack was no pro-
It took eight days for the Administra-
tion to formally declare that the four
Americans “were killed in the course of a
terrorist attack on our embassy,” in the
words of Matt Olsen,director of the Na-
tional Counterterrorism Center.But six
days later Mr.Obama was asked by Joy
Behar on “The View” if “it was an act of
terrorism”?He said the government
didn’t know.In his September 25
dress,Mr.Obama made several general
references to the YouTube video but
made no mention of terrorismin the con-
text of Benghazi.
His campaign stump speech to this
day includes the lines that “al Qaeda has
been decimated” and the “finally
turning the page on a decade of war to
do some nation-building right here at
home” (Thursday in Las Vegas).
i i i
Mr.Obama has made the defeat of al
Qaeda a core part of his case for re-elec-
tion.Yet in Benghazi an al Qaeda affiliate
killed four U.S.officials in U.S.buildings,
contradicting that political narrative.
The President may succeed in stone-
walling Congress and the media past
Election Day.But the issue will return,
perhaps with a vengeance,in an Obama
second term.The episode reflects di-
rectly on his competence and honesty as
Commander in Chief.If his Administra-
tion is found to have dissembled,careers
will be ended and his Presidency will be
severely damaged—all the more so be-
cause he refused to deal candidly with
the issue before the election.
America has since closed the Libya
diplomatic outpost and pulled a critical
intelligence unit out of a hotbed of Isla-
mism,conceding a defeat.U.S.standing
in the region and ability to fight terrorist
groups were undermined,with worrying
repercussions for a turbulent Middle East
and America’s security.This is why it’s so
important to learn what happened in
The Fog of Benghazi
What we nowknow—
and still don’t—
about President
Obama’s 9/11.
The rubble of the U.S.consulate,September 13.
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:
| Monday,November 5,2012 THE WALL STREET JOURNAL.
Today is a big day for Laos.
Overshadowed by its neighbors for
years,it will host this year’s Asia-
Europe Summit for the first time.
The country recently finalized its
accession to the World Trade Orga-
nization,the last member of the
Association of Southeast Asian Na-
tions to do so.This marks a major
step in Laos’ integration into the
global economy.Yet the govern-
ment seems bent on grasping de-
feat from the jaws of victory.
The problem is that WTO mem-
bership alone won’t be enough to
sustain the country’s current
boom.Economic growth of 8.3%
this year is impressive,but is
tilted toward mining and other
heavy industries.The economy
must eventually attract a broader
range of investments.
Although Vientiane will reap
many rewards from WTO member-
ship,plenty of growth hurdles will
remain.The World Bank’s 2012
“Ease of Doing Business” index
ranks the Lao Peoples Democratic
Republic 165th out of 183 coun-
tries,a drop of two spots from
163rd in 2011.In 2011,Laos at-
tracted only $450 million in for-
eign direct investment,compared
to the $892 million into Cambodia
or the $7.4 billion into Vietnam,
according to the U.N.Conference
on Trade and Development.
Vientiane has done significant
damage to its own reputation
through its poor treatment of for-
eign and domestic investors alike.
For a case study,consider the his-
tory of one of our clients,Sanum
Investments Ltd.Since May 2007,
the Macau-based subsidiary of a
Dutch company has invested more
than $85 million in a variety of
projects,including resorts and gam-
ing facilities in Laos.This has cre-
ated more than 2,000 jobs.
Yet as the businesses have be-
come more successful,they have
come in for unwanted attention
from some quarters of the govern-
ment.The Tax Department,under
the Ministry of Finance,now
claims the company owes $23 mil-
lion in unpaid construction taxes,
various overtime fees for immigra-
tion services provided by the gov-
ernment at the border and an
agent tax on fees paid to the oper-
ators of junkets that bring tourists
to the casinos and resorts.These
charges range from questionable
to entirely fabricated.
Such disputes aren’t unusual in
the world of international invest-
ment,but Vientiane’s handling of
the matter has been troubling.The
government has used the dispute
as an excuse to cancel permits for
existing and future projects,launch
unlawful audits and impose retro-
active tax demands.In one in-
stance,of which the Queen in “Alice
in Wonderland” would be proud,a
Lao court imposed an unheard of
$5 million fine and began enforcing
it before the hearing was over.
The Tax Department has pur-
sued the tax case despite the fact
that in 2012 the Ministry of Fi-
nance signed an agreement with
Sanum confirming that all con-
struction taxes had already been
paid.Three prime ministerial de-
crees have stated that overtime
fees were not to be charged.The
original agreement with the gov-
ernment under which Sanum in-
vested was supposed to provide
for a flat tax on all revenues
through December 2013.
The matter of agent taxes is
slightly more complex,hinging on
the correct understanding of the
legal relationship between Sanum
and junket operators.But the ca-
price with which Vientiane has
acted in the other matters doesn’t
inspire confidence in its ability to
reach a fair resolution.
Indeed,despite what appear to
be firm statements from govern-
ment officials in Sanum’s favor in
two of the three disputed matters,
the Tax Department maintains that
if the company doesn’t pay the
$23 million bill,it will seize Savan
Vegas,the company’s largest re-
maining project in Laos.
If it does,the likely beneficiary
will be the ST Group.It has already
been handed another valuable Sa-
numasset,the Thanaleng Slot Club.
That casino was seized in April
2012,once its monthly net income
attained the $3 million mark,after
legal wrangling similar to the cur-
rent cases involving Sanum.
In that instance,which started
as a joint venture between Sanum
and ST Group,the ST Group sued
Sanum on baseless allegations that
the expiration of a temporary
agreement ended the joint venture,
even though the Master Agree-
ment between the parties covering
all Lao investments remained in
full force.The proceeding itself
was heavily tilted in ST Group’s fa-
vor—Sanum was only given three
days’ notice of the setting of the
trial,insufficient given the magni-
tude of the proceeding.
Moreover,Sanumwas afforded
only an hour to present evidence in
a complex commercial matter,saw
its assets seized by the court before
the trial was over,and less than an
hour later was issued a nine-page,
single-spaced court judgment.After
wrongfully awarding Sanum’s 60%
stake in the venture to ST Group,
the court then imposed a $5 million
fine on Sanumfor having asserted
a counterclaimfor damages that
was denied.
This kind of case has an obvi-
ous chilling effect on foreign in-
vestment,but its negative conse-
quences for Laotians extend
further.Sanum has filed for inter-
national arbitration against the
government,pursuant to interna-
tional investment treaties Vien-
tiane signed.Not only is such arbi-
tration expensive for Laotian
taxpayers,but if Sanum wins,the
taxpayers will have to pay com-
Laotians have already incurred
such an expense at least once in
recent history.In 2009,Thai-Lao
Lignite,a Thai company,won an
arbitration award against Laos.In
that case,the company had signed
a project development agreement
with Vientiane to build a power
plant near the Thai border to sell
electricity into Thailand.After a
dispute arose over whether the
company was also allowed to mine
coal in Laos for the plant,the gov-
ernment tried to argue Thai-Lao
Lignite hadn’t been a party to the
PDA.The company received a
multi-million dollar judgment from
an arbitration tribunal.
It does not have to be this way.
Just as joining the WTO will re-
quire fundamental changes associ-
ated with more openness and re-
spect for the rule of law,so too
Laos’ leaders can decide to turn
the corner and respect foreign in-
vestment.A positive change here
can complement WTO accession
and send the message that Laos is
ready for sustained growth.
Ms.Schwab is a former U.S.
Trade Representative.Mr.
Burghardt is a former European
Union ambassador to the United
States.They are a consultant and
senior counsel respectively at the
law firm Mayer Brown,where
they advise the investors of Sa-
num Investments.
Hurricane Sandy
barely qualified as a
Category 1 storm
when it made land-
fall in the New York
landed a year earlier,had been
downgraded to a tropical stormby
the time it touched the city.
For comparison,the 1821 Nor-
folk and Long Island hurricane was
a Category 3 by current metrics
when it laid waste to Lower Man-
hattan.The 1938 New England
hurricane was a Category 3 when
it flooded parts of the city and
battered Long Island.Hurricane
Donna in 1960 was considered a
strong Category 1 when it pro-
duced an 11-foot storm surge in
New York harbor.
Those,like New York Gov.An-
drew Cuomo,Mayor Mike
Bloomberg and certain local news
anchors,who insist on an apocalyp-
tic explanation for the city’s recent
weather-related mishaps,might
want to rein in their shamanizing.
The apparent increase in the
storms’ destructiveness is not due
to climate change but to the simple
fact of more people and stuff in the
paths of not especially unprece-
dented bouts of severe weather.
“It’s not prudent to sit here and
say it’s not going to happen again,”
intoned Mr.Cuomo this week.“I
believe it is going to happen
Duh.Seventy-five hurricanes
have hit or passed near New York
since 1800.The governor hardly
needs his Nostradamus hat to pre-
dict more.
When the high tide of political
enthusiasm for climate action be-
gan to recede around the time of
Al Gore’s Nobel,it receded for
good reason,and not because of
Republican intransigence,or any
“climategate” email scandal,or
even because of the inconvenient
absence of warming from the tem-
perature record after 1998.
The moment passed because
even a political system as prodigal
as ours could not bridge the chasm
between costs and benefits.Even
many Democrats were stopped in
their tracks by the question:How
much should we spend on climate
change in order to have no effect
on climate change?Likewise,
whatever the truth of man’s role in
global warming,whatever the mer-
its of regulating CO
,making cli-
mate policy the answer to hurri-
canes can’t be anything but a fraud
on the public.Doing so,literally,is
like proposing to spend trillions to
reduce by an inch or two an 11-foot
storm surge that might occur
sometime in the next century.
James Hansen,the NASA
alarmist,inadvertently illustrates
the problem of scale confronting
anybody who wants to change the
Earth’s climate by regulating CO
He recently claimed it would be
“game over” for Earth’s climate if
Canada were allowed to develop
its oil sands.
Canada,never mind its energy
industry,accounts for just 1.7% of
global CO
output.You could ban
Canada and the effect would be
outweighed by a single year’s Chi-
nese growth.And that’s the real
problem for climate warriors:
Nothing as dinky as Canada’s oil
sands,a target we could actually
get our hands around,would make
the slightest difference.
Meanwhile,wasn’t the subject
Way back in 1968—when,by the
way,scientists were worried about
global cooling—Congress was al-
ready at wit’s end over the recur-
rent bailouts demanded by flood-
prone communities.As the
Congressional Research Service ex-
plains,the solution was a national
flood-insurance programthat
“would greatly reduce the reliance
on federal disaster relief assis-
tance.Property and business own-
ers would in effect pre-fund their
own flood-related property losses.”
It didn’t turn out that way.
Flood insurance was sold at subsi-
dized prices,and disaster aid con-
tinued to flow anyway,so the end
result was even greater incentive
to build and rebuild on exposed
flood plains.
Congress has been trying to un-
tangle its cross-purposes ever
since.With its latest efforts,own-
ers of “repetitive loss properties”
are encouraged to invest in flood-
proofing or move.Just this sum-
mer Washington began rolling
back long-standing subsidies for
grandfathered sites.
Never mind the silliness on dis-
play in New York last week,with
Mayor Bloomberg,like a man
bursting with newfound resolve,
endorsing President Obama be-
cause his climate mojo will some-
how save the city from future
floods.The post-Sandy political ac-
tion will not be focused on climate
politics,and Mr.Bloomberg knows
it.Not only is the flood insurance
program broke;it has blown
through $18 billion of its $21 bil-
lion in borrowing authority to pay
post-Katrina claims,meaning the
legislature will have to act.
Will Congress throw its hard-
won insurance reforms to the
winds?Will it engage in another
disaster-aid blowout of the type
that in the past has always guaran-
teed that the next storm will be
more destructive than the last?
History is not encouraging.Bob
Sheets,then-head of the National
Hurricane Center,told the media
after 1979’s Hurricane Frederic:“It
was like an urban renewal pro-
gram out there.And that kind of
thing takes place almost any place
you’ve had a big hurricane strike.”
Messrs.Bloomberg and Cuomo
understandably want to shake off
any blame for the disruption
caused by the kind of storm that
has regularly disrupted the city for
two centuries.Not happy are the
questions raised by Sandy,and by
every hurricane:Where should we
build?How should we protect
what we build?Those are espe-
cially hard questions when the log-
ical answer (as in many shore
communities) is the politically
toxic one of asking people not to
rebuild what was just knocked
down unless they’re prepared to
forgo taxpayer assistance next
time it gets knocked down.
No wonder politicians prefer to
engage in magical talk about cli-
mate change while waiting for the
federal checks to roll in.
[ Business World ]
The Next Step for Laos
You Can’t Fix a Hurricane With Climate Policy
Almar Latour,Editor in Chief,Asia
Dean Napolitano,Senior Editor
Hugo Restall,Editorial Page Editor
Wendy DeCruz,Institutional Sales
Charlotte Lee,Circulation Sales
Dan Molloy,Advertising Sales
Chad Tendler,Communications
Shawn Hiltz,Marketing
Simon Wan,IT
Christine Brendle,Publisher
Published since 1889 by
Dow Jones and Company
© 2012 Dow Jones & Company.All Rights Reserved
Politicians avoid the hard
questions of where to build
and what to protect.
Laos’ Industry and Commerce
Minister Nam Viyaketh with WTO
director general Pascal Lamy.
THE WALL STREET JOURNAL.Monday,November 5,2012 |
For the past few days,we’ve all been
properly focused on one of the worst storms
of our lifetimes.We mourn those who were
lost.And we pledge to stand with those
whose lives have been turned upside down
for as long as it takes to recover and re-
build—better than before.
Because when hardship hits,America is
at its best.The petty differences that con-
sume us in normal times fade away.There
are no Democrats or Republicans during a
storm—only fellow Americans.That is how
we get through the most trying times:to-
In 2008,we were mired in two wars and
the worst economic crisis since the Great De-
pression.Together,we’ve battled our way
back.Our businesses have created over five
million new jobs in the past two and a half
years.Home values are on the rise.Manufac-
turing is growing at the fastest pace in 15
years.The American auto industry is back.
Thanks to the service and sacrifice of our
brave men and women in uniform,the war in
Iraq is over.And Osama bin Laden is dead.
We’ve made real progress.But we’re not
done yet.On Tuesday,Americans get to
choose between two fundamentally different
visions of America—one where we return to
the top-down policies that crashed our econ-
omy four years ago,and one built on a
strong,growing middle class.
Our free market is the engine of Amer-
ica’s progress,driven by risk-takers,innova-
tors and dreamers.Our people succeed when
they have the chance to get a good educa-
tion and learn new skills—and so do the
businesses that hire them,or the companies
they start.We believe that when we support
research into scientific and medical break-
throughs,new industries will start here and
stay here.We grow faster when our tax code
rewards hard work and companies that cre-
ate jobs in America,and when quality health
care and a dignified retirement aren’t just
achievable goals but a measure of our values
as a nation.
For eight years,we had a president who
shared these beliefs.Bill Clinton asked the
wealthiest to pay a little more so we could re-
duce the deficit and still make these invest-
ments.By the end of his second term,Amer-
ica had created 23 million new jobs.Incomes
were up.Poverty was down.Deficits became
surpluses.And Wall Street did very well.
In the eight years after,we followed a
different path.Bigger tax cuts for the
wealthy we couldn’t afford.Encouraging
companies to ship jobs and profits overseas.
Fewer rules for big banks and insurers.The
result of this top-down economics?Falling
incomes,record deficits,the slowest job
growth in half a century,and an economic
crisis we’ve been cleaning up for the past
four years.
Gov.Mitt Romney has offered—under the
guise of “real change”—these very same pol-
icies that failed our country so badly.But we
know better.
We shouldn’t end college tax credits to
pay for millionaires’ tax cuts;we should
make college more affordable for everyone
who’s willing to work for it.We should re-
cruit 100,000 math and science teachers so
that high-tech,high-wage jobs aren’t created
in China but in America.And we should
equip another two million Americans at
community colleges with skills that busi-
nesses are looking for right now.
Change is an America that is home to the
next generation of manufacturing and inno-
vation.I’mproud I bet on the American auto
industry.I refuse to cede the future of manu-
facturing to other countries.We need a tax
code that stops rewarding companies that
ship jobs overseas and starts rewarding com-
panies that create jobs here;one that stops
subsidizing oil-company profits and keeps
supporting new energy jobs and new tech-
nology that will cut our oil imports in half.
Change is an America that turns the page
on a decade of war to do some nation-build-
ing here at home.So long as I’mcommander
in chief,we’ll pursue our enemies with the
strongest military in the world.But it is time
to use the savings fromending the wars in
Iraq and Afghanistan to pay down our debt
and rebuild American roads,bridges,schools
and broadband.
Change is an America where we reduce
our deficit by cutting where we can and ask-
ing the wealthiest to go back to the income-
tax rates they paid under President Clinton.
I’ve worked with Republicans to cut a trillion
dollars of spending,and I’ll do more.I’ll work
with anyone of any party to move this coun-
try forward.But I won’t eliminate health in-
surance for millions of poor,elderly or dis-
abled on Medicaid,and I won’t turn Medicare
into a voucher to pay for another million-
aire’s tax cut.That is surrender to the same
philosophy that hurt middle-class families
for too long.
I’mfighting for the Americans whose let-
ters I read at night,whomI meet on the trail
every day.The laid-off furniture worker
who’s retraining at age 55 for a career in bio-
technology.The owner of a small restaurant
who needs a loan to expand after the bank
turned himdown.The autoworker who’s
back on the job filled with the pride of build-
ing a great car.
When these Americans do well,America
does well.That is the change we need right
now.Now’s the time to keep pushing for-
ward to make sure that no matter who you
are,where you come fromor how you
started out,you can work to achieve your
American dream.
That is the America within our reach.
That is why I’masking for Americans’ votes
this Tuesday.
Mr.Obama,a Democrat,is seeking re-elec-
tion as president of the United States.
The Candidates Make Their Closing Arguments
After more than a year of campaigning,
endless political advertisements,two con-
ventions and four debates,the presidential
election is almost over.The big decision of
2012 will soon be in the hands of the vot-
ers.The choice Americans make will shape
great things,historic things,and those will
determine the most important and inti-
mate aspects of every American life and
every American family.All presidential
elections matter.This one matters a great
It matters to the senior who needs med-
ical care but,thanks to ObamaCare,can’t
find a doctor who is taking new Medicare
patients.It matters to the men and women
who once had good-paying jobs with bene-
fits but now work part-time with no bene-
fits just to put food on the table.It mat-
ters to the college student graduating this
spring with a heavy load of debt and few
opportunities to pay it back.It matters to
the single mother who lives in fear of fore-
closure as her employment prospects dwin-
This election is about them.It is about
all of us.
It is about the education of our chil-
dren,the value of our homes,the take-
home pay from our jobs,the price of the
gasoline we buy,the choices we have in
our health care.It is also about broader
forces—the growth of the economy,the
strength of our military,our dependence
on foreign oil,our leadership role in the
After four years of disappointments,fix-
ing America’s problems requires a new di-
rection.The path we’re on hasn’t led us
where we need to go.In so many ways,it
seems that things have gotten even worse.
We can make excuses for what has gone
wrong,and many have tried.But excuses
won’t turn this country around.Only lead-
ership can do that.
I know something about leadership be-
cause I have led before.I have reformed
businesses that were on the verge of col-
lapse.I have helped to save an Olympics
that was plagued by scandal.I have
worked with men and women on both
sides of the aisle in Massachusetts to
achieve real change and real reform.
I can do it again in Washington.Repub-
licans and Democrats in Congress may
seem to share very little these days,but
they share responsibility for the problems
we now face.Just as it took both parties
to bring us to where we stand,it will take
both parties to get us moving again in the
right direction.
That is something we can only accom-
plish if we work tirelessly to bridge the di-
vide between the political parties.I will
meet with Democratic and Republican lead-
ership regularly.I will look for common
ground and shared principles.And I will
put the interests of the American people
above the interests of the politicians and
the bureaucrats.
Together,we will overcome our difficul-
ties and usher in a new age of prosperity.
America is ready for that kind of leader-
ship.Paul Ryan and I will provide it.Our
plan for a stronger middle class will create
jobs,stop the decline in take-home pay,and
put America back on the path of possibility
and opportunity.
This,in turn,will enable us to fulfill our
responsibilities to promote the principles
of peace as leader of the Free World.We
will help the Muslim world combat the
spread of extremism.We will dissuade Iran
from building a nuclear bomb.We will
build enduring relationships throughout
Latin America.And we will partner with
China and other great nations to build a
more stable and peaceful world.
We face big challenges,but we also have
big opportunities.New doors are open for
us to sell our ideas and our products to the
entire world.New technologies offer the
promise of unbounded information and lim-
itless innovation.New ideas are changing
lives and hearts in diverse nations and
among diverse peoples.If we seize the mo-
ment and rise to the occasion,the century
ahead will be an American Century.
Our children will graduate into exciting
careers that are worthy of their qualifica-
tions.Our seniors will be confident that
their retirement is secure.Our men and
women will have good jobs and good pay
and good benefits.Our veterans will come
home to a bright future.We will have ev-
ery confidence that our lives are safe,and
that our livelihoods are secure.
This requires a different direction,a
change from the course of the past four
years.It requires that we put aside the
small and the petty,and demand the scale
of change that we deserve:real change,big
change.I pledge that my presidency will
bring about that kind of change—confront-
ing the problems that politicians have
avoided for over a decade,revitalizing our
competitive economy,modernizing our ed-
ucation system,restoring our founding
If you are ready for that kind of change,
if you want this to be a turning point in
America’s course,join us and vote Tuesday
for the kind of leadership that these times
I am running for president because I be-
lieve in America.I believe in the America
that never gives up,never stops striving,
never ceases believing in itself.That is
what I have been campaigning for,and that
is what I will fight for as president of the
United States.
Mr.Romney,a former governor of Massa-
chusetts,is the Republican candidate for
president of the United States.
Americans shouldn’t surrender to
the same philosophy that hurt
middle-class families for so long.
ARomney-Ryan administration will
confront the problems politicians
have avoided for a decade.
Real Progress,But We’re Not Done ANew Direction For America
| Monday,November 5,2012 THE WALL STREET JOURNAL.
In a Corner of Myanmar,
Some Muslims Seek Relief
Ghetto Develops as Rohingyas Get Hemmed In;Clashes Threaten Economic and Democratic Gains
Muslim enclave in this scrappy port
town on the Bay of Bengal is quickly
turning into a prison-like ghetto,
highlighting the risk that Myanmar’s dra-
matic democratic revival could unleash cen-
turies-old ethnic hatreds that had partly
been held in check by nearly 50 years of mil-
itary rule.
Sittwe,a town of around 250,000 people,
is supposed to be one of Myanmar’s new
boomtowns.The main drag is dotted with
brand-new banks,and India is funding a new
$214 million port to open up a route up the
Kaladan River to its eastern border,with an
eye to turning this strip of Myanmar’s coast-
line into a trading hub.
But a couple of hundred meters back
from where the river empties into the ocean,
7,000 Muslim Rohingyas are crammed into a
steadily shrinking neighborhood called Aung
Min Glar.
Just a few months ago the Rohingyas in
Sittwe moved around freely and often
traded with the area’s majority Buddhist Ra-
khine population.Now,the Rohingyas homes
are ring-fenced by burnt-out buildings and
military checkpoints,which,while protect-
ing them from attack,also restrict their
movements.Spasms of conflict in June and
again last week have left more than 170
dead in clashes between the Rohingyas and
Buddhist Rakhines,swelling the population
of Aung Min Glar and threatening the coun-
try’s recent democratic and economic gains,
analysts say.
“We can’t work,we can’t go out,and
we’re running low on food,” said Habib Bul-
lah,52 years old,a village elder.When peo-
ple fall ill,they are often unable or afraid to
go to hospitals and sometimes die,he says,
gesturing to four freshly dug graves around
the back of one of the three remaining
mosques as fruit bats careen through the
dusk sky,a world away from the bustling
streets nearby.
An hour or so’s drive from Sittwe,up to
100,000 more Rohingyas displaced by the
clashes are living in a series of sweltering
refugee camps where malnourishment and
disease are rife and where security forces
and local Rakhine activists impede aid work-
ers from operating freely.
More are arriving every day.“There’s no
more fishing for Rohingyas in Kyaukpyu any
more,” said one new arrival,28-year-old
Aung Hla,referring to a fishing port farther
down the coast where 600 Rohingya homes
and 200 Rohingya fishing boats were set
ablaze last month.“It’s all gone.”
Other Rohingyas are speeding up a sea-
sonal migration to seek work in nearby
countries,especially Malaysia.The United
Nations’ refugee agency expressed concern
Thursday that a boat with an estimated 130
people on board,possibly including some
Rohingya refugees from Rakhine state,sank
off the coast of Bangladesh.
The growing divides in Rakhine state are
also now focusing international attention on
what could be Myanmar’s biggest dilemma:
How to nurture the growth of a functioning
democracy while keeping the lid on ethnic
tensions.Loosened reins on expression have
opened the door for more inflammatory
rhetoric that might not have been tolerated
under the military regime,which handed
power to a new,quasicivilian government
last year.
The U.S.and the European Union,among
other trade partners,are watching Myan-
mar’s response closely.While freer elections
and more open media encouraged Western
countries to lift many of their sanctions
against Myanmar,which is also known as
Burma,the measures were only suspended,
not removed.Both Washington and Brussels
have warned authorities that sanctions
could be reimposed if ethnic conflicts
Myanmar’s borders today were set by its
former British colonial rulers.It encom-
passes a wide range of territory,from the
flat delta of the Irrawaddy River to the rug-
ged mountains of the north and northeast.
There are 135 different ethnic groups recog-
nized by the government,with the majority
Bamar,or Burman,making up 58% of Myan-
mar’s total population of 64 million.Presi-
dent Thein Sein’s government has signed
cease-fire pacts with large insurgent groups,
including the Karen in the east,but conflicts
continue with another large group,the
Kachin,in the north.
The Rohingyas,which number around
800,000,comprise less than 1% of Myan-
mar’s total population,but around a fifth of
the people in Rakhine state,where tensions
with local Buddhists run deep.Since 1982,
the government doesn’t classify the Rohing-
yas as citizens,considering them to be ille-
gal migrants from Bangladesh despite many
Rohingya families having lived in the area
for several generations.Border police re-
strict the movement of many Rohingyas,in-
cluding determining whether or not they can
marry,Rohingya activists say.Beyond Rakh-
ine state,Rohingyas often encounter dis-
crimination for their generally darker skin
This year’s violence began in June after
the rape and murder of a Rakhine Buddhist
woman was blamed on local Muslims.Tit-
for-tat clashes quickly escalated into wide-
spread rioting,leaving 75,000 Rohingyas to
seek safety in squalid relief camps.Most are
still there.The most recent wave of violence
began in October and has so far claimed 89
lives and made an additional 32,000 people
homeless,according to the government.
Animosity toward the Rohingyas is being
driven on in part by nationalist-minded Bud-
dhist monks who say they fear the Islamiza-
tion of large parts of Myanmar.Among other
things,monks led by senior cleric Wiseitta
Biwuntha,known as the Venerable Wirathu,
successfully rallied against the government
Soldiers marched Wednesday in Sittwe,capital of Myanmar’s Rakhine state,which has been roiled by sectarian clashes.
1057 King Anwarahta founds the first state
in Bagan and adopts Buddhism as a national
1948 Burma gains independence from
1962 A military coup turns Burma into a
military state.
1982 Rohingyas denied citizenship
2009 Thailand expels hundreds of
Rohingyas,many of whom had washed up
there in boats sent off course by a storm.
Their fate remains uncertain.
2010 Myanmar’s military government
releases dissident Aung San Suu Kyi from
prison and holds elections.
2011 The military formally hands power to a
new government which begins enacting
political and economic reforms.
June 2012 Ethnic clashes between
Rohingyas and Buddhist Rakhines erupt in
western Rakhine state.Scores are killed.
October 2012 Fresh clashes and arson
attacks occur in Rakhine state.Tens of
thousands of Rohingyas seek refuge in a
ghetto in Sittwe and relief camps.
November 2012 Myanmar’s government
warns villagers from both sides to turn in their
weapons,or face repercussions.
WSJ research
Trapped in Conflict
Rohingyas in Myanmar have long faced animosity
THE WALL STREET JOURNAL.Monday,November 5,2012 |
to stop the opening of a liaison office for the
57-member Organization of the Islamic Con-
ference which was designed to help channel
aid from the Muslim world to Rohingyas liv-
ing in relief camps.The Venerable Wirathu
previously has been jailed for his role for al-
legedly instigating anti-Muslim riots in Man-
dalay in 2003.He was released in a prisoner
amnesty earlier this year,and the monastery
where he teaches in Mandalay is a hotbed of
anti-Muslim sentiment.Protesters there reg-
ularly carry banners urging the army to stop
shooting at Rakhines attempting to remove
Muslim settlers,and describe Rohingyas as
illegal immigrants who must be forced out
of Myanmar.
The Venerable Wirathu Sunday said in an
interview that he was compelled to act in
order to protect the interests of Rakhine
Buddhists.“They are victims in this conflict,
too,” he said.
Around Sittwe,Rakhine activists also
post stickers objecting to the presence of
United Nations and aid workers in the area.
Some Rakhines say they also have been
victims of violence,blaming Muslims for
building settlements near public markets
and accusing the security forces of shooting
into peaceful demonstrations with little or
no provocation.“We were only saying that
we don’t want Muslims here,” said one Ra-
khine man in his 30s.
Local government officials in Rakhine
state didn’t respond to requests for com-
ment.Myanmar’s national government,
meanwhile,has accused unidentified foreign
groups of assisting Rohingyas,whom they
accuse of launching terrorist attacks in Ra-
khine state.Last week,the government or-
dered all communities in the area to hand
over weapons such as spears,machetes and
homemade firearms to the security forces
by Sunday.“It is obvious…that some local
and foreign [groups] are on the side of
[Rohyingya activists] involved in the inci-
dents,” the government said in a statement
reported by state-run media.
Some Rohingyas fear that such language
paves the way for massacres and the kind of
ethnic cleansing that tore apart the former
Yugoslavia in the 1990s.“There is a slow
genocide under way here.The other groups
want to clear out the Muslims,” said Saw
Moe Kyaw,who is now living in the Takebi
refugee camp near Sittwe.Kyaw Hla Aung,a
former aid worker and court stenographer
also living in the camps,worries that the
next generation of children are growing up
without access to government schools.In-
stead,they must resort to Islamic schools
which,where they are present,focus on Ar-
abic and Islamic instruction rather than
Myanmar languages or English.
“We are being cut off from the rest of
Myanmar.It is as if the government is try-
ing to turn us into foreigners,which is what
they say we are,” Mr.Kyaw Hla Aung said.
Other Rohingyas are more hopeful that
the government will slowly respond to in-
ternational pressure and broaden its defini-
tion of what it means to be a Myanmar citi-
zen.The United Nations’ special rapporteur
Tomas Ojea Quintana last month urged
Myanmar’s leaders to do more to alleviate
the root causes of the conflict,especially
the issue of the Rohingyas’ citizenship.
Either way,political analysts suggest that
the government will likely move cautiously
in dealing with the Rohingya question,
largely because the group is so unpopular
among the wider Myanmar population and
national elections are approaching in
2015.The opposition National League for De-
mocracy led by Nobel Peace Prize winner
Aung San Suu Kyi,normally a vocal sup-
porter of human rights,has been noticeably
quiet on the issue.Earlier this year,Ms.Suu
Kyi said she “didn’t know” whether Rohing-
yas should be considered Myanmar citizens.
A spokesman for her party,Nyan Win,said it
is now urging the government to provide
more security for all communities in Rakh-
ine state.
Jan Zalewski at IHS Global Insight in
London predicts the government will move
only slowly to respond to growing interna-
tional pressure on the fate of the Rohingyas.
“There will be lots of committees and hear-
ings,but little real action,” Mr.Zalewski
Meanwhile,Sittwe’s economic promise is
beginning to falter.Swe Htay,a local fish
trader,says many fishermen are afraid to
venture out to sea because of the threat of
more violence on shore.
As a result,the output of one of Sittwe’s
main industries is faltering.Cross-border
trade with Bangladesh and India’s north-
eastern states is also dwindling as traders
hold off on making the trek to border cross-
In addition,some of the Rohingya middle
class has now been displaced from their
once-thriving businesses in Sittwe.Fresh
transplants to the relief camps often talk
about the shocking conditions they see
among the teeming tents and stifling dormi-
tories.“People are dying for no reason be-
cause they don’t have access to proper
health care,” said Maung Phyu,a physician
who says he used to run a medical clinic in
Sittwe until it was burned down by rioters
last June.
The conflict is also threatening impor-
tant foreign investments.The fishing port
of Kyaukpyu,where many Rohingyas es-
caped apparent arson attacks in boats,is
also the starting point of an oil-and-gas
pipeline from the Bay of Bengal to China.
Asked about the Rohyingya situation last
month,China’s Foreign Ministry spokesman
Hong Lei said China hoped that Myanmar
can remain stable,according to Chinese
state media.
Essar Group,the Indian company con-
structing the new Sittwe port project,
meanwhile describes the situation in Rakh-
ine state as “critical.” The project envisions
building a deep-water port at Sittwe and
dredging 225 kilometers upriver to the town
of Paletwa,where cargo will be transferred
to trucks plying a planned 140-kilometer
highway to the Indian border,and,in
theory,opening up an alternative route to
the rest of the India by sea and bypassing
the difficult land crossing squeezing past
Bhutan and Bangladesh.
So far,there has been no serious impact
on construction,an Essar spokesman said,
but “we hope that normalcy is quickly re-
“For us,democracy only seems to make
things worse,” says Mr.Kyaw Hla Aung,the
former aid worker.“It seems the only thing
our politicians can agree on is that the Roh-
ingyas must be trod down.”
Rohingya refugees took shelter in a relief camp in Takebi on Thursday.More than 170 have died as Myanmar’s Rakhine state has been roiled by clashes between the Muslim group and Buddhist Rakhines.
Aformer aid worker and court stenographer living in the camps
worries that children are growing up without access to government
schools.Instead,they must resort to Islamic schools,which focus
on Arabic and Islamic instruction rather than Myanmar languages.
| Monday,November 5,2012 THE WALL STREET JOURNAL.
he wants to adopt.“He has tried as
hard as he can to repackage the
same policies that didn’t work and
offer them up as change,” he said.
Mr.Obama said it also wasn’t
change to withhold key details of his
plans until after the election—for in-
stance,how he would offset the cost
of his proposed tax cut.And he again
laid into Mr.Romney for suggesting
that Chrysler auto jobs were moving
to China when in fact,the company is
looking to expand in both countries.
Mr.Romney,meanwhile,has set-
tled into a speech on the campaign
trail that embraces the idea that the
election is a choice between himand
He lists his experiences running
the Olympics and turning around
businesses—though he rarely utters
the word “Bain” after his tenure at
Bain Capital faced so many attacks.
He holds up his termas governor of
Massachusetts as evidence of his bi-
partisan credentials.
“You know your neighbor that
may or not have decided who to vote
for?They really know all they need
to knowabout who to vote for based
on what we’ve done in the past,” Mr.
Romney said Saturday.
The choice concept is one that
Romney campaign staffers resisted
for months believing that if the elec-
tion were anything but a referendum
on the president,Mr.Romney would
That theory is still being tested
with a closely contested race nation-
wide.In Iowa,a Midwestern battle-
Continued from first page
ground,polls have fluctuated giving
each candidate an edge at times.But
a Real Clear Politics polling average
shows Mr.Obama with a slight lead.
While the GOP hopeful’s speech is
mostly set,Mr.Romney is still snap-
ping up opportunities to take digs at
his opponent.
On Friday night and again Satur-
day he seized on Mr.Obama’s remark
that “voting is the best revenge.”
“He’s asking his supporters to
vote for revenge,” Mr.Romney said
Saturday.“I’masking you to vote for
love of country.”
Mr.Obama made the remark Fri-
day afternoon.By Saturday morning
the Romney campaign had turned it
into a television ad that asks “What
is your reason for voting?”
The two candidates enter the final
stage with firmadvantages they had
fromthe start.Mr.Obama derives his
tiny lead by holding a slightly larger
base of support,51% to 43%,among
women voters than Mr.Romney has
among men,the Wall Street Journal/
NBC News poll found.
The former Massachusetts gover-
nor has the support of 51% of men,
compared to 44% who back the pres-
The poll of 1,475 likely voters
across the country has a margin of
error of plus or minus 2.55 percent-
age points.
With state polls continuing to
show Mr.Romney lagging behind in
the critical state of Ohio—Mr.Obama
was ahead 51% to 45%,according to
a Wall Street Journal/NBC News/
Marist Poll released Friday—his cam-
paign is making a concerted,last-
minute push to try to seize Pennsyl-
vania,a win that would scramble the
electoral map and negate a potential
loss by the GOP nominee in Ohio.
A running average of all national
polls maintained by Real Clear Poli-
tics now has the two men within
0.2% of one another.The average
doesn’t include the newJournal poll.
In the similarly down-to-the-wire
2004 clash between President
George W.Bush and Sen.John Kerry,
Mr.Bush actually entered the final
stretch with a lead slightly above
2%—comfortable,by the look of this
year’s election.
Mr.Obama got high marks in the
Wall Street Journal/NBC News poll
released Sunday for his handling of
the aftermath of Sandy,the storm
that lashed the northeast U.S.last
week.Nearly seven in 10 voters ap-
proved of how he dealt with Sandy,
compared with 15% who disap-
proved.His approval was higher,
75%,among voters in the northeast.
—Corey Boles
contributed to this article.
son during the trip.After returning
to China,Mr.Sun said none of the
projects he saw met his criteria for
investing.“The returns are too low.”
In the wake of the global finan-
cial crisis,cashed-up Chinese com-
panies were widely expected to
swoop in and buy up struggling
businesses in hard-hit Western
economies.Instead,they mostly
went shopping for natural resources
in developing economies.
Now there is an intensifying
campaign to get Chinese investors
to write checks in the U.S.The tour
group including Mr.Sun is alone ca-
pable of investing more than $1 bil-
lion,organizers said,which is why
cash-strapped states are getting in
on the sales pitch.
In Wisconsin,the group dined in
Gov.Scott Walker’s mansion on a
showcase of local products,includ-
ing Asiago cheese and herb-crusted
tenderloin.“We have big hopes and
dreams” for the group,said Rebecca
Kleefisch,Wisconsin’s lieutenant
The tour also met with Texas
Gov.Rick Perry and Florida Gov.
Rick Scott.
Chinese investment into the U.S.
is already on the rise.According to
Rhodium Group,a New York con-
sulting firmthat tracks Chinese out-
ward investment,companies there
invested $6.3 billion into
panies and projects between Janu-
ary and September,more than the
$5.8 billion invested in all of 2010,
the previous record for annual in-
While energy deals still take up
the majority of new investment,a
slowing domestic economy in China
has small and private entrepreneurs
looking for opportunities overseas
to earn a better return or give them
an edge back in their home market.
Continued from first page
But obstacles remain,often re-
lated to the fact that many Chinese
have never invested overseas be-
fore—one reason they developed a
reputation for being slowto commit.
The trend could also slow if Chinese
investors feel they aren’t welcome
in the U.S.
In late September,the Obama
Administration,citing national secu-
rity,nullified the purchase of four
wind-farm projects sites within or
near restricted air space in Oregon
by a company owned by two Chi-
nese nationals.
A week later a congressional re-
port warned that telecommunica-
tions equipment made by Chinese
companies Huawei Technologies Inc.
and ZTE Corp.pose a threat to U.S.
Still,things are changing.“It’s
getting easier [to do deals] because
the U.S.side is learning and more
willing,partly…because of the need
for capital,” said Hanson Li,head of
the San Francisco office of Hina
Group,a Chinese investment bank,
who wasn’t involved in the U.S.tour.
But he said patience is needed “so
things don’t turn sour on the U.S.
The visit by Mr.Sun’s group was
organized by a Chinese private-eq-
uity firm,Piyi Investment Co.,that
opened its first overseas office in
the Trump Building on Wall Street.
Many members of the group had
never traveled outside of China.
The trip started on Sept.20 in
Dallas and then the group split up,
with some heading to Orlando,
where they visited Universal Stu-
dios,before heading on to Wiscon-
The others went to Los Angeles
and Portland,Ore.,where they
toured the local vineyards,before
reconnecting with the rest of the
group in Washington,D.C.,where
the State Department hosted a re-
ception.The trip ended in NewYork.
The group met with more than
100 companies,including a no-frills
airline in Florida,a golf course in
Texas,and a company making power
from biomass in Oregon.
The companies,which were ask-
ing for funding of between a few
million dollars and $275 million,ac-
cording to a Piyi prospectus,were
also involved in health care,agricul-
ture or environmental technologies
such as water treatment—all areas
Beijing is trying to promote—as well
as real estate and vineyards.
While no deals have been done
yet,the investor group has asked for
more information from 25 of the
companies they met with,and plan
to decide which they are interested
in investing in by mid-December,ac-
cording to Piyi.
One investor has already taken
the first step by signing a letter of
intent with a California-based life-
sciences company looking for $27
million in backing,the fund said.
Scott Mosley,foreign direct in-
vestment manager for the Wisconsin
Economic Development Corp.,said
he was aware of a number of re-
quests fromindividual investors for
more information on the Wisconsin
“I think that the largest chal-
lenge in getting American entrepre-
neurs and Chinese investors to a
deal is setting the right environment
where each side…can operate in a
manner and at the speed to which
they are accustomed,” he said.
Presidential Election in U.S.Coming Down to the Wire
U.S.Firms Put Out Red Carpet for Chinese Investors
Republican presidential candidate Mitt Romney,left,in Iowa Sunday.In right photo,President Barack Obama with former President Bill Clinton,left,in New Hampshire.
Zhang Zhenguo rides a bull in Dallas,where a group of potential Chinese investors were on tour.
U.S.Election 2012
Scan this image to
get real-time
coverage on your
mobile device,or visit
Coming to America
Chinese investment in U.S companies
and projects
The Wall Street Journal
By private Chinese companies
Full year
Monday,November 5,2012
As of 4p.m.ET Euro 1.2844 g 0.72% Yen/US$ ¥80.52 À 0.51% Yen/A$ ¥83.50 À 0.24% Oil 84.86 g 2.56% Gold 1674.10 g 2.33% 10-year Treasury g 4/32 yield 1.728% 3-monthLibor 0.31275
Buffett’s Berkshire Hathaway
Buys Another Retailer
Investors SeemSkeptical
Apple Will Overdeliver
An Election Promise:Market Clarity
Investors Hope for Signs About How the U.S.’s Fiscal Problems Will Be Resolved;Avoiding the Cliff
Tuesday’s presidential and con-
gressional elections can’t come soon
enough for investors hoping the re-
sults finally provide some clarity on
crucial U.S.fiscal policy questions.
While the win-
ners have a sizable
list of long-term is-
sues to tackle when
it comes to government spending,
taxes and regulation,many investors
will be watching the results with an
eye toward a more pressing concern:
reaching a deal to avoid the so-
called fiscal cliff,the year-end expi-
ration of some $670 billion worth of
tax cuts and spending that econo-
mists say could send the U.S.back
into recession.
“The fiscal cliff becomes front
and center,” says Michael Jones,
chief investment officer at River-
Front Investment Group in Rich-
mond,Va.,which manages $3.3 bil-
Many investors expect a close
contest on election night,but for
President Barack Obama to win.
They also anticipate that Republi-
cans will keep a majority in the
House of Representatives and that
Democrats will retain slimcontrol of
the Senate.That is a scenario that
will set up an instant battle over
whether to keep or kill the tax cuts
and spending.
A win by Mitt Romney is seen as
taking fiscal-cliff concerns off the ta-
ble,as both sides of the aisle are ex-
pected to agree to an extension that
would defer the need for immediate
fixes.But a Romney victory also
could introduce fresh unknowns,
particularly when it comes to the
end of Federal Reserve chairman
Ben Bernanke’s term in 2014,or
trade with China.
Regardless of the outcome,inves-
tors are looking forward to having
the election in the rearview mirror.
That is not just fromthe standpoint
of investment decisions,but also be-
cause uncertainty over tax and regu-
latory policy is widely seen as hav-
ing been a damper on economic
activity in recent months.
“Regardless of who gets elected,
the clarity of knowing the results of
the election is going to be a positive
for the markets,” says Matthew Ru-
bin,head of the investment strategy
group at Neuberger Berman,which
manages $203 billion.“Knowing
who the president is will allow in-
vestors to again focus on the funda-
mentals and put this uncertainty be-
hind them.”
Stocks have posted healthy gains
for the year.The Dow Jones Indus-
trial Average finished Friday’s ses-
sion up 7.2% so far in 2012 while the
Standard & Poor’s 500-stock index is
up 12.5%.
Some say a win for the President
could ultimately spark safe-haven
buying of U.S.Treasurys and the U.S.
dollar and a sell-off in riskier invest-
ments such as stocks.That is be-
cause House Republicans have re-
fused to back any revenue increases
and President Obama has said he
would veto any extension of upper-
income tax cuts,notes John Bellows,
investment management strategy
analyst at Western Asset Manage-
ment,which manages $459 billion.
“They set themselves up to have
pretty difficult negotiations and that
raises the prospect they fail to get
the negotiations done by Dec.31,”
says Mr.Bellows.
While potentially damaging,a
prolonged fight may not be as sig-
nificant to the markets as last sum-
mer’s debt-ceiling debacle,even if it
is accompanied by another down-
grade to the government’s credit
rating,says Benjamin Pace,chief in-
vestment officer at Deutsche Bank’s
private wealth management group.
“It’s not like the shock of last
summer when we woke up…and re-
alized we were no longer triple-A
rated—something we never thought
we would see in our lifetime,” he
ARomney win,by contrast “would
Please turn to page 24
Source:J.P.Morgan The Wall Street Journal
Poll Positions
J.P.Morgan's viewof which sectors would do better or worse under
Romney or Obama
Small caps
Health care
Global cyclicals
A Battle to
Survive in
Bond Trade
On the day last week that UBS
AG made the striking announcement
that it is largely getting out of bond
trading,the Swiss bank’s rival,
Deutsche Bank AG,said it reaped a
windfall on the business.
The banks’ differing fortunes
shed light on how the securities in-
dustry’s biggest business works and
the wrenching changes it is under-
going.Although most banks experi-
enced a third-quarter bounce in the
fixed-income business,a variety of
factors,including regulatory
changes that may crimp already
modest returns,could prompt oth-
ers to follow UBS’s lead.
UBS,buffeted in recent years by
depressed markets and costly trad-
ing missteps,said Tuesday it is clos-
ing down most of its trading opera-
tion for fixed-income and related
products as it focuses its investment
bank on less-risky businesses like
advising on mergers and stock un-
“We have to choose where we
can add value,” UBS Chief Executive
Sergio Ermotti said in an interview
that day.
Yet Deutsche Bank reported
Please turn to page 29
Hyundai Surrenders on Mileage Claims
Hyundai Motor Co.and Kia Mo-
tors Corp.overstated the fuel econ-
omy for more than one-third of the
vehicles they sold in the the
past two years,an embarrassing con-
cession by two of the fastest-growing
car makers in the U.S.
On Friday,the U.S.Environmental
Protection Agency said Hyundai and
Kia issued incorrect mileage esti-
mates on fuel consumption for about
900,000 vehicles sold since late 2010.
Such estimates appear on new-vehi-
cle windowstickers intended to pro-
vide car buyers information on vehi-
cle fuel economy under different
driving conditions.
Hyundai Motor Group,which
owns both companies,acknowledged
its estimates differed fromthe fuel-
economy figures produced by the
EPA during its investigation.The
South Korean company apologized
for what it called “procedural errors”
in its testing,issued new estimates
for the vehicles involved,and agreed
to compensate buyers of cars and
sport-utility vehicles that were la-
beled incorrectly.
It is the largest correction of
mileage calculations by any auto
maker since the EPA began compiling
estimates.Since 2000,only two
other vehicles,a 2012 BMW328i and
a 2001 Dodge Rampickup,have had
to cut their mpg claims,the EPA said.
The changes will lower the miles-
per-gallon estimates on most of
Hyundai’s and Kia’s 2012-13 models.
Their combined fleetwide fuel-econ-
omy average will fall to 26 mpg,or
about 11 kilometers per liter,for 2012
models from 27 mpg.
For the Hyundai Elantra,the
change means its EPA mileage rating
drops to 28 mpg city and 38 mpg
highway,down from 29/40.The Kia
Soul Eco falls to 26 mpg city and 31
mpg highway,from 29/36.
“We are going to make this right
and we will be more driven than ever
to make sure our vehicles deliver
outstanding fuel economy,” said John
Krafcik,chief executive of the com-
pany’s North American sales arm.
Hyundai said human error led to in-
correct calculations.
The 2013 vehicles with lower-
than-advertised fuel economy include
the Hyundai Accent,Elantra,Genesis
Azera,Santa Fe,Tucson and Veloster.
Kia’s 2013 vehicles include the Rio,
Please turn to page 22
Missing MPGs
Hyundai and Kia lowered their estimates for fuel economy on several
vehicles ater an investigation by the EPA.Here are three examples:
2013 Hyundai Santa Fe Sport
Potential reimbursement:$193* Potential reimbursement:$52* Potential reimbursement:$111*
2013 Hyundai Elantra Coupe
2013 Kia Rio
(2WD automatic) (automatic) (automatic)
Source:the company
*Based on an owner driving 15,000 miles and using the national aver
Note:10 miles per gallon is about 4.2 kilometers per liter.
age unleaded fuel price through Oct.31.
Photos:Associated Press (Hyundai);Kia Motors America
The Wall Street Journal
| Monday,November 5,2012 THE WALL STREET JOURNAL.
Bain & Co......................35
Bakrie & Brothers........21
Berau Coal Energy........21
Berkshire Hathaway.....28
Bluebird Bio..................22
BNP Paribas.................28
Boston Consulting Group
Charles Schwab............29
China Construction Bank
Chrysler Group................6
Colonial Pipeline.............8
Consolidated Edison.......8
Co-Operative Bank.......26
Deutsche Bank..............19
Elpida Memory.............26
E*Trade Financial.........29
Ford Motor...............22,24
General Motors..........6,22
Global Logistic
Glovista Investments...24
Government of Singapore
Investment Corp........26
HSBC Holdings.............28
Hyundai Motor..............19
Interpublic Group..........23
Japan Airlines..........21,26
J.P.Morgan Chase...24,29
Kanbawza Bank............26
Kia Motors....................19
Knight Capital Group....29
Koch Industries...............6
London Stock Exchange
Morgan Stanley,...........29
Myanmar Oriental Bank
Neuberger Berman.......19
News Corp.....................23
Oriental Trading...........28
Par IV Capital
Payden & Rygel............20
Publicis Groupe.............23
Public Service Enterprise
Rhodium Group.............18
RiverFront Investment
Roche Holding...............22
Singapore Exchange.....26
Sprint Nextel................20
Standard & Poor's........19
Succorinvest Central
TD Ameritrade Holding29
Time Warner.................23
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.
This index lists the
names of business-
people and government
regulators who receive
significant mention in
Today’s Journal.
Bewkes,Jeff L..............23
Di Galoma,Tom............24
Sun Wenbin....................1
Corrections Amplifications
Softbank Corp.’s bid to take control of
Sprint Nextel a $20.1 billion
deal,excluding debt.A table accompany-
ing a Thursday Business & Finance arti-
cle about Japanese banks’ overseas lend-
ing incorrectly compared it with nine
other deals in which the debt was in-
Jay Wong is a portfolio manager for
Payden & Rygel.A Business & Finance
article Oct.29 about the U.S.stock mar-
ket incorrectly gave the firm’s name as
Payden & Rydel.
Apple’siPadMini HitsaCrowdedMarket
Apple lined up to buy
the iPad Mini when it went on sale
Friday.But the scenes were calmer
than for other recent Apple
launches,raising the question of
whether the device can be a block-
buster holiday product.
Demand was strong in storm-
ravaged New York,where hundreds
still gathered outside Apple’s flag-
ship Fifth Avenue store.But the ini-
tial crowd of 580 fell below the 750
that greeted the launch of the last
version of the iPad this March,ac-
cording to counts from Piper Jaf-
Elsewhere in the U.S.,lines were
also shorter than recent launches.In
Apple’s backyard of San Francisco,
lines at a downtown store were half
to less than a third of the size they
have been for other Apple gadgets.
On his way to work,engineer
Mike Boyer,55 years old,noticed
the line was less than a block long,
so he jumped in.“I was planning to
stop by during lunch,” he said.
The iPad Mini,which measures
7.9 inches diagonally,is a test of
whether Apple can shore up the
lower end of the tablet market with
a pricier product than rivals.The
iPad Mini starts at $329,while rival
products such as Google Inc.’s
Nexus 7 and Amazon.comInc.’s Kin-
dle Fire start at $199 respectively.
Those devices have a slightly
smaller 7-inch screen.
Analysts have predicted Apple
could sell more than a million iPad
Minis this first weekend and several
million for the quarter.
The smaller iPad is part of the
largest product push Apple has
made ahead of a holiday season in
recent history.On Friday,the Cuper-
tino,Calif.,company also started
selling a slightly updated version of
its full-size iPad,which has a screen
that measures 9.7 inches diagonally.
The launches come as investors
are newly cautious about Apple af-
ter driving up its stock to records in
September.Apple shares fell 3.3% on
Friday to $576.80.
The calmer scenes over the iPad
Mini were expected because the de-
vice is only part of Apple’s overall
iPad lineup and versions with cellu-
lar access don’t go on sale until
In New Zealand,where sales first
got under way,just a few people
lined up outside a retail store in
Wellington on Friday.Even so,the
country was running low on stock.
Dick Smith Electronics New Zea-
land merchandise manager Craig
Douglas said the company had re-
ceived only a couple of hundred
iPad Minis for the entire country.He
expected to sell out by the close of
business Friday.
Outside Apple’s flagship U.K.
store in Covent Garden,London,a
group of about 50 Apple fans waited
early Friday for the new gadgets,a
far cry fromthe hundreds that lined
up ahead the launch of the iPhone 5
in September.
Leaving the store,software de-
veloper Ranbir Kler said he bought
an iPad Mini after Apple “bom-
barded” himon Safari with ads.The
31-year-old is an Apple fan and owns
an iMac,Apple TV and an iPod but
no iPad.The iPad Mini is the perfect
“sofa-surfing device,” he said.
—Drew FitzGerald,Lucy Craymer,
Lilly Vitorovich and Nicky Redl
contributed to this article.
Lines in the U.S.were shorter than recent launches.Above,shoppers waited outside an Apple store in Chicago on Friday.
Microsoft,AsianSuppliers Test Smartphone Design
working with component suppliers
in Asia to test its own smartphone
design,people familiar with the sit-
uation said.
The move suggests the com-
puter-software company is increas-
ingly adopting a variation of a busi-
ness model favored by rival Apple
Inc.,which designs computers and
phones along with the software that
powers them.
Officials at some of Microsoft’s
parts suppliers said the U.S.-based
company is testing a smartphone
design but isn’t sure whether a
product will be mass-produced.
One person said the screen of
Microsoft’s smartphone currently
being tested measures between 4
and 5 inches.Apple’s newest smart-
phone,the iPhone 5,has a 4-inch
screen,while Samsung Electronics
Co.’s Galaxy S III phone has a 4.8-
inch screen.
Speculation has swirled for
months that Microsoft would make
its own smartphone,after the com-
pany unveiled in June its first
homegrown computing device,the
Surface tablet.
The Surface recently went on
sale,and it remains controversial
among longtime computer-maker al-
lies of Microsoft,some of whombe-
lieve the company is unfairly com-
peting with their personal-computer
models running Microsoft’s Win-
dows software.
In an interview with The Wall
Street Journal last week,Microsoft
Chief Executive Steve Ballmer de-
clined to comment regarding
whether Microsoft would make its
own smartphone.
“We’re quite happy this holiday
[season] going to market hard with
Nokia,Samsung and HTC,” said Mr.
Ballmer,referring to companies
making smartphones powered by
Microsoft software.“Whether we
had a plan to do something different
or we didn’t have a plan,I wouldn’t
comment in any dimension.”
A Microsoft spokesman declined
to comment.
If Microsoft pushes ahead with
its mobile phone,it would under-
score how far Microsoft has moved
away fromits long-standing practice
of making software and leaving de-
cisions about design,features and
marketing of the computing hard-
ware to partners such as Hewlett-
Packard Co.or Samsung.
In addition to the Surface,Mi-
crosoft produces the Xbox video-
game consoles and it increasingly
has dictated how Windows-powered
PCs and smartphones made by its
partners look,perform and are
pitched to consumers.
As it does so,Microsoft pulls
froma modified playbook of Apple,
whose hardware-plus-software ap-
proach Microsoft officials long have
scorned.Google Inc.,whose Android
smartphone software is the market-
share leader,owns cellphone maker
Motorola Mobility Holdings Inc.
even as outside companies such as
Samsung also power their smart-
phones with Android.
Smartphones running Microsoft’s
two-year-old Windows Phone oper-
ating software for cellphones ha-
ven’t sold well,and Microsoft may
want to leave itself an option to test
whether its own phone would spur
Stephen Elop,the chief executive
of Nokia Corp.,last month said he
would welcome a Microsoft-made
phone because he believed it would
be a “stimulant” to sales for compa-
nies making Windows Phone de-
vices.Mr.Elop said Nokia can stand
out from any competing devices.
The market for smartphones is
rapidly expanding with demand par-
ticularly strong in China and other
emerging markets.Research firm
IDC expects global smartphone ship-
ments to increase 39% this year to
686 million units.
In 2010,Microsoft launched and
then quickly killed a line of youth-
oriented smartphones called the
Kin.The phones carried Microsoft’s
brand,but were manufactured by
Japanese electronics company
Sharp Corp.
Heard on the Street:Forecasting
sales from Apple’s capital hill........34
THE WALL STREET JOURNAL.Monday,November 5,2012 |
JAL’s Net Advances
Modestly After IPO
TOKYO—Japan Airlines
ported a modest rise in net profit
for the first six months of the fiscal
year,its first reporting period since
the company relisted its shares in
the year’s second-largest initial
public offering after that of Face-
book Inc.
JAL said its net profit edged up
2.4% in the fiscal first half fromthe
year before owing to cost-cutting
and a pickup in air travel after last
year’s earthquake and tsunami in
Japan.Net profit was ¥99.72 billion
($1.24 billion) in the six months
ended September,compared with
¥97.41 billion in the same period last
year.It also raised its forecasts for
net profit and operating profit for
the full fiscal year through March.
The results and revised forecasts
may assuage the fears of investors
who weren’t fully convinced of the
viability of JAL’s outlook in the face
of uncertainties for the global econ-
omy and price competition from
budget carriers in Asia.
In a news conference following
the earnings announcement,JAL
President Yoshiharu Ueki said the
company expects the impact of
territorial disputes between China
and Japan to cut into revenue by
¥10 billion in the second half.But
that should be offset by stronger-
than-expected revenue in the first
half,he said.The company expects
the impact of the disputes to last
for a year or so,Mr.Ueki said.
JAL said its revenue rose 5.7% to
¥634.23 billion in the six-month pe-
riod from ¥599.87 billion the year
before.After its outlook revision,it
now predicts a net profit of ¥140
billion,higher than the ¥130 billion
previously foreseen.It raised its op-
erating profit outlook to ¥165 billion
from ¥150 billion.
But the company cut its revenue
outlook to ¥1.215 trillion from
¥1.220 trillion due to a slowdown in
demand for domestic flights and
cargo services,as well as the terri-
torial dispute between Japan and
JAL’s revamp efforts under
government-led restructuring has
made it one of the most profitable
airlines in the world,less than three
years after filing Japan’s biggest
corporate collapse by a nonfinancial
company.The carrier relisted its
shares on the Tokyo Stock Exchange
on Sept.19.The shares had stayed
below the IPO price for several
weeks after the market debut.
JAL shares closed up 1.7% Friday
at ¥3,900 on the Nikkei Stock Aver-
age,compared with a 1.2% rise for
the broader index.
The airline said it would propose
at its annual general shareholders
meeting in June a change to its arti-
cles of incorporation so it can pay a
dividend to all foreign shareholders,
even if their combined holdings ex-
ceed a third of outstanding voting
The airline reports earnings
under Japanese accounting stan-
Rothschild Seeks Allies
In Bid for Bumi Assets
Rothschild is considering a bid for
some of the coal assets of Bumi
PLC,to counter last month’s more
than $1.2 billion offer by Indonesia’s
Bakrie Group and has approached
one of the group’s most high-profile
rivals to join,people familiar with
the plans said Friday.
The rival,presidential front-run-
ner and general-turned-businessman
Prabowo Subianto,had been ap-
proached more than once since Sep-
tember and has consistently re-
jected the overtures,people within
the Bakrie camp with knowledge of
the matter said.Mr.Subianto’s team
was campaigning at a local by-elec-
tion in the east of Indonesia’s main
island,Java,and didn’t immediately
answer telephone calls.
Bakrie Group’s patriarch,Abur-
izal Bakrie,heads Indonesia’s Golkar
Party and is also a contender in the
2014 presidential elections.
Mr.Rothschild’s rival bid demon-
strates how the saga of Bumi’s col-
lapse in value and corporate-gover-
nance squabbles still may be far
from a clean resolution.
Mr.Rothschild,who was born in
Britain,resigned fromBumi’s board
last month,voicing concerns that
Chairman Samin Tan was deter-
mined to drive through a proposal
made by the Bakries aimed at sever-
ing strained ties between the family
and the London-listed company.
The Bakries proposed exiting
Bumi and buying back all of the
company’s Indonesian assets.This
would leave Bumi with no assets
other than the cash proceeds from
the sale and would return control of
some of Indonesia’s most productive
coal mines to Bakrie Group.
Mr.Rothschild claimed that the
proposal wasn’t in the interests of
Bumi’s minority shareholders and
seemed to favor Mr.Tan.
A person familiar with the mat-
ter said Mr.Rothschild was consid-
ering a consortium bid that would
focus on buying Bumi’s 85% stake
inPT Berau Coal Energy,Tbk for
which the debt-laden Bakrie family
has offered $950 million,without
providing details on how the pur-
chase would be funded.Berau Coal
Energy is Indonesia’s fifth-largest
coal producer.
A spokesman for Mr.Rothschild
declined to comment on whether a
rival bid was being formed,but con-
firmed that “Nat Rothschild is in
talks with a number of parties,” to
find a way for Bumi to retain its In-
donesian coal assets,while main-
taining robust U.K.-style corporate
governance.“An important part of
this solution would be a consensual
exit for the Bakries,Mr.Tan and
their associates,” the spokesman
Mr.Tan owns Indonesian coking-
coal company PT Borneo Lumbung
Energi & Metal,which owns a
23.8% stake in Bumi.Tan’s company
hopes to get additional compensa-
tion fromBakrie Group in a separate
deal to unwind Borneo’s joint ven-
tures with the family.
Following several news reports
of Mr.Rothschild’s rival bid,Bumi’s
share closed up 14% on Friday,while
shares of PT Borneo Lumbung En-
ergi & Metal,one of the largest
shareholders,closed up 17%.Shares
in PT Bumi Resources and Berau
Coal Energy,two of Bumi’s Indone-
sian mining holdings,rose 1.7% and
18% respectively.
Bumi said it had taken note of its
share-price move,but said it hasn’t
received any such proposal.
Bumi was formed last year when
Bakrie Group folded some of their
coal assets into Mr.Rothschild’s
London-listed investment vehicle.
The two sides have been squabbling
since over how the assets were
managed.The boardroombattle es-
calated recently following allega-
tions of email hacking,which are
under investigation by Indonesian
The company’s share price has
fallen more than 70% since listing.
Bakrie Group sought an end to
the dispute last month by proposing
a deal that would sever its ties with
Bumi.In a multistage deal,the
Bakries first proposed to give up
their 23.8% stake in Bumi in ex-
change for a the 10.3% stake the
London-listed company holds in PT
Bumi Resources,which is Indone-
sia’s largest thermal coal producer.
In the second stage of the offer,
Bakrie Group would buy Bumi’s re-
maining 18.9% stake in PT Bumi Re-
sources for $278 million.Finally,
Bakrie Group would buy Bumi’s
other mining asset,an 85% stake in
Berau Coal Energy,for about $950
Mr.Rothschild reacted to this
proposal by resigning fromthe com-
pany’s board.
Analysts were unconvinced that
Mr.Rothschild would be able to se-
cure the backing of presidential
front-runner Mr.Subianto for his ri-
val bid.Despite being a rival of the
Bakries,Mr.Subianto is unlikely join
a business challenge against themin
an area as fraught as Bumi has be-
come,they said.
Bumi’s board would only enter-
tain a fully underwritten offer from
Mr.Rothschild for any of its coal
holdings,said a person familiar with
“Any offer from Rothschild
would have to be superior and prop-
erly-financed compared to what the
Bakries have already put on the ta-
ble,” Richard Knights of Liberum
Capital said.
The person also noted that
Bumi’s board was only currently
considering the first part of the
Bakries’ proposal.The sale of Bumi’s
stake in Berau was not being consid-
ered,even though the company’s
chairman Mr.Tan has said he was
prepared to accept the entire Bakrie
—Eric Bellman,Alex MacDonald
and I Made Sentana
contributed to this article.
Nathaniel Rothschild resigned from Bumi’s board but still wants to prevent Indonesia’s Bakries from gaining control.
Wipro’s Profit Rises 24%;
Sales Gains Are Predicted
BANGALORE,India—Wipro Ltd.
posted a 24% rise in its fiscal sec-
ond-quarter net profit,and the soft-
ware exporter forecast improved
sales growth at its outsourcing divi-
sion,which has been struggling
amid a tough business environment.
The Indian company said it ex-
pects revenue at its outsourcing di-
vision to increase in a range of 1.3%
to 3.2% during the October-Decem-
ber quarter fromthe previous three
months,as last year’s restructuring
at the unit starts to pay off.
The improved financial outlook
pushed Wipro shares up as much as
3.2% to 373 rupees ($6.93).The
stock later pared its gains and
closed up 1% at 364.95 rupees on
the Bombay Stock Exchange.
Bangalore-based Wipro,which is
listed in New York and Mumbai,has
been struggling to expand its infor-
mation-technology business because
of the global economic slowdown,
which has led many clients to cut
technology budgets.
Wipro last year appointed a new
chief executive for its IT division
and restructured its operations.
The steps taken by Wipro to spur
growth have started taking effect
“much,much slower than we ex-
pected,” said T.K.Kurien,executive
director and chief executive of the
IT business.
Wipro said its second-quarter
net profit rose to 16.11 billion rupees
($299.4 million),compared with
13.01 billion rupees a year earlier.
A Dow Jones Newswires poll of
21 analysts had expected a net profit
of 15.23 billion rupees.
In the three months through
September,revenue increased 17%
froma year earlier to 106.20 billion
The market was expecting 108.42
billion rupees.
Profit increased 2% sequentially,
while sales remained flat.
The company,which earns more
than three-fourths of its revenue
from the outsourcing division,ex-
pects the unit to generate revenue
of between $1.56 billion and $1.59
billion in the current quarter
through December.
The unit’s revenue increased 1.7%
to $1.54 billion in the July-Septem-
ber quarter.
Wipro also has a consumer-care
and lighting-product business,
which it plans to make into a sepa-
rate unit to focus more on the out-
sourcing business.
Chief Financial Officer Suresh
Senapaty said delays in decisions
about technology spending are likely
to ease after Tuesday’s U.S.presi-
dential election,as clients get more
clarity regarding the economic situ-
The U.S.accounts for more than
half of Wipro’s IT business revenue.
The operating margin at the out-
sourcing unit shrank 0.3 percentage
point sequentially to 20.7% in the
July-September quarter,weighed
down partly by wage increases in
Brokerage Prabhudas Lilladher
said in a note to clients that it ex-
pects Wipro’s “revenue momentum
to get better in the fourth quarter.”
Presidential candidate
and former Gen.
Prabowo Subianto,had
been approached.
| Monday,November 5,2012 THE WALL STREET JOURNAL.
India Revokes Roche Patent
BANGALORE,India—In the latest
blow to multinational drug compa-
nies,a government board in India
revoked the patent of Roche Hold-
ing AG’s expensive drug for an in-
fectious liver disease.
The decision Friday by the Intel-
lectual Property Appellate Board to
deny patent protection to the hepa-
titis C drug Pegasys,came as multi-
national drug companies here are
reeling from denials of patent pro-
tection for several expensive thera-
pies that have been granted intellec-
tual-property rights elsewhere in
the world.
Novartis AG is currently battling
for patent protection for its block-
buster cancer drug Glivec in India’s
Supreme Court.
The denials of patents on some
of the drug industry’s biggest-sell-
ing medicines globally show the
challenges the industry faces trying
to enter India’s fast-growing phar-
maceutical marketplace.How these
patent decisions play out will affect
the viability of India as a market-
place for these companies even as it
also defines the affordability of
these life-saving medicines for poor
and middle-class Indians.
Roche,the Switzerland-based in-
ternational drug maker,had re-
ceived a patent for Pegasys fromthe
Indian patent authority in 2006.
This was subsequently challenged
by the Indian generic drug maker
Wockhardt Ltd.and the Mumbai-
based civil society group Sankalp
Rehabilitation Trust.They argued
that Pegasys should not be given
patent protection because it was
neither a “novel” product nor did it
demonstrate inventiveness,which
are among the criteria for gaining
patent protection in India.
India had been viewed as an ex-
citing place for multinational drug
companies because the market is ex-
pected to grow to $74 billion by
2020 from $11 billion last year,ac-
cording to PricewaterhouseCoopers
But they have faced several re-
versals on the patent front of late.
India’s patent office earlier this
year ordered Germany’s Bayer AG to
issue a “compulsory license,” allow-
ing an Indian generics company to
copy its patented cancer treatment
Nexavar and market it at one-30th
the cost.Bayer has taken its appeal
to the Indian patent appellate board.
Novartis has been trying to
patent its cancer drug Glivec in In-
dia since its application was re-
jected in 2006.The case is currently
before India’s Supreme Court.
Roche’s Pegasys was the first
medicine to get patent protection in
India after the country adopted a
new patent law in 2005 recognizing
patents on pharmaceutical products.
Before that,it had protected only
manufacturing processes.
The new law contained language
allowing patents to be opposed on a
number of grounds,including lack-
ing inventiveness or not being a
novel innovation.
India’s patent office had in 2009
rejected the patent challenges to Pe-
gasys filed by Sankalp and Wock-
hardt,upholding Roche’s patent.But
Sankalp then filed the appeal before
the appellate board.
In its decision to set aside
Roche’s patent,the appellate board
supported the company’s claims
that its work on Pegasys was novel
but asserted that the technology in-
volved in the invention was “obvi-
ous” and could be replicated easily.
A Roche spokesman suggested
the decision boded badly for the fu-
ture of drug development in India.
“We remain concerned that a policy
of neglect for patent rules would in-
hibit research into future treat-
ments,” he said.
Health activists argued that what
was at stake was access to life-sav-
ing medicines and that people were
dying of hepatitis C because they
couldn’t afford to buy the medicine.
A government panel denied patent protection to the hepatitis C drug Pegasys.Above,Roche’s Switzerland headquarters
At Hyundai,
An Apology
Over Mileage
Sorento,Soul and Sportage.For 2012
models,Kia’s Optima hybrid and
Hyundai’s Sonata hybrid are added to
the list.
Customers will receive a debit
card that will reimburse them for
their difference in the EPA combined
fuel-economy rating,based on the
fuel price in their area and their own
actual miles driven.
The blunder could hurt Hyundai’s
reputation,particularly because the
company has built its marketing on
claims of 40 mpg on the highway in
many of its cars.
Three Hyundai vehicle models,in-
cluding the Elantra,and the Kia Rio
that all purportedly could get 40
mpg in highway driving were shown
to fall short of that mark.For in-
stance,fuel economy for the Elantra,
one of Hyundai’s top-selling cars,
falls to 28 mpg in city driving and 38
mpg on the highway,from 29 mpg
and 40 mpg,previously.
The company estimated that a
Florida Hyundai owner who drove
15,000 miles over a year would be el-
igible for a more-than-$90 reim-
bursement.It had no estimate on the
total cost of compensating custom-
ers.Based on its reduced fleetwide
fuel economy and the number of ve-
hicles involved,it could run upward
of $80 million a year.
Hyundai advertisements have
tweaked General Motors Co.and
Ford Motor saying that its
U.S.rivals offer a few models that
achieve 40 miles a gallon,as long as
they include certain modifications
and extra technology—changes
sometimes highlighted in the U.S.
companies’ advertisements with as-
terisks.Hyundai claimed standard
versions of cars like the Elantra
could get 40 mpg without special
fuel-saving features.
The EPA opened its investigation
after inquiries fromother car makers
about Hyundai’s and Kia’s mileage
claims and complaints fromconsum-
ers who weren’t getting the fuel
economy advertised on the label.
To rebut Hyundai’s mileage esti-
mates,Ford last year set up a test of
a Ford Focus and an Elantra that
were equipped with sophisticated
fuel monitors.Journalists were chal-
lenged to achieve the fuel economy
advertised in each car’s window
sticker.A Ford spokesman said on
Friday that it didn’t ask the EPA to
retest Hyundai’s claims.
The EPA allows car makers to
submit mileage estimates,which it
certifies,and post themon the win-
dowstickers that customers see.The
agency occasionally undertakes more
comprehensive investigations with
car makers.“EPA had received a
number of consumer complaints
about Hyundai mileage estimates.
Through the agency’s ongoing audit
program,staff experts at EPA’s [Na-
tional Vehicle Fuel Economy Labora-
tory] observed discrepancies be-
tween results from EPA testing of a
MY2012 Hyundai Elantra and infor-
mation provided to EPA by Hyundai,”
the EPA said in a written statement.
With tests it made at the Hyun-
dai-Kia research-and-development
facility in suburban Seoul over recent
months,the agency identified mis-
takes the company made when it
changed its fuel-testing procedure in
2010.Some of the models that Hyun-
dai and Kia currently sell in the U.S.
aren’t affected because their mileage
was tested under conditions the EPA
signed off on before 2010.
Continued from page 19
Gene-Therapy Approval Marks Milestone
The European Union has ap-
proved for sale the Western world’s
first gene-therapy drug,a type of
medicine that introduces function-
ing genes to patients whose defec-
tive genes cause disease.
The costly drug,which treats a
rare metabolic disease,is the first
gene therapy to be licensed in the
U.S.or Europe,though there is a
gene therapy for cancer on the mar-
ket in China,and many others are
being tested in clinical trials.
The European approval is a land-
mark for the field,which is beginning
to make progress after years of false
starts and high-profile troubles,in-
cluding the death of one patient in a
clinical trial in the 1999.
The drug’s approval is “a huge step
forward for the field because it’s the
first time a genetic medicine has been
licensed,” said Len Seymour,a profes-
sor of gene therapy at Oxford Univer-
sity who is unaffiliated with the
drug’s development.“It begins to
exemplify what genetically coded
medicines can do.”
The drug,developed by the closely
held Dutch company UniQure,is a
one-time injection that will carry an
eye-popping price in the range of
€1.25 million ($1.6 million),a company
spokesman said.National insurers in
Europe are likely to pay the tab.In
some markets,UniQure may collect
payment in installments over five
years,he said.
In an interview,UniQure Chief Ex-
ecutive Jorn Aldag said the high
price is justified in part because the
company will have a very small mar-
ket:only about one or two people
per million have the extremely rare
disease that the drug,called Glybera,
treats.That amounts to several hun-
dred people in the European Union.
Other drugs for such rare disorders,
called “orphan diseases,” also carry
high prices of up to $300,000 a year,
a phenomenon that has drawn criti-
cism from some insurers.
Glybera contains a gene that
helps the body produce an enzyme
that breaks down harmful fats in the
blood.Patients with the disease,
called lipoprotein lipase deficiency,
or LPL,have defective copies of the
gene and are unable to process the
fat particles,which can lead to po-
tentially lethal inflammation of the
pancreas,as well as early onset of
diabetes and cardiovascular disease.
The treatment traveled a long
road to approval.The European
Medicines Agency,or EMA,initially
rejected the drug three times,ex-
pressing doubts about its efficacy.
This time around,the agency
changed its analysis and approved
the use of the drug only in severe
cases.The agency finally recom-
mended Glybera for approval in
July,a recommendation the Euro-
pean Commission formally endorsed
on Friday.
UniQure said it plans to file the
drug for regulatory approval next
year in the U.S.,where there are no
gene therapies yet approved for
Investment in gene therapy has
boomed in recent years as positive
clinical trial results have renewed
hopes for the field.The California
Institute for Regenerative Medicine,
or CIRM,a taxpayer-funded insti-
tute that finances cutting-edge med-
ical research,is backing an array of
gene therapy studies,including one
being conducted by Bluebird Bio of
Cambridge,Mass.,in a rare disorder
called beta-thalassemia.
The European approval of Glybera
gives a boost to a field that has had
“fits and starts” since gene therapy
research began several decades ago,
said Ellen Feigal,vice president for re-
search and development at CIRM.
The most marked setback was
the death of one teenager in a gene-
therapy study in 1999.Later,several
children in two separate gene-ther-
apy trials in Europe came down
with leukemia.The results
prompted the U.S.Food and Drug
Administration to place a temporary
halt on certain gene-therapy trials.
In April 2003,it eased the ban.
Recent results have proved more
promising,including a gene therapy
that successfully treated children
suffering froma genetic illness that
causes blindness.
Last year,researchers at Univer-
sity College London and St.Jude
Children’s Research Hospital in the
U.S.successfully used gene therapy
to treat six patients fromhemophilia
B,a blood-clotting disease.
Gene therapy is often attempted in
diseases caused by single genes,such
as cystic fibrosis.Researchers initially
hoped that swapping a good gene for
a bad would work as a sort of silver
bullet in cystic fibrosis,but scientists
encountered many obstacles,includ-
ing weak efficacy and side effects,said
Uta Griesenbach,a cystic fibrosis re-
searcher at Imperial College Lon-
Dr.Griesenbach and colleagues
this summer began testing a new
gene therapy in 130 patients with
Cystic Fibrosis—the largest trial yet
of a gene therapy for the disease.
Pricey Medicine
The EU approved the West’s first
gene-therapy drug.
Glybera,made by a Dutch firm,
UniQure,is a one-time injection
that could cost in the range of $1.6
The drug works by introducing
functioning genes to patients
whose defective genes cause
UniQure plans to file for
approval next year in the U.S.,
where there are no gene therapies
yet approved for sale.
THE WALL STREET JOURNAL.Monday,November 5,2012 |
Tweeting for Votes
How Facebook,Twitter Woo Politicians
Social-media companies Face-
book Inc.and Twitter Inc.are try-
ing to turn political advertising into
a big business,courting U.S.presi-
dential candidates,political-action
committees and interest groups to
siphon off some of the billions of
dollars spent on election ads.
Over the past year,the compa-
nies have met with hundreds of po-
litical groups to tutor themon effec-
tive social-media ad strategies.They
also have staffed up to work with
political campaigns to tailor ads to
specific voters and snag ad dollars.
“We want to spend every waking
moment talking to political advertis-
ers about how they can use Twitter
to win,” said Peter Greenberger,
Twitter’s head of political advertis-
ing sales and the executive who es-
tablished Google Inc.’s political-ad-
vertising arm in 2007.
When Republican presidential
candidate Mitt Romney picked run-
ning mate Paul Ryan in August,
Democratic opposition-research
group American Bridge 21st Century
wanted to bring attention to its new
when Twitter came into the picture.
The San Francisco-based com-
pany had held several brainstorming
sessions with American Bridge to
coach the group on howto use Twit-
ter ads to quickly circulate its politi-
cal announcements.Based on those
meetings,American Bridge decided
to pay for a Twitter message to pro-
mote its MeetPaulRyan.comwebsite.
The ad showed up at the top of
the Twitter page when users
searched for terms like “Romney,”
“Paul Ryan” or “vice president.” The
ad,known as a “promoted tweet,”
appeared about 160,000 times,and
nearly 5,000 Twitter users clicked
on it,said American Bridge,which
has since bought more than two
dozen Twitter ads.
“We’ve been very pleased” by the
Twitter ads and the response to
them,said American Bridge Presi-
dent Rodell Mollineau,who adds
that his group can’t afford wide-
spread TV commercials.The social-
media companies “have been in tune
to what we’re trying to accomplish.”
Across the aisle,Facebook
pitched Mr.Romney’s campaign to
be among the first users of the ser-
vice’s ads on cellphones.The cam-
paign is now one of the biggest buy-
ers of Facebook mobile ads.These
ads,which show up in a Facebook
user’s news feed,link to Mr.Rom-
ney’s page and indicate which
friends are fans of the candidate.
About 10% of people who viewed
the ads clicked through,said Zac
Moffatt,digital director for Mr.
Romney’s campaign.
“There’s not an advertising prod-
uct that they offered that we haven’t
at least beta-tested,” Mr.Moffatt
said,declining to give specifics on
how much the campaign has spent
on social-media ads.
Mr.Romney’s campaign also re-
cently purchased Twitter ads so
when a person searches
for “Obama,” the most-prominent
post is a criticism of President Ba-
rack Obama’s policies toward Israel.
Twitter ads are sold by comput-
erized bidding for words or terms,
similar to how Google sells ads
alongside Web-search results.Twit-
ter said the most in-demand politi-
cal keyword ads include “Obama,”
“Romney” and “vote.”
For Twitter and Facebook,politi-
cal advertising isn’t yet big money.
Research firm Borrell Associates
predicts digital political advertising
will reach $170 million this year,
more than sixfold the levels of 2008
but still less than 2% of the $9.8 bil-
lion estimated total election spend-
ing,which remains dominated by TV
But Twitter and Facebook,which
both declined to disclose their polit-
ical-ad revenue,said success with
political campaigns isn’t just about
the money—it can also help win
more advertising overall frommar-
keters selling soap or cellphones.In-
deed,Twitter and Facebook are
compiling case studies to show non-
political marketers how political
campaigns used social-media.
“Ever since the 1960s with the
Kennedy election,political cam-
paigns have led marketing thought,”
said AdamBain,Twitter’s president
of global revenue.
Facebook and Twitter executives
said now is the time to make politi-
cal ads into a bigger business,given
that most candidates and others in
the Washington political machine
use Twitter and Facebook to stay
connected with constituents,keep
up on news and bicker with rivals.
“We used to have to convince
campaigns to sign up and be part of
the digital bandwagon,” said Adam
Conner,a manager of public policy
at Facebook.“Now it’s step one.”
Facebook now has half a dozen
employees in Washington D.C.,Aus-
tin,Texas and its Menlo Park,Calif.,
headquarters working with political
campaigns,up from one in 2008.
The company has pitched politi-
cal consultants on targeting ads at
users based on the email addresses
of supporters.Facebook has also
passed tips to political campaigns,
including how Facebook users are
most likely to engage with a political
ad shown from 9 10 p.m.,
said Katie Harbath,a manager of
public policy at Facebook.The com-
pany speaks to each campaign’s digi-
tal staff nearly every day,according
to members of both teams.
Twitter launched its political-ad
effort last fall after the company
identified politics as a pillar of its
young revenue strategy.
“We thought this was going to be
the year of the Twitter election,” Mr.
Bain said.
The group of staffers pitching
political ads is the only Twitter ad
team devoted to a single industry.
Twitter also recently commissioned
research aimed to showpolitical op-
eratives how Twitter users who see
frequent tweets and Twitter ads
from campaigns are more likely to
make political donations.
Political campaigns are spending
on the “promoted tweet,” which
looks like a regular Twitter post and
which advertisers pay to have show
up at the top of a streamof tweets,
or to people who might not see the
tweet otherwise,the company said.
Based on demand from political
campaigns,Twitter also prioritized
a project announced in September to
let advertisers tailor paid messages
to people by state or region.This
would presumably let campaigns
target voters in swing states such as
Ohio and Colorado.
The pace of political-ad efforts at
the social-media companies has
picked up in recent weeks.
Before one of the recent presi-
dential debates,Twitter’s Mr.Green-
berger called and emailed political-
related advertisers to suggest they
craft ads based on words likely to
generate attention during the de-
For example,on Twitter’s sug-
gestion,seniors group AARP bought
ads during a presidential debate tied
to terms such as Medicare and
Candy Crowley,the debate modera-
Mr.Greenberger said after next
week’s election,“we take a vaca-
tion”—but then Twitter’s political
ads team will shift attention to the
next drama in Washington.“The
lame-duck [U.S.] Congress could be
a very busy term,” he said.
Warning signs from several big
advertising companies late last
month about a significant
slowdown in ad spending puts the
spotlight on
earnings due this week.
CBS Corp.,Time Warner Inc.,
Discovery Communications Inc.
and News Corp.,each of which
have significant advertising
exposure through their TV
networks and other media outlets,
will report for the September
quarter.Analysts looking for clues
about the state of the ad market
are likely to closely scrutinize
their results,along with any
comments company executives
make about the fourth quarter.
Executives are likely to
indicate the expected impact of
Hurricane Sandy.Some TV
stations broadcasting news
coverage of the storm cut their
advertising drastically or went ad-
free for a couple of days last
week.The superstorm’s total
impact on the advertising market
could be a revenue loss of about
$500 million,or 1% of the volume
for the fourth quarter,estimates
Pivotal Research Group analyst
Brian Wieser.
The overall ad climate this year
has been lackluster,despite the
strong boost provided to TV
advertising by the election.During
earnings reports for the second
quarter,over the summer,media
executives blamed the Olympic
Games for soft ad-revenue
growth,saying that much of the
available ad spending had been
shifted to NBC during the Games,
hurting competing media
At that time,executives,in
general,were cautiously positive
about the third quarter.In late
September,Time Warner Chief
Executive Jeff Bewkes said at a
conference that the ad market
looked “a little better,” but
“there’s not yet resurgence.”
But comments 10 days ago
from advertising holding
companies Interpublic Group of
Cos.WPP PLC and Publicis
Groupe SA portray a much
bleaker climate.Each reported
that marketers had cut back their
spending in September,a result of
political uncertainty in the U.S.
and the economic crisis in Europe.
The weakness was evident in
several industries,including retail,
pharmaceutical and consumer
packaged goods industries,ad
executives said.
Researchers have scaled back
ad-spending forecasts.Pivotal
Research,Group said last week
that U.S.advertising spending
would be flat for 2012,excluding
the impact of political and
Olympic ad spending.In August it
had forecast a 1.4% gain.Media
buyers say they don’t expect a
major uptick by the end of the
year or even the first half of 2013.
“The majority of conversations
we are having with clients are not
about spending more,” says Tim
Spengler,chief executive officer of
MagnaGlobal,a media-buyer arm
of Interpublic Group.
Given the timing of the
slowdown,it may be the fourth
quarter that shows the impact
more.For the third quarter,signs
suggest results are likely to be
tepid.Comcast Corp,owner of
NBCUniversal,said late last month
its big cable networks division
had flat ad sales in the quarter.
Among those particularly
exposed to any ad slowdown is
CBS,which reports on Wednesday.
CBS,which owns the CBS
broadcast network,a TV station
group,as well as a big radio
business and billboards,got 63%
of total revenue from advertising
last year,according to its filings,
more than most media companies.
That share may come down
this year,as CBS has been beefing
up revenue from subscription fees
shared by cable and satellite TV
firms as well as licensing revenue
from digital outlets.
Pivotal’s Mr.Wieser estimates
CBS’s broadcast advertising
revenue fell 3% in the third
quarter to $652 million.Total
revenue,however,he expects to
increase slightly.And he expects
third-quarter earnings to rise 19%.
Big cable networks also are
feeling a pinch.Time Warner,
which owns networks like TNT,
TBS and CNN,likely had a 2%
decline in ad revenue,says
Michael Nathanson of Nomura
Securities.Time Warner also
reports on Wednesday.
At News Corp.,whose
properties include Fox News,the
Fox broadcast network,and the
FX network,as well as
newspapers like The Wall Street
Journal,ad revenue is expected to
be roughly flat in the
broadcasting division and rise by
a mid-single-digit percentage in
the cable division,says David
Bank of RBC Capital Markets.
News due to report on
Tuesday,as is Discovery.
The Week Ahead looks at
coming corporate events.
Media Companies Likely to Be Ad-Market Bellwether
[ The Week Ahead ]
U.S.political campaigns and their backers are buying more ads on social
networks such as ike Facebook and Twitter.
At the top,a Twitter ad bought by the Obama campaign to appear when a
Twitter user searched for the phrase or hashtag ‘Romnesia,’ Among the Rom-
ney campaign’s Twitter ads was the one at the bottom,about defense cuts.
Twitter’s ads are sold by
computerized bidding;it
said the most in-demand
political keyword ads
include ‘Obama,’
‘Romney’ and ‘vote.’
| Monday,November 5,2012 THE WALL STREET JOURNAL.
Election Could Set Course for Treasurys
For Bond Traders,It Is a Matter of Who They Think Will Have a Smoother Time Addressing ‘Fiscal Cliff ’
After Tuesday,bond investors
could have a new compass for trad-
ing Treasurys,when they find out
which party claims the presidency.
The election,and what it means
for year-end fiscal negotiations and
growth in the com-
ing years,is ex-
pected to set a di-
rection for a market
that has been in limbo for the past
three months.The widely held view
is that President Barack Obama re-
claiming the executive branch of
government would support Trea-
surys,while a win for Republican
challenger Mitt Romney would lift
appetite for riskier investments at
the expense of U.S.debt.
“Once we get the election behind
us,all this political uncertainty
about who’s going to be in the
White House and what our country’s
road map is going to be will be ce-
mented,” said Wilmer Stith,portfo-
lio manager of the $300 million Wil-
mington Broad Market Fund.
For bond managers,it comes
down to which administration will
have a smoother time addressing
the so-called fiscal cliff—a set of
spending programs and tax cuts ex-
piring at year-end that would likely
send the still-recovering economy
back into recession if triggered all
at once.
Many regard Mr.Romney as the
more business-friendly candidate,
who is seen having an easier time
reaching a deal with Congress to
avoid the fiscal cliff.
Mr.Romney has also stated he
wouldn’t reappoint Federal Reserve
Chairman Ben Bernanke when his
term expires in early 2014,which
would remove a key promoter of the
central bank’s bond-buying stimulus
By contrast,investors fear a re-
peat of the political tensions seen
last August during the debt-ceiling
debate if Mr.Obama is re-elected.
“We won’t hit the full fiscal cliff
no matter who gets in,but the feel-
ing on Wall Street is just that
chances are better with a Romney
win,” said Tomdi Galoma,managing
director at broker-dealer Navigate
This thinking played out Friday
after the release of an upbeat Octo-
ber employment report,considered
supportive of Mr.Obama’s cam-
paign.Treasurys sold off in reaction
to the positive data,but quickly
found buyers positioning for an
Obama-led fiscal negotiating pro-
Benchmark 10-year yields,which
move inversely to prices,rose as
high as 1.78% before falling back to
1.73% late Friday.Barclays sees this
yield rising to 2% on a Romney vic-
tory and falling to 1.5% or lower on
an Obama win.The election out-
come could also set the tone for
Wednesday’s $24 billion,10-year of-
fering and Thursday’s $16 billion,
30-year bond sale.
Still,regardless of who takes of-
fice,uncertainties remain about
how the negotiating process will
play out through year-end,a factor
that will prevent yields from surg-
ing significantly in November and
Wilmington’s Mr.Stith remains
invested in five-year notes,which he
says offer the juiciest yield still pro-
tected by the Fed’s policies,while
also being more immune to selloffs
than longer-dated bonds when
growth expectations improve.
For now,10-year yields rest in
the middle of a 0.45-percentage-
point range held since early August,
as polls showed Mr.Romney run-
ning a tighter race than many ex-
Fixed-income analyst Anthony
Valeri at LPL Financial points to
moves in the bond market that coin-
cided with Mr.Romney closing in on
Mr.Obama in the polls after the
first presidential debate on Oct.3,
which suggest a Republican victory
would weigh on Treasurys.
Corporate bonds,for instance,
outperformed Treasurys after the
first debate,widely heralded as a
Mr.Romney win.An average of the
extra yield demanded on invest-
ment-grade corporate debt over
comparable Treasurys fell by 0.17
percentage point last month.
The Treasury yield curve,a line
that illustrates yield levels across
maturities,also steepened since
that debate.The gap between two-
and 10-year yields rose as high as
1.53% from1.37% on Oct.3.Steeper
curves often reflect a brighter eco-
nomic outlook.
Hemmed In
Yield on 10-year Treasury note
The Wall Street Journal
Source:Ryan ALMvia WSJ Market Data Group
One Hope for Presidential Outcome:Clarity
lead to a pretty-good sized relief rally”
for stocks and other risky invest-
ments,says RiverFront’s Mr.Jones.
Within the stock market,Mr.
Jones and others see defense stocks
as an instant beneficiary of a win by
Mr.Romney,in large part because
the sector likely would avoid the au-
tomatic spending cuts that a failure
to reach agreement on the fiscal cliff
issues would trigger.
In addition,Mr.Jones believes a
win by Mr.Romney would be a big
boost for banks because it would
raise expectations of a repeal of the
Dodd Frank financial-oversight law.
The re-election of President Obama
likely would hurt stocks of high-end
retailers because of expectations of
higher taxes on the wealthy,he says.
J.P.Morgan stock-market strate-
gist Thomas Lee also expects a vic-
tory by Mr.Romney to benefit en-
Continued from page 19 ergy and health-care stocks due to
expected regulatory changes.Coal
stocks would be one potential bene-
ficiary,he says.Small-company
stocks,also could get a boost on an
expected pickup in mergers-and-ac-
quisition activity.
Meanwhile,a re-election of Presi-
dent Obama would be a positive for
hospital stocks and high-dividend
payers,Mr.Lee says,while financial
stocks should be avoided in such an
Still,some investors see a win by
Mr.Romney as introducing new un-
Chief among them is the course
of monetary policy,says Carlos Asi-
lis,chief investment officer at Glo-
vista Investments,which manages
$500 million.Mr.Romney has criti-
cized the Fed’s Mr.Bernanke and
any replacement could enact more
restrictive monetary policy than
would be the case in a second term
under President Obama,he says.
Mr.Asilis says he would play a
win by Mr.Romney by betting on a
decline in gold prices and a rise in
the dollar.He would play a re-elec-
tion of Mr.Obama by emphasizing
“reflation trades” such as bullish
bets on housing and commodities
and bets against the U.S.dollar.
Another area of uncertainty
would be relations with China,says
Mr.Asilis.Mr.Romney has promised
to label China a “currency manipula-
tor” under,which could lead
to trade frictions that would un-
nerve markets,says Mr.Asilis.And
with a tougher stance toward Iran,
ultimately a “Romney victory would
be bad news for the markets.”
RiverFront’s Mr.Jones says that
while a win by Mr.Romney would
prompt worried chatter about mone-
tary policy,he thinks fears of a sud-
den change in monetary policy will
prove unfounded.“Interest rates will
stay at zero,” he says.
When it comes to the makeup of
Congress,RiverFront’s Mr.Jones
says a surprise win in both houses
by either side would be negative for
riskier investments.
“I don’t think it’s a question of
Republican or Democratic,when one
party controls both ends of Pennsyl-
vania Avenue,people in the markets
believe that’s when bad things hap-
pen,” says Mr.Jones.
Seen Driven
By the Vote
NEWYORK—All eyes in the for-
eign-exchange market this week will
be on Tuesday’s U.S.election.
“The election is important be-
cause of what happens with the fis-
cal cliff,government regulations and
Fed policy,” said
Aroop Chatterjee,a
strategist at Bar-
clays in New York.
The so-called fiscal cliff is a set
of spending programs and tax cuts
whose expiration,scheduled for
year end,could send the economy
into recession if legislators fail to
reach a deal to avert that.
The result of the presidential
and legislative elections could de-
termine how the debate over the fis-
cal cliff plays out.But no matter
which presidential candidate wins,a
deadlock over the matter is possi-
ble,and this could increase market
volatility,Mr.Chatterjee said.
The election could also affect the
U.S.Federal Reserve’s policies.The
central bank has been buying bonds,
weakening the U.S.currency by in-
creasing the supply of dollars.Mitt
Romney has indicated he might
nominate more hawkish members to
the Fed’s board,who would be less
inclined to support future easing.
“The [potential] tightening of
Fed policy is positive for the dollar,”
Mr.Chatterjee said.
On Friday,the dollar touched a
six-month high against the yen and
gained against the euro after a bet-
ter-than-expected U.S.employment
report.This pointed to an improving
economy,a contrast with Japan and
with continued concerns over the
euro zone’s outlook.
Market participants are also
waiting for the Bank of England’s
policy decision Thursday,in which it
might announce another target for
its asset-purchase program.An in-
crease would tend to weaken ster-
What a
difference a few
months makes.
Back in June,
two influential
surveys from the
Institute for Supply Management
showed both manufacturing and
the far-larger service part of the
economy in an alarming
The manufacturing survey that
month fell below 50,the line
between expansion and
contraction,for the first time in
three years.The services
component was still above that
boundary,but the weakest in
three years.
Three positive ISM surprises
later,economists are projecting
Monday will see yet another good
reading of 54.5 for October’s
nonmanufacturing index after last
week’s 51.7 for manufacturing.
Given the steady improvement,
it seems unlikely that September’s
surprisingly strong 55.1 reading
was a fluke.
And good ISM surveys tend to
come in clusters.
That is in part because the ISM
surveys ask respondents whether
things are improving,not how
good they are.A soft patch like
that in spring and early summer
can either be a sign of a change in
the business cycle or the
springboard for renewed
What could go wrong?
One red flag,a weakening in
auto sales to an annualized rate of
14.3 million vehicles in October
from 14.9 million a month earlier,
can be chalked up almost entirely
to Hurricane Sandy.
Ford Motor Co.estimated that
the storm cost the industry up to
25,000 units in the final days of
the month.When annualized,that
would have left sales at 14.6
million,only slightly below
Other consumer indicators
looked fairly strong,too.
The Thomson Reuters Same
Store Sales Index registered a
better-than-expected 4.7% gain
last month excluding drugstores.
Positive sentiment could begin
stalling this month,though.
Warnings about the pre-emptive
impact of the “fiscal cliff” of
automatic spending cuts and tax
hikes are beginning to sound like
a broken record,but the public
finally may be paying attention.
A survey by RBC Capital
Markets showed 55% of
respondents in June weren’t
following the fiscal cliff;this has
dropped to 39% recently.
Once Tuesday’s election is out
of the way and the political horse-
trading can begin,the reality of
which tax and spending measures
are on the table will begin to
influence both consumer and
corporate budgeting.
Another good ISM services
reading for October can dispel
doubts about the economy’s
momentum—just as it faces its
biggest threat.
ISMReport Should ShowU.S.Momentum
[ Ahead of the Tape ]
Staying Upbeat
ISMnonmanufacturing index
Sources:FactSet;Dow Jones Newswire
Many investors expect a
close contest on election
night,but for President
Barack Obama to win.
THE WALL STREET JOURNAL.Monday,November 5,2012 |
For information about listing your funds,please email or call +852 2573-7121
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.
Alexandra Convertible Bond Fund I,Ltd.(Class A)
OT OT VGB 08/31 USD 2155.22 NS NS NS
CPS-Master Priv Fund GL OT
11/01 USD 112.21 NS 11.1 17.9
Platinm-All Star OT OT CYM 09/30 USD NS 3.0 0.5 -0.2
Platinm-All Weather OT OT USA 10/31 USD 129.92 2.4 3.2 3.8
Platinm-Dynasty OT OT CYM 09/30 USD 96.84 -3.4 -8.5 -7.9
Platinm-Emancipation OT EQ CYM 05/31 USD 105.47 0.2 -8.5 5.7
Platinm-Equity Plus OT OT USA 05/29 USD 35.02 -18.2 -63.7 -45.6
Platinm-Gbl Dividend GL EQ CYM 09/30 USD 60.56 4.5 1.2 -10.1
Platinm-Nordic OT OT CYM 09/30 SEK 511.64 2.9 4.7 -9.9
Platinm-Premier OT OT CYM 12/31 USD NS -55.9 -66.0 -44.3
Platinm-Turnberry OT BD USA 02/28 USD 60.14 -1.2 -3.0 NS
Superfund Cayman* GL OT CYM 10/30 USD 32.70 -14.8 -37.8 -16.2
Superfund GCT USD* GL OT LUX 10/30 USD 1565.00 -15.6 -36.8 -17.8
Superfund GreenGold A(SPC)
GL OT CYM 10/30 USD 1126.76 -2.5 -23.7 -1.5
Superfund Green Gold B(SPC)
GL OT CYM 10/30 USD 960.27 NS NS NS
Superfund Q-AG* GL OT AUT 10/30 EUR 5813.00 -5.9 -19.2 -8.4
WintonEvolution EURCls H GL OT CYM 09/28 EUR 1063.00 -5.7 -3.8 0.6
WintonEvolution GBPCls G GL OT CYM 09/28 GBP NS -5.5 -3.6 0.6
WintonEvolution USDCls F GL OT CYM 09/28 USD NS -5.7 -3.9 0.5
WintonFutures EURCls C GL OT VGB 09/30 EUR 231.79 -3.3 -3.2 3.6
WintonFutures GBPCls D GL OT VGB 09/30 GBP 251.13 -3.1 -3.0 5.9
WintonFutures JPYCls E GL OT VGB 09/30 JPY 16102.23 -3.8 -4.1 2.7
WintonFutures USDCls B GL OT VGB 09/30 USD 822.53 -3.3 -3.4 3.5
Funds which are fairly representative of the Indian large cap equity market.At least 75%of total equity
assets invested in Indian equities.Ranked on %total return (dividends reinvested) in U.S.dollars for one
year ending November 02,2012
FUND FUND LEGAL %Return in $US**
NS Mirae Asset Mirae Asset Global INRIND 26.90 10.88 NS NS
India China ConsumptionDiv
Inv (India) Pvt.Ltd
NS SBI Magnum Sbi Funds INRIND 28.54 7.45 -10.85 -5.93
BluechipDiv Management Private Limited
NS Templeton Franklin Templeton INRIND 25.24 7.29 -9.69 -1.93
India Equity Inc Div
Asst Mgmt(IND)Pvt Ltd
NS Principal Principal Pnb INRIND 31.97 6.91 -13.56 -10.80
GrowthDiv Asset Mgmt.Co.Priv.Ltd.
NS Fidelity Fidelity Fund INRIND 30.32 6.48 -9.38 -2.36
India Special Situations Div
Management Private Limited
NS Reliance Reliance Capital INRIND 32.05 6.04 -14.14 -8.48
Equity Bns Asset Mgmt Limited
NS Reliance Reliance Capital INRIND 33.65 5.72 -13.25 0.45
Regular Savings - Equity Gr
Asset Mgmt Limited
NS Reliance Top Reliance Capital INRIND 32.12 5.56 -10.02 -4.17
200Bns Asset Mgmt Limited
NS Kotak Contra Kotak Mahindra INRIND 25.55 5.28 -12.49 -3.28
Div Asset Management Co.Ltd.
NS QuantumL/T QuantumAsset INRIND 25.26 5.11 -8.67 2.66
Equity Div Management Co Pvt.Ltd.
NOTE:Changes in currency rates will affect performance and rankings.Source:Morningstar,Ltd
KEY:** 2YRand 5YRperformance is annualized 1 Oliver’s Yard,55-71 City Road
NA-not available due to incomplete data;London EC1Y1HQUnited Kingdom
NS-fund not in existence for entire period;
Phone:+44(0)203 107 0038;Fax:+44(0)203 107 0001
Arabica-Coffee Futures Look
Poised to Keep on Dropping
NEW YORK—Arabica-coffee
prices are at nearly their lowest
point since June,and market condi-
tions point to still lower prices
Arabica coffee for delivery in De-
cember ended at $1.5345 a pound on
ICE Futures U.S.on Thursday,the
lowest settlement
since June 20.
Prices recovered
slightly on Friday,
rising 1.3 cents,or 0.8%,to $1.5470
a pound,but were still down 1.9%
for the week.
Arabica-coffee futures have been
well below 2011’s levels,when prices
peaked above $3 a pound.
To try to counter the drop,Bra-
zilian coffee growers have been
storing rather than selling their ara-
bica beans.
But Colombia and Central Ameri-
can growers kicked off their har-
vests last month,and as the influx
of supply pushes prices lower,Bra-
zilian growers may try to sell before
the prices fall too far.
“There’s a lot of coffee in the
hands of Brazilian producers,” said
Marcio Bernardo,an analyst at bro-
kerage Newedge.
Growers in Brazil,the source of
about one-third of the world’s cof-
fee,are expected to reap a record
50.48 million 60-kilogrambags this
year,according to a government
forecast.Colombia is expected to
produce about eight million bags in
2012,according to the National Fed-
eration of Coffee Growers for Co-
lombia,and at least 10 million bags
in 2013.
The harvest in Brazil is com-
plete,but Colombia and Central
America started picking their beans
last month.As those beans are har-
vested,growers there are expected
to sell because they aren’t as well-
financed as their counterparts in
Brazil.”We can’t wait,” said Ricardo
Villanueva,president of the Guate-
malan Coffee Association.Guate-
mala is Central America’s second-
largest grower after Honduras.
Central America and Colombia
“don’t have a lot of options in keep-
ing those beans off the market as
the Brazilians,” said Keith Flury,a
senior commodities analyst at Ra-
Some are predicting a cascade
effect once Central American and
Colombian producers start selling.
“I think this will put some pres-
sure on [Brazilian] growers and en-
courage the wiser ones among them
to let go of some coffee beans,” said
Sterling Smith,a commodities spe-
cialist at Citibank.“As the harvest
picks up,more coffee will become
available and that tends to create
pressure on prices.”
Prices could slip as low as $1.40
a pound,Mr.Smith said.Arabica-
coffee prices last traded around that
level in June 2010.Some traders are
preparing for the release of grow-
ers’ beans on the market by selling
now,Mr.Smith said.
Arabica-coffee futures are down
11% since Oct.1.
Fund Scorecard
AHWTop-Div.Int.GL EQ LUX 07/29 EUR 46.59 -8.9 -8.2 -2.7
Concentra AE EU EQ DEU 11/02 EUR 68.69 26.2 25.4 8.0
Industria AE EU EQ DEU 11/01 EUR 77.05 14.3 18.6 2.8
InternRent AE EU BD DEU 11/02 EUR 45.83 5.5 11.3 7.9
CAM-GTF Limited OT OT MUS 10/25 USD 381727.96 24.3 20.5 -0.4
India Equity AA EA EQ LUX 10/31 USD 1.00 18.3 -5.7 -12.4
International Growth GL EQ LUX 10/31 USD 3.38 11.5 8.3 4.4
International Growth AA GL EQ LUX 10/31 USD 0.78 11.2 8.0 4.2
Japanese Growth JP EQ LUX 10/31 USD 2.46 -2.3 -6.5 -5.7
Japanese GrowthAA JP EQ LUX 10/31 USD 0.63 -2.5 -6.8 -5.9
Latin America Equity AA GL EQ LUX 10/31 USD 1.18 6.3 -2.3 -7.8
Manulife GF Strategic Income Fund AA
OT OT LUX 10/31 USD 1.13 7.5 7.5 5.6
Manulife Glbl Fund Asia Total ReturnAA
AS BD LUX 10/31 USD 1.03 10.7 8.9 NS
MGF Asia Value Dividend Equity Fund
OT OT LUX 10/31 USD 1.37 21.6 13.9 2.7
Russia Equity AA EE EQ LUX 10/31 USD 0.61 6.0 -8.1 -8.3
TaiwanEquity AA AS EQ LUX 10/31 USD 1.30 17.2 9.7 5.7
Turkey Equity AA OT OT LUX 10/31 USD 0.98 46.7 24.8 -5.4
U.S.Bond AA US BD LUX 10/31 USD 1.26 8.3 9.1 6.4
U.S.SmCap Equity AA US EQ LUX 10/31 USD 0.91 12.3 5.7 -2.0
U.S.Special Opportunities US BD LUX 10/31 USD 0.90 28.3 19.5 1.1
U.S.Tsy Inf-ProtSec AA OT OT LUX 10/31 USD 1.39 5.6 6.9 7.3
IndonesianGrthFund GL EQ BMU 10/31 USD 184.85 2.8 -0.5 1.3
Asia Value Formula Fd-B OT OT CYM 11/01 USD 9.61 10.3 3.6 -2.6
TNI MENASpecial Sits Fund OT OT BMU 09/30 USD 1040.85 5.5 3.4 -4.4
TNI MENAUCITSFund OT OT IRL 10/25 USD 1030.18 11.0 9.8 -0.9
TNI UAEBlue Chip Fund OT OT ARE 10/24 AED 5.16 19.5 16.5 -1.2
nWEBSITE:WWW.VALUEPARTNERS.COM.HK,TEL:(852) 28809263,FAX:(852) 25648487
Intel-ChinMainlnd Foc AS EQ CYM 11/01 USD 32.02 5.3 -0.5 -8.4
Intel-China Converg* AS EQ CYM 11/01 USD 110.50 2.9 -3.6 -11.3
VPClassic - A AS EQ CYM 11/01 USD 197.88 6.6 1.3 -7.5
VPCLassic - B AS EQ CYM 11/01 USD 90.93 6.2 0.8 -8.0
VPHigh Dividend Stk OT OT CYM 11/01 USD 60.93 20.9 17.1 2.0
YMR-NGrowthFund JP EQ IRL 11/02 JPY 7783.00 0.0 -3.6 -3.5
nYuki 77Series
Yuki 77 General JP EQ IRL 11/02 JPY 4688.00 -0.5 -4.2 -4.7
nYuki AsiaUmbrellaSeries
Yuki Rebounding Gro Fd JP EQ IRL 11/02 JPY 8201.00 -0.1 -5.2 NS
nYuki ChugokuSeries
Yuki ChugokuJpn Gen JP EQ IRL 11/02 JPY 5582.00 2.3 -1.3 -3.6
Yuki ChugokuJpnLowP JP EQ IRL 11/02 JPY 5883.00 -6.2 -9.1 -7.2
nYuki HokuyoJapanSeries
Yuki Hokuyo JpnGen JP EQ IRL 11/02 JPY 3669.00 1.3 -3.3 -3.7
Yuki Hokuyo JpnInc JP EQ IRL 11/02 JPY 4383.00 4.8 1.7 -1.5
Yuki Hokuyo JpnSmCap JP EQ IRL 11/02 JPY 5053.00 21.0 18.9 8.6
nYuki MizuhoSeries
Yuki Mizuho Gen Jpn III JP EQ IRL 11/02 JPY 3404.00 0.2 -4.3 -4.4
Yuki Mizuho JpnDyn Gro JP EQ IRL 11/02 JPY 3382.00 0.1 -3.9 -6.9
Yuki Mizuho JpnExc 100 JP EQ IRL 11/02 JPY 5474.00 1.3 -3.2 -3.2
Yuki Mizuho JpnGen JP EQ IRL 11/02 JPY 6853.00 -2.5 -6.1 -5.2
Yuki Mizuho JpnGro JP EQ IRL 11/02 JPY 4936.00 -0.6 -4.9 -6.0
Yuki Mizuho JpnInc JP EQ IRL 11/02 JPY 6378.00 2.2 -0.6 -2.8
Yuki Mizuho JpnLg Cap JP EQ IRL 11/02 JPY 3876.00 -1.3 -5.5 -6.8
Yuki Mizuho JpnLowP JP EQ IRL 11/02 JPY 9544.00 2.0 -2.0 -2.6
Yuki Mizuho JpnPGth JP EQ IRL 11/02 JPY 5882.00 3.8 -0.3 -5.5
Yuki Mizuho JpnSmCp JP EQ IRL 11/02 JPY 6767.00 17.5 13.1 6.2
Yuki Mizuho JpnVal Sel AS EQ IRL 11/02 JPY 4658.00 6.8 2.7 -3.0
JF ASEANEq (SGD)A(acc) AS EQ LUX 11/01 SGD 16.41 13.7 15.0 3.5
JF Asia Pac ex-Jap Eq(SGD)A(acc)
AS EQ LUX 11/01 SGD 12.30 6.5 0.6 -9.1
JF China (SGD)A(acc) AS EQ LUX 11/01 SGD 10.43 4.3 -0.1 -13.7
JF Greater China (SGD)A(acc)
AS EQ LUX 11/01 SGD 13.07 12.0 5.7 -6.1
JF India (SGD)A(acc) EA EQ LUX 11/01 SGD 12.76 13.2 -4.3 -12.8
JF Korea Equity (SGD) A(Acc)
AS EQ LUX 11/01 SGD 12.90 0.5 -3.9 NS
JF Pacific Tech (USD) A(acc)
OT EQ LUX 11/01 USD 15.04 10.3 5.5 -1.3
JF Singapore (SGD)A(acc) AS EQ LUX 11/01 SGD 16.10 19.1 14.9 0.0
JPMAfrica (USD) A(acc) OT OT LUX 11/01 USD 10.94 18.1 18.4 -0.5
JPMAmerica Large Cap A(acc) - SGD
US EQ LUX 11/01 SGD 13.37 NS NS NS
JPMAsia Pac Bond (USD)A(acc)
AS BD LUX 11/01 USD 12.03 10.3 8.6 5.1
JPMBrazil Eq (SGD)A(acc) OT OT LUX 11/01 SGD 10.59 -10.6 -13.3 -16.4
JPMEast Eur (EUR)A(dist)(JF)
EU EQ LUX 11/01 EUR 28.62 20.3 16.6 -6.8
JPMEmerg EMEA(SGD)A(acc)
OT OT LUX 11/01 SGD 12.75 9.1 8.1 -7.7
JPMEmerg Mid East Eq(SGD)A(acc)
OT OT LUX 11/01 SGD 12.39 15.5 10.1 -9.7
JPMEmerg Mkt Eq (SGD)A(acc)
GL EQ LUX 11/01 SGD 13.15 4.5 2.0 -7.0
JPMEmerg Mkt Infra(SGD)A(acc)
OT OT LUX 11/01 SGD 14.00 5.6 1.4 NS
JPMEmerg Mkt LC Debt(SGD)A(acc)
OT OT LUX 11/01 SGD 18.19 4.8 3.5 NS
JPMEmerging Markets Debt A(mth) - USD
GL BD LUX 10/31 USD 16.37 16.3 15.4 8.9
JPMGlb Dyn (SGD)A(acc)(Hedged)
GL EQ LUX 11/01 SGD 11.61 11.2 11.5 NS
JPMGlb Nat Res (SGD)A(acc)
GL EQ LUX 11/01 SGD 17.25 -9.8 -14.9 -15.1
JPMGlbl Consumer Trends (SGD)A(Acc)
OT EQ LUX 11/01 SGD 18.31 3.2 0.5 NS
JPMGlbl Mining (SGD)A(Acc)
GL EQ LUX 11/01 SGD 16.12 -10.2 -15.0 NS
JPMGlobal Corporate Bond Fund A(mth) - USD
US BD LUX 10/31 USD 105.91 10.2 10.4 6.8
JPMGlobal HighYield Bond A(mth) USD
OT OT LUX 10/31 USD 103.81 11.9 11.9 8.4
JPMLatinAmer Eq(SGD)A(acc)
GL EQ LUX 11/01 SGD 12.54 1.0 -1.8 -9.2
JPMRussia (USD) A(dist) EE EQ LUX 11/01 USD 11.38 10.8 -0.6 -12.7
JPMUSAggregate Bond A(mth) - SGD(Hedged)
US BD LUX 10/31 SGD 12.94 NS NS NS
JPMUSAggregate Bond A(mth) - USD
US BD LUX 10/31 USD 10.81 4.1 5.4 5.2
JPMUSHigh Yield Plus Bond AUSDAcc
US BD LUX 11/01 USD 106.99 NS NS NS
JPMUSSmCap Grwth (USD)A(Dist)
US EQ LUX 11/01 USD 103.85 11.0 13.3 9.0
JPMUSTechnology A(acc) - SGD
OT EQ LUX 11/01 SGD 12.68 NS NS NS
JPMF Asia Pacific Income Fund USDA(mth)
AS BA LUX 10/31 USD 113.94 NS NS NS
JPMF Indonesia Fund USDA(acc)
OT OT LUX 11/01 USD 103.25 NS NS NS
JPMIF Global Convertibles - USDClass A(acc)
OT OT LUX 11/01 USD 113.34 9.2 6.9 0.3
JPMIF Global Financials - SGDClass A(acc)
OT EQ LUX 11/01 SGD 15.35 16.2 13.1 NS
JPMIF Global Income Fund USDA(div)(hedged)
EU BA LUX 11/01 USD 138.79 NS NS NS
JPMIF Global Select Eq USDClass A(acc)
GL EQ LUX 11/01 USD 156.84 14.7 13.7 1.6
JPMIF Income Opportunity USDClass A(acc)
OT OT LUX 11/01 USD 174.81 5.6 5.5 2.9
nHSBCTrinkausInvestment ManagersSA
Prosperity Return Fund A JP BD LUX 10/29 JPY 9330.06 8.9 6.3 -3.1
Prosperity Return Fund B OT OT LUX 10/29 JPY 7854.68 14.1 8.6 -6.4
Prosperity Return Fund C OT OT LUX 10/29 USD 88.62 11.4 4.5 -4.9
Prosperity Return Fund D OT OT LUX 10/29 EUR 133.77 26.3 29.0 12.6
Renaissance Hgh Grade Bd A
JP BD LUX 10/29 JPY 10172.32 15.5 12.7 0.6
Renaissance Hgh Grade Bd B
JP BD LUX 10/29 JPY 8513.15 19.4 13.6 -2.0
Renaissance HghGrade Bd C
JP BD LUX 10/29 USD 95.47 16.6 9.4 -0.8
Renaissance Hgh Grade Bd D
JP BD LUX 10/29 EUR 107.23 15.9 16.7 2.7
American Growth US EQ LUX 10/31 USD 19.93 14.2 13.9 11.1
American Growth AA US EQ LUX 10/31 USD 1.14 14.0 13.6 10.8
AsianEquity OT OT LUX 10/31 USD 2.62 12.7 4.1 -2.0
AsianEquity AA OT OT LUX 10/31 USD 0.84 12.5 3.8 -2.2
AsianSmCap Equity AA OT OT LUX 10/31 USD 1.75 29.8 20.2 8.0
China Value A AS EQ LUX 10/31 USD 6.76 4.6 -2.6 -9.6
China Value AA AS EQ LUX 10/31 USD 2.12 4.4 -2.8 -9.9
DragonGrowth AS EQ LUX 10/31 USD 1.50 13.8 5.5 -6.9
DragonGrowthAA AS EQ LUX 10/31 HKD 7.28 13.3 5.0 -7.3
Emerging Mkt Infrastructure
OT OT LUX 10/31 USD 0.97 NS NS NS
Emg Eastrn Europe A EU EQ LUX 10/31 USD 4.43 16.9 1.2 -6.3
Emg Eastrn Europe AA EU EQ LUX 10/31 USD 1.91 16.7 1.0 -6.5
EuropeanGrowth EU EQ LUX 10/31 USD 8.85 16.1 4.9 -1.7
EuropeanGrowthAA EU EQ LUX 10/31 USD 0.63 15.8 4.7 -2.0
Global ContrarainAA GL EQ LUX 10/31 USD 0.86 8.8 -9.2 -13.9
Global Property AA OT EQ LUX 10/31 USD 0.88 24.3 18.8 7.3
Global Resources AA GL EQ LUX 10/31 USD 1.05 -2.6 -11.4 -5.6
Healthcare AA OT EQ LUX 10/31 USD 1.19 17.7 18.2 10.9
Many growers have been storing,rather than selling,Brazilian beans.
In print & online. Contact:
| Monday,November 5,2012 THE WALL STREET JOURNAL.
Insider Fine Sought in Japan
TOKYO—Japanese regulators on
Friday sought a new fine against To-
kyo-based investment adviser Japan
Advisory,for allegedly trading on
information gleaned froma research
report compiled by Nomura Hold-
ings Inc.
In June,Japan Advisory’s license
was revoked and its Tokyo opera-
tions effectively shut down after
regulators alleged it placed a large
short-sale order for shares of Nip-
pon Sheet Glass Co.based on confi-
dential information of a forthcoming
equity issuance in 2010.At the time,
the Securities and Exchange Sur-
veillance Commission sought a fine
of ¥370,000 ($4,600).
On Friday,the SESC sought a
second fine,totaling ¥120,000
($1,500),against Japan Advisory for
allegedly trading on what regulators
said was inside information ahead of
a share and bond offering by Elpida
Memory July 2011.Nomura
was one of the underwriters of the
The SESC is the securities watch-
dog of Japan’s Financial Services
Agency,the country’s financial regu-
lator.The SESC has to ask the FSA
to impose a fine,and the FSA makes
the actual order for the fine.
The SESC didn’t seek a fine
against Nomura.
Japan Advisory’s Tokyo office
was closed after its license was re-
voked,and a company executive
couldn’t be reached for comment
Friday.While Japan Advisory hasn’t
publicly commented since the case
came to light in June,the FSA said
Japan Advisory has submitted a
written complaint denying the ear-
lier allegations of insider trading.
The case is the latest in Japan’s
ongoing crackdown on insider trad-
ing,where employees at brokerage
firms were alleged by regulators to
have passed on nonpublic informa-
tion to clients on share offerings.
The SESC alleged that Japan Ad-
visory employees found out about
the Elpida offering by noticing that
the issuer’s name had been left out
of a sector report provided by a No-
mura employee and concluded for
themselves what it meant.
As part of internal rules,names
are removed from research reports
of companies that will announce a
share offering within the coming
Regulatory officials said the lat-
est instance is different from five
previous cases in which sales staff
at a number of brokerage firms were
accused by regulators of deliberately
leaking confidential information to
In June,Nomura confirmed that
some of its employees were the
source of leaks in three of those
cases,and two of its top officials re-
signed to take responsibility.
Because the Nomura employee
was complying with company rules,
the latest case also highlights the
complexities and consequences of
the ways in which full-service bro-
kerages such as Nomura handle con-
fidential information.
An SESC official said Nomura re-
ported the Elpida case to regulators
after discovering its potential in-
volvement during an internal probe
the brokerage has been conducting.
The FSA in August issued Nomura a
business-improvement order for lax
internal controls.
In a statement Friday,Nomura
said there was a “strong possibility”
it was connected to the incident.
“Nomura continues to fully cooper-
ate with the commission in its inves-
tigation,” the brokerage said.
Nomura has already implemented
various improvement measures that
include allowing the name of compa-
nies preparing a share offering to be
included in research reports.
The FSA also ordered Nomura to
report on the cause of the latest
case,and said it will closely monitor
the effectiveness of the steps No-
mura announced to enhance its in-
ternal controls.
The insider-trading cases have
resulted in modest fines because
fines in Japan are calculated based
on fees investment funds receive
from clients.Penalties in Japan are
generally imposed only on those
who trade on inside information,al-
though those who leak information
can also be prosecuted if they bene-
fit from others’ trading or are seen
as accomplices.
Elpida’s Tokyo office was closed
Friday and a company spokesperson
couldn’t be reached for comment.
—Atsuko Fukase
contributed to this article.
Nomura was one of the underwriters on an Elpida Memory deal on which Japan Advisory is accused of insider trading.
GLP Plans
$1.5 Billion
In Tokyo
Warehouse operator Global Lo-
gistic Properties looking to
raise up to $1.5 billion by listing
some of its properties in Japan,in
what could be the second-biggest
initial public offering in that coun-
try this year,a person with knowl-
edge of the deal said Friday.
The Singapore-listed company,
which is 50.6%-owned by sovereign-
wealth fund Gov-
ernment of Singa-
pore Investment
Corp.,intends to complete the IPO
of its Japanese real-estate invest-
ment corporation by the end of this
year,the person said.
The proposed J-REIT IPO,if suc-
cessful,would be this year’s second-
largest offering in Japan after Ja-
pan Airlines Co.’s $8.5 billion
September flotation.
GLP’s plan comes amid a bout of
strength in Japan’s property-related
stocks,which have outperformed
the broader local equities market.
The Tokyo Stock Exchange REIT In-
dex is up about 27% this year,best-
ing the Topix index’s 3.2% rise over
the same time.Meanwhile,the
Topix real-estate subindex is up 49%
so far this year.
As part of the deal,GLP plans to
sell 30 of its Japanese properties to
J-REIT,which it will partly own and
manage,for about ¥209 billion ($2.6
billion),the company said in a state-
The company will keep ¥100 bil-
lion in cash proceeds mainly for in-
vestments in China and Japan,
where it operates a $14 billion port-
folio that includes 446 warehouses
across 36 cities.
A GLP spokeswoman declined to
comment.In its Thursday state-
ment,GLP didn’t state when the IPO
might launch or the offer’s potential
GLP wholly owns 68 properties
in Japan and partly owns another 15
with joint-venture partners.Apart
from the initial deal for 30 proper-
ties,J-REIT has a three-year option
to buy up to three more of GLP’s
Japanese warehouses for up to
¥12.6 billion,according to GLP.J-
REIT will also have priority over
other potential buyers should GLP
decide to sell any of its remaining
Japanese properties over the next
10 years.
In the Thursday statement,GLP
Deputy Chairman Jeffrey Schwartz
said the proposed asset sale is part
of the company’s plans for “recy-
cling capital to fund expansion in
high-growth markets and growing
our strong fund management plat-
GLP listed on the Singapore Ex-
change in October 2010 after rais-
ing about 3.5 billion Singapore dol-
lars (US$2.9 billion),in what was at
the time the city-state’s biggest IPO
since 1993.
The plan by GLP to list J-REIT
shares in Tokyo also comes as Croe-
sus Retail Trust,a company to be
backed with Japanese shopping-mall
assets,tests investors’ interest for
its proposed S$800 million initial
public offering in Singapore,people
with knowledge of that transaction
said last month.
—Brad Frischkorn
contributed to this article.
Visa Signs Deals With Myanmar Banks
Visa Inc.said Saturday that it
will partner with three banks in
Myanmar,allowing Visa’s ubiquitous
credit cards to be issued and ac-
cepted in the nascent market—a
move designed to bring the long-
isolated Southeast Asian country
closer to global financial integra-
The U.S.-based financial-services
giant signed licensing agreements
with three local banks,Kanbawza
Bank Ltd.,Myanmar Oriental Bank
Ltd.and Co-Operative Bank Ltd.,
known as CB Bank,following an an-
nouncement in August that it will
start training workshops for banks
in the country.In September,com-
petitor MasterCard Inc.signed a
similar licensing agreement with CB
Bank—one of Myanmar’s largest pri-
vate banks,set up in 1992—and said
it was preparing ATMs and point-of-
sales machines to accept credit
cards issued by foreign banks.
Visa’s announcement,made in
the commercial center of Yangon,is
a further milestone in the develop-
ment of Myanmar’s financial infra-
structure,crippled after decades of
harsh military rule and international
sanctions.Tourists and investors
still have to carry large quantities of
cash,unable to use foreign-issued
credit cards at the few ATMs around
Yangon or even in many hotels.
Peter Maher,Visa’s group coun-
try manager for Southeast Asia and
Australasia,didn’t give a specific
date on when foreigners could ex-
pect to use their Visa-branded
credit cards in Myanmar,but he ex-
pects it to be by early next year.
However,he said delays might occur
in readying banks for the technology
necessary to process electronic pay-
“In all my meetings in Yangon,
the lights were going on and off and
the air-conditioning was going on
and off,” Mr.Maher said in an inter-
view.“This is Myanmar;everyone is
doing things for the first time.”
Serious infrastructure concerns
remain even in Myanmar’s biggest
cities.Yangon,the most developed
and prosperous of Myanmar’s cities,
is only 67% electrified,according to
the Asian Development Bank.Visa
will make additional investments,
including in power terminals and
telephone lines,to buffer capabili-
ties in providing electronic pay-
ments.Mr.Maher declined to spec-
ify their size but said they were
“not multimillion-dollar invest-
Myanmar’s steady steps toward
financial inclusion,analysts say,
could have a huge impact on tour-
ists and investors,and boost Myan-
mar’s fledgling economy as more
visitors make impulse retail pur-
chases and other spending decisions
using credit cards.
Still,lawyers observing the coun-
try say the market remains murky
for the world’s biggest companies—
often subject to the greatest amount
of scrutiny and corporate due dili-
gence—which have to choose local
partners carefully.
Visa said it chose the three
banks based on their interest and
enthusiasm in providing electronic
payments,their existing networks,
and after a process of analyzing
which banks are most ready to com-
ply with international compliance
—James Hookway
contributed to this article.
Visa’s Peter Maher discusses the company’s move into Myanmar.
THE WALL STREET JOURNAL.Monday,November 5,2012 |
| Monday,November 5,2012 THE WALL STREET JOURNAL.
Berkshire to Buy
Oriental Trading
Berkshire Hathaway Inc.said it
agreed to buy Oriental Trading Co.,
a mail-order toy and novelty retailer
owned by private-equity firmKKR &
Co.and a group of other investors.
Berkshire,run by Warren Buf-
fett,agreed to pay about $500 mil-
lion for the business,according to a
person with knowledge of the deal.
The purchase of Oriental Trad-
ing,based in Berkshire’s hometown
of Omaha,Neb.,adds another retail
company to Berkshire’s stable and
marks a vote of confidence in the
company,which emerged from
bankruptcy protection in February
last year.
“Oriental Trading is a leader in
its industry,has a strong manage-
ment teamand delivers exceptional
customer value and service,” Mr.
Buffett said in a statement released
jointly with Oriental Trading on Fri-
Separately,Berkshire said Friday
that third-quarter profit jumped
72% to $3.92 billion on investment
gains and an improvement in the
company’s derivatives portfolio.
But operating earnings,Mr.Buf-
fett’s preferred metric for evaluat-
ing his company,fell 11% to $3.4 bil-
lion,or $2,057 per Class A share.
The decline was the result of an un-
favorable comparison to last year’s
third quarter,when the company
benefited froma large re-estimation
of reserves at one of its reinsurance
operations.Profit at Berkshire’s
noninsurance businesses rose 19% to
$2.47 billion.
Berkshire is just the latest in a
string of owners for Oriental Trad-
KKR took a stake in the company
during its bankruptcy proceedings,
exchanging debt for a shareholding
in the company.The firmowns one-
third of Oriental Trading through
the special-situations unit of its KKR
Asset Management business.Other
investors in the company include
hedge funds Crescent Capital Group
and Par IV Capital Management
LLC.They all hold seats on Oriental
Trading’s board.
Berkshire’s purchase values the
company at about seven times earn-
ings,allowing KKR to double its ini-
tial investment in Oriental Trading’s
loans,according to two people with
knowledge of the matter.
As recently as 2006,Oriental
Trading was valued at about $1 bil-
lion,when Carlyle Group LP paid
about $750 million to buy a 75%
stake from Brentwood Associates.
Shortly after that deal,Oriental
Trading’s sales began to slip and,by
early 2009,it had missed financial
performance targets required under
its loan agreements,according to
Moody’s Investors Service.
KKR and the other funds bought
up the company’s loans,which were
trading at a discount,and ex-
changed themfor stock through the
bankruptcy.Since then,Oriental
Trading has increased its revenue
by improving its sales process and
reaching new customers,the person
with knowledge of the deal said.
Warren Buffett’s firm will pay about $500 million for the retailer.
CCB Eyes U.K.Dim-SumBond
HONG KONG—State-owned
China Construction Bank
considering selling up to 2.5 billion
yuan ($400 million) of offshore
yuan-denominated bonds in London
as part of Beijing’s effort to interna-
tionalize its currency,people famil-
iar with the situation
said Friday.
The planned issue
is scheduled for this
month,one of the people said.It
would be the first “dim-sum bond”
issued by a Chinese bank in London,
which has been promoting itself as
an offshore yuan hub.
Hong Kong,which Beijing has
designated as the test bed for the
yuan’s internationalization,remains
the world’s largest offshore yuan
trading center,though other finan-
cial centers such as London and Sin-
gapore are seeking a slice of the
China Construction Bank’s pro-
posed yuan bond—to be issued by
its London unit CCBL Funding PLC
and guaranteed by CCB—will target
European investors and likely will
be listed on the London Stock Ex-
change,the people said.
CCB units CCB International Cap-
ital Ltd.and CCB (London) Ltd.will
be arranging the bond sale,one per-
son said.While the list of under-
writers has yet to be completed,
HSBC Holdings PLC and BNP
Paribas SA are likely to participate,
the person said.
Fitch Ratings said in a statement
Friday the proposed issue is ex-
pected to be rated at A.
A spokesman at CCB,China’s
second-largest bank by assets,said
the timing of the issuance hasn’t yet
been determined.
The issue comes after HSBC is-
sued a two billion yuan,three-year
yuan bond in April,the first ever
dim-sumbond in London.The bond
was listed on the London Stock Ex-
change and had drawn substantial
interest from European investors.
THE WALL STREET JOURNAL.Monday,November 5,2012 |
E*Trade Answers a Critic FromWithin
Director—and Rival—Kenneth Griffin Raised Questions About How Brokerage Handled Orders
E*Trade Financial Corp.agreed
to improve order-handling practices
after Kenneth Griffin,a director who
also runs a competing trading firm,
raised concerns over whether the
brokerage delivered on its promise
to execute trades as quickly and as
cheaply as it could for its 2.9 million
brokerage customers.
Mr.Griffin’s questions prompted
E*Trade to conduct an internal re-
viewinto its handling of orders from
customers of its online brokerage,
including how it uses its own mar-
ket-making business to execute
those trades,according to people fa-
miliar with the discussions.
E*Trade said a director’s ques-
tions had prompted the inquiry but
didn’t identify the board member in
its filing.An E*Trade spokesman de-
clined to comment on the director’s
identity.According to one person fa-
miliar with the matter,Mr.Griffin,
who joined E*Trade’s board in 2009,
raised concerns about the order-
flow practices several months ago.
Mr.Griffin has told people close
to him that he is concerned about
whether E*Trade customers are re-
ceiving the best execution on their
trades,compared to what they
might receive if outside firms han-
dled the orders,according to people
familiar with discussions about the
Mr.Griffin couldn’t be reached
for comment on Friday.
The inquiry marks the latest set-
back for a brokerage firm still reel-
ing from losses from its mortgage
business and a lack of management
stability.It also underlines the com-
plex relationship E*Trade has main-
tained with Mr.Griffin,whose firm
is the company’s largest shareholder.
Mr.Griffin’s Citadel LLC,a Chi-
cago-based trading firm,owns a
9.6% stake of E*Trade,and has come
to the firm’s rescue twice in recent
years to help shore up its capital po-
sition.But Citadel also operates its
own market-making business,which
competes with E*Trade for profits
from executing retail-investor or-
As part of Citadel’s initial rescue
in 2007,E*Trade agreed to route
40% of its “marketable customer or-
ders” in certain publicly traded
stocks to Mr.Griffin’s firm.That
pact expired in 2010.Recent filings
don’t specify how many orders
E*Trade now sends Citadel’s way.
Last year,Mr.Griffin publicly
pushed for E*Trade to sell itself,
without success.In July 2011,Cita-
del sent E*Trade a letter,saying that
managers of the online brokerage
had “squandered” a “phenomenal
franchise” and that the board had
“continually failed to act in the best
interest” of shareholders.
Prospects for a deal faded as the
European sovereign-debt crisis
weakened investor confidence and
sent stocks lower.E*Trade said in-
stead it would focus on its core on-
line brokerage operations.
This summer,E*Trade ousted
Chief Executive Steven Freiberg,a
former Citigroup Inc.banker,two
years into his four-year contract.He
had succeeded Robert Druskin,an-
other Citi veteran who had served as
interimCEO for only a few months.
Mr.Druskin had succeeded Donald
Layton,who retired after less than
two years as CEO.
E*Trade Chairman Frank Petrilli
has now stepped in on an interim
basis while the firm searches for a
permanent successor for Mr.
The company’s reviewfocuses on
“best execution,” or the legal obliga-
tion brokers have to assure that cus-
tomers get the best prices for their
trades in the shortest time frame.
Many E*Trade customers are mom-
and-pop investors trading small ac-
counts fromtheir personal comput-
E*Trade said in its filing that it
has changed how it monitors its
handling of customer orders,and is
still analyzing “data necessary to as-
sess the quality of execution” for
brokerage customers.
Outside firms are conducting
E*Trade’s review,and “the firms
have recommended that we imple-
ment changes to improve upon our
standards,processes and compliance
procedures,” the filing said.“The
company agrees with these recom-
E*Trade differs fromsome of its
biggest competitors,including
Charles Schwab Corp.and TD
Ameritrade Holding Corp.,in that it
executes a bigger chunk of its cus-
tomers’ trades internally rather than
routing themto brokers such as Cit-
adel,UBS AG or Knight Capital
Group Inc.
E*Trade routed 39% of its cus-
tomer orders in New York Stock Ex-
change-listed securities and 38% of
its orders in Nasdaq Stock Market
securities to its own market-making
business during the quarter ended
Sept.30,according to a regulatory
The E*Trade unit that matches
customers’ buy and sell orders
makes payments to another E*Trade
affiliate based on the volume of or-
der flow.Rivals like Citadel compete
for the same order flow and the
profits driven by it.
E*Trade director Kenneth Griffin’s Citadel LLC competes with the brokerage.
Banks’ Differing Fortunes Show
The Upheaval in Bond Trading
third-quarter revenue in its fixed-in-
come division of €2.5 billion ($3.24
billion),a 15% gain fromthe second
quarter.It was a strong result that
reflected a broad rebound in the
business this summer.
The upswing resulted froma de-
cision by the European Central Bank
over the summer to take steps to
ease the borrowing costs of Spain
and other financially stressed coun-
tries in the euro zone.That as-
suaged investors’ fears that the cur-
rency bloc could splinter,bringing
cash that had been on the sidelines
Continued from page 19 flooding back into the market.
Trading volumes on fixed-income
floors on both sides of the Atlantic
surged,as did the prices of bonds
banks were holding on their books.
Both factors contributed to a surge
in revenue compared with a de-
pressed second quarter.The ECB de-
cision,together with steps taken by
the Federal Reserve,also served as
a catalyst for many companies to is-
sue debt,providing a further boon
to trading.
Fixed-income trading could eas-
ily turn south,however,if the Euro-
pean situation worsens.Many ana-
lysts said that remains a possibility.
The business,generally referred
to as fixed income,currencies and
commodities,or FICC,comprises a
number of trading segments includ-
ing foreign exchange and commodi-
ties such as oil,as well as govern-
ment,mortgage and high-yield
bonds.It is Wall Street’s biggest
revenue generator.Banks globally
took in $100 billion to $105 billion
from the business last year,said
Citigroup analyst Kinner Lakhani.
He estimated that FICC revenue
globally rose about 8% in the third
quarter from the previous three
Despite the uptick,the UBS news
has prompted a number of investors
and analysts to question whether
some banks,especially those that
aren’t in the top tier,should also
consider retrenching.In recent
years,returns in the fixed-income
business have often been subpar.
Business has been volatile as inves-
tor sentiment ebbed and flowed re-
garding the financial and economic
challenges Europe and the U.S.face.
Even Barclays PLC,a power-
houses in the business,was forced
to field questions in its third-quar-
ter conference call following a lack-
luster FICC resultClearly,there will
be significant pressure from inves-
tors,especially post-UBS,for other
second-tier global players to con-
sider restructuring their fixed-in-
come operations,” said Mr.Lakhani.
Other factors that help explain why
investors are questioning banks’
participation in the business include
looming regulatory changes,includ-
ing new rules that will force banks
to set aside more capital against
some trading books and to move
some trading and clearing opera-
tions to exchanges.In many case,
returns for banks on their fixed-in-
come businesses are already below
their cost of equity—a yardstick in-
vestors use to judge performance—
and the regulatory overhaul is ex-
pected to make matters worse The
banks that are expected to come un-
der the most pressure to rethink
their fixed-income strategies are
those that lag in terms of scale,
such as Morgan Stanley,analysts
said.The securities firmhad a mar-
ket share in the business of 5.2% in
the first half,compared with 12.3%
for market leader J.P.Morgan
Chase & Co.,according to Citigroup.
Investors undoubtedly took note
that UBS shares have risen 17% this
week in response to the news.
Fixed-income trading is a scale-
dependent business,in part because
there are a number of fixed costs,
for items such as technology and
regulatory compliance,that banks
must ante up if they want to be in
the market,no matter how large
they are.Morgan Stanley’s fixed-in-
come business came roaring back in
the third quarter after a depressed
second quarter,nearly doubling its
revenue.CEO James Gorman said
recently that the fixed-income busi-
ness is “very critical” and “attrac-
tive.” Others at the firmpoint to im-
portant links between the business
and other products Morgan Stanley
offers clients,such as merger ad-
They acknowledge that the chal-
lenge is to gain scale and trim the
amount of capital it has tied up in
the business.
—Liz Rappaport and David Enrich
contributed to this article.
Deutsche Bank reaped a windfall in fixed-income trading.
Bumpy Broker
Trade Financial’s daily share price
Source:WSJ Market Data Group
Size Matters
Top 10 banks by market share in the bonds-trading business
in the first half of 2012
Source:Citibank The Wall Street Journal
Deutsche Bank
Goldman Sachs
Bank of America
BNP Paribas
Morgan Stanley
Credit Suisse
| Monday,November 5,2012 THE WALL STREET JOURNAL.
Giants aroundtheworld
InU.S.-dollar terms.
DowJones CountryTitans
Previous session Year-to-date 52-week
Turkey -1.72%
40.2% 28.5%
Germany 0.34
20.5 19.1
Switzerland 0.66
17.0 20.8
SouthAfrica 0.84
14.1 14.5
Singapore 0.41
14.0 5.4
Netherlands 0.71
13.8 16.1
HongKong 1.56
13.7 6.4
Australia -0.07
11.2 5.6
France 0.49
10.5 11.4
Sweden 0.65
9.9 9.8
Italy -0.28
5.5 2.9
Russia 0.75
5.4 -2.4
5.1 5.9
Japan 1.31
4.0 unch.
Canada -0.97
3.6 -0.2
SouthKorea 1.22
2.4 -3.8
China88 0.44
Spain 0.94
Brazil -0.54
DowJones Regional Sector Titans
Media -0.78%
24.2% 25.6%
Fincl Svcs -0.24
22.6 18.4
Real Estate 1.00
22.6 17.9
Banks -0.28
20.9 16.5
Insurance -0.75
19.6 12.6
Retail -0.45
18.2 17.4
Tiger 50* 0.99
14.8 6.8
Global 50 -0.77
11.0 11.8
Asian50 0.75
9.1 4.7
Arab50 -0.01
2.5 -3.1
Source:S&PDowJones Indices
Major players &
At right,a look at the Asia Titans,the biggest and best known
companies in Asia.Below,some of the Dow Jones Titans indexes
of biggest and most liquid stocks in individual countries and regions
DowJones AsiaTitans:Friday's best andworst...
Market value,Previous
in billions close,in
Company Country Industry of US$ local currency Previous session 52-week Three-year
Fanuc Corp.Japan Industrial Machinery $39.9 13,350
Softbank Corp.Japan
Mobile Telecommunications
37.5 2,714
8.1 27.4
Commercial Vehicles Trucks
21.9 1,786
-3.1 0.9
Honda Motor Japan Automobiles 55.7 2,467
7.1 -12.5
SamsungElectronics South Korea Semiconductors 178.9
36.7 84.8
HonHai PrecisionInd Taiwan
Electrical Components Equipment
$35.6 88.60
12.2 -8.0
Reliance Industries India Exploration Production 48.9 29.93
-16.5 -63.9
Woolworths Australia
Food Retailers Wholesalers
36.8 28.73
22.8 1.7
NTTDoCoMo Japan
Mobile Telecommunications
63.3 116,300
-15.0 -10.7
Panasonic Japan Consumer Electronics 12.6 411.00
-44.4 -67.4
...Andtherest of Asia's bluechips
Market value,inlocal
Company/Country (Industry)
inbillions (U.S)
currency Latest 52-week Three-year
East JapanRailway 27.5 5,510 2.23% 18.6% -3.3%
Japan (Travel Tourism)
Shin-EtsuChml 25.1 4,655 2.08 20.1 -1.6
Japan (Specialty Chemicals)
NissanMotor 38.7 686.00 2.08 -2.1 5.5
Japan (Automobiles)
ItochuCorp.16.0 808.00 2.02 6.3 43.5
Japan (Industrial Suppliers)
RioTintoLtd.25.9 57.38 2.01 -13.6 -8.6
Australia (General Mining)
KDDI 35.1 6,270 1.95 9.2 32.0
Japan (Mobile Telecommunications)
TokioMarine Hldgs 20.6 2,148 1.95 19.3 -7.4
Japan (Property Casualty Insurance)
China Life Insurance 22.9 23.85 1.92 17.2 -35.7
China OffShore (Life Insurance)
Mitsui 25.9 1,137 1.79 3.0 -4.1
Japan (Industrial Suppliers)
BHPBilliton 114.6 34.42 1.77 -5.8 -6.2
Australia (General Mining)
Mitsubishi 30.0 1,454 1.68 -6.2 -24.1
Japan (Industrial Suppliers)
Hitachi Ltd.24.7 427.00 1.67 2.6 46.2
Japan (Electronic Equipment)
SumitomoMitsui Finl 43.6 2,475 1.64 15.4 -20.4
Japan (Banks)
Toyota Motor 135.0 3,140 1.62 25.3 -12.0
Japan (Automobiles)
MizuhoFinancial Grp 37.8 126.00 1.61 16.7 -31.1
Japan (Banks)
SunHungKai Prop 37.2 110.10 1.38 2.8 -6.5
Hong Kong (Real Estate Holding Development)
PetroChina 29.0 10.66 1.33 6.2 12.4
China OffShore (Integrated Oil Gas)
Bank of China 35.1 3.25 1.25 18.6 -25.0
China OffShore (Banks)
CNOOC 94.1 16.34 1.24 8.4 37.5
China OffShore (Exploration Production)
Mitsubishi UFJ Finl 63.9 362.00 1.12 8.4 -26.0
Japan (Banks)
Market value,inlocal
Company/Country (Industry)
in billions (U.S)
currency Latest 52-week Three-year
SumitomoCorp.16.8 1,078 1.03% 10.2% 25.3%
Japan (Industrial Suppliers)
Indl CommBk China 58.8 5.25 0.96 6.3 -15.1
China OffShore (Banks)
China ConstructionBank 184.3 5.94 0.85 1.9 -9.6
China OffShore (Banks)
NipponT&T 59.8 3,625 0.83 -7.8 -3.8
Japan (Fixed Line Telecommunications)
JapanTobacco 55.7 2,235 0.81 17.3 75.8
Japan (Tobacco)
TaiwanSmcndtr Mfg 79.7 89.90 0.78 21.7 50.3
Taiwan (Semiconductors)
CheungKong 34.6 115.80 0.70 21.3 17.0
Hong Kong (Real Estate Holding Development)
China Mobile (HK) 227.7 87.80 0.57 14.8 19.0
China OffShore (Mobile Telecommunications)
POSCO 26.9 337,500 0.45 -10.6 -32.2
South Korea (Steel)
Canon 43.0 2,589 0.43 -25.6 -24.3
Japan (Electronic Office Equipment)
Woodside Petroleum 29.1 34.01 0.32 -6.5 -29.5
Australia (Exploration Production)
Takeda Pharm 36.5 3,710 0.27 6.8 3.1
Japan (Pharmaceuticals)
CommonwlthBk of Aus 95.8 57.37 0.17 19.0 12.7
Australia (Banks)
Seven I Hldgs 27.3 2,471 0.12 15.3 23.8
Japan (Broadline Retailers)
WestfieldGrp 24.8 10.58 -0.09 42.6 9.8
Australia (Retail)
Wesfarmers Ltd.40.9 34.01 -0.38 6.7 25.0
Australia (Home Improvement Retailers)
Westpac Bking 79.9 25.03 -0.44 16.3 -2.2
Australia (Banks)
Hyundai Motor Co.Ltd.43.4 215,000 -0.46 -7.3 110.8
South Korea (Automobiles)
National Australia Bk 58.6 24.87 -0.60 -0.2 -13.9
Australia (Banks)
Aus NZBk 70.8 25.15 -0.71 20.3 11.3
Australia (Banks)
Sources:DowJones Indexes;WSJ Market Data Group
Credit derivatives
Spreads oncredit derivatives areonewaythemarket rates
creditworthiness.Regions that aretreadinginroughwaters
canseespreads swingtowardthemaximum—andviceversa.
Indexes belowarefor five-year swaps.
Markit iTraxxIndexes
sincemost recent roll
Index:series/version inpct.pts.Mid-price Coupon Maximum Minimum Average
1.27 98.68% 0.01% 1.41 1.16 1.29
1.97 95.44 0.01 2.11 1.82 1.97
5.13 99.45 0.05 5.81 4.76 5.33
1.20 99.02 0.01 1.43 1.14 1.28
2.11 94.74 0.01 2.27 2.02 2.16
Note:Dataas of November 1
Spreads on five-
year swaps for
corporate debt;
based on Markit
iTraxx indexes.
In percentage points
Europe Senior Financials
Europe Crossover
Index roll
Source:Markit Group
All statistics published in
The Wall Street Journal
Asia from markets outside
the Asian-Pacific region
reflect preliminary data.
markets &
Credit-default swaps:Asiancompanies
Atitsmostbasic,thepricingof credit-defaultswapsmeasureshowmuchabuyer hastopaytopurchase-and
howmuch a seller demands to sell-protection fromdefault on an issuer's debt.The snapshot belowgives a
sensewhichwaythemarket was movingyesterday.
Showingthebiggest improvement...
CHANGE,inbasis points
Five-day 28-day
RenesasElectrs 626 –28 –20 –106
KT&G 68 –3 –5 –16
ChinaConstr Bk 139 –3 –4 –38
276 –5 –10 –1
Natl Agric CoopFedera 92 –2 –10 –13
Nankai Elec Rwy 160 –3 –3 –8
Expt Import BkKorea 75 –1 –2 –16
Advantest 67 –1 –3 –2
Kawasaki KisenKaisha 837 –12 –17 –25
NipponTelegraph Tel 48 –1...–2
Andthemost deterioration
CHANGE,inbasis points
Five-day 28-day
Panasonic 478 99 189 215
SANYOElec 472 95 182 210
Sony 499 43 59 86
NEC 450 25 –49 –149
Hitachi 74 3 –2 –11
SwirePac 97 3...–9
RicohCo 223 6 9 27
KoreaDepIns 69 2 1 –14
KookminBk 86 2..–13
CapitaLand 186 4 8 5
Source:Markit Group
Follow the markets throughout the day,with updated
stock quotes,news and commentary at
Also,receive emails that summarize the day’s trading in
Europe and Asia.To sign up,go to
BehindEurope's deals:Bankrevenue rankings,France
BehindeveryIPO,bondoffering,merger deal or syndicatedloanis oneor moreinvestment banks.Hereare
investment banks rankedbyyear-to-daterevenues fromrecent deals.
Equity Debt Mergers &
share capital markets capital markets acquisitions Loans
BNPParibas $162 11.1% 12% 47% 30% 11%
SGCorporate Investment Banking
130 8.9 16 47 22 15
Credit AgricoleCIB 115 7.8 6 56 16 22
Natixis 95 6.5 2 78 3 17
JPMorgan 77 5.2...44 49 7
HSBC 73 5.0 11 60 13 16
DeutscheBank 62 4.3 3 36 56 5
MorganStanley 61 4.2 16 27 57 1
3.5 2 37 55 6
THE WALL STREET JOURNAL.Monday,November 5,2012 |
Follow the markets throughout the day with updated stock quotes,news and commentary at at,receive email alerts that summarize the day’s trading in Europe and Asia.To sign
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Prices of futures contracts withthemost openinterest
EXCHANGELEGEND:CBOT:Chicago Board of Trade;CME:Chicago Mercantile Exchange;NYBOT:NewYork Board of Trade;MDEX:Bursa Malaysia
Derivatives Berhad;LIFFE:London International Financial Futures Exchange;LME:London Mercantile Exchange;NYMEX:NewYork Mercantile Exchange;
Year Year
Commodity Exchange Last price Net Percentage high low
740.25 -10.75
849.00 499.00
1525.75 -34.25
1,781.50 1,183.00
866.50 -2.00
953.25 629.50
Live cattle
125.300 -0.025
135.550 122.400
2,444 24
2,707 2,050
154.50 1.05
247.10 152.80
19.41 0.03
25.13 19.18
70.30 0.09
97.39 64.61
479.00 -5.25
520 396
1,577 17
1,737 1,380
Robusta coffee
1,974 -10
2,226 1,935
3.4825 -0.0695
4.02 3.26
($/troy oz.)
1679.60 -35.90
1,800.90 1,535.40
($/troy oz.)
30.970 -1.278
37.65 26.22
1,960.00 27.50
2,349.00 1,831.00
20,295.00 -150.00
25,700.00 17,675.00
7,785.00 -30.50
8,647.00 7,270.00
2,135.00 25.00
2,322.00 1,760.00
1,892.00 3.00
2,195.50 1,756.50
16,200 -195
21,880 15,260
Crude oil
84.87 -2.22
110.25 79.11
2.9519 -0.0813
3.3517 2.5428
2.5770 -0.0566
2.9554 2.1726
Natural gas
3.669 -0.149
4.0880 3.0950
Brent crude
104.95 -2.39
120.77 90.16
Gas oil
918.75 -21.00
1,040.25 798.00
Sources:SIXFinancial Information;WSJ Market Data Group
Per In
Per euro In euros U.S.dollar U.S.dollars
Argentina peso-a 6.1289 0.1632 4.7719 0.2096
Brazil real 2.6086 0.3833 2.0311 0.4924
Canada dollar 1.2772 0.7830 0.9944 1.0056
Chile peso 617.27 0.001620 480.60 0.002081
Colombia peso 2347.11 0.0004261 1827.43 0.0005472
Ecuador USdollar-f 1.2844 0.7786 1 1
Mexico peso-a 16.6887 0.0599 12.9936 0.0770
Perusol 3.3355 0.2998 2.5970 0.3851
Uruguay peso-e 25.495 0.0392 19.850 0.0504
U.S.dollar 1.2844 0.7786 1 1
Venezuela bolivar 5.59 0.178985 4.35 0.229885
Australia dollar 1.2386 0.8073 0.9644 1.0369
1-mo.forward 1.2416 0.8054 0.9667 1.0345
3-mos.forward 1.2476 0.8015 0.9714 1.0294
6-mos.forward 1.2560 0.7962 0.9779 1.0226
China yuan 8.0224 0.1247 6.2462 0.1601
HongKong dollar 9.9541 0.1005 7.7501 0.1290
India rupee 69.1195 0.0145 53.8155 0.0186
Indonesia rupiah 12349 0.0000810 9615 0.0001040
Japanyen 103.42 0.009669 80.52 0.012419
1-mo.forward 103.40 0.009671 80.50 0.012422
3-mos.forward 103.33 0.009678 80.45 0.012430
6-mos.forward 103.23 0.009687 80.37 0.012442
Malaysia ringgit-c 3.9203 0.2551 3.0523 0.3276
NewZealand dollar 1.5542 0.6434 1.2101 0.8264
Pakistanrupee 122.652 0.0082 95.495 0.0105
Philippines peso 52.789 0.0189 41.101 0.0243
Singapore dollar 1.5711 0.6365 1.2232 0.8175
SouthKorea won 1402.22 0.0007132 1091.75 0.0009160
Taiwandollar 37.529 0.02665 29.220 0.03422
Thailand baht 39.536 0.02529 30.783 0.03249
Per In
Per euro In euros U.S.dollar U.S.dollars
Euro zone euro 1 1 0.7786 1.2844
1-mo.forward 0.9997 1.0003 0.7784 1.2847
3-mos.forward 0.9991 1.0009 0.7779 1.2856
6-mos.forward 0.9982 1.0018 0.7772 1.2867
CzechRep.koruna-b 25.246 0.0396 19.656 0.0509
Denmark krone 7.4594 0.1341 5.8078 0.1722
Hungary forint 281.67 0.003550 219.30 0.004560
Norway krone 7.3599 0.1359 5.7303 0.1745
Polandzloty 4.1088 0.2434 3.1990 0.3126
Russia ruble-d 40.423 0.02474 31.472 0.03177
Swedenkrona 8.5995 0.1163 6.6954 0.1494
Switzerland franc 1.2070 0.8285 0.9397 1.0641
1-mo.forward 1.2065 0.8289 0.9393 1.0646
3-mos.forward 1.2052 0.8298 0.9383 1.0657
6-mos.forward 1.2032 0.8311 0.9368 1.0675
Turkey lira 2.3004 0.4347 1.7910 0.5583
U.K.pound 0.8013 1.2480 0.6239 1.6029
1-mo.forward 0.8014 1.2478 0.6239 1.6027
3-mos.forward 0.8015 1.2476 0.6241 1.6024
6-mos.forward 0.8018 1.2472 0.6243 1.6019
Bahraindinar 0.4842 2.0653 0.3770 2.6526
Egypt pound-a 7.8402 0.1275 6.1043 0.1638
Israel shekel 4.9976 0.2001 3.8911 0.2570
Jordandinar 0.9091 1.0999 0.7079 1.4127
Kuwait dinar 0.3620 2.7621 0.2819 3.5476
Lebanonpound 1931.65 0.0005177 1503.95 0.0006649
Saudi Arabia riyal 4.8168 0.2076 3.7503 0.2666
SouthAfrica rand 11.2569 0.0888 8.7645 0.1141
UnitedArabdirham 4.7175 0.2120 3.6730 0.2723
a-floatingrateb-commercial ratec-government ratec-commercial rated-RussianCentral Bank rate.
Major stockmarket indexes
Stockindexes fromaroundtheworld,groupedbyregion.Showninlocal-currencyterms.
Region/Country Index Close Net change Percentage change Yr.-to-date
ASIA-PACIFIC DJ Asia-Pacific 126.63 0.73
Australia SPX/ASX200 4460.10 2.50
9.9 4.2
China CBN600 19294.65 83.57
-0.9 -16.8
Hong Kong Hang Seng 22111.33 289.46
19.9 11.4
India Sensex 18755.45 193.75
21.4 6.8
Indonesia Jakarta Composite 4338.89 3.530
13.5 14.7
Japan Nikkei Stock Average 9051.22 104.35
7.0 2.8
Topix 752.09 8.77
Malaysia Kuala Lumpur Composite 1656.13 -19.56
8.2 12.1
NewZealand NZSX-50 3914.08 -17.81
19.5 17.5
Pakistan KSE100 16101.55 139.18
41.9 34.7
Philippines Manila Composite 5424.51
24.1 27.3
Singapore Straits Times 3040.75 14.14
14.9 6.8
South Korea Kospi 1918.72 20.28
5.1 -0.5
Taiwan Weighted 7210.47 30.83
2.0 -5.2
Thailand SET 1306.60 8.61
27.4 36.5
EUROPE Stoxx Europe 600 274.85 1.15
12.4 14.6
Stoxx Europe 50 2561.55 8.38
8.1 12.3
Region/Country Index Close Net change Percentage change Yr.-to-date
EuroZone Euro Stoxx 252.17 1.31
Euro Stoxx 50 2547.15 13.28
10.0 11.2
Denmark OMXCopenhagen 446.91 3.84
25.3 33.2
Finland OMXHelsinki 5634.91 61.50
5.2 -0.2
France CAC-40 3492.46 17.06
10.5 11.8
Germany DAX 7363.85 28.18
24.8 23.4
Italy FTSEMIB 15769.28 -37.45
4.5 2.8
Netherlands AEX 337.60 2.17
8.0 11.8
Russia RTSI 1444.19 0.69
4.5 -6.4
Spain IBEX35 7968.9 82.50
-7.0 -7.3
Switzerland SMI 6701.37 41.12
12.9 18.4
Turkey ISENational 100 71422.61 -1129.90
39.3 27.1
U.K.FTSE100 5868.55 6.63
5.3 6.2
AMERICAS DJ Americas 366.53 -3.44
11.3 10.5
Brazil Bovespa 58382.68
2.9 -0.5
Argentina Merval 2395.13 44.80
-2.7 -13.3
Mexico IPC 41761.78
12.6 13.8
EuropeanandAmericasindexdataareasof 5:00p.m.ET.
Sources:SIXFinancial Information;WSJ Market DataGroup
Cross rates
U.S.-dollar andeuroforeign-exchangerates inglobal trading
U.S.0.964 0.624 0.994 6.246 0.779 7.750 53.815 9614.95 80.523 1.210 1091.75 3.052 41.101 1.223 0.940 29.220 30.783
Australia 1.037 0.647 1.031 6.477 0.807 8.036 55.803 9969.97 83.496 1.255 1132.06 3.165 42.618 1.268 0.974 30.298 31.919
Britain 1.603 1.546 1.594 10.012 1.248 12.423 86.260 15411.60 129.069 1.940 1749.93 4.892 65.879 1.961 1.506 46.835 49.341
Canada 1.006 0.970 0.627 6.281 0.783 7.794 54.119 9669.26 80.978 1.217 1097.91 3.069 41.333 1.230 0.945 29.385 30.956
China 0.1601 0.154 0.100 0.159 0.125 1.241 8.616 1539.34 12.892 0.194 174.79 0.489 6.580 0.196 0.150 4.678 4.928
Euro 1.284 1.239 0.801 1.277 8.022 9.954 69.120 12349.26 103.422 1.554 1402.22 3.920 52.789 1.571 1.207 37.529 39.536
HongKong 0.129 0.124 0.080 0.128 0.806 0.100 6.944 1240.62 10.390 0.156 140.87 0.394 5.303 0.158 0.121 3.770 3.972
India 0.0186 0.0179 0.0116 0.0185 0.1161 0.0145 0.1440 178.67 1.4963 0.0225 20.29 0.0567 0.7637 0.0227 0.0175 0.5430 0.5720
Indonesia 0.0001 0.0001 0.0001 0.0001 0.0006 0.0001 0.0008 0.0056 0.0084 0.0001 0.11 0.0003 0.0043 0.0001 0.0001 0.0030 0.0032
Japan 0.012 0.012 0.008 0.012 0.078 0.010 0.096 0.668 119.41 0.015 13.56 0.038 0.510 0.015 0.012 0.363 0.382
NewZealand 0.826 0.797 0.516 0.822 5.162 0.643 6.404 44.471 7945.50 66.542 902.18 2.522 33.964 1.011 0.777 24.146 25.438
SouthKorea 0.0009 0.0009 0.0006 0.0009 0.0057 0.0007 0.0071 0.0493 8.81 0.0738 0.0011 0.0028 0.0376 0.0011 0.0009 0.0268 0.0282
Malaysia 0.328 0.316 0.204 0.326 2.046 0.255 2.539 17.631 3150.12 26.382 0.396 357.69 13.466 0.401 0.308 9.573 10.085
Philippines 0.024 0.023 0.015 0.024 0.152 0.019 0.189 1.309 233.94 1.959 0.029 26.56 0.074 0.030 0.023 0.711 0.749
Singapore 0.818 0.788 0.510 0.813 5.106 0.637 6.336 43.995 7860.32 65.828 0.989 892.51 2.495 33.600 0.768 23.887 25.165
Switzerland 1.064 1.026 0.664 1.058 6.647 0.829 8.247 57.267 10231.56 85.687 1.288 1161.76 3.248 43.736 1.302 31.093 32.757
Taiwan 0.034 0.033 0.021 0.034 0.214 0.027 0.265 1.842 329.06 2.756 0.041 37.36 0.104 1.407 0.042 0.032 1.053
Thailand 0.032 0.031 0.020 0.032 0.203 0.025 0.252 1.748 312.35 2.616 0.039 35.47 0.099 1.335 0.040 0.031 0.949
earnings Net Year- Three-yr.,
yield* ratio* Dows Jones Index Last change Daily to-date 52-wk.annualized
1.29% 21 Shenzhen -c 293.71 0.96 0.33% -0.6% -19.5% -8.2%
2.10 17 U.S.TSM 14639.53
-1.01 12.4 12.4 11.4
5.38 12 Global Select Div -d 216.82 -1.16 -0.53 7.7 4.3 4.2
5.57 9
Asia/Pacific Select Div -d
329.95 -0.08 -0.03 18.4 10.6 8.0
3.62 6
HongKongSelect Div -d
190.02 1.13 0.60 10.2 6.1 2.3
3.94 16
U.S.Select Dividend -d
413.28 -5.15 -1.23 6.8 10.0 12.1
2.05 16 Islamic Market 2256.87 -15.73 -0.69 9.1 5.9 7.1
2.25 15 Islamic Market 100 2442.97 -18.81 -0.76 9.8 10.0 7.1
2.59 10
Islamic China/HKTitans30
1634.27 18.90 1.17 16.4 8.6 4.8
1.44 13 SustainabilityKorea 1362.57 17.18 1.28 7.0 -3.4 6.8
3.27 23
2745.85 -16.75 -0.61 9.5 12.5 14.6
DJ-UBSCommodity-p 140.37 -2.72 -1.90 -0.2 -6.1 1.8
MSCI indexes
Developedandemerging-market regional andcountryindexes
fromMSCI Barraas of November.02,2012
MorganStanleyIndex Last Daily YTD 52-wk.
331.82 -0.83% 10.8% 6.9%
World(DevelopedMarkets) 1,313.19 -0.89 11.0 7.9
WorldSmall Cap 238.33 -1.20 12.6 8.7
Kokusai (Worldex-Japan) 1,327.48 -0.99 12.4 9.3
EAFE 1,531.52 -0.61 8.4 1.8
EmergingMarkets (EM) 999.63 -0.43 9.1 0.4
442.75 0.11 12.7 3.5
ACFar East ex-Japan 491.18 -0.14 12.4 5.2
Japan 455.38 0.02 2.1 -3.1
China 59.59 1.27 12.6 5.7
ChinaA(ChinaDomestic) 2,211.17 1.91 -1.7 -15.2
0.77 20.6 13.4
India 723.31 0.56 21.0 4.2
1.20 11 Korea 541.97 -1.00 4.3 -0.2
Malaysia 593.72 0.36 6.1 8.1
-0.53 13.5 4.7
Taiwan 257.76 0.18 1.4 -4.3
Thailand 480.55 0.12 18.2 20.2
Australia 906.21 -1.27 10.2 3.7
NewZealand 94.96 -0.91 11.9 12.0
-1.17 13.6 13.7
EUROPE 94.33 1.27 11.0 11.7
*Twenty-threedevelopedand26emergingmarkets Source:MSCI Barra
*Fundamentals arebasedondatainU.S.dollar.Footnotes:c-inlocal currency.d-dividends reinvested.p-previous day.Note:All dataas of 11:30a.m.ET.Source:DowJones Indexes
DowJones Indexes
earnings Net Year- Three-yr.,
yield* ratio* Dows Jones Index Last change Daily to-date 52-wk.annualized
2.41% 16 Global TSM 2587.67 -11.56 -0.44% 10.4% 7.4% 5.7%
2.86 22 Global DOW 1932.44 -4.06 -0.21 7.2 3.9 1.2
2.74 14 Global Titans50 193.61 -1.50 -0.77 11.0 11.8 5.3
2.91 15 Asia/Pacific TSM 1249.69 7.14 0.57 7.6 1.6 2.5
2.99 13
Asia/Pacific ex-JapanTSM
3285.53 17.06 0.52 13.3 4.1 4.8
2.97 18 EuropeTSM 2618.35 -7.29 -0.28 11.5 7.0 0.3
2.72 8
4077.59 11.30 0.28 9.5 0.8 2.6
3.34 11 AsianTitans50 130.17 0.97 0.75 9.1 4.7 0.3
3.59 8 BRIC50 516.10 2.35 0.46 3.9 -6.2 -3.1
1.88 13 CBNChina600 -c 19294.65 83.57 0.44 -0.9 -16.8 -10.9
2.89 8 ChinaOffshore50 3888.64 36.03 0.94 9.9 1.6 -1.2
1.94 13 Shanghai -c 262.88 1.42 0.54 -0.8 -16.9 -10.2
| Monday,November 5,2012 THE WALL STREET JOURNAL.
DowJones Industrial Average
139.46,or 1.05%
875.60,or 7.2%
1,109.92,or 9.3%
*Price-to-earnings ratio for the Nasdaq 100 Note:Price-to-earnings ratios are for trailing 12 months
Sources:WSJ Market Data Group;Birinyi Associates
moving average
Nasdaq Composite Index
37.93,or 1.26%
376.98,or 14.5%
295.98,or 11.0%
S&P500 Index
13.39,or 0.94%
156.60,or 12.5%
160.97,or 12.8%
DJIAcomponent stocks
Stock Symbol inmillions Latest Points Percentage
AT&T T 23.1 $34.93 –0.16 –0.46%
Alcoa AA 13.4 8.65 –0.10 –1.14
AmExpress AXP 6.0 56.71 –0.14 –0.25
BankAm BAC 220.0 9.85 0.11 1.13
Boeing BA 4.2 70.05 –0.74 –1.05
Caterpillar CAT 6.8 85.79 –1.86 –2.12
Chevron CVX 8.2 108.37 –3.09 –2.77
CiscoSys CSCO 28.6 17.35 –0.15 –0.89
CocaCola KO 10.9 37.08 –0.25 –0.67
Disney DIS 9.3 49.86 0.08 0.16
DuPont DD 8.4 44.15 –0.85 –1.89
ExxonMobil XOM 12.5 90.27 –1.33 –1.45
GenElec GE 44.9 21.31 –0.03 –0.14
HewlettPk HPQ 26.6 13.76 –0.24 –1.71
HomeDpt HD 8.7 62.02 –0.24 –0.39
Intel INTC 51.5 22.06 –0.20 –0.90
IBM IBM 4.1 193.43 –3.72 –1.89
JPMorgChas JPM 16.8 42.42 –0.42 –0.98
JohnsJohns JNJ 7.7 70.90 –0.60 –0.84
McDonalds MCD 7.7 86.86 0.06 0.07
MRK 10.9 46.00 0.06 0.13
Microsoft MSFT 56.9 29.50 –0.02 –0.05
Pfizer PFE 30.8 24.55......
ProctGamb PG 6.8 69.19 –0.06 –0.09
3M MMM 2.9 88.97 –0.28 –0.31
TravelersCos TRV 5.0 69.62 –0.61 –0.87
UnitedTech UTX 4.7 78.07 –0.99 –1.25
UtdHlthGp UNH 4.7 56.05 –0.90 –1.58
Verizon VZ 12.0 44.52 –0.62 –1.37
WalMart WMT 8.4
U.S.stocks:most active...
Stock Symbol in millions Latest Points Percentage
BankAm BAC 220.0 $9.85 0.11 1.13%
SPDRS&P500 SPY 131.2 141.56 –1.27 –0.89
SiriusXM SIRI 68.3 2.90 0.09 3.20
Microsoft MSFT 56.9 29.50 –0.02 –0.05
AmIntlGp AIG 56.1 32.68 –2.52 –7.16
iShrMSCIEmrgMkt EEM 53.7 41.60 –0.22 –0.53
FordMotor F 52.9 11.17 –0.08 –0.71
SPDRFnclSelSct XLF 52.2 16.00 –0.09 –0.59
Intel INTC 51.5 22.06 –0.20 –0.90
GenElec GE 44.9 21.31 –0.03 –0.14
SprintNextel S 41.3 5.70 0.09 1.60
PwrShrsQQQ QQQ 41.0 65.17 –0.70 –1.07
iShrRu2000 IWM 39.3 81.19 –1.30 –1.57
FacebookClA FB 38.2 21.18 –0.03 –0.14
AlphaNtrlRes ANR
9.06 0.20
Biggest gainers...
BigFvSprts BGFV 2,044.1 $12.02 3.10 34.76%
RestorationHardwr RH 6,837.7 31.10 7.10 29.58
EnzoBiochm ENZ 2,952.2 2.78 0.48 20.87
AssistLivngA ALC 779.6 9.64 1.63 20.35
TripAdvisor TRIP 12,206.4 35.12 5.71 19.42
...Biggest losers
ActiveNetwork ACTV 16,192.6 $5.42 –3.87 –41.66%
GluMobile GLUU 8,926.7 2.56 –0.70 –21.47
GlobusMedical GMED 1,582.5 14.38 –3.29 –18.62
SkywrkSol SWKS 17,233.9 19.95 –4.13 –17.15
ChinaHGSRealEst HGSH 1,100.3 2.25 –0.46 –16.97
ADRs of Asiancompanies*
High Low Stock Symbol inOOOs Latest Points
$16.31 $12.00 TaiwanSemi TSM 6,865.4 $15.77 –0.34 –2.11%
154.15 99.71 BaiduADS BIDU 5,967.3 105.09 –1.61 –1.51
30.08 8.79 FocusMediaHldg
5,459.8 24.91 1.05 4.39
13.78 9.27 KoreaElecPwr KEP 4,593.1 13.28 –0.46 –3.35
36.41 12.36 CtripInt ADS
3,673.6 20.34 0.05 0.24
4.40 0.71 SuntechPwr STP 3,198.1 1.00 0.18 21.95
22.35 10.91 SonyADS SNE 2,733.8 11.33 –0.49 –4.15
82.23 59.87 BHPBiltonADS BHP 2,105.5 70.93 –0.81 –1.13
30.63 14.86 TataMtrsADS TTM 1,802.5 25.26 –0.26 –1.02
18.83 14.03 NTTDoCoMoADS DCM 1,727.6 14.37 –0.28 –1.91
16.22 10.85 SKTeleADS SKM 1,482.0 15.76 –0.18 –1.13
60.86 37.93 InfosysADS INFY 1,285.2 43.81 –0.11 –0.25
5.98 2.70 AUOptrncs AUO 1,200.2 4.01......
35.16 27.28 DrRdyLabADS RDY 1,105.6 33.15......
9.56 5.00 Panasonic ADS PC 1,097.8 5.00 –0.23 –4.40
15.70 8.41 LGDisplayADS LPL 1,093.4 15.55 0.28 1.83
5.36 4.01 MitsuUFJ ADS MTU 1,072.9 4.46
21.74 12.16 ChinaUnicomHK CHU 982.9 16.09 –0.41 –2.48
2.77 1.83 UtdMicroADS UMC 880.6 1.84 –0.02 –1.08
42.49 24.14 ICICI BkADS IBN 645.8 40.25 0.17 0.42
4.74 3.14 AdSemEgADS ASX 599.2 3.71
11.49 7.56 WiproADS WIT 592.0 8.51 –0.10 –1.16
48.48 29.81 CanonADS CAJ 544.6 31.69 –0.86 –2.64
65.54 40.69 Netease
487.1 54.28 –1.67 –2.98
41.14 29.26 TelkomIndo TLK 467.7 39.22 –0.31 –0.78
59.45 46.26 ChinaMobile CHL 463.0 56.15 –0.24 –0.43
6.19 3.95 Slcnwr ADS SPIL 447.8 4.78 0.03 0.63
17.08 11.64 KTCrpADS KT 385.9 16.93 –0.02 –0.12
39.32 24.47 HDFCBnk HDB 331.9 37.52 –0.14 –0.37
39.35 27.52 HondaMtr ADS HMC 288.2 30.47 0.12 0.40
*Most activeAmericandepositaryreceipts trackedbyDowJones
Source:WSJ Market DataGroup
Global government bonds
Latest,month-agoandyear-agoyields andspreads over or under U.S.Treasurys onbenchmarktwo-year
and10-year government bonds aroundtheworld.Dataas of 12p.m.ET
Coupon Maturity,inyears Yield Latest Previous MonthAgo Year ago Previous Monthago Year ago
4.300 Austria* 2 0.130 -15.6
-11.8 71.0 0.137 0.117 0.956
3.650 10 1.948 21.9
31.1 91.5 1.956 1.934 2.913
4.000 Belgium 2 0.197 -8.9
7.4 244.0 0.212 0.308 2.686
4.000 10 2.415 68.6
91.8 235.9 2.410 2.541 4.357
3.125 Finland* 2 0.032 -25.4
-16.2 15.6 0.059 0.072 0.402
3.500 10 1.741 1.2
12.3 19.9 1.754 1.746 2.197
2.500 France 2 0.170 -11.6
-6.8 79.2 0.168 0.167 1.038
3.250 10 2.108 37.9
56.4 108.7 2.096 2.188 3.085
0.250 Germany 2 0.003 -28.3
-18.4 18.0 0.028 0.051 0.427
1.750 10 1.448 -28.1
-16.3 -17.9 1.462 1.460 1.820
n.a.Greece 2 n.a....
3.000 Italy 2 2.370 208.4
197.6 503.2 2.353 2.211 5.278
5.000 10 4.876 314.7
333.4 410.7 4.827 4.958 6.105
Netherlands 2
0.056 -23.0
-14.7 37.2 0.061 0.087 0.618
2.250 10 1.705 -2.4
10.8 25.7 1.719 1.731 2.256
5.450 Portugal* 2 5.056 477.0
405.6 1901.7 4.679 4.290 19.263
3.850 10 8.294 656.5
718.2 1095.2 8.093 8.805 12.950
6.750 Spain 2 3.031 274.5
289.4 369.1 2.898 3.129 3.938
3.500 10 5.645 391.6
408.8 340.7 5.546 5.711 5.406
2.250 U.K.2 0.254 -3.2
-3.9 24.9 0.263 0.195 0.495
4.000 10 1.856 12.7
8.0 5.7 1.869 1.703 2.055
0.250 U.S.2 0.286...
......0.293 0.234 0.246
2.000 10
1.623 1.999
Source:Tullett Prebon,except * markedcountries fromICAPplc
Latest 52wks ago
U.S.3.25% 3.25%
Canada 3.00 3.00
Japan 1.475 1.475
Britain 0.50 0.50
ECB 0.75 1.50
Switzerland 0.53 0.51
Australia 3.25 4.50
HongKong 5.00 5.00
Onemonth 0.20900% 0.24750%
Threemonth 0.31275 0.43750
Sixmonth 0.53800 0.63111
Oneyear 0.87500 0.94883
Latest 52wks ago
Onemonth 0.05500% 1.19563%
Threemonth 0.13071 1.44125
Sixmonth 0.27179 1.65875
Oneyear 0.54357 2.00875
Onemonth 0.11000% 1.24700%
Threemonth 0.19700 1.48800
Sixmonth 0.38500 1.70100
Oneyear 0.61100 2.04400
Onemonth 0.28000% 0.22000%
Threemonth 0.39643 0.29071
Sixmonth 0.54571 0.40000
Oneyear 0.85571 0.71071
Offer Bid
Onemonth 0.2500% 0.1500%
Threemonth 0.3500 0.2500
Sixmonth 0.5000 0.4000
Oneyear 0.8000 0.7000
Latest 52wks ago 0.75% 0.75%
Fed-fundstarget 0.00 0.00
Call money 2.00 2.00
Overnight repurchaserates
U.S.0.27% 0.08%
U.K.(BBA) 0.430 0.505
Eurozone 0.02 0.62
Sources:WSJ Market DataGroup,SIXFinancial Information,ICAP
The curve shows the yield to maturity of current bills,notes and bonds;all data as of 3 p.m.ET.
One year ago
Yield to Modified Month Quarter Year
Ryan Index maturity duration to-date to-date to-date 12-month
30-year Treasury 2.919% 19.93 –1.33% –1.46% 2.77 % 6.81 %
10-year Treasury 1.728 8.97 –0.38 –0.67 4.55 7.10
7 Year Treasury 1.168 6.68 –0.21 –0.53 3.54 5.44
Five-year Treasury 0.729 4.89 –0.07 –0.33 2.49 3.31
RyanIndex 1.203 7.57 –0.33 –0.53 2.50 4.14
3 Year Treasury 0.386 2.94 –0.01 –0.18 0.52 0.75
Two-year Treasury 0.285 1.99...–0.07 0.42 0.59
1 Year Treasury 0.178 0.96......0.15 0.17
Six-monthTreasury 0.152 0.50...0.01 0.06 0.12
RyanCashIndex-a 0.117 0.44...0.01 0.10 0.12
Three-monthbill 0.096 0.25...0.01 0.10 0.10
One-monthbill 0.041 0.07...0.01 0.07 0.08
a-Performance of a cash investment
Source:Ryan ALM
THE WALL STREET JOURNAL.Monday,November 5,2012 |
Asianstocks inthenews
Want Want ChinaHoldings Ltd.
Hong Kong HK$11.40
s 4.0% or
Thesnack-foodmaker hit a52-week
highas theHangSengendedat a15-
In Hong Kong dollars
Price-to-earnings ratio N.A.
Earnings per share,past four quarters N.A.
Dividend yield 1.2
Daily 1 wk.52 wks
Food &Beverage 0.3% -0.1% 9.5%
Want Want China Holdings Ltd.
4.0% 4.2% 61.2%
Mitsubishi EstateCo.Ltd.
Japan ¥1,665
s 4.1% or
Earnings fromdeveloper Mitsui Fudosan
boostedstocks across thesector,
includingthis one.
In yen
Price-to-earnings ratio 32
Earnings per share,past four quarters N.A.
Dividend yield 0.7
Daily 1 wk.52 wks
Real Estate 1.1% 1.5% 23.3%
Mitsubishi Estate Co.Ltd.4.1% 3.4% 26.6%
SamsungHeavyIndustries Co.Ltd.
Korea 34,700won
s 6.1% or
Theshipbuilder reportedsolidearnings
In won
Price-to-earnings ratio 10
Earnings per share,past four quarters N.A.
Dividend yield 1.4
Daily 1 wk.52 wks
Indus Gds &Svcs 1.0% 1.7% -1.7%
Samsung Heavy Industries Co.Ltd.
6.1% -2.9% 11.2%
GalaxyEntertainment GroupLtd.
Hong Kong HK$29.05
s 7.6% or
Gamblingrevenueacross theMacau
sector roseabetter-than-expected3.2%
In Hong Kong dollars
Price-to-earnings ratio N.A.
Earnings per share,past four quarters N.A.
Dividend yield N.A.
Daily 1 wk.52 wks
Travel &Leisure 1.1% 0.8% 6.9%
Galaxy Entertainment Group Ltd.
7.6% 6.4% -40.5%
ChowTai FookJewelleryGroupLtd.
Hong Kong HK$10.58
s 9.6% or
Thejeweler couldprofit fromfavorable
economic policies at thepartycongress
that begins Thursday
In Hong Kong dollars
Price-to-earnings ratio N.A.
Earnings per share,past four quarters N.A.
Dividend yield 0.9
Daily 1 wk.52 wks
Retail -0.1% -0.4% 2.5%
ChowTai Fook Jewellery Group Ltd.
9.6% 10.6% 0.0%
Australia A$30.66
t 2.3% or
Shares went ex-dividend.
In Australian dollars
Price-to-earnings ratio N.A.
Earnings per share,past four quarters N.A.
Dividend yield N.A.
Daily 1 wk.52 wks
Financial Services 1.3% 1.9% 5.7%
Macquarie Group Ltd.-2.3% 1.4% 31.9%
Japan ¥165
t 2.4% or
Fitchdowngradedits debt to‘junk’ aday
after it warnedit might not beableto
surviveonits own
In yen
Price-to-earnings ratio N.A.
Earnings per share,past four quarters N.A.
Dividend yield 6.1
Daily 1 wk.52 wks
Personal &Hshld Gds 0.3% -0.4% -2.7%
Sharp Corp.-2.4% 1.3% -75.6%
Malaysia 6.2 ringgit
t 4.9% or
Investors cashedinonrecent gains inthe
telecomsector.This oneis still upnearly
20%this year
In ringgit
Price-to-earnings ratio 22
Earnings per share,past four quarters N.A.
Dividend yield N.A.
Daily 1 wk.52 wks
Telecommunications 0.0% -0.6% 5.1%
Axiata Group Bhd -4.9% -18.7% -57.2%
Taiwan TW$197.00
t 5.7% or
Margincalls after thestockbroke
NT$200for thefirst timeaccelerated
theday’s decline.
In Taiwan dollars
Price-to-earnings ratio 6
Earnings per share,past four quarters N.A.
Dividend yield 20.3
Daily 1 wk.52 wks
Technology 0.9% 1.7% 0.8%
HTCCorp.-5.7% -13.7% -35.0%
Japan ¥1,928
t 6.1% or
Fiscal second-quarter net profit slid17%
onaslowdowninthesemiconductor and
In yen
Price-to-earnings ratio 17
Earnings per share,past four quarters N.A.
Dividend yield 2.0
Daily 1 wk.52 wks
Personal &Hshld Gds 0.3% -0.4% -2.7%
Nikon Corp.-6.1% -20.5% -52.4%
Moving the
At right,Japan’s benchmarkstockindex
andthebiggest movers amongthe
larger Asianstocks indexes andstocks
Friday.Beloweachindexareits most
activelytradedstocks.Thecharts show
thepercentagechangeineachindex’s or
stock’s value,rather thanthepoint
change,for purposes of comparison.The
indexlevel or stockpriceis indicatedon
eachaxis.All indexes andstocks are
showninlocal currencyterms.
Nikkei StockAverage
Japan 9051.22
1.17% or 104.35
Stock inmillions Close Net %
Panasonic 100.14 411 -3 –0.72
Sharp 56.30 165 -4 –2.37
NomuraHldgs 44.59 298 12 4.20
Toshiba 36.31 296 2 0.68
MitsuUFJFin 35.85 362 4 1.12
HongKong 22111.33
1.33% or 289.46
Stock inmillions Close Net %
BankofChina 397.73 3.25 0.04 1.25
Ind&Comml 333.39 5.25 0.05 0.96
286.55 5.94 0.05 0.85
100.29 8.48 0.08 0.95
PetroChina 97.48 10.66 0.14 1.33
SouthKorea 1918.72
1.07% or 20.28
Stock inmillions Close Net %
YungjinPharm 44.64 2,315.00 300.00 14.89
Mirae 22.94 508.00 –5.00 –0.97
22.74 2,925.00 –95.00 –3.15
KukjePharmIndl 19.53 2,600.00 –120.00 –4.41
12.85 2,600.00 … …
India 18755.45
1.04% or 193.75
Stock inmillions Close Net %
TataMotors 11.07 270.05 2.60 0.97
Wipro 5.10 364.60 3.35 0.93
3.60 101.55 1.95 1.96
ICICIBank 2.08 1,079.65 22.30 2.11
1.76 2,152.45 36.95 1.75
A weak yen and buying in real-estate
plays easily offset earnings-related sell-
ing in Sharp,Nikon,and Ibiden on Fri-
day.The index rose 1.3% on the week.
The benchmark hit its highest close
since Aug.2,2011,and the week’s 2.6%
climb was the best weekly showing
since mid-September.
Tech stocks and battered shipbuilders
led Friday’s advance,the fourth gain in
five sessions.The week’s 1.4% rise was
the best in seven weeks.
This was the biggest one-day gain
since Sept.21,and it powered the mar-
ket to its 11th weekly rise in the last 14
Follow the markets throughout the
day,with updated stock quotes,news
and commentary at
Also,receive emails that summarize
the day’s trading in Europe and Asia.
To sign up,go to
| Monday,November 5,2012 THE WALL STREET JOURNAL.
ABrighter Past
Initially reported gains in U.S.
employment,and the gains
after revisions
The Wall Street Journal
Source:U.S.Labor Department
300 thousand
Initially reported
New Job:Lifting CEO Spirits
The Labor Department has been
revising its job figures upward.Per-
haps investors should do the same
with their view of the economy.
Friday’s employment report
showed the economy added 171,000
jobs in October.That is better than
the 125,000 gain economists had
been looking for,and came despite a
loss of 13,000 government jobs.
The rise in the unemployment
rate to 7.9% from7.8% a month ear-
lier reflected not a deteriorating la-
bor market but an increase in the
number of people looking for work.
That suggests that an improving job
market has begun drawing people
who had quit looking for work back
into the hunt.
But pleasing as the October fig-
ures were,the revisions to data
from prior months were more tell-
ing.The Labor Department now
says that there was a gain of
148,000 jobs in September,rather
than the 114,000 it reported a
month ago.
The August job gain,meanwhile,
has been bumped up to 192,000
from an initial 96,000.
When it prepares the monthly
employment report,the Labor De-
partment usually only has responses
fromabout 70% of the employers it
surveys for the job count.In the
later months,the employer response
rate climbs to about 95%,and the
Labor Department is able to make a
more accurate job count.
One takeaway from the revised
figures is that September’s drop in
the unemployment rate to 7.8% from
8.1% in August may have partly re-
flected an improving job market
rather than some statistical fluke.
Indeed,while the survey of
households that underlies the unem-
ployment-rate calculation covers a
smaller share of the workforce than
the employer survey does,it can be
more sensitive to shifts in the tenor
of the job market.
The revisions also help explain
why consumers have been feeling
upbeat lately.Getting a job,seeing
people around you getting jobs and
not worrying about losing a job are
all great mood improvers.
What is most surprising is that
the job gains are coming in an envi-
ronment where business sentiment
has been battered by weakness
abroad,uncertainty surrounding the
election and Washington’s failure so
far to address the spending cuts and
expiration of the Bush-Obama tax
cuts set for Dec.31.
In a survey conducted late in the
third quarter,the Business Roundta-
ble found that the economic outlook
of chief executives had fallen to its
lowest level since the third quarter
of 2009.Back then,of course,the
U.S.economy was still rapidly shed-
ding jobs.
That business is adding workers
even though executives apparently
feel so down in the dumps says
something about underlying de-
mand.It can only be imagined how
much more hiring and spending
they would be doing with a little
more clarity on how the “fiscal cliff”
might be resolved.
—Justin Lahart
Forecasting Distant Sales
FromApple’s Capital Hill
Apple doesn’t give investors
much to go on when it comes to
The only “guidance” Apple regu-
larly offers is for the upcoming
quarter,and some analysts have
grown skeptical of those figures.Af-
ter all,the maker of iPhones rou-
tinely sets a low bar that it leaps
over with ease.
But in its 10-K filing published
last Wednesday,Apple looks further
forward in at least one respect:pro-
jecting the amount it plans to in-
vest for capital expenditures,par-
ticularly on factory equipment.
Some have used that figure to esti-
mate the following year’s sales,but
in 2012 the relationship started to
break down.
In the fiscal year that ended in
September,Apple’s capital spending
jumped to $10.3 billion from $4.6
billion in the prior year.Had the
figure’s historical relationship with
sales held,Apple would have re-
ported tens of billions of dollars
more in revenue than it actually
did.As for fiscal 2013,Apple says
capex will be $10 billion,the first
time since at least 2004 the com-
pany has projected the figure will
While Apple spends some capital
budget building data centers and
retail stores,the vast majority is es-
sentially spent outfitting assembly
lines within suppliers’ factories.
Note the jump in Apple’s long-
lived assets in China—up from $2.6
billion to $7.3 billion in the past
year.Given suppliers’ thin profit
margins,it is easier for Apple to
front the cash for manufacturing
equipment that can’t be used for
anything besides its own products.
Yet the stagnation in capital
spending doesn’t mean Apple’s
sales are going to hit a wall.An-
other figure in the filing suggests
why.Apple had committed to pur-
chase $21 billion worth of products
and components from its suppliers
as of the end of September.That
figure is up from $14 billion this
time last year.
It isn’t clear why capex is ex-
pected to be lower in 2013,but one
possibility is Apple spent more in
2012.Last year’s capital budget
came in $2 billion higher than origi-
nally predicted.
Indeed,the bigger issue for Ap-
ple in the current quarter may not
be sales,but gross profits.
The iPhone 4S was largely un-
changed from the iPhone 4 and had
particularly high margins,having
benefited from two years of im-
proving component costs,argues
analyst Toni Sacconaghi of Bern-
stein Research.
The iPhone 5 is a totally new de-
vice.Combine that with other new
products like the iPad Mini,and it
is easy to see why Apple says mar-
gins will fall.
Despite these signals,analysts
project earnings per share of $13.57
for the quarter,compared with Ap-
ple’s guidance of $11.75.
In other words,analysts’ as-
sumption seems to be that,once
again,the company has simply un-
Yet the recent slide in Apple’s
share price—down 18% from Sep-
tember’s peak—suggests another
possibility:For the first time in a
while,investors themselves are
skeptical the company will overde-
—Rolfe Winkler
Big Apple
Apple's capital expenditures
Source:SEC filings
*2013 figure is Apple's guidance
China’s Winter of Content:
Revived Growth Should Hold
China’s growth has revived.Ex-
pect it to stay buoyant for a while.
The latest sign of recovery:an
uptick in October’s purchasing man-
agers’ index.This came in at 50.2 in
October,up from49.8 in September
and above the 50 mark that sepa-
rates growth fromcontraction.That
is only a slight shift,but it suggests
September’s moderate acceleration
in growth has been sustained.
There are three reasons to be-
lieve it will stick around a while lon-
First is the year-end government
spending splurge.China’s budget
targeted a deficit of 800 billion yuan
($128 billion) for the year.So far,
the Ministry of Finance has run a
surplus of 646 billion yuan.Going
on past performance,the last two
months will see a rush to spend un-
used funds,contributing to a flood
of liquidity and stronger demand.
Then there is a return to yuan
appreciation.With China’s currency
down in the first eight months of
the year,some exporters held their
earnings in dollars rather than con-
verting them into yuan.
In the past two months,the yuan
erased its losses.In October,it rose
at an annualized pace of 7.4%.That
should push exporters to convert
their dollars into yuan,boosting li-
quidity further.
Finally,the central bank appears
fixed on keeping monetary condi-
tions relaxed.In the face of higher
public spending,stronger inflows
fromthe trade account,and capital
inflows following a third round of
quantitative easing in the U.S.,
China’s policy makers could have
battened down the hatches.Instead,
they have continued to push funds
into the markets,with a record 379-
billion-yuan injection last week.
Put it together,and the uptick in
China’s growth looks set to be sus-
tained a few months longer.
—Tom Orlik
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THE WALL STREET JOURNAL.Monday,November 5,2012 |
When in Doubt,M.B.A.s Turn to ‘Bible’
Business Students Rely on Examples in ‘Case in Point’ Study Guide to Prepare for Job Interviews
On some college campuses,it’s
hailed as a Bible—the guide every
M.B.A.or any aspiring consultant
needs to ace some of the toughest
job interviews.It even comes with
a set of commandments;the first:
“Listen to the question.”
Now in its seventh edition,
“Case in Point” has become the
biggest business book you’ve
never heard of,a best seller with
more than 100,000 copies sold in
print and electronic versions,ac-
cording to its author,Marc Cosen-
tino.Published in 1999,the 228-
page paperback explains and
unpacks the open-ended business
dilemmas—known as case ques-
tions—that characterize inter-
views at management-consulting
firms such as McKinsey & Co.
“It’s the first book people go
to,” says Ben Nowell,the 40-year-
old president of the Columbia
Graduate Consulting Club,a group
of several dozen students who
meet to stage mock interviews us-
ing questions pulled from “Case in
Point” and other sources.
The guide’s popularity offers a
glimpse into the world of aspiring
management consultants,who of-
ten spend months preparing for
interviews at one of the so-called
Big Three firms:McKinsey,Bain &
Co.and Boston Consulting Group
Inc.From now until the end of the
year,students will cram for on-
campus interviews,which gener-
ally take place from October
through December.The prize:a
job with a six-figure starting sal-
ary and an entree into an elite
group that includes prominent
CEOs and entrepreneurs.
Mr.Cosentino,57 years old,
says he never imagined his book—
now available in four languages—
would become a cult classic.The
latest edition,which sells for $30,
last week topped’s
best-seller chart in the consulting
category,and was the site’s 879th
most popular book overall as of
According to Nielsen BookScan,
17,000 copies of the latest edition
and about 58,000 copies of all
other editions have been sold to
date,though this figure doesn’t in-
clude e-books sold on the Kindle
or bulk purchases from colleges,
such as the 200 copies Harvard
Business School orders annually.
Between 20% and 30% of the
graduating classes from top busi-
ness schools such as Harvard,Co-
lumbia and Stanford University
take jobs in consulting after grad-
uation,according to recent statis-
tics from those schools.
Mr.Cosentino says the book’s
aim isn't only to help students ace
the case interview process,but
also to train them to “think like a
senior manager.”
In consulting interviews,which
typically last 30 to 45 minutes,a
partner or senior consultant from
the firm spends the first half prob-
ing the interviewee’s leadership
experience.He or she then pres-
ents a scenario,often inspired by
a real-life company predicament,
such as whether to break into a
new market.
Armed with nothing more than
a pencil and pad,the interviewee
must devise a solution on the
spot—all while doing the math
aloud so the interviewer can eval-
uate how he or she thinks.
Interviewers often intentionally
throw candidates off by telling
them their answers are wrong,
just to see how they will react,Mr.
Cosentino says,so he simulates
that approach with the students
he tutors.As the student begins
outlining a solution,he repeatedly
interrupts and tells them they’re
wrong,pushing to see whether the
student can defend the argument
without getting defensive.
Brian Rolfes,director of global
recruiting at McKinsey,says the
firm doesn’t use such tactics.“We
don’t throw curveballs,” he says.
“[The interview] is meant to be a
Bain global chief talent officer
Russ Hagey said “there may be
others” who try to throw candi-
dates off,but his firm doesn’t sub-
scribe to this approach.“We really
want to put people in a position to
show their best.”
“If you’re not prepared,you
could be right for consulting,but
you’ll probably fail,” says Christo-
pher Malone,a 30-year-old BCG
consultant who graduated earlier
this year from Dartmouth Col-
lege’s Tuck School of Business,
where he led the consulting club.
Mr.Malone,who interviewed at
four firms in January 2011 and
eventually received two internship
offers,including one from BCG
that led to a full-time job,says he
used “Case in Point” but quickly
moved on to other prep materials.
While he found the book too
“rigid” and formulaic in its ap-
proach,he says it was neverthe-
less a good primer in introducing
him to some of the basic princi-
ples of case studies.
Many take the “Case Com-
mandments” as gospel.They were
evident during a recent practice
session at Columbia Business
School,when Travis Reaves,28,
instructed Johannes Preis,27,to
determine whether a carbonated
beverage brand should launch fla-
vored bottled water.Mr.Reaves,a
former McKinsey summer intern,
has already secured a full-time job
at the firm after he graduates next
year,while Mr.Preis is currently
in the midst of interviews at sev-
eral firms.
After asking several clarifying
questions (Commandment No.5)
about the product name and mar-
ket size,Mr.Preis spent two min-
utes scribbling furiously on a piece
of paper and organizing his areas
of focus (Commandment No.6)
into plant utilization,regional
markets and management exper-
tise.By the time he summarized
his rationale to Mr.Reaves (Com-
mandment No.13),he had filled
four sheets of paper.His conclu-
sion,after crunching sales figures,
calculating the profit margin and
converting ounces to gallons:For a
12.5% slice of the market,the
product was “feasible.”
Mr.Cosentino began writing
study guides for consulting inter-
views while working at Harvard’s
undergraduate career office in the
1990s.The school published his
initial guides,but he later moved
to self-publish “Case in Point.” He
now runs a business consulting
would-be consultants.
Consulting firms seem to view
Mr.Cosentino with ambivalence.
He recalls how a BCG partner once
chided him for revealing a current
case-study question to a group of
students.But BCG also in 2007 or-
dered 1,000 copies of the book to
give to prospective applicants,he
says.A BCG spokesman couldn’t
confirm whether either incident
took place.
But the popularity of “Case in
Point,” along with other study
guides such as Victor Cheng’s
“Case Interview Secrets,” may
work against aspiring students.
Mel Wolfgang,BCG’s head of
recruiting in the Americas,inter-
views about 100 students every
year and says he can tell when
someone sounds too “scripted.”
“It’s sort of painful,” he says,
about hearing such responses.
“Preparation is crucial.Overprepa-
ration can be fatal.”
Columbia Business School students Johannes Preis,left,and Travis Reaves during a mock interview session last month.
The top business leaders in Asia making headlines last week in select global and regional media.Powered by DowJones Factiva and edited for relevance and clarity.
To see historical data and individual country Power Lists,go to scan the code to the right
Photos:Reuters (Okuda);Associated Press (Li);Bloomberg News (Goh and Clyne);Agence France-Press/Getty Images (Mallya)
Takashi Okuda
Sharp warned that it had doubts
about remaining a going concern,
and Mr.Okuda said the ‘situation
could have been different if we took
steps more quickly.’
Robin Li
Chief Executive
Mr.Li said Baidu’s third-quarter
profit rise was ‘driven by
encouraging customer growth and
improvements to our
monetization platform.’
Goh Choon Phong
Chief Executive
Singapore Airlines
The airline bought 10% of Virgin
Australia for US$108.5 million
in a deal that helps Virgin
intensify competition with rival
Qantas Airways.
Cameron Clyne
Chief Executive
National Australia Bank
National Australia Bank reported a
22% slump in annual profit,and
Mr.Clyne cited ‘ongoing
challenges in the U.K.’
Vijay Mallya
Kingfisher Airlines
Mr.Mallya told Reuters
he won’t sell assets to
help Kingfisher.
Compiled by Carlos Tejada/The Wall Street Journal
| Monday,November 5,2012 THE WALL STREET JOURNAL.
General Electric Co.Vice Chairman John
Rice travels to as many as 40 countries a
year to manage business lines as diverse as
jet engines,ultrasound machines and wind
Mr.Rice,55 years old,moved to Hong
Kong early last year to head global growth
for one of the world’s larg-
est companies.He took the
helm of GE’s overseas opera-
tions at a time when the
global economy was recovering from a re-
cession,and GE’s international presence
was growing:In 2011,the non-U.S.busi-
nesses generated 53% of the company’s
$147.3 billion in revenue,compared with
50% of its $149.6 billion revenue in 2010.
In an interview,Mr.Rice,who has
worked at GE for more than three decades,
talked to Kathy Chu about the company’s
big bet on Asia,the challenges of getting
into developing economies,and why he
won’t be challenging CEO Jeff Immelt for
the top job anytime soon.
The following interview has been edited.
:As head of global growth for GE,you
oversee 150 countries from Hong Kong.Why
Hong Kong,and what does this say about
GE’s bet on Asia?
:Certainly,Asia is important,but so
is the Middle East,Latin America,Africa.
The fact that we’re here and not somewhere
in Latin America doesn’t lessen the impor-
tance of Latin America.The important thing
is that it had to be outside the United States
so you could get that perspective,and the
lens of being situated in a different market.
:GE has made a big bet on Asia,but it’s
also bet on resource-rich countries such as
Australia,Peru and Canada.As economic
growth in China and other parts of Asia
slows,how does that affect GE’s investment
in the region?
We certainly are sensitive to,and
react to,short-term shifts,but we also have
to have a good hand on the rudder and
make sure we are keeping a long-term view
in mind.We’re in long-cycle businesses,so
whether orders are up or down in a specific
quarter rarely should change our long-term
There’s no question you have to respond
to short-term challenges in a particular
place and reduce costs or reallocate costs.
That’s part of what every responsible busi-
ness does.You also have to balance that
with a long-term strategy.If you’re in one
day and out the next,you’re not going to be
viewed as a good long-term partner.
The slowing Asian economies have not
lessened the appetite for infrastructure.
People still need power generation,health
care,water,forms of transportation.
GE set a goal of generating $10 billion
in revenue in China by 2010,but that hasn’t
happened yet.Has it been harder to grow in
We began in China as a place to
buy inexpensive components for appliances,
for the products we were producing in other
places.Then we started selling things in
China,then we started looking at China as a
place to manufacture.Now China is a place
where we do all of those things,but growth
is going to come more from the partner-
ships we create.These take longer to put to-
gether,and they’re a little bit more compli-
cated.We didn’t really know what to expect.
GE’s expansion overseas has created a
lot of jobs in other countries.How do you
respond to the critics who say these jobs
should be staying in the U.S.?
:I don’t understand the criticism.In
our aviation business,we have 3,000 en-
gines on operation on airlines based out of
China,and much of the content comes from
U.S.operations.There are thousands of jobs
in the U.S.that exist because of our ability
to participate in the Chinese aviation indus-
The critics seem to think you can pull all
investments out from a market and still
have unlimited opportunities to sell into
that market.It doesn’t really work that
If you want to participate in global mar-
kets,you have to be an investor.We need to
do it in a way that’s complementary.I want
to create jobs in the U.S.,too.I don’t think
that the global economy is going to be fully
healthy unless we get the unemployment
rate down in the United States.Too many
people take job creation as a zero-sum
game,and that’s not the way it works.
GE is expanding in countries including
Myanmar and Mongolia.What opportuni-
ties do you see in these countries,and what
are the challenges?
You see in every place an emphasis
on electricity.One of the things that gov-
ernments want to do is show the popula-
tion they can put more electricity on the
grid,keep the lights on longer as a way to
show people’s lives are getting better.Any
talk about a change in standard of living
means nothing if you don’t have electricity.
But bureaucracies aren’t necessarily
wired to go fast.There are concerns about
corruption;there are a lot of challenges to
the governmental decision-making process.
What is your management style?
I have high expectations for myself
and for people around me.I hold myself
and people accountable,but I also want to
be part of the solution.Part of being an ef-
fective leader is to be somebody who wants
to help solve problems.
You’re one of three vice chairmen at
GE.Any interest in the top job?
Jeff [Immelt] and I are about the
same age.I love being part of the GE lead-
ership team.I have no aspiration to another
job at GE.I can’t envision a circumstance
under which I would be offered the [CEO]
How do you find the right global foot-
Our job is to pull all of the com-
pany’s interests together and make sure
that’s reflected in our strategy.When we
think about where to put an aviation serv-
ices shop,you have to look at what engines
have been ordered by the airlines in the re-
gion,when they might be delivered,what
are the other opportunities that might be
coming up.
The biggest challenge we have is a world
that needs enormous infrastructure invest-
ments.A billion and a half to two billion
people lack the basics.How do their de-
mands in basic infrastructure,electricity,
power generation get built,and over what
period of time?Where do we have to be sit-
uated,where do we have to have people,
service shops and training facilities,to opti-
mize that?One of the things our team is
paid to do is figure out where and how this
global footprint should evolve so we can
get the best results for our shareholders
and customers.
Education:B.A.from Hamilton College in
Career:Mr.Rice joined GE’s financial-
management program after college,and has
held positions in the industrial conglomerate’s
appliance,corporate auditing,plastics,and
energy divisions.
Extracurricular:Riding motorbikes,enjoying
quiet beaches and low-maintenance friends.
[ John Rice ]
General Electric
AmericanPowerhouse Builds Global Profile
Asia Today
Scan this code to watch an
interview with GE Vice
Chairman John Rice in Hong
Kong,or go to
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