Emerging markets like India and Indonesia are becoming focal points for investors in an increasingly aging world according to insights from Fidelity International and BlackRock Investment Institute. The robust population growth is helping these two nations are positioned to benefit significantly as demographics play a more significant role in investment strategies.

The attention on India and Indonesia is heightened by anticipated increases in infrastructure spending, which is expected to stimulate economic growth in both countries. Recent elections in both nations underscore their aspirations to become major economic players, leveraging their dynamic populations as a primary asset.

While neighbouring countries, including China, grapple with aging populations, India and Indonesia stand out due to their youthful labour forces. This demographic advantage has attracted attention from investors, as demonstrated by the surge in interest in India's stock market following its population milestone surpassing China's.

Fidelity notes that the financial sector stands to gain substantially from the growing credit needs of both corporations and consumers in these burgeoning economies. With projections indicating population growth of at least 10% by 2040, India and Indonesia contrast starkly with China's expected population decline.

The youthfulness of India and Indonesia's working-age populations suggests the potential for higher future earnings growth, according to BlackRock Investment Institute. This demographic dividend, along with other market factors, has contributed to the upward trajectory of both countries' stock markets.

However, realising the full potential of this demographic advantage requires structural reforms to enhance job market flexibility and attract foreign investment. Indonesia's incoming administration aims for ambitious economic growth, while investors monitor India's progress in implementing national-level policy changes at the state level.

For investors considering sovereign debt, metrics such as the age-dependency ratio and fiscal burden are crucial for long-term investment decisions. While developed economies face increasing healthcare and pension costs due to aging populations, emerging markets may experience a more staggered burden, potentially mitigating state funding challenges.

Overall, India and Indonesia present promising opportunities for investors amidst a shifting demographic landscape and on-going structural reforms. (Source: ET)