KENANGA ANNUAL REPORT 2019

281 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2019 50. FINANCIAL RISK MANAGEMENT (CONT’D.) (b) Market risk (cont’d.) (iii) Equity price sensitivity analysis (cont’d.) 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. Percentage Change in Equity Price 2019 Impact on Profit or Loss 2019 Impact on Equity 2019 Percentage Change in Equity Price 2018 Impact on Profit or Loss 2018 Impact on Equity 2018 RM’000 RM’000 RM’000 RM’000 +30% 47,992 - +30% 4,482 - -30% (57,164) - -30% (11,337) - 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 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. 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, with a total mark-to-market value of SAR 18.1 million. The impact of a +/- 30% change in equity prices on the Group’s profit or loss arising from these investments are shown as follows: Percentage Change in Equity Price 2019 Impact on Profit or Loss 2019 Impact on Equity 2019 Percentage Change in Equity Price 2018 Impact on Profit or Loss 2018 Impact on Equity 2018 RM’000 RM’000 RM’000 RM’000 +30% - 7,369 +30% - 5,862 -30% - (7,369) -30% - (5,862)