Asian stocks posted their worst month of falls since the height of the global financial crisis in 2008.
Until a few weeks ago, Asia had been largely ambivalent about the risks posed by the eurozone crisis. But recent conversations with bankers reveal a rising sense of unease as they ponder the impact of a Greek exit from the euro and assess fears the crisis might yet consume larger European economies such as Spain and Italy.
Volatility in the Asian equity markets, fuelled primarily by concerns about the eurozone, has led to a number of high-profile initial public offerings (IPOs) being shelved or cancelled.
Graff Diamonds $1 billion is the latest in a series of withdrawn or postponed IPOs in Asia and it the largest to be pulled, alongside Indias Vodafone Essar.
China Yongda Automobile, China Nonferrous Metal Mining and Singapores Ascendas Hospitality Trust have all announced the withdrawal or postponement of their offerings this week.
Several bankers voiced concerns about the impact of the eurozone. I think we are all waiting to see just how bad the situation in Greece becomes and if Spain, in particular, gets worse well really start to take notice," says one. "If Europe falls into a prolonged depression, there is no way that Asia can avoid severe pain.
Alexis Adamczyk, co-head of equity capital markets for Asia Pacific at HSBC, says: The focus here in Asia is very much on the eurozone crisis. China is a relatively easy fix it is just a question of managing the economy properly. But Greece and Spain are very complicated. I think we are all just hoping for more clarity after the Greek election on June 17.
Dixit Joshi, head of Asian equities at Deutsche Bank, adds: Issues surrounding Europe continue to lead to risk aversion. If Europe does go into deep recession, there is no way Asia can avoid being affected.
Deutsche Bank says in a research note that renewed uncertainty over the fate of the euro poses considerable risks for Asia, pointing out that the region contains some of the worlds most export-sensitive economies.
Deutsche pointed out that the 2008/09 recession saw GDP growth in emerging Asia decline as much as it did during the Asian financial crisis, an indication of whats at stake for Asia in the Greek election.
It is not only concerns over the eurozone that are making markets so volatile. The economies of China and India appear to be slowing, exacerbating the outlook for investors.
Speculation over the composition of a Chinese stimulus package has been rife in recent days, further unsettling some bears, who fear a misallocation of credit, and providing cheer for bulls, who market Chinas ample firepower to forestall any slowdown.