5 South African Stocks To Consider For 2012

By Investopedia Staff | April 27, 2012 AAA

The BRIC countries - Brazil, Russia, India and China - often dominate headlines, and for good reason. With over 2.8 billion people between them (more than 40% of the world's population), the room for growth in these developing economies has businesses salivating at any opportunity to put their products in the hands of new consumers brimming with cash. Investors too have been watching these emerging economies as dominant forces in the next 50 years. The recent admission of South Africa gives the group presence on three continents (Africa, Asia and South America), as well as a looming presence in Eastern Europe, thanks to Russia.

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At first blush, South Africa seems like a strange addition to the group. It isn't ranked in the top 10 countries in terms of population as its fellow members are, its land area isn't as large, and its gross domestic product (GDP) is a quarter of Russia's ($1.45 trillion to $357 billion). The move may be part of a greater BRIC strategy to get on the good side of a country in a rapidly developing continent, since Brazil, Russia, India and China all have economic ties to Africa that they want to entrench. The population in the Southern Africa region, in which South Africa is considered the gateway country, represents 20% of Africa's current total population of nearly 1 billion people. Among its peers, South Africa is considered to be the most developed country, has greater political stability and is considered less corrupt (according to Transparency International).

SEE: Understanding BRIC Investments

Getting exposure into South African equities is possible through the iShares MSCI South Afica Index ETF (ARCA:EZA), which contains 50 individual holdings. However, for those looking for individual positions, you may want to check out the following South African stocks for 2012 that have been down for 2011:

Company Market Cap YTD Performance %
Sasol Ltd.(NYSE:SSL) 31.9B -0.15%
Sappi Limited(NYSE:SPP) 1.9B +24.13%
Harmony Gold Mining Co. Ltd.(NYSE:HMY) 4.2B -16.24%
Great Basin Gold Ltd. (NYSE:GBG) 389.7M -23.16%
Gold Fields Ltd.(NYSE:GFI) 9.3B -15.28%

Bottom Line
While South Africa's addition to the club may be considered premature by some analysts, it is clear that emerging markets will continue to play an important role in the world economy. As exporters of commodities to the rich world and importers of goods made by more developed countries, BRICS represent a giant influx of both industrial workers and cash-flush consumers.

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