Some analysts predict that Asia won't suffer dramatically from a possible U.S. recession because increased trade and investment within Asia has made the region less reliant on the United States than in the past. Excluding Japan, 43% of Asia's exports go to other nations in the region, Lehman Bros. calculates, up from 37% in 1995.
But on Monday, uncertainty and pessimism reigned.
In Tokyo trading, exporters got hit hard, partly because of the yen's recent strength against the dollar. Toyota Motor tm lost 3.3% and Honda Motor hmc sank 3.4%.
In Hong Kong, Bank of China bachf dropped 6.4% and China Construction Bank cichf slid 7.8%.
India's benchmark Sensex index fell 1,353 points, or 7.4% — its second-biggest percentage drop ever — to 17,605.35. At one point, it was down nearly 11%.
The decline hit companies across the board, with power utility Reliance Energy relff falling 16.4%. Major software company Tata Consultancy Services slid 7.6%.
"A gloomy U.S. climate has affected the global markets. Even if those markets recover, it will take sometime for the recovery to reach India because today's fall has been so drastic," said Jayant Pai, of the Mumbai investment company IL&FS.
Pai and others suggested that the declines could lead to a buying opportunity.
"The sell-off today takes us close to the bottom," she said.
But leading investment bank Morgan Stanley said Monday that was not the case now, at least as far as Europe was concerned.
"We are not compelled to buy yet despite bearish sentiment," its European equity strategy team said in a note. "We continue to prefer cash over equities."
Recent polls show institutional investors with large cash holdings, a sign of deep concern about the future direction of assets.