Why India and China may be less affected?

Here are a few more reasons why Asia may be relatively less affected by the financial market crisis in the US and Europe
1. Mortgages are new to the emerging economies of Asia. Home loans represent only 19% of GDP in Japan, 12% in China, and a mere 5% in India, according to CLSA figures for 2007. In contrast they form 105% of GDP in the US.
2. Very few mortgages have been securitized and sold as mortgage backed securities. Other complex securities like CDOs and CMOs are yet to make their entry into the Asian markets.
3. Asian banks were much more conservative in their mortgage lending, limiting loans to a maximum of 70% of the home price. In the US, mortgage lenders loaned anything from 80% to even 100% of the home price.
4. Real estate related exposures of Indian and Chinese banks are relatively small. In India, HDFC, Axis Bank, and Yes Bank have the biggest exposure to property developers, at about 12% of loans.

External trade accounts for over 70% of China's GDP and 40% of India's GDP, and is much higher for many of the smaller East Asian economies. While it is true that many Asian economies are heavily export dependent, more than half of the their exports are among themselves.

For the past two decades, the high domestic savings and investments of Asian economies has been the engine of global economic growth. Their cheap exports have gone into triggering and then sustaining a global "savings glut" and a "consumption boom" in the US. With the export market now drying up, the time may have now come for the emerging economies of Asia to stoke their hitherto suppressed domestic consumption.

None of this can save Asia from the contagion effects of the financial market Tsunami that originated in the US financial markets. However, in these extraordinary times, a decline of growth rate from 12% to 9% for China and from 9% to 7% for India, are exceptional and enviable achievements. Both are more than double the most optimistic assessment of the global economic growth rate!

Update 1
Economist has this article explaining why contrary to popular perception, China may not be that closely dependent on exports.

Headline figures show that China's exports surged from 20% of GDP in 2001 to almost 40% in 2007. However, in value-added terms, by stripping out imported components, and then converting the remaining domestic content into value-added terms by subtracting inputs purchased from other domestic sectors, we find that the "true" export share is just under 10% of GDP, making China slightly more exposed to exports than Japan, but nowhere near as export-led as Taiwan or Singapore. At first glance, that second step seems odd: surely the materials which exporters buy from the rest of the economy should be included in any assessment of the importance of exports? But if purchases of domestic inputs were left in for exporters, the same thing would need to be done for all other sectors. That would make the denominator for the export ratio much bigger than GDP.