Economic Calendar

Monday, September 12, 2011

TSX may open lower on euro zone worries, commods

Mon Sep 12, 2011 12:14pm GMT

Sept 12 (Reuters) - Toronto's main stock index could open lower, dragged down by falling commodity prices and a sell-off in world equities markets on concern about the Greek debt crisis.


* Canadian equity futures pointed to a lower open.

* U.S. stock index futures fell sharply as fears of a credit rating downgrade of French banks and the lack of a solution to Greece's debt problem heightened concerns about the euro zone's debt crisis.

* European share prices fell to a 26-month low , led by banks and insurers on concerns over a lack of political unity in the euro zone in tackling the debt crisis as worries grow that Greece could default on its debts.

* Markets in Asia were down with Hong Kong shares falling sharply with heavy selling of banks and property counters pushing the benchmark to its biggest single-day drop since a rout on Aug. 9.


* The Thomson Reuters-Jefferies CRB index , a global commodities benchmark, fell 0.62 percent in early trade.

* Oil fell on deepening concerns over Europe's sovereign debt crisis and slowing global growth.

* Gold fell as investors sold holdings to raise cash, following last week's rise to record highs, in order to cover losses elsewhere, including European equity markets pummeled by growing fears about the intensifying debt crisis.

* Copper fell to its lowest in almost a month on investor concern about the policymakers' ability to permanently solve Europe's debt crisis and on worries of a slowing economy which clouded the outlook for demand.


* Rainy River Resources Ltd. : The company said drilling in the western area of its northwest Ontario gold project continued to show narrow zones of high-grade gold mineralization and wider zones of low-grade gold mineralization.

* Mosaid Technologies : The company said it is actively exploring a number of alternatives to Wi-Lan Inc's C$480 million buyout offer, as it believes the company is worth more.

* Niko Resources : The oil and gas producer said a unit of Hess Corp will become a partner in one of the company's production sharing contract in Indonesia.

* Talison Lithium : The miner said its quarterly revenue fell 11 percent hurt by the appreciation of the Australian dollar against the U.S. dollar.

* Petrominerales Ltd. : The oil producer said it has been unable to restart production at its Corcel and Guatiquia fields due to protests around its facilities that have shut-in over 30,000 barrels a day.

* Zargon Oil & Gas Ltd. : The company said it reduced its fourth-quarter monthly dividend by about 29 percent to ward off lower oil prices.


Following is a summary of research actions on Canadian companies reported by Reuters.

* Le Chateau Inc rating cut to sell from neutral at Versant Partners

* Lundin Mining Corp price target cut to C$7.50 from C$8; rating buy at TD Securities ($1= $0.99 Canadian)


European Banks Valued at Post-Lehman Lows Show Sovereign Risks Are Growing

By Aaron Kirchfeld and Adam Ewing - Sep 12, 2011 6:31 PM GMT+0700

Enlarge image Europe Banks at Post-Lehman Lows

A pedestrian enters the headquarters of BNP Paribas SA in Paris, France. Photographer: Antoine Antoniol/Bloomberg

Sept. 12 (Bloomberg) -- Carsten Brzeski, senior economist at ING Group in Brussels, discusses Greece's debt crisis and outlook for the country to remain in the euro zone. He speaks with Linzie Janis on Bloomberg Television's "First Look." (Source: Bloomberg)

Sept. 12 (Bloomberg) -- Neil Barofsky, former special inspector general for the Troubled Asset Relief Program and a Bloomberg Television contributing editor, talks about the European debt crisis and its impact on the banking industry. Barofsky speaks with Deirdre Bolton and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

Investors are valuing European banks at levels not seen since the depths of the credit crunch that followed the collapse of Lehman Brothers Holdings Inc. as concern over a Greek default and debt contagion escalates.

A Bloomberg index shows 46 lenders trading at 0.56 times book value, the cheapest since the post-Lehman lows of March 2009, signaling investors estimate their net assets are worth less than the companies claim and are demanding discounts for perceived risks. Valuations reflect the impact of a potential sovereign default for some banks, according to Barclays Capital analysts led by Jeremy Sigee.

Group of Seven finance chiefs meeting in Marseille, France, over the weekend vowed to support banks amid growing concern that the debt crisis is morphing into a banking crisis. As doubts linger about the ability of some European lenders to withstand a Greek default and its ripple effects, the cost of insuring their debt rose to records, while a measure of their reluctance to lend to each other climbed to a 2 1/2-year high.

“Politicians need to get their heads together and deal with the inevitable: a Greek default and recapitalization of some banks,” said Peter Thorne, a London-based analyst at Helvea Ltd. “You have to make the banks look financially stable and secure so that people are prepared to deposit money with them for more than 24 hours.”

Funding Costs Rise

Deutsche Bank AG (DBK) Chief Executive Officer Josef Ackermann said on Sept. 5 that market conditions remind him of late 2008, and urged lawmakers to act to avoid a repeat of the financial crisis, which spawned the worst global recession since the Great Depression.

The Markit iTraxx Financial Index linked to senior debt of 25 banks and insurers increased 12 basis points to 312 and the subordinated index jumped 25 to 560, according to JPMorgan Chase & Co. The difference between the three-month euro interbank offered rate, or Euribor, and the overnight indexed swap rate, a measure of banks’ reluctance to lend to each other, rose to 0.853 percentage point, the widest gap since March 2009.

August was the worst month for long-term debt issuance for the region’s lenders in more than five years, Bank of America Corp. analysts led by Derek De Vries said in a note last week.

The Bloomberg Europe Banks and Financial Services Index of stocks dropped 4.1 percent today to the lowest level in almost 2 1/2 years. The index has slumped 37 percent so far this year, led by financial companies based in peripheral Europe, such as Banco Comercial Portugues SA and National Bank of Greece SA, as well as those with investments there, such as Commerzbank AG of Germany and France’s Societe Generale (GLE) SA.

Implied Writedowns

In the case of some banks, the plunge implies writedowns beyond the current level of sovereign bond prices, according to a note from Sigee on Sept. 7.

BNP Paribas SA, Societe Generale and Credit Agricole SA (ACA), France’s largest banks by market value, are trading at levels that imply a 100 percent loss on Greek, Irish and Portuguese holdings, according to Barclays. In the case of Paris-based Societe Generale, the share price even implies full writedowns on Italian and Spanish debt, according to Barclays.

“The current discounts to book are driven by much broader macro concerns, and attributing all of the discount to a single risk factor like sovereign is too simplistic,” Sigee wrote, adding that the French banks’ risks remain manageable. “However, it does give a sense of how severely sovereign risks have been priced into equity valuations.”

Credit Ratings

BNP Paribas (BNP), Societe Generale and Credit Agricole tumbled in Paris trading on a possible ratings cut by Moody’s Investors Service, extending their more than 40 percent slide in the last three months. They may have their credit ratings cut as early as this week because of their Greek holdings, two people with knowledge of the matter said.

Societe Generale said today it plans to sell 4 billion euros ($5.4 billion) in assets by 2013 to reassure investors about its finances. The lender said it holds about 900 million euros of Greek bonds and has “no significant” Irish or Portuguese debt.

Bank of France Governor Christian Noyer said French banks are capable of facing any Greek response to sovereign-debt difficulties and have no liquidity or solvency problems.

“Whatever the Greek scenario, and whatever provisions have to be made, French banks have the means to face it,” Noyer said in an e-mailed statement today. “French banks have neither liquidity nor solvency problems.”

Greek Cuts

The 90 banks that underwent European stress tests would face an estimated capital shortfall of 350 billion euros if Greek, Portuguese, Irish, Italian and Spanish government bonds were written down to market values, according to Nomura analysts led by Jon Peace. No “practical” amount of capital can prepare them for a large sovereign debt impairment or default, Nomura said in a note on Sept. 7.

Prime Minister George Papandreou, vowing to avoid a default and keep Greece in the euro, approved new measures to help plug a yawning budget gap as resistance builds to extending more aid to the European Union’s most-indebted nation.

Greek 10-year bonds are trading at a 52 percent discount to face value, according to Bloomberg data. By comparison, some banks agreed in July to write down the value of their Greek securities by an average 21 percent as part of a bond exchange and debt buyback program for Greece.

ECB Rift

Reflecting concern that Greece may fail to meet the terms of its aid package and miss its payment obligations, German Chancellor Angela Merkel’s government is preparing plans to shore up its nation’s financial sector, three coalition officials said Sept. 9. The surprise resignation of Juergen Stark from the European Central Bank on the same day exposed the policy rifts aggravating the debt turmoil.

“Stark resigning is another development that suggests Germany isn’t really behind a lot of what the ECB needs to do to shore up the situation,” said Jonathan Fayman, a fund manager at BlueBay Asset Management Plc in London. With Merkel preparing banks for the possibility of a default, “the market is scared and it looks like it should be,” he said.

Henrik Drusebjerg, senior strategist at Nordea Bank AB in Copenhagen, said the financial turmoil will force policy makers to find a solution that would otherwise have taken decades.

“Why?” he said. “Because the alternative is a total breakdown.”

To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at Adam Ewing in Stockholm at

To contact the editors responsible for this story: Frank Connelly at


Tata Motors Seeks New CEO as Jaguar Plunges

By Siddharth Philip and Steven Rothwell - Sep 12, 2011 7:03 PM GMT+0700

Tata Motors Ltd. (TTMT), owner of the Jaguar and Land Rover brands, is being forced to search for a new chief executive officer as it struggles to revive sales of luxury cars amid a worsening debt crisis in Europe.

Carl-Peter Forster, 57, who helped the Jaguar Land Rover unit turn to profit in the year ended March 31, quit on Sept. 9 after less than two years as the global head of India’s biggest automaker citing “unavoidable personal circumstances.”

Forster’s replacement will face the challenge of reversing six straight months of declining sales at Jaguar as economies in Europe stall. Tata Motors, which last year got 35 percent of its revenue from the U.S. and Europe, needs to find a head for the company soon to avoid derailing a plan to invest $2.4 billion annually in new models and expanding into China, according to Deepesh Rathore, managing director for IHS Automotive.

“They are going to be left wondering who is going to replace him,” said Andrew Jackson, an analyst at research firm Datamonitor in London. “This is a big blow really for Jaguar Land Rover. He signed off on a very bold change in direction for the company.”

Tata Motors’ shares declined 4.3 percent, the most since Aug. 19, to 146.35 rupees at the 3:30 p.m. close in Mumbai. The company’s shares have dropped 44 percent this year, making it the worst performing stock in the BSE India Sensitive Index.

Credit to Management

“The credit for the turnaround of Jaguar Land Rover goes to the management team and workforce of the company,” Ratan Tata, chairman of Tata Motors, said in an e-mailed statement today. “No single person can or should take credit for the improvement in the company’s operations.”

Prakash Telang, managing director of the company’s Indian operations, and Ralf Speth, chief executive officer of Jaguar Land Rover, will represent their respective units on Tata Motors’ board, according to an e-mailed statement on Sept. 9.

Forster presided over a 20-fold jump in Jaguar Land Rover’s profit before tax in the year ended March 31. He also led Tata Motors plan to tap China, Asia’s largest economy.

China is the No. 1 growth market for Jaguar Land Rover, Forster said in a Bloomberg TV interview in May. Tata Motors is looking for a local partner in China to set up assembly operations in the country, and the company has shortlisted manufacturers, Forster said in a separate interview the same month, without naming any of the potential partners.

‘Difficult to Replace’

Forster helped by “pulling Jaguar and Land Rover out of the mud and making them profitable,” said Peter Schmidt, managing director of Warwick, England-based Automotive Industry Data. “It will be very, very difficult to replace him in the short term, and possibly in the long term.”

The Jaguar Land Rover unit, based in Gaydon, England, generated 57 percent of Tata Motors’ revenue for the year ended March 31, up from 53 percent a year earlier.

The division’s pretax profit surged 20-fold to 1.12 billion pounds for the fiscal year. Jaguar aims to challenge Bayerische Motoren Werke AG with a hybrid supercar and an entry-level sedan to compete with the 3-Series.

The new models are part of Tata’s plans to invest 1.5 billion pounds ($2.4 billion) annually in product development at Jaguar and Land Rover over the next five years. The spending will include 40 new vehicles or upgrades, including the Range Rover Evoque, for which the company has begun deliveries.

Concept Cars

Jaguar will unveil its C-X16 concept car at the Frankfurt Motor Show tomorrow, according to the company’s website. The 186 miles (299 kilometers) per hour two-seater sports car is the company’s smallest car in more than fifty years. Land Rover also intends to introduce a new Defender model in 2015 and will show the Land Rover DC100, its concept for a potential successor.

Europe’s debt crisis drove a 23 percent decline in Jaguar sales to 4,372 in July, according to a company statement. Almost 25 percent of Jaguar and Land Rover sales come from the U.K., where the economy grew at the slowest pace in the second quarter since it contracted in the first three months of 2010. North America and Europe account for about 22 percent each of sales, according to a company presentation.

Forster, who was hired in February 2010, will remain as a non-executive member on the company’s board, Mumbai-based Tata Motors said in the statement. The company recruited Forster from General Motors Co. (GM) where he was head of European operations.

Nano Sales

Passenger-vehicle sales at Tata Motors slumped 33 percent in August from a year earlier after India’s central bank raised its benchmark interest rate to 8 percent in July, the highest among Asia’s biggest economies.

Deliveries of the Nano, the world’s cheapest car, plunged 85 percent to 1,202 units in August, Tata Motors said in a statement on Sept. 1. The Society of Indian Automobile Manufacturers said last week it may cut the industry’s sales forecast after economic growth slowed to the lowest in six quarters in the three months ended June.

“I would expect Forster’s position to be filled up in the next two to three months if the company wants to keep their plans on track,” said Rathore.

Tata Motors bought Jaguar Land Rover from Ford Motor Co. in 2008 for $2.5 billion.

To contact the reporters on this story: Siddharth Philip in Mumbai at; Steven Rothwell in London at

To contact the editor responsible for this story: Kae Inoue at


Gold Declines as Some Investors Sell to Cover Losses in Equity Markets

By Nicholas Larkin - Sep 12, 2011 7:17 PM GMT+0700

Gold declined in New York as some investors sold the metal to cover losses in equities that dropped on concerns that the European debt crisis is worsening.

European and Asian stocks slumped on speculation German Chancellor Angela Merkel is preparing for a Greek default. The dollar was little changed after earlier today climbing to the highest level in more than six months against six major currencies. Gold touched an all-time high $1,923.70 an ounce on Sept. 6 and today set records priced in euros and Swiss francs.

“The margin clerks will be sharpening their knives today and will take dead aim even upon gold if that is where they think they can find liquidity,” Dennis Gartman, an economist and the editor of the Suffolk, Virginia-based Gartman Letter, said in his daily report. Some investors “will argue that gold will prove valuable and will hold its value even as stock prices plunge, and in the long run they may well be right.”

Gold for December delivery fell $16.70, or 0.9 percent, to $1,842.80 an ounce by 8 a.m. on the Comex in New York. Immediate-delivery gold was 0.9 percent lower at $1,839.68 in London.

Bullion is in the 11th year of a bull market, the longest winning streak since at least 1920 in London, as investors seek to diversify away from equities and some currencies. The metal is up 30 percent this year, outperforming global stocks, commodities and Treasuries.

Germany’s Banks

Officials in Merkel’s government are debating how to shore up German banks in the event that Greece fails to meet the budget-cutting terms of its aid package and is unable to get a bailout-loan payment, three coalition officials said on Sept. 9. Merkel is due to hold talks on the debt crisis with European Commission President Jose Manuel Barroso today.

BNP Paribas SA, Societe Generale SA and Credit Agricole SA, France’s largest banks by market value, may have their credit ratings cut by Moody’s Investors Service as soon as this week because of their Greek holdings, two people with knowledge of the matter said.

“While gold is capable of rallying in the face of a strong dollar, an extended upward move in the dollar does put some obstacles in its path,” Edel Tully, a London-based analyst at UBS AG, wrote in a report. Still, “gold should benefit from the scaling back of risk appetite on what appear to be rising fears of a Greek default, contagion to the rest of the periphery, and the impact on banks.”

Gold exchange-traded-product holdings rose on Sept. 9 for the first time since Aug. 30, gaining 11.8 metric tons to 2,149.8 tons, data compiled by Bloomberg show. Assets reached a record 2,216.8 tons on Aug. 8.

Silver for December delivery in New York slipped 1.5 percent to $40.995 an ounce. Platinum for October delivery was down 1.2 percent at $1,816.10 an ounce. Palladium for December delivery dropped as much as 2.5 percent to $720.15 an ounce, the lowest price since Aug. 9, and was last at $725.05.

To contact the reporters on this story: Nicholas Larkin in London at

To contact the editor responsible for this story: Claudia Carpenter at


Indonesia’s Stock Market Value to Lure Investors, Panin Says

By Berni Moestafa and Chan Tien Hin - Sep 12, 2011 5:12 PM GMT+0700

Enlarge image Indonesia’s Stock Market Value to Lure Investors

University students touring the Indonesia Stock Exchange walk past stock quotes reflected in a window in Jakarta, Indonesia. The value of Indonesian equities surged 17 percent to $416 billion this year to Sept. 9, surpassing Malaysia’s $407 billion to become the ninth-biggest stock market in Asia. Photographer: Ed Wray/Bloomberg

Indonesian stocks have become more attractive to overseas investors after the world’s fourth-most populous nation overtook Malaysia as Southeast Asia’s second- largest equities market by value, PT Panin Sekuritas said.

“Foreign investments into Indonesian stocks will likely increase as portfolios are weighted in line with the size of a nation’s stock market,” Winston Sual, who helps manage $991 million at Jakarta-based Panin Sekuritas, said in a Sept. 9 interview. The firm’s $407 million Panin Dana Maksima fund has climbed 40 percent in the past year, beating 35 rival funds, according to data compiled by Bloomberg.

The value of Indonesian equities surged 17 percent to $416 billion this year to Sept. 9, surpassing Malaysia’s $407 billion to become the ninth-biggest stock market in Asia. Singapore’s stock market is the biggest in Southeast Asia at $523 billion. The Jakarta Composite index (JCI) has risen 8 percent in 2011 through last week, compared with a 3.3 percent drop in the FTSE Bursa Malaysia KLCI Index.

Foreign investors stepped up buying of Indonesian shares as China and India increased demand for coal and palm oil, benefiting companies such as PT Bumi Resources and plantation owner PT Astra Agro Lestari. Rising incomes have also spurred domestic spending, lifting consumer companies including PT Astra International, the biggest automotive retailer.

Indonesia’s economy is the largest in Asean and it is resilient because of strong domestic consumption,” Panin’s Sual said, referring to the Association of Southeast Asian Nations.

Faster Growth

The Indonesian economy, the largest in Southeast Asia, will likely expand 6.5 percent this year, the fastest pace since the 1998 Asian financial crisis, President Susilo Bambang Yudhoyono said Aug. 16. That compares with the Malaysian central bank’s estimate for growth of as much as 6 percent.

Indonesia’s stock index dropped 2.6 percent to close at 3,896.12 in Jakarta, its biggest drop since Aug. 19. The Kuala Lumpur benchmark index slid 1.6 percent to 1,446.26, compared with a 1.9 percent fall in the MSCI Emerging Markets Index.

Bank Indonesia kept its benchmark interest rate unchanged on Sept. 8 at 6.75 percent for a seventh month to help support domestic consumption, which accounts for about 56 percent of the economy.

People Factor

Indonesia’s population of 243 million ranks behind only those of China, India and the U.S. By contrast, Malaysia has about 28 million people and Singapore 4.7 million, U.S. Census Bureau data show.

“There will be more investments going into the stock market as people are looking for a growth story,” Lye Thim Loong, who helps manage about $770 million at Libra Invest Bhd. in Kuala Lumpur, said. “We have been very actively investing in Indonesia. You have the population to sustain a domestic consumption story.”

Overseas investors bought a net $1.7 billion of Indonesian shares this year through August, according to data compiled by Bloomberg. Foreign investors sold a net 500 million ringgit ($166 million) of Malaysian stocks this year through August, according to data from the Kuala Lumpur stock exchange and Credit Suisse Group AG.

To contact the reporter on this story: Berni Moestafa in Jakarta at; Chan Tien Hin in Kuala Lumpur at

To contact the editor responsible for this story: Darren Boey at


Rolex Oysters Face Swiss Franc Crisis With Celebs’ Help

By A. Craig Copetas - Sep 12, 2011 5:32 PM GMT+0700

Enlarge image Jean-Noel Bioul

Rolex director Jean-Noel Bioul sits on the terrace of the Geneva Golf Club during the Rolex Trophy European Challenge Tour. Photographer: A. Craig Copetas/Bloomberg

Eight-time Le Mans winner and Rolex "Testimony" Tom Kristensen celebrates a birdie putt on the 15th green at the 2011 Rolex European Challenge Tour at the Geneva Golf Club. Photographer: A. Craig Copetas/Bloomberg

Pablo Picasso models a native American bonnet on his head and a Rolex GMT Master on his wrist. Source: Rolex Blog via Bloomberg

Along an Alpine fairway veiled between the private banks of Geneva and the lakefront estates of their jumpy Swiss depositors, Jean-Noel Bioul taps his wrist and offers clients the ultimate in luxury shielding for perilous economic times.

The product costs around $7,000 and current investors include guitarist Eric Clapton and actor Daniel Craig. It was developed in 1956 with the help of physicists at the nearby European Organization for Nuclear Research, site of CERN’s Hadron Collider. The item weighs 157 grams and is guaranteed to tell the correct time during thermonuclear incidents that release up to 1,000 Gauss of magnetic field density.

“The Milgauss is the one model that comes with a lightning bolt as the second hand,” says Bioul, the 57-year-old international sponsorship director of the Geneva-based watchmaker Rolex Group. It’s the only maker of timepieces that also can supply an unscripted photograph of Pablo Picasso wearing an American Indian war bonnet on his head and a Rolex Oyster Perpetual Chronometer on his wrist.

Luxury watchmakers are specialists at concocting marketing campaigns to explain why their brand can take a licking and keep on ticking. Yet closely held Rolex doesn’t disclose its financial details let alone tell how a GMT-Master -- strapped to the wrist of Che Guevara in 1956 -- sailed into Cuba with Fidel Castro aboard the yacht Granma and was used to time guerilla activities. Select Rolex owners, though, play a key role in the company’s classy branding strategy.

Swiss Bank

“We have the reputation of operating like a Swiss bank,” Bioul chuckles on a patio at the Geneva Golf Club’s Rolex Trophy-Challenge Tour, an annual event since 1991. “That’s changing, slowly.”

Rolex annually makes 700,000 watches, Bioul says. Growth markets in China and India helped cushion the company against the Swiss franc’s overvaluation against the euro during this summer’s currency crisis, he says. A Goldman Sachs Group Inc. (GS) report in August slashed Swiss growth forecasts for next year to 0.6 percent from 2 percent. On Sept. 7, the Swiss National Bank decided to cap the franc’s rate to protect trade.

“We’re still doing well in Europe and North America, even in a global economy that’s difficult,” says Bioul, who joined Rolex in 1993 after helping manageMark McCormack’s London-based sports marketing company International Management Group. “Rolex has never been pressured by time, but we pride ourselves on being able to change with the times to ensure growth in a dignified manner.”

Scraps of Paper

Central to that philosophy, set down by Rolex co-founder Hans Wilsdorf, are some 102 years of Rolex chronicles kept in the company’s archives. Bioul says these scraps of paper, photographs and statements on the reliability and enduring fashion of a Rolex watch are the institutional backbone of the company’s continuing financial success under Chief Executive Officer Gian Riccardo Marini, who in May succeeded Bruno Meier as head of the biggest luxury-watch brand.

The characters in these stories who capture Rolex’s imagination are singularly called “Testimony,” a grammatically clumsy proper noun that refers to individuals or organizations (such as tennis star Roger Federer, tenor Placido Domingo and the Royal & Ancient Golf Club of St. Andrews) tapped to contractually star in ad campaigns.

The first thing Bioul does when he spots someone wearing a Rolex is to ask them to recount the story of the watch.

Rolex Family

“Every Rolex owner has a personally passionate story to tell about their watch and everyone who wears a Rolex is immediately looked upon as an investor and a member of the Rolex family,” Bioul says. “They’re our representatives and we want to know about them.”

Elevation to Testimony status is rigorous. “Virtually all Testimonies already wear a Rolex,” Bioul says. “We listen and then fact-check the story behind them and their watch. Do the story and individual meet the dignity of the brand? If so, we offer Testimony. It’s not about money. You don’t become rich with a Rolex watch deal.”

Testimonies usually receive a three-year contract valued at around 35,000 Swiss francs ($39,561) and 30,000 Swiss francs worth of Rolex watches over the duration of the agreement, according to a former Testimony who asked to remain anonymous because the parties to the negotiation had promised to keep details confidential.

“You’ll never find a baloney story at Rolex,” Bioul says. “A Testimony must already be in love with the watch and its capabilities. If they’re in it for the money we’re not interested.”

Channel Swimmer

Although Rolex’s first official Testimonies were 1960s sports superstars Arnold Palmer, Jackie Stewart and Jean-Claude Killy, Bioul says Wilsdorf started the program in 1927, when he asked Mercedes Gleitze to wear a Rolex during her swim of the English Channel to show a skeptical public that the Oyster case was rugged and waterproof.

“That was the beginning of Testimony,” says Bioul, who today manages a stable of 120 Testimonies in categories that include golf, yachting, tennis, equestrian, exploration, auto racing, the arts and an eight-man and -woman scuba team who last year explored life in the minus-50-degree waters under the North Pole wearing Sea-Dweller DEEPSEA watches.

“We keep our eyes open, we quietly look for achievements of discovery, human qualities, regardless of how famous or as of yet accomplished the individual,” Bioul says.

Executive's Challenge

Back in the mid-1970s, for instance, Rolex’s then Chief Executive Officer Patrick Heiniger was at a golf tournament when he spotted a despondent young man who failed to make the cut. “Heiniger took him aside and said, ‘let’s go out and play the back nine. If you can beat me, I want you to represent Rolex,’” Bioul says.

The kid whipped Heiniger and became a Testimony. His name was Seve Ballesteros.

In the often balmy world of product placement, Barry Hyde, 45, is an authority on the etiquette of pitching pricey aspirational goods. He’s chief marketing officer for the United States Golf Association in Far Hills, New Jersey. His job is to ensure professional golf doesn’t become entangled with underwriters who might tarnish the USGA’s reputation.

“Golf, tennis, even the arts have a culture ripe to be exploited by sponsors,” is Hyde’s verdict. “This happens all the time but never with Rolex. I might not know much about the fine arts, but if I see a Rolex ad about an artist I’m going to read it because I know the person will be compelling.”

Racing Daytona

Tom Kristensen is Testimony even though he didn’t wear his Rolex Daytona race watch during the eight first-place finishes at the wheel of an Audi in the 24 Hours of Le Mans.

“The Daytona does nothing in the cockpit of a modern race car,” Kristensen, 44, says. “All the analog information the watch supplies is digitally transmitted to the car by computer. Yet the Daytona is useful when I drive AC Cobras and other classic racers at competitive events like Goodwood.”

Kristensen says Rolex values the protocols of his risky culture. “Traditional sponsors are not like that,” says the Testimony Rolex describes as “the man who can’t slow down.”

“There’s no obligation for me to attend any Rolex event,” Kristensen says after sinking a birdie putt. “But I do because Rolex family members and Testimonies are fascinating people to meet.”

Over at the clubhouse, Bioul remains on the prowl. He spots a writer wearing a vintage 1975 GMT-Master. There’s another story to tell back at the office.


To contact the writer on the story: A. Craig Copetas in Paris at or @ACraigInParis

To contact the editor responsible for this story: Mark Beech at


Oil Drops for Third Day on Concern Debt Crisis to Limit Growth, Fuel Need

By Grant Smith and Ben Sharples - Sep 12, 2011 7:10 PM GMT+0700

Oil fell for a third day in New York, the longest losing streak in a month, as investors bet that Europe’s debt crisis will limit economic growth. Production resumed in the Gulf of Mexico as the threat of storms eased.

West Texas Intermediate crude slid as much as 2.6 percent while equities tumbled and the euro slumped on growing speculation that Germany is preparing for a Greek debt default. Nate, a storm over eastern Mexico, weakened as it moved further inland, the U.S. National Hurricane Center said. The oversupply of oil may disappear as the market absorbs the release of stockpiles, Goldman Sachs Group Inc. said. OPEC said Libya will be able to restore most oil production within six months.

“The debt crisis in Europe is leading to fear about economic growth,” said Hannes Loacker, an analyst at Raiffeisen Bank International AG in Vienna and the fifth most-accurate forecast of Brent prices in the eight quarters to June. “If sentiment in the equity markets remains bad, it will be tough for oil to move higher.”

Crude for October delivery fell as much as $2.24 to $85 a barrel in electronic trading on the New York Mercantile Exchange and was at $86.08 at 12:36 p.m. London time. The contract slipped $1.81 to $87.24 on Sept. 9. Prices are 11 percent higher than a year ago.

Brent oil for October settlement decreased $1.72, or 1.5 percent, to $111.05 a barrel on the London-based ICE Futures Europe Exchange. The European benchmark contract was at a premium of $24.88 to U.S. futures, compared with the record close of $26.87 on Sept. 6.

Gulf of Mexico

The euro fell to its lowest level since 2001 against the yen and slid versus the dollar. Speculation that German Chancellor Angela Merkel is preparing for a Greek default curbed demand for the shared currency, limiting investor demand for dollar-denominated oil futures as a hedge.

About 6.2 percent of oil production and 4 percent of natural gas output from the Gulf of Mexico are still shut after Lee battered the area, a Bureau of Ocean Energy Management, a Regulation and Enforcement report showed Sept. 9. Nate, downgraded to a post-tropical cyclone, was about 75 miles (120 kilometers) southwest of Tuxpan, Mexico, the U.S. National Hurricane Center said in an advisory before 10 p.m. Mexico City time yesterday.

Bullish Bets

Hedge funds cut bullish bets on oil last week while increasing those on gasoline. The funds and other large speculators reduced wagers that prices will rise, with the number of futures and options combined falling by 5,780, or 3.6 percent, to 155,837, according to the Commodity Futures Trading Commission’s Commitments of Traders report. Bets motor fuel will rally increased by 13 percent, the data showed.

“The idea that European and U.S. economic growth is going to be weak over the next year seems like a reasonable forecast,” said John Vautrain, a senior vice president at Purvin & Gertz Inc. in Singapore. “WTI will stay enormously depressed, $10 to $20 a barrel or more below Brent.”

In London, money managers raised bullish bets on Brent crude by 12 percent in the week ended Sept. 6, according to data from ICE Futures Europe.

Speculative bets that prices will rise, in futures and options combined, outnumbered short positions by 72,455 contracts, the London-based exchange said today in its weekly Commitment of Traders report. Net-long positions rose by 8,024 contracts, from 64,431 a week earlier.

Libya Output

Libya will be able to restore most of the oil production halted during fighting against Muammar Qaddafi in six months, and resume full capacity in 18 months, according to the Organization of Petroleum Exporting Countries. OPEC “marginally” lowered estimates for global oil consumption in 2012, and trimmed its 2011 assessment by 150,000 barrels a day, in a monthly report today.

Still, oil markets are likely to tighten in the remainder of the year and into 2012 as the market absorbs additional supplies from the release of strategic stockpiles in the U.S., Goldman Sachs Group said in a research note e-mailed today.

To contact the reporter on this story: Ben Sharples in Melbourne at Grant Smith in London at

To contact the editor responsible for this story: Stephen Voss on


Oil Tanker Sailing for Libya’s Mellitah as First Cargo From West Offered

By Alaric Nightingale and Michelle Wiese Bockmann - Sep 12, 2011 3:38 PM GMT+0700

Oil Tanker Sailing for Libya

An engineer stands in the grounds of the Zawiya oil refinery near Tripoli on Aug. 29, 2011. Photographer: Shawn Baldwin/Bloomberg

An engineer monitors equipment inside the control room at the Zawiya oil refinery near Tripoli on Aug. 29, 2011. Photographer: Shawn Baldwin/Bloomberg

An oil tanker is sailing to the Libyan port of Mellitah, a sign the nation may be resuming energy exports after months of fighting that led to the ouster of Muammar Qaddafi, ship-tracking data show.

The Newlead Avra, capable of hauling about 540,000 barrels, signaled earlier today about 30 miles from the Libyan coast, the data compiled by Bloomberg show. The 229-meter (750-foot) vessel is 7.9 meters deep in the water, compared with a maximum draft of 14.45 meters when fully loaded. It can carry crude or refined-oil products, according to Bureau Veritas Group, which monitors ships’ compliance with laws on seaworthiness.

Libya wants to resume crude exports in two to three weeks, Guma El-Gamaty, the U.K. coordinator for the country’s National Transitional Council, said Sept. 8. Shipments from the country, holder of Africa’s biggest oil reserves, plunged during a conflict that escalated in February and led to leader Qaddafi being deposed.

An 80,000 metric-ton cargo of crude was being offered for shipment from Mellitah last week, three people with direct knowledge of the transaction said Sept. 8. The loading is likely the first from the nation’s west since March, said Thomas Zwick, an Oslo-based analyst at Lorentzen & Stemoco AS, a consultant to the shipping industry.

Commercial Officer

The Newlead Avra is on a 12-month charter to Vitol Group and currently has no cargo onboard, according to Sozon Alifragis, the chief commercial officer of Newlead Holdings Ltd., which owns the vessel. A spokesman for Vitol declined to comment.

Libyan crude output slumped to 60,000 barrels a day in July from 1.7 million barrels in January, according to the Paris- based International Energy Agency, which advises 28 industrialized nations.

Operations resumed about two weeks ago at the 120,000 barrel-a-day Zawiyah refinery near the Libyan capital of Tripoli, El-Gamaty said. The plant is processing 30,000 barrels a day and will reach full capacity in six to eight weeks, he said. The crude-export facility in the eastern port city of Tobruk is undamaged, he said.

Libyan crude output increased to as much as 1.87 million barrels a day in 2008 from 1.38 million barrels in 2002, according to U.S. Energy Department data.

To contact the reporter on this story: Alaric Nightingale in London at; Michelle Wiese Bockmann in London at

To contact the editor responsible for this story: Stuart Wallace at


ANC Mulls Law to Supersede Mining Contracts, Godongwana Says

By Franz Wild and Nasreen Seria - Sep 12, 2011 5:39 PM GMT+0700

South Africa’s national needs should take precedence over mining companies’ desire to export and a law to overrule mine contracts may be considered, the head of the ruling party’s task team formed to study a proposal to nationalize mines said.

The country’s coal, iron ore and other mineral reserves should benefit the continent’s biggest economy, the African National Congress’s Enoch Godongwana said in an interview in Johannesburg on Sept. 8.

South Africa’s policies should be guided by “to what extent we can utilize our resources to achieve a number of goals, among them growth and redistribution,” Godongwana, 54, said. “Legislation that supersedes any contract you have” to ensure the assets meet the country’s needs is an option, he said. “In certain circumstances, national interest must prevail.”

Citigroup Inc. last year valued the country’s mineral resources at $2.5 trillion, the most of any nation. Leaders of companies including AngloGold Ashanti Ltd. (ANG), Africa’s biggest gold producer, and Standard Bank Group, the continent’s largest lender, have said nationalizing mines will curb growth and hinder job creation in a country where one in four is unemployed.

South Africa has the world’s largest reserves of platinum, 30 percent of the world’s gold and supplies coal to Indian and European power stations. Anglo American Plc (AAL), Rio Tinto Group and BHP Billiton Ltd. (BHP) have assets in the country, which is also home to two of the world’s four biggest gold miners and the two largest platinum producers.

‘Insulting the Intelligence’

The ANC’s Youth League and the Congress of South African Trade Unions, the country’s largest labor grouping and a party ally, say that the ANC will adopt nationalization as a policy at its national conference next year, and is only looking into the details of how best to do it. The study was agreed to after repeated demands by the youth wing, which is led by the 30-year old Julius Malema.

“If there are some people who say we’re going to nationalize and we’re just looking at the modalities, I’d suggest that that person is insulting the intelligence of ANC delegates,” said Godongwana, who opposes state control of industry. “I don’t believe we should take on managing more than we can.”

November Report

As a motivation for such a law Godongwana, who is also the country’s deputy minister of economic development, cited the example of a coal mine that lies next to a state-owned power plant yet focuses on exports while the fuel needed to generate electricity is brought in from another mine. He also criticized the level of South African steel prices even though the country has abundant deposits of iron ore.

The ANC will in November publish a report on findings by an independent task team that is examining models of nationalization or increased state participation in mining around the world, he said. Those findings, based on visits by the team to countries including Chile and Botswana, will be made available for public comment.

With a jobless rate of 25.7 percent, South Africa’s government is aiming at the 7 percent annual economic growth that it says it needs to create 5 million jobs by 2020. The economy expanded 1.3 percent in the second quarter, its slowest pace in two years, according to the Pretoria-based national statistics office.

Government companies already run a coal mine and a diamond operation, while the Public Investment Corp., which manages pension funds for state workers, and Industrial Development Corp. hold stakes in mining companies.

Investor Concern

Kumba Iron Ore Ltd. (KIO), which owns the country’s largest iron- ore mine, is 17 percent held by the two state-owned companies and coal producer Exxaro Resources Ltd. (EXX) is 5.3 percent held by the PIC, according to data compiled by Bloomberg.

The ANC Youth League’s campaign to wrest mine ownership from what it calls a white capitalist elite, has caused “an uneasiness from investors particularly from outside South Africa” who don’t understand that the discussion is at a party rather than government level, Godongwana said. Sixty-six percent of South African lawmakers are representatives of the ANC.

“While its being debated all the investment is on hold and thats not helping anybody,” Peter Major, head of Cadiz Corporate Solutions’ mining and resources unit, said in in an interview from Cape Town today. “Nobody is putting new money into anything here. We have foreign investment but they are buying our bonds and our shares but bricks and mortar is very negligible. It’s not really creating jobs.”

Urgency, Inequality

Still, the youth league has raised issues that South African society needs to tackle, Godongwana said.

“One thing positive is that it’s introduced a sense of urgency on some of the social ills engulfing our society,” referring to the Youth League’s lobbying.

South Africa’s Gini coefficient, a measure of income inequality, is 0.68, according to the South African Treasury, one of the highest in the world and higher than in 1994, when the country held its first all-race elections and ended the apartheid system of institutionalized racial discrimination. A reading of zero means complete equality, while a reading of one means complete inequality.

To contact the reporters on this story: Franz Wild in Johannesburg at; Nasreen Seria in Johannesburg at

To contact the editor responsible for this story: Andrew J. Barden at


Tropical Storm Nate Downgraded Over Mexico as Maria Moves From Caribbean

By Ann Koh and Lananh Nguyen - Sep 12, 2011 7:07 PM GMT+0700

Nate weakened as the storm moved over Mexico with heavy rains and has been downgraded to a post- tropical system, the U.S. National Hurricane Center said.

Seven oil rig workers were found alive in a lifeboat in the Gulf of Mexico while two died and one remains missing, Petroleos Mexicanos said.

The remnants of Nate were about 75 miles (120 kilometers) west-southwest of Tuxpan, Mexico, with maximum winds of 30 mph, the NHC said in its final advisory for the storm.

The Mexican Navy found seven of the 10 missing oil rig workers and transferred them by helicopter to Carmen City, Pemex said in a statement. In a conflicting report, Heliservicio De Campeche, an airlifting contractor, said 10 workers were found alive.

Tropical Storm Maria moved further from the northeastern Caribbean with 60 mph winds and was 165 miles north of Puerto Rico, the center said today in a separate advisory. The storm was headed northwest at 9 mph.

A gradual turn toward the north is expected the next couple days, the NHC said. “The center of Maria will continue moving away from the islands of the northeastern Caribbean and pass well east of the southeastern Bahamas.”

To contact the reporters on this story: Ann Koh in Singapore at; Lananh Nguyen in London at

To contact the editor responsible for this story: Alexander Kwiatkowski at