Markets in Asia fell Monday, following Friday's bearish performance in U.S. equities, a powerful aftershock to China's killer earthquake, and as Chinese telecom restructuring plans wiped $25 billion off the value of China Mobile (CHL) - Get Report.

In Hong Kong, the Hang Seng dove 587 points, or 2.4%, to 24,127.13, while in China the Shanghai Composite Index tumbled 109 points, or 3.1%, to 3364.54. The Japanese Nikkei gave up 322 points, or 2.3%, to 13,690.19, the index's lowest level in a month.

Trading volume in Hong Kong was ultra-thin, at HK$43.29 billion, or $5.6 billion.

"The whole growth story is a little bit different now: People are now assessing the risk of investing in China," says Alex Wong, a director of Ample Financial Group in Hong Kong. "If you look at the market, there are too many policies affecting overall investment in Chinese shares. The market could revalue down 10% here in the next two months."

Wong adds that as liquidity remains low in Chinese "red chips", investors will shy away from placing big bets on these companies, since the thin liquidity makes selling shares to take profits difficult.

While the aftershock, which registered a magnitude of 6.4 on the Richter scale, shook domestic confidence in Shanghai and Hong Kong listings, speculation that China Mobile may lose its dominant position in a long-awaited industry reshuffling dominated the news flow.

Shares in China Mobile plunged 8.2%, to HK$114.90 in Hong Kong, spurred by heavy selling from local investors with big leveraged positions, said traders. Goldman Sachs downgraded its rating on China Mobile to sell from neutral.

On Friday, Chinese officials announced that China Mobile,

China Telecom

(CHA) - Get Report

,

China Unicom

(CHU) - Get Report

and

China Netcom

(CN) - Get Report

would be merged and reshuffled to form three equally matched, competing providers. Right now, China Mobile dominates two-thirds of the fledgling wireless market.

Broadly, the plans call for parts of China Netcom and China Unicom to be merged into one company, while China Telecom, China's largest fixed-line carrier, will acquire Unicom's mobile network and assets of China Satellite Communications. Shares in Telecom, Unicom and Netcom are suspended from trading and are likely to remain so for some time, according to traders.

Among financials,

HSBC Holdings

(HBC)

lost 0.7%, to HK$130.90, and

Bank of China

(BACHF)

eased 2%, to HK$ 3.85, as investors unloaded shares on concerns about lasting negative impacts of the May 12 earthquake on Chinese consumption. Sunday's aftershock of the earthquake has so far claimed 6 lives, and injured up to 1,000, according to local reports. Analysts in China insist that the effect on the domestic economy will be short-lived, however.

As reports of the May 12 earthquake's damage have become progressively more grave over the last week, a wide range of Chinese shares have been impacted, including unrelated plays such as

Baidu.com

(BIDU) - Get Report

. At the close of trading in New York Friday, Baidu had lost more than 10% of its value, or nearly $1 billion in market cap, at $328.71 a share.

"This earthquake could push up inflation in the short term, especially food prices, as well as capital goods prices due to the reconstruction efforts, but the whole impact will be minimal in the long term," says Cheng Wei Qing, chief strategist at CITIC Securities in Beijing. Analysts forecast inflation of around 6.6%, and GDP growth of around 10% for 2008, taking into account the effects of the earthquake.

China Life Insurance

(LFC) - Get Report

dove 3.8%, to HK$30.35, and

Ping An

(PIAIF)

slipped 4.1%, to HK$62.45, as investors mulled more payouts on the newly released figure of 62,664 dead in the earthquake. China Life announced Monday it is investing 1.2 billion yuan ($173 million) in its nonlife, property and casualty insurance subsidiary China Life P&C Company.

Among commodities, gold rose 0.1%, to $926.70 an ounce, while oil rose to $132.99 by the European afternoon, from $131.90 earlier in Asia. Gold miners in Hong Kong surged, with

Sino Gold

( SIOGF) leading the pack, ahead 8%, at HK$41.30.

In Japan, exporters dragged the main indices lower, as the yen remained firm against the dollar. One dollar was buying 103.43 yen at the end of the trading session, vs. 103.31 yen in the Japanese morning.

"We may have a little more downside for the dollar, it very much depends on stock market performers,"says Yoji Takeda, who manages $1.1 billion for RBC Investment Management in Hong Kong. "These days the

Japanese currency follows the dollar-denominated stock market performers."

Canon

(CAJ) - Get Report

fell 3.1%, to 5270 yen, and

Honda

(HMC) - Get Report

gapped down 3.3%, to 3230 yen.

Nintendo

(NTDOY)

bucked the trend, however, rising 0.2%, to 58,900 yen, as the release of its new game console-based exercise "balancing board" cheered investors. The product, called Wii Fit, allows players to use Nintendo's Wii console to engage in more than 40 activities ranging from yoga to snowboarding.

In the rest of Asia, markets fared less badly than in China and Japan. In South Korea, the Kospi lost 1.5%, to 1800.58, while in Taiwan the Taiex fell 1.4%, to 8707.83. In India, the Bombay Sensitive Index gave up 1.8%, to 16,348.50.

Be sure to check out the Far East Portfolio at Stockpickr.com to find out which Indian and Chinese companies are making big moves and announcing major news.

Daniel M. Harrison is a business journalist specialising in European and emerging markets, in particular Asia. He has an MBA from BI, Norway and a blog at

www.theglobalperspective.biz

. He lives in New York.