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SINGAPORE, July 29 (Reuters) - South Korea's stock market

plummeted for a second-straight session on Wednesday after

earnings from chipmaker SK Hynix ( SKHY ) failed to allay

investor fears about the durability of the AI trade.

The benchmark KOSPI index closed down about 6% on

Wednesday after an almost 11% rout in the previous session as

retail investors rushed to exit positions.

Here are some comments from analysts and investors:

PETER KIM, SENIOR MANAGING DIRECTOR, KB SECURITIES, SEOUL:

"The selloff is not driven by fundamental deterioration.

This is a liquidity and sentiment-driven event, fuelled by the

forced unwinding of single-stock leveraged ETFs across Korea,

U.S., HK and UK, making the move sharper and more extreme than

warranted by fundamentals.

"Sentiment remains fragile and retail-dominated, with fund

flows and retail positioning currently the key market driver

rather than earnings or fundamentals. The scale of leverage

built up means the flush out will not complete within one or two

weeks, and the price correction itself is generating more

negative headlines, creating a self-reinforcing cycle that

continues to overshadow any positives."

GINA KIM, PORTFOLIO MANAGER FOR EMERGING MARKET EQUITIES,

NORDEA ASSET MANAGEMENT, SINGAPORE:

"Given that the fundamental thesis remains intact, there

does appear to be an irrational, panic-like element to the

current selling, which has been concentrated in AI-related tech

names.

"Some of this selling can be rationalised - de-risking ahead

of the summer holidays, margin calls and similar flows -

alongside recent newsflow on the sustainability of AI capex

given rising debt levels and lower FCF at the CSPs, Chinese AI

breakthroughs, and advances in chip manufacturing technology."

"We have trimmed some of our larger tech stock exposure due

to single stock limits rather than for fundamental

reasons."

GARY TAN, PORTFOLIO MANAGER AT ALLSPRING GLOBAL INVESTMENTS,

SINGAPORE:

"SK Hynix ( SKHY ) delivered strong results, but in today's AI

market, strong is no longer enough. Investors were looking for

additional catalysts, particularly around long-term agreements

and shareholder returns, to support a memory sector that has

become the epicentre of the AI trade. Without those signals, we

expect volatility in AI-linked equities across Asia to persist

as leveraged positions unwind and the market resets

expectations.

FRANK BENZIMRA, HEAD OF ASIA EQUITY STRATEGY, SOCIETE

GENERALE, HONG KONG:

"It's certainly a very crowded trade which is being unwound.

If you look at what is falling in the market, it has been the

stocks in which you have the most leverage, and especially you

have this single-stock leveraged ETFs, which had exploded during

the months of May and June, and you have the top which had been

reached at the end of June, and since that time you are seeing

some deleveraging at work.

"It's very difficult to say when will this selloff end, but

at the moment, it's definitely not the trade where we want to

be."

SHINGO IDE, CHIEF EQUITY STRATEGIST, NLI RESEARCH INSTITUTE,

TOKYO:

"There was no fresh event that soured sentiment; the market

is simply extending its recent trend. Japanese stocks may not

have fully completed their correction, but they had fallen to

levels where the adjustment could have run its course. For

markets such as the KOSPI, the correction may still have further

to go.

"Regarding Japanese equities, (halt in operations at some

companies due to the earthquake), has been reflected. That said,

rather than the impact of the earthquake, it feels more like a

correction in a market that had become overheated - that factor

seems stronger."

FABIEN YIP, MARKET ANALYST, IG, SYDNEY:

"What we saw earlier in the month was that the foreign

investors, a lot of them have taken profit, and that's why we've

seen a lot of selling pressure on the KOSPI as well as on the

Korean won. While that has kind of tapered off in the past few

days, it looks like the number of market participants in the

market, because it's so volatile, has kind of tapered off, so

there are less people participating in the volatility. And given

the volume is lower, it could potentially also drive prices

wilder.

"In general, the clients that we are dealing with have been

participating in the volatility, because a lot of these are

shorter-term traders, so having that volatility in place is

actually quite beneficial ... definitely seeing a lot of

interest around tech names in the past few weeks."

WEE KHOON CHONG, APAC MACRO STRATEGIST, BNY, HONG KONG:

"Market has been very volatile for some time, in particular

in Korea, as reflected in the KOSPI volatility. Today's price

action suggests that the leverage within Korean equity remains

high and further unwind could be expected. We won't say market

is in a panic mode, more like a rotation into other sectors

which has been largely out of sight for a while. Investors

flows, based on BNY's custodian data shows selling pressure

concentrated in IT sectors while broad demand in most of the

rest."

PIERRE HOEBRECHTS, DEPUTY CIO AT EAST EAGLE ASSET

MANAGEMENT, HONG KONG:

"The market gave a warning in June already, but no one

listened. Very much a technical sell off. The amount of money

that went into SK and Samsung was staggering. The number of

accounts opened in Korea combined with the local leverage and

very concentrated exposure, with the cherry on the cake being

large 2x levered foreign ETF just made it an accident waiting to

happen."

"The selloff will stop once most of the margin accounts have

been wiped out, which should be not far from here."