Wednesday saw sharp selloffs in Japan, Singapore, and Down Under, while the rest of Asia continued its New Year celebrations.
In Japan, the Nikkei 225 lost 372.05 points, or 2.3%, to 15,713.39, as banking and commodities stocks continued to get hammered.
The index, which has closed in the red for six of the past seven sessions, is down 24.7% from its 52-week high set last June.
The Japanese yen, which is seen as a safe-haven investment during times of market volatility, continued to strengthen, with the dollar fetching just 114.63 yen Wednesday, as the dollar-yen pair tapped its lowest levels since November 2014. In its session low, the pair traded at 114.23.
Major exporters Toyota, Nissan, Honda and Sony finished down as much as 2%
Shares of Sharp were down 6.1% in morning trade. The troubled electronics maker has been at the center of competing takeover offers from Taiwan-based Hon Hai Precision Industry, better known as Foxconn, and Japanese state-backed Innovation Network Corp. of Japan (INCJ).
According to reports, the state-backed fund is arguing that its proposed package of cash, asset sales and support from lenders could be worth one trillion yen ($8.5 billion U.S.) to Sharp, compared with Foxconn's offer of 660 billion yen, but INCJ said it wasn't increasing its offer.
Japan's major trading houses were sharply lower, with Mitsubishi Corp shedding 4.4% Itochu Corp down 4.6% and Sumitomo Corp down 4.4%. They have been facing billions of dollars in impairment due to a double whammy of emerging market downturn and a global commodities rout.
Banking stocks in Australia were swept up in the banking sell-off in Europe and the U.S., with three of Australia's so-called Big Four banks finishing in the red. NAB, ANZ and Westpac closed down as much as 1.9%
But Commonwealth Bank of Australia tacked on 1.8%; before the market open, the company reported a 4% gain in fiscal first-half cash profit, in line with expectations. Cash profit for six months ended December 31 rose to A$4.80 billion ($3.39 billion U.S.) compared with A$4.62 billion a year earlier.
However, major energy plays across Asia were mostly lower, with Santos down 2.6%, Woodside Petroleum dropping 0.9% and Inpex shedding 2.8% Tokyo-based Cosmo Energy gave up early gains to finish 1.6% lower.
Singapore's DBS Bank said in a morning note that while China's markets remain closed, risk aversion is still heightened due to selloffs in other parts of the world.
Hong Kong and South Korea will resume trading on Thursday. Mainland Chinese markets and Taiwan will be closed for the week.
In other markets;
Markets in Taiwan, Hong Kong, Shanghai, and Seoul were shuttered for holiday
In Singapore, the Straits Times Index returned from holiday to dump 41.11 points, or 1.6%, to 2,582.16
The NZX 50 in New Zealand removed 51.83 points, or 0.9%, to 6,019.49.
In Australia, the ASX 200 fell 56.4 points, or 1.2%, to 4,775.68
