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Anyone still want to buy the "de-coupling" economic theory? China is still growing but that number is slowing and the rest of Asia has been closely tied with that incredible growth in recent years. Bubbles do not have soft landings. They tend to crash and burn regardless of what Wall Street or their lapdog media friends say.
A big wave of defaults could be forming among small and medium-sized companies in Asia, raising the spectre of a pile of bad loans at the region's banks and a further plunge in investor trust.
Troubling signs are already popping up. Several Hong Kong companies have shuttered factories in China, including home appliance maker BEP International and toy maker Smart Union Group.
They may not be the only ones. Exporters, property, shipping and retail companies could be hit because they racked up debt and expanded aggressively in the boom times, leaving them ill equipped for the bust being seen across Asia, analysts said.
Slowing economies are crimping cash flow and profits in the region, while access to capital has been severely constrained as the global financial crisis sparks widespread risk aversion, choking off lending for smaller companies which are in most need of funds.
"It's inevitable that default rates will rise in Asia as these companies are now struggling to obtain new debt capital or simply to roll-over their repayment obligations," said Scott Bennett, a Singapore-based fixed income fund manager for Aberdeen Asset Management.
"SMEs have less access to capital, both debt and equity, and they don't have large, untapped credit lines or the sizeable cash reserves that larger and more mature corporates have."
