JOHANNESBURG, March 21 (Reuters) - The hearty self-congratulation with which South Africa welcomed its accession to the BRIC grouping of major emerging countries has been met with a deafening silence from global investors.
Since Pretoria joined more than two years ago and changed the group's name to BRICS, almost all of the major BRIC funds have maintained zero exposure to South Africa. If there is an "S" country in their portfolios, it is more likely to be South Korea or Singapore.
South Africa will have an equal seat at the table next week when it hosts a summit of leaders from Brazil, Russia, India and China in Durban on Tuesday and Wednesday, even though its economy is dwarfed by those of its new partners.
"While it is difficult to justify South Africa's inclusion into the BRIC acronym from an economic perspective, the country remains the most developed of the sub-Saharan African nations and, in this regard, can be seen as the continent's representative," said Anna Stupnytska, macro economist, at Goldman Sachs Asset Management.
"It would be great if South Africa took up the challenge of trying to be that, unifying the continent through stronger cross border trade and infrastructure links. If that were to occur, then Africa as a continent could perhaps be regarded as a genuine BRIC economy," Stupnytska said.
Jim O'Neill, chairman of Goldman Sachs Asset Management, coined the BRIC concept in 2001 and has since said South Africa does not belong in the group.
The original BRIC group represents about 20 percent of the global economy and 43 percent of the world's population.
Add South Africa, call it BRICS, and the combined GDP figure rises by 0.55 percentage points.
If South Africa were a province in China, its GDP would rank number six, just above Hebei, a producer of coal and sorghum
South Africa's economy is about 80 percent smaller than the smallest of the BRIC members, Russia and India. The Brazilian government's official BRICS fact sheet leaves South Africa out of the mix when talking about GDP growth for the group.
It is this relatively small size that could derail the biggest agenda item on the table at the BRICS Summit, the formation of a BRICS development bank to serve as a counter to the likes of the International Monetary Fund and World Bank.
South African diplomats have said the current plan is to have all five partners contribute $10 billion to fund the BRICS bank. For China, it is a relatively small sum that represents about 11 hours of GDP. For South Africa, it is more than double its national defence budget.
BRICS leaders are also likely to endorse plans at the summit to create the bank as well as a joint foreign exchange reserves pool that would initially hold between $90 billion and $120 billion, senior emerging market officials said on Thursday.
"If the bank is an equal partnership it will be weakly capitalised because South Africa will set a low threshold for contributions," said Mark Rosenberg, Africa analyst for the Eurasia Group global political risk consultancy.
"If not, and the parties are assigned different 'roles', South Africa's will be largely symbolic - i.e. the bank may be based in South Africa but ultimately financed by the other members, especially China," Rosenberg said.
It is not that South Africa is a bad investment, actually, quite the opposite.
Since the start of 2012, Johannesburg's benchmark Top-40 index has shot up by more than 25 percent while the main indices in Brazil, Russia, India and China have been solidly in the red, according to Reuters data.
Johannesburg has also been ranked as the best regulated exchange in the world by the World Economic Forum's Global Competitiveness Report.
But South Africa is excluded from BRIC funds is because the size of its economy and population are much smaller than those of the group's original members.
South Africa is usually covered by funds that invest in the next tier of smaller emerging economies that include the likes of Turkey and Indonesia.
South Africa however hopes to expand its economy through the BRICS grouping, seeing it as a way to increase trade.
But there are difficulties. Almost all of South Africa's exports to the BRIC states are relatively low value raw commodities while it imports value-added finished goods. The mix is not likely to change, especially when the pay of a South African factory worker is three to six times higher than that of a Chinese worker, who is also more efficient.
The most appealing items South Africa and its neighbours offer the original BRIC states are the commodities they need to power their economies.
By setting up in South Africa, the BRICS partners can gain access to the regional grouping SADC - Southern African Development Community - 15 countries with a total GDP of around $575 billion and a population of about 260 million, where South Africa is the driving force.
It includes fast growing economies such as Angola, one of Africa's biggest oil producers, Botswana, the world's biggest diamond producer, and Mozambique, with untapped coal reserves that have attracted billions of dollars in investment from Brazilian mining company Vale.
"South Africa extends the group into Africa, strengthening its status as a representative of 'emerging markets' writ large, versus the 'developed markets' which typically dominated multilaterals like the IMF," said Eurasia Group's Rosenberg. (Additional reporting by David Dolan; Editing by Giles Elgood)