Answer for how to understand indexes

I have explained in the link below how an index like KLCI is used:
The index is meant to be used as a benchmark for performance and has no direct relationship with any local company in terms of analysis. 
Each stock market has its own index and it is a representation of that particular stock market’s or industry’s performance. To be able to answer whether you can compare a local company to another country’s index of the same industry, we must first understand why this comparison is made. If you would like to strictly compare performances, then there is no issue. If you would like to use the foreign index as a benchmark, then we have to see if the assumptions in the comparison make sense or not. At the end of the day, the reason why you are comparing the performance of a company to any particular index must make sense. 

About The Author

Peter Lim

Investor (Not Speculator).