Company: MEGL
Filing Date: 2025-04-14
Form Type: 20-F
Source: 0001641172-25-004566
Chunk: 107

Company: Magic Empire Global Ltd
Filing Date: 2025-04-14
Form: 20-F
Item: Item 11
Chunk 107
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ITEM
11. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Credit
risk

Assets
that potentially subject the Group to a significant concentration of credit risk primarily consist of cash, accounts receivable and other
current assets.

The
Group believes that there is no significant credit risk associated with cash, which were held by reputable financial institutions in the
jurisdictions where the Company and its subsidiaries are located. The Hong Kong Deposit Protection Board pays compensation up to a limit
of HK$500,000 (approximately US$64,369) if the bank with which an individual/a company hold its eligible deposit fails. With effect from
1 October 2024, the protection limit has been increased to HK$800,000 (approximately US$102,991). As of December 31, 2024, cash balance
of HK$127,511,687 (US$16,415,630) was maintained at financial institutions in Hong Kong and an aggregate of HK$3,229,557 were insured
by the Hong Kong Deposit Protection Board.

The Group has designed their credit policies with an objective to minimize
their exposure to credit risk. The Group’s accounts receivable are short term in nature and the associated risk is minimal. The
Group conducts credit evaluations on its clients and generally does not require collateral or other security from such clients. The Group
periodically evaluates the creditworthiness of the existing clients in determining an allowance for doubtful accounts primarily based
upon the age of the receivables and factors surrounding the credit risk of specific clients.

Interest
rate risk

The Group’s exposure on fair value interest rate risk mainly arises
from its fixed deposits with bank. It also has exposure on cash flow interest rate risk which is mainly arising from its deposits with
banks.

In respect of the exposure to cash flow interest rate risk arising from
floating rate non-derivative financial instruments held by the Group, such as cash, at the end of the reporting period, the Group is not
exposed to significant interest rate risk as the interest rates of cash at bank are not expected to change significantly.

Foreign
currency risk

The
Group is exposed to foreign currency risk primarily through service income that are denominated in a currency other than the functional
currency of the operations to which they relate. The currencies giving rise to this risk are primarily US$. As HK$ is currently pegged
to US$, the Group’s exposure to foreign exchange fluctuations is minimal.

ITEM
12.