Asian shares 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 December 2, 2013.
The Nikkei fell 1.65% and the Shanghai Composite dropped 1% as well.
In her first meeting as Fed chair, Janet Yellen said the central bank would increase rates about six months after finishing its bond-buying program.
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.
The falls in Asian markets followed a broad sell off in US markets.
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.
Japan recently reported its smallest trade gap in nine months, after January saw a record surge in imports ahead of the tax changes.
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