Global Financial Markets Show Resilience Mid-Year Amid M&A Surge and Lending Growth
August 7, 2025 – World Economic Forum
As we reach the midpoint of 2025, global financial markets demonstrate notable robustness, underscored by a surge in mergers and acquisitions (M&A) activity and a sharp rise in securities lending revenues. These developments illustrate sustained investor confidence despite ongoing economic uncertainties and geopolitical tensions, according to recent analyses compiled by the World Economic Forum’s Centre for Financial and Monetary Systems.
M&A Boom and Lending Surge Highlight Market Strength
Global M&A volumes have soared to an impressive $2.6 trillion year-to-date, marking the busiest period since 2021. While the total number of deals has dipped by 16%, the overall deal value has increased by 28%, driven largely by consummate boardroom ambitions, a sharp uptick in AI-related transactions, and a rebound in large-scale deals in the United States. The US market remains the epicenter of M&A activity, accounting for over half of global transactions. Meanwhile, deal-making in the Asia Pacific region has doubled, outpacing the European, Middle Eastern, and African (EMEA) markets.
This robust activity indicates a strong corporate appetite for growth, with elevated company valuations sustaining despite fewer overall transactions. The willingness among investors to engage actively in markets highlights confidence in navigating persistent financial and geopolitical headwinds.
In tandem, global securities lending revenues saw a significant increase of 53% year-on-year in July alone, reaching $1.57 billion. This growth is attributable primarily to increased trading volumes and liquidity in the US and Asian equity markets. The surge in securities lending is also indicative of a heightened risk appetite among investors, despite prevailing volatility fueled by inflation concerns, trade tensions, and regulatory changes.
International bodies such as the International Monetary Fund and the European Central Bank have acknowledged these market trends, recognizing risks associated with financial volatility while commending the resilience observed in credit markets and non-bank financial intermediaries.
US Banks Face Potential Crackdown Over Political ‘Debanking’ Claims
In the United States, the White House is preparing an executive order aimed at addressing allegations of politically motivated "debanking"—a term used by critics, including former President Donald Trump and his supporters, to describe the closure of bank accounts allegedly due to clients’ political affiliations.
According to Reuters, the proposed directive would authorize federal banking regulators to investigate these claims and enforce penalties where discriminatory practices are found. Agencies would be urged to utilize their existing powers under consumer protection, fair lending, and antitrust legislation to ensure fair treatment.
The banking industry has consistently denied these allegations, asserting that account closures result from risk management processes mandated by law, such as anti-money laundering regulations, rather than political bias. Some financial-sector observers caution that the government intervention risks politicizing banking supervision.
This impending regulatory scrutiny contrasts with a broader deregulatory push in the US financial landscape, especially concerning digital assets. For example, the recent passage of the GENIUS Act—the first significant cryptocurrency legislation enacted by Congress—signals the administration’s goal to establish the US as a global crypto innovation hub. In support of this, federal agencies have relaxed supervisory requirements, such as removing the need for banks to seek formal pre-approvals for certain crypto-related activities.
Additional Finance News Highlights
-
Accounting Industry’s AI Adoption Challenges: Hywel Ball, former UK head of EY, highlighted in the Financial Times that the largest accounting firms, often referred to as the "Big Four," face substantial challenges in adopting artificial intelligence technologies efficiently. Their vast organizational scale can hinder the cultural shifts needed for rapid innovation, offering smaller firms a competitive edge in agility.
-
European Pharma Sector Reacts to Trade Concerns: European pharmaceutical shares experienced a decline, with the STOXX Healthcare index dropping 2% on August 6, 2025. This reflects investor apprehension following President Trump’s renewed commitment to impose tariffs on imported drugs and encourage companies to relocate production to the US.
-
South Korean Market Impacted by Tax Reform: South Korea’s KOSPI index fell by 3.9%, narrowing gains after strong inflows in July. Investor confidence is shaken due to concerns over ongoing tax reform efforts and the persistence of the “Korea discount” phenomenon.
-
UK Corporate Director Exodus Amid Tax Changes: An FT analysis revealed that 3,790 company directors have left the UK since the government eliminated preferential tax treatment for non-domiciled residents, compared with 2,712 departures in the previous year. The United Arab Emirates is the top relocation choice for these executives.
-
Construction Sector Contraction in the UK: UK construction activity experienced its steepest decline since 2020, with the S&P Global Purchasing Managers’ Index (PMI) falling to 44.3 in July, well below the 50 mark delineating contraction. The decline reflects continuing slowdowns in housebuilding.
-
Rising Natural Disaster Costs: Swiss Re estimates that natural disasters caused $80 billion in insured losses during the first half of 2025—nearly double the 10-year average. Wildfires in California and recent storms across the US contributed heavily to this surge. Insured losses could surpass $150 billion as hurricane season progresses.
Further Insights and Research from the World Economic Forum
The World Economic Forum continues to explore key financial system challenges through its dedicated platforms:
-
Experts Aurora Matteini and Derek Baraldi discuss how financial mechanisms can support agricultural system transformation to address climate shocks and inflationary pressures, based on the Forum’s Playbook of Financing Solutions for Food Systems Transformation.
-
Following the enactment of the GENIUS Act, Forum analysts Sandra Waliczek and Harry Yeung unpack the regulatory framework for stablecoins and the broader implications for the cryptocurrency industry.
-
In confronting the looming global retirement savings deficit, Yie-Hsin Hung, CEO of State Street Investment Management, featured in the Forum’s Meet the Leader podcast to discuss demographic trends reshaping retirement and the multi-pronged strategies required to close the gap, supported by the Centre for Financial and Monetary Systems’ Longevity Economy initiative.
For ongoing updates and in-depth analysis, readers are invited to access the World Economic Forum’s Centre for Financial and Monetary Systems and subscribe to the Forum Stories newsletter.
This article is based on the World Economic Forum’s August 7, 2025 publication and is republished under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License.