July 5, 2007 (LPAC) -- Capital flows into Asia from private equity funds and hedge funds have increased dramatically, driving up stock and property values in a new Asian bubble, according to Nomura strategist Sean Darby at the fourth annual Nomura Asia Equity Forum held in Singapore July 4, reports the Straits Times. "There are already certain characteristics of a bubble forming in Asia, particularly in China's equity market," Darby said.

The figures are eye-popping: the Shanghai and Shenzhen stock markets have risen by 42.6 per cent and 96 per cent respectively so far this year, while housing prices in the country's 70 largest cities are growing at 6.4 per cent. The more established exchange in the British banking outpost of Singapore has surged 19.1 per cent so far this year. The Kuala Lumpur share market has jumped 25.6 per cent.

Senior economist Takuma Ikeda at Nomura Research Institute warned that bubble could blow due to the current defaults in the sub-prime mortgages sector of the US economy, which could "wreak financial havoc" in the region.