UK fund managers have become bearish on Hong Kong and Singapore for the first time since the crisis began, according to Gallup and Merrill Lynch.
Bijal Shah, global strategist at Merrill Lynch, attributed the "sell" stance in countries in both Singapore and Hong Kong to two factors.
First, companies in Singapore and Hong Kong are exposed to smaller countries, such as South Korea, with serious economic problems. Second, both Singapore and Hong Kong have taken an aggressive interest rate stance in an attempt to defend their currencies.
"It seems as if the contagion is spreading outwards," commented Mr Shah.
According to the survey, bearish UK fund managers outnumbered bullish ones by 11 per cent in Hong Kong and 18 per cent in Singapore.
There was also evidence that financial turmoil in the Far East had tempered the London housing market boom, according to Savills, the up-market estate agent.
The value of central London properties rose by more than a fifth last year, as buyers rushed to snap up new homes, bringing back memories of the 1980s housing boom. But Savills believes central London prices will rise by just 4 per cent this year.
But, in the longer term, Savills predicts the commercial property market will shrug off the conspicuous lack of Far Eastern buyers and should continue to grow strongly in 1998.
Aubrey Adams, managing director of Savills, said yesterday: "London surged ahead much faster than expected this year and the Far East will slow growth but the market should still continue to grow. For commercial property the Far East is not a factor, with the bulk of activity coming from UK funds. There should be strong growth in the commercial sector for the next 18 months at least."
Savills profits rose by more than a third to pounds 4.1m for the six months to October, however, its shares slipped 4p to 124p.