NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2023 312 WE ARE KENANGA LEADERSHIP MESSAGE VALUE CREATION MODEL KENANGA INVESTMENT BANK BERHAD ANNUAL REPORT 2023 51. FINANCIAL RISK MANAGEMENT (CONT’D.) (b) Market risk (cont’d.) (iii) Equity price sensitivity analysis Equity price risk is the risk of financial loss arising from adverse changes in prices of equities and equity derivatives. The following table demonstrates the impact of a +/- 30% change in equity prices across the board on the Group’s profit or loss and equity. Change in equity price 2023 Impact on profit or loss 2023 RM’000 Impact on equity 2023 RM’000 Change in equity price 2022 Impact on profit or loss 2022 RM’000 Impact on equity 2022 RM’000 Equity-investments +30% 23,781 - +30% 31,812 - -30% (90,578) - -30% (56,362) - From risk management perspective, a risk limits framework governing the activities of equity and equity derivatives trading has been established, primarily intended to: 1) Prevent excessive exposures to a single risk factor or a group of risk factors; and 2) Constrain the general level of risk taking for a business. Additionally, other components of limit framework including stop-loss trigger, issuance size, permitted products, management oversights etc. were put in place for better governance as well as to embrace best practices of market risk management. The risk framework was designed in accordance to the Group’s and the Bank’s risk appetite and a closely controlled risk parameter, e.g. stop-loss trigger, will ensure losses arising from the course of trading are limited. In addition, the Group’s associate company has made some equity investments in Saudi Arabia. The impact of a +/- 30% change in equity prices on the Group arising from these investments are shown as follows: Change in equity price 2023 Impact on profit or loss 2023 RM’000 Impact on equity 2023 RM’000 Change in equity price 2022 Impact on profit or loss 2022 RM’000 Impact on equity 2022 RM’000 Equity-investments +30% - 19,951 +30% - 11,323 -30% - (19,951) -30% - (11,323)
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