Calpers pull-out will not affect investors sentiment: economists

comments     Kevin Tan     Published     Updated

Malaysian economic observers believed that the decision by the California Public Employees Retirement System (Calpers) to pull out its investments from Malaysia will not affect other investors sentiment.

It is not positive but it could be an isolated development, said Ramon Navaratnam, director of Asian Strategy and Leadership Institute (Asli) of the giant United States pension funds decision yesterday

He told malaysiakini that overall, the Malaysian market will not be affected as it is strong, adding that the pull-out is not made based on macroeconomic factors.

Navaratnam had earlier spoken about the economic outlook for the world and Malaysia at the two-day National conference on competing after Afta: challenges and opportunities organised by Asli in Kuala Lumpur which began yesterday.

Asian Wall Street Journal today reported that Calpers will pull out of Indonesia, Malaysia, the Philippines and Thailand because these countries do not meet its new investment guidelines.

Those guidelines now take into consideration political stability, labour standards and transparency, including free press and good accounting.

Missing opportunities

AWSJ said the move could affect emerging Asian markets over the long term by discouraging other big pension funds from investing in the countries blacklisted by Calpers.

However, Navaratnam, who is also corporate adviser to public-listed company Sunway Group, attacked this view, saying, The people who take the decision are not doing the shareholders justice. They are missing the opportunities in Malaysia.

Economist Ooi Sang Kuang echoed Navaratnams opinion.

At the end of the day, investors will look for the highest rate of returns, he said. You dont buy a country. You buy companies that deliver superior returns.

Ooi is the managing director of RHB Research Institute which was voted as the top research house in Malaysia by leading business weekly, The Edge . Ooi himself was voted best Malaysian strategist by the weekly last year.

Although he conceded there are investors who will look into ethical considerations, he said they are not large in numbers.

According to AWSJ , Calpers uses a complicated system that ranks 27 emerging markets on country factors such as political stability and market factors such as market regulations in making its investment decisions.

Malaysia was reportedly ranked 24th out of 27 on the country factors. Malaysias problems were said to be political stability, transparency and labour practices.



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