Malaysian investors expecting the return of CalPERS - a major United States pension investment fund - had their hopes dashed early this week as the fund continued to shun key Southeast Asian emerging markets.

According to a Feb 19 Reuters report, CalPERS was expected to put Malaysia and Thailand back o­n its list of approved emerging markets this year but market watchers were surprised with the tightening of its policy.

Based o­n its latest directive, CalPERS will not be investing in 12 countries, a list which also included India, China and Russia.

Only 14 emerging markets worldwide qualified based o­n stringent criteria adopted by the fund last year.

CalPERS, or the California Public Employees' Retirement System, first withdrew from Malaysia, Indonesia and the Philippines last year o­n grounds that the countries ranked unfavourably in a country assessment process.

The influential fund created unease in developing nations when it added criteria such as civil liberties, press freedom and independence of the judiciary as factors to be considered in its investment policies.