Asian markets fell after the US Federal Reserve hinted that it might raise interest rates as soon as 2015.
Hong Kong’s Hang Seng index officially hit “bear” territory, falling by 1% for a cumulative 20% decline since 2 December 2013.
The Nikkei fell 1.65% and the Shanghai Composite dropped 1% as well.
In her first meeting as chair, Janet Yellen said the central bank would increase rates about six months after finishing its bond-buying programme.
Most analysts expect that will occur towards the end of 2014.
The early rate rise indicator surprised many investors, who had expected rates to remain low for a longer period of time.
That led to renewed fears that the end of easy money could negatively impact emerging economies that relied on foreign investors.
Peter Redward, of Redward Associates, says increasing US interest rates will have the same impact in Asia that they have had on other emerging economies.
“We’re going to see the type of reaction we’ve seen in other emerging markets which means interest rates are probably going to climb as well,” he told the BBC, adding that the Philippines might be the first Asian nation to raise rates.
Furthermore, he added that while increasing economic growth in the US might be good domestically, it might not have as strong an impact overseas.
“The issue for Asia is that the US isn’t the locomotive for this region that it once was,” he said.
“The rise of China and the relative decline of the US means that it just isn’t going to pull the region forward like it has in the past.”
The decline in the benchmark Nikkei comes despite Bank of Japan (BOJ) governor Haruhiko Kuroda’s comments on Wednesday that the country was on track to meet the bank’s 2% inflation target.
The BOJ has been engaged in a massive stimulation effort to combat deflation and encourage spending.
Mr Kuroda said he was confident Japan’s economy would continue to grow despite a planned tax increase, which is set to take effect on 1 April.
The country recently reported its smallest trade gap in nine months, after January saw a record surge in imports ahead of the tax changes.