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Asia is still at risk from quantitative easing: Nomura

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Asia's economies face sluggish growth and high macro risks, weakened by the influx of easy money and China's slowing growth, according to Nomura.

"Asia overall has become addicted to easy money, and this has weakened economic fundamentals," said Rob Subbaraman, chief economist for Asia ex-Japan at Nomura, in a note. "As a consequence – and quite pervasively across the region – there has been a rapid build-up of private domestic credit, frothy property markets, slowing productivity growth and a sizable shrinkage in current account surpluses (turning to deficits in India, Indonesia and Hong Kong).

In addition, the quantitative-easing fueled capital inflows have reduced the market discipline to pursue structural reforms, he added.

(Read more: Why tapering doesn't mean QE is going away)

Nomura also expects China's recent pickup in economic growth will soon fade, with a resumption of tighter policies and easing potential output set to push economic growth below 7 percent in 2014.

"The recent economic recovery has once again all the hallmarks of low-quality growth: it is driven by shadow financing, heavy industry and investment in property and infrastructure sectors," the report said.

Nomura economists also believe the likely accumulation of massive debts by China's local government financing vehicles since 2009 poses major risks to the economy.

The flow of easy money to Asia ex-Japan may not be turned off any time soon.

"With the Bank of Japan engaging in unprecedented easing, lending by Japanese financial institutions, especially into neighboring markets, will continue to soar, helping to offset potential tapering and tightening elsewhere," HSBC said in a note.

(Read more: Central banks don't need to rush ultra-easy money exit: IMF's Lagarde)

Japanese banks could continue to increase their exposure to Southeast Asia, HSBC said. It noted lending to Southeast Asia as a share of Japanese banks' total assets, domestic and foreign, is around 1.6 percent, below its peak of 2.3 percent in 1994.

If Japanese banks raise their exposure to Southeast Asia back to 1994 levels, it would result in about $66 billion in additional lending, or roughly 4% of the region's current gross domestic product, HSBC said, adding this assumption may be conservative.

But not everyone expects the flow of funds into the region will be a negative.

(Read more: For Japan, China is losing its competitive edge)

"The investment drive that has gripped the region over the last couple of years should persist in 2014, although the pace of capital accumulation has likely peaked," said Fred Gibson, an associate economist at Moody's, in a note.

He has a positive outlook for Southeast Asia's economies, expecting the steady improvement in global growth will boost the region toward its long-run trends by the end of 2014.

"Southeast Asia's economies tend to be export‐driven, so the recent stabilization in Europe, upbeat data from Japan, and a policy‐induced soft landing in China are all positive for the region," he said.

—CNBC.Com's Leslie Shaffer; Follow her on Twitter @LeslieShaffer1

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