A new development at the World Trade Organization reveals that emerging markets have won a major food fight — giving investors a shot at cashing in.

An article from today’s Wall Street Journal reported that the U.S. was crying about how India and China undermined crucial tariff talks about agriculture. The U.S. said that a sudden reversal by the two Asian giants threatened to shut out the U.S. from those booming emerging markets.

We have a different take on it — one that could serve as an indicator of an emerging-market bounce-back.

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Can we get a rousing Hallelujah?

Our Taipan Emerging Market Index jumped 9.3% this week as financial institutions come crashing down around us. Our 9.3% gain follows last week’s 5% rise. All I can say is that the numbers have spoken.

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

I won’t regurgitate the bad news on Wall Street, since I don’t want to rub it in. All I can say is that while most investors are crying in their beer, readers of the Taipan Emerging Market Blog are raising a glass of Champaign. (Oops, did I just rub it in?)

Once again the best news comes out of Asia. Our biggest winner this week is India’s Sensex Index (Bombay: ^BSESN) at +3.99%. It barely beat out our long-term gainer, the Shanghai SSE Composite Index (Shanghai: 000001.SS), which rose 3.49%.

The Times of India credits the boost to expectations on inflation.

Data released after market closed on Thursday showed annual inflation at 11.91% in early July, slightly higher than the previous week’s 11.89%, but below market expectations for more than 12%, according to the Times of India.

It also reported that lower crude prices helped interest-sensitive sectors like banks and real estate.

If this trend can continue in India, it’s likely to spread to other emerging markets. Inflation has been hurting just about all of these markets — undermining otherwise thriving economies. Although it’s too soon to tell if this is a long-term trend, I’d suggest you put your broker on speed dial.

Have a great weekend.

–Irwin Greenstein

Ask yourself this…

If the U.S. housing market is at rock bottom, how can heavy-equipment maker Caterpillar, Inc. grow its sales by 13%?

The answer is simple: emerging markets.

In April, Caterpillar (NYSE:CAT) announced surprisingly strong results and a 13% surge in Q1 profits. Caterpillar’s work-around to the U.S. housing crunch is an aggressive push into emerging markets.

Countries such as China, India and Russia contributed to the company’s 30% leap in international sales. By contrast, North American sales rose a paltry 4%. Sales and revenues outside North America represented 58% of total sales and revenues in Q1 — up from 53% of the total a year ago.

Naturally, Caterpillar is increasing its commitment to emerging markets. In addition to China and India, the company is focused on the Commonwealth of Independent States — or the former Soviet Bloc.

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Companies around the world have come to milk Indonesia for all its worth

More than 17,500 islands dot the country of Indonesia. Riddled with volcanoes and forests, surrounded by 50,000 miles of coastline, this nation is rich in natural resources.

Nutmeg and cloves, coffee and tea, rice and rubber… Agriculture is a major force in Indonesia’s economy, employing more than 42 million people. But the world at large isn’t just salivating over Indonesia’s crops.

Crude oil, natural gas, tin, copper and gold reserves have drawn international attention to this country, and Indonesia has welcomed it with open arms.

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