Asian stock markets gave investors a white-knuckle ride in 2007 but most are up sharply and analysts predict turbulent gains next year despite a severe US financial crisis.

"I think Asian markets will be up over the whole of2008 - but they are set to fall substantially over the next few montits first," Shanghai-based expert Andy Xie, a founer Morgan Stanley economist, told AFP

Chinese and Indian shares led the pack this year, fizzing up 93 percent and 47 percent respectively. The rise defied fears that they and many other Asian stocks had already become too bubbly and expensive.

China held a series of sometimes huge stock flotations that raised billions of dollars, while foreign investors continued to pour money into Indian shares.

But the key Japanese bourse had 9 year to forget as the Nikkei-225 index slumped 11 percent amid a global credit crunch rooted in the ailing US economy.

"The overall Japanese market has come down quite sharply in the last few weeks," Tokyo-based fund manager Hideo Shiozumi, the chief executive of Shiozumi Asset Management. toldAFP. Asian markets have struggled since November, mainly due to fears about the impact of an expected US economic slowdown after a mortgage default crisis there, analysts say.

China's attempt to curb high economic and stock market growth, for instance by hiking borrowing costs repeatedly, has also affected sentiment, they say.

Xie said Asian stocks became too expensive during the year, making them vulnerable to shocks such as the US crisis.

He warned that the Hang Seng index in Hong Kong could fall some 21 percent to 22,000 points over die next few weeks after rising about 39 percent this year. But he predicted a recovery in Asia from March onwards.

Among other major Asian bourses, South Korea rose about 31.8 percent in 2007, Singapore roughly 17 percent. Australia some 12 percent and Taiwan nine percent.

Some of the region's smaller markets did well, with Indonesian shares up 52 percent and the Malaysian market rising 32 percent in 2007.

Shares in Thailand and the Philippines rose about 26 percent and 21 percent respectively, but

New- Zealand ended very slightly down.

'1 suspect that Asian shares will continue to do well over the next 12 months." Matt Robinson, an analyst at Moody's Economy.com in Sydney, toldAFP.

He said 2007 had been characterised by persistent stock market growth in Asia interrupted by sharp sell-offs.

The latter included a slide in February, when Chinese shares tumbled nearly nine percent in a single day, he said.

The sell-offs also included a slump from late July as the US mortgage default crisis ballooned, sending Asian markets down 10 percent or more, he added.

The crisis involves struggling "subprime" mortgage holders with poorer credit histories.

It has caused billions of dollars in financial losses and a severe credit crunch with banks now jittery about lending money. It has also raised the threat of a US economic recession.

Some economists think Asia is better placed than in the past to weather a US slowdown - a view known as "decoupling" — due to the region's now vast foreign exchange reserves and huge infrastructure spending programme.