Trusting Analysts

How much should we trust analysts? How accurate are they? Let’s discuss the empirical historical evidence on this.
The proposed test – analyzing the accuracy of analysts in forecasting year end targets for Malaysia’s FBM KLCI index.

The parameters of our analysis are as follows:
– at least 5 research recommendations for a particular target year
on best effort basis – the source shall be published before the target year or Q1 of the current target year

The results of our tests are as follows:

FBMKLCI_Analysts.png
A simple conclusion:
– the selected analysts tend to underestimate when the market is on a downtrend, overestimate when the market is on the uptrend
– average differential rate against mean / median (since 2010) – approximately 2.0% (overestimation)

List of sources used to compile the above stats:

2010
http://ck5354.blogspot.my/2009/12/osk-3rd-quarter-earning-09.html

Click to access E17.pdf


http://klse-bursa.blogspot.com/2009/12/klci-end-of-2010-target-raised-to-1400.html
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=20&cad=rja&uact=8&ved=0ahUKEwiU97zhqafRAhULp48KHSFnA8s4ChAWCEwwCQ&url=http%3A%2F%2Fturtleinvestor888.blogspot.com%2F2009%2F12%2Fmy-2010-klci-target.html&usg=AFQjCNERRtxuBrCobyY-7FDSPOYXL0B4Dw&sig2=W6um3Ny0rl1oYsr-cwNOIQ&bvm=bv.142059868,d.c2I
http://www.thestar.com.my/business/business-news/2010/02/08/25-msian-stocks-that-are-expected-to-outperform-the-fbm-klci/

2011

FBM KLCI 2011 Year End Target Compilation

2012
http://www.thestar.com.my/business/business-news/2012/01/07/ubs-sees-fbm-klci-hitting-1700-points-by-yearend/
http://www.thesundaily.my/news/254772

HLIB Research cuts year-end target for FBM KLCI


http://jeannekong.blogspot.my/2011/12/normal-0-challenging-year-ahead.html

2013
https://sg.finance.yahoo.com/news/midf-research-reaffirms-end-2013-030003581.html
http://www.theedgemarkets.com/my/article/cimb-research-maintains-neutral-m%E2%80%99sia-end-2013-klci-target-1640-points

Click to access AmFamily-Takaful-Investment-Linked-AnnualReport-2013-ENG-20130726115652368.pdf


http://kfc1973-stock.blogspot.my/2012/12/maybank-ib-research-maintains-neutral.html
https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=22&cad=rja&uact=8&ved=0ahUKEwi7wJHGsKfRAhXEuY8KHcWAAvs4FBAWCB0wAQ&url=http%3A%2F%2Fwww.kualalumpurpost.net%2Fcitibank-keeps-year-end-klci-target-at-1720%2F&usg=AFQjCNEiw0WlThxvXuXmtuX0DXz7DugKIw&sig2=B8iKW2qOuQji-Ohfj0ijmw

2014
http://www.thestar.com.my/business/business-news/2014/03/07/uob-kay-hian-malaysia-research-maintains-end-2014-klci-target-at-1900/
http://www.thesundaily.my/news/896489
https://sg.finance.yahoo.com/news/alliance-keeps-end-2014-klci-044004066.html
https://www.fundsupermart.com.my/main/research/-View-2014-Outlook-For-the-Malaysia-Equity-Market-4148
https://sg.finance.yahoo.com/news/strategy-affin-ib-research-raises-005006144.html

2015
http://klse-online.blogspot.com/2015/01/fbm-klci-likely-path-in-2015.html

JF Apex revises year end target FBM KLCI to 1,720


https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=11&cad=rja&uact=8&ved=0ahUKEwicxLnrsqfRAhWEvo8KHQXwAn44ChC3AggYMAA&url=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3DH9NY-td9H-8&usg=AFQjCNHT0Xf26bfYhTCPo_wbqsCmrRvPWQ&sig2=Mcd_nbwj7gPbEJ_MGufA8A&bvm=bv.142059868,d.c2I

Click to access Market%20Strategy%20-%201Q15%20Investment%20Strategy%20(Kenanga).pdf


Click to access ILP%20Annual%20Report%202014.pdf

2016
http://www.thesundaily.my/news/1692808
http://www.seaisi.org/News/4202/MIDF+Research+introduces+end-2016+target+for+KLCI+at+1800+points+
https://themalaysianinsider.wordpress.com/2015/12/15/cimb-research-raises-end-2016-klci-target-to-1900-points/

Click to access Tradewise-%20Replace%20exports(1).pdf


Click to access Maybank%20Investment%20Bank%20Shares%20Investment%20Strategies%20For%201H2016.pdf

THIS IS A PERSONAL BLOG AND SHALL NOT BE RELIED IN WHATSOEVER MANNER BY ANYONE. ALL ARTICLES CONTAINED IN THIS SITE ARE FOR INFORMATION AND ILLUSTRATIVE PURPOSES ONLY AND DOES NOT PURPORT TO SHOW ACTUAL RESULTS. IT IS NOT, AND SHOULD NOT BE REGARDED AS INVESTMENT ADVICE OR AS A RECOMMENDATION REGARDING ANY PARTICULAR SECURITY OR COURSE OF ACTION. SOURCES USED IN THIS SITE HAVE NOT BEEN INDEPENDENTLY VERIFIED FOR ACCURACY, COMPLETENESS AND TIMELINESS. YOU SHOULD SEEK INDEPENDENT AND PROFESSIONAL INVESTMENT ADVICE IN REGARD TO YOUR INVESTMENT DECISIONS. THE AUTHOR MAY HOLD POSITIONS IN THE SECURITIES MENTIONED IN THE ARTICLES

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