About four months ago, China’s sovereign wealth fund, China Investment Corp., announced that it would up the amount of money it pours into foreign investments by 30%. Now, CIC has about $90 billion to spend on assets abroad.

CIC has some complex dealings with internal state-owned banks, like the Agricultural Bank of China and China’s Development Bank. Not surprising, since on of CIC’s major funtions, indeed, the reason it was formed at all was to provide financial stability for China’s state-owned banks.

Near the end of last week, China’s Development Bank signed a $100 million loan contract with Banco de Chile (BCH:NYSE).

BCH is Chile’s second largest bank, and has also signed an agreement to open joint credit lines with CDB. According to the press release, CBD wants to invest in Chile’s “ports, bioceanic corridors and junior mining companies.

Chile is a major producer of copper, which is of great import to China. In fact, China’s capital investment in infrastructure like roads, factories, and property climbed 27.3% in the first half of 2008. That’s more than was expected, and this continued growth is sure to keep demand high for industrial metals like copper.

This should come as no surprise to any of you who have been keeping up with the sovereign wealth fund story. Barely a month ago, Kuwait announced it would boost investments in stocks, bonds and real estate in China, India and Japan.

But I did find one interesting story…

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Hey, Irwin…

Looks like the world is becoming more focused on frontier markets in Africa and the Middle East. Several new ETFs have popped up, making access to these markets so much easier for US investors.

They are Vectors Gulf States ETF (MES:NYSE), the Market Vectors Africa ETF (AFK:NYSE), the PowerShares MENA Frontier Countries ETF (PMNA:Nasdaq) and Claymore’s Frontier Markets ETF (FRN:NYSE). (Note: The FRN includes investments in a number of other frontier markets, including Latin American and Eastern European countries.)

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This week saw a reversal from last Friday when we trounced the big boys.

Our Taipan Emerging Market Index dropped 14.28% today — a case of severe inflation backlash. Rising energy and food prices sent investors fleeing for safety into other sectors. As we’ve maintained all along, emerging markets are not for crybabies. If you want to make dough in emerging markets you need to be in for the long haul.

Key
ALL ORDINARIES IDX (ASX: ^AORD) Australia
BSE SENSEX (Bombay: ^BSESN) India
IBOVESPA SAO PAULO (^BVSP) Brazil
EGYPT CMA GENL INDX (Cairo: ^CCSI) Egypt
HANG SENG INDEX (HKSE: ^HSI) Hong Kong
COMPOSITE INDEX (Jakarta: ^JKSE) Jakarta
COMPOSITE INDEX (Kuala Lumpur: ^KLSE) Kuala Lumpar
KOSPI Composite Index (KSE: ^KS11) South Korea
MERVAL BUENOS AIRES (Buenos Aires: ^MERV) Argentina
IPC (Mexico: ^MXX) Mexico
NZX 50 INDEX GROSS (NZSE: ^NZ50) New Zealand
IGBM (Madrid: ^SMSI) Spain
TEL-AV TASE-100 IND (^TA100) Israel
TSEC weighted index (Taiwan: ^TWII) Taiwan
SSE Composite Index (Shanghai: 000001.SS) Shanghai
iShares MSCI South Africa Index (EZA) South Africa
RTSI INDEX (RUS: RTS.RS) Russia
ISHARES MSCI THAILAN (NYSEArca: THD) Thailand
iShares MSCI Turkey Invest Mkt Index (TUR) Turkey

Just consider that last week, the Taipan Emerging Market Index saw a gain of 7.58%, leaving the S&P 500 and the Dow in the dust.

Emerging markets are volatile. In this instance, they are susceptible to inflation because they need the capital to maintain growth. Much of that money comes from commodity exports, which traditionally trade in dollars. So naturally a declining dollar can spark a sell-off.

More often than not the bullish sentiment of the commodity market can fend off the impact of a weak dollar. Other times, though, investors panic and get out of emerging markets and move to pastures that are perceived as greener (read safer).

At this point we’re not too worried. The current drop in our index seems like just another cyclical trough. Let’s see how investors feel after Wall Street returns from a long weekend. As of this writing, the S&P 500 is down 1.21%, with the Dow also down 1.09%.

Keep the faith.

–Irwin Greenstein

Whenever Big Media sounds off about the Man Cave, my testosterone begins to boil.

It’s funny, they say, how some regular guy has carved out a bit of space in his basement to play Guitar Hero III, watch baseball all weekend and plaster his walls with photos of NASCAR great, Dale Earnhardt. Here, the Man Cave dweller can smoke cigars with his buds, pig-out on pizza and swill cold beer.

Yes, it’s another feel-good goof from Big Media about the American working stiff making it through his humdrum, so-called life.

But what are the real implications of this Man Cave scourge? Or, with a riff on Freud, “What do men really want?”

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