Calpers said in their decision that the stock exchange was manual when it had been automated since 1997. If they don't even know that, how can they know that the human rights record is like

Peter Wallis The Economist

The Philippines was struck-off, threatening $15.7m in investments, because Calpers' research incorrectly found the stock exchange settled trades manually and not electronically.

The bourse was automated in 1997.

Despite the mistake, the fund also announced it was barring investment in companies based in "banned" countries, even if they were listed on markets like the US.

India, China, Russia, Venezuela, Colombia, Pakistan, Sri Lanka, Morocco, Jordan, and Egypt are all deemed unacceptable by the fund.

'Honest mistake'

The rare U-turn by the investment committee of Calpers was unanimously approved after a staff recommendation.

"We apologize for this and we understand it was an honest mistake," fund spokesman Brad Pacheco said after the vote.

Mr Buenaventura hopes investment will grow

Philippine officials had contacted Calpers to point out that its consultant, Wilshire Associates, was using outdated information.

"It should be noted that we actually never sold the investments, even though the policy was adopted earlier this year. We were still waiting for clarification on a number of items," Mr Pacheco said.

Calpers' review in February looked at a range of issues, including labour practices, political risk, market volatility and regulation, and investor protection.

"Calpers said in their decision that the stock exchange was manual when it had been automated since 1997. If they don't even know that, how can they know that the human rights record is like," Peter Wallis of The Economist in the Philippines told the BBC's World Business Report.

"I have a feeling it was a blanket decision to pull-out of these countries."

Fund officials said they did not anticipate any immediate reinstatement of Thailand, which has also pressed for a reappraisal, or other countries it has banned.

Philippines reputation

While Calpers' investments in the Philippines is relatively small, the decision was a public relations blow for its stock market, which fell sharply in the days following the decision.

"Calpers is a giant and the commitment of Calpers to invest or not to invest in the Philippines has an enormous impact for us," said Philippine ambassador to Washington Albert del Rosariodel Rosario, who was in Sacramento for the vote.

Philippines central bank Governor Rafael Buenaventura said the decision would send a positive signal to other fund managers and hopefully boost investment.

"I think the amount really is not that significant. What is more significant there is really the signal it gives to other investors," Mr Buenaventura told Reuters.

The Philippine stocks dropped on Tuesday, despite the Calpers decision, on concerns of high first quarter budget deficit.