CalPERS lowers investment grade for India most among 27 nations

MUMBAI: The California Public Employee’s Retirement System (CalPERS), the biggest US pension fund with $165.8 billion in assets under management, reduced its investment grade for India by the most in its annual review of 27 nations.

Pakistan showed the biggest improvement, while Sri Lanka fell below investment grade. Others that improved the maximum in Calpers’ eyes from last year are Egypt, Indonesia, Morocco and Philippines.

India scored 2 out of a maximum 3 for 2006, falling from 2.25 last year, according to a study conducted by Wilshire Consulting for CalPERS and posted on the Sacramento-based fund’s website. Pakistan scored 1.8 compared with 1.63 last year.

CalPERS, with $165.8 billion under management, periodically reviews the markets it plans to invest in using a seven-factor model defined by the Investment Committee of CalPERS, the report said.

Since 1987, CalPERS has been coming out with this list, India and Peru being added to it in 2004.

Three country parameters of the study include political stability, transparency, and productive labour practices, while market factors involve liquidity and volatility, regulation including legal systems and investor protection, openness of the market, and settlement proficiency and transaction costs.

“The analysis has been conducted on a relative basis with a goal toward sorting the countries from the most able to support institutional investment to the least,” says the report.

CalPERS invests in nations that score 2 and more. The 19 qualifying nations include Argentina, Brazil, Chile, the Czech Republic, Hungary, India, Indonesia, Israel, Jordan, Malaysia, Mexico, Peru, the Philippines, Poland, South Africa, South Korea, Taiwan, Thailand, and Turkey. While Hungary retained its No. 1 ranking from last year with a score of 2.7, Sri Lanka fell below the threshold with a 1.8 score.

It has been granted a grace period of a year to improve its score before being expelled from the list, the report said. Poland, Chile and the Czech Republic were ranked No 2, with 2.6 points each. Others to get the same score as India were Indonesia, Argentina, Turkey and Malaysia.Overseas demand for Indian stocks helped the BSE Sensex to a record as investors tapped the second-fastest pace of growth among the world’s 20 biggest economies. – (Bloomberg, with DNA Business Bureau)

Indi’s $665 billion economy expanded 7.5% in the year ended March 31, 2005 and 8% in the next two quarters.

The Sensex rose 42% in 2005 and has already risen 4.8% this year. It closed at record 9919.89 on January 31, 2005.