Annual Report 2021

China Merchants China Direct Investments Limited Annual Report 2021 109 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2021 5. FINANCIAL INSTRUMENTS (CONTINUED) Market risk (continued) Currency risk (continued) Foreign currency sensitivity For the currency risk of the Group, if the exchange rate of RMB against USD had increased/decreased by 5%, the Group’s after taxation result for the year would increase/decrease by US$309,000 (2020: US$302,000). If the exchange rate of RMB against Hong Kong Dollar had increased/decreased by 5%, the Group’s after taxation result for the year would decrease/increase by US$322,000 (2020: US$469,000). In the opinion of the management, the sensitivity analysis is unrepresentative of the inherent foreign currency risk as the year end exposure does not reflect the exposure during the year. Interest rate risk The Group is not subject to material fair value interest rate risk as the Group’s fixed interest rate bearing financial assets are measured at amortised cost. The Group is exposed to cash flow interest rate risk through the impact of rate changes on interest bearing financial assets (mainly short-term bank deposits at market rate) at market rates. At 31 December 2021, bank balances of US$14,746,993 (2020: US$39,296,263) were interest bearing and withdrawable on demand. Since the prevailing market interest rates are minimal, the fluctuation of interest rate will have minimal impact to the Group’s change in bank balances and other interest bearing assets. Interest rate sensitivity No sensitivity analysis on cash flow interest rate risk is prepared as the Group considers the effect would be minimal at the end of the reporting period. Price risk The Group is exposed to price risk through its investments as disclosed in note 15 and financial liabilities in note 20 which are measured at FVTPL.