Vietnam markets opening after the Lunar New Year holidays saw their worst session in over a year, as investors priced in the economic impact of the virus outbreak.
Adding to woes, the World Health Organization (WHO) on Wednesday expressed concern over the person-to-person spread of the virus in three countries, including Vietnam.
Flag carrier Vietnam Airlines was among the biggest losers as it shed 6.9% to close at a record low.
Meanwhile, WHO said it would reconvene later on Thursday to deliberate whether the rapid spread of the virus could now be labelled a global emergency.
The new virus has claimed 170 lives in China so far, with the number of infected patients growing to 7,711 in the country.
Infections have been reported in at least 15 other countries, prompting investors to worry about the fiscal health of the world's second-largest economy which recently started showing signs of recovery.
So far, confirmed cases of infection have been reported in Singapore, Malaysia, Philippines, Vietnam and Thailand.
Indonesian shares shed 0.9% after the finance minister on Wednesday said the tourism sector would be hit as Chinese tourists, who make up a bulk of tourist footfalls in the country, cancel travel plans due to the outbreak.
Financials and automakers were the biggest drags on the index, with Bank Mandiri and automotive firm Astra International losing 1.9% and 2.9%, respectively.
The Singaporean index also slid, as lender DBS Group Holdings dropped 0.5% and transport services provider SATS Ltd fell 1.7%.
The Malaysian stock index fell for an eighth straight session, as resources and utility stocks weighed.
Philippine shares also fell, closing at their lowest since Dec. 10, 2018.
(This story corrects paragraph 12 to show Malaysian stocks recorded their eighth straight session of losses, not lost for record eight sessions)
By Arpit Nayak
