(Yicai Global) July 19 -- The value added of Shanghai’s financial sector surged 6.1 percent in the six months ended June 30 from the same period last year to contribute over one fifth of the city’s gross domestic product despite the severe fallout from the latest wave of Covid-19.

The value added of Shanghai’s financial sector amounted to CNY412.5 billion (USD61.2 billion) in the first six months, according to the latest data from the Shanghai Statistics Bureau released yesterday. This was despite the city’s first-half GDP slumping 5.7 percent year on year to CNY1.9 trillion (USD282 billion).

As China’s financial hub, Shanghai took action to ensure the stable operations of its financial sector as soon as the latest flare-ups of Covid-19 started in March. For example, infrastructure facilities such as the China Foreign Exchange Trade System and National Interbank Funding Center offered remote access so that financial institutions could trade from afar.

As a result, the capital market’s transaction volume jumped 16.8 percent to CNY1.3 quadrillion (USD192.6 trillion) in the first half from a year earlier. Securities transactions on the Shanghai Stock Exchange surged 18.7 percent and those in the interbank market soared 22.6 percent, the bureau said.

Deposits and loans both swelled. The balance of Chinese yuan and foreign currency deposits advanced 12.1 percent at the end of June from the same period the year before to CNY18.6 trillion (USD2.7 trillion) while loans gained 9.4 percent to CNY10.1 trillion.

More loans means robust demand for money and indicates that economic activities are on the rebound, Ma Haiqian, deputy director of the Shanghai Academy of Development and Reform, told Yicai Global. And a higher balance of deposits shows people and companies are keen to save but less willing to spend money and make investments.

Shanghai unveiled a revitalization plan at the end of May to help the real economy recover from the outbreaks. The city urged banks to help companies out of difficulties by offering preferential interest rates to suppliers of epidemic control materials, firms hit hard by the virus, as well as micro, small and medium-sized businesses.

As a result, the city’s yuan-denominated loans increased CNY186.8 billion in June, CNY87.8 billion more than the growth a year ago and reversing two months of decline, the People’s Bank of China 's Shanghai office said on July 13.

The rapid expansion of yuan loans in June was mainly because the Covid-19 outbreaks were under control and the local government was quick to relieve logistics bottlenecks, drive financing demand through economic activities and restore normal life and business operations, Zhou Maohua, a macro analyst at China Everbright Bank, said earlier.

Editors: Dou Shicong, Kim Taylor