Asian stocks suffered heavy losses on Thursday amid signs of a contraction in China's economy and following the Federal Reserve's decision to continue reducing its stimulus.
The final China HSBC purchasing manager's index (PMI) fell to a new six-month low of 49.5 in January, from last week's preliminary estimate of 49.6, confirming expectations of a slowdown in the world's second largest economy.
"Within the week, it didn't plunge further from our preliminary reading but it is below 50. The broad story is that China is decelerating. It's not a collapse but we need to see policy measures to support growth after Chinese New Year otherwise we might continue to slide, " said Frederic Neumann, co-head of Asian economics and managing director at HSBC.
Meanwhile, a sell-off on Wall Street overnight also weighed on sentiment. The Dow Jones Industrial Average, S&P 500 and Nasdaq shed over 1 percent each after the Fed opted to stick with its plan to trim its monthly bond purchases, now down to $65 billion, regardless of recent distress in emerging markets.