There’s good news for the Indian stock markets. India — along with Peru — has passed the investment test of the largest US pension fund, Calpers, winning an endorsement that is likely to spur more foreign stock buying in these emerging markets.Just two months ago, both India and Peru had failed to meet Calpers’ requirements, which is a checklist for market efficiency, corporate governance practices, political stability and respect for human rights.But the $165 billion-plus pension fund voted on Monday to allow investments in both countries as they have shifted to the T+1 settlement system (settling stock trades the day after they are made) in line with global standards.India is moving into the T+1 settlement much ahead of many Western markets. Sebi is also introducing straight through processing (STP) which will facilitate faster and smoother trade and settlement.The California Public Employees’ Retirement System (known as Calpers) also decided to keep investing in the Philippines, following intense lobbying by Manila to prevent the fund from selling about $67 million in Philippine stocks.Calpers, which had just under $2 billion invested in emerging markets last year, has a reputation as an influential market watchdog and advocate for corporate reform. Its moves are widely watched — and imitated — by other international investors. It took on several Wall Street firms and even the New York Stock Exchange for unfair trade practices, lack of corporate governance and investor rights. India’s booming economy — GDP in the October-December quarter rocketed more than 10 pc from a year earlier — propelled the stock market up 73 pc last year, making it the best performing Asia’s market after Thailand. The BSE sensex had shot up from around 2950 level in April 2003 to 6200 level in January 2004, thanks to huge FII investments.Though many top US funds like Morgan Stanley, Merrill Lynch and Janus regularly invest in India, Calpers had kept away, citing various reasons. Sacramento, California-based Calpers earlier this year had threatened to yank its investment from the Manila market because the Philippines failed to make the grade on its scorecard for transparency and openness in emerging markets.But the Philippines argued that the fund’s scorecard, which rates such areas as market efficiency, corporate governance practices, political stability and civil rights, had ignored recent developments. After a review, investment staff at Calpers agreed that the Philippines deserved a higher score for its recent reforms to shareholder rights, a spokesman said.
