Economies in Asia may be doing much better than those in Europe or North America but Asian stock indexes posted yearly declines for the first time in three years.

A multiplicity of factors shares the blame, including the sovereign debt crisis in Europe, lackluster growth in the United States, fears of a slowdown in China, the earthquake and tsunami in Japan, and floods in Thailand.

This is how the markets reacted:

The MSCI AC Asia Pacific Index - which tracks Australia, China, Indonesia, Japan, South Korea, Malaysia, New Zealand, the Philippines, Singapore and Thailand - ended the year down 23 percent.

Boards at the Korea Exchange Bank in Seoul track the Kospi index and the US dollar-South Korean won exchange rate. Asia is one of the few bright spots in the world economy. Ahn Young-Joon / AP

So did Hong Kong's Hang Seng Index.

Japan's Nikkei dropped about 19 percent.

Australia's ASX 200 lost 13.8 percent.

The Shanghai Composite Index fell 22 percent despite economic growth of 9 percent-plus. It was its biggest drop since 2008 and followed a 14 percent decline in 2010.

South Korea's Kospi fell 11 percent.

Asian stocks lost about a quarter of their value through 2011, compared with losses of 12 percent in Europe and a basically flat year for the S&P500 in the US.

"It defies comprehension," said Francis Lun, managing director of Lyncean Holdings in Hong Kong.

Still, the losses may have set the stage for larger gains in the year ahead. "There is a saying that what goes up must come down. And the reverse is also true," Lun said.

The Philippines' economy was among the worst performers in the region but its stock market was the best, gaining 4.1 percent through 2011 and poised to continue rising. Stocks in Indonesia ended the year up 3.2 percent, while Malaysia stayed basically flat, registering up only 0.78 percent. They were the only gainers in the region.

The fate of the region's markets in 2012 will depend on whether investors regain their appetite for risk. That's difficult to imagine, given that most of the variables that kept stocks down through 2011 have not improved.

The downside risks for some sectors are significant.

In its 2012 outlook, Morgan Stanley pointed to real estate. It said there is potential for a "worse-than-expected deterioration in China's property market" that could weigh on the country's growth and affect real estate stocks. More significant may be a shortage of cash as formal and informal lending tighten in the face of increasing default risks.

But some equity boosters are brewing.

Improved manufacturing numbers out of China gave regional stocks a bit of a lift on the first day of trading in 2012 and continued to allay fears of a hard landing in the world's second largest economy.

In Japan, the government keeps spending on reconstruction following the March earthquake and tsunami.

The Philippine Stock Exchange started 2012 with extended trading hours as it prepares to link up with other markets in the region later this year.

Stock exchanges in Singapore, Malaysia and Thailand plan to set up electronic trading links in June. The Philippines will join later. Indonesia and Vietnam have also expressed interest but their participation hinges on regulatory approval at home. Indonesia is poised to grow as domestic demand rises and its economy remains relatively sheltered from the outside world.

"I think you have to be optimistic about Asia for 2012," Lun of Lyncean Holdings said. "As long as the EU keeps muddling through, the equities markets will rise."