Monday saw Asian markets continue the heavy declines that began at the end of last week, with trading in all exchanges sharply lower, and Hong Kong bearing out the worst of the losses.The Hang Seng tumbled 1,091 points, or 3.7%, to 28,373.63 points, while in China the Shanghai Composite Index fell 150 points, or 2.59%, to 5,667.33 points. Investors were notably relaxed about the big declines, however, with some saying the situation could have been worse in Hong Kong, where the Hang Seng was expected to lose up to 1,500 points. "This is a short-term consolidation, and it's healthy because there is still a lot of liquidity in the market here," says Carmen Au-Yeung, a fund manager at $11-billion Comgest Far East in Hong Kong. Markets were reacting to three forces, say dealers: a deep sell-off in U.S. equities on Friday, a recent run in valuations in the region, and an unwinding yen carry trade, forcing hedge funds using cheap Japanese debt to unwind many of their long positions as the yen spiked today. The yen was trading up 0.43% vs. the dollar, to 113.71 by market close, from 114.20, at one point touching a 6-week high of 113.26. "Hedge funds have been trading actively in China shares, borrowing from the yen to buy the equities," says Winner Lee, an associate director of BNP Paribas in Hong Kong. "Now, since the Hang Seng hit 29,000, they have been buying puts to do some shorting activity and to buy protection on their long positions."