EMERGING MARKETS-Asia stocks reel on valuation jitters; KOSPI tumbles over 6%

Nov 5 (Reuters) - Equities across Asian emerging markets suffered their steepest drop in weeks on Wednesday, with South Korea's benchmark gauge slumping more than 6%, as fears over stretched valuations eroded investors' risk appetites.

The MSCI index of emerging Asia equities .MIMS00000PUS shed 2.6% in its worst intraday decline since the early April "Liberation Day" tariff turmoil, while a gauge tracking ASEAN equities .MISU00000PUS slipped to a two-week low, dragged lower by Singapore.

Stocks are beating a hasty retreat across Asia on fears that equity markets may have become overstretched after an artificial intelligence-driven rush drove most benchmark gauges to record levels.

A selloff was triggered after the CEOs of Morgan Stanley MS.N and Goldman Sachs GS.N questioned whether sky-high valuations could be sustained.

"Retail investors and hedge funds have been extremely exposed on the long side to technology stocks in particular globally," said Jon Withaar, a senior portfolio manager at Pictet Asset Management in Singapore.

"A combination of some negative CEO comments on valuation overnight combined with the violent downward move in crypto has damaged sentiment."

South Korea's KOSPI index .KS11 toppled 6.2% in its worst intraday fall since August 2024, abruptly reversing course after a 20% surge since the start of October propelled it to record highs.

Its currency, the won KRW=KFTC, extended losses, weakening 0.6% to its lowest point since mid-April.

Chipmakers Samsung Electronics 005930.KS and SK Hynix 000660.KS fell 8% to 9%, with the former clocking its worst session in 15 months.

Taiwan's benchmark index .TWII shed 2.6% to fall by the most in three weeks, after advancing more than 10% in October on the AI-fuelled rush into equities. Its dollar TWD=TP weakened for the sixth consecutive session to hit its lowest point since early May.

In Southeast Asia, Singapore's FTSE Straits Times index .STI slipped 1%, weighed by lenders DBS Group DBSM.SI, OCBC OCBC.SI, and United Overseas Bank UOBH.SI, which lost between 0.5% and 1.6%.

Indonesia's Jakarta Composite index .JKSE and Malaysia's KLCI .KLSE slid around half a percentage point each, while the benchmark Philippine stock index .PSI shed 1%.

HIGHLIGHTS:
Yield on Indonesia's 10-year bonds ID10YT=RR inches lower to 6.153%
Philippine annual inflation at 1.7% in October
Malaysia's central bank to hold rate at 2.75% through 2026 - Reuters poll
Bank of Japan debated growing case for rate hike, September minutes show