Comparing a company to KLCI

October 26, 2014

Q & A › Comparing a company to KLCI
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Siew Lee Lim asked 9 years ago

HI KCLau/Peter,

Can u show me an example of comparing a company to KLCI index? Could you explain more on the KLCI and how i should use it?

Peter Lim Staff replied 9 years ago

The KLCI consist of biggest 30 companies in Malaysia, and most people use it as a benchmark against their stock performance.Say your stock returns 20% in year 2009. Is that good? If you say yes because it’s higher than FD, then it’s incorrect, as stocks should be compared against its benchmark, which in the case of Malaysia’s stocks, its compared to KLCI.Just like a car going at 40 km/h. Is it fast? If you compare it to walking, then it’s incorrect.In 2009, the KLCI went up 45%, thus if your stock selection is returning less than 45% in year 2009, then you’ve performed worst than the benchmark.Likewise, if KLCI earns -20% on that year, you did well even when your stock selection earns -5%.Hope it helps.