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THE BENEFITS OF How Xi Undermines

THE WALK-AND-TALK China’s Reforms
PERSONAL JOURNAL | A8 OPINION | A11

TUESDAY, SEPTEMBER 13, 2016 ~ VOL. XLI NO. 9 WSJ.com ASIA EDITION
As of 12 p.m. ET DJIA 18148.83 À 0.35% NIKKEI 16672.92 g 1.73% STOXX 600 342.23 g 0.95% BRENT 48.27 À 0.54% GOLD 1321.50 g 0.65% EURO 1.1230 g 0.04% DLR ¥101.95 g 0.73%

Japan Warns of North Korean Threat

What’s Policy Fears
News Bring Higher
Business & Finance

C anadian fertilizer firms

Agrium and Potash
confirmed plans to merge
in a deal that will create a
Bond Yields
BY CHRISTOPHER WHITTALL kets remained rattled.
crop-nutrient giant valued AND MIKE BIRD The yield on the 10-year Ger-
at about $27 billion. B1 man government bond touched
Bond markets are on the a high of 0.57% in the morning,
 A selloff in government
move again. according to Tradeweb, and fin-
bonds continued to rattle
The selloff in government ished at 0.37%, its highest close
markets as investors low-
bonds that started last week since late June when the U.K.’s
ered their expectations of
continued to ripple through fi- vote to leave the European
future stimulus. A1, B1
nancial markets on Monday as Union triggered a rush to
 The most vibrant mar- investors dialed back their ex- safety. In Japan, yields on the
ket for yuan trading outside pectations of future central- 10-year government bond hov-
mainland China has become bank stimulus. ered just below zero, from a
a battleground for Beijing Investors are now asking low of minus-0.29% in late July.
to defend the currency. B1 whether markets are on the The yield on the 10-year U.S.
verge of another so-called Treasury note was up slightly
 Samsung nominated the
bond-market tantrum, in which at 1.689% late morning in New
son of its chairman to the
yields rise sharply as prices fall. York.
board as the firm’s shares
So far, most conclude that mar- Asian and European stock
fell sharply in the wake of a
kets are not. Many investors be- markets also remained unset-
global phone recall. B3
lieve that central banks will tled Monday, after Friday’s sell-
 HP agreed to buy Sam- continue to provide aggressive off in U.S. shares. Hong Kong’s
sung’s printer business, a stimulus because economic Hang Seng Index skidded 3.4%
KAZUHIRO NOGI/AGENCE FRANCE-PRESSE/GETTY IMAGES

deal aimed at helping the growth and inflation remain Please see BONDS page A2
U.S. company expand into low.
high-volume devices. B3 But they predict volatility  Heard: Corporate debt is ripe
ahead, and on Monday the mar- for BOJ to target..................... B8
 Japan’s SHC Design
plans to start selling a
self-contained 3-D-printing
system for producing low-
cost artificial limbs. B1
 Investors have been flee-
Clinton to Release
Health Records
ing Mongolian markets after
the revelation that govern-
ment debt would be far
above the nation’s target. B5
DEFENSIVE POSTURE: Prime Minister Shinzo Abe reviewed an honor guard in Tokyo on Monday. Japan’s
 OPEC said crude-oil
new defense minister, ahead of a U.S. visit, said North Korea's nuclear program poses an imminent threat. A3 BY LAURA MECKLER
output from rival produc-
ers is turning out to be
WHITE PLAINS, N.Y.—Dem-  Capital Journal: Clinton’s
stronger than expected. B5
ocratic presidential nominee biggest dilemma ............... A7

China Rethinks Alliance

Hillary Clinton will release ad-  Opinion: Are the candidates
World-Wide ditional medical records this fit enough to serve?...... A11
week, a spokesman said Mon-
day, after a health-related wob-

With a Reeling Venezuela

 The Philippines’ Duterte ble leaving a 9/11 ceremony put wanted the information about
called for the U.S. to with- her well-being into the spot- Mrs. Clinton’s diagnosis to
draw its remaining mili- light and reanimated critics’ come from her doctor, which
tary advisers, saying their complaints about secrecy. he said wasn’t possible until
presence makes them a BY KEJAL VYAS its citizens and companies in conveyed concerns over secu- Press secretary Brian Fallon she examined the candidate
target for Abu Sayyaf. A2 Venezuela, China appears to be rity and Venezuela’s debt repay- also said the campaign made again later in the day.
CARACAS—China spent recalculating its alliance with ment during emergency meet- mistakes handling the situa- Last year, Mrs. Clinton re-
 Clinton will release ad-
much of the past decade build- the nation where it has made ings held from April to tion on Sunday, specifically by leased a summary of her
ditional medical records this
ing a strategic alliance with about $60 billion in loans. June with dozens of representa- not responding to questions health, including the results of
week after a pneumonia
Venezuela, a country that sits As a result, Venezuela tives from Chinese state compa- for 90 minutes about Mrs. some medical testing. Until
diagnosis put her well-be-
atop the world’s largest oil re- might not get meaningful nies, according to four officials Clinton’s exit from the memo- now, her campaign said that
ing in the spotlight. A1, A7
serves and was led by a social- fresh loans or investment from Chinese companies. rial event in Manhattan. was sufficient and pointed out
 North Korea’s nuclear ist president, the late Hugo from China, raising the possi- “The consensus was that no Even then, a spokesman at- her release was more detailed
detonation raises the im- Chávez, who admired Mao Ze- bility of deeper cutbacks and new money was going to be tributed her departure to feel- than opponent Donald
petus for closer military dong and wanted to counter shortages in the oil-rich nation invested,” said one of the offi- ing overheated, when she also Trump’s. But after Sunday’s
cooperation between U.S. influence in Latin America. or a default on more than $110 Please see CHINA page A2 had pneumonia—a fact the events, she decided to release
Japan and the U.S. A3 These days, confronted with billion in government and campaign didn’t disclose until more information, Mr. Fallon
a pile of unpaid bills and in- state-oil-company bonds.  Offshore yuan trade suggests late in the afternoon. Mr. said.
 Syria’s Assad vowed to
creasing security headaches for China’s envoy in Caracas Beijing intervention................. B1 Fallon said the campaign Please see CLINTON page A7
keep fighting what he called
“terrorists,” hours before a
U.S.-Russian brokered cease-
A Town Named for Bacon
fire was set to begin. A5
 China appears to be
recalculating its alliance
Ponders Switching to Pie ISIS OPERATIVES LEARN
with Venezuela, con-
fronted with unpaid bills
and security headaches. A1
i i

The mayor likes the health halo,

i
TRICKS OF SPYCRAFT
 Myanmar’s Suu Kyi will
visit Obama this week, re-
but faces saturated opposition
newing the question of Encryption and misdirection leave few clues for intelligence agencies
whether he is ready to drop
BY RACHEL PANNETT which supports veganism—and
remaining sanctions. A4
a name change. BY SAM SCHECHNER AND BENOIT FAUCON Abaaoud had slipped past the dragnet and
 Two militants dressed EGGS AND BACON BAY, Aus- Its suggestion: Apple and entered the city unnoticed.
as doctors attacked a hos- tralia—Yes, there is a place in Cherry Pie Bay. Weeks before Islamic State militant Ab- Drawing from a growing bag of tricks, Is-
pital in the Afghan city of Australia named for eggs and A tour of this embuttered lo- delhamid Abaaoud led the Nov. 13 terror at- lamic State accomplices located in Syria
Kandahar, killing at least bacon. And yes, some people cale shows the battle to be far tacks in Paris, French authorities thought he likely used phones and WhatsApp accounts
one patient. A5 have a problem with that. from cooked. was holed up in northern Syria. Western In- belonging to Abaaoud and other attackers to
It’s not the ridiculousness of “I don’t think you go down telligence agencies pursuing Abaaoud had mask the group’s travel to Europe, said a
 South Sudan’s leaders
the name they object to. It’s the to Eggs and Bacon Bay and tracked him there using cellphone location Please see ISIS page A6
have transferred much ill-
cholesterol. think about your lifestyle,” said data and other electronic footprints.
gotten wealth outside the
Peter Coad, Eliza Withers, a The Paris attacks, which killed 130 people,  Syrian leader Assad vows to fight despite
country, a report by a non-
the mayor of the college student, showed how badly they were fooled. cease-fire............................................................................. A5
governmental group said. A5
area, which is one morning as
found on the is- she took a bite of
CONTENTS
Arts & Ent............... A9
Opinion.............. A10-11
Personal Journal.. A8
land of Tasmania,
has thrown his
egg and bacon
pie. “Maybe it
Fertilizer
Giants
Business & Fin.. B1-4 Sports........................ A12
Crossword.............. A12 Technology.......... B3-4 weight behind a makes you want
Finance & Mkts B5-8 U.S. News.................. A7 proposal to come Breakfast to eat eggs and
Heard on Street.... B8
Markets Digest..... B6
Weather................... A12
World News........ A2-5
up with a differ- bacon. But I
ent, healthier name. He be- don’t think driving into Apple
To Merge
China: RMB28.00; Hong Kong: HK$23.00;
Indonesia: Rp25,000 (incl PPN);
lieves this would help enhance and Cherry Bay would make SEED MONEY:
Japan: Yen620 (incl JCT); Korea: Won4,000; the Huon Valley’s image as a you want to go for a run.” Agrium Inc. and
Malaysia: RM7.50; Singapore: S$5.00 (incl GST)
place where foodies can load “It’s been Eggs and Bacon Potash Corp.
KDN PP 9315/10/2012 (031275); MCI (P)
NO. 106/10/2015; SK. MENPEN R.I. NO: 01/ up on farm-fresh produce and Bay for yonks,” meaning for confirmed a deal to
SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998
seafood. “If we can promote ages, noted Naomi Smith, sip- create a crop-nutrient
healthy lifestyles then I think ping tea at the Country giant valued at about
DAVID STOBBE/REUTERS

we should,” he said. Women’s Association charity $27 billion, the latest

“Considering the high levels store. “People won’t be able to in a string of trans-
of cholesterol and saturated fat find it if they change the actions in the global
in eggs and bacon, the area name.” farming sector. Left,
may as well be called ‘Heart At- Graham Victor, a 67-year-old potash stored near
s Copyright 2016 Dow Jones & tack Bay,’ ” said a spokes- butcher and self-declared Saskatchewan. B1
Company. All Rights Reserved
woman for People for the Ethi- “meatarian,” is, unsurprisingly,
cal Treatment of Animals, Please see BACON page A6
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A2 | Tuesday, September 13, 2016
Duterte Calls for U.S. Advisers to Leave
Philippine leader says
American military’s
presence invites
attacks by Abu Sayyaf
BY CRIS LARANO
MANILA—Philippine Presi-
dent Rodrigo Duterte called
for the U.S. to withdraw its re-
maining military advisers,
warning that their presence in
a southern island makes them
a valuable target for the ex-
tremist Abu Sayyaf militant
group.
The remarks on Monday by
Mr. Duterte, known for his
blunt speech, are likely to fur-
ther complicate his already
prickly relationship with the
U.S. The Obama administra-
tion last week canceled a
meeting with Mr. Duterte at a
regional summit after he re-
ferred to President Barack
Obama as a “son of a whore”
and railed against the colonial
history of the Philippines. The
slur against Mr. Obama was
lobbed in the broader context
of Mr. Duterte’s approach to
human rights in his high-pro-
file war on drugs.
“For as long as we stay
with America, we will never
have peace,” Mr. Duterte said
BONDS
Continued from Page One
to 23290.60, its biggest drop
since February, and Japan’s Nik-
kei Stock Average fell 1.7% to
16672.92. The Stoxx Europe 600
index declined 1% to 342.23.
U.S. stocks, however, turned
higher. The Dow Jones Indus-
trial Average was up 69.40
points, or 0.4%, at 18154.85 in
midday New York trading.
The increase in government-
bond yields reverses only a por-
tion of the tremendous drop re-
corded in recent years as
central banks kept interest
rates at record lows, or knocked
them into negative territory,
and some launched huge bond-
buying programs.
At the start of 2016, yields in
the U.S., the U.K., Germany and
Japan were all higher than they
are today.
The recent selloff started on
Thursday after European Cen-
tral Bank President Mario
Draghi declined to commit to
extending the bank’s €80 billion
($89.9 billion) monthly asset
purchases, which are currently
slated to end in March 2017.
Investors are also concerned
CHINA
Continued from Page One
cials. “There was a clear mes-
sage from up top: Let them
fall,” said the official. He said
Chinese companies were mov-
ing employees to Colombia
and Panama for personal-
safety reasons and because
many Chinese-led projects
have ground to a halt.
Since February, at least
three Venezuelan opposition
lawmakers as well as econo-
mists and oil-industry consul-
tants have gone to Beijing at
the invitation of China’s Com-
munist Party to discuss a tran-
sitional government and re-
covery plan to turn around the
world’s worst-performing
economy, according to several
Chinese and Venezuelan peo-
ple familiar with the talks. The
International Monetary Fund
estimates Venezuela’s econ-
omy declined by nearly 6% last
year and will contract 10% this
year.
China is still owed about
$20 billion of the $60 billion it
has lent, these people said, and
is concerned about corruption
and misappropriation of its de-
velopment funds. It also wants
guarantees that its invest-
ments in Venezuela will be re-
spected by the opposition amid
a fast-deteriorating situation
involving food riots and ram-
pant crime.
China’s Foreign Ministry de-
nied in a written statement that
it has been rethinking its rela-
tionship with Venezuela. It said
the Chinese government has re-
peatedly reminded its citizens
and companies in the country
to raise their safety awareness.
The loans Chinese financial in-
stitutions have provided, it
said, were commercially driven
and have “brought about prac-
tical benefits for both sides.”
Venezuela’s foreign ministry
didn’t respond to requests to
President Duterte cited accounts of U.S. troops killing Muslims during the Philippines’ colonial era.
Monday during a swearing-in
ceremony for public officials
here. “We might as well give it
up.”
He warned that the contin-
ued presence of U.S. personnel
in the Philippines risks inflam-
ing an already volatile cam-
paign to track down members
of Abu Sayyaf, whom security
experts estimate to number
around 300 fighters.
Abu Sayyaf will kill Ameri-
that the Bank of Japan is near-
ing the limit of its bond-buying
program and may reduce its
purchases of the country’s long-
dated government debt.
That has upended a convic-
tion that has shaped financial
markets over the last two years:
that central banks would keep
on easing monetary policy.
“Nobody has been buying on
[economic] fundamentals, but
on [market] technicals,” said
Mark Dowding, co-head of in-
vestment-grade at BlueBay As-
set Management. “And the
dominant technical has been
central banks being massive
buyers of assets.”
Investors are looking at past
“tantrums” for clues to how
this selloff may play out.
In spring 2015, sovereign
bonds around the world also
fell sharply and Germany was
again the focus. Then, the yield
on the 10-year German bund
rose from just above zero in
late April to just below 1% in
early June as prices plunged.
That selloff wasn’t driven by
any particular market event or
economic reversal. But yields
soon began to fall again.
While the increase in yields
this time around has, so far,
been smaller, investors do ex-
The crisis has hurt the shop run by Gustavo Ian Wu, above.
comment. Venezuelan President
Nicolás Maduro recently told a
visiting Chinese business delega-
tion: “We value very much this
extraordinary relationship with
the People’s Republic of China.”
Security risks are growing for
Chinese expatriates, a long-estab-
lished merchant class here. They
have become targets for kidnap-
pers and extortion rings, prompt-
ing many to leave the country.
Venezuela has the world’s
China appears to be recalculating its alliance with Venezuela. A Chinese market in Caracas, above.
WORLD NEWS
cans, Mr. Duterte said. “They security policies,” Mr. Tril-
will try to kidnap them for lanes said in a statement. “The
ransom,” he said. U.S. special operations forces
The comments sparked crit- have been instrumental in the
icism from other Philippine development and increased ef-
politicians. fectiveness of our [Armed
Sen. Antonio Trillanes IV, a Forces of the Philippines].”
former navy officer, said Mr. The U.S. Embassy in Manila
Duterte was letting emotion couldn’t be reached to com-
cloud his judgment. ment. Philippine military offi-
“The anti-U.S. bias of Presi- cials also couldn’t be reached
dent Duterte should not be the to comment.
basis of the recrafting of our U.S. forces have been sta-
pect it to continue.
Francesco Garzarelli, co-head
of global macro and markets re-
search at Goldman Sachs, pre-
Moving Higher
Bond yields are on the rise as investors question whether the stock
of global negative-yielding debt has grown too much.
dicts the 10-year Treasury yield
will rise to 2% by year-end. Global stock of
BlueBay’s Mr. Dowding said 10- negative-yielding debt
year German yields could rise
another 0.2 to 0.3 percentage $50.0 trillion
point.
“In relation to expectations 40.0
for the economy, these bond
yields are very low. They got Positive-yielding
ridiculously low in the after- 30.0
math of Brexit,” Mr. Garzarelli
said.
20.0
“We’ve now passed the most
extreme valuation levels, but
Negative-yielding
we’re still at levels that look 10.0
quite dire relative to the macro
outlook.”
But many investors don’t ex- 0.0
pect the sort of big move in 2013 ’14 ’15
yields that happened in spring
last year. Source: Bank of America Merrill Lynch (negative yields);
That is because the factors Thomson Reuters (bonds, as of 9:30 a.m. ET)
that have encouraged central
banks to act—slow growth and icy maker world may be evolv-
low inflation—haven't gone ing, but broadly speaking we’re
away, particularly in the euro- still dealing with the same un-
zone and Japan. Central-bank derlying fundamentals and
bond buying is aimed at boost- that’s not likely to change,” said
ing growth and inflation by Charlie Diebel, head of interest
pushing investors into riskier rates at Aviva Investors.
assets, and prodding banks into Last year’s tantrum came at
lending more. a time when investors were
“Yes the [central bank] pol- more confident that central
miliar with the discussions in
Beijing.
How China plays its Venezu-
ela hand could have ramifica-
MIGUEL GUTIERREZ FOR THE WALL STREET JOURNAL (2)
tions across Latin America and
Africa, where resources-rich
countries turned to Chinese fi-
nancing during the commodi-
ties boom, said Diego Moya-Oc-
ampos, analyst with the risk
consultancy IHS.
Bilateral talks in Caracas in
August produced a commit-
ment from China for only a few
thousand vans and trucks to
help ease shortages, the Vene-
zuelan government announced,
but no big loans.
During the meetings in
China, Venezuela’s opposition
second-highest murder rate, ac- offered assurances that Beijing’s
cording to the independent loans would be recognized, hop-
Venezuela Violence Observa- ing to keep the door open to
tory. Many recently arrived more credit if a new govern-
Chinese state workers rarely ment comes to power, said the
venture out from where they people familiar with the talks.
live and work. “We can’t afford to lose the
“At all levels in China, privileged relationship we’ve de-
there’s a huge worry about veloped with China,” one said.
what is happening in Venezu- The Chinese government and
ela and an understanding that Venezuela’s opposition both
a change in government is want to make future invest-
needed,” said one person fa- ment deals more transparent
THE WALL STREET JOURNAL.
tioned in the southern Philip-
pines since 2002, training and
advising Filipino troops in
their campaign against Abu
Sayyaf, an affiliate of al
Qaeda that has earned a
grisly reputation for kidnap-
ping and beheading Western-
ers. More recently the group
has declared allegiance to Is-
lamic State. Abu Sayyaf said
TED ALJIBE/AGENCE FRANCE-PRESSE/GETTY IMAGES
its supporters were responsi-
ble for a bombing in Davao
City this month that killed 14
people. Mr. Duterte previously
served as mayor of Davao
City.
At its peak, the U.S.-Philip-
pine operation involved more
than 1,000 Americans before
officially ending in 2015. A few
advisers and technical-support
teams remain.
Mr. Duterte’s remarks raise
further questions about the
relations between the U.S. and
the Philippines, traditionally
one of America’s strongest al-
lies in the Asia-Pacific region.
He has said close ties with the
U.S. are important, but he is
also adamant in holding Amer-
ica to account for what he
sees as its past excesses.
On Monday, before calling
for the remaining U.S. forces
to leave, he displayed pictures
from the early 20th century
showing American soldiers
10-year government-
bond yields
0.2%
0.1
Germany
0.0
–0.1
Japan
–0.2
–0.3
’16 June July Aug. Sept.
THE WALL STREET JOURNAL.
bank’s quantitative-easing pro-
grams would work, particularly
in Europe. That meant that in-
vestors thought the ECB’s bond-
buying was transitory, said Jack
Kelly, an investment director at
Standard Life Investments.
“Skepticism over the effec-
tiveness of QE is more en-
trenched this year and wage in-
and subject to approval from
Venezuela’s president as well as
the opposition-controlled Na-
tional Assembly—a bid to en-
sure their survival should the
opposition take over.
Relations blossomed under
former President Chávez. Cheap
Chinese mobile phones, motor-
cycles and home-building mate-
rials helped Venezuela’s gov-
ernment win support among
the poor. Venezuela welcomed
thousands of Chinese techni-
cians to work on infrastructure
ventures, largely paid for with
shipments to China of 600,000
barrels of oil a day. China was a
crucial lender of last resort as
investors in international debt
markets charge Venezuela some
of the highest borrowing rates
in the world.
Then security emerged as a
concern. Warnings distributed
by the Chinese embassy here to
Chinese nationals, reviewed by
The Wall Street Journal, refer
to attacks against foreigners.
“As Asian people, to the
greatest extent possible, you
should avoid traveling by your-
selves,” read one advisory from
the local office of China’s state-
owned Sinohydro Corp.
“At the same time, you
should also avoid traveling in
groups, which can easily draw
the attention of criminals,” it
said. Kidnappings increased
60% in 2015, the notice said. It
advised workers to avoid giving
out personal information, such
as living arrangements, to Ven-
ezuelan colleagues.
An embassy email from
March recommended buying
guard dogs and installing GPS
systems in cars to make ab-
ductees easier to locate.
The Federation of Chinese
Associations here, which keeps
a registry of 23 social clubs
across Venezuela, estimates
that more than 30,000 Chinese
have left the country since 2014.
More than 100,000 remain.
—Brian Spegele
contributed to this article.
standing over a mass grave of
Muslims in the southern Phil-
ippines during the U.S.’s long
campaign to pacify the region
after the Spanish-American
War.
Mr. Duterte’s spokesman,
Ernesto Abella, subsequently
issued a statement saying that
the Philippine president’s re-
marks were aimed at empha-
sizing how the country is now
attempting to craft an inde-
pendent foreign policy. Mr.
Abella also said Mr. Duterte
wants the U.S. to atone for
what he perceives as the injus-
tices inflicted on Muslim Fili-
pinos in the southern Philip-
pines, which Mr. Duterte has
singled out as one of the roots
of the continuing insurgency
there.
“The American silence on
the matter lacks congruence
with its ‘moral’ position, in the
light of actions taken in the
past by the Germans who con-
fessed and made atonement
for the Holocaust, and Japan,
which made reparations for
the atrocities it perpetrated
among the peoples they con-
quered,” Mr. Abella said.
Under previous leader Beni-
gno Aquino III, the Philippines
had worked to expand its mili-
tary relations with Washing-
ton.
flation is simply not coming
through,” he said.
The depth of the current
move in bond markets will de-
pend on central banks, the in-
stitutions that inspired the
original reaction.
Investors are particularly
concerned over the Bank of
Japan’s Sept. 21 meeting, when
officials will reveal their assess-
ment of the central bank’s cur-
rent policies.
Analysts are watching to see
whether the bank will defend or
backtrack on its policy of nega-
tive interest rates, which was
announced in January this year
and has helped keep yields low.
The U.S. Federal Reserve is
meeting on the same day. Inves-
tors will be watching closely for
clues as to whether the Fed will
increase rates before the end of
the year.
Themos Fiotakis, co-head of
fixed-income strategy at UBS,
believes that yields will rise “a
little further” but predicts that
the current era of low yields
will continue.
Markets, though, “can still
move violently,” Mr. Fiotakis
added. “Any hint that the ECB
may not be quite as dovish as
the market thinks is enough to
cause a selloff.”
CORRECTIONS 
AMPLIFICATIONS
Brian Bolke is the president
and co-founder of Dallas bou-
tique Forty Five Ten. An Off
Duty article in the Friday-Sun-
day edition about new fashion
trends inspired by the 1980s
incorrectly said he also is CEO.
Readers can alert The Wall Street
Journal to any errors in news articles
by emailing wsjcontact@wsj.com.
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THE WALL STREET JOURNAL.
Nuclear Test Raises U.S.-Japan Stakes
North Korea’s threats
come as Japan’s new
defense minister plans
visit to Washington
North Korea’s recent nu-
clear detonation and acceler-
ated missile testing raise the
impetus for closer military
cooperation between Tokyo
and Washington, as Japan’s
new defense minister pre-
pares for her first official
visit to the U.S. this week.
By Alastair Gale in
Seoul and Chieko
Tsuneoka in Tokyo
Tomomi Inada, a lawyer
with no defense experience, is
expected to meet with U.S.
Secretary of Defense Ash
Carter on Thursday, U.S. offi-
cials said. Ms. Inada became
defense minister last month.
North Korea’s nuclear pro-
gram poses a “serious and im-
minent threat,” she told mili-
tary officers in Tokyo on
Monday, warning also of ris-
ing tensions with China over
disputed islands in the East
China Sea. To cope with secu-
rity challenges, Japan needs
to reinforce its alliance with
the U.S. and build cooperation
with other countries such as
the Philippines and Australia,
she said.
North Korea fired three
missiles last week that landed
about 150 miles off the west
coast of Okushiri Island, close
to Hokkaido, the northern-
most of Japan’s four main is-
lands. In August, a North Ko-
rean missile landed around
the same distance from the
coast of Japan’s main island
of Honshu.
The missiles, followed by
the nuclear explosion last
week, have intensified recrim-
inations and diplomacy from
Beijing to Tokyo to Washing-
ton to New York, where the
United Nations is considering
steps to penalize Pyongyang.
Mr. Carter last week said
Prime Minister Shinzo Abe speaks at the Defense Ministry on Monday. Tomomi Inada, below, became defense minister last month.
China, which is North Korea’s
chief economic and diplo-
matic partner, bore “great re-
sponsibility” for Pyongyang’s
nuclear stance.
A Chinese foreign ministry
spokeswoman, referring to
the planned deployment of a
U.S.-built missile-defense sys-
tem in South Korea, warned
that “unilateral action” would
aggravate tension. On Mon-
day, she said both the cause
of the nuclear problem and
the solution lies with “the
U.S., not China.”
Against that backdrop,
China and Russia on Monday
kicked off eight days of long-
planned joint military exer-
cises, highlighting an increas-
ingly close relationship
between two powers with sig-
nificant differences with the
U.S. For the first time, they
held the exercises in the
South China Sea, another
source of building U.S.-Chi-
WORLD NEWS
nese tension. China’s navy
said the exercises would in-
volve drills to practice de-
fending and seizing islands, a
move likely to unsettle neigh-
bors with overlapping territo-
rial claims in the sea. China’s
air force also said that it sent
jet fighters, bombers and
other aircraft on a drill over
the Western Pacific on Mon-
day.
Following its nuclear test
last week, North Korea said
that it can now easily put a
nuclear device on a missile,
escalating concerns. North
Korea often threatens Japan,
the U.S. and South Korea with
attack, citing the need to pre-
emptively counter an invasion
by the U.S. and its allies. The
U.S. has about 54,000 military
personnel based in Japan,
many of them on the southern
island of Okinawa.
On Monday, South Korea’s
Defense Ministry said North
* Tuesday, September 13, 2016 | A3
Pacific Forum CSIS, a Hono-
lulu-based think tank.
U.S.-Japanese defense co-
operation has increased under
Prime Minister Shinzo Abe. A
2015 agreement on defense
guidelines increased U.S.-
Japan coordination in many
areas, including maritime se-
curity and missile defense.
Ms. Inada and Mr. Abe both
criticized China in speeches
at the Monday event after To-
kyo said four Chinese coast-
guard vessels sailed close to
the Japanese-controlled Sen-
kaku islands on Sunday. Ear-
lier a Chinese naval vessel en-
tered waters around the
FRANCK ROBICHON/EUROPEAN PRESSPHOTO AGENCY
islands.
The countries have been
facing off in the East China
Sea over the uninhabited is-
lands, called Diaoyu in China.
Without naming China specif-
ically, Mr. Abe referred to a
“violation of Japan’s territo-
rial waters by a warship,”
saying this put Tokyo in an
“extremely severe situation.”
In the U.S., Ms. Inada is
likely to discuss the maritime
tensions as well as the long-
stalled relocation of an Amer-
North Korean dictator Kim ican military base on Japan’s
Jong Un has ordered further southern island of Okinawa.
missile and nuclear testing Mr. Abe’s administration has
this year as Pyongyang pur- faced strong local resistance
sues a range of nuclear-tipped to the plan to move the base
missiles to threaten the U.S. to a rural area. Opposition to
and its allies. the U.S. military presence in
Japan’s Defense Ministry Okinawa surged in June after
recently submitted a request the rape and murder of a local
for an increase in its budget woman. A U.S. military con-
that includes funds to expand tractor has been charged in
the coverage area of its Pa- the case.
KIM KYUNG-HOON/REUTERS
triot antimissile systems to Ms. Inada’s nationalist
better defend against North views have caused friction
Korea. The ministry declined with U.S. ally South Korea.
to comment on her U.S. trip. Before taking office she regu-
Ms. Inada’s trip to the U.S. larly visited the Yasukuni
as defense minister at first Shrine in Tokyo, which South
looked like a get-acquainted Koreans and Chinese see as
visit, but tackling the North glorifying Japan’s military
Korea appears capable of con- Korea threat has become an past. Since taking office, Ms.
ducting another nuclear test urgent agenda item. Inada has said she wants to
at any time. Pyongyang has “She’s not the first Japa- improve ties with South Ko-
expanded its nuclear-test site nese defense minister to have rea and has refrained from
in the country’s far northeast little experience with defense visiting the shrine.
in recent months with new issues, but it will require her —Te-Ping Chen
tunneling for underground to be a fast learner,” said and Jeremy Page in Beijing
detonations of nuclear bombs. Ralph Cossa, president of the contributed to this article.
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A4 | Tuesday, September 13, 2016
Iran Denies Ships
Harass U.S. in Gulf
Tehran says Pentagon
claims are inflated
and stem from U.S.
fear of its power
BY ARESU EQBALI
AND ASA FITCH
U.S. claims about Iranian
vessels veering dangerously
close to American warships
were exaggerated and
stemmed from fear of Iran’s
power, a spokesman for Iran’s
armed forces said.
“The Islamic Republic’s
vessels always act in full
awareness of international
rules and regulations and
based on defined norms,”
Brig. Gen. Masoud Jazayeri
said Sunday, according to the
official Islamic Republic News
Agency. “Therefore the
[American] claims are not
only untrue, but stem from
Suu Kyi’s Visit to Test U.S. Pivot Indonesia’s Busiest
BY JAMES HOOKWAY
Aung San Suu Kyi will visit
President Barack Obama at the
White House on Wednesday, a
move that will affirm the for-
mer dissident’s role as Myan-
mar’s de facto leader and re-
new the question of whether
Washington is ready to drop
its remaining sanctions on the
country.
Her arrival in the U.S. will
also cast a spotlight on Mr.
Obama’s efforts to cement his
administration’s pivot to Asia
in his final months in office.
Both sides have been pre-
paring the ground for the
visit. Ms. Suu Kyi last month
visited China, Myanmar’s most
important neighbor and trade
partner, where she worked to
ROSLAN RAHMAN/AGENCE FRANCE-PRESSE/GETTY IMAGES
Ms. Suu Kyi at a summit in Vientiane, Laos, this month. She will visit Mr. Obama on Wednesday.
World
Watch
UNITED KINGDOM
David Cameron
To Leave Parliament
Former U.K. Prime Minister
David Cameron announced he is
stepping down as a member of
Parliament, ending a 15-year ca-
reer as a British lawmaker.
Mr. Cameron said he didn’t
want his presence in Parliament
to be a distraction for the U.K.’s
new administration.
Mr. Cameron served as Brit-
ish prime minister from 2010
until late June, when he resigned
from the post after losing a ref-
erendum on Britain’s continued
membership of the European
Union. The 49-year-old had led
the campaign to preserve the
U.K.’s membership, but Britons
sided with those advocating
Britain’s exit by 52% to 48%.
Mr. Cameron is the member
of Parliament for Witney in Ox-
fordshire, England. His resigna-
tion will trigger a special election
to succeed him.
—Jason Douglas
INDIA
Industrial Output
Contracted in July
India reported an unexpected
contraction in industrial produc-
their fear of the power of the
Islamic Republic’s soldiers.”
Gen. Jazayeri was respond-
ing to concerns voiced by U.S.
officials about near-confron-
tations between U.S. ships
and Iranian vessels in and
around the Persian Gulf.
In one such incident last
month, a U.S. Navy spokes-
man said, four vessels from
Iran’s Revolutionary Guard
Corps approached an Ameri-
can destroyer at high speed,
ignoring radio communica-
tions and other warnings. Ira-
nian boats also made a close
approach to an American ship
in the Strait of Hormuz in
July.
While interactions between
Iranian and U.S. ships are
common, American officials
have raised growing alarm re-
cently about the risk of an es-
calation at sea between the
two rivals.
Gen. Jazayeri, however,
help restore relations after a
fraught few years during
which Myanmar tilted more
toward the West after its mili-
tary began a series of political
reforms.
Ms. Suu Kyi has also moved
to tackle some of the ethnic
tensions that accompanied
this political liberalization.
This month she met with for-
mer United Nations Secretary-
General Kofi Annan, who she
invited to lead an advisory
commission investigating vio-
lence in Rakhine state. More
than 100 ethnic Rohingya
Muslims were killed there dur-
ing sectarian rioting in 2012;
thousands tried to escape by
boat to Malaysia or Thailand.
The U.S., in an effort to
spur trade, eased some of its
tion in July, although consumer
inflation eased more than pre-
dicted in August, providing a
mixed picture of the health of
the South Asian economy.
Output of manufacturing,
mining and utility companies fell
2.4% from a year earlier, revers-
ing a 2% increase in June. The
median forecast of 14 econo-
mists polled by The Wall Street
Journal was for a 1.3% rise.
The weak reading under-
scores concerns over the
strength of the South Asian
economy despite the broader
gross domestic product data
showing robust expansion.
Separate data also issued
Monday showed consumer infla-
tion in August declined to 5.05%
year over year, from 6.07% in
July, thanks to a slower rise in
food prices.
The significant easing could
build the case for the central
bank to resume lowering inter-
est rates, as industry groups
complain about high borrowing
costs that are crimping invest-
ments and consumer demand.
—Anant Vijay Kala
FRANCE
Hollande Moves
To Safeguard Factory
French President François
Hollande ordered his government
to prop up Alstom’s Belfort fac-
tory after the high-speed train
maker said it plans to close pro-
duction at the emblematic site
because of weak demand.
The sprawling Belfort indus-
trial site near the German and
HK JP KO ML SI
WORLD NEWS
said American claims of close
approaches weren’t accurate.
“When Iranian vessels pass
the Americans a few kilome-
ters from them, they claim
that the Iranian boats have
come within one kilometer,”
he said.
A U.S. defense official said
videos taken by U.S. crews
show just how close Iranian
ships get to American ships.
The Pentagon said that about
10% of the “normal interac-
tions” are considered by the
U.S. to be “unprofessional” or
“unsafe.”
Iran has just as much right
as anyone else to operate in
international waters, Gen. Joe
Votel, head of the U.S. Central
Command, said last month.
“What I call on Iran to do is
be the professional force that
they claim to be.”
Iran has long asserted its
dominance over the Persian
Gulf, and incidents involving
economic sanctions on Myan-
mar in May after Ms. Suu Kyi’s
National League for Democ-
racy won elections in Novem-
ber. It introduced general li-
censes, or waivers, that make
it easier for American compa-
nies or individuals to do busi-
ness in Myanmar. It also re-
moved seven state-owned
enterprises and three state-
owned banks from a blacklist
of companies prohibited from
doing business with the U.S.,
while adding an additional
six—all controlled by business-
man Steven Law and his Asia
World conglomerate.
It is unclear whether the
U.S.—or Myanmar, for that
matter—would like to see the
sanctions relaxed further.
“It’s something that we
Swiss borders has regularly been
threatened by closure, making it
a political battleground for lead-
ers hoping to show they have a
solution to France’s industrial de-
cline.
“The president gave us one
single goal: maintaining train ac-
tivities at the Belfort site,”
French Economy and Finance
Minister Michel Sapin said Mon-
day after attending a meeting
with the president. A spokes-
woman declined to comment on
Mr. Hollande’s decision.
By reviving the French gov-
WATER WARS: India’s top court ordered Karnataka state to release water from a disputed river to
neighboring Tamil Nadu. In this photo, an Indian police officer and his detainee walk past burning
trucks that belong to Tamil Nadu state, which were set ablaze by angry mobs in Bangalore.
IN UK FR MN PR
The destroyer USS Nitze, in a photo provided by the U.S. Navy.
its ships in the key oil-ship-
ping waterway have prolifer-
ated over the years.
In January, Iran captured
continue to look at, because
the purpose of the sanctions
regime was to support a dem-
ocratic transition, and some of
the sanctions even were tied
to the treatment of Ms. Suu
Kyi specifically,” deputy na-
tional-security adviser Ben
Rhodes told reporters during
Mr. Obama’s visit to Laos last
week.
Some of Ms. Suu Kyi’s ad-
visers, meanwhile, suggest
that sanctions shouldn’t be
fully lifted: They need them to
exert pressure on Myanmar’s
military, which still controls
the important defense and in-
terior ministries and effec-
tively shares power with Ms.
Suu Kyi’s administration.
One of her party’s biggest
gripes is a legal ban on Ms.
Suu Kyi becoming president
because her two adult sons
are foreign nationals—a con-
stitutional prohibition intro-
duced by the military and
that can be removed only
with the support of the 25%
voting bloc that the army
controls in parliament.
Instead, Ms. Suu Kyi offi-
cially fills the specially created
role of state counselor. Her
visit to the White House, con-
firmed by Mr. Obama during
an Asian leaders’ summit last
week, helps to underscore her
role as Myanmar’s leader irre-
spective of whether she has
the title of president, which is
held by her nominee, Htin
Kyaw.
Some human-rights groups,
including Human Rights
Watch, have called on Wash-
ington to maintain its remain-
ing sanctions on the country
to deter the military from
backsliding on political re-
forms.
ernment’s interventionism, Mr.
Hollande is launching a last-gasp
effort to outflank his rivals in
the presidential 2017 election by
positioning himself as a leading
guardian of French industry.
However, the government will
have to tread carefully, as the
European Commission prohibits
direct or indirect state aid to pri-
vate companies.
Many of Mr. Hollande’s poten-
tial rivals in the 2017 have built
reputations as protectors of Al-
stom and the Belfort site, which
became a home for French train
THE WALL STREET JOURNAL.
US NAVY/AGENCE FRANCE-PRESSE/GETTY IMAGES
two small U.S. Navy boats af- briefly and released, but the
ter they strayed into Iranian incident heightened tensions
territorial waters. The 10 in the region just days before
crew members were held Iran’s nuclear deal took effect.
Day for Butchers
BY ANITA RACHMAN Boethdy Angkasa, the agri-
culture ministry’s coordinator
JAKARTA — Indonesians for the sacrifices, said the cost
slaughtered over 600,000 ani- of transporting animals to the
mals on Monday, nearly one- big cities has long been one of
tenth of the livestock normally the biggest contributors to the
butchered in a year, as they annual uptick in prices.
marked Eid al-Adha, one of the In recent years, the ministry
holiest celebrations in the Is- has sent advisers to help farm-
lamic calendar. ers boost production, provid-
In a modest success for the ing them with guidelines on
country’s bureaucrats, the in- how to better care for live-
crease in prices due to soaring stock and breed more robust
demand for livestock wasn’t as animals that can better with-
great as in previous years. stand the journey to Jakarta
Preparations for the festi- and other cities.
val, which marks the prophet Technology plays a role,
Abraham’s willingness to sacri- too. Online markets have
fice his son to God, began helped match buyers and sell-
early. People converged at ers more efficiently, helping to
mosques or open fields to pray keep a lid on price increases.
before slaughtering cows, “Beef is still considered
sheep, goats and buffalo. In quite a luxury here,” Mr. Ang-
some areas, alleys ran red with kasa said. “The government
blood before devotees distrib- wants to push down prices so
uted packages of meat to it’s more accessible.”
neighbors or to the poor. Indonesia’s softening econ-
The Ministry of Agriculture omy may have contributed to
deployed 1,600 people across this year’s relatively modest
greater Jakarta to help oversee price rises. Lower prices for
the rituals at over 9,000 sites. commodities such as palm oil,
The weeks before Eid al- coal and natural gas mean
Adha are difficult for officials household spending isn’t
in Indonesia. Some 650,000 growing as rapidly as before.
animals were expected to be That is disappointing peo-
butchered around the festival ple such as Marjono. The live-
this year; the scale of the stock farmer said he traveled
slaughter can lead to logistical nearly 280 miles (450 kilome-
headaches and soaring prices. ters) from his home in central
The cost of the two most Java to a market in southern
popular offerings, cattle and Jakarta to sell about 100 goats
goats, rose as much as 30% in and eight head of cattle. He
the run-up to the holiday, with left Monday with two goats
some cattle reaching prices as and one cow unsold.
high as $1,300 a head. In pre- “It was OK this year, but I
vious years, though, prices sold more last year—175 goats
have risen more; in 2014, they and 10 cows,” said Mr. Mar-
surged 35%. jono, who goes by one name.
makers fleeing the Alsace-Lor- The U.K.’s central bank Mon-
raine territory when it was an-
nexed by Germany in 1871.
day announced the surprise de-
parture of Minouche Shafik, who
— Inti Landauro
and William Horobin
will leave her position as deputy
governor for markets and bank-
ing in February, before joining
UNITED KINGDOM the LSE in September after a
“cooling off” period.
Shafik Quits to Join Ms. Shafik was recruited by
Economics School the central bank in 2014, having
One of the Bank of England’s been a deputy managing director
four deputy governors is to at the International Monetary
leave more than two years be- Fund. Her term was due to end
fore the end of her term to be- in July 2019.
come director of the London On joining the institution, her
School of Economics. main task was to lead the Fair
and Effective Markets Review,
which was a response to a se-
ries of high-profile scandals in
London’s financial district, includ-
ing the fixing of interest rate
benchmarks and similar manipu-
lation of foreign-exchange rates.
—Paul Hannon
YEMEN
Strikes on Well
Reportedly Kill 30
Saudi-led airstrikes on a wa-
ter well in northern Yemen re-
portedly killed 30 people and
wounded 17, a U.N. official said
Monday, making it one of the
deadliest attacks since peace
AIJAZ RAHI/ASSOCIATED PRESS
talks collapsed a month ago.
The U.N. Humanitarian Coor-
dinator for Yemen, Jamie McGol-
drick, said in a statement that
the casualties in the village of
Beit Saadan included first re-
sponders and children. The
strikes took place on Saturday,
on the eve of the Muslim holi-
day of Eid al-Adha.
—Associated Press
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Tuesday, September 13, 2016 | A5

WORLD NEWS

Glue Snafu Delays

Austrian Election
BY ANTON TROIANOVSKI
Three weeks before a
scheduled presidential election
that could install postwar Aus-
tria’s first right-wing populist
head of state, the country’s
top elections official said the
vote needed to be postponed.
The reason: Defective glue
has been causing some mail-in
ballot envelopes to open, ren-
dering the vote inside invalid.
“I must acknowledge that a
ballot-card production error is
the reason why we cannot
guarantee an election that is
SANA/ASSOCIATED PRESS
for Oct. 2, pitting center-left
candidate Alexander Van der
Bellen against Norbert Hofer
of the anti-immigrant Freedom
Party. Mr. Hofer, propelled by
a popular backlash against the
centrist government’s han-
dling of the refugee crisis, has
been running about even with
Mr. Van der Bellen in the polls.
Mr. Van der Bellen beat Mr.
Hofer by just over 30,000
votes in a runoff election on
May 22. In July, the Constitu-
tional Court ordered a rerun
because of improprieties in
how some mail-in ballots were

irreproachably in conformity processed. But in recent days,

with the law,” said Interior
Minister Wolfgang Sobotka,
who oversees elections, in Vi-
enna on Monday. “We cannot
estimate today how many and
Syrian President Bashar al-Assad, center, walking with officials on Monday in Daraya, a formerly rebel-controlled suburb of Damascus. which of these ballot cards
could still open.”
reports emerged in Austrian
media that some mail-in ballot
envelopes for the rescheduled
vote were defective, raising
the prospect of yet another
bungled election.
“If a well-developed and

Syrian Leader Assad Vows

Mr. Sobotka said he would
submit a bill to parliament on
Tuesday to postpone the vote
until Dec. 4.
It was the latest embarrass-
modern democracy such as the
one in Austria isn’t able to
guarantee regular elections,
then it is anything but funny,”
journalist Michael Völker

To Fight Despite Cease-Fire

BY MARIA ABI-HABIB turned to government control
AND NOAM RAYDAN after a four-year siege by Mr.
Assad’s forces. The president
BEIRUT—Syrian President also joined local officials in a
Bashar al-Assad vowed to keep local mosque for prayers on
fighting what he called “ter- the Muslim holiday of Eid al-
rorists” and take back rebel- Adha.
controlled territory, just hours It was a rare public appear-
before endorsing it.
Few details of the deal have
been shared with the opposi-
tion, an opposition political
official in contact with rebel
groups said. In particular, the
opposition was seeking clarifi-
cation on sanctions for gov-
ment for the Alpine country’s wrote in Der Standard news-
government, which has been paper on Sunday.
struggling to execute a closely “One could take this glue fi-
watched election. asco as a symbol of what Aus-
The runoff vote for the tria needs now: to stick to-
criticized his government for mainly ceremonial post of gether,” Mr. Van der Bellen
agreeing to the deal only after president had been scheduled said Monday.
it succeeded in reimposing a
siege over opposition-held dis-
tricts of Aleppo, once the
country’s largest city and eco-
nomic powerhouse.
Fighting intensified be-

CHRISTIAN BRUNA/EUROPEAN PRESSPHOTO AGENCY

before a U.S.-Russian brokered ance for Mr. Assad, timed to ernment breaches of the tween rebels and government
cease-fire was set to begin. coincide with the beginning at cease-fire, the official said. forces there and elsewhere
“The Syrian state is deter- sundown of a cease-fire ham- Syria’s armed and political across the country following
mined to retake every area mered out by the U.S. and opposition have criticized pre- late Friday’s announcement of
from the terrorists, and re- Russia and announced late vious truces, claiming they fa- the cease-fire in Geneva, as
store security and safety,” said Friday by U.S. Secretary of vor the regime by allowing it each side sought to set what-
Mr. Assad on Monday, employ- State John Kerry and Russian to continue laying siege to op- ever terms on the ground they
ing a term he and his govern- Foreign Minister Sergei Lav- position-controlled communi- could ahead of the truce’s
ment routinely use to describe rov. ties across Syria to force their scheduled start late Monday.
the opponents who are seek- Hours after the government surrender. Rebel groups launched
ing to unseat him. leader’s visit to Daraya, Syria’s Iran and the Lebanese Shi- rocket attacks against govern-
The Syrian president made mainstream political opposi- ite movement Hezbollah, two ment areas in Aleppo and
his comments to reporters for tion, the High Negotiations close allies of Mr. Assad, de- across other parts of north-
state-run media as he walked Committee, and several rebel clared their support for the west Syria on Monday, while Austrian Interior Minister Wolfgang Sobotka announcing on
through the streets of Daraya, factions called for “guaran- cease-fire accord over the regime helicopters dropped Monday a two-month postponement of presidential elections.
a Damascus suburb that sur- tees” on the implementation weekend. barrel bombs on opposition-
rendered last month and re- of the cease-fire agreement Opponents of Mr. Assad held areas of the city.

Brexit Doesn’t Keep

Report Blasts South Sudan Leaders EU Students Away
BY MATINA STEVIS

NAIROBI, Kenya—South Su- BY DENISE ROLAND quickly to assuage potential

dan’s leaders have transferred concerns among incoming EU
millions of dollars of ill-gotten LONDON—Britain’s decision students. Further, those arriv-
wealth outside the country to leave the European Union ing this year would have ap-
while waging a civil war that doesn’t appear to have dented plied to study in the U.K. well
has left nearly half the coun- the number of EU students before the Brexit vote.
try’s people homeless or in ur- planning to start degrees in EU students currently are
gent need of humanitarian aid, the U.K. in the coming weeks, charged the same fees as U.K.
a nongovernmental group said though senior figures warn the students, which at £9,000
Monday. vote could take a more serious ($12,000) a year for most uni-
President Salva Kiir and toll next academic year. versities are lower than the
some his top associates, along EU students haven’t relin- charges for those from outside
with Riek Machar, the coun- quished offers from U.K. uni- the bloc: The fees for non-EU
try’s former vice president, versities any more than usual international undergraduates
JUSTIN LYNCH/ASSOCIATED PRESS

have invested millions of dol- this year, according to several range from £9,500 to £49,600,
lars in real estate in Kenya, top institutions surveyed by depending on the type of de-
Uganda and Australia, accord- The Wall Street Journal. gree, according to the Com-
ing to a report by The Sentry, “We’ve had no obvious indi- plete University Guide, a
which investigates corruption cation at this stage there will higher-education data service.
and organized crime in Africa, be a reduction in the number Students from the EU also can
following a two-year probe. of EU students,” said Paul Teu- apply for grants and low-inter-
The watchdog group was lon, director of admissions for est student loans, a benefit
founded by Hollywood actor South Sudanese President Salva Kiir with U.N. and U.S. officials in the capital of Juba this month. King’s College London. How- that isn’t extended to other in-
George Clooney and John ever, “we will only really know ternational students.
Prendergast, a former official “The leaders of South Su- study the report and respond until he was ousted in July af- where we stand towards the But the government hasn’t
in the Clinton administration. dan’s warring parties manipu- to it later. Messrs. Clooney ter the collapse of a power- end of September or beginning guaranteed these benefits to
According to the report, late and exploit ethnic divi- and Prendergast said Monday sharing agreement. He is now of October.” those enrolling in 2017 or be-
these powerful political fig- sions in order to drum up they would meet with U.S. in neighboring Sudan. The same is true for Uni- yond. Julia Goodfellow, presi-
ures and their immediate rela- support for a conflict that President Barack Obama, State Foreign donors sponsored versity College London, ac- dent of the lobbying group
tives have large ownership in- serves the interests only of the Secretary John Kerry and South Sudan’s independence cording to its provost, Michael Universities U.K., said there
terests in local oil, top leaders of these two klep- Treasury Secretary Jack Lew declaration in 2011 and have Arthur. Representatives of Im- was an urgent need to address
construction, security and tocratic networks and, ulti- to present the investigation supplied billions of dollars in perial College London, the the issue to prevent a likely
gambling businesses—in viola- mately, the international facili- and lobby for the use of anti- aid since the two political ri- London School of Economics decline in EU student applica-
tion of South Sudanese law tators whose services the terrorism and anti-money- vals pitted their tribes and and Political Science, and the tions for entry next academic
barring officeholders from en- networks utilize and on which laundering rules to seize the armies against each other universities of Oxford, Bristol, year.
gaging in commercial activity. they rely,” it says. South Sudanese leaders’ as- nearly three years ago. Cardiff, Edinburgh, Glasgow, That matters because
The report accuses the two A spokesman for Mr. Kiir sets. The conflict has cost thou- Nottingham and Southampton around 125,000 university stu-
leaders of perpetuating con- didn’t immediately reply to Mr. Kiir’s presidential sal- sands of lives since. About 1.6 also said they didn’t expect a dents in the U.K. are from an-
flict in South Sudan, the calls and messages requesting ary is about $60,000 annually. million of South Sudan’s 12 fall in EU students enrolling other EU member state,
world’s youngest nation, to comment. A spokesman for Mr. Machar drew a govern- million people have been this year. around one in 20. At some
amass personal wealth. Mr. Machar said he would ment salary $54,000 annually forced to flee their homes. That is partly due to reas- universities, that proportion is
surances from the U.K. govern- as high as one in five.
ment soon after the Brexit Losing those students

Militants Attack Hospital in Kandahar vote that nothing would

change for those enrolling this
academic year. Several univer-
sities themselves moved
“would create a huge intellec-
tual, cultural and creative
hole,” Prof. Arthur said.
“There’d be a lot missing.”
BY EHSANULLAH AMIRI caped further into the hospital Kandahar. No ICRC staff mem- Borders hospital in Kunduz
AND JESSICA DONATI before being killed by security bers were present during killed 42 civilians, even
forces about an hour later, a Monday’s raid due to this though the facility’s coordi-
KABUL—Two militants spokesman for the Kandahar week’s Muslim religious holi- nates were on a list of pro-
dressed as doctors raided a governor said. Angry families day Eid al-Adha, said ICRC tected locations.
hospital in Kandahar sup- outside protested to be allowed spokeswoman Jessica Barry. The Kandahar militants
ported by the International into the compound to rescue The attack was the latest in were likely targeting Kanda-
Committee of the Red Cross, trapped relatives as the gunfire a string of incidents that have har’s deputy governor, who
killing at least one emergency rang out across Afghanistan’s struck aid workers in Afghani- had been scheduled to visit
room patient in an hour fire- second-largest city. stan, despite repeated pleas by the hospital for the holiday
fight, Afghan officials said. An Afghan intelligence offi- humanitarian agencies to re- Monday but canceled his ap-
The men, armed with pistols cer and a policemen were also spect their neutrality. pearance after being warned
OLI SCARFF/GETTY IMAGES

and suicide vests, wounded killed in the attack, a foreign Hospitals in Afghanistan of an impending attack, an Af-
two other people before being official in the country said. Af- have repeatedly been attacked ghan official said.
shot dead by Afghan security ghan authorities didn’t con- or caught in the crossfire in “The deputy governor with
forces, the officials said. The firm their deaths. recent years, making the coun- a convoy of several provincial
firefight took place in patient No group immediately try one of the most dangerous officials were on their way to
wards, they said. claimed for the attack. places for aid workers to oper- the hospital when we got re-
The first militant was The ICRC employs some 50 ate. ports of a security incident,”
quickly shot by an intelligence Afghan and international staff- An October U.S. precision said the governor’s spokes- The University of Oxford is one of several British universities that
agent, while the second es- ers at the Mirwais Hospital in airstrike on a Doctors Without man, Samim Khapalwak. say they aren’t expecting a decline in EU students this year.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A6 | Tuesday, September 13, 2016 THE WALL STREET JOURNAL.

FROM PAGE ONE

ISIS one message about joining a

Continued from Page One
Western security official: “We
relied too much on technology.
And we lost track.”
Terror attacks in Europe,
which have killed more than
200 people in the past 20
months, reflect new opera-
tional discipline and technical
savvy by the Islamic State ter-
rorists who carried them out,
security officials said.
The extremist group’s com-
jihadist team. Then he added
that French intelligence ser-
vices “are reading this. You
have a message for them?”
The two men were arrested
on their return to France in
spring 2014. Mr. Mohamed-Ag-
gad was sentenced in July to
nine years in prison, and Mr.
Taher to eight years, both for
terrorist association. A lawyer
for Mr. Mohamed-Aggad said
she was appealing the verdict.
A lawyer for Mr. Taher didn’t
respond to a request to com-
ment.

CHRISTOPHE ENA/ASOCIATED PRESS (TOP); ZUMA PRESS

munications, once commonly
conducted on phones and so-
cial-media accounts easily
tracked by authorities, have
evolved into a mix of en-
crypted chat-app messages
over WhatsApp and Telegram,
face-to-face meetings, written
notes, stretches of silence and
misdirection.
These techniques helped
protect attackers from West-
ern intelligence agencies by
leaving few electronic clues in
a sea of intercepted data.
In recent months, Europe
has been convulsed by a string
of simple yet lethal attacks.
Some were committed by peo-
ple who appear to have re-
ceived little direct training
from Islamic State. The sus-
pects in a failed plot in France
last week were “remotely con-
trolled” from Syria by the
group, prosecutors said Friday.
Officials worry such attacks
could be a way to distract intel-
ligence services while militants
prepare more complex plots.
The Paris attacks
showed how badly
authorities were
fooled.
The Paris attackers commu-
nicated sparingly—electronic
silences sometimes lasted
weeks—as they crossed the
continent in September and
October en route to their
deadly rendezvous in Paris, se-
curity officials said. When
they did communicate, they at
times called or sent text mes-
sages on disposable cellphones
they used once and tossed.
“Try to make it so that even
if the idolatrous dogs intercept
and decrypt your messages…the
only information they will be
able to find is your username
and password,” advised Islamic
State’s French-language maga-
zine Dar Al Islam this spring.
Patrick Calvar, head of
France’s main domestic intelli-
gence agency, told French par-
liament investigators in May
that Islamic State had become a
hierarchical, militarized organi-
zation, drawing expertise from
experienced jihadists and veter-
ans of Iraqi security forces.
“We’re dealing with people
who are well versed in clan-
destine operations, and who
understand our capabilities,”
Mr. Calvar said. “We’re up
against real professionals.”
This Wall Street Journal ac-
count of the evolving state of
Islamic State communications
is based on court filings, gov-
ernment transcripts and Is-
lamic State propaganda and
internal documents, as well as
interviews with officials inves-
tigating terror cells in Brus-
sels and Paris.
Islamic State is a militant
group of the internet age, its
followers steeped in Facebook,
smartphones and text messag-
ing. These tools, which helped
spread the terror group’s mes-
sage around the world, also
helped authorities foil plots,
capture suspects and win con-
victions in the group’s early
Islamic State tightened se-
curity following airstrikes by
the U.S.-led coalition on its
territories in Syria and Iraq.
The terror group in October
2014 banned the use of GPS to
avoid detection by Western al-
lies, according to documents
seized by U.S. Special Forces
and viewed by the Journal.
‘A different breed’
Western recruits have since
returned from Syria better
trained, security officials said.
“At the point at which
they’re leaving Belgium,
France, the U.K., these guys
are amateurs. By the time they
are turned around and come
back again, they are a differ-
ent breed of terrorist,” said
Rob Wainwright, the director
of Europol, which coordinates
law-enforcement agencies in
the European Union.
Abaaoud had a close call
before the Paris attacks that
may have taught him a lesson
about the vulnerability of elec-
tronic communications.
He coordinated a group, in-
cluding fighters from Islamic
State territory, to attack Bel-
gium in late 2014, Belgian
judges said in May during a
trial of accused participants.
Members of the group used
disposable phones and com-
municated, in part, through at
least one shared WhatsApp ac-
count and Telegram. But they
may not have been careful
enough. Belgian police tapped
their phone lines.
The phone taps started with
a Belgian man they had sus-
pected of returning from
Syria. From there, phone taps
and physical surveillance led
authorities to accomplices and
a house in Verviers, Belgium,
used by the alleged plotters.
Authorities found weapons,
bomb-making chemicals and
police uniforms at the house
during a January 2015 raid.
Two suspected terrorists were
killed in a gunfight with po-
lice.
Western intelligence ser-
vices used Abaaoud’s commu-
nications with the suspected
plotters to locate him in Ath-
ens. By the time Greek police
cordoned off the streets sur-
rounding Abaaoud’s hideout,
he was gone.
Hunting Abaaoud
Western intelligence agen-
cies continued to pursue
Abaaoud electronically, inter-
cepting data sent by phones
linked with him, French offi-
cials said.
The trail led to Syria. Secu-
rity officials suspect Abaaoud
Workers survey the damage, above, after a raid in November on an apartment in the Paris suburb of Saint-Denis a day after Islamic
State militant Abdelhamid Abaaoud, pictured below, was killed. Abaaoud had slipped past authorities to lead the Nov. 13 attacks.
Ways ISIS Keeps Its Secrets
The terror group’s communications, once commonly conducted
on phones and social media accounts easily tracked by authorities,
have evolved into a mix of high- and low-tech methods to avoid
detection, including encrypted messages, disposable phones,
face-to-face meetings, written notes and stretches of silence.
Disposable phones
Cellphones used for as little as a single conversation then
tossed to avoid being tracked by cellphone location data.
Misdirection
Terror Tips: ‘Use and Throw’
Tips posted by Islamic State- secrets off the grid and to limit
related propaganda outlets de- who knows what—techniques
scribe high- and low-tech meth- long used by al Qaeda, which
The strategy of giving cellphones identified with an individual to ods to avoid detection: Switch favors messengers and hand-
accomplices who act as decoys, hiding a terrorist's true location. mobile phones frequently; sign written notes.
up for online accounts using “They’re using anonymity as
Encrypted apps
temporary phone numbers; hop- much as they use encryption,
scotch frequently between chat because encryption can attract
apps, making any intercepted the attention of intelligence
conversations difficult to follow. services,” said Jean-Charles Bri-
“Buy cheap burner phones; sard, president of the Center
use and throw,” Islamic State for the Analysis of Terrorism, a
Such message services as WhatsApp and Telegram relay sympathizers wrote in one Paris-based think tank. “It’s a
messages that are difficult for authorities to decode. chat-app message. huge challenge.”
The extremist group has —Sam Schechner
THE WALL STREET JOURNAL. also apparently learned to keep and Benoit Faucon
and accomplices there were telligence agencies, including plices assigned to set off bombs leader, officials said. Some of
making final plans for the Paris from the U.S., stepped up ef- at the Stade de France arena. the men used encrypted com-
attacks early last summer, se- forts to find Abaaoud and his “By the time these guys re- munications in an apparent ef-
lecting targets and choosing at- accomplices. Cellphones entered Europe, the plan was fort to reach allies in Syria for
tack teams. Around that time, pinged their locations. The good to go, such that the com- instructions, including Ibrahim
intelligence agencies recorded data through mid-October munications necessary to de- el-Bakraoui, one of two broth-
calls between Abaaoud in Syria showed Abaaoud moving cide on the plan and get it ers who died in the suicide-
and his family in Morocco. among the Syrian cities of ready could be kept to a mini- bomb attacks in Brussels.
In mid-August, Western in- Raqqa, Manbij and Deir Ezzour. mum,” said Mr. Wainwright of Four months later, on
telligence agents got an in- Officials aren’t certain ex- Europol. March 22, Mr. el-Bakraoui and
kling that Abaaoud aimed to actly when or how Abaaoud When they did communicate, two others set off bombs in
strike France. They arrested and the others landed in Eu- the terrorists used both en- the Brussels airport; an ac-
Reda Hame, an Islamic State rope. Evidence assembled af- crypted message apps and dis- complice blew himself up on a
operative and French national, ter the attacks suggests that posable phones. Some phones crowded train. Altogether, 32
who had returned to France Abaaoud and other attackers were used for a single conver- people were killed.
from Syria. Officials say Mr. were on the continent at least sation, Bernard Bajolet, head of The men left behind a lap-
Hame told them that Abaaoud by late September. France’s foreign-intelligence top and other digital tools for
had ordered him to launch an Once in Europe, the Paris at- agency, told French parliamen- authorities to mine for infor-
attack. He also revealed that tackers kept their conversa- tary investigators in May. mation, officials said, evidence
Abaaoud planned to strike a tions to a minimum. The three The scale of the Paris attack their security precautions had
rock concert, according to a men assigned to attack the came as a shock. Three teams grown lax.
French parliament report. Bataclan concert hall with ma- of men armed with rifles and In April, investigators
Using cellular networks, Wi- chine guns had no contact for suicide belts arrived in rental stumbled across another com-
Fi hot spots and satellites, in- weeks with the three accom- cars on Friday, Nov. 13. One munications tool, the en-
group sprayed gunfire at out- crypted audio message.
door restaurant terraces. An- Italian prosecutors said Is-
other tried to enter the soccer lamic State officials in the
stadium where the French pres- Middle East had in April sent
ident was watching the national audio messages over Whats-
team. At the concert hall, three App to Abderrahim Moutahar-
terrorists killed 89 people. rik, a Moroccan-born Italian.
Three days later, French offi- The messages ordered at-
cials realized Abaaoud wasn’t tacks in Italy and were found
in Syria, but had directed the by chance: Mr. Moutaharrik
Paris carnage in person. played them aloud in his car
On Nov. 18, five days after and they were captured by a re-
the killings, a combination of cording device planted by au-
tips, phone taps and cell- thorities, according to a court
THIBAULT CAMUS/ASSOCIATED PRESS

years. phone-location data led French document and prosecutors.

Karim Mohamed-Aggad, a
brother of one of the Paris at-
tackers, sent text messages ex-
tolling jihad and martyrdom in
late 2013 before heading to
Syria with friends from Stras-
bourg, France, according to a
court document. Radouane Ta-
her, a companion, talked in
officials to an apartment north
of Paris, where Abaaoud and
two accomplices were killed in
an hourslong firefight.
The raid left other affiliated
terrorists in Belgium—includ-
ing alleged Paris attacker
Salah Abdeslam, who had re-
Rescue workers ferry a wounded victim from the Bataclan concert hall after the Paris attacks. turned to Brussels—without a
“Light up the fire on the
flowing crowd, pour grenades
on the crusader’s head,” said
one message, part of an Arabic-
language poem. “Don’t have
mercy until he’s broken.”
—Matthew Dalton, Noemie
Bisserbe and Manuela Mesco
contributed to this article.

BACON name. Some say the wife of a

Continued from Page One
opposed to the move—and to
all forms of arterial correct-
ness. “We’ve been talking about
healthier lifestyles for the last
100 years and every time some-
body comes up with a healthier
alternative, somebody else
knocks it back,” he says.
Outside his shop, the Cygnet
Butchery, Mr. Victor has placed
all-caps sign that declares:
“SAVE EGGS AND BACON BAY!
DON’T GIVE IN TO SMALL-
MINDED PEOPLE.”
No one is quite sure how
Eggs and Bacon Bay got its
former governor once ate eggs
and bacon there, while others
believe it came from a native
flower whose yellow-and-red
blooms resemble the dish.
Andy Abramowich, a Cana-
dian who owns The Cat’s
Tongue Chocolatiers in nearby
Huonville, offers a wholly un-
substantiated story about a
French explorer named “Mon-
sieur Oeuf Lardon” who may
(or may not) have discovered
the place. In addition to choco-
lates, Mr. Abramowich sells
“Bacon Soap” which, he says, is
a “wonder” for bathing.
A sign on Mr. Abramowich’s
counter reads: “Vegetarians live
up to nine years longer than
meat eaters. Nine horrible,
worthless, baconless years.”
Also found in Australia are
Roast Beef Creek and Beefsteak
Creek in New South Wales, and
Leg of Lamb Bank in Western
Australia—the latter named by
early cartographers because its
contours resembled a Sunday
roast.
Pip Banks-Smith, a local
teacher, said Australia’s obses-
sion with food names likely
stems from early settlers
“imagining beautiful food that
they couldn’t have.”
Tasmania, a former penal
colony off Australia’s southern
tip, once relied on logging,
mining and agriculture for sus-
tenance. Lately, the island state
has reinvented itself as a culi-
nary tourism destination. Win-
eries and posh restaurants,
which serve up dishes such as
Huon Valley Council, a county
authority Mr. Coad heads.
Among the guidelines officials
must consider: Will a name
and eggs (two fried eggs and
two rashers of bacon) has
around 255 calories, while a
113-gram slice of store-bought
wallaby kebabs, made from a change remove confusion and apple and berry pie has roughly
native marsupial, have enhance public safety, and does 274 calories, according to the
sprouted up alongside orchards it have broad community sup- Dietitians Association of Aus-
and wooden farm cottages. port? tralia. “They are quite similar,
Mr. Coad, the mayor, often The Huon Valley Council’s with no standout in terms of a
steps onto his backyard jetty official Facebook page has been better nutritional profile,” a
with a net to snag a salmon bubbling over with feedback, spokeswoman said.
for dinner. “If you look south, not all of it entirely helpful. Re- On a recent afternoon, Rex
the next stop is Antarctica,” he sponding to one glib remark, Beuganey—who is a vegetar-
said. “It’s a pretty unique the council urged the male ian—bit into a slice of apple
spot.” poster not to be so flippant. and cherry pie and declared:
The decision whether to “There’s a lot at steak,” they “That’s lovely, but I still
change the bay’s name ulti- wrote. wouldn’t want the bay to
mately rests with the govern- One potential hitch to the change its name.” His friend,
ment-appointed Tasmanian No- proposal is the awkward fact Jim Farley, munching on eggs
menclature Board. The first that pie isn’t actually healthy. and bacon, responded: “It ain’t
step is winning approval of the An average plate of bacon broke so don’t fix it.”
 For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
Clinton Is Facing a Trump Dilemma
CAPITAL JOURNAL
GERALD F. SEIB
H
illary Clinton’s health
issue is her most cur-
rent problem, but not
her biggest one.
The larger issue, revealed
by the difficulties she’s en-
countered in the last couple
of weeks, is the same one
more than a dozen Republi-
can presiden-
tial contend-
ers grappled
with, largely
unsuccess-
fully, during
the primary
season: How do you run
against a candidate as uncon-
ventional, harsh and relent-
less as Donald Trump?
Sen. Marco Rubio and for-
mer Florida Gov. Jeb Bush
can sympathize, for they dis-
covered the difficult strategic
choice Mr. Trump presents.
An opponent can try to ignore
his jabs and pursue his or her
own agenda instead, only to
discover that Mr. Trump has
used his tactics to define the
race and soak up much of the
oxygen in the room by grab-
bing attention for himself.
Or the foe can engage in a
kind of punch-counter-punch
exchange of insults, only to
learn how hard it is to beat
Donald Trump at his own
game.
Mr. Trump’s primary rivals
never quite figured out how
to navigate between those
two paths—and now Mrs.
Clinton is struggling with the
same problem.
“The primary should have
been a case study in the les-
son that you can never, ever
let Trump control the tone
and tempo of the race,” says
Kevin Madden, who was a top
JUSTIN SULLIVAN/GETTY IMAGES
Democratic nominee Hillary Clinton shown speaking with reporters Friday in New York.
CLINTON
Continued from Page One
On Monday, Mr. Trump also
said he would put out more
medical information, though
his timetable wasn’t clear.
Mrs. Clinton was spending
Monday at home resting, the
campaign said, though she
planned to call into a fund-
raiser in San Francisco.
Mr. Fallon said Mrs. Clinton
didn’t plan to change her
schedule after her diagnosis of
pneumonia on Friday.
That day, she attended a
national-security meeting,
talked to reporters and at-
tended a fundraiser. She also
participated in meetings on
Saturday and didn’t want to
miss the 9/11 event on Sunday,
he said.
“Her intention was to
power through,” he said. “She
was full-steam ahead.” He said
aides had to persuade her to
cancel the California trip,
which was scheduled for Mon-
day and Tuesday.
It is possible she will return
to the campaign trail on
Wednesday, but it wasn’t clear
whether she would travel to
Nevada, where she has an
event scheduled that day.
Republican presidential candidate Donald Trump speaking in Pensacola, Fla., on Friday
strategist on Mitt Romney’s
2012 GOP presidential cam-
paign. “If you do, he will put
you in a reactive, defensive
crouch and you will end up
running at his pace instead of
your own.”
At the same time, Mr.
Madden adds, “you can never
assume your opponent will
implode on their own or the
media scrutiny will be enough
to showcase the contrasts be-
tween you and your oppo-
nent. You have to go at your
opponent decisively and re-
lentlessly, disassembling the
argument for their candi-
dacy.”
Mrs. Clinton’s current
problems illustrate how tough
it is to get the mix right.
It’s possible, perhaps even
likely, that the Clinton camp
decided to hide the fact that
she was diagnosed with pneu-
monia last week because dis-
closing that would have
There were discussions
about deploying her husband,
former President Bill Clinton,
to attend Los Angeles fund-
raisers in her stead. She also
had planned to appear on El-
len DeGeneres’s talk show.
Mrs. Clinton, who main-
tained a grueling travel sched-
ule as secretary of state and
now as a presidential candi-
date, “continues to feel better
but intends to remain at home
today, following her doctor’s
recommendation to rest,”
spokesman Nick Merrill said
Monday.
Mrs. Clinton’s defenders
pointed to her resilience.
“ ‘Powering through’ illness is
what women do: Stoically, ev-
ery. single. day,” former Michi-
gan Gov. Jennifer Granholm
wrote on Twitter.
But former Obama adviser
David Axelrod said the way
that Mrs. Clinton handled the
situation was a problem and
fed the perception that the
candidate isn’t always
straightforward with the pub-
lic.
“Antibiotics can take care
of pneumonia,” he wrote on
Twitter. “What’s the cure for
an unhealthy penchant for pri-
vacy that repeatedly creates
unnecessary problems?”
The campaign didn’t dis-
U.S. NEWS
played directly into the narra-
tive Mr. Trump and his al-
lies—principally former New
York Mayor Rudy Giuliani—
were crafting of a Democratic
nominee with mysterious, se-
rious health issues.
There is no easy
way to handle the
challenge Mrs.
Clinton confronts.
If so, Mr. Trump laid a
trap—and Mrs. Clinton
walked into it.
Likewise, Mrs. Clinton’s
second new problem may
have been another case of
walking into a Trump trap.
She asserted at a fundraiser a
few days ago that “to be
grossly generalistic, you could
put half of Trump’s support-
ers into what I call the basket
close until Sunday afternoon,
hours after a video emerged of
Mrs. Clinton stumbling as
aides helped her into her van,
that Mrs. Clinton has been di-
agnosed with pneumonia two
days earlier.
Clinton communications di-
rector Jennifer Palmieri re-
plied to Mr. Axelrod: “We
could have done better yester-
day, but it is a fact that public
knows more about HRC than
any nominee in history.”
On Monday, Mr. Trump
wished Mrs. Clinton a speedy
recovery but also aired ques-
tions about her health, citing a
coughing episode during a
rally earlier this month. Mrs.
Clinton attributed the cough
to seasonal allergies.
“I hope she gets well soon.
I don’t know what’s going on.
I’m like you, I just see what I
see,” Mr. Trump said on Fox
News. “The coughing fit was a
week ago, so I assume that
was pneumonia, also. I would
have to think it would have
been, so something is going
on, but I just hope she gets
well and gets back on the trail,
and we’ll be seeing her at the
debate.”
The candidates are sched-
uled to meet on Sept. 26 in
Hempstead, N.Y., for their first
debate.
Tuesday, September 13, 2016 | A7
pummeled for this comment.
That misses the point.
Such a style is what people
have come to expect, and in
some cases admire, about Mr.
Trump. It’s not what they ex-
pect of Hillary Clinton, nor
does it play to the former
secretary of state’s strengths.
This is what both Messrs.
Bush and Rubio learned the
hard way during the primary
season. When they decided to
engage in a knife fight with
Mr. Trump, they got sliced up
pretty badly.
In this case, the “deplor-
ables” comment also cut
against what had emerged as
the uber theme of the Clinton
campaign, which is that
Americans are “Stronger To-
gether.” In a recent “Meet the
Press” interview, Mrs. Clinton
EVAN VUCCI/ASSOCIATED PRESS
cited that slogan as the big
idea animating her candidacy.
The deplorables comment
went in the opposite direc-
tion, and just when the Clin-
ton camp was trying to pivot
to stress her agenda more.
T
here is no easy way to
handle the challenge
of deplorables. The racist, Mrs. Clinton confronts.
sexist, homophobic, xenopho- Republicans learned early this
bic, Islamaphobic—you name year that ignoring Mr. Trump
it.” and his jabs doesn’t work
Mrs. Clinton backtracked very well.
later, repeating that she had “You can’t ignore Trump,”
been “grossly generalistic” says Alex Conant, a top ad-
about Trump supporters and viser to Sen. Rubio’s presiden-
saying “that’s never a good tial campaign. “He is too good
idea.” of a showman and his mes-
The bad idea may have sage is too salient.” But cam-
been being lured into trying paigning in Trump style also
to play the attack game in undercuts the key difference
Trump style. This time, Mrs. Clinton is trying to draw
though, the target wasn’t Mr. between his approach and
Trump but rather many of the hers.
voters backing him, which is a Her advantages lie in her
crucial difference. more detailed grasp of policy
Clinton supporters are issues and her government
doubtless galled that Mr. experience. His advantages lie
Trump has attacked so many in his advocacy for a new at-
people over the last year— titude in Washington and dis-
Hispanic immigrants, Mus- missal of the establishment.
lims, Sen. John McCain—and Perhaps Mrs. Clinton would
himself has been “grossly be better off staying in her
generalistic” along the way, lane, and allowing other Dem-
yet has prospered anyway, ocrats to engage Mr. Trump
while Mrs. Clinton is being in his.
"The Paradise Underneath the Horizontal Line - 33" by Yu Will, Helios Gallery, Taiwan, Room 4110
U.S.
Watch
ECONOMY
Inflation Expectations
Increased in August
A three-month slide in con-
sumer inflation expectations re-
bounded in August, according to
a survey by the Federal Reserve
Bank of New York.
Consumer inflation expecta-
tions for one year from now
ticked up last month to 2.79%,
the highest level since October.
The increase appears to have
been driven mostly by increases
in the expected prices of food,
rent, medical care and college tu-
ition. Consumers in the survey
expected gasoline prices would be
lower a year from now, however.
Federal Reserve officials pay
close attention to inflation expec-
tations because they can predict
the path of actual inflation. The
central bank has been struggling to
boost inflation up to its 2% annual
target for more than four years.
—David Harrison
OREGON
Trial Is Set to Begin
For Armed Protesters
Nearly nine months after the
armed occupation of a federal wild-
life refuge in Oregon, arguments in
the first trial against some of the
participants were opening in Port-
land, Ore., on Tuesday.
Eight of the 26 protesters facing
charges—including their leader, Am-
mon Bundy—were due to appear
before a jury in a federal court-
house. Mr. Bundy, 41 years old; his
brother Ryan, 43; and the six oth-
ers all face charges of conspiracy to
impede federal officers through in-
timidation, threats or force.
All eight have pleaded not
guilty. A lawyer for Ammon
Bundy didn’t respond to request
for comment. Ryan Bundy is rep-
resenting himself. The protesters
said the federal government re-
stricted cattle ranching, logging
and other economic development
on land set aside for preservation.
—Jim Carlton
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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A8 | Tuesday, September 13, 2016 THE WALL STREET JOURNAL.

PERSONAL JOURNAL.

The Office Walk-and-Talk Really Works

The health benefits are Carolina Department of Health and
Environmental Control in Colum-
real for people who bia, S.C. She was startled to learn
regularly take walking from an app months ago she was
getting only about one-third of her
meetings at work 10,000-steps-a-day goal.
Ms. Bracey started inviting col-
BY RACHEL BACHMAN leagues on 15-minute walking
meetings, a few a week. She came
They don’t require yoga pants to find that the mobile meetings
or a shower, but the research is are more relaxed than seated ones,
clear: Walking meetings count as and remove barriers between man-
exercise. agers and employees.
“If corporations were to adopt “Even just having a desk be-
this ubiquitously, you just start to tween two people, it almost states
think of those health benefits add- that you’re in this position and
ing up,” says James Levine, co-di- they’re in that position,” Ms.
rector of obesity solutions at the Bracey says. “When you’re side by
Mayo Clinic and Arizona State Uni- side, we’re there with our comfy
versity. “It’s an amazingly simple shoes on and we’re just two peo-
thing and it costs nothing.” ple out walking.”
Walking meetings are typically Walking meetings also spur
held with two or three people over more ideas, Ms. Bracey says. Re-
a set route and period—often 30 search backs her up. Creative out-
minutes. They can take place at a put increases by an average of 60%
nearby park or even in office hall- when people are walking, accord-
ways. Some people are using walk-
ing meetings to boost their daily
How to Walk and Talk ing to a 2014 Stanford University
of 176 college students and other
step counts. Others are spurred by  Limit meetings to two to three people adults. Study participants were
mounting research on the physical asked to think of alternate uses for
and mental benefits of being more  Keep meetings to 30 minutes a given object, for instance, while
mobile at work. they were seated or walking. When
One of the few studies on walk-  Aim to get 150 minutes of aerobic activity a week people were walking, they pro-
ing meetings, published this year, duced more responses that no one
FROM TOP: ISTOCK; KPMG UK

demonstrated their potential. The  Walking for 15 minutes burns an average of 56 calories else in the group had thought of
three-week study, co-written by Dr. than when they were sitting.
Alberto J. Caban-Martinez, a phy-  Sitting at a laptop for 15 minutes burns 20 calories Jeff Donnay, a managing direc-
sician and scientist at the Univer- tor at Salo, a Minneapolis-based
sity of Miami, showed a 10-minute  Standing at a desk for 15 minutes burns 22 calories staffing and consulting agency,
gain among the 17 participants in says he often walks while talking
weekly physical activity after they on the phone.
added walking meetings. “I’m on a wireless headset, so
The more participants engaged ducted while walking, experts say. 56 calories, compared with 20 cal- few sort of quizzical looks from I’m walking around the office right
in moderate physical activity at Although standing desks have ories for sitting at a laptop com- some people” when she suggested now,” he said in a recent phone
work, the less likely they were to received attention in recent years, puter and 22 for standing. Walking a few months ago that her office call.
miss work for health reasons, ac- standing burns scarcely more calo- participants moved at about 2.6 hold walking meetings. The head Mr. Donnay says a study of of-
cording to the study, published in ries than sitting, according to a miles an hour, says study co-au- of communications at business-ad- fice-based health care conducted
the journal Preventing Chronic study of 74 people by researchers thor Seth Creasy, now a postdoc- visory firm KPMG in London none- at Salo and co-written by the
Disease. Being sedentary for long at the University of Pittsburgh toral fellow at the University of theless paired off the 26 people in Mayo Clinic’s Dr. Levine, published
stretches is linked with obesity, published earlier this year in the Colorado, Denver. That’s a bit her department and sent them on in 2011, persuaded him and his col-
Type 2 diabetes and a range of Journal of Physical Activity and slower than the 3-miles-an-hour one 30-minute walking meeting a leagues to move more at work. Mr.
other conditions. Health. federal health guidelines say week. The pairings were randomly Donnay also holds about two 30-
Most Americans get less than The study found that walking counts as brisk walking. assigned and rotated weekly to in- minute walking meetings a month,
the recommended 150 minutes a for 15 minutes burns an average of Sorrelle Harper says she got “a clude everyone and to stimulate sometimes in a nearby park.
week of moderate-intensity aero- new conversations. In a previous job, Paul Nuki re-
bic activity, such as brisk walking. Each pair settles on a topic, called staging long, out-of-office
Previous studies have shown that which can range from career goals walking meetings that turned out
walking for as little as 15 minutes to client strategy, ahead of time. to be too ambitious for some of
a day can add up to three years of All the talks are confidential, his co-workers.
life expectancy. which has made them more candid “Three or four members of the
Walking meetings have been than typical meetings, Ms. Harper team would book a holiday for
outlined in a TED Talk and encour- says. Despite occasional rain and that day or phone in sick,” he re-
aged in a Funny or Die video with even snow flurries, employees calls. Mr. Nuki has since co-
the cast of “The West Wing,” have embraced the meetings, Ms. founded a London-based company,
whose characters were known for Harper says. People seem “much StepJockey, to combat sedentary
their frequent walk-and-talks. The more animated when they’re walk- behavior in large office buildings
2015 federal dietary guidelines ing side-by-side in the fresh air.” by promoting the use of stairs.
suggested people use walking Paula Bracey is a director of He says it’s also important to
meetings to increase physical ac- project management at the South make clear that walking meetings
tivity. are work, not meanderings or gos-
Meetings, phone calls and email sip sessions. “If bosses see you
have come to consume more than Walking in London wandering outside heading to a
90% of the working time of man- Becca Appleby and Nahidur cafe, the instinct is, ‘Why aren’t
agers and some other workers, Rahman hold a walking meeting they at their desks working?’ ” Mr.
such as consultants. Many of those near the London office of business- Nuki says. “So you need to let peo-
meetings and calls could be con- advisory firm KPMG. ple know.”

Boxing, Biking and Bikinis: The Three B’s of Fitness

BY JEN MURPHY

Bikinis and pasta might seem

like an odd pairing, but not to
Margot Micallef. The 57-year-old
eats a lot of pasta, as chief execu-
tive of Gabriella’s Kitchen, a forti-
fied pasta company based outside
Toronto. She also competes in bi-
kini fitness competitions.
After losing her sister and busi-
ness partner, Ga-
WHAT’S YOUR briella Micallef,
WORKOUT? to cancer in
2012, Ms. Mi-
callef turned to
exercise. “I was overwhelmed by
the loss, as well as the challenge of
running the company on my own,”
she says.
BRIAN BUCHSDRUECKER FOR THE WALL JOURNAL (2)

Ms. Micallef hired a personal

trainer, joined a boxing gym and
started biking with a friend. “Exer-
cise gave me mental clarity and fo-
cus,” she says.
Ms. Micallef divides her time
among Calgary, Vancouver and To-
ronto because she runs two busi-
nesses: Oliver Capital Partners, in Margot Micallef, above and left,
Calgary, Alberta, which invests in prepares for 100-mile bike rides and
private companies looking for ex- bikini fitness competitions by working
pansion capital or an outright sale; out with Louie Raposo, of Impact
and Gabriella’s Kitchen, which sells Boxing & Fitness in Calgary, Alberta.
high-protein, gluten-free products
under the label Skinnypasta. sick, she always would say, ‘Find ing back extensions using a TRX coach helped teach me to ride says.
Eventually, Ms. Micallef got so the time to take care of your Suspension Trainer. more efficiently and to focus.” Ms. Micallef bought a Special-
fit that her trainer, Yvan Courn- health, because you will always Depending on which competi- Ms. Micallef starts her day with ized Elite Ruby road bike for
oyer, suggested she sign up for a find the time to take care of your tion or bike ride she is training for, a cup of organic ginger-green tea. $3,500 (prices in Canadian dol-
bodybuilding competition. “I al- illness,’ ” Mrs. Micallef says. she cycles or boxes in the after- Her breakfast concoction is a com- lars); her Shimano Ultegra 6800
ways thought bodybuilding was for “That’s why I always find the noons or evenings at Impact Box- bination of goat-milk yogurt, ber- wheel set cost $750. She spent
Arnold Schwarzenegger types,” she time.” ing & Fitness in Calgary. “Boxing is ries, cucumbers, chia, hemp and $750 on an ultralight Scicon Aero-
says. Last year, in May, she com- Ms. Micallef’s workouts begin one of the scariest things,” Ms. Mi- flax seeds, shredded coconut, comfort bike bag so she can travel
peted in a regional fitness compe- at 6 a.m., Monday through Friday. callef says. spices like cinnamon, cayenne and with her bike. She likes Campag-
tition of the British Columbia Ama- She has personal trainers in Cal- Ms. Micallef does various drills turmeric, fish oil and a touch of nolo cycling apparel, Specialized
teur Bodybuilding Association and gary, Vancouver and Toronto and on different bags with a trainer. Or maple syrup. “It’s a challenge to Body Geometry gel gloves and her
placed second in the age 45-plus keeps an extra bike and workout she rides on Calgary’s bike paths, get all of my ingredients into my Specialized Sierra helmet. She
bikini category.She plans to com- gear at her 26-year-old son’s To- completing rides of two to three yogurt when I travel, but I try,” spent $350 on her Sidi Eagle 5 Fit
pete in the Popeye’s Fall Classic bi- ronto apartment. When she is in hours on weekends. After last she says. Lunch and dinner are Venice bike shoes. She boxes in
kini competition in November. New York City, which is about one year’s Branch Out Bike Tour, she protein- and vegetable-focused; Everlast Grid high top boxing
To balance her strength train- week a month, a trainer comes to hired a cycling coach for three pasta with capers, artichokes, spin- shoes and runs in Brooks Adrena-
ing, Ms. Micallef does long-dis- her hotel. days. “I felt really out of control on ach and kale is a go-to meal. She line GTS shoes.She buys Lolë leg-
tance cycling. For the past two Each day her workout will focus the downhills and was surprised snacks on raw vegetables or apples gings, Nike shorts and Gap Fit
years she has participated in the on a different muscle group: For that the hardest part for me throughout the day, and cuts out tops. Her custom-made competi-
Branch Out Bike Tour, a 100-kilo- legs and back, she might perform wasn’t the uphill, but being able to all sugar leading up to a body- tion bathing suit cost $250. She
meter ride in Panorama, British three sets each of step-ups, re- concentrate on the long flat building competition. “Luckily, I spends about $100 an hour on
Columbia. “When my sister got verse flyes, split squats, and stand- stretches of road,” she said. “My don’t have a sweet tooth,” she training.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. Tuesday, September 13, 2016 | A9

ARTS & ENTERTAINMENT

Lightening Up a Too Dark Knight

BY BEN FRITZ

THEY’RE TWO OF THE MOST successful movies

of the year, grossing a combined $1.5 billion
at the global box office.
“Batman v Superman: Dawn of Justice”
and “Suicide Squad” are also two of the year’s
biggest disappointments, met with viciously
negative reviews, bitter fans’ complaints and
large second-weekend sales drops that indi-
cate word-of-mouth was unkind, to say the
least. The Wall Street Journal’s Joe Morgen-
stern wrote that “Suicide Squad” represented
“an all-out attack on the whole idea of enter-
tainment” due to its “exceptional cynicism
and startling ineptitude.”
Warner Bros. is responding to this paradox
by charging full-speed ahead with plans for
its DC “cinematic universe”—while conceding
the movies to date have fallen creatively
short, a rare public admission in Hollywood.
The studio has reworked the 2017-slated
“Justice League” in hopes of making it less ZAP! Warner Bros.
grim and depressing than March’s “Batman accentuates the positive

v Superman.” And it has put fan-favorite
comic book and TV writer Geoff Johns in a
senior position overseeing the next wave of
movies, along with veteran production exec-
utive Jon Berg.
One of the duo’s main goals, they said in
their first interview since taking the jobs
this past spring, is to make DC superheroes
on the big screen more inspiring.
“Mistakenly in the past I think the studio
has said, ‘Oh, DC films are gritty and dark
and that’s what makes them different.’ That
couldn’t be more wrong,” said Mr. Johns, who
has written comic books featuring most of
the company’s top superheroes. “It’s a hope-
ful and optimistic view of life. Even Batman
has a glimmer of that in him. If he didn’t
think he’d make tomorrow better, he’d stop.”
Many have complained that such a sense
of optimism was precisely what was missing
from director Zack Snyder’s “Batman v Su-
perman” and his 2013 Superman reboot “Man
of Steel.” Neither Ben Affleck’s Batman nor
Henry Cavill’s Superman crack a smile, and
both films feature so much death and de-
struction, including killings perpetrated by
the main characters, that bloggers labeled
them the “DC cinematic murderverse.”
The shuffle that made DC movies a full-
time job for Messrs. Berg and Johns came
soon after the public reaction to “Batman v
Superman.” Previously, no Warner executives
were devoted exclusively to the studio’s su-
perhero films. Mr. Berg worked on them
along with other productions, and Mr. Johns
was a consultant with no authority.
Their appointments indicate that after giv-
ing Mr. Snyder the type of long leash ac-
corded Christopher Nolan on the hit “Dark
Knight” Batman trilogy, Warner has con-
cluded it needs to oversee its DC movies
more closely. A spokeswoman for Mr. Snyder
said he was unavailable to comment.
There was precedent in comics for Mr.
Snyder’s interpretations, particularly Frank
Miller’s revered 1986 comic-book miniseries
“The Dark Knight Returns,” in which Bat-
man and Superman battle. And director Da-
vid Ayer’s “Suicide Squad,” though it had
significant reshoots and last-minute editing,
was never going to be a lighthearted romp,
since its source material is about villains co-
erced into doing good.
While they knew the movies had flaws and
expected them to be controversial, Warner
executives were taken aback by the over-
whelmingly negative responses, people at the
studio said. They believed they had created
more grounded, character-based stories that,
like “The Dark Knight,” would favorably stand
out from chief rival Marvel Studios’ consis-
tently successful but fluffier fare such as
“Avengers” and “Guardians of the Galaxy.”
The negative reactions were troubling. De-
spite the box office, if people aren’t happy
and excited to see what’s next when they
come out of theaters, the long-term prospects
for DC films and consumer products are poor.
Warner plans to release at least two movies
based on DC characters every year for the
foreseeable future at a cost of several billion
dollars. CEO Kevin Tsujihara has said DC is
one of three pillars of his studio’s movie busi-
ness, along with Harry Potter and Lego.
Still, Warner executives have found rea-
WARNER BROS.
after bad reactions to
films like ‘Batman v
Superman.’
sons to take heart. The fact that this year’s par for the course. And it’s expected to have
movies were met with strident opinions—in- fewer of Mr. Snyder’s controversial flourishes,
stead of a shrug like the Twentieth Century like the dream sequences in “Batman v Super-
Fox 2015 superhero flop “Fantastic Four”— man,” in favor of focusing more tightly on the
indicates that fans care about the charac- plot, people close to the picture said.
ters. Big opening weekends mean that the Plans to make “Justice League” a multi-
marketing and concepts resonated—a par- movie story were also abandoned. Instead, a
ticularly impressive feat for “Suicide 2019 sequel will stand alone. “Justice League”
Squad,” given the low profile of the comic will come out in November 2017, following
book on which it’s based. And even people next June’s “Wonder Woman.” Mr. Johns did
who didn’t like the movies latched onto a rewrite of the script for the superheroine’s
characters who proved popular, particularly origin story, working with director Patty Jen-
Gal Gadot’s Wonder Woman and Mr. Af- kins, and is co-writing a solo Batman movie
fleck’s Batman in “Batman v Superman” and with Mr. Affleck, who will also direct. It will
Margot Robbie’s Harley Quinn and Will feature Joe Mangianello, from “Magic Mike”
Smith’s Deadshot in “Suicide Squad.” and “True Blood,” as nemesis Deathstroke
“To have these characters be part of the and could come as early as 2018, though War-
fabric of pop culture is so rewarding, though ner hasn’t set a release date.
of course we’re disappointed the movies As he is writing screenplays and working
weren’t better reviewed,” said Mr. Berg. He with Mr. Berg to develop other coming DC
spoke from the London set of “Justice movies, including “Flash,” “Aquaman” and
League,” where Mr. Snyder is a few weeks “Cyborg,” Mr. Johns has pulled back from his
away from completing a five-month shoot. work on DC television shows and comic
“Justice League” was already intended to books. In May, however, he wrote a special
be less depressing than “Batman v Super- called “Rebirth” that gave DC’s comic-book
man,” but Messrs. Berg and Johns worked line a more hopeful tone and a renewed focus
with Mr. Snyder and screenwriter Chris Ter- on each superhero’s core qualities—following
rio to make changes after gauging fan reac- complaints that, like the recent movies, they
tions to the superhero fight. “We accelerated had gone astray from what fans loved about
the story to get to the hope and optimism a them. Early sales numbers have been strong,
little faster,” said Mr. Berg. and Mr. Johns said he is applying the lessons
“Justice League” will also directly address to his films. “We’re trying to take a really
Batman’s extreme actions in the last movie, hard look at everything to make sure we stay
such as torturing criminals and nearly killing true to the characters and tell stories that
the man of steel, rather than accept them as celebrate them,” he said.

ART
DOCUMENTARIES

The Origins of Beatlemania

BY JOHN JURGENSEN

THE LEGACY OF THE BEATLES is

usually explained through their record-
ings. A new documentary film explores
the other side of their career, as per-
formers. On the road and in concert,
the four bandmates bonded, defined
their moptop image and accelerated
their creativity in the studio—until
Beatlemania forced them to retreat
from the stage.
FROM TOP: APPLE CORPS LTD.; JEFF LIPSKY

At the center of “The Beatles: Eight

Days a Week—The Touring Years” is
the band’s meteoric run between their
Ed Sullivan appearance in 1964 and
their final public concert 50 years ago,
at San Francisco’s Candlestick Park on
Aug. 29, 1966. Before that, however,
came years of groundwork, including
hundreds of pre-fame performances
before the band released its first sin-
gle, “Love Me Do.”
“A lot of people thought we were an
overnight sensation. We weren’t. Peo-
ple didn’t realize we had all this devel-
opment,” 74-year-old Paul McCartney
says in the film.
For director Ron How-
ard, the band’s journey
formed the basis of
“an adventure
story.” As they
went from sharing
cramped quarters
in the seedy part
of Hamburg to
hiding in a bath-
room to escape the
crush of fans and
media in New York,
their tale turned into
“an ensemble survival
story,” says Mr. Howard, the
ELEVATING THE EVERYDAY David Shrigley’s ’Memorial’ in New York.
A Monumental
Grocery List
commissioned by an anonymous
BY ANNA RUSSELL
group, which rise like oversize grave-
COME TOGETHER Director Ron Howard, below, stitched together fan footage. stones in a rural part of the state.
BRITISH ARTIST David Shrigley’s The 19-foot-tall monument includes a
submit their personal recordings and They played their guitars through low- monumental public sculpture, “Memo- set of 10 guidelines to life inscribed in
footage. There are some 2,000 audio, wattage amplifiers, and the sound rial,” unveiled last week in the south- eight languages. Mr. Shrigley says of
visual and photographic clips was delivered through stadiums by east corner of New York’s Central “Memorial,” “I liked the idea that a
in the film from more tinny public address systems used by Park, is a 17-foot-tall grocery list ren- shopping list and a memorial serve
than 100 sources, in- sports announcers. The Beatles had dered in solid granite. On the docket the same purpose. They are both an
cluding fans, collec- three roadies and almost zero stage are everyday items such as milk, eggs aid to memory.” One of them, he
tors and archive spectacle, aside from their matching and sausages. “Rice wine vinegar added, is meant for something
houses. They in- suits. didn’t make the cut,” he said. grander. “But for most of us, what
cluded a jackpot The band made the decision to quit Later this month, in London’s Tra- are the noble deeds of our lives?”
revealed by a touring while sliding around the back falgar Square, Mr. Shrigley will mount Mr. Shrigley’s offbeat aesthetic will
woman who used of a cargo truck that was carting them an equally incongruous project: a 10- appear elsewhere this fall too. For a
a Super 8 camera away from the stage at Candlestick foot tall “thumbs-up” sign cast in festival in Toulouse, France, this
to shoot much of Park. Three months later they started dark bronze, titled “Really Good.” month, he has designed wonky but
the band’s final work on “Sgt. Pepper’s Lonely Hearts For an artist primarily known for still functional guitars with one string
concert from a good Club Band,” and released five more al- darkly comic drawings of stick fig- and maracas in the shape of giant
seat in Candlestick bums before breaking up in 1970. As ures in absurdist situations, it’s a fists. At his show at the Rose Art
Park. After she devel- Mr. Lennon says in the film, “We really high-stakes introduction to a Museum at Brandeis University in
oped it and watched it expressed ourselves through the re- broader public. The 47-year-old Mr. Waltham, Mass., which opened Sun-
once or twice, it sat under her cords, because we could no longer do it Shrigley was born in Macclesfield, day, Mr. Shrigley invites visitors to
DAVID SHRIGLEY/ANTON KERN GALLERY/PUBLIC ART FUND, NY

filmmaker behind movies such as
“Apollo 13” and the “The Da Vinci
Code“ trilogy (including October’s “In-
ferno”).
“Eight Days a Week” is his second
feature-length documentary. His first,
“Made In America,” was about Jay Z
and the launch of the rapper’s music
festival of the same name. “Eight Days
a Week” is set for release this week in
theaters, where showings will include a
half-hour of restored footage from the
Beatles’ 1965 concert at New York’s
Shea Stadium.
In 2014, the filmmakers put out a
request online, asking Beatles fans to
bed for five decades.
Editors painstakingly stitched this
source material together, synchroniz-
ing bootleg audio recordings with
footage shot by fans. The din from
screaming fans that made it difficult
for the Beatles to hear themselves on
stage also stymied the filmmakers.
Music producer Giles Martin (son of
the Beatles’ producer George Martin)
worked to filter out the screams so
the music could be heard in the audio
mix.
The film is also a snapshot of a
band that grew faster than the con-
cert technology available to them.
outside.” England, and trained at the Glasgow make “life drawings” from a 9-foot,
Mr. Howard, who was experiencing School of Art. He lived in Glasgow badly proportioned sculpture of a
a different kind of fame then as a star for years afterward, gaining a repu- woman. “The better you are at draw-
on “The Andy Griffith Show,” recalls tation for deadpan doodles, often ing, the less your drawing is going to
wearing a Beatles wig on his 10th underscored with wry text. (One look like reality,” he said.
birthday in 1964. (His parents couldn’t drawing depicts a cat and mouse For “Really Good,” Mr. Shrigley
find the Beatles boots he had re- shaking paws. “I won’t kill you,” says wrote his proposal to create it using
quested.) After interviewing the two the cat. “Thanks,” says the mouse.) the voice of an arrogant politician. He
surviving band members for the docu- Mr. Shrigley’s art often straddles this argued that the thumbs-up sign
mentary, the director compared their line, somewhere between sincerity would work as a self-fulfilling proph-
accounts to those of the astronauts he and irony, profundity and nonsense. ecy, making London and the world a
talked to when making “Apollo 13.” The artist toys with this line in better place. “Obviously it’s nonsense
“They achieved something momen- “Memorial” as well. He modeled the to suggest that,” he said. “But I’ve
tous in the human experience,” he said, piece after the towering Georgia suddenly, in a funny sort of way,
“but they don’t really know how to ex- Guidestones (1980), mysteriously come to believe it might be true.”
plain it.”
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A10 | Tuesday, September 13, 2016 THE WALL STREET JOURNAL.

OPINION
REVIEW & OUTLOOK
U.S. Congress Can
Clinton and the ‘Deplorables’ Save the Internet
I
n one of Saturday Night Live’s more memo- will be different. They won’t wake up and see
rable political skits, Jon Lovitz playing Mi- their jobs disappear, lose a kid to heroin, feel President Obama another government-led organization. The
wants this to be the lawmakers found it “troubling” that
chael Dukakis in 1988 exclaims after an- like they’re in a dead-end. Those are people we
last month of an Obama administration lawyers failed even
other silly statement by Dana have to understand and empa- open, uncensored to ask what happens to Icann’s antitrust
Carvey as George H.W. Bush Her comments about thize with as well.” internet guaranteed status if the U.S. contract ends.
that “I can’t believe I’m losing So she thinks half of Mr. by the U.S. govern- The Constitution says Congress must
to this guy!” More than a few
Trump voters—her Trump’s voters are loath-
Democrats are beginning to fellow Americans—show some bigots and the other INFORMATION ment. His plan to approve the sale of government prop-
end American erty. The Icann contract is government
AGE
wonder if Hillary Clinton could half are losers and dupes stewardship would property worth billions of dollars, yet
soon be saying that about Don-
why she could lose. who deserve Democratic pity.
By L. Gordon
hand new power to the Obama administration has ignored
Crovitz
ald Trump, of all people. It’s no accident that Mrs. authoritarian gov- the requirement to seek congressional
That’s the essence of a Fri- Clinton said this at a fund- ernments offended approval. “Absent clear legal certainty,
day story in the Washington Post headlined raiser headlined by Barbra Streisand, the by the internet as we know it. moving forward with the transition
The good news is it appears congres- could have devastating consequences
“Democrats wonder and worry: Why isn’t Clin- friendliest of crowds, because this really is
sional leaders have agreed to rescue the for internet users,” the legislators write,
ton far ahead of Trump?” The reporters quote what today’s elite progressives believe about internet in time to prevent the Sept. 30 because litigation would create ques-
former Senate Majority Leader Tom Daschle as America’s great unwashed. expiration of U.S. oversight. Sen. Ted tions about who has authority to award
saying that given “all the things that Trump has Mr. Trump has certainly made appalling com- Cruz, who has pushed hard against the and manage internet addresses.
done, the numbers should be far more explicitly ments, but Republicans and media conservatives plan since it was announced two years
in her favor, but they’re not.” have criticized him for it. They denounced his ago, told me last week he’s “cautiously
The tone is Lovitz-like disbelief, which praise of Vladimir Putin. They assailed his at- optimistic” legislators will block it The White House will end
helps to explain why the polls are tightening. tacks on Judge Gonzalo Curiel and his insensi- through a rider to the federal budget: U.S. oversight on Sept. 30
Democrats have convinced themselves that tivity to the Khan family. Some have said they “The basic proposition of keeping the in-
Mr. Trump is such a threat to the republic that can’t support the GOP nominee. ternet free has united Republicans across unless lawmakers step in.
the spectrum and should also unite Dem-
they can’t recognize that Mrs. Clinton is But where are the Democrats raising doubts
ocrats with Republicans.”
equally as unacceptable to most of the coun- about Mrs. Clinton’s behavior? Mrs. Clinton re- Top Senate and House Republicans Each of these objections is enough to
try. In a year when most Americans want neged on her confirmation promise to the Sen- have signaled they will ensure U.S. over- retain U.S. oversight, but the broader
change in Washington, Democrats don’t want ate not to mix her State Department duties with sight continues to protect the Internet point is that Icann’s stakeholders—de-
to admit that they’ve nominated the epitome the Clinton Foundation by doing favors for do- Corporation for Assigned Names and velopers, engineers, network operators
of the self-dealing status quo that disdains nors. She maintained a private email server to Numbers, or Icann, and its stakeholders. and entrepreneurs—are free to operate
their fellow Americans. hide her official emails and lied about it to the The leaders of the four congressional an open internet because U.S. protection
Consider the reaction over the weekend to public. Yet no prominent Democrat we know committees that oversee the internet— prevents Beijing, Moscow, Tehran and
Mrs. Clinton’s comments Friday night that has denounced this deception, and former Sen. John Thune and Rep. Fred Upton other authoritarian regimes from med-
“just to be grossly generalistic, you could put House Speaker Nancy Pelosi says there’s “too (Commerce) and Sen. Chuck Grassley dling. The Obama administration may
half of Trump’s supporters into what I call the much ado” about it. and Rep. Bob Goodlatte (Judiciary)—sent not be comfortable with American ex-
a detailed letter last week to Commerce ceptionalism, but the internet fosters
‘basket of deplorables.’ Right? The racist, sex- The great liberal media watchdogs aren’t
Secretary Penny Pritzker and Attorney free speech and innovation because it
ist, homophobic, xenophobic, Islamophobic— challenging Mrs. Clinton either. They’re beat- General Loretta Lynch: “This irreversible was built in the image of the U.S.
you name it.” ing up NBC’s Matt Lauer because he spent too decision could result in a less transpar- The administration has been reduced
The remarks echo Mitt Romney’s comment much time asking Mrs. Clinton about the ent and accountable internet governance to arguing that having been promised an
in 2012 about the 47% on the government dole. emails during last week’s military forum. This regime or provide an opportunity for an end to U.S. oversight, other countries
The media played up the Romney comments as is best understood as a collective warning to enhanced role for authoritarian nation- will now be upset if this doesn’t happen.
emblematic of an out-of-touch rich guy, and the moderators of the coming debates not to states.” They focused on several fatal Too bad. Why make authoritarians happy
they probably contributed to his defeat. Mrs. jeopardize their standing in polite progressive problems with the Obama plan: by giving them the power to censor web-
Clinton’s comments were arguably worse, at- company by doing the same. Several countries are committed to sites globally, including in the U.S.?
tributing hateful motives to tens of millions of i i i ending Icann’s status as a U.S. legal en- Sen. Cruz observed it was interesting
Americans, but the media reaction has treated As Mrs. Clinton’s support has eroded in the tity, which would invalidate its legal that the Obama plan “doesn’t have much
protections. “The matter of jurisdiction in the way of outspoken Democratic sup-
it like a mere foot fault. polls, Democrats are figuring out that they may
alone raises questions,” the legislators port,” though the Democratic platform
Mrs. Clinton apologized, sort of, on Saturday have nominated the only candidate who could wrote. “These critically important juris- supports the Obama handover, which the
by saying in a statement that, “Last night I was lose to Donald Trump. But then they didn’t give dictional issues cannot wait for resolu- Republican platform opposes. It would be
‘grossly generalistic,’ and that’s never a good themselves many good choices. Their Congres- tion after the transition occurs.” fascinating if internet freedom became
idea. I regret saying ‘half’—that was wrong.” sional leaders are old, and their bench in the “We have serious concerns about the an issue in the presidential election.
But she went on to say she was otherwise right states is thin after their election wipeouts of ability to ensure that Icann would follow One of the first people to object to the
because some of Mr. Trump’s supporters are the 2010 and 2014. Mrs. Clinton’s bid to be the first its own bylaws” absent oversight, the Obama plan was Bill Clinton, whose ad-
likes of David Duke. woman President fit the party’s priority for lawmakers wrote. ministration created the system of U.S.
Yet the rest of what she said was almost as identity politics, and the Clinton machine would The legislators also rejected the claim stewardship of the internet in the 1990s.
insulting. She said Mr. Trump’s other support- do what it takes to win. of Icann’s general counsel that Icann never Soon after the plan was announced in
Mrs. Clinton is still leading, and Mr. Trump had an antitrust exemption. They cited a 2014, Mr. Clinton warned: “A lot of peo-
ers are “people who feel that the government
federal appeals court decision in 2000 ple who have been trying to take this au-
has let them down, the economy has let them is always a driverless-car accident waiting to finding antitrust immunity arising from thority away from the U.S. want to do it
down, nobody cares about them, nobody wor- happen. But it’s also obvious that a majority of operating the root zone under the U.S. for the sole purpose of cracking down on
ries about what happens to their lives and their Americans do not want to vote for an extension government contract. That’s important Internet freedom and limiting it and hav-
futures, and they’re just desperate for change. of the Clinton dynasty. They aren’t “deplor- because authoritarian governments would ing governments protect their backsides
It doesn’t really even matter where it comes ables.” They’ve seen Mrs. Clinton in public life argue Icann could only regain antitrust ex- instead of empower their people.”
from. They don’t buy everything he says, but for 25 years and they know what they’ll be get- emption by joining the United Nations or What does Mrs. Clinton think?
he seems to hold out some hope that their lives ting if she wins.

Honesty and Presidential Health Return to JFK’s

H ‘Rising Tide’ Model
illary Clinton left a 9/11 memorial ser- campaign bus, either.) Mrs. Clinton is in “excel-
vice after feeling overheated on Sunday, lent physical condition,” the note concludes, and
her campaign first dismissed it as noth- Dr. Bardack reiterated that judgment as recently By Lawrence Kudlow lon and his tax assistant at Treasury,
ing, but then her physician re- as last month. And Brian Domitrovic Harvard law professor Stanley Surrey;
leased a statement saying Mrs. Trump and Clinton Mr. Trump in December re-

S
Wilbur Mills, the Democratic chairman
Clinton was diagnosed with leased a four-paragraph letter ince 2000, U.S. economic output of the House Ways and Means commit-
pneumonia on Friday.
should both be held from Harold Bornstein, a New has inched along at a rate of 1.8% a tee; and the nation’s top business leader,
The event understandably to the John McCain York gastroenterologist who year, an astoundingly low number U.S. Chamber of Commerce President H.
raises new questions about asserted that the GOP nomi- almost half of the long-term average of Ladd Plumley, and top labor chief,
the Democrat’s health. Yet
medical standard. nee would “be the healthiest more than 3%. This isn’t the way Amer- George Meany of the AFL-CIO. By 1963,
ica is supposed to be. The U.S. has regu- each member of this diverse group had
neither presidential nominee individual ever elected to the
larly achieved more than 3% economic joined Kennedy in calling for significant
has released a thorough medi- presidency.” Cardiovascular growth as a matter of course, as it has across-the-board cuts in income-tax
cal history, while both are among the oldest status? “Excellent.” Lab results? “Astonish- led the global industrial and technologi- rates, in the context of a dollar guaran-
and least trusted by Americans in modern ingly excellent.” cal revolutions with millions of new teed against gold, as the policy mix nec-
times. The candidates could help voters with If this sounds glib, perhaps that’s because jobs, entrepreneurial wonders and mass essary to sustain 5% growth.
an independent and bipartisan review of their Dr. Bornstein has since told NBC that he wrote prosperity in tow. JFK created the model—king dollar
health records. the letter in minutes while a black car idled out- The two greatest political figures in and tax cuts—assembled the coalition,
For weeks Donald Trump has suggested Mrs. side. Mr. Trump has disclosed no other health America since World War II staked their and kept his eye on the economic objec-
Clinton is not physically fit for office, tweeting information, aside from the occasional photo presidencies on economic growth: John tive. The opponents who remained were
that his opponent lacks “drive” and “stamina” of him working through a bucket of Kentucky F. Kennedy in the 1960s and Ronald Rea- liberal Keynesian economists in the White
gan in the 1980s. Kennedy was the pio- House, beneficiaries of tax loopholes that
and in a separate subtlety asking “#WheresHil- Fried Chicken.
neer. When Reagan rallied to the cause derived their value from high rates, and
lary? Sleeping!!!!!” The Clinton campaign dis- Mrs. Clinton and Mr. Trump should be held of growth 20 years later, he did so ex- deficit-hawk Republicans in Congress.
missed these swipes as “idiotic,” to quote vice- to the same standard as Sen. McCain, who in plicitly following Kennedy’s “a rising The Kennedy coalition prevailed, and by
presidential candidate Tim Kaine in an interview 2008 invited medical experts and journalists tide lifts all boats” model. the time the president’s policy became
with ABC News. Mrs. Clinton’s traveling press to scour more than 1,000 pages of records, Americans often think that the law in February 1964, the nation had be-
secretary told an NBC reporter who published many from the Mayo Clinic, where he was 1950s were a decade of economic gun a nearly nine-year run of 5% annual
a story on the subject to “get a life.” treated for melanoma. Reviewers could not re- growth. True, there were gains for peo- growth. This feat remains one of the
The public has an interest in the health of po- move the documents from a private room, but ple lucky enough to work for the big greatest success stories in the modern
tential Presidents, and the issue is hardly new: In the campaign sent out a detailed description firms. But there were three recessions history of American public policy.
1995 a Time magazine feature asked about of the Senator’s history from more than one during Dwight Eisenhower’s presi- Running for president at the end of the
then-72-year-old Republican front runner and specialist who treated him. Nothing turned up, dency (1953-61), including one from stagflationary 1970s, the Republican Rea-
1957-58 that saw a similarly severe gan, like the Democrat JFK two decades
eventual nominee Bob Dole: “Is he too old to be and questions faded.
two-quarter drop in gross domestic earlier, understood the importance of re-
president?” In early 2008 the press rolled out a Marc Siegel, an NYU professor of medicine, product as during the Great Recession storing economic growth. In 1980, Reagan
cascade of stories that Arizona Republican Sen. was among those who reviewed Mr. McCain’s re- of 2008-09. Structural unemployment adopted Rep. Jack Kemp’s “duplication”
John McCain, who was 71 at the time, might be too cords and describes the episode nearby. He sug- (the number out of work at the eco- (as Kemp called it) of the Kennedy tax
damaged to be President after years of torture gests that the Trump and Clinton campaigns al- nomic peak) rose remorselessly in the cut. The masterful communicator then
during the Vietnam War and bouts of cancer. low similar access. 1950s, as did youth and African-Ameri- persuaded so many Democrats and liberal
Mrs. Clinton, 68, is the oldest nominee in her The irony is that the reporters who chased can unemployment. Republicans that both the 1981 and 1986
party’s history. Mr. Trump, 70, would be the old- Sen. McCain are now dismissing any questions By the end of 1960, the average rate of tax cuts had big congressional majorities.
est president ever sworn into office if he wins. of candidate health as a conspiracy against Mrs. growth during the Eisenhower presidency The 1986 act passed the Senate 97-3 and
Both have reached an age when medical risks Clinton, as if her campaign has never fibbed was just 2.5%. Kennedy won the presi- took the top income-tax rate down to
multiply, though plenty of younger presidents about private email, the Clinton Foundation or dency that year after a campaign in which 28%, one of the lowest levels ever. Along
he specifically pledged 5% growth to the came another two-decade period of
have suffered health trouble: John F. Kennedy in sundry other topics. This pattern of dishonesty
nation. As president, he kept the number growth mainly between 4% and 5%.
his early 40s had Addison’s disease, which he hid is one reason health rumors persist. By the way, “118,573” tucked in his suit pocket, to re- The JFK-Reagan policy nexus shows
from the public. Mrs. Clinton told the FBI recently that she mind him of the cat’s whisker margin of that we have the model to return to
The candidates have released perfunctory didn’t remember certain briefings because she his popular-vote victory and the need to growth. It works. There is no reason the
statements, but it isn’t much. Mrs. Clinton’s phy- was recovering from her 2012 concussion. So keep his campaign promise. model cannot be used again now. The
sician, Lisa Bardack, last year put out a two-page add that to the list of reasons her neurological When the Democrat Kennedy took of- greatest Democrat and the greatest Re-
summary of the Democrat’s health: blood clots records are relevant. fice in January 1961, he put three Repub- publican of the past 50 years both rose
in 1998 and 2009; a fractured elbow in 2009; and Mr. Trump has said he’s willing to release his licans in cabinet-level positions, includ- above partisan politics and in a civil and
a concussion in 2012 that resulted in a blood clot full history if Mrs. Clinton does, and that he ing C. Douglas Dillon as secretary of the optimistic manner convinced the nation
in her head and temporary double vision. She may even disclose his first. If he’s so sure he’s Treasury. The 35th president was part of that the king-dollar, tax-rate-cut policy mix
a high-level tradition in American poli- will work—and it did. Whoever becomes
was treated with blood thinners and, according struck a winning issue, then he should. No one
tics of inclusiveness and the desire to America’s next president should follow in
to the letter, the clot dissolved. Mrs. Clinton’s expects a President to be an Olympic athlete. win debates on the merits. their pro-growth, bipartisan footsteps.
cancer evaluations are “all negative.” But the public is entitled to a review of the evi- Spurred on by his campaign theme to
The former first lady has seasonal pollen al- dence, and the brouhaha over coughing and “get this country moving again” and to Messrs. Kudlow and Domitrovic are
lergies, occasionally drinks alcohol and “eats a other tedium is the latest symptom of a broader deliver on his 5% growth goal, Kennedy the authors of “JFK and the Reagan Rev-
diet rich in lean protein, vegetables and fruits.” malady: That voters are wondering if either put together a coalition of growth- olution: A Secret History of American
(We don’t tell our doctors about pizza on the candidate is leveling with them. oriented officials and officeholders—Dil- Prosperity” (Portfolio, 2016).
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL.
Clinton and Trump: Healthy Enough to Serve?
By Marc Siegel
W
hen Hillary Clinton
left a 9/11 memorial
service on Sunday—
reportedly feeling
overheated, stum-
bling, seeming to be about to faint—
the question once again came up
about the health of America’s presi-
dential candidates and the public’s
right to know.
Medical advances of the 20th and
the early-21st century have helped
most people to live longer, healthier
lives, and U.S. presidents are no
exception. But older people often
have multiple medical problems,
and when they run for public office,
the question comes up as to
whether these problems could inter-
fere with performance.
Candidates over the age
of 70 or with a medical
history should release their
health records for private
viewing by a few reporters.
In 2016 the U.S. has two older can-
didates, Donald Trump, 70, and Hillary
Clinton, 68. An argument can be made
that Mr. Trump should release his full
health records on the basis of his age.
His sparse but glowing physician’s let-
ter, from Dr. Harold Bornstein of Le-
nox Hill Hospital in New York City, as-
serts in classic Trump hyperbole that
if elected, Mr. Trump would be “the
healthiest individual ever elected to
the presidency.” Mr. Trump reportedly
has low blood pressure (110/65), takes
a daily aspirin, and is on Lipitor to
lower his cholesterol while admitting
to a diet containing considerable
amounts of fast food.
How Xi Jinping Undermines China’s Reforms
By Joshua Eisenman
‘W
e shall proceed with re-
form and opening up
without hesitation,”
China’s President Xi Jinping told his
country’s top leaders in August 2014
during a symposium marking the
100th anniversary of the birth of for-
mer leader Deng Xiaoping. At the
time, this pledge appeared sincere.
Since taking office in March 2013,
Mr. Xi had consistently advocated a
reform agenda intended to continue
the economic restructuring and na-
tional revitalization that Deng had
started in 1978. Now, two years later,
and despite his consolidation of
power, Mr. Xi’s reforms are mired in
a morass of bureaucratic hurdles and
official foot dragging.
The problem is that Mr. Xi’s
agenda is self-contradictory. It at
once calls for deepening reforms and
the rule of law while demanding
strict conformity with party ortho-
doxy. This recipe, which can be
called reform without opening up,
has failed to produce results.
True, China’s anticorruption cam-
paign has taken down hundreds of
thousands of officials within the
Communist Party. But it has yet to
be institutionalized, sending a pow-
erful signal to elites that it remains
politically motivated, a cudgel
Remembering the Courage of the CIA’s Friends
By Jack Jolis
B
arack Obama last week became
the first sitting U.S. President
to visit Laos. Promising to
“continue to deal with the painful leg-
acy of war,” he announced increased
U.S. aid to help Laos clear unexploded
munitions from the so-called “secret
war” of 1962-75. Having served as a
CIA case officer in Laos in 1970, I
know something about that legacy—
particularly the bits that went un-
mentioned by Mr. Obama.
My own thoughts are with our
most loyal and dedicated allies from
that era, the dwindling Hmong of
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In contrast, Hillary Clinton’s doc-
tor, Lisa Bardack of Mount Kisco,
N.Y., has released a much more
extensive letter to cover, among
other things, Mrs. Clinton’s 2012
fall, concussion and incidentally
discovered blood clot on the out-
side of her brain (transverse ve-
nous sinus thrombosis) that (cou-
pled with a history of a previous
blood clot in her leg) will require
lifetime anticoagulation for which
she currently takes the blood thin-
ner Coumadin.
Dr. Bardack’s letter includes a de-
scription of Mrs. Clinton’s recovery
from concussion, the blood clot, a
follow-up MRI and subsequent neu-
rological testing a year later that is
reported as being normal. She
writes that Mrs. Clinton is in excel-
lent physical condition and fit to
serve as president.
What are missing are the records.
Is Sunday’s episode insignificant or
part of an underlying problem? Her
doctor reported later Sunday that
she was found to have pneumonia
Friday, is on antibiotics, was dehy-
drated and overheated but is now
better. Anything more specific is
bound by HIPAA, unless the candi-
date authorizes a private release to
a small group as John McCain did
when he was running for president
in 2008.
Without the actual facts, specula-
tion runs rampant, even among phy-
sicians. It isn’t acceptable for a doc-
tor to put forth diagnostic
impressions on a patient he hasn’t
examined or whose records he hasn’t
reviewed. I am concerned about the
speculative response to Mrs. Clin-
ton’s recurrent cough, especially
when you consider that up to 90% of
cases of chronic cough are due to ei-
ther postnasal drip, asthma or acid
reflux. All are common problems
that are treatable and in no way an
wielded against the president’s ri-
vals. Many of those who might be af-
fected, therefore, are simply waiting
for the heat to die down or are ac-
tively working to thwart official in-
vestigations of their malfeasance.
Meanwhile, the once-enthusiastic
Chinese public has been shocked by
the extent of official graft, and for
good reason. In 2013, an estimated
180,000 officials were disciplined for
corruption. In 2014, the estimate
was 232,000. Last year, the figure
topped 300,000.
Economic reforms have also
stalled. Despite strong high-level
support at the outset, the initial ex-
citement over the Shanghai Free
Trade Zone has faded, shrugged off
as anachronistic by many foreign
firms seeking access to the entire
Chinese market. Similarly, Beijing’s
measures to liberalize currency
trading and capital markets have
been reversed.
When markets crashed last sum-
mer, authorities intervened by pur-
chasing equities, pressuring traders
not to sell, increasing lending and
infrastructure-investment spending,
tightening regulations on capital
outflows and depreciating the Chi-
nese currency. Although this tem-
porarily halted the market’s de-
cline, it also chilled investment and
exacerbated capital outflows. To
northern Laos, for whom the war
never ended. A small population of
Hmong persist today in their ances-
tral mountains of Xieng Khouang,
waging a desperate struggle against
the Laotian government’s punitive
war of extermination. Their conflict
now isn’t so much “secret” as forgot-
ten or ignored, at least by the U.S.
and other outside powers.
For centuries the Hmong have
been fighting off encroaching for-
eigners—whether Lao, Chinese or
Vietnamese. They were enthusiastic
partners 40 years ago for U.S. offi-
cers seeking intelligence on the
40,000 to 60,000 North Vietnamese
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OPINION
Hillary Clinton leaves the National 9/11 Memorial in New York, Sept. 11.
obstacle to being president.
In 1980 the media expressed con-
cern that Ronald Reagan was too
old at 69 to be president. There was
no mention of specific health is-
sues, and Reagan proved to be
healthy throughout his eight years,
with the exception of a near-fatal
gunshot wound that couldn’t have
been anticipated. Alzheimer’s dis-
ease as far as we know developed
after he left office.
Previous presidents, from Wil-
liam Henry Harrison (who died of
pneumonia after only a month in of-
fice), to Woodrow Wilson (who suf-
fered a stroke during his last term
that wasn’t revealed), to FDR (the
severity of his illness wasn’t pub-
licly known), to JFK (Addison’s dis-
ease), to Nixon (who took multiple
medications including the anticon-
vulsant Dilantin) had undisclosed
health problems.
More recently, public concerns
have been raised about the health of
pump up the market, China is now
moving about 2 trillion yuan ($299
billion) of its people’s pensions
from low-risk, low-yield govern-
ment bonds into riskier securities,
including equities.
The results are hardly reassuring.
Between March and June, China’s
currency fell 3% against the dollar,
its largest quarterly fall on record.
The president’s policies
are a contradiction of
liberalization and
retrenched Party orthodoxy.
By July, China’s foreign-exchange
holdings were down to about $3.21
trillion, off by about 20% from their
June 2014 peak of $4 trillion. They
remained steady in August.
Reforms have been stillborn be-
cause China’s “opening up,” initiated
by Deng in 1978 and reaffirmed by
Premier Zhu Rongji in the 1990s, is
under threat. Restrictions on infor-
mation flows on the internet and so-
cial media, known officially as “inter-
net sovereignty” or “governance of
cyberspace with Chinese socialist
characteristics,” have become more
pervasive, more difficult to surmount
soldiers who, at any given time, ille-
gally used Laos as a staging area and
conduit to South Vietnam. As part of
what was then the Royal Lao Army,
the Hmong were invaluable to U.S. ef-
forts to interdict and harass the in-
vading North Vietnamese.
Most of these brave Hmong were
captured or killed following the U.S.
withdrawal. In 1975 the Royal King-
dom of Laos became the “Lao Peo-
ple’s Democratic Republic,” which
proceeded to rape, murder or torture
more than 100,000 Hmong regardless
of whether they were “guilty” of hav-
ing helped the Americans. The lucky
ones fled through Thailand to Califor-
nia, Minnesota and Wisconsin. By the
1990s, fewer than 10,000 remained in
Laos and, as of 2016, perhaps 100 are
still fighting.
These few maintain a threadbare
guerrilla resistance against the geno-
cidal policies of the communist gov-
ernment in Vientiane—the same re-
gime that wined and dined Mr. Obama
last week. Mr. Obama’s speech only
mentioned the Hmong as part of
“Laos’s tapestry of proud ethnic
groups and indigenous peoples.” He is
likely unaware of the dramatic reality
in those mountains. The Laotian mili-
tary restricts access to the area, often
with landmines that are more reactive
than unexploded U.S. ordinance.
An intrepid Spanish documentary
film crew led by David Beriain re-
cently undertook the fraught and
dangerous mission of locating the
doughty Hmong in northern Laos.
The result is “Clandestino: The Lost
Army of the CIA,” produced by
93Metros y 7yAccion in conjuction
Tuesday, September 13, 2016 | A11
REUTERS
candidates running for president. In
1996, Sen. Bob Dole at 73 became the
oldest candidate to run for
president, and he felt compelled to
release his full health records under
pressure from President Bill Clin-
ton’s campaign. Sen. John Kerry
allowed the media a brief look at his
military medical records in 2004,
and George W. Bush released approx-
imately 400 pages of health records
in 2000 and again in 2004.
But the first time a real standard
was superimposed was in 2008,
when I joined a group of more than
20 journalists in Phoenix for a pri-
vate three-hour session at a local
hotel to review more than 1,100
pages of Sen. McCain’s medical re-
cords. The focus was on the sena-
tor’s age (71) and his history of
melanoma, as he’d had four. Our
endeavor was a witch hunt of sorts,
though we all concluded from the
records that the melanoma hadn’t
spread or recurred and Mr. McCain
and more effective at silencing dis-
sent. This trend will continue under
the new cybersecurity law slated for
approval later this year.
Moreover, an already-approved
nongovernmental-organization law,
which will take effect in January, has
put a chill on Chinese cooperation
with foreign organizations and stig-
matized that cooperation by placing
it under the purview of the security
services. At a time when interna-
tional coordination among NGOs and
transnational networks has reached
its apex, it has never been more dif-
ficult for foreign NGOs to work with
their Chinese counterparts.
Other elements of this tightening
include a new counterterrorism law
that requires foreign-technology
firms to hand over sensitive data to
Beijing. Visa restrictions have be-
come more onerous on foreigners.
And there has been an increase in
anti-Western, anti-liberal and anti-
Japanese attacks in the official
press. The word “sensitive” is now
regularly used at academic confer-
ences to preclude discussion of in-
convenient topics. Chinese women
are being warned not to date for-
eigners, for fear they are spies hunt-
ing for state secrets.
Another important reason for the
lack of progress is the autocratic
methods and Maoist tactics used to
with The Discovery Channel. The film
has screened in Europe and is now in
negotiation for U.S. release.
The documentary traces the crew’s
journey from Hmong exile groups in
Minnesota, through the back alleys of
Udon Thani in Thailand, and to the
A new film honors
a legacy that Obama
overlooked during his
visit to Laos last week.
Laotian border, where they posed as
tourists to enter the country. From
there, the team trekked for two
weeks to find the secret and con-
stantly moving Hmong encampment.
The regime in Vientiane calls these
Hmong “insurgents,” but Mr. Beri-
ain’s extraordinary footage shows
that the handful of men, women and
children are just fighting to survive.
“I was 9 years old,” an adolescent
boy tells Mr. Beriain, recalling his
first firefight. “They shot my
grandpa, and I picked up his gun and
started shooting.”
The Hmong suffer most of their
casualties when venturing to find
food. In one scene, a 20-year-old
mother shows Mr. Beriain the scar on
her arm from the day Laotian sol-
diers attacked while she cooked roots
for her children.
The film highlights a few returned
exiles among the Hmong resistance
who snuck back into Laos from their
refuges in America. Most of the film’s
was fit to serve. Requests for then-
Sen. Obama to release his records
for a similar viewing got no trac-
tion, only a short letter that re-
vealed him to be a former smoker
with low cholesterol and blood pres-
sure who jogged frequently.
In retrospect, his youth and vigor
were probably enough, and 2008 set
the new standard that unless you
were elderly or had a significant
medical history, summary letters from
a candidate’s primary-care physician
were necessary and sufficient.
Flash forward to 2012. Mr. Obama
was again pronounced fit, having
reportedly not smoked while in the
White House and working out
several times a week. Challenger
Mitt Romney, then 65, released a
letter that revealed his active health
problems to be only benign prostatic
hypertrophy, low heart rate and high
cholesterol (on Lipitor). The new
standard had been met.
I was never completely comfort-
able with the way Sen. McCain was
treated in 2008, though at least by
the time the records were released
in May the obsessive media focus
wasn’t on questions of PTSD from
the Vietnam War, only on his mel-
anoma history. A new standard
was set then, and it should be fol-
lowed now.
I call it the McCain Protocol: If
you are 70 or over (Mr. Trump) or
have a health history (Mrs. Clinton),
records should be made available by
the candidate for a private viewing
of select journalists or perhaps an
independent board of physicians.
This transparency may be excessive,
but consistency would demand that
it be part of the vetting process for
our highest public office.
Dr. Siegel is an internist in New
York City and medical correspondent
for Fox News.
advance reform. Mr. Xi has called on
“every branch and every member” of
the Communist Party to enforce a
yearlong political campaign to study
his speeches, ensure “strict party
management at the grassroots level,”
“consolidate Party members’ Marxist
positions and ensure that the entire
Party maintains a high degree of ide-
ological and political consistency.”
But this isn’t Mao’s China, and many
local cadres either ignore the slo-
gans or deride them in private.
As enthusiasm fades and obsta-
cles arise, the momentum of Mr. Xi’s
campaign-driven reform strategy has
proved short-lived. Today, many Chi-
nese still believe that China’s rise
can only continue through “opening”
and effective reforms. But the coun-
try’s current strategy runs counter
to this approach and harkens back to
an earlier era of politically driven
policy. As such, it is likely to con-
tinue provoking resentment and op-
position, from party members and
domestic interests as well as foreign
businesses and NGOs that feel unrea-
sonably constrained in an increas-
ingly hostile, nationalistic China.
Mr. Eisenman is an assistant pro-
fessor at the LBJ School of Public Af-
fairs at the University of Texas at
Austin and a senior fellow at the
American Foreign Policy Council.
subjects are descendants of the
Hmong who worked with the CIA de-
cades ago. Combatants by birth, they
have effectively been trapped and be-
sieged their whole lives.
“Have you considered surrender-
ing?” Mr. Beriain asks one Hmong
man, who is no older than 40 and rid-
dled with bullet wounds. “My nephew
turned himself in,” replies the man.
“The Lao Army killed him, so we
can’t give up.”
Because I appear briefly in the
film, I was invited to the opening in
Madrid in May. Spanish press wanted
to know what effect I hoped the doc-
umentary would have on the tragic
situation in northern Laos.
No happy outcome seems possible
under current conditions: The Lao-
tian regime won’t tolerate the inde-
pendent existence of a minority out-
side its totalitarian control, and the
Hmong imperative to maintain their
way of life seems inextinguishable.
The Hmong have made repeated
pleas to the United Nations for help,
with little to show for it.
The best anyone can hope for is
that enough people will see this film
to bring moral pressure on Vientiane
for a humane modus vivendi. The
Hmong who survive in northern Laos
are the living legacy of the “secret
war,” and they want only to be left in
peace. I salute the producers of “The
Lost Army of the CIA” for making
such an outcome more likely, how-
ever remote it remains.
Mr. Jolis was a U.S. Army officer in
Vietnam in 1968-69 and a CIA officer
with the Hmong in northern Laos in 1970.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
A12 | Tuesday, September 13, 2016 THE WALL STREET JOURNAL.

SPORTS

Heard On Tennis’s Master of the Upset

The Field In winning his third major
title, Stan Wawrinka
proved once again that he
is the man of big matches
BY TOM PERROTTA

New York
Stan Wawrinka looks more like a
lumberjack than a tennis player.
Thick shoulders, burly chest, scruffy

ALEX GOODLETT/GETTY IMAGES; MICHAEL REAVES/GETTY IMAGES

beard and mustache. He is strong
but unpredictable. He likes to point
to his head during matches, because
he knows that if he keeps his mind
clear and his one-handed backhand
flowing, he can beat anyone.
Kerber, Not Williams, Wawrinka’s latest triumph, a four-
set victory over Novak Djokovic on
Now Tops the Rankings Sunday for the U.S. Open title, was
U.S. Open champion Angelique proof. Although men’s tennis has
Kerber officially became the oldest long been ruled by the sport’s “Big
woman to debut at No. 1 in the Four”—Djokovic, Roger Federer,
WTA rankings, ending Serena Wil- Andy Murray and Rafael Nadal—it’s
liams’ record-tying run of 186 con- time to start reassessing that exclu-
secutive weeks in the top spot. sive club’s membership.
Monday’s rankings are the first Wawrinka now has three major ti-
since February 2013 without Wil- tles, matching Murray. Wawrinka re-
liams at No. 1. mains ranked No. 3 in the world, still Stan Wawrinka played another magical major final on Sunday when he defeated Novak Djokovic to win the U.S. Open.
The 28-year-old Kerber’s rise behind Djokovic and Murray but
from No. 2 was assured when Wil- ahead of No. 4 Nadal and Federer, In his career, Wawrinka is 0-15 winner of 14 major titles, once said At the Olympic Games in Rio,
liams lost in the semifinals at who has slipped to seventh amid in- against No. 1-ranked players in best- made him jealous. Djokovic lost his first match, to
Flushing Meadows. jury. Nadal, 30, hasn’t won a major of-three-set matches, and 0-4 at Most pros with a one-handed back- eventual silver-medalist Juan Martín
Kerber (above) went on to beat the past two years, and Federer, 35, Grand Slams before the final. But in hand are vulnerable to high-bouncing del Potro. He played little before the
Karolina Pliskova in Saturday’s final hasn’t since 2012. major finals, he is now 3-0 against topspin. Wawrinka throttles those U.S. Open, and not much more once
for her second Grand Slam title of But the new U.S. Open champion, top-seeded opponents, with a victory balls. His down-the-line blasts practi- he got here, either, because his op-
the season. She defeated Williams at 31, is going strong. against Nadal and two against Djok- cally leave trails of smoke. ponents kept getting hurt. One of
at the Australian Open in January, Wawrinka is a late bloomer. He ovic. His 2015 French Open final vic- “No one else can get that kind of them withdrew before their match
then was the runner-up to the didn’t win his first major title until tory against Djokovic, in four sets, pace on the one-hander,” said James began and two others retired during
American at Wimbledon in July. the 2014 Australian Open, when he was one of the best matches played Blake, the former pro. “It’s a lot of play.
—Associated Press was 28. Djokovic, 29, is a steady by anyone in this historic era of the upper body strength.” Djokovic said the rest had helped
champion, always in finals, always Big Four. “Novak, he’s a beast mentally,” and that he was at his peak headed
Fowler, Holmes, Kuchar eating the right foods and drinking “He plays best in the big Wawrinka said. “It’s always the big- into the final. Peak Djokovic is
Make U.S. Ryder Team the right drinks. Wawrinka is as un- matches,” Djokovic said. “He was gest challenge to play against him.” nearly invincible—really, there’s only
U.S. Ryder Cup captain Davis predictable and messy as an after- more courageous.” Wawrinka’s backhand started to one man these days who stands a
Love III chose Rickie Fowler, J.B. midnight subway in Manhattan. He On Sunday, Wawrinka dropped click in the second set. As he hit good chance. Blake explained why
Holmes and Matt Kuchar for three tosses rackets, towels, finger tape, the first set to Djokovic. He did the harder and deeper, Djokovic slid Wawrinka is that man.
of his four picks for the upcoming wristbands and sweaty shirts all same against Djokovic in the 2014 along the baseline like a man on a “He has the ability to hit someone
showdown with Europe at Ha- around his on-court chair, like a col- Australian Open quarterfinals and in Slip N Slide to keep the ball in play. off the court, and he can have that
zeltine. lege kid in his dorm room. Wawrinka the 2015 French Open final, then By the time the fourth set rolled clear in his mind,” Blake said. “Peo-
Those three join Dustin Johnson, almost lost in the third round here, came back to win each time. around, Wawrinka had more energy. ple play their best when they have a
Jordan Spieth, Phil Mickelson, Pat- when he faced a match point against Wawrinka’s coach, Magnus Norman, Djokovic looked like he’d run up the clear plan and they’re not second-
rick Reed, Jimmy Walker, Brooks Britain’s Daniel Evans. has learned that there’s no need to steps of the Empire State Building. guessing.”
Koepka, Brandt Snedeker and Zach The beauty of Wawrinka doesn’t worry. Djokovic won the first two major Wawrinka now has a 5-19 record
Johnson, who qualified in the final come early in tournaments. He needs “I know that he’s always going to titles of the season in Melbourne against Djokovic in his career. He’ll
standings for the Americans. time to settle in, to believe in his come back,” Norman said. “He has and Paris, but then he went into hid- never pull even, but he won’t mind.
Love will announce his final pick strokes, to gather speed. Once he more than one life in five sets.” ing this summer. He lost early at When it counts, there’s no man in
GETTY IMAGES

on Sept. 25. The Ryder Cup begins makes it to the end, he’s a different After his slow start, Wawrinka Wimbledon, to American Sam Quer- tennis better than Stan.
on Sept. 30. Once dominated in the man—Wawrinka has won his last 11 punished Djokovic with strong rey. He said he had some personal “He’s a man for the big tourna-
biennial matchup, Europe has won tournament finals. The longer and serves, deep forehands and the one- problems to work out, without giv- ments,” Norman said. “He’s a man of
the last three and 8 of 10. —AP later the match, the better he plays. handed backhand that Pete Sampras, ing details. Then he had a sore wrist. the big matches.”

Weather The WSJ Daily Crossword | Edited by Mike Shenk

Shown are today’s noon positions of weather systems and precipitation. Temperature bands are highs for the day.
-15 1 2 3 4 5 6 7 8 9 10 11 12 13 66 Arabian Sea’s 27 Champagne
-10 Gulf of ___ specification
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64 65 66 8 Congressional 48 Site in the first
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34 Successor and purchases
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Baghdad 41 22 s 42 23 s Kansas City 26 16 t 24 17 pc Rome 28 18 pc 28 19 pc 17 •Condiment Clementine”
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Detroit 27 18 pc 23 12 pc New Delhi 35 24 s 35 26 pc 27 Petty officer on a 44 “M*A*S*H” 65 “Someone Like E L E P H A N T S A T A L E
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Solve this puzzle online and discuss it at WSJ.com/Puzzles.
s

Frankfurt 32 17 s 31 18 s Orlando 30 23 t 31 23 t Zurich 28 12 t 28 12 s T R U N K S L E N S E R N

©2016 Dow Jones & Co. Inc. All rights reserved. 6DJ3504

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For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
Yen vs. Dollar
110
BUSINESS & FINANCE
101.95 t 0.73% Hang Seng
105
100
95
J J A J
As of 12 p.m. ET
© 2016 Dow Jones & Company. All Rights Reserved.
Hong Kong Yuan Trade Tightens
Intervention by Beijing
Hibor Highs
suspected as the cost The cost of borrowing yuan overnight in Hong Kong has surged in
for banks to borrow recent days, while yuan bank deposits in the city have been falling,
climbs above 5.5% tightening liquidity.
The most vibrant market
for yuan trading outside main-
land China has turned into a
key battleground for Beijing to
defend the Chinese currency.
By Saumya
Vaishampayan
in Hong Kong and
Lingling Wei in Beijing
Suspected intervention by
Chinese banks in what is
known as the offshore market
in Hong Kong has led to a
surge in the cost for banks in
the territory to borrow yuan
from one another. Investors
and analysts believe the inter-
vention—which they say likely
has come at the behest of
China’s central bank—is aimed
at thwarting bets against the
Chinese currency, also known
as the renminbi.
More Pain
For Swiss
Lenders
BY PAUL J. DAVIES
In polite circles they call
it “regularization.” More
bluntly, it is coming clean.
Wealthy people in Europe
have been admitting for
years to having money they
should have de-
HEARD clared to tax au-
ON THE thorities. For
STREET Swiss banks, that
has been money
out the door as
clients moved it home or
withdrew funds to pay taxes.
But the trend is spreading
to emerging markets. And
starting next year, a global
automatic exchange of infor-
mation program will be ad-
opted by about 50 countries.
Under the program, coun-
tries will share with each
other details of financial as-
sets owned by nonresidents,
lifting the lid on more hid-
den funds.
For the Swiss private
banks, this will tamp down
growth, but is also likely to
depress profitability because
these cross-border assets
have historically produced a
higher gross margin.
Customers in Latin Amer-
ica have already begun tak-
ing back funds from the in-
dustry due to tax amnesty
programs in Argentina, Bra-
zil, Chile and Mexico. Russia
and South Africa, too, are
causing outflows.
Credit Suisse, UBS and Ju-
lius Baer all noted some ef-
fects of this trend in their
recent results.
Within Europe, the total
amounts “regularized” be-
Please see HEARD page B2
Rate Fears, Global Growth Concerns Weigh in Asia
BY KENAN MACHADO
Asian shares started the
week notably weaker as fears
of a possible U.S. interest-rate
increase gripped markets, with
investors assessing the poten-
tial impact on
MONDAY’S growth.
MARKETS “We are tak-
ing the selloff
in the U.S. [on
Friday] very, very seriously,”
said Amir Anvarzadeh, global
head of equity sales for Japan
at BGC Partners. He said the
equities weakness on both
sides of the Pacific indicates a
NEW SAMSUNG ROLE FOR HEIR APPARENT TECHNOLOGY | B3
23800
23290.60 t 3.36% Gold
22500
21200
19900
J A
Three-month yuan
Hibor rate
6% Sept. 12: 5.52%
5 1.0
4 0.8
3 0.6
2 0.4
1 0.2
0 0.0
J J A S
Note: 1 trillion yuan = $149.7 billion
Sources: Thomson Reuters (HIBOR rate); Hong Kong Monetary Authority (deposits)
On Monday, the overnight
interbank yuan borrowing rate
in Hong Kong reached 5.5155%,
its highest since Feb. 19. The
rate breached 5% on Thursday,
ending a nearly two-month
stretch of relative calm, and
has since remained at levels
that traders characterized as
Low-Cost Prosthetics, Via Printer
BY MEGUMI FUJIKAWA
Fuminori Ando thought he
would never be able to wear
traditional Japanese summer
sandals. The design of his arti-
ficial leg didn’t allow it.
Then the 41-year-old, who
lost his right leg below the
knee soon after he was born,
heard about SHC Design Inc., a
startup that is using three-di-
mensional printing to produce
custom-made polymer limbs.
Mr. Ando, who has a day
job at an internet company,
started working part time for
SHC Design helping with pat-
ents, and the company crafted
him a free prosthetic leg de-
signed to accommodate the
sandal. The artificial limb in-
cludes a specially curved heel,
as well as a space for the san-
dal’s strap between the big
and second toes.
“It would have cost me a lot
if I made something like this
in a regular way,” said Mr.
Ando, wearing a pair of san-
dals color-coordinated with
his Japanese-style summer
outfit.
Typically handmade from
multiple materials, a pros-
thetic limb costs an average of
$4,200 in Japan, according to
health-ministry data. SHC De-
sign Chief Operating Officer
Yutaka Tokushima said he ex-
pects his company’s printer
will be able to produce a pros-
thetic leg for about $100.
The 3-D printing craze
erupted a few years ago with
visions of industrial parts and
even whole minicars being
churned out inexpensively.
Much of the hype has yet to be
borne out, but SHC Design’s
technology suggests the prom-
ise of 3-D printing when com-
bined with other advances.
In the case of prostheses,
the other advance was an elas-
reversal in trend. “Whatever
growth we are getting [glob-
ally] could slow down” if in-
terest rates rise, Mr. Anvarza-
deh added.
Emerging markets in Asia
are particularly vulnerable to
a rate increase in the U.S. as
better returns there could
prompt a flight of capital from
less-developed areas. But
some analysts say strong
growth and the potential for
earnings to pick up faster in
Asia will temper any sharp
withdrawals.
After U.S. stocks on Friday
posted the biggest declines
1400
1321.50 t 0.65% WTI crude
1350
1300
1250
J J A J
THE WALL STREET JOURNAL.
Monthly total customer
yuan deposits
1.2 trillion yuan
895 million
2004 ’06 ’08 ’10 ’12 ’14 ’16
THE WALL STREET JOURNAL.
elevated.
Suspected heavy yuan buy-
ing by Chinese banks has
helped squeeze a market that
China had tried to foster just a
few years ago as it looked to
promote the yuan as a major
international trading currency.
It comes on top of other re-
tic polymer that is soft to the
touch and suitable for medical
devices. Developed by rubber
maker JSR Corp., which has
teamed up with SHC Design on
this project, the polymer is fed
into a printer specially de-
signed to output soft materials
stably. Guided by a template
that SHC Design’s software
since the initial post-Brexit
drops, following a summer de-
void of volatility in equities
trading there, Australia’s S&P/
ASX 200 declined 2.2% Mon-
day and Taiwan’s Taiex fell
1.2%—both finishing at their
lowest levels in two months.
Hong Kong’s Hang Seng In-
dex skidded 3.4% to 23290.60,
the biggest decrease since
February.
The Shanghai Composite
shed 1.8%, finishing at a one-
month low, and the Nikkei
Stock Average ended down
1.7%. Korea’s Kospi, which
notched its largest decline in
50
46.21 s 0.72% 10-Year JGB
0.00
yield -0.013% 10-Year Treasury
45 -0.10
40 -0.20
35 -0.30
J A J J A J
Tuesday, September 13, 2016 | B1
cent measures from Beijing in- according to the Hong Kong
tended to support the cur-
rency, such as tightening
restrictions on money flowing
Monetary Authority. Yuan-
bond issuance has dropped to
$6.3 billion this year from
out of the mainland.
“It’s pretty obvious that
renminbi internationalization
$16.2 billion a year earlier, ac-
cording to Dealogic.
The declining interest in us-
has taken a back seat” to de- ing the yuan for trading and
fending the currency, an exec- capital-raising has come as
utive at one of China’s top Beijing’s priorities have
four state banks operating in shifted, with the Chinese econ-
Hong Kong said. omy losing steam after years
“The stated views and anal- of breathtaking growth—and
yses are not true,” the People’s steady yuan appreciation. Bei-
Bank of China said when asked jing first allowed the yuan to
for comment. It didn’t elabo- be bought and sold outside the
rate. President Xi Jinping said mainland in 2010, in Hong
last week that yuan liberaliza- Kong, still the world’s major
tion would be carried out in center for offshore trading in
an orderly way and China the currency.
would continue to encourage Now, a more urgent task for
the yuan’s use abroad. China is to prevent the cur-
Yuan-related trading has rency from falling too much
been falling in Hong Kong and potentially further erod-
since Beijing first put a ing investors’ confidence in
squeeze on the market earlier the economy.
this year, according to the lat- Since early this year,
est data. Deposits denomi- China’s central bank has been
nated in the Chinese currency trying to let some air out of
have dropped to 667.1 billion the yuan while trying to make
yuan ($99.9 billion) in July sure that the descent doesn’t
from a peak of just over 1 tril- become so fast as to trigger
lion yuan in December 2014, Please see YUAN page B2
SHC Design operations chief
Yutaka Tokushima, far left,
with Fuminori Ando, who got a
3-D-printed leg from the
company. Above, prototypes
MIHO INADA/THE WALL STREET JOURNAL (2)
ized for activities such as
swimming or skiing, or for
particular shoes.
“There’s a perception out
there that [prosthetics] users
shouldn’t need a lot of op-
tions,” said Mr. Ando. He once
bought an expensive artificial
leg to wear while swimming,
he said, but stopped using it
because it was too heavy and
didn’t look very good.
creates from a scan of the cus- In a poor country like the
tomer’s healthier leg and the Philippines, SHC Design’s tech-
desired footwear, the printer nology could fill a more funda-
sprays out a prosthetic leg. mental need. Nearly 350,000
Insurance generally pays people there need prosthetic
for a prosthetic limb for ev- legs, and more than 90% can’t
eryday use, but the high cost get one because of the cost
of standard artificial legs and lack of specialists to treat
makes it expensive for wearers them, according to Japan In-
to get additional ones special- Please see PRINT page B2
two months Friday, topped In the U.S., the Dow Jones
that with a 2.3% decline. Sam- Industrial Average edged up
sung Electronics, which 63.38 points, or 0.4%, to
makes up one-sixth of the in- 18148.83 at midday and the
dex, notched its biggest de- S&P 500 rose 0.6%, after Fri-
cline in four years, with a 7% day posting their biggest de-
slide on more worries about clines since the U.K. voted to
the Galaxy Note 7. leave the European Union. The
Easy monetary policies Nasdaq Composite rose 0.8%.
have propped up asset prices In Europe, the Stoxx Europe
globally since the financial cri- 600 shed 1%.
sis nearly a decade ago. One bright spot Monday
Alex Furber, a senior client- was Japanese life insurers,
services executive at CMC which gained on expectations
Markets in Singapore, said, that their investments abroad
“U.S. stocks were overvalued, will yield higher returns. Dai-
and a correction there was due ichi Life Insurance rose 2.3%,
for some time.” and T&D Holdings rose 2.1%.
2.25
yield 1.686%
1.50
0.75
0.00
J A
Sources: Tullett Prebon; SIX Financial
Canadian
Fertilizer
Companies
To Merge
BY JUDY MCKINNON
AND AUSTEN HUFFORD
TORONTO—Canadian fertil-
izer companies Agrium Inc.
and Potash Corp. of Saskatch-
ewan Inc. confirmed plans to
merge on Monday, in a deal
that would create a crop-nutri-
ent giant valued at $27 billion.
Potash shareholders would
own about 52% of the new
company and Agrium share-
holders would own about 48%.
The two have a current com-
bined market capitalization of
about $27 billion, and the
merged company would have
annual revenue of nearly $21
billion.
Joining forces helps Sas-
katchewan-based Potash, the
world’s largest fertilizer pro-
ducer by capacity, insulate its
earnings against volatile
moves in crop-nutrient prices
by giving it access to Agrium’s
steadier retail business that
sells fertilizer, seeds and
equipment.
Agrium, based in Calgary,
Alberta, gains the ability to
greatly bolster its production
of potash and other fertilizer
ingredients, representing a bet
that demand and prices for
these products have bottomed
and are poised for a rebound.
Potash prices have been
under pressure since 2013,
when Russian producer Ural-
kali JSC pulled out of its sales
partnership with Belarusian
Potash Co. That ended a car-
tel system that, along with a
North American trading
group that includes both Pot-
ash and Agrium, helped to
control global prices for the
fertilizer.
Agrium Chief Executive
Chuck Magro said in a confer-
ence call Monday the planned
merger is the culmination of
two years of private talks with
Potash Corp. CEO Jochen Tilk.
“We have a common view of
where the fertilizer world is
going,” Mr. Magro said.
The merger between Potash
and Agrium adds to a string of
transactions involving the
global farming sector, includ-
ing the pending merger of Dow
Chemical Co. and DuPont and
China National Chemical
Corp.’s planned takeover of
Swiss pesticide and seed com-
pany Syngenta AG.
U.S. lawmakers said last
month that they plan to hold a
hearing to examine this wave
of mergers, saying the deals
potentially could reduce com-
petition and lead to higher
prices.
The Potash-Agrium tie-up is
expected to face scrutiny from
antitrust regulators in the U.S.
and Canada, among others,
over the combined companies’
North American share of
global potash production ca-
pacity, analysts say. The two
together would control just
23% of global production ca-
Please see DEAL page B2
Switch Off
Shares on South Korea's stock
exchange fell after Samsung
asked customers not to use Note
7 devices.
1.51 million won
1.50
1.49
1.48
1.47
1.46
1.45
9 a.m. Noon 3 p.m.
Note: 1 million won = $897.09
Source: Thomson Reuters
THE WALL STREET JOURNAL.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B2 | Tuesday, September 13, 2016 THE WALL STREET JOURNAL.

INDEX TO BUSINESSES BUSINESS NEWS

These indexes cite notable references to most parent companies and businesspeople
in today’s edition. Articles on regional page inserts aren’t cited in these indexes.

A
ABN Amro Group........B7
Abu Sayyaf ................. A2
Alphabet......................B4
Apple...........................B3
B Hanjin Group...............B2
Banca Monte dei Paschi
di Siena.....................B7
Bank of Hangzhou......B8
Bank Polska Kasa Opieki
.....................................B7
Belarusian Potash ...... B1
BlackRock....................B5
Bridgewater Associates
.....................................B7
C Hyundai Merchant
Carlyle Group..............B7
Franklin Templeton.....B5
Gilead Sciences...........B8
Goldman Sachs Group B5
Google ......................... B4
H
Hanjin Shipping .......... B2
Hewlett Packard
Enterprise.................B8
Hitachi.........................B8
HP................................B3
HSBC ........................... B7
Hubei TKD Crystal
Electronic Science
&Technology..............B8
Hyundai.......................B2
Marine.......................B2
Nimble Storage...........B8
O
Oracle .......................... B8
Össur...........................B2
P-R
HanjinUnloadsShipinU.S.
BY KWANWOO JUN working with Hanjin’s smaller
Pfizer...........................B8 South Korean rival, Hyundai
SEOUL—A Hanjin Shipping Merchant Marine Co., and
Phillips.........................B8
Powszechny Zaklad Co. vessel was set to finish un- other companies to deploy ex-
Ubezpieczen..............B7 loading freight in California on tra vessels to deal with
Pure Storage...............B8 Monday, clearing the way for stranded cargo.
Rio Tinto ..................... B5
more of its ships to dock, as Hanjin filed for the equiva-
S
the ailing South Korean com- lent of chapter 11 in South Ko-
Samsung Electronics pany works with ports in the rea last month and days later
............................... B1,B3 U.S. and around the world to sought chapter 15 bankruptcy
Sanofi..........................B4 get its frozen supply chain protection in the U.S.
SHC Design.................B1
moving again. Chapter 15 gives a foreign
Sinohydro....................A2
The Hanjin Greece docked company the benefits of U.S.

Christie's.....................B8
Claren Road Asset
Management.............B7
Clovis Oncology .......... B8
D L
Dai-ichi Life Insurance
.....................................B1
Dell Technologies........B8
Deutsche Telekom......B4
Dow Chemical.............B1
F-G
Facebook...........A6,B4,B8
Fine Art Group............B8
FinecoBank..................B7
I-K
IHS...............................A2
Intesa Sanpaolo..........B7
Korean Air Lines.........B2
Leslie Hindman
Auctioneers...............B8
Life Sciences...............B4
Los Angeles Modern
Auctions....................B8
M-N
Microsoft.....................B4
NetApp........................B8
Nike.............................B3
JASON REED/REUTERS
Sinovation Ventures...B5
SolarCity......................B4 at Long Beach, Calif., on Satur- bankruptcy law, including pro-
Sotheby's....................B8 day and began unloading tections that prevent creditors
Space Exploration cargo Sunday after days of be- from seizing assets. But the
Technologies.............B4 ing stranded off the coast. A U.S. court’s power is limited
Syngenta.....................B1 Hanjin Shipping spokeswoman and much of the aftermath of
T in Seoul said at least three Hanjin’s problems have left up to $14 billion of cargo stranded at sea. the bankruptcy will have to be
Tata Group .................. B4 more cargo ships—the Hanjin worked out in South Korea.
Tata Steel....................B4 Gdynia, the Hanjin Jungil and some respite over the week- both the funding and the legal The Seoul central district
Telefonica....................B4 the Hanjin Montevideo—were end after Korean Air Lines permission necessary to un- court has given Hanjin until
Tesla Motors...............B4 expected to follow suit at the Co., its largest shareholder load four ships bound for U.S. Nov. 25 to submit a rehabilita-
U U.S. port. and Hanjin Group’s flagship ports. Hanjin also has asked a tion plan that will determine
UniCredit.....................B7 The financial woes of one of company, agreed to lend it 60 South Korean court for autho- whether it can continue oper-
UnitedHealth Group....B4 the world’s largest shipping billion won ($54 million), us- rization to use a further $3.5 ating. However, this is seen by
lines have left as much as $14 ing Hanjin Shipping’s Long million to have goods that analysts as granting the com-

INDEX TO PEOPLE billion of cargo stranded at

sea, and pressure is mounting
on South Korea and the U.S. to
Beach port-terminal assets as
collateral.
The airline’s agreement Sat-
have already been unloaded
and are sitting at U.S. ports
delivered to their owners, a
pany more time for an orderly
liquidation, given that the
government has signaled that
A G Mustier, Jean-Pierre...B7 break the logjam. Several Han- urday is part of Hanjin Group’s process that its lawyer said it sees no future for Hanjin by
Ando, Fuminori...........B1 Gownder, J.P...............B3 N jin ships have been seized by earlier pledge to put up 100 could be jump-started as soon calling on smaller rival Hyun-
Anvarzadeh, Amir.......B1 Gupta, Bejoy Das........B5 creditors or turned away from billion won in aid to help re- as Wednesday. dai Merchant to buy its
Neumann, Frederic ..... B1
ports, with terminals refusing solve the cargo crisis. South Korean Minister of healthy assets.
Assar, Samir...............B7 H Nouri, Amy..................B3
to unload cargo for fear they Hanjin Group Chairman Cho Trade, Industry and Energy The company and Hyundai
B Hindman, Leslie..........B8 P won’t get paid. Yang-ho has promised to make Joo Hyung-hwan met with lo- Merchant handle the bulk of
Bolke, Brian................A2 Hughes, Jason ............ B4 Page, Larry..................B3 Court papers show a total the remaining 40 billion won cal exporters and smaller ship- Korea’s exports and have been
Burgener, Eric.............B8 of 13 ships either owned or available by Tuesday, accord- pers Sunday and promised to unprofitable for several years,
J Pang, Iris.....................B2
leased by Hanjin are set to ing to Korean Air. use government funds to help amassing debts in a global
C Jenkins, Mark ............. B7 S make their next port of call in One of Hanjin’s lawyers on deliver cargo to its final desti- shipping market awash in ex-
Caldato, Fabio.............B7 Jordison, Don..............B5 Sy, Ben........................B2 the U.S. Friday said in a U.S. federal nation on time. Mr. Joo also cess capacity and plummeting
Chang, Sean................B2 K T The cargo operator got court that the company has said the government was prices.
Cho, Yang-ho...............B2 Tas, Steven.................B4
Kewsong, Lee..............B5

YUAN PRINT
Cook, Tim....................B3 Tilk, Jochen.................B1
L branches of Chinese state- such bets last month when the
Crompton, John .......... B7 Tokushima, Yutaka.....B1 owned banks to buy up the dollar was trading at 6.63
Lake, Spencer..............B7
D V currency, sending the over- yuan in Hong Kong. The dollar
Lee, Jae-yong..............B3
Daly, Kevin..................B5 night yuan-borrowing cost to was trading at 6.6913 yuan
Lee, Kai-Fu..................B5 Viola, Fabrizio.............B7
Continued from the prior page a record 66.8%. late Monday in the offshore Continued from the prior page
Daryanani, Amit ......... B3 W
Lee, Sei-cheol ............. B3 excessive capital outflows. Then, as now, downward market, down 0.1% from late ternational Cooperation
E Longo, Vicenzo............B7 Waterworth, James....B4 That strategy often risks get- pressure on the yuan—and up- Friday. “People are still look- Agency, an aid arm of the gov-
Erickson, Brad.............B3 Lores, Enrique.............B3 Weisler, Dion .............. B3 ting derailed by investors who ward pressure on the dollar— ing for opportunities to put a ernment that provided funding
use the offshore market in was exacerbated by expecta- bearish trade on,” he said. for trials in the Philippines of
F M Williams, Jeff.............B3
Hong Kong, where the cur- tions the Federal Reserve soon Such negative sentiment the 3-D limb printer. More
Fautz, Florian..............B7 Masuda, Tsuneo..........B2 Z rency can be traded freely, to might raise interest rates in has resulted in the squeeze of than 100,000 Filipinos whose
Furber, Alex.................B1 Musk, Elon..................B4 Zuckerberg, Mark ....... B3 wager against the yuan. (In the U.S. yuan funds in Hong Kong’s disabilities prevent them from
the mainland, the yuan is al- This time around, many in- market in recent sessions, as working could get jobs if sup-
lowed to swing only 2% above vestors saw similar tactics many say Beijing is again put- plied with an artificial limb,

HEARD flows in 2016 and 2017 to

continue at a rate similar to
what occurred in 2015, ac-
cording to Citigroup. Julius
or below the level set by the
central bank each day.)
The more that bearish bets
pile up on the yuan offshore,
from Beijing as bearish yuan
wagers in Hong Kong rose
ahead of a Group of 20 eco-
ting those short sellers on
alert.
“It doesn’t look normal to
me,” said Iris Pang, senior
the agency said.
“I wanted to provide my
product to those really in
need,” said SHC Design Chief
Continued from the prior page Baer said it expects emerg- the more difficult it is for the economist for Greater China at Executive Tsuneo Masuda,
tween 2011 and the end of ing-market regularization central bank to control its de-
Beijing’s priorities investment bank Natixis, part who started the company after
last year were huge, at more outflows to drag on growth scent. These bets typically are have shifted as the of France’s Groupe BPCE. “I’m working at a medical-equip-
than 40 billion Swiss francs for two to three more years. enacted by traders who borrow more convinced [this is] inter- ment maker for 26 years.
($41 billion) for Credit Su- The big question is the yuan overnight, and ex-
Chinese economy vention.” SHC Design, which has re-
isse and an additional 30 bil- whether the trend will change it for dollars, exchang- has lost steam. Despite growing deprecia- ceived some subsidies from
lion francs for UBS. spread to Asia, where the ing the money back the follow- tion pressure, many investors the Japanese government,
A study by Deutsche Bank best growth potential re- ing day after the yuan has expect the Chinese central plans to begin selling its sys-
and Oliver Wyman estimated sides. India and Indonesia dropped—a practice known as nomic summit in China last bank to try to prevent rapid tem—the 3-D printer and soft-
that these outflows cut pre- have declared tax amnesties, short selling. A rise in over- week. Some investors placed weakening of the yuan—al- ware—as soon as next April in
tax earnings by between 400 but the effects aren’t yet no- night borrowing costs makes the bets in belief that China ready the worst-performing the Philippines and Japan, said
million and 500 million ticeable. this a less-profitable trade. would have fewer incentives to currency in Asia this year— operating chief Mr. Tokush-
Swiss francs over the period The types of clients Swiss Following a surprise weak- hold the yuan steady after the ahead of the yuan’s forthcom- ima. It will cost about $2,000,
for each of the banks. Across banks attract in Asia—the ul- ening of the yuan’s official high-level gathering, which ing inclusion in the Interna- he said. A scanner is also re-
Swiss banking, the study es- trarich—may present less of rate by the central bank in Beijing had hoped would tional Monetary Fund’s official quired and must be purchased
timates that regularization a tax risk, because they ha- early January, investors piled showcase the country’s eco- reserve-currency basket, from another provider.
and more focus on the su- ven’t avoided taxes in the on bets against the currency nomic might. scheduled for Oct. 1. The company believes it
perwealthy, who get lower same small, systematic way in Hong Kong’s market, caus- “We see consistent interest The PBOC’s overarching would be the first to offer a
fees on their big accounts, over decades that European ing a widening divergence be- in shorting” the yuan offshore, goal is to “prevent any big self-contained 3-D printing
have cut margins by about clients did. For the superrich tween the yuan traded there said Ben Sy, head of fixed in- eruptions,” said Sean Chang, system for prosthetic limbs,
30% since 2010. of a country such as China, and its mainland peer. Chinese come, currencies and com- head of Asian debt investment according to Mr. Tokushima,
The peak of European out- the cash they have salted authorities at the time re- modities at J.P. Morgan Chase at Baring Asset Management and it plans to seek patents
flows was in 2012 and they away across Asia may be sponded by drastically tight- & Co.’s private bank in Asia. (Asia) Ltd. for the printer and software.
have declined steadily since, more at risk if they fall out ening yuan liquidity in Hong Mr. Sy said clients had started —Carol Chan contributed All Nippon Airways Co. is also
but outflows from emerging of favor politically, or if Kong, by ordering local to inquire about putting on to this article. on board in a research capac-
markets have picked up. other policies change. ity as it explores ways to give
Credit Suisse has forecast By the end of 2018, when passengers with prosthetic
that 5 billion more Swiss
francs will go this year,
mostly from emerging-mar-
ket clients.
information exchange has
been in place for a while, the
impact on Asia will be
clearer. For those banks with
DEAL limbs easier routes through
airport security, where the
standard models set off
alarms.
This rate is less than half slowing or struggling invest- Continued from the prior page Larger prosthetics compa-
what it was in the heaviest ment-banking businesses, pacity, but 60% or more of nies are also looking at 3-D
years, but will still be a drag the last thing they need is North American capacity, printing. Ottobock, a prosthet-
on growth for the whole in- more difficulty making ahead of Mosaic and Intrepid ics maker based in Germany,
dustry. Swiss banks as a money in their most promis- Potash, National Bank said in a distributes 3-D-printed leg
group expect tax-related out- ing wealth markets. note ahead of Monday’s an- covers made by San Francisco-
nouncement. based UNYQ Design Inc. that
ADVERTISEMENT Mr. Magro, who is to be- allow users to conceal the me-
DAVID STOBBE/REUTERS

come CEO of the new com- chanical parts. Prosthetics

The Mart pany, said he is “highly confi-
dent” the proposed merger
won’t trigger antitrust issues.
ANNOUNCEMENTS He said the potash market has
become very competitive with
the emergence of new produc-
ers, and there is very little
overlap in the companies’ ni-
trogen and phosphate opera-
tions.
The companies estimated
the deal would generate as
much as $500 million in an-
nual operating synergies and
employ about 20,000.
Agrium has more than 1,200
retail outlets, mostly located
in Canada and North America,
and sells a little more than
10% of the nitrogen, phosphate
BUSINESS OPPORTUNITY TRAVEL and potash it manufactures to
industrial customers. The rest
goes to retail customers.
Midwest thin film (CdTel) manufacturer Save Up To 60% Potash’s Mr. Tilk will be ex-
of solar panels for sale. Includes two
automated production lines and 5,000
First & Business ecutive chairman of the com-
INTERNATIONAL
completed panels. Fully relocatable. Major Airlines, Corporate Travel bined company, which will be
Interested parties can email at Never Fly Coach Again! based in Saskatoon, Potash’s
bsmith75usa@aol.com, or call www.cooktravel.net current headquarters.
419-297-5972. (800) 435-8776 For the first six months of
2016, Potash’s earnings fell
Businesses For Sale. 75% to $196 million, as the
Advertise in The Mart company’s average sale price
Exclusively in The Wall Street Journal Asia. for the fertilizer declined to
Call (852) 2831-2553 $154 a ton in the second quar-
(65) 6415-4279 or (813) 6269-2701 ter, from $273 in the year-ear-
lier period and $387 a ton in
the fourth quarter of 2014 be-
Prices for fertilizer ingredient potash have been under pressure.
fore the collapse of the Rus-
sian-Belrusian sales partner-
ship.
Agrium’s earnings declined
almost 18% to $568 million in
the first half of 2016, from the
year-earlier period.
Since last year, potash sales
have been hurt by Brazil’s
slumping currency, which un-
dercut demand from one of
the world’s big consumers of
the fertilizer. More recently,
delays in the signing of supply
contracts with China and In-
dia, two of the other largest
fertilizer markets, also hurt
pricing.
Both companies, though,
say they are more optimistic
for potash during the rest of
the year amid signs volume
sales will increase. Outside of
North America, Potash and
Agrium sell the crop nutrient
through Canpotex, a Saskatch-
ewan-based exporter that also
includes rival Mosaic Co.
In July, Canpotex signed
new supply pacts with Indian
maker Össur hf. in Reykjavik,
Iceland, uses 3-D printing to
make prototypes and some
parts for its microprocessor-
controlled knee, according to
research-and-development di-
rector Magnús Oddsson.
customers to cover the next “With further development
three months and an agree- of the technology, this method
ment with China for shipments will be used more,” he added.
to the end of 2016. Tom Fise, executive direc-
Under the deal, Potash tor of the American Orthotic &
shareholders would receive 0.4 Prosthetic Association, said he
common share of the new com- isn’t aware of any other fully
pany for each common share printed legs as close to market
they own and Agrium share- as SHC Design’s.
holders would receive 2.23 He said he sees potential
common shares of the new durability issues with polymer
company for each common legs compared with standard
share of Agrium they own. ones, which are made of mate-
On Monday, Agrium shares rials such as titanium and car-
were down 3.2.%, trading in bon fiber. An Ottobock official
New York at $92.18, and Pot- said the company hasn’t used
ash shares were down 1.8%, 3-D printing to manufacture
trading at $16.66. an entire prosthesis because it
The companies first an- doesn’t think the current tech-
nounced they were in prelimi- nology could produce one that
nary discussions late last would last for three-to-five
month. years.
The deal is expected to Mr. Tokushima of SHC De-
close in mid-2017 and is sub- sign said he hasn’t seen dura-
ject to customary closing con- bility problems in trials so
ditions, including approvals by far—and notes that if a 3-D-
regulators, Canadian courts printed leg wears out, a new
and shareholders. one could be made quickly and
—Jacquie McNish relatively cheaply using the
contributed to this article stored data.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL. * Tuesday, September 13, 2016 | B3

TECHNOLOGY @wsjd | wsjd.com

HP Bolsters Printing Assets NewSamsungRole

Company agrees to
pay Samsung $1.05
For Heir Apparent
billion for business as BY EUN-YOUNG JEONG

it looks to take on SEOUL—Samsung Electron-

Xerox, Canon ics Co. nominated Lee Jae-yong,
the son of its longtime chair-
BY DON CLARK AND man, to its board of directors as
EUN-YOUNG JEONG shares in the technology titan
suffered their steepest one-day
HP Inc. agreed to buy Sam- decline since 2008 in the wake

SEONGJOON CHO/BLOOMBERG NEWS

sung Electronics Co.’s printer of a global phone recall.
business for $1.05 billion, a The latest step in the eleva-
deal designed to help the Sili- tion of Mr. Lee, the South Ko-
con Valley company expand rean company’s vice chairman
into high-volume devices that and heir apparent, comes more
handle printing and copying than two years after his father,
DAVID PAUL MORRIS/BLOOMBERG NEWS

for office work groups. Chairman Lee Kun-hee, was hos-

The transaction, which is pitalized following a heart at-
subject to regulatory approval, tack. He remains incapacitated.
is expected to close within 12 Samsung on Monday said Samsung’s Lee Jae-yong
months, the companies said on the announcement wasn’t re-
Monday. Samsung also agreed lated to the crisis that has en- Samsung advised users of the
to make an equity investment gulfed the company since it Galaxy Note 7 smartphone to
of $100 million to $300 million initiated a voluntary recall of turn off the device and not use
in HP through open-market its latest smartphone, the Gal- it. Several airlines have asked
stock purchases after the sale axy Note 7, earlier this month passengers not to use the
is completed. HP printers on a retail shelf. A Samsung deal would help HP move into high-volume office devices. because of a risk that the bat- phone while flying or stow
HP, created as part of the tery might catch fire. them in checked luggage.
breakup of Hewlett-Packard Co. ing engines used in its own la- company’s better-performing lion in annual revenue and Investors dumped Samsung The statement disclosing Mr.
last fall, sells personal comput- ser printers, while HP has al- areas. ranks No. 5 in unit shipments shares again Monday, knock- Lee’s nomination also came on
ers but gets most of its profit ways used external suppliers The world’s top maker of of PC printers. Printing engines ing a further $15.9 billion off the day Samsung said it agreed
from supplying ink and toner for these components. smartphones, memory chips account for 10% to 15% of the the company’s market value to sell its printing business unit
for the printers it sells. It is the Enrique Lores, president in and refrigerators, it ranks fifth cost of goods HP sells, he esti- after wiping out more than to HP Inc., a deal viewed by ana-
market leader in the desktop- charge of HP’s imaging and in the global hard-copy periph- mated. $10 billion Friday. lysts as driven by the third-gen-
class printer segment. printing business, said acquir- erals market by shipments with Canon is HP’s main supplier Samsung shares Monday eration heir’s desire to slim
That business hasn’t been ing printer engine technology a 4% market share, behind of printing engines in its exist- finished down 7% at 1.465 mil- down the company’s business
growing lately, in part because would both bolster its profit global majors HP, Canon, Seiko ing product line, a relationship lion won ($1,321) in Seoul, the portfolio and strengthen its bet-
PC users print fewer pages margins and help it shape the Epson Corp. and Brother Indus- Mr. Lores said he expected to largest fall since October ter-performing areas.
these days. HP last month re- evolution of its laser printers. tries Ltd. Samsung’s shipments continue. Beyond helping HP 2008. Analysts said Samsung’s His nomination will be put
ported that revenue from ink “You have control over the declined by 8.9% in the second enter the market for A3 ma- steep decline was compounded to a shareholder vote on Oct.
and toner supplies declined core technology,” he said. quarter compared with a year chines, he said, the deal would by global market concern over 27, the company said. The ad-
18% in the third fiscal quarter “That is very, very important.” earlier, according to research likely help winnow the number a possible U.S. interest-rate in- dition of Mr. Lee to the com-
from the year-earlier period, The deal includes about firm IDC. of suppliers in the market. crease this year as well as de- pany’s board will allow him to
while printer hardware unit 6,500 of Samsung’s printing-re- Samsung doesn’t break out “We see HP as a consolida- clines in U.S. stocks last week. increase his involvement in
sales were down 10%. lated patents, which Mr. Lores separate sales figures for its tor in the market,” Mr. Lores South Korea’s main Kospi business decisions such as in-
Dion Weisler, HP’s chief ex- said would also help HP expand printer business, which falls said. “We want to drive this share index dropped 2.3%, its vestments and merger-and-ac-
ecutive, has vowed to spur rev- its business. Around 6,000 under the consumer electronics consolidation and make it hap- biggest one-day fall since Jan- quisition deals, a person famil-
enue growth by moving into Samsung employees will join division that sells televisions pen.” uary. “It’s one thing piling on iar with the matter said.
larger printer-copier combina- HP, including about 1,500 engi- and home appliances such as Besides selling laser printers after another,” said Lee Sei- Mr. Lee, 48 years old, became
tions known by the designation neers, he said. refrigerators and washing ma- for the A3 market, HP expects cheol, an analyst at NK Invest- vice chairman of Samsung Elec-
A3, the stronghold of such Samsung has been slimming chines. Last year, consumer to try to diversify its products ment & Securities. tronics in 2012 after stints as
companies as Xerox Corp., down its business portfolio un- electronics contributed to just with a proprietary technology Since the company an- chief customer officer and chief
Canon Inc., Ricoh Co. and Kon- der the leadership of the con- 4.7% of the company’s operat- that evolved from inkjet print- nounced the voluntary recall operating officer. He is known
ica Minolta Inc. Samsung al- glomerate’s vice chairman and ing profit, while the higher- ers. of more than 2.5 million for keeping a low profile in def-
ready has a business selling A3 heir apparent, Lee Jae-yong, profile smartphone and chip PageWide, which sprays ink smartphones on Sept. 2, it has erence to his father. Lately, how-
machines, which HP will ac- and increasing its focus on its divisions generated 38.4% and using a print head as wide as been under pressure to act ever, he has stepped up public
quire in the deal. market among other technol- 48.4%, respectively. the paper being used, can print more decisively in response to appearances, serving as the face
HP also will acquire the abil- ogy companies, said Lee Sei- Amit Daryanani, an analyst color pages much faster than increasing reports of phones of Samsung in meetings with
ity to manufacture the crucial cheol, an analyst at NH Invest- at RBC Capital Markets, esti- traditional inkjets, whose catching fire because of faulty Facebook Inc. Chief Executive
mechanisms inside laser print- ment & Securities, adding that mated in a research note that printer heads move back and lithium-ion batteries. On Fri- Mark Zuckerberg, Google parent
ers, known as printing engines. the deal can be seen as a bid to Samsung’s printer business forth across a page, and at a day, the U.S. Consumer Prod- Alphabet Inc. CEO Larry Page
Samsung developed the print- strengthen the South Korean generates $1 billion to $1.6 bil- lower cost than laser printers. uct Safety Commission and and Chinese leader Xi Jinping.

Apple Watch Shifts Focus The place where expert ideas for
tourism business are spread.
Toward Sports and Fitness
BY ROBERT MCMILLAN
AND SARA GERMANO

When Apple Inc. Chief Ex-

ecutive Tim Cook introduced
the Apple Watch two years
ago, he touted its many fea-
tures, including email, a calen-
dar, the weather and phone
calls. 22-25 September 2016
Mr. Cook also described the
watch’s health features. But
when Apple unveiled an up-
dated model last week, how-
ever, the focus was clearly on
XINHUA/ZUMA PRESS

sports and fitness. “We think

Apple Watch is the ultimate
device for a healthy life,” said
Jeff Williams, Apple’s chief op-
erating officer.
The evolving presentations Apple operating chief Jeff Williams introduced the Series 2
underscore a shift in Apple’s watch, designed to be water resistant to a depth of 50 meters.
marketing focus for the watch,
from a stylish jack-of-all- provide more utility to your tion of its Nike+ app, released
trades fashion accessory to a user base and enrich that ex- this summer, combines ele-
personal trainer. perience,” he said. ments of fitness tips and moti-
Apple designed the new Still, Mr. Erickson said the vation with a customized mar-
version, called Series 2, to be
water resistant to a depth of
new Apple Watch could cut
into sales of fitness-focused
ketplace, aimed at increasing
direct sales of the company’s
The premier travel event composed of
50 meters, thanks to a custom- devices from companies such apparel and shoes.
designed speaker system that as Garmin Ltd. and Fitbit Inc. But Apple Watch users will
flushes out water after a
swim. Apple also touted a
Amy Nouri, a Garmin
spokeswoman, said the Apple
also be able to download apps
from Nike competitors, includ-
Travel Showcase
partnership with Nike Inc. to Watch will introduce more ing Under Armour Inc. and Business Meeting
market sports-themed watches consumers to the types of closely held Strava Inc.
along with GPS capability that products it makes. “It’s excit- San Francisco-based Strava &
helps the device track hikes,
runs and bicycle rides.
ing that Apple is coming out
with watches like this,” she
offers GPS-enabled fitness
tracking largely for runners and
Tourism Forum
Analysts estimate that Ap- said. “It really legitimizes the cyclists and counts its member- Seminar and Workshop
ple sold about 12 million wearable space.” ship in the tens of millions, ac-
watches in the year following “We believe there’s plenty cording to a spokesman.
its April 2015 launch, but the of room in the category given Since 2013, Under Armour
product hasn’t proved to be a the significant growth it is ex- has spent more than $700 mil-
breakout hit like the iPhone; periencing,” a Fitbit spokes- lion to acquire a suite of fit-
Apple has sold more than one man said. ness apps and counted more
billion iPhones over the past A significant part of the Ap- than 175 million registered us-
nine years. One rumored fea- ple Watch’s sporty push comes ers as of July. The newest Ap-
ture Apple didn’t add to the via the Nike deal. A new ver- ple watches, including the
watch: a cellular connection, sion of the watch, the Apple Nike-branded edition, will be
so the watch can handle calls Watch Nike+, comes equipped compatible with Under Ar-
independent of an iPhone. with the latest Nike+ running mour’s UA Record and Map-
“They’re still missing out app and Nike-inspired watch MyRun apps, according to a
on a central purpose, but faces and bands. spokeswoman.
they’re inching toward a de- Despite the prominent Nike In a statement, Nike said
vice that does fitness and branding on the watch, it isn’t the co-branded version of the
health quite well,” said J.P. clear if it will help the world’s watch will feature its logo and
Gownder, an analyst with For- largest sportswear maker gain that some functions, including
rester Research Inc. share in the competitive fit- directing Apple’s Siri voice
Apple still considers the
Watch a multipurpose digital
ness-tracker app marketplace.
Nike has focused on devel-
command to begin workouts,
will sync only with Nike’s run- Find more on our website.
t-expo.jp/en
accessory. Pacific Crest Securi- oping software since abandon- ning app.
ties analyst Brad Erickson ing production of its own “Apple and Nike both share
agrees. “If you’re Apple, your wearable fitness devices, in- a passion to make life easier
broader purpose is to use your cluding its short-lived Fuel- and more fun for our consum-
devices and your ecosystem to Band, in 2014. The latest edi- ers,” the company said.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
B4 | Tuesday, September 13, 2016
Tesla
Revamps
Autopilot
BY TIM HIGGINS
Tesla Motors Inc. is chang-
ing the way its Autopilot sys-
tem works following the fatal
crash in May of a car that was
driving under semiautono-
mous control.
The revision, which Tesla
Chief Executive Elon Musk
outlined Sunday, will depend
more on radar signals to help
guide Tesla vehicles along
roadways, and adds safeguards
to keep drivers engaged at
high speed.
The software updates will
be rolled out within the next
two weeks and delivered to
vehicles over the air, he said.
They will affect Tesla vehi-
cles built since October 2014,
before which the hardware
used by Autopilot wasn’t in-
cluded. Autopilot, which uses
cameras, radar and sensors to
steer vehicles and adjust their
speed, has come under scru-
tiny since the Florida crash
that killed Tesla driver Joshua
Brown in May, the first known
death of a driver using the
system. The car in the May 7
incident failed to brake auto-
matically because the system
didn’t distinguish a truck’s
white trailer from the bright
sky, Tesla has said.
The National Highway Traf-
fic Safety Administration is in-
vestigating the crash, focusing
on the emergency-braking and
forward-collision warnings.
The changes announced on
Sunday might have prevented
the accident, Mr. Musk said.
Mr. Musk told reporters on
a conference call that the
changes will make the system
even safer. “This is not going
from bad to good. It’s going
from good to, I think, great.”
Autopilot is regarded as a
major step toward self-driving
cars, though Tesla warns users
that the technology doesn’t
make Tesla vehicles autono-
mous and that drivers must
remain ready to take control.
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Tesla’s updated Autopilot technology will rely more on radar.
Despite those warnings,
some experts have questioned
whether the technology might
lead users to rely too much on
the vehicle’s driving capabili-
ties. Consumer Reports, for
example, wrote that Autopilot
was “too much autonomy too
soon.”
As part of the changes to
Autopilot, the system will dis-
engage if drivers ignore three
warnings within the span of
an hour to keep their hands on
the wheel. To reactivate the
system, the vehicle would have
to be stopped and restarted.
Mr. Musk has vigorously de-
fended the Autopilot technol-
ogy, saying it improves safety.
When activating the system,
drivers must acknowledge by
clicking on a screen that they
are responsible for the vehicle.
Radar, which was added to
Tesla vehicles in October 2014,
had been a supplement to the
onboard camera and image-
processing technology, the
company said Sunday.
Using radar, which detects
objects by sending out pulses
of electromagnetic waves to
detect objects, to guide vehi-
cles is complicated because
the waves interact differently
than light waves with objects
in the roadway.
“The big problem in using
radar to stop the car is avoid-
ing false alarms,” Mr. Musk
wrote in a blog post on the
company’s website. “Slamming
on the brakes is critical if you
are about to hit something
large and solid, but not if you
are merely about to run over a
soda can.” Part of the solution,
according to Mr. Musk, is to
take advantage of Tesla vehi-
EXPERIENCE
Taehyung Kim
@wsjplus #wsjplus
TECHNOLOGY
Chat Apps to Face
Tighter Rules in EU
SPENCER PLATT/GETTY IMAGES
Some of the world’s biggest
telecom companies are poised
to win a round in their global
slugfest with Silicon Valley—
at least in Europe.
The European Union’s exec-
By Sam Schechner
in Paris and
cles’ ability to communicate Stu Woo in London
with one another and collabo-
rate on their understanding of utive arm is expected this
road conditions. week to propose subjecting
“The net effect of this…is online services such as Micro-
that the car should almost al- soft Corp.’s Skype and Face-
ways hit the brakes correctly book Inc.’s WhatsApp to some
even if a UFO were to land on of the same rules that have
the freeway in zero visibility long regulated the telecom-
conditions,” Mr. Musk wrote. munications business, said
Tesla’s decision to update technology and telecom lob-
its radar software intensifies byists briefed by EU officials.
Mr. Musk’s bet that radar is an Skype, for example, might
effective technology to help have to offer emergency-call-
cars navigate the world. ing services for European cus-
Alphabet Inc.’s Google unit tomers who use its online-
and others racing toward fully voice service to dial
self-driving cars are counting traditional phone numbers.
on a technology known as li- In cases where it assigns
dar, which is similar to radar users telephone numbers—al-
but uses lasers. Mr. Musk reit- lowing for the receipt of calls
erated on Sunday that he from traditional phones—it
doesn’t anticipate using lidar could also be required to let
because it doesn’t have the those users take their num-
same capabilities as radar. bers with them if they decide
Asked whether the im- to move to a different pro-
provements would have pre- vider. Chat service WhatsApp
vented the fatal Florida crash, could be subject to new over-
Mr. Musk said he believed so sight from national telecom
because the radar would have regulators on topics such as
detected the trailer. network security.
Some Tesla drivers have ad- The draft proposals are
mitted that Autopilot’s success still in flux. But what is clear
may have lulled them into a is that the EU is proposing to
false sense of security. “I look move in a direction telecom
down at my phone a little executives have been pushing
more than I used to,” Jason for years. The executives say
Hughes, an Autopilot user they want a “level playing
from Hickory, N.C., told The field” with tech companies
Wall Street Journal in July. amid all the new, mostly free,
As he responds to Tesla
safety concerns, Mr. Musk also
Diabetes Venture Is Formed
faces controversy for propos-
ing in June to combine Tesla
and SolarCity Corp., where he
is chairman, and questions on
why one of his Space Explora- Sanofi SA has teamed up
tion Technologies Corp. rock- with Verily Life Sciences LLC,
ets exploded during routine a unit of Google parent Alpha-
fueling on Sept. 1. bet, to develop high-tech tools
for managing diabetes.
By Denise Roland
in London and
Inti Landauro in Paris
The French pharmaceutical
group Monday said the new
company, called Onduo, would
combine its expertise in diabe-
tes medicine with Verily’s
knowledge of miniaturized
electronics, analytics and soft-
ware development. The com-
panies didn’t disclose the fi-
nancial details of the deal.
The agreement is the latest
sign of convergence between
Silicon Valley and the pharma-
ceutical industry as technol-
ogy companies aim to tap
ever-higher demand for health
care products from aging pop-
ulations, while drugmakers
seek alternatives to the
lengthy and risk-laden process
Business
Watch
TATA STEEL
Indian Steelmaker
Posts Surprise Loss
Tata Steel Ltd., one of the
world’s biggest steelmakers, sur-
prised analysts Monday by post-
ing a 10-fold widening in its
first-quarter net loss as a slow-
down in demand and losses at
its U.K. business hurt margins.
The company, part of India’s
salt-to-software Tata Group,
posted a net loss of 31.83 billion
rupees ($475.7 million) for the
three months ended June 30,
compared with a loss of 3.17 bil-
lion rupees a year earlier.
The net loss from discontin-
ued operations due to its divest-
ment of parts of its U.K. steel
business stood at 33.55 billion
rupees compared with 3.39 bil-
lion rupees a year earlier. Reve-
nue fell 5% to 263.32 billion ru-
pees, reflecting sluggish demand.
—Vibhuti Agarwal
LINDE
Gas Company Ends
Praxair Merger Talks
Industrial-gas giant Linde AG
ended merger talks with U.S. ri-
val Praxair Inc. because the Ger-
© 2016 Dow Jones & Co., Inc.
All rights reserved. 3DJ4256 man company feared losing key
functions in a combination that
would have created the indus-
THE WALL STREET JOURNAL.
Dialing Up
Telecom firms have been playing defense against
tech firms offering voice and text alternatives.
Global mobile-phone messaging traffic
70 trillion messages
60
50
40
30
20
10
0
’13 ’14 ’15
*Doesn't include picture or video messages
Source: Ovum
online communications ser-
vices that they perceive to
have undermined telecom
companies’ traditional voice
and text services.
They have long wanted the
EU to repeal some of the in-
dustry-specific regulations
they face, particularly on user
privacy. Failing that, they
have pushed to extend some
of the same telecom rules to
internet-based services.
“It would be better to re-
move rules for us,” said a
telecom executive who has
been briefed on the proposals.
“But this is real progress.”
A spokeswoman for the Eu-
ropean Commission said the
proposed rules are part of the
EU’s strategy to “encourage
investments in next-genera-
tion networks, set the right
conditions for modern digital
networks and provide a level
of developing new medicines.
Sanofi and Google already
have spent a year exploring
the potential of high-tech de-
vices to improve diabetes care
by, for example, using micro-
chips to continuously monitor
blood-sugar levels in patients.
Monday’s deal is the result of
that work, according to a com-
pany spokeswoman.
People with diabetes must
monitor their food intake and
exercise levels, as well as stick
to an often complex treatment
regimen. Stefan Oelrich, head
of diabetes at Sanofi, said On-
duo would work to bring these
aspects of diabetes treatment
together in a single product.
Such a product also could
attract interest from the gov-
ernments, employers and in-
surers who pay for health care
by providing a tool for mea-
suring the outcomes of various
treatments, he added.
Sanofi said the collabora-
tion initially would focus on
Type 2 diabetes, the much
Tata Steel posted a loss of $475.7 million in the June quarter.
try’s largest player, valued at
roughly $60 billion, according to
people familiar with the talks.
Both companies—each valued
at around $30 billion—said on
Monday in separate statements
that they terminated talks that
were disclosed almost four
weeks ago.
Linde said its chief executive
and shareholder representatives
on the company’s supervisory
board decided to end talks be-
cause discussions over “gover-
nance aspects did not result in a
mutual understanding.”
Two people familiar with the
matter said Linde’s leadership
felt uncomfortable with a
merger because the company
and its Munich headquarters
would have lost too many key
functions.
—Eyk Henning
and Nina Trentmann
STARBOARD VALUE
Activist Shareholder
Takes Perrigo Stake
Starboard Value LP has built
@wsjd | wsjd.com
SMS App-based*
’16 ’17 ’18 ’19 ’20
Forecasts
THE WALL STREET JOURNAL.
playing field for all market
players.”
The proposals still face po-
tentially years of debate and
changes before adoption. But
they represent a rare boost to
telecom companies in their
skirmishes with Silicon Val-
ley’s lobbying machinery.
While telecom executives
increasingly acknowledge that
services such as Snapchat and
WhatsApp help them sell
more expensive data plans, in
many parts of the world they
have also been on the defen-
sive about how those so-
called over-the-top services
have eaten into their tradi-
tional offerings. Tech compa-
nies say oversight from the
EU’s national telecom regula-
tors could raise costs and lead
to jurisdictional disputes, dis-
couraging them from launch-
ing new services.
more common form of the dis-
ease. This affects about 90% of
all diabetes patients and oc-
curs when the body produces
insulin but is unable to use it
effectively.
Paris-based Sanofi is one of
the world’s biggest makers of
diabetes drugs, though that
part of the business is under
pressure from increasingly
cost-conscious health systems.
Mr. Oelrich said one attrac-
tion of the Verily collaboration
for Sanofi is that it could yield
a new product much faster
than traditional drug develop-
ment.
He expects Onduo to launch
its first product within two to
three years, instead of the
roughly 10 years it takes to
develop a new medicine.
The two companies ap-
pointed Joshua Riff, formerly
a senior executive at United-
Health Group’s Optum, as the
chief executive of Onduo,
which will be based in Cam-
bridge, Mass.
JASPER JUINEN/BLOOMBERG NEWS
a 4.6% stake in Perrigo Co., val-
ued at nearly $600 million, and
is urging the drug company to
refocus on its core business
The activist shareholder sent
Perrigo a letter Sunday criticiz-
ing the company for failing to
live up to performance targets it
set while successfully fending
off a $26 billion takeover offer
last year from Mylan NV. A copy
of the letter was reviewed by
The Wall Street Journal.
Starboard, fresh off victory at
Yahoo Inc., argues Perrigo man-
agement has been distracted by
the merger fight and attempts
to diversify away from its over-
the-counter drugs business, a
powerhouse in private-label
medicines including versions of
headache remedy Tyle-
nol, heartburn aid Pepcid and al-
lergy pill Claritin. Starboard ar-
gues the company should
command a far higher stock-
market value but has lost inves-
tor confidence, according to the
letter.
—David Benoit
and Jonathan D. Rockoff
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
To reprint or license content, please contact our reprints and licensing department at +1 800-843-0008 or www.djreprints.com
THE WALL STREET JOURNAL.
ECB Aims
To Tackle
Bad Debt
At Banks
BY TOM FAIRLESS
AND TODD BUELL
FRANKFURT—The European
Central Bank published new
proposals on Monday aimed at
forcing eurozone banks to face
up to a mountain of bad debt, a
€900 billion ($1.01 trillion)
problem that policy makers
worry is curbing new lending
and hindering the region’s eco-
nomic recovery.
The proposals are part of a
broader effort by the ECB, the
eurozone’s top banking supervi-
sor, to restore confidence in Eu-
rope’s battered lenders, which
are contending with ultralow
interest rates and sluggish eco-
nomic growth. They call on
banks to establish separate
units to manage bad debt, dis-
close more information to su-
pervisors, and set clear one-
year and three-year targets for
winding up problem loans.
“Banks can and, in many
cases should, be doing more to
reduce the level of” bad loans,
said Sharon Donnery, Ireland’s
deputy central-bank governor,
who heads an ECB task force on
nonperforming loans.
Around 7% of the
loans of the biggest
eurozone banks have
turned sour.
ECB officials have expressed
concerns that bad loans are
weighing on bank stocks and
preventing lenders from pass-
ing on ultralow interest rates to
consumers and businesses. Eu-
ropean bank stocks have fallen
more than 20% this year.
In a call with journalists on
Monday, Ms. Donnery said asset
quality was “a serious challenge
for many European banks,”
which could constrain credit
growth and economic activity
and lead to higher funding
costs.
Around 7% of the loans of
the biggest eurozone banks
have turned sour, according to
ECB data, but the problem is
most acute in Southern Europe,
where about 47% of loans in
Greece and 45% in Cyprus are
nonperforming. That compares
with 2% in Germany. The ECB
defines nonperforming loans as
those that are more than 90
days past due, and for which
the debtor is deemed unlikely to
repay in full.
In Italy, where about 12% of
loans are nonperforming, offi-
cials have said that the govern-
ment hopes to inject as much as
€40 billion in capital into do-
mestic banks, though such a
move would likely face opposi-
tion in Brussels and Berlin.
Under the ECB’s guidelines,
banks will be required develop
clear strategies to accelerate
loan disposals, including quan-
titative targets and greater in-
vestment in information tech-
nology and staff. They will also
be required to provide incen-
tives to tackle the issue quickly.
While the proposals aren’t
binding, banks will have to ex-
plain failures to comply.
Property Funds Back After Brexit Closure Sinovation Ventures
BY ART PATNAUDE
Some U.K. real-estate funds
have started thawing out after
the post-Brexit freeze.
Asset manager Columbia
Threadneedle Investments
said Monday that its U.K.
property fund would reopen
later this month. The London-
based firm had shut down
trading in early July when
investors were rushing to pull
their money out after Britain
voted to leave the European
Union.
Earlier this month, asset
management firm Canada Life
lifted the suspension of
redemptions on its U.K. real-
estate fund. And U.K. fund
manager Aberdeen Asset
Management PLC reopened its
property fund in mid-July,
having taken a slightly different
approach after Brexit,
suspending its fund for a short
time and charging a steep fee if
an investor still insisted on
pulling money out.
Some of the biggest U.K.
FINANCE & MARKETS
Investors Flee Indebted Mongolia
Once a market darling,
the high-yielding,
commodity-rich nation
turns into a pariah
BY CAROLYN CUI
AND JULIE WERNAU
There is nary a corner on
Earth where investors won’t
journey to find extra yield. But
the trip to Mongolia is proving
treacherous.
Money managers piled into
assets from the world’s most
sparsely populated country in
past years on the prospects of
vast untapped mines rich with
copper and gold. Mongolian
debt got an additional boost
this year, soaring 6% in July,
as raw-material prices picked
up and investors sought alter-
natives to low and even nega-
tive bond yields in developed
countries.
But in August, Mongolia’s
finance minister stunned
global investors by saying that
its government debt would
reach 78% of the gross domes-
tic product, far above the
country’s 55% target. The rev-
elation triggered a selloff in
Mongolia’s markets, with the
country’s dollar-denominated
debt tumbling 7.7% last month
and the nation’s currency fall-
ing the most among all its de-
veloping-economy peers, be-
fore rebounding slightly this
month.
“Until recently, Mongolia
was a darling of the markets
and they couldn’t do anything
wrong,” said Bejoy Das Gupta,
chief economist for Asia Pa-
cific at the Institute of Inter-
national Finance. “But when
the hard landing happens,
markets adjust very quickly.”
Mongolia is among a hand-
ful of countries with once-
bright futures that took on
massive debt loads during a
period of investor enthusiasm
for frontier markets. In 2011,
the nation was the world’s
fastest-growing economy, ex-
panding at a 17% rate as prices
of copper, gold and iron ore
soared.
Foreign lenders handed
over billions of dollars to the
government, its banks and
mining companies to help ex-
OPEC: Rivals’ Output Tops Expectations
BY BENOIT FAUCON
LONDON—OPEC said Mon-
day that crude-oil output from
rival producers is turning out
to be stronger than expected
and will result in a bigger glut
of petroleum than previously
believed this year and next.
The findings present a di-
lemma for the Organization of
the Petroleum Exporting
Countries before the 14-nation
oil cartel meets in Algeria from
Sept. 26 to 28 to talk about
ways to limit output and bring
the crude market back into bal-
ance. OPEC members are strug-
gling with oil prices that have
fallen over 50% in the past two
years because global supply is
outstripping demand.
In its closely watched
monthly report on market con-
ditions, OPEC said non-OPEC
members like the U.S., Russia
property funds remain shut,
including those at Standard
Life Investments Ltd., Aviva
Investors and M&G Invest-
ments. In August, Aviva told
investors it wouldn’t reopen its
fund for at least six months.
But the reopening of even a
few funds signals that
investors’ concerns about the
impact on U.K. property market
London’s market has fared better than some property experts expected.
Houses in Ulan Bator, Mongolia. In August, the government said it may soon stop paying civil servants and the military due to debt.
tract wealth from under- 2017, part of $2 billion in ma-
ground. Among the bonds’ turing public- and private-sec-
holders are BlackRock Inc., tor debt in 2017, according to
Franklin Templeton, Gold- the International Monetary
man Sachs Group Inc. and Fund.
UBS Global Asset Manage- Investors are pinning hopes
ment, according to the latest on a vast gold and copper mine
holder data from Thomson that is expected to lead to
Reuters. Mongolia’s debt levels huge economic growth. In De-
swelled 264% in the five years cember 2015, the government
ended 2015, the largest in- approved a $4.4 billion financ-
crease in the world during ing deal for Rio Tinto PLC’s
that period, according to second phase of the Oyu Tolgoi
Moody’s Investors Service. copper and gold mine, believed
But the commodities bust to be the world’s largest un-
that began in 2011 crimped the derdeveloped reserve of cop-
country’s growth. Now, the per, concluding a four-year-
prospect of higher U.S. inter- long negotiation. But delays in
est rates, which could make the projects have been costly:
bonds in developing econo- During the wait, copper prices
mies less attractive, could more than halved.
worsen a troubled situation. As the country’s current fi-
As of the first quarter, nancial woes deepened, the
Mongolia’s total debt owed to government resorted to emer-
foreign creditors stood at gency measures. In August,
$22.6 billion, compared with a the government said it may
still tiny $11.8 billion economy. soon stop paying its civil ser-
Meanwhile, a $580 million vants and the military and
Mongolian bond taken on to raised interest rates by 4.5
help finance a still-unfinished percentage points, to 15%, to
project to connect 21 prov- combat capital outflows.
inces with roads comes due in Moody’s also lowered Mon-
and Norway will produce about
190,000 barrels a day more Bucking Up
than expected in 2016, a sign OPEC now believes its rivals will produce more oil than expected.
that production outside the
cartel has remained resilient Change in non-OPEC supply expectations between
despite low prices. August and September
By 2017, the cartel’s data
Europe
suggests, oil supplies will out-
strip demand by an average of Former Soviet Union
about 760,000 barrels a day,
over three times higher than U.S.
OPEC predictions made just Latin America
–20,000
last month. Those dynamics
suggest that OPEC members Total non-OPEC supply
may not want to institute a so-
called freeze on their output, Source: OPEC
which would limit their ability
to compete with rising produc- Oil prices fell in London after
tion from outside the cartel. the report was released, as
“I am very concerned,” said traders determined there was
an OPEC official involved in the now less hope of a deal next
negotiations. If non-OPEC month. Brent, the global bench-
members are producing more, mark, fell 1.5% to $47.27, but
“it won’t be easy” to agree on later rebounded slightly.
capping OPEC production, the Overall, OPEC production
official said. declined only slightly in August
have eased since the EU
referendum in late June, when
sales haven’t been as big as they
were in previous downturns.
the property market was hit Shares have rebounded.
hard. In addition to funds The stability has been
suspending trade, shares of reason enough for some asset
listed landlords sank, deals managers to resume business.
collapsed, and completed sales “Any effects of the Brexit
were done at a discount. vote on the overall U.K.
So far, the market has held up economy, negative or other-
better than some property experts wise, will take many months, if
had expected. The discounts on not years, to transpire, and
sometime after that for the
property market,” Don Jord-
ison, managing director of
property at Columbia Thread-
needle Investments, said in a
statement.
Open-ended funds have been
popular with investors because
they offer real-estate returns
without the volatility that
comes with owning the shares
JONATHAN BRADY/ZUMA PRESS
of listed real-estate companies.
Yet these funds often face
criticism over their structure:
They promise investors the
ability to withdraw their money
daily even though property
assets can take months to sell.
—Elizabeth Pfeuti
contributed to this article.
Tuesday, September 13, 2016 | B5
Digging Out
A looming debt pile in Mongolia is spooking even the most
yield-hungry investors.
External debt as a
percentage of GDP
200% Forecast
150
100
50
0
2004 ’06 ’08 ’10 ’12 ’14 ’16
Sources: Moody’s (debt); J.P. Morgan (bonds)
golia’s sovereign credit rating,
sending it further into junk
status. Standard & Poor’s
made a similar move.
If Mongolia turns to the In-
ternational Monetary Fund for
help, that could prop up inves-
tor confidence that it will be
90,000 barrels a day
60,000
50,000
190,000
THE WALL STREET JOURNAL.
to 33.2 million barrels a day.
But with a few exceptions
such as economically depressed
Venezuela, OPEC members have
been pumping at full tilt in the
past two years despite the fact
all that output has kept prices
at historic lows. OPEC members
had hoped that a period of low
Raises $674 Million
BY LI YUAN
HONG KONG—A Chinese
venture-capital fund raised
about 4.5 billion yuan, or
about $674 million, in capital
as the country’s top venture
firms build up their cash piles
amid a cooling environment
for funding.
Sinovation Ventures, co-
founded by former Google Inc.
and Microsoft Corp. executive
Kai-Fu Lee, said Monday it
closed two venture-capital
funds: a dollar-denominated
fund of $300 million—in
which Apple Inc. supplier Fox-
conn Technology Group was
the anchor investor—and a
yuan-denominated fund total-
ing the equivalent of $374 mil-
lion.
Sinovation Ventures plans
to invest the funds raised in
startup companies involved in
artificial intelligence, building
enterprise software, and creat-
ing entertainment content.
WU HONG/EUROPEAN PRESSPHOTO AGENCY
Emerging markets’ bond
performance in August
TOP FIVE
Zambia 12.0%
Iraq
8.1
Cameron 5.9
Ghana 5.6
Mozambique 5.2
BOTTOM FIVE
0.1% Philippines
–0.1 Honduras
–0.4 Chile
–0.8 South Africa
–7.7 Mongolia
THE WALL STREET JOURNAL.
able to pay its debt, said Kevin
Daly, a portfolio manager at
Aberdeen Asset Management,
with $9 billion in emerging-
market debt under manage-
ment, including Mongolian
bonds. The IMF visited the
country in August.
prices would chase out produc-
ers who have high costs in the
U.S. and elsewhere, causing
supply to naturally fall as in-
vestment across the world de-
clined. Monday’s report showed
the obstacles to that strategy.
OPEC said American produc-
tion is set to decline at a
slower rate than previously ex-
pected after the U.S. oil indus-
try added 77 drilling rigs in the
past two months. The U.S. is
still set to pump about 340,000
barrels a day less this year at
13.63 million barrels, but that is
66,000 barrels a day more than
previously expected, OPEC said.
Those figures include about 9
million barrels a day of crude
production, along with output
of lighter types of petroleum
such as condensates.
—Kjetil Malkenes Hovland
in Oslo contributed
to this article.
In recent months, Chinese
venture-capital firms have
reined in investing after a
frantic 2015. Valuations are
falling and some startups are
struggling to find investment.
But top venture firms are still
able to raise money because
returns from other assets have
been disappointing.
“We still see many good
ideas and trends to invest in,”
Mr. Lee said. “High-quality
startups won’t be cheap and
will require a lot of invest-
ment as they grow.”
Sinovation Ventures, for-
merly known as China’s Inno-
vation Works, is among the
most aggressive Chinese ven-
ture funds betting on startups
that use artificial-intelligence
technology to develop prod-
ucts from driverless cars to
enterprise software.
It has invested $100 million
in 25 such companies in the
U.S. and China in the past
three years.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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B6 | Tuesday, September 13, 2016 THE WALL STREET JOURNAL.

MARKETS DIGEST
Nikkei 225 Index STOXX 600 Index S&P 500 Index Data as of 12 p.m. New York time
Last Year ago
16672.92 t 292.84, or 1.73% Year-to-date t 12.40% 342.23 t 3.29, or 0.95% Year-to-date t 6.45% 2138.94 s 11.13, or 0.52% Trailing P/E ratio * 24.86 20.77
High, low, open and close for each 52-wk high/low20012.40 14952.02 High, low, open and close for each 52-wk high/low 385.43 303.58 High, low, open and close for each P/E estimate * 18.52 16.42
trading day of the past three months. All-time high 38915.87 12/29/89 trading day of the past three months. All-time high 414.06 4/15/15 trading day of the past three months. Dividend yield 2.12 2.20
All-time high: 2190.15, 08/15/16

* P/E data based on as-reported earnings from Birinyi Associates Inc.

17500 360 2200

65-day moving average 17000 65-day moving average 350 2160

16500 340 2120

16000 330 2080

Session high
DOWN UP 65-day moving average
15500 320 2040
t

Session open Close

Close Open
t

15000 310 2000

Session low
Bars measure the point change from session's open
14500 300 1960
June July Aug. Sept. June July Aug. Sept. June July Aug. Sept.

International Stock Indexes Data as of 12 p.m. New York time Global government bonds
Latest 52-Week Range YTD Latest, month-ago and year-ago yields and spreads over or under U.S. Treasurys on benchmark two-year
Region/Country Index Close NetChg % chg Low Close High % chg and 10-year government bonds around the world. Data as of 12 p.m. ET
World The Global Dow 2430.56 –12.14 –0.50 2033.03 • 2489.23 4.0 Country/ Spread Over Treasurys, in basis points Yield
MSCI EAFE 1689.97 –17.30 –1.01 1471.88 • 1956.39 –1.5 Coupon Maturity, in years Yield Latest Previous Month Ago Year ago Previous Month ago Year ago
MSCI EM USD 888.23 –21.09 –2.32 691.21 • 1044.05 11.8 3.250 Australia 2 1.600 80.2 77.4 76.9 119.8 1.560 1.467 1.907
4.250 10 2.056 37.0 29.9 40.7 55.4 1.973 1.919 2.745
Americas DJ Americas 516.63 2.07 0.40 433.38 • 529.32 6.0
1.250 Belgium 2 -134.5 -134.8 -130.4 -91.8 -0.562 -0.606 -0.209
-0.547
Brazil Sao Paulo Bovespa 58134.08 134.35 0.23 37046.07 • 60310.50 34.1
1.000 10 0.269 -141.6 -142.9 -139.5 -120.7 0.245 0.117 0.984
Canada S&P/TSX Comp 14530.73 –9.27 –0.06 11531.22 • 14855.69 11.7
1.000 France 2 -0.570 -136.8 -136.3 -127.3 -86.4 -0.577 -0.575 -0.154
Mexico IPC All-Share 46047.59 –411.58 –0.89 39924.09 • 48956.06 7.1
0.500 10 0.270 -141.6 -143.1 -139.6 -120.1 0.243 0.116 0.990
Chile Santiago IPSA 3161.19 –26.85 –0.84 2730.24 • 3259.22 7.4
0.000 Germany 2 -0.626 -142.5 -141.5 -132.3 -95.6 -0.629 -0.625 -0.246
U.S. DJIA 18148.83 63.38 0.35 15450.56 • 18668.44 4.2
0.000 10 0.035 -165.1 -166.1 -161.7 -153.5 0.013 -0.106 0.656
Nasdaq Composite 5166.79 40.88 0.80 4209.76 • 5287.61 3.2
0.250 Italy 2 -0.053 -85.2 -85.6 -78.3 -59.0 -0.070 -0.086 0.119
S&P 500 2138.94 11.13 0.52 1810.10 • 2193.81 4.6
1.600 10 1.275 -41.0 -42.4 -46.2 -35.7 1.251 1.050 1.835
CBOE Volatility 16.53 –0.97 –5.54 11.02 • 32.09 –9.2
0.100 Japan 2 -0.249 -104.7 -99.7 -89.5 -69.6 -0.211 -0.197 0.013
EMEA Stoxx Europe 600 342.23 –3.29 –0.95 303.58 • 385.43 –6.4 0.100 10 -0.013 -169.8 -169.8 -161.9 -184.3 -0.024 -0.107 0.349
Stoxx Europe 50 2852.97 –23.78 –0.83 2556.96 • 3305.96 –8.0 4.000 Netherlands 2 -0.584 -138.2 -138.0 -129.7 -94.3 -0.593 -0.599 -0.234
France CAC 40 4439.80 –51.60 –1.15 3892.46 • 5011.65 –4.3 0.500 10 0.145 -154.1 -155.3 -151.4 -135.0 0.121 -0.002 0.841
Germany DAX 10431.77 –141.67 –1.34 8699.29 • 11430.87 –2.9 4.450 Portugal 2 0.463 -33.5 -29.9 -34.4 -39.5 0.488 0.354 0.315
Israel Tel Aviv 1437.24 4.21 0.29 1378.80 • 1607.43 –6.0 2.875 10 3.178 149.3 147.8 118.0 41.5 3.152 2.692 2.606
Italy FTSE MIB 16840.28 –316.20 –1.84 15017.42 • 22874.96 –21.4 0.250 Spain 2 -0.098 -89.6 -91.5 -86.3 -60.0 -0.129 -0.165 0.109
Netherlands AEX 447.60 –5.28 –1.17 378.53 • 474.87 1.3 1.950 10 1.085 -60.1 -59.0 -58.1 -9.2 1.084 0.931 2.099
Russia RTS Index 983.78 –4.09 –0.41 607.14 • 1017.32 30.0 4.250 Sweden 2 -0.593 -139.1 -138.2 -134.2 -118.7 -0.596 -0.644 -0.478
Spain IBEX 35 8866.60 –158.90 –1.76 7579.80 • 10631.60 –7.1 1.000 10 0.304 -138.1 -139.4 -147.6 -154.6 0.281 0.036 0.645
Switzerland Swiss Market 8206.20 –57.93 –0.70 7425.05 • 9080.56 –6.9 1.250 U.K. 2 0.163 -63.5 -60.8 -55.3 -10.8 0.178 0.144 0.601
South Africa Johannesburg All Share 52802.00 –545.30 –1.02 45975.78 • 54760.91 4.2 2.000 10 0.770 -91.5 -90.7 -99.1 -47.2 0.768 0.521 1.720
Turkey BIST 100 77053.54 … Closed 68230.47 • 86931.34 7.4 0.750 U.S. 2 0.798 ... ... ... ... 0.786 0.698 0.709
U.K. FTSE 100 6700.90 –76.05 –1.12 5499.51 • 6955.34 7.3 1.500 10 1.685 ... ... ... ... 1.674 1.512 2.191
Asia-Pacific DJ Asia-Pacific TSM 1450.12 –27.37 –1.85 1188.42 • 1499.93 4.3
Australia S&P/ASX 200 5219.60 –119.60 –2.24 4765.30 • 5587.40 –1.4 Commodities Prices of futures contracts with the most open interest 12 p.m. New York time
China Shanghai Composite 3021.98 –56.88 –1.85 2655.66 • 3651.77 –14.6 EXCHANGE LEGEND: CBOT: Chicago Board of Trade; CME: Chicago Mercantile Exchange; ICE-US: ICE Futures U.S.; MDEX: Bursa Malaysia
Hong Kong Hang Seng 23290.60 –809.10 –3.36 18319.58 • 24099.70 6.3 Derivatives Berhad; TCE: Tokyo Commodity Exchange; COMEX: Commodity Exchange; LME: London Metal Exchange;
NYMEX: New York Mercantile Exchange; ICE-EU: ICE Futures Europe. *Data as of 9/9/2016
India S&P BSE Sensex 28353.54 –443.71 –1.54 22951.83 • 29045.28 8.6 One-Day Change Year Year
Indonesia Jakarta Composite 5281.92 … Closed 4120.50 • 5461.45 15.0 Commodity Exchange Last price Net Percentage high low
340.75 -0.25 -0.07% 449.00 314.75
Japan Nikkei Stock Avg 16672.92 –292.84 –1.73 14952.02 • 20012.40 –12.4 Corn (cents/bu.) CBOT
Soybeans (cents/bu.) 988.00 7.75 0.79% 1,186.25 868.00
Malaysia Kuala Lumpur Composite 1686.44 … Closed 1600.92 • 1727.99 –0.4
Wheat (cents/bu.)
CBOT
CBOT 408.25 4.75 1.18 551.50 386.75
New Zealand S&P/NZX 50 7279.76 –188.84 –2.53 5585.43 • 7571.11 15.1
Live cattle (cents/lb.) CME 106.300 1.900 1.82 125.475 99.375
Pakistan KSE 100 40340.23 … Closed 30564.50 • 40340.23 22.9
Cocoa ($/ton) ICE-US 2,788 26 0.94 3,216 2,728
Philippines PSEi 7581.79 … Closed 6084.28 • 8102.30 9.1
Coffee (cents/lb.) ICE-US 150.50 -0.65 -0.43 157.65 119.40
Singapore Straits Times 2873.33 … Closed 2532.70 • 3083.07 –0.3
Sugar (cents/lb.) ICE-US 20.68 -0.01 -0.05 21.37 13.48
South Korea Kospi 1991.48 –46.39 –2.28 1835.28 • 2066.53 1.5
Cotton (cents/lb.) ICE-US 68.75 -0.33 -0.48 77.98 54.19
Taiwan Weighted 8947.06 –106.63 –1.18 7664.01 • 9262.89 7.3 Robusta coffee ($/ton) ICE-EU 1914.00 5.00 0.26 1,932.00 1,423.00
Thailand SET 1411.85 –33.43 –2.31 1224.83 • 1552.64 9.6
Copper ($/lb.) COMEX 2.0990 0.0065 0.31 2.3290 1.9710
Source: SIX Financial Information;WSJ Market Data Group Gold ($/troy oz.) COMEX 1325.80 -8.70 -0.65 1,384.40 1,066.00
Silver ($/troy oz.) COMEX 18.900 -0.468 -2.42 21.250 13.865
Currencies London close on Sept. 12 Aluminum ($/mt)* LME 1,586.50 1.00 0.06 1,700.50 1,451.50
Tin ($/mt)* LME 19,500.00 -25.00 -0.13 19,625.00 13,225.00
Yen, euro vs. dollar; dollar vs. major U.S. trading partners US$vs,
Mon YTDchg Copper ($/mt)* LME 4,643.00 7.00 0.15 5,070.50 4,320.50
Country/currency in US$ per US$ (%) Lead ($/mt)* LME 1,906.00 6.00 0.32 1,967.00 1,598.00
20%
Yen Europe Zinc ($/mt)* LME 2,298.00 -9.00 -0.39 2,364.00 1,467.00
s
Bulgaria lev 0.5739 1.7424 –3.2 Nickel ($/mt)* LME 10,375.00 35.00 0.34 10,950.00 7,750.00
10
Croatia kuna 0.1500 6.667 –4.9 Rubber (Y.01/ton) TCE 153.90 0.90 0.59 159.60 149.50
Euro zone euro 1.1230 0.8905 –3.3
0 Palm oil (MYR/mt) MDEX 2639.00 -1.00 -0.04 2,669.00 2,171.00
Czech Rep. koruna-b 0.0416 24.064 –3.3
s Denmark krone 0.1509 6.6287 –3.5 Crude oil ($/bbl.) NYMEX 46.86 0.40 0.86 53.39 34.10
–10 s WSJ Dollar index 0.003629 275.57 –5.1
Hungary forint NY Harbor ULSD ($/gal.) NYMEX 1.4656 0.0149 1.03 1.6112 1.0272
Euro Iceland krona 0.008734 114.50 –12.0
–20 RBOB gasoline ($/gal.) NYMEX 1.3962 0.0351 2.58 1.5121 0.9930
Norway krone 0.1214 8.2378 –6.8
0.2576 3.8814 –1.1
Natural gas ($/mmBtu) NYMEX 2.991 0.101 3.49 3.1480 2.1680
2015 2016 Poland zloty
Russia ruble-d 0.01546 64.698 –10.0 Brent crude ($/bbl.) ICE-EU 48.87 0.40 0.83 54.12 33.05
US$vs, US$vs,
YTDchg YTDchg Sweden krona 0.1176 8.5015 0.7 Gas oil ($/ton) ICE-EU 424.75 -2.75 -0.64 477.50 298.00
Mon Mon
Country/currency in US$ per US$ (%) Country/currency in US$ per US$ (%) Switzerland franc 1.0270 0.9737 –2.8
Turkey lira 0.3357 2.9792 2.1 Sources: SIX Financial Information; WSJ Market Data Group
Americas Hong Kong dollar 0.1289 7.7582 0.1
Ukraine hryvnia 0.0376 26.6175 10.9
Argentina peso-a 0.0666 15.0160 16.0
India rupee
Indonesia rupiah
0.0150
0.0000757
66.7968 0.9
13205 –4.6
U.K. pound 1.3314 0.7511 10.7 Cross rates London close on Sep 12
Brazil real 0.3046 3.2828 –17.1 Middle East/Africa
Japan yen 0.009808 101.95 –15.2
Canada dollar 0.7645 1.3081 –5.5 USD GBP CHF JPY HKD EUR CDN AUD
Kazakhstan tenge 0.002960 337.82 –0.3 Bahrain dinar 2.6528 0.3770 –0.04
Chile peso 0.001490 671.10 –5.3 Australia 1.3291 1.7698 1.3654 0.0130 0.1713 1.4928 1.0161 ...
Macau pataca 0.1252 7.9882 –0.2 Egypt pound-a 0.1126 8.8805 13.4
Colombia peso 0.0003384 2955.25 –6.9 Canada 1.3081 1.7415 1.3435 0.0128 0.1686 1.4689 ... 0.9841
Malaysia ringgit-c 0.2433 4.1102 –4.5 Israel shekel 0.2648 3.7768 –3.0
Ecuador US dollar-f 1 1 unch
New Zealand dollar 0.7317 1.3667 –6.6 Kuwait dinar 3.3165 0.3015 –0.6 Euro 0.8905 1.1857 0.9145 0.0087 0.1148 ... 0.6807 0.6699
Mexico peso-a 0.0524 19.0784 10.9
Pakistan rupee 0.0096 104.310 –0.6 Oman sul rial 2.5970 0.3851 0.03 Hong Kong 7.7582 10.3284 7.9677 0.0761 ... 8.7120 5.9311 5.8372
Peru sol 0.2946 3.3950 –0.6
Philippines peso 0.0210 47.512 1.4 Qatar rial 0.2746 3.641 –0.03 Japan 101.9530 135.7500 104.7300 ... 13.1420 114.4900 77.9500 76.7000
Uruguay peso-e 0.0343 29.120 –2.6
Singapore dollar 0.7356 1.3594 –4.2 Saudi Arabia riyal 0.2666 3.7509 –0.1 0.9737 1.2962 ... 0.0095 0.1255 1.0935 0.7443 0.7324
Venezuela bolivar 0.100100 9.99 58.4 Switzerland
South Korea won 0.0008984 1113.03 –5.4 South Africa rand 0.0695 14.3964 –7.0
U.K. 0.7511 ... 0.7715 0.0074 0.0968 0.8436 0.5742 0.5652
Asia-Pacific Sri Lanka rupee 0.0068871 145.20 0.7 Close Net Chg % Chg YTD % Chg
0.7524 1.3291 –3.1 Taiwan dollar 0.03154 31.703 –3.7 U.S. ... 1.3314 1.0270 0.0098 0.1289 1.1230 0.7645 0.7524
Australia dollar WSJ Dollar Index 86.42 –0.09 –0.11 –4.16
China yuan 0.1497 6.6806 2.9 Thailand baht 0.02866 34.890 –3.2 Sources: Tullett Prebon, WSJ Market Data Group Source: Tullett Prebon

Key Rates Top Stock Listings 12 p.m. New York time

Latest 52 wks ago % YTD% % YTD% % YTD%
Libor Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Cur Stock Sym Last Chg Chg Asia Titans 50
One month 0.52772% 0.20900% ¥ TakedaPharm 4502 4668.00 -0.89 -23.03 CHF RocheHldgctf ROG 239.00 -0.42 -13.53 Last: 140.33 t 3.54, or 2.46% YTD s 3.0%
Three month 0.85578 0.33550 Asia Titans HK$ TencentHoldings 0700 207.00 -3.18 35.56 £ RoyDtchShell A RDSA 1857.00 -1.22 21.69
145
Six month 1.25528 0.54175 HK$ AIAGroup 1299 50.10 -2.34 7.51 ¥ TokioMarineHldg 8766 3944.00 -2.35 -16.30 € SAP SAP 78.38 -0.60 6.81 High
One year 1.56644 0.85455 ¥ AstellasPharma 4503 1569.00 -0.57 -9.38 ¥ ToyotaMtr 7203 6093.00 -1.26 -18.63 € Sanofi SAN 69.95 -0.57 -11.01 Close 140
Euro Libor AU$ AustNZBk ANZ 26.19 -2.13 -6.23 AU$ Wesfarmers WES 42.50 -0.35 2.14 € SchneiderElectric SU 59.50 0.17 13.20 Low 135
One month -0.37286% -0.11357% AU$ BHP BHP 19.94 -4.04 11.65 AU$ WestpacBanking WBC 29.03 -1.73 -13.50 € Siemens SIE 103.80 -0.95 15.49 t
Three month -0.32014 -0.03786 HK$ BankofChina 3988 3.56 -4.30 2.89 AU$ Woolworths WOW 22.32 -2.32 -8.90 € Telefonica TEF 9.50 -2.34 -7.18 130
Six month -0.20614 0.03057 HK$ CKHutchison 0001 99.50 -2.74 -4.69 € Total FP 43.44 -0.96 7.37 50–day
125
One year -0.07686 0.14386 HK$ CNOOC 0883 9.43 -2.68 16.85 Stoxx 50 CHF UBSGroup UBSG 14.13 -2.35 -27.61
moving average
120
Euribor ¥ Canon 7751 2901.50 -3.44 -21.05 CHF ABB ABBN 21.61 -1.19 20.32 € Unilever UNA 40.76 -0.67 1.62
One month -0.37100% -0.10400% ¥ CentralJapanRwy 9022 17125 -0.35 -20.72 € ASMLHolding ASML 90.94 -1.24 10.16 £ Unilever ULVR 3505.00 -0.71 19.77 17 24 1 8 15 22 29 5 12 19 26 2 9
Three month -0.30300 -0.03800 HK$ ChinaConstructnBk 0939 5.77 -5.41 8.66 € AXA CS 19.27 -2.82 -23.64 € Vinci DG 66.98 -0.45 13.26 July Aug. Sept.
Six month -0.19800 0.03700 HK$ ChinaLifeInsurance 2628 20.20 -5.61 -19.52 € AirLiquide AI 94.65 -1.01 -8.68 £ VodafoneGroup VOD 222.40 0.50 0.63
One year -0.05700 0.15700 HK$ ChinaMobile 0941 94.50 -3.57 8.00 € Allianz ALV 134.90 -1.21 -17.52 CHF ZurichInsurance ZURN 256.40 -0.62 -0.77
Yen Libor AU$ CmwlthBkAust CBA 70.22 -0.92 -17.90 € Anheuser Busch ABI 110.35 -0.63 -3.54
DJIA Stoxx 50
One month -0.07371% 0.04943% ¥ EastJapanRailway 9020 8958.00 -1.14 -21.76 £ AstraZeneca AZN 4858.00 0.81 5.23
16735 -2.99 -20.61 64.98 -0.21 -6.57 Last: 2852.97 t 23.78, or 0.83% YTD t 8.0%
Three month -0.03536 0.08357 ¥ Fanuc 6954 € BASF BAS 71.42 -1.60 0.99 $ AmericanExpress AXP
Six month -0.00479 0.12586 ¥ Hitachi 6501 477.80 -2.47 -30.90 € BNP Paribas BNP 46.88 -2.20 -10.25 $ Apple AAPL 104.67 1.49 -0.56 2925
One year 0.08914 0.23543 TW$ Hon Hai Precisn 2317 77.50 -0.64 91.83 £ BT Group BT.A 385.00 -1.29 -18.38 $ Boeing BA 129.01 0.38 -10.77
¥ HondaMotor 7267 3090.00 -1.47 -20.97 € BancoBilVizAr BBVA 5.56 -2.44 -16.73 $ Caterpillar CAT 81.07 0.35 19.29 2850
Offer Bid
KRW HyundaiMtr 005380 138500 -0.72 -7.05 € BancoSantander SAN 4.09 -2.62 -10.25 $ Chevron CVX 101.42 0.15 12.74 2775
Eurodollars
HK$ Ind&Comml 1398 4.83 -4.55 3.21 £ Barclays BARC 170.05 -2.69 -22.32 $ CiscoSystems CSCO 31.06 0.68 14.38
One month 0.6000% 0.5000%
42.60
2700
Three month 0.9500 0.8500
¥ JapanTobacco 2914 3950.00 -0.40 -11.65 € Bayer BAYN 93.55 -1.55 -19.21 $ CocaCola KO 0.78 -0.84
¥ KDDI 9433 3074.00 -0.74 -2.54 £ BP BP. 428.70 -0.80 21.10 $ Disney DIS 92.96 0.58 -11.53 2625
Six month 1.3500 1.2500
¥ Mitsubishi 8058 2176.00 -1.81 7.30 £ BritishAmTob BATS 4698.00 0.05 24.58 $ DuPont DD 67.83 -0.88 1.85 2550
One year 1.6500 1.5500
¥ MitsubishiUFJFin 8306 532.30 -2.54 -29.69 CHF FinRichemont CFR 58.90 -0.42 -18.31 $ ExxonMobil XOM 86.91 0.08 11.49
Latest 52 wks ago
1369.00 -1.83 -5.29 $ GenElec GE 30.07 -0.12 -3.45 17 24 1 8 15 22 29 5 12 19 26 2 9
¥ Mitsui 8031 € Daimler DAI 62.40 -1.67 -19.57
July Aug. Sept.
Prime rates ¥ Mizuho Fin 8411 178.00 -1.17 -26.90 € DeutscheTelekom DTE 14.55 -1.56 -11.95 $ GoldmanSachs GS 169.63 0.63 -5.88
U.S. 3.50% 3.25% ¥ NTTDoCoMo 9437 2577.50 -0.90 3.76 £ Diageo DGE 2065.50 -0.70 11.26 $ HomeDepot HD 127.80 0.05 -3.36
Canada 2.70 2.70 AU$ NatAustBnk NAB 26.60 -2.56 -11.92 € ENI ENI 13.56 -1.53 -1.74 $ Intel INTC 35.67 0.65 3.54
Japan
Hong Kong
1.475
5.00
1.475
5.00
¥ NipponStl&SmtmoMtl 5401 2057.50
4591.00
-3.79
-0.82
-14.84
-5.07
£ GlaxoSmithKline GSK 1592.00 -0.47 15.95 $
$
IBM
JPMorganChase
IBM
JPM
156.75
66.61
0.68 13.90
-0.06 0.88
Dow Jones Industrial Average P/E: 20
¥ NipponTeleg 9432 £ HSBC Hldgs HSBA 565.60 -2.15 5.48
Policy rates ¥ NissanMotor 7201 1031.50 -1.67 -19.38 € INGGroep INGA 11.10 -1.99 9.36 $ JohnsJohns JNJ 117.75 -0.41 14.63 Last: 18148.83 s 63.38, or 0.35% YTD s 4.2%
ECB 0.00% 0.05% ¥ NomuraHldgs 8604 481.80 -0.99 -29.05 £ ImperialBrands IMB 3907.50 -0.45 8.95 $ McDonalds MCD 115.54 0.84 -2.20
Britain 0.25 0.50 1030.50 -1.58 -16.93 $ Merck MRK 62.66 0.28 18.64 18500
¥ Panasonic 6752 € IntesaSanpaolo ISP 2.12 -2.03 -31.28
Switzerland 0.50 0.50 HK$ PetroChina 0857 5.11 -2.11 0.39 € LVMHMoetHennessy MC 152.00 -0.13 4.90
$ Microsoft MSFT 56.37 0.28 1.60
$ NikeClB NKE 55.61 0.51 -11.02 18000
Australia 1.50 2.00 HK$ PingAnInsofChina 2318 41.55 -3.48 -3.15 £ LloydsBankingGroup LLOY 56.97 -3.95 -22.03
U.S. discount 1.00 0.75 $ RelianceIndsGDR RIGD 31.75 1.76 3.76 € LOreal OR 167.25 0.06 7.69
$ Pfizer PFE 34.25 0.44 6.10 17500
Fed-funds target 0.25 0.00 AU$ RioTinto RIO 47.41 -2.45 6.04 £ NationalGrid NG. 1042.00 -1.19 11.15
$ Procter&Gamble PG 87.14 1.04 9.73
Call money 2.25 2.00 1465000 -6.98 16.27 $ 3M MMM 176.28 0.36 17.02 17000
KRW SamsungElectronics 005930 CHF Nestle NESN 77.75 -0.70 4.29
4416.00 -0.99 -20.43 $ TravelersCos TRV 114.21 -0.20 1.20
Overnight repurchase rates ¥ Seven&I Hldgs 3382 CHF Novartis NOVN 77.25 -0.19 -11.00 16500
6691.00 -3.01 8.99 $ UnitedTech UTX 103.18 0.49 7.40
U.S. 0.54% 0.18% ¥ SoftBankGroup 9984 DKK NovoNordiskB NOVO-B 298.30 0.74 -25.41
3520.00 -2.00 -23.58 $ UnitedHealthGroup UNH 134.27 0.49 14.14 17 24 1 8 15 22 29 5 12 19 26 2 9
Euro zone n.a. n.a. ¥ Sumitomo Mitsui 8316 £ Prudential PRU 1368.00 -2.29 -10.65
116.70 -3.47 24.48 $ VISAClA V 81.99 0.81 5.73 July Aug. Sept.
HK$ SunHngKaiPrp 0016 £ ReckittBenckiser RB. 7201.00 0.28 14.65
Sources: WSJ Market Data Group, SIX 175.00 -1.69 22.38
$ Verizon VZ 52.08 0.51 12.69 Note: Price-to-earnings ratios are for trailing 12 months
TW$ TaiwanSemiMfg 2330 £ RioTinto RIO 2294.50 -2.36 15.91
Financial Information, Tullett $ WalMart WMT 71.12 1.17 16.02 Sources: WSJ Market Data Group; Birinyi Associates
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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THE WALL STREET JOURNAL.
Italy’s Biggest Bank Caught in Tight Spot
UniCredit’s troubles
imperil the nation’s
economy, financial
stability in eurozone
BY GIOVANNI LEGORANO
MILAN—For UniCredit
SpA, the summer of discontent
for Italy’s banks looks likely to
stretch well into the fall—and
possibly beyond.
UniCredit, Italy’s largest
lender by assets, emerged as
one of the weakest big banks
in Europe in July’s stress
tests, showcasing the failure
of its attempts to respond to
rock-bottom interest rates and
a huge pile of bad loans.
Now, as Jean-Pierre Must-
ier, the bank’s new chief exec-
utive, readies a big-bang plan
to revive UniCredit’s fortunes,
he faces a series of unpalat-
able choices: Aggressive action
to cut the bank’s €80 billion
($89.9 billion) in bad loans—
the largest of any European
bank—would force the Mila-
nese bank to raise billions in
fresh capital, while an asset
sale could help bolster its cap-
ital position but would hurt al-
ready thin profit.
Stressed Out
UniCredit stock has slid over the
past year, as investors worried
about its capital buffer in the
event of a shock.
€5
4 responded by gradually raising
3
2 up 2% to €7.9 billion for 2015.
1
0 and what it pays on deposits—
J F M A M J J A
€1 = $1.12
Source: FactSet
THE WALL STREET JOURNAL.
Carlyle Taps Pension Executive
BY MATT JARZEMSKY
Carlyle Group LP hired a
senior executive from Canada’s
biggest pension fund to over-
see debt investing, part of the
asset manager’s effort to re-
group from setbacks in its
credit and hedge-fund busi-
ness.
Washington, D.C.-based Car-
lyle tapped Mark Jenkins, most
recently head of global private
investments at Canada Pen-
sion Plan Investment Board,
for the new position, according
to a statement.
The hire follows a series of
setbacks in Carlyle’s global
market strategies arm, which
encompasses much of the
firm’s investing outside of pri-
vate equity and real estate.
Like its peers, the firm has ex-
panded beyond its roots in
corporate buyouts over the
years, seeking to diversify,
boost assets and appeal to
shareholders following its 2012
initial public offering.
Global market strategies has
been a sore spot for Carlyle,
largely because of struggles at
its hedge funds Claren Road
Asset Management, Vermil-
lion Asset Management LLC
and Emerging Sovereign
Group LLC. In May, Mitch
Petrick stepped down from a
role running the $34.7 billion
business. Carlyle tasked long-
time private-equity executive
Kewsong Lee to rebuild it and
has said it is reviewing options
to improve the unit’s perfor-
mance.
Overall, global market strat-
egies’ funds have fallen in four
straight quarters, including a
High-Ranking HSBC Banker to Depart
BY MARGOT PATRICK
LONDON—A top HSBC
Holdings PLC banker, Spencer
Lake, is leaving the bank after
being sidelined in a manage-
ment shuffle earlier this year.
Mr. Lake, a group general
manager who was with the
bank for a decade, ran HSBC’s
global capital financing busi-
ness until February, when
HSBC merged the function
into its global banking unit.
Mr. Lake became vice chair-
man of global banking and
Meanwhile, the travails of
Italy’s No. 3 lender, Banca
Monte dei Paschi di Siena
SpA, promise to only compli-
cate Mr. Mustier’s job. On
Thursday, Monte dei Paschi
said its CEO, Fabrizio Viola,
had agreed with the bank’s
board to resign, in a surprise
move that came as that bank
works on a plan to shed €28
billion in bad loans.
Troubles at UniCredit,
which has a vast business in
Germany and Eastern Europe,
could threaten not only Italy’s
ailing economy but also the
continent’s already fragile fi-
nancial stability.
Britain’s vote to leave the
European Union has upended
Europe’s status quo, making
the financial system more sen-
sitive to shocks. Investors are
watching UniCredit closely, as
they expect its fate to affect
both Italy and potentially
other lenders on the conti-
nent.
“Fixing UniCredit is of para-
mount importance for Italy’s
banking system, for the coun-
try’s economy and for the eu-
rozone,” said Fabio Caldato, a
London-based partner at asset
manager Olympia Wealth
Management.
Like most of its Italian
peers, UniCredit has sustained
a double whammy of ultralow
interest rates—Italian mort-
gage rates are as low as 1%—
and a decade of economic dol-
drums in Italy, which have
helped drive up bad loans and
batter profits.
For several years, the bank
commissions, selling assets
and cutting costs. The push
has yielded little. In the past
two years, commissions inched
That failed to offset an 8%
drop in net interest income—
the difference between inter-
est the bank receives on loans
S to €12 billion last year.
As a result, a plan to reach
net profit of €5.3 billion in
2018 appears wildly optimis-
KEITH BEDFORD/REUTERS
Carlyle’s global market strategies arm has been a sore spot amid struggles at its hedge funds.
12% decline in the first three
months of the year.
Mr. Jenkins is focused on
the unit’s credit investing,
which includes energy lending,
providing capital to midsize
companies and bets on dis-
tressed debt.
Credit is an “established,
profitable business” for Car-
lyle, Mr. Lee said in an inter-
view. “Mark’s hiring makes a
strategic statement that we
are committed to investing in
and growing the credit plat-
form.”
Carlyle has been active in
collateralized loan obligations,
markets with a set of strate-
gic projects and a greatly re-
duced role in day-to-day op-
erations.
Mr. Lake didn’t immedi-
ately respond to a request for
comment.
His departure is the latest
in a series of exits from the
global banking division after
Florian Fautz, global head of
mergers and acquisitions, and
John Crompton, head of cor-
porate finance, left in June.
HSBC is cutting tens of
thousands of jobs across its
FINANCE & MARKETS
UniCredit Chief Executive Jean-Pierre Mustier’s job is complicated by low interest rates and a weak economy.
tic, with net profit last year at
just €1.7 billion. At the same
time, the bank has had to
write down €24 billion in bad
loans in three years.
These problems have con-
spired to leave UniCredit’s
common equity Tier 1 ratio, an
important measure of banks’
capital, at 10.51% at the end of
the second quarter, just a hair
over regulatory requirements
of 10% and lower than the
12.7% for its Italian rival In-
tesa Sanpaolo SpA.
UniCredit ousted its chief
executive this spring, hiring
Mr. Mustier in June.
With the stock down more
than 60% since the start of the
year, Mr. Mustier sought to
buttress investor confidence in
July by announcing two trans-
actions immediately after tak-
distressed investing and other
areas of credit over the years.
It may seek to build on its na-
scent debt business in Europe
or providing bonds and loans
to small companies or those
with atypical capital needs.
During his eight years at
CPPIB, he built the pension
fund’s direct-lending business
and oversaw its $12 billion ac-
quisition of General Electric
Co.’s private-equity lending
business, Antares Capital. Be-
fore that, Mr. Jenkins co-led
Barclays PLC’s leveraged-fi-
nance business in New York
and worked in Goldman Sachs
units and exiting businesses
to improve returns. Within in-
vestment banking, it has com-
bined country, sector and
product teams to save money.
Samir Assar, HSBC’s chief
executive for global banking
and markets, told staff in a
memo that Mr. Lake had been
a great advocate for the bank,
helping it to win awards and
influence policy.
Mr. Lake joined the bank in
2006 as global head of debt
capital markets after a long
stint at Merrill Lynch. He be-
ing the helm: the sale of 10%
stakes in two of the bank’s
crown jewels—online broker
FinecoBank SpA and Poland’s
Bank Pekao SA.
However, a few weeks later,
the stress tests showed that a
downturn would leave the
bank with a dangerously thin
capital buffer of just over 7%.
The bank’s stock fell 13% in the
days after the stress tests. It
has picked up since but is still
down 55% in the past year.
Now, Mr. Mustier faces
some tough choices as he
readies a new strategic plan
slated before year’s end. First,
he plans to fatten UniCredit’s
capital cushion by at least €8
billion, according to a person
familiar with his thinking.
But the figure could be
higher if the bank decides to
Group Inc.’s finance and fixed-
income departments.
CPPIB, like other Canadian
pensions, takes stakes in funds
managed by Carlyle and other
firms but also directly invests
in companies and other assets.
In recent years, the pension
has invested in department-
store chain Neiman Marcus
Group, retailer 99 Cents Only
Stores and health-care infor-
mation technology company
IMS Health Inc.
CPPIB promoted managing
director Shane Feeney to
global head of private invest-
ments, succeeding Mr. Jenkins.
came a group general man-
ager—a top HSBC ranking—in
2012.
At the bank, Mr. Lake was
a key conduit between HSBC
and governments and policy
makers.
He is chairman of the In-
ternational Capital Market
Association, an industry body
for debt markets, and helped
drive work at HSBC around
internationalizing the Chinese
currency and promoting so-
called green, or environmen-
tally friendly, finance.
Tuesday, September 13, 2016 | B7
sell a large chunk of its bad
loans in one go—an option in-
vestors are pushing for and
Mr. Mustier is considering, the
person said.
A major move to unload
bad loans, perhaps as much as
€20 billion, “will be key for a
rerating of the stock,” said Vi-
cenzo Longo, a Milan-based
strategist at IG Markets.
However, Monte dei Paschi
presented a plan in July to sell
€28 billion of bad loans at 27%
of face value. That has effec-
tively set a new benchmark for
the pricing of Italian bad
loans. Since UniCredit attri-
butes a higher value to its bad
loans, a sale of €20 billion of
loans would force it to take €2
billion in write-downs—thus
increasing the size of a capital
increase.
Bridgewater Raises
Cash for Key Fund
BY MATT WIRZ
Bridgewater Associates
LP, the world’s largest hedge-
fund manager, is raising new
money for its flagship Pure
Alpha fund for the first time
since 2009, a person familiar
with the matter said.
The move follows an un-
characteristically poor perfor-
mance this year for the $70
billion fund, prompting the
firm to open Pure Alpha up to
investors to bring it back to
its optimal size, the person
said.
Pure Alpha uses a macro
investment strategy to bet on
and against world markets.
The fund, which hasn’t had a
losing performance in the
past 15 years, lost about 9%
through August. It has re-
turned an average 12% annu-
ally since 1991.
News of Pure Alpha’s re-
opening was reported earlier
by the Financial Times.
Bridgewater’s slightly
smaller All Weather fund,
which employs a risk-parity
strategy based on passive au-
tomated programs, did far
ABN Amro Considers
A Round of Job Cuts
BY MAARTEN VAN TARTWIJK
AMSTERDAM—ABN Amro
Group NV could eliminate
more than 1,000 jobs as the
Dutch bank ramps up a re-
structuring plan designed to
reduce costs.
ABN Amro said Monday in
a letter to its works council
that it is considering scrap-
ping 975 to 1,375 jobs in the
next couple of years, a move
that would reduce annual
costs by €195 million
($219 million) to €225 million.
The bank, which is controlled
by the Dutch government, em-
ploys around 22,000 people
worldwide.
The bank had already
hinted at job losses when it
presented its second-quarter
results in August. The job cuts
could affect the bank’s fi-
ALESSIA PIERDOMENICO/BLOOMBERG NEWS
Mr. Mustier could also sell
assets to beef up capital, but
such prospects have worsened
recently. Turmoil in Turkey
would make it hard to sell the
bank’s Turkish business.
Meanwhile, UniCredit has
been in talks to sell its remain-
ing 40% stake in Pekao to Pol-
ish insurer PZU SA, but the
latter is now interested in buy-
ing just 30%, according to peo-
ple familiar with the situation.
Any capital increase could
also collide with Monte dei
Paschi’s plans for a €5 billion
share sale this winter, amid a
market with little appetite for
Italian banking shares.
Indeed, Monte dei Paschi is
considering asking investors
to convert riskier bonds into
shares to reduce its capital in-
crease.
better this year, returning
13% through the end of Au-
gust. This marks a reversal
from 2015, when Pure Alpha
gained about 5%, while All
Weather lost 7%.
Investors had been lining
up to allocate new capital to
Bridgewater for years when
the firm last year launched a
new fund called Optimal Port-
folio, which blends the All
Weather and Pure Alpha
strategies. The firm took in
about $11 billion last year.
Pure Alpha, the
firm’s flagship fund,
lost about 9%
through August.
Bridgewater continued to
take investments for Optimal
Portfolio at the start of 2016
and reopened Pure Alpha
about five months ago, the
person familiar with the mat-
ter said. Investors have put
about $11.5 billion of new
money into Bridgewater since
January, the person added.
nance, human-resources and
communication departments.
The plans will be completed in
the coming months.
The restructuring comes as
European banks grapple with
record-low interest rates,
stricter regulations and a shift
to digital banking services.
Analysts have said the current
environment could force lend-
ers to further slash costs.
ABN Amro said market con-
ditions are pressuring its
business model and profit
margins, and that it needs to
free up money to invest in
growth areas such as digital
services.
“We need to tackle the
bank’s bureaucracy, eliminate
duplication of work, make
sure that our managers ‘walk
the talk,” Chief Executive Ger-
rit Zalm said.
For personal non-commercial use only. Do not edit or alter. Reproductions not permitted.
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B8 | Tuesday, September 13, 2016 THE WALL STREET JOURNAL.

Email: heard@wsj.com
HEARD ON THE STREET FINANCIAL ANALYSIS & COMMENTARY WSJ.com/Heard

Deals Fuel Flash Play

Pure Storage is growing rapidly but the shares are relatively cheap. Corporate Debt Is
Advances Pure Storage revenue, in millions
$1,000
Price as a multiple of forward sales

Pure Storage 2.7

A Ripe BOJ Target
In Biotech 800
Nasdaq Composite 2.5
Japan’s corporate-bond bonds has more than dou-
The needs of big drug- 600 market is taking off just in bled in the year so far and
EMC† 2.3
makers are driving the stock- time for the Bank of Japan is at its highest since 2013.
price outlook of smaller bio- 400 to play an even bigger role Given that the BOJ has so
IBM 1.9
tech companies. in it. many restrictions on its cor-
200
That suggests the bright- NetApp 1.8 In the Japanese central porate-bond program in
ening investment environ- 0 bank’s vast asset-purchase terms of size, maturity and
ment could stick around. The Nimble Storage 1.6 program, corporate bonds investment grade, an expan-
FY2013 ’14 ’15 ’16 ’17* ’18*
biotech market has heated have been an afterthought. sion in one form or another
*estimate †as of Sept. 6 closing of acquisition by Dell
back up after an ugly start to Note: Fiscal years ended January With the bank’s entire pol- makes sense. That Europe
the year. Placid markets have Sources: the company; FactSet THE WALL STREET JOURNAL. icy in flux in advance of a already has gone down this
lowered the cost of issuing policy meeting later this path gives the BOJ a track

Don’t Race to Bash Flash

equity, and deals are back on month, the market already record to learn from.
the table now after a lull. may be anticipating big Buying more of slightly
The recent sale of Mediva- changes afoot. longer-dated bonds may
tion to Pfizer fetched $14 Japan’s corporate-bond prove the most appealing
billion including debt, far Businesses are taking to While flash memory has seeing success. market stands out as a mi- option. Bank officials have
more than investors ex- flash memory in a big way, long been used in consumer In its most recent quar- nuscule ¥57 trillion ($555 signaled a desire to keep
pected, with no shortage of creating opportunities for devices such as smart- terly report last month, Net- billion) droplet compared medium-term rates low,
suitors. Despite Friday’s sell- large, established tech giants phones, cameras and laptops, App said that sales of its all- with the ¥909 trillion ocean even as they try to restore
off, the Nasdaq Biotechnol- as well as upstarts. But in- its adoption in data centers flash systems surged 385% that is the government-bond relatively higher rates fur-
ogy Index has returned 8.5% vestors remain skeptical of was once limited by its high year over year. Its stock market. Because of that, the ther out along the yield
over the past six months. who will end up with the cost relative to magnetic price has jumped by over BOJ’s corporate-bond-buy- curve.
Smaller companies generally most chips in their stack. disks and other more tradi- one-fifth since that report. ing program has been lim- That can be seen in the
have done better. Sales of flash-based stor- tional forms of storage. That means more price ited to ¥3.2 trillion a year BOJ’s preference for buying
Modest hints of deals can age systems used in data But that gap is narrowing competition for the likes of since it launched in 2013. By shorter-term bonds in re-
send stocks higher. Gilead centers and other business and the increasing impor- Pure and Nimble, which still contrast, it targets pur- cent months. As a result,
Sciences executives said last functions are rising rapidly. tance of running supereffi- are losing money and don’t chases of ¥80 trillion of yields on two-year triple-B-
week at an investor confer- That is fueling growth for cient data centers has given have a wide portfolio of government bonds. rated corporate bonds have
ence that the company feels Pure Storage and Nimble flash a new opportunity. It other products to fall back Making matters worse, fallen 0.22 percentage point
an urgency to look at outside Storage, two younger com- consumes far less power and on. EMC, which is in a pat- new issuance of corporate since the last policy meeting
deals and that they would be panies that specialize in accesses data faster than ent dispute with Pure Stor- bonds fell in 2014 and 2015, at the end of July, and those
willing to take a risk on a these products. other forms of storage. In- age, may even be a stronger giving the BOJ fewer bonds on 10-year bonds are up
company developing a class In just four years, Pure ternet giants like Facebook threat now, given that it is to buy. slightly.
of new cancer drugs known Storage has gone from $6 that operate huge networks part of the closely held Dell But the corporate-bond As the BOJ searches for
as PARP inhibitors. million in annual revenue in of data centers were early Technologies empire that no landscape has changed of ways to make a difference,
That nod came with some 2013 to nearly $585 million adopters, and others are fol- longer will be scrutinized for late. Issuance is up almost it may find buying more
big caveats—but it was for the trailing 12 months. lowing suit. its quarterly results. A sur- 30% so far this year, accord- corporate bonds is part of
enough to send shares of Nimble’s annual revenue has Data-storage arrays using vey of technology resellers ing to data provider Dea- the answer. A little bit of re-
Tesaro and Clovis Oncology increased from about $54 only flash will make up at in July by Barclays found logic, giving the BOJ a tail therapy never hurt any-
up 7% and 15%, respectively. million to more than $400 least 70% of all primary 81% were seeing “increased larger universe of assets to one.
Buying stocks on deal million over the same pe- data-storage units sold in discounting” for most data- buy. Under its current pro- —Anjani Trivedi
speculation appears fool- riod. 2020, according to a forecast storage vendors. gram, the BOJ can buy up to
hardy, but big drugmakers Yet the market has taken by IDC. Still, even smaller compa- ¥100 billion of a company’s
must replace maturing prod- a rather dim view of the two. Flash memory will be a nies with compelling tech- bonds, as long as it doesn’t Bond Party
ucts continuously. Pure Storage has shed more “key catalyst and compo- nology can stake out a valu- purchase more than 25% of Issuance of Japanese corporate
Gilead Sciences, facing a than 20% of its value this nent” in the design of data able piece of real estate in the total amount issued. It bonds, year-over-year change
sharp reversal in revenue year and trades at just 2.7 centers this year and moving the data center of the future. buys only investment-grade
30%
growth this year and with times forward sales, only a ahead, IDC analyst Eric And depressed valuations bonds excluding those from
20
nearly $25 billion in cash slight premium to the Nas- Burgener wrote in a July re- could make companies such financial institutions. Unlike 10
and securities plus easy ac- daq Composite Index’s aver- port. as Pure and Nimble attrac- the European Central Bank’s 0
cess to the investment-grade age. Nimble, down 9% for the That means established tive buyout targets. Both still program, it doesn’t publish –10
bond market, is motivated year, trades at just 1.6 times data-storage-equipment pro- face an uphill battle, but un- a menu of corporate bonds –20
and able to act. forward sales. viders can’t afford to be left like many other tech up- that it will buy. –30
With such companies on The reasons speak to the out. EMC, NetApp, Hewlett starts, their current values The BOJ buys only bonds 2009 ’10 ’11 ’12 ’13 ’14 ’15 ’16*
the hunt, finding long-term brutal competitive dynamics Packard Enterprise, Hitachi can hardly be considered that have maturities over *Through Sept. 7
biotech bargains is a chal- at play in enterprise data and Oracle all now sell their flashy. the next one to three years. Source: Dealogic
lenge. —Charley Grant storage. own all-flash arrays and are —Dan Gallagher Issuance of such short-dated THE WALL STREET JOURNAL.

FINANCE & MARKETS

Art Sellers Are Finding

China’s securities regulator
Finance greenlighted 14 initial public of-
ferings Friday that will raise up
Watch to 11.6 billion yuan ($1.7 billion),
Chief Executive John Cryan told
staff in a letter the bank pub-
lished Monday on its website.
“Do not allow yourself to be-

Auctioneers Want to Deal

confirming speculation the pace come distracted by speculation
of debuts is picking up. In the about alleged mergers or sales
first half of this year, 67 IPOs plans,” Mr. Cryan wrote in the
raised 33.2 billion yuan. note, one of a series of monthly
BY DANIEL GRANT —Yifan Xie updates he plans.
CHINA Fees from asset management
This fall isn’t shaping up to DEUTSCHE BANK deliver stable returns compared
be the best of times for art auc-
New IPO Approvals with the bank’s bigger, more-vol-
tion houses. Which means it Still Picking Up Pace Asset Management atile trading and investment-
may be a very good time for Despite months of weak trad- Is Still ‘Essential’ banking units. Mr. Cryan said in
people looking to sell their ing in a range-bound market, Deutsche Bank AG’s asset- his note that he wanted to be
works of art. Beijing is showing no sign of management business “is and “unambiguously clear” about as-
Weakness in the British shying away from launching new will remain an essential part” of set management’s essential role.
SIMON DAWSON/BLOOMBERG NEWS

pound, the euro and petroleum shares. the company’s business model, —Jenny Strasburg
prices are all expected to take
their toll on bids in the Novem-
ber sales of impressionist, mod-
ern and contemporary art in
Advertisement INTERNATIONAL INVESTMENT FUNDS
New York City. The U.S. elec-
tions in November, too, are [ Search by company, category or country at asia.WSJ.com/funds ]
causing some to worry that the
market that month could be NAV —%RETURN—
FUND NAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
weak. Auction houses Christie’s, Phillips and Sotheby’s could see a drop
VP Classic-C Units AS EQ HKG 09/09 USD 15.86 5.7 8.4 3.8
Philip Hoffman, founder and in works offered for sale in November, says Philip Hoffman. VP Classic-C Units AUD H AS EQ HKG 09/09 AUD 13.07 6.6 9.4 5.4
VP Classic-C Units CAD H AS EQ HKG 09/09 CAD 12.73 6.3 8.7 4.8
chief executive officer of the VP Classic-C Units HKD H AS EQ HKG 09/09 HKD 10.76 4.9 NS NS
London-based Fine Art Group, Here’s a look at some of the money from both buyers and VP Classic-C Units NZD H
VP Classic-C Units RMB
AS
AS
EQ HKG
EQ HKG
09/09 NZD
09/09 CNH
13.11
10.69
5.8
4.8
8.9
NS
5.3
NS
Data as shown is for information purposes only. No offer is being made by
a private-equity firm specializ- incentives that upscale auction sellers, and consignors of de- Morningstar, Ltd. or this publication. Funds shown aren’t registered with the VP Classic-C Units RMB H AS EQ HKG 09/09 CNH 10.41 6.3 NS NS
U.S. Securities and Exchange Commission and aren’t available for sale to United VP Multi-Asset Fund Cls A HKD OT OT HKG 09/09 HKD 10.03 NS NS NS
ing in artworks, fears as much houses are often willing to offer sirable items may seek a re- States citizens and/or residents except as noted. Prices are in local currencies. VP Multi-Asset Fund Cls A USD OT OT HKG 09/09 USD 10.19 3.8 NS NS
as a 30% drop in works offered when their cupboards start to duction or even elimination of All performance figures are calculated using the most recent prices available. VP Taiwan Fund AS EQ CYM 09/09 USD 17.20 19.4 20.5 1.2

for sale in November at the look a little less well-stocked: the commission, which is NAV —%RETURN—
FUND NAME GF AT LB DATE CR NAV YTD 12-MO 2-YR
Christie’s, Phillips and So- sometimes as high as 30%. For information about listing your funds,
theby’s auction houses in New GUARANTEES: An auction “When you know there is com- n Chartered Asset Management Pte Ltd - Tel No: 65-6835-8866 please contact: Freda Fung tel: +852 2831
Fax No: 65-6835 8865, Website: www.cam.com.sg, Email: cam@cam.com.sg
York. house will sometimes commit petition with other auction CAM-GTF Limited OT OT MUS 09/02 USD 319501.51 14.1 17.9 -5.6 2504; email: freda.fung@wsj.com
But what sellers sitting on to paying the individual who is houses, the first place you
the fence need to know is, the selling, known as the consignor, cave is with commissions,”
art auction houses have lots of an agreed-upon amount—re- says Leslie Hindman, owner of
incentives that can sweeten the gardless of whether the art- Chicago-based Leslie Hind-
terms for collectors who are
willing to sell valuable pieces in
uncertain times.
work actually sells. In effect,
the auctioneer is buying the
consignment, guaranteeing the
man Auctioneers.

FEES: Auction houses regu-

n Website: Https://Www.Valuepartners-Group.Com/ Tel: (852) 2143 0688
China A-Share Fund Cls A AUD H OT
China A-Share Fund Cls A AUD UnH OT
China A-Share Fund Cls A CAD H OT
OT HKG
OT HKG
OT HKG
09/09 AUD
09/09 AUD
09/09 CAD
11.94 -5.8
10.90 -9.9
11.13 -6.6
5.3
-3.8
3.6
NS
NS
NS
LIST YOUR
China A-Share Fund Cls A EUR H OT OT HKG 09/09 EUR 11.75 -7.3 3.5 NS
seller, say, $4 million for the larly charge an array of fees for China A-Share Fund Cls A EUR UnH OT OT HKG 09/09 EUR 11.31 NS NS NS

Auction houses have painting that has been valued

at $4 million. If the auction
services including photography,
transportation, storage, insur-
China A-Share Fund Cls A GBP H OT
China A-Share Fund Cls A GBP UnH OT
China A-Share Fund Cls A HKD H OT
China A-Share Fund Cls A HKD UnH OT
OT HKG
OT HKG
OT HKG
OT HKG
09/09 GBP
09/09 GBP
09/09 HKD
09/09 HKD
11.76 -4.0
12.91 3.9
11.88 -6.7
11.73 -6.0
6.9
19.6
3.6
3.9
NS
NS
NS
NS
FUNDS
many incentives that house doesn’t sell the picture, ance and marketing. All of China A-Share Fund Cls A NZD H OT
China A-Share Fund Cls A NZD UnH OT
OT HKG
OT HKG
09/09 NZD
09/09 NZD
11.74 -5.8
9.87 -12.8
5.3
-9.5
NS
NS
or sells it for less than $4 mil- these fees may be waived if the China A-Share Fund Cls A RMB (CNH) OT OT HKG 09/09 CNH 12.65 -4.5 6.8 NS
can sweeten the lion, the company eats the loss. auction wants the consignment
China A-Share Fund Cls A USD OT
China A-Share Fund Cls A USD H OT
OT HKG
OT HKG
09/09 USD
09/09 USD
11.70 -6.2
11.82 -6.2
3.4
4.0
NS
NS
terms for sellers. enough. China Greenchip-A Units
China Greenchip-A Units AUD H AS
AS EQ CYM
EQ CYM
09/09 HKD
09/09 AUD
54.84
9.24
3.5
3.9
5.3
6.0
-6.6
-7.0
PERFORMANCE BONUS: China Greenchip-A Units CAD H AS
China Greenchip-A Units NZD H AS
EQ CYM
EQ CYM
09/09 CAD
09/09 NZD
9.03
9.47
3.1
4.8
4.6
6.8
-7.9
-5.7
Consignors can ask—but only ADD-ONS: Consignors can China Greenchip-A Units USD AS EQ CYM 09/09 USD 9.08 3.5 5.2 -7.6
China Greenchip-A2 QDIs Units AS EQ CYM 09/09 HKD 9.99 3.5 5.3 -6.7
To test the waters, experts ahead of time—for a cut of ask for good positioning in the GC Hi Yield Inc - Cls A MDIs GBP H OT OT CYM 09/09 GBP 9.64 12.5 16.6 NS
advise contacting more than what the auction house charges sale catalog—even for place- GC Hi Yield Inc-Cls A MDIs AUD H OT
GC Hi Yield Inc-Cls A MDIs CAD H OT
OT CYM
OT CYM
09/09 AUD
09/09 CAD
9.19 13.8
9.23 12.7
18.8
16.8
8.8
7.1 In print & online. Contact:
one auction house to learn the buyer as a premium. The ment on the cover. A separate GC Hi Yield Inc-Cls A MDIs NZD H OT OT CYM 09/09 NZD 9.48 14.3 19.3 10.1
GC Hi Yield Inc-Cls P HKD Acc sh OT OT CYM 09/09 HKD 13.73 13.0 17.2 7.1
what they’re willing to offer. premium may be 25%, 20% or catalog, or a catalog-within-a- GC Hi Yield Inc-Cls P HKD MDIs sh OT OT CYM 09/09 HKD 9.06 13.1 17.2 7.1
GC Hi Yield Inc-Cls P MDIs SGD H OT OT CYM 09/09 SGD 9.94 13.2 17.8 NS
The more valuable and rare the 12% of the final sale price at catalog can be a possibility if GC Hi Yield Inc-Cls P USD Acc sh OT OT CYM 09/09 USD 13.84 12.9 17.1 7.0
object, the more sellers can both Christie’s and Sotheby’s. the seller has a number of GC Hi Yield Inc-Cls P USD MDIs sh OT OT CYM 09/09 USD 9.11 12.9 17.0 7.0 wsja.advertising@dowjones.com
GC Hi Yield Inc-ClsA MDIs EUR H OT OT CYM 09/09 EUR 10.07 11.8 15.8 NS
bargain. The higher the sale price, the noted items. Consignors also Hi-Div Stk Cls A RMB H Acc OT OT HKG 09/09 CNH 10.59 8.0 9.7 NS
Hi-Div Stk Cls A RMB UnH Acc OT OT HKG 09/09 CNH 12.57 7.9 9.8 3.7
“I use all the tools available lower the percentage. If it is may ask the auction house to Hi-Div Stk Cls A1 OT OT HKG 09/09 USD 76.72 6.8 7.4 0.0
to me to get important consign- made part of the agreement, a advertise the sale (and the spe- Hi-Div Stk Cls A2 AUD H MDIs OT
Hi-Div Stk Cls A2 CAD H MDIs OT
OT HKG
OT HKG
09/09 AUD
09/09 CAD
9.63
9.71
7.1
6.2
7.9
6.5
0.8
-0.5
ments,” says Peter Loughrey, work that sells for more than cific consignment) in various Hi-Div Stk Cls A2 GBP H MDIs OT OT HKG 09/09 GBP 9.15 5.9 6.4 NS
Hi-Div Stk Cls A2 HKD MDIs OT OT HKG 09/09 HKD 9.88 7.1 7.7 -0.2
president of Los Angeles Mod- expected may trigger an extra media and to promote the par- Hi-Div Stk Cls A2 MDIs OT OT HKG 09/09 USD 10.82 6.7 7.3 0.0
Hi-Div Stk Cls A2 NZD H MDIs OT OT HKG 09/09 NZD 9.75 6.5 7.8 1.3
ern Auctions. “At $1 million, I payment to the consignor. That ticular objects in a special— Hi-Div Stk Cls A2 RMB H MDIs OT OT HKG 09/09 CNH 9.33 8.8 10.5 NS
offer crazy incentives.” money comes out of the pur- possibly even touring—exhibi- Hi-Div Stk Cls A2 RMB UnH MDIs OT
Intel-China Converg Fund-A AUD H AS
OT HKG
EQ CYM
09/09 CNH
09/09 AUD
9.65
9.49
9.1
1.0
11.5
NS
4.3
NS
It also may be advisable to chaser’s premium as well. tion. Intel-China Converg Fund-A CAD H AS EQ CYM 09/09 CAD 10.80 NS NS NS
Intel-China Converg Fund-A NZD H AS EQ CYM 09/09 NZD 10.82 NS NS NS
ask an art adviser to handle the Mr. Grant is a writer in Am- Intel-China Converg Fund-A Units AS EQ CYM 09/09 USD 143.39 -1.9 1.3 1.5
actual negotiations with auc- AUCTIONEER’S COMMIS- herst, Mass. He can be reached Intel-Chinese Mainland Foc Fund AS
VP Classic-A Units AS
EQ CYM
EQ HKG
09/09 USD
09/09 USD
39.63 -4.1
278.93 6.1
2.1
8.9
1.8
4.2
tion houses. SION: Auction houses earn at reports@wsj.com. VP Classic-B Units AS EQ HKG 09/09 USD 125.73 5.7 8.3 3.6