Asian shares slipped to four-week lows earlier today, as the prospect of higher US interest rates and a strong dollar stemming from the incoming Trump Administration's purported policies of cutting taxes and spending heavily threatened to suck capital out of emerging markets.

MSCI's broadest index of Asia-Pacific shares outside Japan dipped 0.3% to a four-week low. It has lost 3.7% since Donald Trump was elected.

Leading the losses, Hong Kong shares hit a four-month low as the Hong Kong dollar soared in line with the US dollar to which it is pegged, and after insurance shares were hit by a Chinese regulator's warnings.

In addition, investors turned cautious after China's top leaders vowed over the weekend to stem asset bubbles in 2017 and place greater importance on the prevention of financial risk.

Japan's Nikkei, which has benefited from the yen's sharp fall against the dollar, snapped its nine-day winning streak, dipping 0.1% from Friday's one-year high.

"I think the markets' trend will continue. Share prices will edge higher and so will bond yields. The dollar will remain strong. One key question is whether the Dow Jones will hit the 20,000 mark," said Koichi Yoshikawa, Executive Director of Financial Markets at Standard Chartered Bank in Tokyo.

Financial markets briefly turned "risk-off" in late US trade on Friday following news that a Chinese Navy warship had seized a US underwater drone in international waters in the South China Sea.

The diplomatic incident appears to have been resolved for now after the two countries said on Saturday that China will return the drone.

Still, doubts on the future of Sino-US relations with Trump in the White House could eventually cast a shadow on financial markets, some market players say.

Mr Trump has previously threatened to declare China a currency manipulator and force changes in US-Chinese trade policy, which he described as leading to the theft of American jobs.

He has also questioned a highly-sensitive aspect of US-China diplomacy, notably whether Washington will continue to recognise that Taiwan is part of the "One China" line mandated by Beijing.