Annual Report 2021

China Merchants China Direct Investments Limited Annual Report 2021 110 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2021 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% (2020: 20%) higher/lower, the Group’s after taxation result for the year would increase/decrease by US$74,179,000 (2020: US$80,450,000). 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% (2020: 20%) higher/ lower, the Group’s after taxation result for the year would increase/decrease by US$75,857,000 (2020: US$75,032,000). 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, other receivables, and cash and cash equivalents. The Group performed impairment assessment for financial assets and other items under ECL model. Information about the Group’s credit risk management, maximum credit risk exposures and the related impairment assessment, if applicable, are summarised as below: 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.