The perfect emerging market doesn’t exist—well actually, maybe it does. 

In last week’s Exchange Traded Fridays podcast, Kevin Carter, founder and chief investment officer of EMQQ Global, said India is shaping up to be “the dream emerging market” thanks to its massive population—the world’s largest—and several other supportive factors. 

And according to Carter, India’s population lead is only going to widen further because most of the country’s inhabitants are so young. Of the country’s 1.4 billion people, 600 million are in Generation Z, he noted. 

But a big population isn’t the only thing going for India. The country is seeing an accelerated digital shift that should power the economy for years to come.  

India has “the fastest growing e-commerce market,” even though it “still only has 50% smartphone penetration,” Carter said, while adding that that number will quickly increase in the coming years.  

In his eyes, India is doing what China has already done: becoming a digital-first economy. 

But this isn’t happening by accident. Carter mentioned India’s growth is the result of a strong foundation now in place. 

It includes a giant population of talented tech workers and the ecosystem that surrounds them; a powerful prime minister that is “getting stuff done in a way India has never seen;” and a cutting-edge digital public infrastructure that’s provided India with robust identity and payments capabilities.  

These series of government initiatives “were put in place a long time ago” and are now “starting to show incredible power,” Carter explained. 

Dream Emerging Market

If India is the emerging market that has investors the most excited, China is the emerging market that has them most frustrated.  

Great hopes have given way to disappointment after China’s economy and stock market faltered in the months that followed the country’s reopening. 

But the disappointment is more a result of investors’ “unrealistic expectations” than anything fundamental to the Chinese economy, according to Carter.  

People must remember that “a little over seven months ago, China was still in a lockdown,” he said.  
 
“The idea that China was going to end the lockdowns and immediately go back to normal was pretty farfetched,” he added. 

Carter said it’s “too early to say” what China’s economic growth will look like going forward, but he’s optimistic it can resume 5% growth, especially given that the Chinese government has “room to stimulate.” 
 
He also noted that some of the headwinds that brought Chinese stocks down have abated.  

“In addition to the big macro changes and the big interest rates changes, China has had a couple years of its own specific fears that have largely been resolved. The so-called China tech crackdown … and delisting risk … have been resolved,” Carter said, while noting. “Xi Jinping himself has said that he’s supportive of the technology platform companies.” 
 
But investors aren’t talking about this, he noted, because “the headlines of the resolutions don’t make as much noise as the headlines of the fear.”