Mowat said it did not matter whether global markets were separated by geography or asset class, because “we trade together in corrections.” Deborah Schuller, a regional credit officer for Moody’s Investor Service in Asia, said, “If the US consumer quits buying things, it is going to hurt” Asian economies.

Most rated corporations in Asia will be able to withstand nine months of US recession, but if hard times in America stretched to 12 months or more, there could be serious problems, she said. Worries about the Chinese economy are also giving investors in Asia heartburn.

The country’s private property market is in the midst of a shakeout, and scores of small developers have gone out of business. Meanwhile, fears of inflation have been looming for months. Shanghai’s composite index closed down 5.1 per cent at 4,914.44. The Hang Seng’s 5.5 per cent fall was the biggest fall since September 11, 2001. The Hong Kong index fell more than 5 per cent last Wednesday.

The decline in Japanese stocks took the market to the lowest levels in more than two years on concerns that a US recession could be accompanied by a local one. The Nikkei is now down more than 13 per cent in January.

The Japanese finance ministry said on Monday that growth was slowing in five of Japan’s economic regions, which have been hit by stagnant housing investment and the poor employment.

The Bombay Stock Exchange’s Sensex index plummeted 7.4 per cent and suffered its biggest-ever point loss of 1,408 to close at 17,605.35. Hardest hit were some of the most valued Indian companies, including Reliance Communications, Tata Steel and Reliance Industries.

... contd.