Where did it all start?As one report put it, the 1987 market crash was "made in the USA", but the latest turmoil was "made in Asia". While the focus has been on Hong Kong over the past couple of days, a number of Asian markets have faced major upheaval in recent months. It started when currency markets came under pressure in the so-called tiger economies of Thailand, Indonesia, the Phillipines and Malayasia. Speculators forced these states to devalue their currencies. The highlight was a big row between Malayasian Prime Minister, Mr Mahathir Mohamad and international speculator Mr George Soros.

And then came Hong Kong?

Like many other Asian states, Hong Kong has linked its currency to the US dollar. With others being forced to abandon the link, investors started to bet that the same would happen in Hong Kong. But the authorities resisted and share prices in Hong Kong started to collapse.

Why did this worry US and European stock markets?

Part of the reason is that analysts fear what is happening in Hong Kong - and what has happened elsewhere in Asia - could presage a major economic crisis in Asia. Japan, for example, could be hit if its other Asian markets start to suffer from slower growth. And Asia is a major market, for example, for US computer companies which would suffer from lower growth.

Were there other factors worrying investors in the US and Europe?

Certainly. There has been a fear for some time among investors that share prices were overvalued - in other words that prices had risen too far in relation to the profits companies were making. The nervousness about Asian markets focused attention on these concerns and on fears that interest rates could be heading higher in the US. And once enough investors start to sell, the herd mentality tends to set in.

So why the recovery late yesterday in the US?

This happened because enough investors started to believe that things weren't so bad after all, leading some investors to try to pick up shares, which they felt were cheaply valued. Whether this is the start of a genuine recovery is hard to guess.

What impact will it all have?

The value of pension funds and unit trusts, in which most people have some interest, will be hit by the price declines. But so far prices are well ahead of where they were at the start of the year, so the impact should not be a major one, unless share prices turn down sharply again in the days ahead. The effect on international economic growth will also depend on what happens next. A sustained decline in share prices could hit international confidence and economic growth, but last night's recovery on Wall Street may calm nerves for the moment. However, at very least, a volatile period on the international markets lies ahead.