China's stock market crash has erased more than US$3 trillion ($4.5 trillion) in shareholder value since the middle of last month.
Around 43 per cent of Chinese listed companies have now suspended trading in order to avoid the volatility.
The S&P/NZX 50 closed down 0.61 per cent at 5767.70 last night, while Australia's S&P/ASX 200 dropped 2 per cent to 5469.5.
Asian markets tumbled even further.
Hong Kong's Hang Seng closed down 5.8 per cent, which Reuters said was the biggest one-day decline since the global financial crisis in 2008.
Japan's Nikkei 225 closed down 3.14 per cent at 19,737.64.
The New Zealand dollar was trading at US66.40c versus the greenback at 6pm from US66.78c at 7.30am.
Shanghai's index rallied by more than 150 per cent in the year to June 12 in a meteoric rally driven largely by domestic investors trading with borrowed funds, but has since fallen by more than 30 per cent.
The turmoil in Chinese equities is continuing despite a raft of government-introduced measures aimed at halting the crash.
Yesterday, the People's Bank of China said it would provide liquidity to the state-owned China Securities Finance Corporation with the aim of avoiding "systemic risks".
The Financial Times reported that China Securities was buying shares directly, using funds provided by the central bank, in a bid to prop up the market. The Shanghai index regained some ground following the central bank's statement, and was down 4.5 per cent at 6pm.
The tech-heavy Shenzhen index had fallen 2.6 per cent.
Bernard Doyle, of Auckland investment firm JBWere, said global markets were having to deal with the impact of two complex scenarios - Greece's debt crisis and China's market crash.
"The NZX will absolutely be caught up in the impact of this," he said. "We'll be a bit more volatile but New Zealand doesn't actually look too bad in this scenario."
Doyle isn't too concerned about the market chaos causing a fresh wave of weakness in China's economy, whose growth has already slowed to its lowest rate in decades.
But a "truly catastrophic" stock market decline of 50 per cent or more could impact Chinese consumption, he said.
"And anything that could impact Chinese consumption we've got to be a little bit careful about."
China was the destination for around 19 per cent of New Zealand exports last year. A fall in Chinese demand for this country's dairy products has been one of the factors driving the slump in dairy prices.
Li-Gang Liu, ANZ's Hong Kong-based chief economist for greater China, said Chinese banks remained healthy and were not heavily exposed to that country's plunging sharemarkets.
"If the banks remain stable I don't think there will be a financial crisis in China," Liu said. "The market correction in the past few weeks should be viewed as a timely warning, allowing share prices to return to a level reflecting their underlying values."
However, he said a prolonged stock market sell-off could impact Chinese consumer confidence.
"This requires the authorities to take a market-based approach and allow the market to find equilibrium," Liu said. "If they continue to intervene, then the process could be prolonged."
Macquarie Private Wealth equity strategist James Grigor said that while volatility was increasing, New Zealand still had some good growth drivers. "I don't think it's panic stations yet.
"There are still some really good, high quality listed equities in the [local] market that pay a really good yield and they're not paying out 100 per cent of their cash so that yield is quite stable."
