Wall Street's pain was felt across most of Asia yesterday. After Hong Kong, Australia was the biggest loser, with the All Ordinaries Index falling 2.89 per cent to 2,352.2 points. Australian investors fear that higher interest rates in the US will result in an outflow of funds from Australia's financial markets. Over the past year, international investors, particularly Japanese investors, have poured money into Australia to take advantage of its relatively high interest rates. That advantage could soon be lost if Alan Greenspan raises US interest rates further. Brokers said there were no signs of panic in Sydney, as low turnover for the day showed. The so-called dollar-block of Thailand, Malaysia and the Philippines each fell sharply. A rise in US interest rates could deal a double blow to exports from these nations, analyst said. Higher US interest rates would result in a stronger dollar, in turn boosting Southeast Asian currencies, which are closely aligned to the US dollar. Stronger currencies could cut into the export competitiveness of these nations. Higher interest rates would also cool the US economy and slow demand for imports from Southeast Asia, analyst said. Schroder Investment Management fund manager Robin Parbrook said: 'You are not going to see the export rebound people are expecting. A lot of people have been over-optimistic.' Peregrine Brokerage regional analyst Christopher Wood said that yesterday's losses were more of a reflection of the region's inherent weakness than a reflection of Wall Street. He said because there was not new money flowing into the region, Asian stock markets were locked in a zero-sum game, with each market sucking money from the other. 'All the new money is going to eastern Europe and Latin America,' he said. Taipei and Bombay were notable exceptions to the bearishness in Asia. Taiwan jumped almost 2 per cent on the back of bullish technology stocks, while Bombay's benchmark index closed up more than 2 per cent after domestic and international investors sought bargains in the wake of Monday's 8.26 per cent plunge. The Indian market had been hurt by an unfolding political crisis.