Annual Report 2020

China Merchants China Direct Investments Limited Annual Report 2020 106 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2020 5. FINANCIAL INSTRUMENTS (CONTINUED) Financial risk management objective and policies The Group’s major financial instruments include financial assets at FVTPL, investment deposits at FVTPL, other receivables, cash and cash equivalents, other payables and financial liabilities designated at FVTPL. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments include market risk (including currency risk, interest rate risk and price risk), credit risk and liquidity risk. The policies on how to mitigate these risks are set out below. The Group manages and monitors these exposures to ensure appropriate measures are implemented in a timely and effective manner. Market risk Currency risk The Group undertakes certain transactions which expose the Group to foreign currency risk. The related balances include other receivables, cash and cash equivalents and other payables, denominated in a currency other than the functional currency, and so exposures to exchange rate fluctuations arise. The Group currently does not have any foreign currency hedging policy. However, the Group monitors foreign exchange exposure and will consider hedging significant foreign currency exposure should the need arise. The carrying amounts of the Group’s monetary assets and monetary liabilities which are denominated in a currency other than the functional currency of the relevant group entities at the reporting date are as follows: 2020 2019 US$ US$ Monetary assets USD 7,202,108 16,465,564 Hong Kong Dollar 11,261,434 9,431,037 Monetary liabilities USD 14,441,448 4,248,008 Hong Kong Dollar 21,254 22,324