Sellers dominate Asian equity markets Monday 03:25 GMT. Sellers continued to dominate Asian equity markets as analysts debated the cause of last week's rout in emerging market currencies and equities. Indonesia's Jakarta Composite was the worst performer, losing 2.7 per cent on Monday. Hong Kong's Hang Seng fell 2.1 per cent and the Shanghai Composite dropped 1 per cent. In South Korea, the Kospi Composite was down 1.4 per cent. "The growing turmoil in emerging markets is inflicting damage on risk assets across the board and no let-up is expected in the near term," analysts at Crédit Agricole wrote to clients. Analysts have debated whether the trigger for the sell-off was slowing Chinese economic growth, Argentina letting go of its currency support, or political tensions elsewhere in Thailand and Ukraine. Either way, "the picture looks increasingly volatile," Crédit Agricole said. Another reason is that investors seem to be losing faith in central banks" "forward guidance." That makes this Wednesday's statement from the Federal Reserve key. The expectation is that the Fed will scale back its monthly bond-buying programme by another $10bn to $65bn per month, but a pause in the tapering could tell markets the central bank is closely watching the impact of its exit strategy, said Nomura analyst Naka Matsuzawa. The Fed has demonstrated a rather unfriendly stance to the market - showing little concern over dwindling confidence in forward guidance and disappointment with the December jobs data, but rather expressing its intention to continue with QE3 tapering. This explains why the current risk aversion has gone further than expected. In Japan, the Nikkei 225 opened 3 per cent lower before paring losses to 2.5 per cent. While Japan is not, of course, an emerging market, the flight to safety lifted the yen to a seven-week high against the dollar, hurting shares in Tokyo exporters. Losses also were partly due to the country recording its 18th straight monthly trade deficit. The gap between exports and imports was Y1.302tn, the third-biggest monthly gap on record, government data showed. The Nikkei, last year's star performer with a 57 per cent gain, is the worst performing index in the region so far in 2014. It has lost 7.9 per cent, versus a 5.8 per cent fall in the Hang Seng and a 5.1 per cent fall for the Kospi. Analysts at Capital Economics said Japan's trade deficit is likely to widen further this quarter as consumer demand soars ahead of a consumption tax hike, from 5 to 8 per cent, in April. "Beyond that, a tug-of-war between two factors will likely result in the deficit remaining deeply in the red," they noted. On the one hand, we expect the yen to weaken further, which should keep the cost of imports elevated. On the other hand, export volumes are likely to pick up as global growth is accelerating. Yields on Japanese government bonds fell for a fourth straight session with the benchmark 10-year yield dropping to 0.615 per cent - a two-month low - from 0.69 per cent on Jan 21. The drop mimicked the fall in the 10-year US Treasury yield, which hit 2.71 per cent on Friday, the lowest since late November. There's one place where investors still seek risk, though: China's market for initial public offerings. With the end of a 15-month ban on new listings in China the first offerings are causing a frenzy. On Monday morning trading in eight small listings that debuted in Shenzhen last week was again halted after big gains for the shares hit regulatory limits.