Global Financial Markets Show Resilience at Mid-2025 Mark Amid M&A Boom and Lending Surge
By Rebecca Geldard, Senior Writer, Forum Stories
Published: August 7, 2025 | Updated: August 7, 2025
As we reach the midpoint of 2025, the global financial landscape continues to demonstrate unexpected resilience. Despite ongoing economic and geopolitical uncertainties, key financial indicators—including mergers and acquisitions (M&A) activity and securities lending revenues—are posting strong gains, reflecting robust investor confidence worldwide.
M&A Activity Surges to Multi-Year Highs
Global mergers and acquisitions have surged dramatically, reaching an extraordinary $2.6 trillion year-to-date. This marks the busiest dealmaking period since the pandemic apex in 2021 and represents a 28% increase in deal value compared to last year, despite a 16% drop in the number of deals overall.
The United States maintains its status as the dominant market, accounting for over half of the global M&A activity. Notably, the Asia Pacific region has seen deal-making volumes double, surpassing activity levels in Europe, the Middle East, and Africa (EMEA).
Several factors are driving this wave of dealmaking, including corporate board ambitions to accelerate growth, a surge in artificial intelligence (AI)-related transactions, and a rebound in large-scale US megadeals. Elevated asset valuations and strong corporate appetite underscore widespread investor confidence in navigating economic headwinds.
Securities Lending Revenue Climbs Sharply
Complementing the M&A boom, global securities lending revenues experienced a 53% year-over-year increase in July, reaching $1.57 billion—the highest level recorded in recent periods, according to Securities Finance Times. The surge is largely driven by increased activity in US and Asian equity markets, which have seen robust trading volumes supported by ample market liquidity.
This rise in securities lending also suggests investors’ growing risk appetite, even amidst challenges such as trade tensions, inflationary pressures, and shifting regulatory landscapes. The trend aligns with recent analyses by the International Monetary Fund (IMF) and European Central Bank (ECB), both of which note sustained risks alongside solid credit market performance and resilience among non-bank financial intermediaries.
White House Targets Political ‘Debanking’ Practices by US Banks
In a notable regulatory development, the White House is reportedly preparing an executive order aimed at empowering federal agencies to investigate and penalize banks accused of discriminating against customers based on political affiliations. The move responds to repeated claims by former President Donald Trump and his supporters alleging unfair account closures and service refusals—a practice they have termed "debanking."
The draft order intends to direct federal regulators to leverage existing powers under consumer protection, fair lending, and antitrust laws to address these concerns.
Banks, however, have consistently maintained that account closures are driven solely by risk management obligations, such as anti-money laundering mandates, rather than political considerations. Critics of the forthcoming order warn that it risks politicizing banking supervision.
This potential crackdown on account access contrasts sharply with the administration’s concurrent deregulatory initiatives in digital finance, particularly its drive to position the US as the “crypto capital of the world.” Recent legislative achievements include the signing of the GENIUS Act, the first significant cryptocurrency law passed by Congress, which introduces regulatory clarity around stablecoins. Federal banking agencies have also relaxed supervision protocols for crypto-related banking activities, removing requirements for formal pre-approval in certain transactions to foster innovation.
Additional Noteworthy Finance Developments
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Accounting Sector Faces AI Adoption Challenges: Hywel Ball, former UK head of EY, highlighted significant cultural and operational hurdles that the “Big Four” accounting firms face in implementing artificial intelligence, suggesting that smaller, more agile competitors may gain a competitive edge, according to the Financial Times.
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European Pharma Shares Falter: Following renewed tariff threats on imported drugs by Donald Trump, European pharmaceutical stocks declined to a three-month low, with the STOXX Healthcare index dropping 2% on August 6 as investors reacted to calls for reshoring drug production to the US.
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South Korean Market Wobbles Amid Tax Concerns: South Korea’s KOSPI index fell by 3.9%, tempering what was Asia’s strongest market rally this year. Despite considerable capital inflows, investor confidence is dented amid uncertainties about tax reforms and the ongoing “Korea discount” effect.
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UK Sees Director Exodus Post Tax Reform: Analysis published by the Financial Times reveals that nearly 3,800 UK company directors have resigned since the government abolished tax advantages for non-domiciled residents—a rise from 2,700 a year prior. The United Arab Emirates is the preferred destination for many departing directors.
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UK Construction Contracts: The sector experienced its steepest contraction since 2020 in July, with S&P Global’s Purchasing Managers’ Index plunging to 44.3, well below the 50-point threshold that signals expansion, largely due to a downturn in housing construction activity.
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Natural Disasters Drive High Insured Losses: Swiss Re estimates that natural disasters prompted $80 billion in insured losses in the first half of 2025—nearly double the decade’s average—with California wildfires and US storms being major contributors. Total annual losses could exceed $150 billion as hurricane season intensifies.
Additional Resources and Insights from the World Economic Forum
The World Economic Forum’s Centre for Financial and Monetary Systems provides deeper insights into these developments and more:
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Sustainable Finance and Food Systems: Experts discuss how the financial industry can support transforming global food systems to enhance resilience, reduce emissions, and safeguard livelihoods amid climate change-induced agricultural volatility.
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Crypto Regulation and Innovation: Analysis of the GENIUS Act details the new regulatory framework for stablecoins in the US and its implications for the digital currency sector.
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Retirement Savings Crisis: CEO Yie-Hsin Hung of State Street Investment Management outlines the factors driving the retirement savings gap, projected to hit $400 trillion by 2050, and discusses needed multi-faceted solutions in a recent Forum podcast.
For ongoing coverage and expert analysis on these topics, visit the Centre for Financial and Monetary Systems on the World Economic Forum website.
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