Asian equities kicked off the week with sharp losses as emerging markets remained under pressure on fears over a tightening in U.S. monetary policy and credit conditions in China.
Investors took their cues from Friday's rout in global markets when emerging-market currencies from Turkey to Argentina took a beating ahead of Tuesday's Fed meeting. All three major U.S. indices closed down 2 percent on Friday and the pan-European FTSEurofirst 300 Index also closed 2 percent lower.
(Read more: Are emerging markets on brink of another crisis?)
"The EM currency selloff is causing a contagion effect where Asian markets are opening lower. The question is whether the selloff in the EM countries, Turkey, Ukraine and Argentina will have a sweeping effect on the others such as EM Asian countries. There are groups within the EM space that have current account surpluses and demand for their goods which will weather this storm better," wrote Kelly Teoh, market strategist at IG in a note.
Meanwhile, a Forbes report that the People's Bank of China has halted bank cash transfers ahead of the upcoming Lunar New Years holiday sparked fears of a nation-wide liquidity crunch.