Bisnis, JAKARTA — The Indonesian capital market will soon enter the last month of 2023. Several year-end market phenomena are likely to occur, including window dressing, though its impact may be minimal.
Window dressing is a practice carried out by companies or investment managers to enhance the performance of their financial reports before the end of the reporting period. This practice involves adjusting investment portfolios or financial records to appear better than the actual conditions. For instance, a company may sell less profitable assets and increase investments in well-performing assets near the reporting period's end.
In the stock market, window dressing can create distortions in evaluating stock performance or investment portfolios. When companies or investment managers adjust their portfolios, it can create the impression that they have more profitable investments than they do. The impact can make stocks appear more attractive to potential investors, influencing stock prices.
Maximilianus Nico Demus, associate director of research and investment at Pilarmas Investindo Sekuritas, said window dressing will likely occur by year-end. He said that Indonesia's economic fundamentals remain strong despite global uncertainties, such as ongoing inflation, potential rate hikes, rising oil prices driving inflation, and China's slowing economic prospects.