TUESDAY, MAY 3, 2016 ~ VOL. XL NO. 170 WSJ.com

DJIA 17825.55 0.29% S&P500 2070.80 0.27% NIKKEI 16147.38 g 3.11% STOXX600 341.24 g 0.07% OIL 44.72 g 2.61% GOLD 1296.80 0.59% EURO 1.1515 0.57% DLR 106.49 g 0.01%

ASIA EDITION

CONTENTSArts & Ent.............. A11Business & Tech. B1-4Crossword.............. A14Heard on Street.... B8Markets Digest..... B6Money & Inv...... B5-8

Opinion.............. A12-13Personal Journal A10Sports....................... A14Technology............... B3U.S. News.................. A7Weather................... A14World News....... A2-6

s Copyright 2016 Dow Jones &Company. All Rights Reserved

WhatsNews

South Koreas Park saidshe sought Irans help toimplement internationalsanctions on North Koreaas Seoul works to buildpressure on its neighbor. A1 Shiite cleric Sadr trav-eled to Iran, a day after hissupporters withdrew fromtheir occupation of IraqsInternational Zone. A3 A breakdown in publicorder amid Iraqs fightagainst Islamic State is ex-posing the countrys doc-tors to revenge attacks. A3 Egypts police facednew calls for overhaul af-ter a raid on a Cairo pressunion building and the ar-rest of two journalists. A4 If the Indiana primarysets up a Clinton-Trumpelection matchup, it willhelp pave the way for an ex-treme study in contrasts. A2 Filipinos once drivenoverseas by their nationsstagnation are returningin greater numbers. A1 Chinas ruling Commu-nist Party suspended for ayear the membership ofcritic Ren Zhiqiang. A6

Indias government anda consortium of banksare waging a battle againstbusinessman Vijay Mallyaover unpaid loans. B5 Craig Wright, an Aus-tralian businessman, saidhe is Satoshi Nakamoto,the elusive pseudonymouscreator of bitcoin. A1 Baker Hughes laid outa plan to cut costs and buyback stock and debt, afterits merger deal with Halli-burton was scrapped. B1 Saudi Binladin will layoff 50,000 people as theconstruction firm attemptsto turn around a businesshurt by low oil prices. B1 China is investigatingBaidu after the death of ayoung man with cancer whohad tried a therapy foundthrough an online ad. B1 Bond trading in Australiais signaling a rate cut Tues-day by the central bank. B5 India is again lockinghorns with ride-hailingservices Uber and Ola. B3 Puerto Rico said itdidnt plan to make mostof a $422 million debt pay-ment due Monday. B5

Business&Finance

World-Wide

China: RMB28.00; Hong Kong: HK$23.00;Indonesia: Rp25,000 (incl PPN);Japan: Yen620 (incl JCT); Korea: Won4,000;Malaysia: RM7.50; Singapore: S$5.00 (incl GST)KDN PP 9315/10/2012 (031275); MCI (P)NO. 106/10/2015; SK. MENPEN R.I. NO: 01/SK/MENPEN/SCJJ/1998 TGL. 4 SEPT 1998

InsideKEYWORDS B1

This Tech BubbleIs Bursting

Japan and Italy Urge Action on Global Economy

MAURIZIODEG

LINNOCE

NTI/EURO

PEANPR

ESSP

HOTO

AGEN

CY

TEAMING UP: Japanese Prime Minister Shinzo Abe, left, met with Italian counterpart Matteo Renzi inFlorence on Monday ahead of this months Group of Seven summit, which Japan will host. The two leaderssaid they want the summit to show support for flexible budget policies to stabilize the global economy.

CHINAS FLAWED SCHOOLSDRIVE STUDENTS TO U.S.

Fed upwith high-pressure tests and low standards,middle-class looks abroad

as perhaps the most famousname in the GPS landscape.The 50-year-old Canadian cy-clist recently gave a TEDx talkcalled A Creative Spin: Pedal-ing My Art.

With a microphone taped tohis cheek and wearing an un-tucked black shirt and jeans, Mr.Lund pacedaround a stage anddescribed how hefound inspirationafter spontane-ously drawingHappy 2015early last year.

After this, mybike was no longera bikeit was acrimson-dipped paintbrush,said Mr. Lund, a brand strate-gist, during the TEDx talk.

Executives at fitness-appmakers spotted the first exam-ples of GPS art in 2011, withroutes depicting heart shapes orjack-o-lanterns. Over the pastyear, GPS artists have prolifer-

ated and designs have becomemore elaborate, says AndrewVontz, a brand manager atStrava, a fitness app.

People will do crazy thingsto get their minds off of theslog of fitness, says Jason Ja-cobs, chief executive of Run-keeper, another fitness app.

Many of these su-per-fit virtuosos goto great lengths toensure their body ofwork isnt compro-mised by physicalbarriers.

Baltimore-basedcyclist Michael Wal-lace, known by hisartist name Wally-

GPX, was drawing a beachbird and was halfway throughits neck when a buildingblocked his path. Rather thanturning off his phone or alter-ing his design, he parked hisbike, ran the phone throughthe building and left it on a

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

http://www.djreprints.com

2016 Dow Jones & Company. All Rights Reserved. THEWALL STREET JOURNAL. Tuesday, May 3, 2016 | B5

MARKETS DIGEST B6 | MONDAYS MARKETS B7 | FINANCE WATCH B8

Unlike some distressed Ameri-can governments, Puerto Ricocant declare bankruptcy underfederal law. Congress held ahearing last month on biparti-san legislation that would al-low the commonwealth to seeka restructuring of its debt.

In his Sunday night speech,Mr. Garcia Padilla urged actionby Congress. Only a congres-sionally approved restructur-

ing process can provide a com-prehensive solution, he said,according to the translation.

A GDB default might addpressure to the discussions inWashington in the monthsleading up to Puerto Ricosnext major debt payment ofnearly $2 billion in July.

Some of that debt carriessome of the commonwealthsstrongest legal pledges.

Alejandro Garcia Padillas speech is shown at a bar in San Juan.

ERIKAP.

RODRIGUEZ

/BLO

OMBE

RGNEW

S

Geithners WarburgBets on Banking FutureSTARTUPS | B8

Tech Investors AreStill Hungry for GrowthHEARD ON THE STREET | B8

ASS

OCIAT

EDPR

ESS

nancial changes and hasntmade a good-faith effort at aconsensual restructuring.

Expectations of a GDB de-fault were already high aheadof the governors speech. TheGDB had $562 million availablefor paying debt as of April 1,according to the government.

The GDB is continuing itsdiscussions with creditors andsaid late Sunday night thatsome creditors have agreed tohold off on lawsuits while con-versations continue. The par-ties are discussing restructur-ing some of the GDBsoutstanding debt, including aplan that would reduce someobligations by roughly half.

Some lawsuits are alreadyin progress. Last month, agroup of hedge funds that ownGDB bonds filed a complaint infederal court asking that theGDB be barred from allowingthe withdrawal of funds.

Puerto Rico owes investorsabout $70 billion in total. The

island began defaulting ondebt in August, but there havebeen no defaults by the GDB,which provides liquidity toPuerto Ricos governmentagencies.

A GDB default could esca-late Puerto Ricos crisis be-cause the GDB plays such anessential role in keeping cashflowing on the island, saidMatt Fabian, a partner at Mu-nicipal Market Analytics.

This is where Puerto Ricosunwinding begins, he said inan interview Sunday night.This is the beginning of thereal crisis.

The GDB reached an agree-ment late Friday with PuertoRicos state-chartered creditunions to exchange $33 millionworth of debt due Monday for$33 million of debt due a yearfrom now. The other $389 mil-lion was still due Monday.

Negotiations continue inWashington over a plan totackle Puerto Ricos debt crisis.

Puerto Ricos GovernmentDevelopment Bank didnt planto make most of a $422milliondebt payment due on Monday,a step that could move the is-lands financial crisis to a newlevel.

Faced with the inability tomeet the demands of our credi-tors and the needs of our peo-ple, I had tomake a choice, Gov.Alejandro Garcia Padilla said ina speech Sunday night, accord-ing to an English translation ofthe remarks. He said making thepayment would divert moneyneeded for crucial services.

A law enacted by PuertoRicos government in April em-powers Mr. Garcia Padilla tosuspend debt payments to payfor essential services as theU.S. commonwealth awaits helpfrom Congress. Some of PuertoRicos creditors have criticizedthe law, saying the governmentwont commit to necessary fi-

BY HEATHER GILLERS

Puerto Ricos Debt TroubleWorsens

Asof 12 p.m. ET EUR/GBP 0.7852 0.19% YEN/DLR 106.49 g 0.01% GOLD 1296.80 0.59% OIL 44.72 g 2.61% 3-MONTHLIBOR 0.63660% 10-YRTREAS g 7/32 yield 1.847%

HONG KONGThe recentfevered commodities tradingin China hasnt been limited toiron ore. Investors have piledinto futures for everythingfrom wheat and cotton to eggsand asphalt.

As with industrial metals,analysts reckon much of theinterest is coming from specu-lative investors who have beenturned off to Chinas stockmarkets by tighter rules overtrading.

Chinese speculators didntwant to buy into the equitymarket with all the curbs, sothey jumped into the commod-ity markets and it seemstheyve done so in massivestyle, said Michael Coleman,managing director at RCMAAsset Management Pte.

Rampant speculation meansChinese futures markets oftendont reflect economic or in-dustry fundamentals, while ex-cess liquidity attributable toloose monetary policy is fur-ther driving the spike in inter-est in agricultural futures.

For example, turnover ofcorn futures traded on the Da-lian Commodity Exchange wasup by nine times in April froma year earlier, at around $30billion in value, according todata from the exchange. Thatincrease in trading activity isdespite corn prices falling by10% after the Chinese govern-ment announced that begin-ning later this year it wouldstop setting prices, allowingmarket forces freer rein toguide prices.

Trading volume for wheatfutures on the ZhengzhouCommodity Exchange has alsorocketed by around nine timesto roughly $500 million overthe same period, even thoughwheat prices have risen byjust 1.2%.

The increased trading inPlease see FUTURES page B7

BY LUCY CRAYMERAND SHEN HONG

A FrenzyIn FuturesIsnt JustFor Metals

MUMBAIIndias govern-ment and a consortium ofmostly state-owned banks arewaging battle against high-profile businessman Vijay Mal-lya over hundreds of millionsof dollars in unpaid loans.

Indias Foreign Ministrysaid it had canceled Mr. Mal-

lyas passport and was seekinghis extradition from the U.K.as authorities investigatemoney-laundering allegationsagainst him.

The banks, meanwhile, areseeking repayment of loanstaken by a company Mr. Mallyastarted, Kingfisher Airlines,which was buried in debt whenit stopped operating in 2012.The banks say Mr. Mallya per-

sonally guaranteed more than$900 million in loans to King-fisher and have asked Indiancourts to help them find hisassets.

Mr. Mallya, chairman ofUnited Breweries (Holdings)Ltd., has denied any wrongdo-ing and disputes the banks ac-count of the size of the debtand the extent of his personalliability.

Mr. Mallya, who was onceknown as the King of GoodTimes and is often photo-graphed decked out in goldjewelry and surrounded by ce-lebrities, recently has been ex-coriated by politicians whilethe local media offered blow-by-blow coverage.

At an event organized by anIndian media company in

Please see LOANS page B7

BY SHEFALI ANANDAND KENAN MACHADO

India and Lenders Pursue TycoonVijay Mallya is being pursued for repayment on a purported guarantee of more than $900 million in loans to Kingfisher Airlines.

IMAGO/ZUMAPR

ESS

SYDNEYBond marketsconsidered the fever curve ofan economyare signalingthat Australias poor economichealth will force the centralbank to cut interest rates onTuesday.

Some of the largest inves-tors globally, including Gold-man Sachs Asset Managementand BT Investment Manage-ment, have doubled down betson a rally in Australian bonds,spurred by a report releasedlast week showing core con-sumer inflation slipping to anannual rate of 1.5%, the lowestever recorded. That was belowforecasts and short of the cen-tral banks target of 2% to 3%.

Deflationary pressure hasbeen washing around theworld, and its finally arrivedin Australia, said Vimal Gor,head of income and fixed in-terest at BT Investment Man-agement in Sydney. Weve gotslowing growth and short-term deflation. Its quite clearthat the [Reserve Bank of Aus-tralia] will have to act.

Activity in swap marketsshows that investors put thelikelihood of a 0.25-percent-age-point rate cut this weekby the RBA at more than 50%,

up from just 10% before the in-flation figures were released.

Australian governmentbonds rallied as investorsrushed to snap up debt notesin hopes of future returns.Rate cuts typically boost thevalue of existing notes overthe new ones issued at lowerrates. Soaring demand sentprices higher and yields lower.The yield on three-year bonds,the most sensitive to ratechanges, was at 1.86% Monday,down from 2.07% Wednesday,while the yield on 10-yearbonds was off 0.2 percentagepoint to 2.50%.

Mr. Gor, who helps managemore than 77 billion Austra-lian dollars (US$58.6 billion)in assets, was buying short-dated government debt lastweek, adding to a bet he madelast year when he first piledinto Aussie bonds of up tothree-year maturities. He wasanticipating Australias centralbank would soon join globalpeers in slashing interest ratesto stimulate the economy.

But the RBA has held itsfire since cutting the cash rateto a record-low 2% a year ago.Data released in March andApril showed Australia appar-ently emerging from a global

Please see BONDS page B7

BY VERA SPROTHEN

Bond TradingIn AustraliaSignals Cut

Anbang Insurance Group Co.for its purchase of a stake in aFifth Avenue office building.

Weve grown so much theseyears, Xu Chen, general man-ager of Bank of Chinas U.S.branch, said in an interview.The small building is notenough to hold all of us now.

Mr. Xu said he was attractedto both the building and its lo-cation, which he noted was atthe other end of the park fromthe Bank of America tower on42nd Street. The two buildingsare a symbol of the economicinterconnection between Chinaand the U.S., he said.

Bank of China has about 500employees in the U.S., including400 in New York. More than90% of the New York staff arelocal hires, though most ofthem are ethnically Chinese, ac-cording to the bank. Positionsin the new building will includeloan officers, trade service andclearing.

The U.S. subsidiarys generalmanager is from Beijing, thoughother top executives, such asthe chief data officer and thechief compliance officer, are

from the U.S.Bank of China is starting to

move beyond its core businessof lending to Chinese compa-nies. Its roster of blue-chip U.S.borrowers includes VisaInc., Diamond Offshore Drill-ing Inc. and CME Group Inc.,the owner of the derivatives ex-change, according to Dealogic.

The bank also aims to com-pete in some of the lucrative ar-eas that Wall Street firms his-torically have dominated, suchas corporate finance, commod-

ity hedging and commercial-real-estate lending, Chinesebank officials have said.

Other Chinese banks havebeen growing overseas, too.Chinese bank assets in the U.S.stood at around $130 billionlast year, up from $17.3 billionin 2010.

Bank of China by far hasbeen the most aggressive. Ac-cording to the banks annual re-port, overseas subsidiaries ac-counted for 23.6% of thegroups pretax profit in 2015. At

Industrial & Commercial Bankof China Ltd., the countryslargest lender, the figure was6.8%, according to the com-panys annual report.

Chinese bank expansion is aresponse to the countrys slow-ing economic growth. Last year,Chinas biggest banks postedtheir lowest annual profitgrowth in a decade, squeezedby shrinking interest marginsand growing nonperformingloans at home. Bank of Chinasnet profit grew by 1.3% in 2015,down from 8.2% in 2014. Thebank recently reported thatfirst-quarter net profit rose1.7%.

The banks Shanghai-listedshares are down 16.5% year todate, while the Shanghai stockmarket index is down 17%.

One way to stabilize thebanks profit is to do a littlemore overseas, and maybe a lit-tle less at home, Chen Siqing,the banks president, told Chi-nese media in March. Mr. Xusaid its U.S. operation is one ofthe banks most profitable.

Efforts to ramp up U.S. oper-Please see BANKS page B8

One of Chinas biggest lend-ers is planting its flag in themiddle of Manhattan, a sym-bolic move for a bank with am-bitions to challenge Wall Streeton its home turf.

Bank of China is preparingto move its U.S. headquartersthis fall to a new 450-foot-tallglass tower overlooking BryantPark, leaving the low-slungbrick building on New YorkCitys East Side that has beenits home for 35 years. The bankwill occupy more than half ofthe 28-story building, which itacquired for nearly $600 mil-lion in 2014.

The move reflects the banksburgeoning business in the U.S.,where assets soared to $78 bil-lion last year from $13.9 billionin 2010, according to the Fed-eral Reserve.

As the worlds fourth-largestbank by assets, state-ownedBank of China has quietlyfunded some of its countrysmost ambitious cross-borderdeals. That included a loan to

BY CAROLYN CUIAND DANIEL HUANG

The Bank of China Steps Up in Manhattan

The banks new office has a view of the Empire State Building.

JESS

EWINTE

RFO

RTH

EWALL

STRE

ETJO

URN

AL

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

http://www.djreprints.com

THEWALL STREET JOURNAL. Tuesday, May 3, 2016 | B7

Advertisement INTERNATIONAL INVESTMENT FUNDS[ Search by company, category or country at asia.WSJ.com/funds ]

nWebsite: Www.Valuepartners.Com.Hk, Tel: (852) 28809263China A-Share Fund Cls AAUDH OT OT HKG 04/28AUD 11.12 -12.3 -22.1 NSChina A-Share Fund Cls AAUDUnH OT OT HKG 04/28AUD 10.39 -14.1 -21.3 NSChina A-Share Fund Cls A CADH OT OT HKG 04/28 CAD 10.40 -12.8 -23.1 NSChina A-Share Fund Cls A EURH OT OT HKG 04/28 EUR 11.04 -12.9 -22.0 NSChina A-Share Fund Cls A EURUnH OT OT HKG 04/28 EUR 10.75 NS NS NSChina A-Share Fund Cls A GBPH OT OT HKG 04/28 GBP 10.69 -12.7 -22.8 NSChina A-Share Fund Cls A GBPUnH OT OT HKG 04/28 GBP 11.33 -8.8 -19.5 NSChina A-Share Fund Cls AHKDH OT OT HKG 04/28HKD 11.08 -13.0 -22.6 NSChina A-Share Fund Cls AHKDUnH OT OT HKG 04/28HKD 11.34 -9.1 -21.6 NSChina A-Share Fund Cls ANZDH OT OT HKG 04/28 NZD 10.92 -12.4 -21.7 NSChina A-Share Fund Cls ANZDUnH OT OT HKG 04/28 NZD 10.00 -11.7 NS NSChina A-Share Fund Cls A RMB (CNH) OT OT HKG 04/28 CNH 11.74 -11.3 -20.2 NSChina A-Share Fund Cls A USD OT OT HKG 04/28 USD 11.20 -10.2 -22.2 NSChina A-Share Fund Cls A USDH OT OT HKG 04/28 USD 11.02 -12.5 -22.6 NSChina Greenchip-A Units AS EQ CYM 04/28HKD 48.37 -8.7 -33.0 -8.8China Greenchip-A Units AUDH AS EQ CYM 04/28AUD 8.13 -8.5 -34.2 NSChina Greenchip-A Units CADH AS EQ CYM 04/28 CAD 7.99 -8.8 -34.6 NSChina Greenchip-A Units NZDH AS EQ CYM 04/28 NZD 8.31 -8.1 -33.2 NSChina Greenchip-A Units USD AS EQ CYM 04/28 USD 8.00 -8.8 -34.4 NSChina Greenchip-A2 QDIs Units AS EQ CYM 04/28HKD 8.82 -8.6 -33.1 -8.7GCHi Yield Inc - Cls AMDIs GBPH OT OT CYM 04/28 GBP 9.32 4.2 4.5 NSGCHi Yield Inc-Cls AMDIs AUDH OT OT CYM 04/28AUD 8.88 4.7 6.3 7.7GCHi Yield Inc-Cls AMDIs CADH OT OT CYM 04/28 CAD 8.91 4.3 4.7 6.0GCHi Yield Inc-Cls AMDIs NZDH OT OT CYM 04/28 NZD 9.13 5.0 7.3 8.9GCHi Yield Inc-Cls P HKDAcc sh OT OT CYM 04/28HKD 12.69 4.4 4.8 5.7GCHi Yield Inc-Cls P HKDMDIs sh OT OT CYM 04/28HKD 8.71 4.5 4.8 5.8GCHi Yield Inc-Cls PMDIs SGDH OT OT CYM 04/28 SGD 9.52 4.6 5.5 NSGCHi Yield Inc-Cls P USDAcc sh OT OT CYM 04/28 USD 12.79 4.3 4.8 5.7GCHi Yield Inc-Cls P USDMDIs sh OT OT CYM 04/28 USD 8.76 4.4 4.8 5.7GCHi Yield Inc-ClsAMDIs EURH OT OT CYM 04/28 EUR 9.74 4.0 4.1 NSHi-Div Stk Cls A1 OT OT HKG 04/28 USD 70.00 -2.6 -18.4 2.5Hi-Div Stk Cls A2MDIs OT OT HKG 04/28 USD 10.12 -2.7 -18.6 2.5Hi-Div Stk Cls A2MDIs AUDH OT OT HKG 04/28AUD 9.10 -2.4 -18.1 3.6Hi-Div Stk Cls A2MDIs CADH OT OT HKG 04/28 CAD 9.13 -2.9 -19.5 2.3Hi-Div Stk Cls A2MDIs GBPH OT OT HKG 04/28 GBP 8.63 -2.8 -20.0 NSHi-Div Stk Cls A2MDIs HKD OT OT HKG 04/28HKD 9.22 -2.5 -18.7 2.3Hi-Div Stk Cls A2MDIs NZDH OT OT HKG 04/28 NZD 9.26 -2.3 -16.7 4.4Intel-China Converg Fund-AAUDH AS EQ CYM 04/28AUD 8.62 -8.3 NS NS

NAV %RETURNFUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR

nCharteredAssetManagementPte Ltd - TelNo: 65-6835-8866FaxNo: 65-68358865,Website:www.cam.com.sg, Email: cam@cam.com.sgCAM-GTF Limited OT OT MUS 04/22 USD 289208.04 3.3 -15.8 -8.6

nCpCapital AssetManagement Limitedwww.cpgbl.comCP Global Alpha Fund OT OTWSM 04/29 USD 143.72 6.8 18.7 17.1CPMulti-Strategy Currency Fund OT OT CYM 03/31 USD 121.62 6.0 3.5 17.2CPS-Master Priv Fund GL OTWSM 04/29 USD 163.21 -0.6 13.0 13.3

Data as shown is for information purposes only. No offer is being made byMorningstar, Ltd. or this publication. Funds shown arent registered with theU.S. Securities and Exchange Commission and arent available for sale to UnitedStates citizens and/or residents except as noted. Prices are in local currencies.All performance figures are calculated using the most recent prices available.

MONEY & INVESTING

egg futures in Dalian hasntbeen quite so dramatic,though volumes are still up19% in April from a year ear-lier.

Contracts for around128.9 billion eggs changedhands in April alone.

To be sure, there are somefactors that are expected tolend support to commoditiesprices in the coming months.Prices for grains, soybeansand other food commoditieshave recently risen in somemarkets, as weather condi-tions in Central and SouthAmerica have raised concernsthat supplies will tighten.

Unlike the surge in investorinterest in industrial metals,however, the impact of therise in agricultural commodityprices is unlikely to affectglobal prices because the sec-tor is much more insulatedfrom international markets,said Tracy Xian Liao, an ana-lyst at Citigroup.

Imports of agriculturalproducts are tightly controlledand pricing regulations re-main in place for some food-stuffs, such as rice and wheat.

Still, the rise in speculativetrading in agricultural com-modities has raised concernswithin China.

Exchanges there have raisedtransaction fees in recent daysto try to temper the market.

It isnt the first timeChinas agricultural marketshave worried regulators.

Various unofficial commod-ities exchanges have sprungup in China over the last de-cade offering retail investorsthe chance to trade on food-stuffs including kiwifruitsgrown in Sichuan, dates fromXinjiang and mushrooms inHubei.

Investors are able to tradeonline in most of these futuresmarkets. Most require tradersto settle trades with cash, in-stead of making delivery ofphysical goods an option.

Contracts are usually de-signed to be affordable, withthe minimum investment aslow as 200 yuan ($31) per lot.

Trading is often volatile inthose markets and insidertrading is common, analystssay.

A scandal last year at thePan Asia Nonferrous MetalsExchange in Yunnan that cost220,000 retail investors bil-lions of dollars in combinedlosses drew widespread mediaattention and prompted acrackdown on unregulatedcommodities markets.

ContinuedfrompageB5

FUTURES

A rise in farmcommodities is seenas unlikely to affectglobal prices.

Inc., a global risk-consultancyfirm.

Reserve Bank of India Gov.Raghuram Rajan, who hasurged Indian banks to clean uptheir balance sheets, has alsowarned against maligning hon-est entrepreneurs who go bust.

Why will you take risk ifthere is a slightest chance ofdefault and your name is putup in public for shame, Mr.Rajan said last month.

For years, banks have beenfighting several cases againstMr. Mallya, but pressure wasincreased in late Februarywhen it was announced thatMr. Mallya would receive a $75million payout from U.K. spir-its company Diageo PLC, whichhad previously acquired a con-trolling stake in United SpiritsLtd., an Indian distiller thenowned by Mr. Mallya.

Last month, an Indian tribu-nal ordered a halt to Mr. Mal-lyas deal with Diageo. Bankssay they have first right to thismoney.

Shortly after the payoutwas announced, Mr. Mallya leftIndia, touching off a flurry ofactivity among banks and thegovernment. In early March,Mr. Mallya said on Twitterthat he didnt flee from thecountry.

In March, a consortium ofbanksled by the State Bankof India and represented byAttorney General Mukul Ro-hatgi, among othersfiled aplea in Indias Supreme Courtcalling for Mr. Mallya to dis-close all of his assets, both inIndia and overseas. Mr. Mallyarecently submitted the list tothe court.

Lawyers for the consortiumallege Mr. Mallya gave an un-limited personal guarantee forthe Kingfisher loans. Mr. Mal-

lya has challenged this claim incourt, saying that he was co-erced by the banks into sign-ing the guarantee, according tolawyers familiar with the mat-ter. Mr. Mallya also contendsthat any guarantee would bebacked only by assets in India,one of the lawyers said.

Mr. Mallya has twice offeredto settle with the banks, said alawyer familiar with the mat-ter, but banks have refused.Lawyers for the consortiumsaid none of Mr. Mallyas of-fers included any direct repay-ment.

Mr. Mallya has said in aprevious statement that therehas been a near hystericalcampaign in the media di-rected against me, addingthat all I can say is I hopesome sobriety and sense willprevail.

Mr. Mallya inherited hiscompany from his father in the1980s and quickly built it intoone of the worlds biggest al-coholic-beverage empiresthrough acquisitions.

His expensive foray into anairline named after King-fisherhis biggest beerbrandwas as flashy as hewas. It featured flight atten-dants in red skirts calledmodels of the sky. The air-lines ads told people to flythe good times. In recentyears, the market value ofKingfishers meager assets hasfallen sharply. Last week, theconsortium of banks failed tofind any buyers at an auctionof the airlines former head-quarters.

Forbes magazine estimatedthat, at his peak, Mr. Mallyawas worth more than $1 bil-lion.Eric Bellman in New Delhicontributed to this article.

March, Finance Minister ArunJaitley said that Mr. Mallyahad brought a huge bad nameboth to Indias banking andalso to Indias private sector.

Indias banks have been un-der pressurepartly from thecountrys central bank and fed-eral governmentto clean uptheir books, which are bur-dened with record bad debtsthat are weighing on the coun-trys growth.

About 21% of all loans tolarge Indian companies wereconsidered to be stressed as ofJune 2015, up from about 17%in September 2013, accordingto information from the Re-serve Bank of India.

The banks, which have his-torically been slow in going af-ter large borrowers, latelyhave stepped up efforts to re-cover assets and boost theireroding capital base.

But some critics have saidthat the name-and-shame cam-paign against Mr. Mallya is be-ing used as an example to puta scare into potential default-ers, which they say is a riskystrategy.

If authorities and bankersgo too far in their pursuit, In-dia risks making entrepreneurstoo risk averse to start busi-nesses that could fail. Mean-while, wayward borrowerswould have no incentive to payif authorities and bankersdont go far enough.

You dont want to do somuch naming and shamingthat it affects the investmentand lending environment, saidReshmi Khurana, managing di-rector of South Asia for Kroll

ContinuedfrompageB5

LOANS

week, according to data by theU.S. Commodity Futures Trad-ing Commission. They could un-ravel in a flash if rates are cut.

Robert Mead, Sydney-basedhead of portfolio managementat Pimco, who helps manageA$40 billion in assets in Aus-tralia, stacked up on short-dated government bondsmonths ago, arguing Austra-lias cooling housing marketwould likely drag annual GDPgrowth down to 2.25% earlynext year, from 3% currently.

Several banks, includingAustralia & New ZealandBanking Group Ltd., NationalAustralia Bank Ltd. and BNPParibas, have reshuffled swaptrades, which can be used as ahedge against rate shifts.

Sydney-based Philip Mof-fitt, the Asia-Pacific head offixed income for GoldmanSachs Asset Management,who helps invest more thanUS$540 billion and is knownfor betting against the crowd,has begun to take profits on along-standing trade pitchingAustralian against Swedish in-terest-rate futures.

He still expects Australiasthree-year bond yields to fall0.2 to 0.25 percentage pointmorenot just because of po-tentially lower interest ratesin Australia but also becausedemand from yield-starved in-vestors in Europe and Japanlooks to remain high.

commodities rout in far bettershape than other big resourcesproducers such as Brazil andCanada. Gross-domestic-prod-uct growth has trumped ex-pectations, the jobless rate isfalling, and rebounding iron-ore prices are bolstering ex-ports at a time when fearsover a slowdown in China,Australias biggest tradingpartner, are also abating.

Fresh optimism grippedmarkets and led to a selloff ingovernment bonds, which arepopular haven assets. But thatbuoyant mood turned withinminutes last week, when theinflation data signaled theeconomy may need furthermonetary stimulus.

It was a big miss. Its po-tentially a game changer, saidAltaz Dagha, an interest-ratestrategist at BNP Paribas SA inSingapore, who immediatelyadvised the banks internaltraders and clients to positionfor lower Australian bondyieldsfor example, by buyingthe five-year maturity, whichhe says look relatively cheap.The sharp rally weve seen af-ter the inflation data will con-tinue, Mr. Dagha said.

The rate-cut bet isnt uni-versal. A number of money

ContinuedfrompageB5

BONDS

managers, including WesternAsset Management, and half oflocal economists surveyed byThe Wall Street Journal, thinkthe RBA will continue to standpat. And even if it does cut, aweakening Australian dollarcould eat up foreign investorsgains. The prospect of lowerrates sent the currency to itslargest one-day loss in eightmonths last Wednesday; it fellmore than 2% to as low asUS$0.7549, a week after hit-ting 10-month highs.

Those hoping to profit fromfurther declines in Australian

bond yields, the highestamong the handful of coun-tries with a AAA credit rating,say the latest China data bol-ster their case.

Our view on Australia ismostly based on whats hap-pening more broadly in Asia,said Brad Boyd, a fixed-incomeportfolio manager at PaydenRygel in Los Angeles, whichhas $100 billion under man-agement. China is sufferingfrom high debt, slowing demo-graphics and deflation. Thatsa fairly nasty combination, asit lends itself to weak growth.

And Australians are going tofeel it.

Convinced last year that theRBA would cut rates at leasttwice more, Mr. Boyd in-creased his holdings in Austra-lian bonds, which now makeup the majority of all sover-eign debt in the PaydenGlobal Income Opportunitiesfund that he manages.

BTs Mr. Gor recently alsotook a short position on theAustralian dollar. Speculativebets on a rising Aussie byhedge funds and money manag-ers hit three-year highs last

Australia

U.S.

U.K.

Japan

Switzerland

2.52%

1.82

1.60

0.08

0.25

10-year government-bondyields*

Japanese investment inAustralian bonds

Australian 10-year governmentbond yields**

Bond Boom

Sources: Thomson Reuters (yields); ANZ (Japanese investment) THEWALL STREET JOURNAL.

Australian debt is amongthe worlds highest-yielding

and Japanese investors areback in a big way

as bets rise of abond-price rally.

*As of April 29 **Yields fall as bond prices rise.

300 billion

200

100

0

100

200

162015

3.2

2.2

2.4

2.6

2.8

3.0

%

162015

inched down 0.1%. Trading inEurope was quiet, with mar-kets in the U.K. and Irelandclosed for a holiday.

In Japan, electronics partsmaker Murata Manufacturinglost 13% following its projec-tions for a decline in earningsin the fiscal year that startedin April. The company cited ahigher yen, lower product sell-ing prices, increased fixedcosts and higher research-and-development expenses.

Sony fell 4.0% after the

company posted a net loss inthe January-March period,weighed down by its deviceand mobile-communicationbusinesses.

In Australia, sharp falls inAustralian bank shares follow-ing lackluster half-year earn-ings from one of the biggestlenders weighed on thebroader equities market.

Westpac Banking fell 3.5%after it reported first-halfearnings that were slightly be-low expectations and reported

once, said Katsunori Kitakura,strategist at Sumitomo MitsuiTrust Bank.

He said, though, that mar-ket sentiment may improve inthe coming weeks if the gov-ernment takes fiscal stimulusmeasures in time for Group ofSeven summit meetings laterthis month.

The dollar was at 106.38in Asian trading after fallingto as low as 106.16. The dol-lar was above 111.50 beforethe BOJ said it would stay patlast week.

Elsewhere in Asia, Austra-lias S&P/ASX 200 declined0.2%. New Zealands NZX-50fell 0.4%, and South KoreasKospi dropped 0.8%. IndiasSensex was down 0.7%.

In the U.S., stocks bouncedback after their biggest weeklydecline since February.

The Dow Jones IndustrialAverage climbed 80 points, or0.5%, to 17853 by early after-noon. The S&P 500 gained0.4%, and the Nasdaq Compos-ite advanced 0.2%.

Stocks gains have slowedafter rebounding from Febru-ary lows, a rally spurred byimproving data on the U.S.economy, rising oil prices anda softer stance on raising in-terest rates from the U.S. Fed-eral Reserve.

The Stoxx Europe 600

a jump in charges for souredloans.

Meanwhile, telecommunica-tions company Telstra added2.8% after it said it planned toreturn at least 1.5 billion Aus-tralian dollars (US$1.1 billion)to shareholders in the firsthalf of the 2017 financial year.

In India, ICICI Bank wasdown 4.1% following its reporton Friday of a 76% year-over-year drop in fourth-quarternet profit after it set asidemore money to cushionagainst loan defaults.

InterGlobe Aviation wasdown 4.5% after the operatorof IndiGoIndias largest do-mestic airline by marketshareposted nearly no profitgrowth in the January-Marchquarter from a year earlierdue in part to intense fare-price competition.

In commodities, gold tradedclose to a 15-month high inAsia as a weak dollar and de-clines in equity marketsboosted the demand for theprecious metal.

Gold prices were up 0.6% at$1,296.80 an ounce by middayin New York.

U.S. crude-oil prices fell2.6% to $44.72 a barrel.

Many stock markets in Asiawere closed Monday for a hol-iday, including China, HongKong and Singapore.

Japanese stocks fell sharplyMonday on the yens surge toa 1-year high against the U.S.dollar, weak earnings fromseveral big companies and lin-gering concern over the Bankof Japans policy inaction on

Thursday.The Nikkei

Stock Averagedropped 3.1%to 16147.38, fol-

lowing the BOJs decision lastweek to keep its main policyunchanged, despite slowing in-flation and expectations for anexpansion in its asset-pur-chase program, particularly inexchange-traded funds. Japa-nese markets were closed Fri-day for a national holiday.

The yens surge against thedollar Monday also hit Japa-nese exporters.

Over the weekend, the U.S.Treasury Department, in itssemiannual currency report toCongress, pointed to China,Japan, South Korea, Taiwanand Germany for relying onpolicies it said threaten todamage the U.S. and the globaleconomy. The statement maydiscourage the Japanese au-thorities from directly inter-vening in the currency market,analysts said.

Bad news take place all at

BY KOSAKU NARIOKA

Japanese Shares Tumble 3.1%

Telstra says it plans to return at least $1.1 billion to shareholders.

CARL

AGOTT

GEN

S/BL

OOMBE

RGNEW

S

MONDAYSMARKETS

For information about listing your funds,please contact: Freda Fung tel: +852 2831

2504; email: freda.fung@wsj.com

Intel-China Converg Fund-A CADH AS EQ CYM 04/28 CAD 9.88 NS NS NSIntel-China Converg Fund-ANZDH AS EQ CYM 04/28 NZD 10.10 NS NS NSIntel-China Converg Fund-A Units AS EQ CYM 04/28 USD 129.30 -11.6 -32.8 5.4Intel-ChineseMainland Foc Fund AS EQ CYM 04/28 USD 35.53 -14.0 -31.2 4.5VP Classic-A Units AS EQ HKG 04/28 USD 236.64 -10.0 -28.6 4.8VP Classic-B Units AS EQ HKG 04/28 USD 106.86 -10.2 -29.0 4.3VP Classic-C Units AS EQ HKG 04/28 USD 13.47 -10.2 -29.3 4.5VP Classic-C Units AUDH AS EQ HKG 04/28AUD 11.03 -10.0 -28.7 6.5VP Classic-C Units CADH AS EQ HKG 04/28 CAD 10.74 -10.4 -30.7 5.1VP Classic-C Units HKDH AS EQ HKG 04/28HKD 9.24 -9.9 NS NSVP Classic-C Units NZDH AS EQ HKG 04/28 NZD 11.18 -9.8 -26.4 7.1VP Classic-C Units RMB AS EQ HKG 04/28 CNH 9.08 -11.0 NS NSVP Classic-C Units RMBH AS EQ HKG 04/28 CNH 8.91 -9.0 NS NSVPMulti-Asset Fund Cls A USD OT OT CYM 03/31 USD 121.62 6.0 3.5 17.2VP Taiwan Fund AS EQ CYM 04/28 USD 14.77 2.5 -12.1 -4.2

NAV %RETURNFUNDNAME GF AT LB DATE CR NAV YTD 12-MO 2-YR

In print & online. Contact:

wsja.advertising@dowjones.com

LIST YOURFUNDS

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

http://www.djreprints.com