In general, the advice from fund managers is that those already invested in the region should stay put for the moment. They still see the long term as positive for the region, and there are good selective buying opportunities at the moment.
The Far East has three financial blocs: Hong Kong and China; the developing south-east Asian markets or "tiger" economies, including Thailand, Malaysia, Indonesia and the Philippines; and Japan.
Until its recent crash, Hong Kong was seen as the most stable market. But as the economic position deteriorated elsewhere in Asia, investors started taking profits in Hong Kong. The market went into freefall as overseas investors worried that the Hong Kong dollar would not be able to stay pegged to the US dollar. Panic selling resulted.
The market is now off its worst levels, but experts hold mixed views on its prospects. John Hatherly, head of research at M&G, believes investors should stay away until the currency issue is resolved. "Why take the risk when you can invest elsewhere?"
Others are more positive. Fidelity believes Hong Kong is still the best place to invest in Asia. So does Graham Bates, chairman of Leeds-based independent financial advisers Bates & Partners. "Hong Kong is now part of China, forecast to be the largest economy in the world in 30 years. The recent falls present some buying opportunities in Hong Kong, providing you have a medium- to long-term horizon." Mr Bates recommends the HSBC Hong Kong Growth unit trust.
There is less enthusiasm for other parts of the Far East, as the tigers' growth slows and company profits suffer. Weak currencies have meant UK investors losing out even more when converting proceeds into sterling.
Most experts suggest new investors stay away until these markets settle down. Over the long term, Ian Millward, investment marketing manager at Chase de Vere, believes these markets can still appeal to investors looking to build up a highly diversified international portfolio. "There's good growth potential there, but you don't want to try to pick a single market. Be prepared to invest for at least seven years," he says. "Consider the Fidelity Asean unit trust. But most investors should choose a broad-based Far East fund." Mr Millward favours the Schroder Pacific unit trust.
Japan is the major regional bloc and the world's second-largest stock market. It grew rapidly until 1989, but the economy has since faltered. The Nikkei index is less than half its peak. Few fund managers expect imminent economic recovery.
But Japan is expected to recover over the long term, so global investors may want some exposure there, says Alan Gadd, managing director of HSBC Asset Management. "You should capture the first stage through a broadly based Far East fund."
q For Bates & Partners' free booklet on investment in China and Hong Kong call 01132 955955.