Asia has always been more than an interested bystander. On the one hand, cash piles are robust – central banks in the region hold roughly $4,000bn of reserves – as are balance sheets. Hence the ability to pounce when bargains emerge. But external economic slowdown swiftly feeds through to the export-intensive region. The inevitable flight to safety means more foreign capital leaving emerging Asia, marking down assets and weakening currencies. Even absent a co-ordinated global effort, Asian monetary policy will necessarily switch to easing; receding inflationary pressures have already enabled China to move. Further fiscal expansion looks inevitable.

Drilling down, vulnerable sectors include Australian and Korean banks. Both, unlike their neighbours, lend more than they take in deposits and are reliant on overseas markets for funding – to the tune of one-third of the loan book in the case of Aussie lenders. Frothy property markets, especially in the financial centres of Hong Kong and Singapore, are another case in point, especially as banks slash staff and, with them, home rental allowances. HSBC this week also hiked Hong Kong mortgage rates by 50 basis points, dealing another blow to an already falling market. And there could be further to go: as Citigroup points out, residential prices were 33 per cent lower in 1998, during the Asian financial crisis. Meanwhile China, notwithstanding its rhetoric about learning from the US crisis, is merrily ploughing a similar path – seeking to galvanise the property market by loosening loan to value requirements on new home purchases. Asian pain is just starting.