Thursday's bloodbath on Wall Street flowed through Asian markets today, with indices suffering their worst collective decline since September.

In Hong Kong, the Hang Seng plunged 1,024 points, or 3.25%, to 30,468 points, while in China the Shanghai Composite Index dropped for the third day running, losing 136 points, or 2.31%, to close at 5,777.

In Japan, the Nikkei lost 352 points, or 2.09%, to 15,517, as the Topix fell 35 points, or 2.1%, to 1600. The Korean Kospi also suffered, shedding 44 points, or 2.12%, to 2,019.

"Most investors are afraid of the U.S. markets going down further now, and are also trying to unload their share holdings because the indices are already overvalued at this point," says Castor Pang, a buy-side analyst for Sun Hung Kai Financial in Hong Kong. "Overall investment is very weak at this point."

Chinese financials were some of the worst hit, with China Life Insurance ( LFC) losing 3.18%, to HK$50.20 in Hong Kong, and 3.35%, to 70.60 yuan in Shanghai.

Other Hong Kong stocks that gave up recent gains included the telecoms, as China Mobile ( CHL) slipped 3.37%, to HK$ 152.20, while China Telecom ( CHA) fared similarly, down 3.81%, to HK$6.32, and China Unicom ( CHU) dived 4.87%, to HK$17.58.

PetroChina ( PTR), which bucked Thursday's bearish trend on a higher oil price, gave up gains to close down 1.51%, to HK$19.60. China Petroleum and Chemical ( SNP) gained, by 2.85%, to 28.49 yuan in Shanghai, on yesterday's 10% hike in retail fuel prices by Beijing.

Still, the slide in equity prices comes amid voracious deal making. China National Chemical offered A$2.96 billion, or $2.71 billion, for Australian agricultural chemical giant Nufarm ( NUF), enlisting U.S. buyout funds Blackstone ( BX) and Fox Paine. That would be the largest joint purchase of a foreign-owned firm by a Chinese company and a U.S. private equity house to date.

In Japan, Sony ( SNE) gave up 2.74%, to 5,670 yen, while Canon ( CAJ) dipped 2.68%, to 5,800 yen, and Nintendo ( NTDOY), one of the year's best performing Japanese shares, slipped 2.21%, to 70,500 yen.

Toyota ( TM) fared poorly, down 4%, to 6,480 yen, while banks Mizuho Financial ( MFG) and Mitsubishi UFJ ( MTU) plunged on renewed global subprime jitters. Mizuho lost 5.74%, to 607,000 yen, and Mitsubishi UFJ plummeted for the second day running, by 5.98%, to 1,052 yen.

That's bad news for the iShares Japan Index ( EWJ) ETF, which is invested 15.8% across those 6 companies.

The yen strengthened sharply in Asian trading, to 114.59 vs the dollar, against yesterday's price of 115.79. The week's high price dampens recent speculation by many that the yen carry trade may be back in favor as a source of extra capital to regional markets.

In Korea, the government pension fund, which manages $235 billion in assets, is starting a $22 billion fund to invest in oil and gas assets, it announced this week.

Most Korean shares ended the day down, with steelmaker Posco ( PKX) giving up 2.71%, to 610,000 won on a strengthening won, and Kookmin Bank ( KB) a casualty of the broad sell-off in financials, diving 3.18%, to 70,000 won.

Shares in Hanarotelecom ( HANAY) bucked the trend, rising 1.79%, to 8,510 won, after soaring in early trading by nearly 10%, on talk of Australia's Macquarie Bank buying a 39.4% stake in the company. Macquarie is expected to pay up to 13,000 won per share for 91.4 million shares, or a total investment of $1.3 billion.

Sun Hung Kai's Pang says that investors should hold off buying for the time being, and that the performance of Asian markets on Monday will depend on U.S. nonfarm payroll data due to be released later today. If the data is below expectations, investors can expect another broad sell-off, he says.

Pang is looking for a potential fall to 30,000 points for the Hang Seng on Monday, and short term for a pull-back to 28,000 points.

"At this level I would not recommend buying anything, but if the Hang Seng index falls to 28,000, you can buy anything you want because most of the stocks will have returned to their fair value."

"Don't try to be a bargain hunter right now -- wait for it to fall," he adds.
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.

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