Regional markets extended their rally Thursday and have now fought their way back to where they were before the financial crisis struck a year ago.

That is still a long way below the peaks of 2007, but the remarkable rally that began amid the depths of panic and desperation in March is dramatically underlining the region's economic potency.

"The investor pendulum has been swinging towards Asia," said CIMB-GK regional economist Song Seng Wun. "The region's recovery prospects look better than anywhere else, and the post-Lehman selldown was probably overdone."