Fears about the Federal Reserve unwinding its monetary stimulus have sent global markets into a tail spin this week and some analysts argue that the sell-off, rather than looking overdone, is in fact justified amid prospects for a major change in U.S. monetary policy.
"I don't think it's an overreaction," said Joel Stern, chairman and CEO of consulting firm Stern Stewart & Co on CNBC Asia's "Squawk Box," referring to a heavy sell-off in stocks, bonds, commodities and emerging market assets following comments from Fed Chairman Ben Bernanke on Wednesday that the days of easy monetary policy are nearing an end.
"I think it's the beginning of something really quite terrible. I believe we're going to have a major adjustment process," Stern added.
On Friday, major Asian stock markets traded lower, tracking a sharp overnight sell-off on Wall Street. The MSCI Emerging Markets Index meanwhile fell over 1 percent, taking its losses for the past month to around near 9.5 percent.
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While some market watchers say the sell-off is overdone, Stern said the reaction was justified, and investors should be very concerned about the impact of quantitative easing ending.
"Yesterday was a very important day… What prices do in markets is they 'present value' for the future, so today's price reflects what is likely to happen in the future," he said.
The Dow Jones Industrial Average and S&P 500 on Thursday suffered their worst day this year, closing more than 2 percent lower. The pain was not confined to equities, with gold prices also falling sharply and government bond yields spiking higher.
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"I wouldn't say the market completely overreacted but there was partly an overreaction," said Rob Aspin, head of equity strategy at wealth management group for Standard Chartered.
"The key message is that tapering will only occur if an improvement in the U.S. economy merits it, if the economy weakens then the tapering will be diluted. We don't see tapering beginning until the first quarter of next year," he added.