Annual Report 2020

China Merchants China Direct Investments Limited Annual Report 2020 108 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2020 5. FINANCIAL INSTRUMENTS (CONTINUED) Market risk (continued) Price risk (continued) Price sensitivity The sensitivity analyses below have been determined based on the exposure to price risk at the end of the reporting period. If the market bid prices of the listed equity securities had been 20% (2019: 20%) higher/lower, the Group’s after taxation result for the year would increase/decrease by US$80,450,000 (2019: US$53,112,000). This is mainly attributable to the changes in fair values of the listed equity investments held by the Group. If the fair value of the investments other than listed equity securities had been 20% (2019: 20%) higher/ lower, the Group’s after taxation result for the year would increase/decrease by US$75,032,000 (2019: US$60,466,000). This is mainly attributable to the changes in fair values of the investments held by the Group. In the opinion of the management, the sensitivity analysis is unrepresentative of the price risk as the year end exposure does not reflect the exposure during the year. Credit risk and impairment assessment Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group’s financial assets include financial assets at FVTPL, investment deposits at FVTPL, other receivables, and cash and cash equivalents. As at 31 December 2020, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties is arising from the carrying amount of the respective recognised financial assets as stated in the consolidated statement of financial position. Although the cash and cash equivalents are concentrated with certain counterparties, the credit risk on liquid funds is limited because the counterparties are banks with good credit ratings assigned by international credit rating agencies. In this regard, the management considers that the Group’s credit risk on such authorised institutions is low. Accordingly, cash and cash equivalents are subject to 12m ECL assessment. In the opinion of the management, the 12m ECL’s balance is not significant.