FUND managers here and abroad generally believe that, between now and 1999, the South African market will offer lucrative investment opportunities.
The first democratic elections last year helped to open the country to a wider base of foreign investors.
At the same time, South African funds, which have been prevented from being invested abroad, now have some freedom for offshore fund placement.
South Africa has also used a dual currency system for many years - the financial rand for foreigners and the commercial rand for domestic transactions.
That meant that foreigners were prevented from investing in money market instruments.
The financial rand was abolished by President Nelson Mandela's African National Congress Government in March.
This opened the way for foreign investors to buy treasury bills, negotiable certificates of deposit and banker's acceptances.
Another critical factor is the decline in inflation to single digit for the first time in more than 10 years. In 1991, inflation was 15.3 per cent, in 1992 it was 13.9 per cent, in 1993 it fell sharply to 9.7 per cent and, last year, it dropped further to nine per cent.
Inflation for 1995 is expected to average out at 10.7 per cent.
This translates into real interest rates which are at historically high levels.
Real gross domestic product growth has also shown a steady rise, climbing from minus 2.2 per cent in 1992 to 1.2 per cent in 1993, to 2.3 per cent last year and is this year forecast at 3.1 per cent and at four per cent for 1996.
Analysts say that the medium-term and long-term areas of the bond yield curve now provide the best potential value.
Templeton Franklin Investment Services is bullish and has just opened a regional office in South Africa.
Stewart Aldcroft, marketing and sales director in Hong Kong, said South Africa, like Turkey and Brazil, offered the prospect of strong economic growth. Coming from an undervalued position, they were small markets which had become attractive to foreign investors.
'When we were looking at South Africa recently one of the things that we discovered was that a lot of the local share prices were quite overvalued because Old Mutual, Liberty Life and a couple other of the big insurance [South Africa-based] companies could not invest their money in any other country,' Mr Aldcroft said.
'They had big amounts of money under their control, so the only place they could put it was into more South African stock.' The market had now corrected a little and South African funds had a limited capacity to invest offshore.
'If you are in the situation where you consider that South Africa, perhaps, is the principal economy of Southern Africa, it is quite likely that economic growth there will be rapid over the next five years or so.
'That makes it appealing,' Mr Aldcroft said.