U.S. pensions giant Calper exits four ASEAN markets<\/p>\n
Reuter, Singapore\/San Francisco<\/p>\n
The largest U.S. pension fund Calpers will sell its assets in
\nThailand, Indonesia, the Philippines and Malaysia because those
\ncountries failed new investing criteria including human rights
\nand labor practices.<\/p>\n
The move pushed Thai shares and the baht lower and helped send
\nMalaysian shares down on Thursday despite a strong Wednesday
\nrally in U.S. shares. Thailand's finance minister defended his
\ncountry's human rights record and said other foreign funds were
\nlikely to stay.<\/p>\n
Analysts played down the longer-term significance of the move
\nby the California Public Employees' Retirement System, which
\nmanages around US$151 billion in assets, noting the fund's equity
\ninvestments in the region were relatively small. But they said
\nthe impact would be deeper if other U.S. pension funds begin to
\nfollow suit.<\/p>\n
\"While this may not be a precedent, it may get other people
\nthinking that way,\" said Mark Matthews, chief strategist for
\nAsia-Pacific at Standard & Poor's in Singapore.<\/p>\n
Analysts hesitated to estimate how much U.S. public pension
\nfunds hold in Asian assets, but a March 2001 report in a U.S.
\npension journal said the 1,000 largest U.S. pension funds had $5
\ntrillion in total assets. If just one percent of this total was
\ninvested in Asian assets that would be $50 billion.<\/p>\n
\"From the perspective of the Southeast Asian markets, the main
\nimplication (of the move) is that because Calpers is such a large
\nfund, people do watch what they do. Their absence from these
\nmarkets does raise the cost of capital,\" said Christopher Gee,
\nhead of equity strategy at ING Barings in Singapore.<\/p>\n
Calpers said the move to adopt the new measures that examined
\nsocial issues such as human rights, transparency, political
\nstability and labor laws in addition to the usual financial ones
\naffected around $1 billion in emerging market holdings.<\/p>\n
Analysts estimated Calpers had around $80 million invested in
\nMalaysian, Indonesian, Thai and Philippine stocks, judging from
\nthe S&P IFCI Index which is a widely-used benchmark for emerging
\nmarket investors. This would be a drop in the combined market
\ncapitalization of these markets of around $194 billion.<\/p>\n
The Thai government immediately jumped into the fray, with
\nFinance Minister Somkid Jatusripitak saying Calpers' decision was
\nunlikely to lead to an exodus of foreign investors.<\/p>\n
Indeed, Calpers committed $75 million to the government-backed
\nThailand Equity Fund in late October. The fate of that investment
\nwas unclear, as was whether Calpers was invested in fixed income
\nor private equity in Southeast Asia.<\/p>\n
Some analysts speculated the fund would have a presence in
\nthese markets because pension funds usually hold a diverse number
\nof financial instruments, especially fixed income which are seen
\nas less risky than equities.<\/p>\n
Some players in the market were puzzled by Calper's decision
\nbecause it lumped four different Southeast Asian countries
\ntogether and went against the current market trend of boosting
\nallocations to these markets.<\/p>\n
\"Indonesia, the Philippines, Malaysia and Thailand have been
\nthe best performers in Asia,\" said Mansoor Mohi-uddin, currency
\nstrategist at UBS Warburg in Singapore.<\/p>\n
According to figures from Nomura Securities, foreign investors
\nhave bought 6.8 billion baht ($155 million) in Thai stocks, 445
\nbillion rupiah ($43.7 million) in Indonesian shares and 2.3
\nbillion pesos ($44.8 million) of Philippine equities for the year
\nto February 15. There was no data on foreign investors' purchases
\nof Malaysian shares.<\/p>\n
Calpers dropped the Philippines because of financial
\nconsiderations it said, while Malaysia and Indonesia did poorly
\non the human rights front. Thailand received a mixed score, but
\nstill failed to make the cut.<\/p>",
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