Asian markets tumbled Wednesday on growing concerns about emerging market economies, adding to the uncertainty stoked by Donald Trump's trade rows with China and Canada.
After Turkey and Argentina's recent headline-making problems, South Africa became the latest country to spark panic Tuesday with data showing a shock plunge into recession for the one-time economic starlet.
The news sent the rand plunging in a similar way to the Argentine peso and Turkish lira in recent weeks. Observers increasingly fear the problems could spread to other emerging market (EM) countries and possibly spill over into major economies.
"South Africa is back in recession and that was not expected," said Greg McKenna, chief market strategist at AxiTrader.
"The big question is whether this is a... tipping point for EM markets and if the idiosyncratic issues are now adding up to something more structurally pernicious for EM markets. My guess? Yes, it is."
The brewing crisis has seen currencies in a number of emerging markets -- mostly with deep current account deficits -- take a hammering.
India's rupee was sitting at a record low and the Indonesian rupiah at levels last seen during the 1998 Asian financial crisis.
Indonesia said it would take unspecified action against currency speculators and announced plans to delay import-heavy energy projects in order to focus efforts on reducing imports and supporting the rupiah.
Adding to selling pressure on the EM currencies is the US economy's continuing strength, which is forcing the Federal Reserve to raise interest rates. This leads investors to seek better and safer returns in the US.
- Trade in focus -
Data showing an index of manufacturing activity hitting a 14-year high bolstered expectations the Fed will continue to increase borrowing costs. Crucial US jobs data is due out on Friday.
The EM fright is also hitting equities, with investors already on edge as a deadline approaches this week for a public consultation on Trump's proposal to impose tariffs on $200 billion of Chinese imports, on top of the $50 billion already being hit.
While the two sides have held low-level talks there are fears the measures will be implemented, which would spark a retaliation from Beijing and push the world's top two economies closer to an all-out trade war.
Tokyo ended 0.5 percent lower, with the closure of Kansai airport, a key cargo hub particularly for electronic parts, following a strong typhoon acting as a drag on several stocks.
Chip-making devices firm Tokyo Electron lost 1.6 percent, while cosmetics giant Fancl collapsed almost 10 percent on fears the effects of the typhoon could scare off tourists, who are major buyers of Japanese make-up.
Hong Kong shed 2.3 percent in the afternoon and Shanghai fell 1.7 percent, while Singapore gave up 1.2 percent and Seoul dipped more than one percent.
Sydney fell one percent despite news that the Australian economy expanded far more than expected in the second quarter thanks to a pick-up in exports and consumer spending. The local dollar was marginally higher.
Jakarta led a sell-off in EM equities, diving four percent, while Manila was more than two percent lower and Bangkok lost 0.8 percent.
"There seems to be no sign of halting the downtrend" for emerging-market assets, Koji Fukaya, chief executive officer at FPG Securities in Tokyo, told Bloomberg News.
"Investors have become more selective and countries with negative news such as weak economic growth, weak external balances and high inflation face stronger sell-offs."
Eyes are also on the resumption of talks Wednesday between the US and Canada aimed at reviewing NAFTA.
Optimism sparked by Mexico's deal last week with Washington was soon tempered by the failure to close a deal between the US and Canada, with Trump threatening to leave Ottawa out of the pact altogether.
Canadian Prime Minister Justin Trudeau stressed that no deal is better than a bad deal for his country.
London's FTSE fell 0.3 percent at the open, while Paris and Frankfurt each shed 0.4 percent.
Key figures around 0720 GMT
Tokyo - Nikkei 225: DOWN 0.5 percent at 22,580.83 (close)
Hong Kong - Hang Seng: DOWN 2.3 percent at 27,331.66
Shanghai - Composite: DOWN 1.7 percent at 2,704.34 (close)
London - FTSE 100: DOWN 0.3 percent at 7,434.69
Euro/dollar: DOWN at $1.1573 from $1.1600 at 2100 GMT
Pound/dollar: DOWN at $1.2838 from $1.2900
Dollar/yen: UP at 111.46 yen from 111.45 yen
Oil - West Texas Intermediate: DOWN 85 cents at $69.02 per barrel
Oil - Brent Crude: DOWN 70 cents at $77.47 per barrel
New York - Dow: DOWN 0.1 percent at 25,952.48 (close)