✨ Financial Instruments Disclosures
NOTES to the financial statements
in New Zealand Dollars ($000's) (continued)
19 Financial instruments (continued)
Market risk
Market risk is the risk that changes in market prices, such as interest rates or equity prices, will affect the Group's profit or valuation of net assets. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
The risk is mitigated by the policies and procedures outlined in the Group's SIPO. These include diversification of the investment portfolio and prudent investment strategies.
Foreign currency risk
The Group is exposed to foreign currency risk as a result of investment transactions entered into by fund managers in a currency other than the Parent's functional currency, New Zealand dollars ($), which is the presentation currency of the Group. Fund managers typically hedge investments denominated in a foreign currency where appropriate with foreign exchange contracts.
Interest rate risk
The Group has bank call and deposit accounts, government and local authority securities and other investment held by the Group's fund managers that are exposed to interest rate risk. Interest rate risk is mitigated by the use of swaps where appropriate, to achieve an appropriate mix of fixed and floating rate exposure within the Group's policy.
Other market price risk
The entity is not exposed to substantial other market price risk arising from financial instruments.
Quantitative disclosure
Credit risk
The carrying amount of financial assets represents the Group's maximum credit exposure.
The Group's maximum exposure to credit risk for investments by geographic regions and investment type is as follows, net of related derivative liabilities:
| Carrying amount | Group 2012 | Group 2011 |
|---|---|---|
| New Zealand Community Loans | 5,357 | 4,702 |
| New Zealand Cash | 91,858 | 89,363 |
| New Zealand Fixed interest | 86,827 | 133,471 |
| New Zealand Property | 12,749 | 13,218 |
| Australian Equities | 29,741 | 75,644 |
| Private Equity | 14,007 | 13,853 |
| Global Bonds | 123,715 | 57,715 |
| Global Equities | 67,854 | 54,373 |
| Emerging Market Debt | 21,923 | 25,193 |
| Emerging Market Equities | 13,241 | 18,257 |
| Alternative Assets | 0 | 0 |
| Total Financial Assets | 467,072 | 485,789 |
Global Bonds, Global Equities, Australian Equities, Emerging Market Debt and Emerging Market Equities contain investments denominated in US Dollars and Australian Dollars.
The Group has outstanding commitments to private equity funds totalling $13,753,522 (2011: $18,907,655).
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NZ Gazette 2012, No 103
✨ LLM interpretation of page content
💰
Canterbury Community Trust Financial Statements
(continued from previous page)
💰 Finance & Revenue2 July 2012
Financial instruments, Market risk, Foreign currency risk, Interest rate risk, Credit risk, Investment portfolio, Derivative liabilities