The death of North Korean leader Kim Jong Il sent Asian equities tumbling on Monday as worries over stability in the region spooked investors. But analysts told CNBC that the downside would be short-lived.

"If you look back at our past experience in 1994 when Kim Il Sung, Kim Jong Il's father died, we lost 2-3 percent the next day but we gained right away in one and a half days," Cho Hong Rae, senior executive director at Korea Investment Holdings, said.

Both political and market watchers believe China, North Korea's closest ally, will play a pivotal role in ensuring a smooth political transition in the single-party state.