Asian stocks outside of Japan may have rebounded about 5 percent since the start of the month, but don't expect that positive momentum to last, says one strategist.
RBS' head of regional strategy for Asian equities Emil Wolter told CNBC on Friday he expects regional shares to decline by 15 to 20 percent in the next three months as the global economy worsens.
"The key thing… to keep in mind is that the trajectory of economic growth in the world is downwards, there's a better than average chance we're going to have a recession in the world next year, and the market doesn't reflect that risk," Wolter said.
Wolter attributes the bounce in equity markets in recent weeks to positive earning results, but adds that the uptrend will plateau once the reporting cycle is over. Asian economies may be holding up better than their Western counterparts, but the region "still badly needs the rest of the world", and would not be immune from a global downturn.
"We have to acknowledge that our economies are quite open, they are certainly susceptible to global trade flows, and the same thing can be said for our stock market, which have a high cyclical component," Wolter added.
In the event of a recession, the consumption-led Asian markets will be the hardest hit, according to Wolter. Indonesia, which has been a popular hot money destination in the past year, is likely to be most vulnerable to the unwinding of risk trade. Wolter expects the benchmark Jakarta Composite - the only major Asian stock index that has managed gains in the last 12 months - to lead the declines with a near 60 percent drop, followed by India and China.
"The final point to note is that we don't have the same institutional financial market framework that they have in developed markets, that's part of the reason why we're emerging, and this leaves us very vulnerable when foreigners go," Wolter said.