Strategists have warned that most of the region's stock markets have clearly overshot and could soon be heading for some hefty falls. It seems not a question of if, but when. The New Year is generally seen as the most likely bet. 'I am confident we will face a correction in the not too distant future,' Daiwa Securities chief strategist Peter Perkins said. The past three months have seen sweeping gains among most of Asia's once ailing leading indices as investors begin to price in a regional economic recovery - perhaps prematurely and overly so. With liquidity flooding back into the region, Thailand's SET Index soared a staggering 84.04 per cent over the past three months. Malaysia's Composite Index climbed 64.43 per cent over the same period, despite the onset of controversial capital controls in September. Elsewhere, the Philippines' Composite Index improved 65.34 per cent, Singapore's Straits Times Index jumped 57.55 per cent and South Korea's Composite Index gained nearly 50 per cent since the end of August. These gains were made despite a never-ending chain of disappointing economic news. The Philippines last week joined Hong Kong, Indonesia, Japan, Malaysia, Korea, Singapore and Thailand in technical recession. Nikko Research Centre chief strategist Marshall Mays said that while these stock markets had admittedly been heavily oversold, the recent rebounds were too strong and current valuations had little support. 'We still have the same problem, no earnings. We are perhaps six months closer to a recovery, but it is still a long way off,' Mr Mays said. Mr Perkins said: 'People have priced in a very optimistic outcome for Asia and the world. We are likely to see some sobering up in the New Year.' The Hang Seng Index, up 37 per cent over the past three months, is similarly being accused of premature obesity. Mr Mays forecast a gradual unwinding of the index back to about 8,000 points in coming months. Salomon Smith Barney chief strategist Deep Kapur said: 'Hong Kong has clearly overshot. I think it is discounting a scenario that is completely unrealistic.' Zhong Yiru, a strategist at ANZ Investment Bank, said: 'With the real economy still not showing signs of bottoming out and domestic consumption attitudes and wealth accumulation remaining sluggish, we are not in a hurry to embrace the idea of a recovery in the property market. 'But the lower interest rates certainly add to the favourable factors.' Strategists said crashes in the regional stock markets were not expected, rather a gradual unwinding. They also admitted that some regional exchanges could even rise moderately before their expected fall as foreign funds that had missed the boat might belatedly try to hop on to the regional bull run. However, Mr Mays warned that it might not be a sensible thing to invest now. 'The fact of the matter is, if you've missed it, you've missed it,' Mr Mays said.