Global Financial Markets Show Remarkable Resilience at Mid-Year Mark, With M&A Surge and Lending Growth
August 7, 2025 – World Economic Forum
As the global economy navigates persistent uncertainties, financial markets are exhibiting unexpected strength at the midpoint of 2025. Robust merger and acquisition (M&A) activity combined with a significant increase in securities lending revenues signal sustained investor confidence despite ongoing geopolitical tensions and economic headwinds.
M&A Activity Reaches New Heights Driven by US Megadeals and AI Interests
According to data compiled by Reuters and Dealogic, worldwide mergers and acquisitions have surged to an impressive $2.6 trillion year-to-date, marking the busiest period since 2021. This represents a 28% increase in deal value compared to the previous year, despite a 16% decline in the total number of deals. The rise is largely attributed to ambitious corporate strategies, a wave of AI-related transactions, and a rebound in large-scale US deals.
The United States leads as the top market for M&A, accounting for over half of global deal volume. Meanwhile, the Asia Pacific region has seen deal-making activity more than double, outpacing activity in Europe, the Middle East, and Africa (EMEA). Elevated company valuations and a pronounced appetite for growth reflect a deeply ingrained optimism among investors who appear determined to weather economic and geopolitical challenges alike.
Surge in Securities Lending Reflects Strong Market Liquidity and Risk Appetite
The upward momentum extends to securities lending markets as well. July 2025 figures from Securities Finance Times report a 53% year-over-year increase in global securities lending revenues, reaching $1.57 billion. This growth is driven primarily by heightened activity in US and Asian equity markets.
Increased securities lending indicates not only robust trading volumes but also abundant liquidity and a willingness among investors to assume risk amid ongoing market volatility. Factors such as trade tensions, inflationary pressures, and regulatory changes have created uncertainty, yet credit markets and non-bank financial intermediaries continue to perform solidly, as noted by both the International Monetary Fund and the European Central Bank.
White House Prepares Crackdown on Political "Debanking"
Meanwhile, the US political and regulatory landscape is witnessing a new development as the White House readies an executive order aimed at addressing allegations of banks discriminating against customers based on political beliefs—a practice termed “debanking.” The proposed directive would empower federal regulators to investigate and penalize financial institutions accused of such behavior, utilizing existing consumer protection, fair lending, and antitrust authorities.
This initiative follows repeated claims—primarily from former President Donald Trump and his supporters—that major banks have unfairly closed accounts or refused services on political grounds. The banking sector disputes these allegations, asserting that account closures comply with legal risk management requirements, including anti-money laundering protocols, rather than political motivations.
Some industry observers caution that the crackdown might politicize banking oversight, posing challenges for regulatory impartiality. Notably, this move contrasts with a broader deregulatory trend in the US digital assets space. The administration is simultaneously promoting innovation by facilitating legal clarity for cryptocurrencies—highlighted by the recent passage of the GENIUS Act, the first major federal legislation on digital currencies—and easing supervisory burdens on banks engaging in crypto-related activities.
Additional Key Finance Developments
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Accounting Industry Faces AI Adoption Challenges: Hywel Ball, former UK head of EY, highlighted the difficulty that the "Big Four" accounting firms confront in adopting artificial intelligence swiftly. Their extensive scale can hinder the cultural and operational agility required, giving smaller firms a competitive edge in embracing new technologies.
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European Pharma Shares Fall on Tariff Threats: Shares in the European pharmaceutical sector dropped to a three-month low following renewed tariff proposals on imported drugs by former President Trump. The STOXX Healthcare index declined by 2% as investors reacted to the potential impact on global supply chains.
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South Korean Market Reacts to Tax Reforms: South Korea’s KOSPI index slid 3.9%, disrupting its recent rally, amid concerns about new tax proposals and their effect on the country’s investment environment. Although July saw $4.5 billion in inflows, investor confidence is tempered by doubts over reform momentum and the so-called “Korea discount.”
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UK Experiences Director Exodus Amid Tax Changes: Data analysis reveals that 3,790 UK company directors departed following the government’s elimination of favorable tax treatment for non-domiciled residents—a notable increase from the previous year. The United Arab Emirates has emerged as the top relocation destination for these executives.
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UK Construction Sector Contracts Sharply: July saw the steepest decline in UK construction activity since 2020, with the S&P Global Purchasing Managers’ Index falling to 44.3, signaling contraction mainly due to a slowdown in housebuilding.
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Natural Disasters Cause Record Insured Losses: Swiss Re estimates that the first half of 2025 witnessed $80 billion in insured losses from natural disasters, nearly double the 10-year average. Wildfires in California and major US storms led the spike, with total yearly losses expected to potentially exceed $150 billion as the hurricane season progresses.
Further Insights from the World Economic Forum
The Forum continues to explore critical intersections between finance, sustainability, and social change:
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Transforming Food Systems Through Finance: Experts Aurora Matteini and Derek Baraldi examine the financial sector’s role in enhancing resilience and reducing emissions in agriculture amid increasing climate volatility. Their insights build on the Forum’s Playbook of Financing Solutions for Food Systems Transformation.
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Implications of the GENIUS Act for Crypto Markets: The recently signed US legislation sets a regulatory framework for stablecoins, offering clarity to the burgeoning digital currency industry. Forum analysts Sandra Waliczek and Harry Yeung analyze the law’s potential impact.
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Addressing the Global Retirement Savings Gap: With forecasts indicating a $400 trillion retirement savings shortfall by 2050, The Forum’s Meet the Leader podcast features Yie-Hsin Hung, CEO of State Street Investment Management, discussing demographic shifts and the need for comprehensive solutions. Initiatives like the Centre for Financial and Monetary Systems’ Longevity Economy program are pivotal in confronting this challenge.
For continuous updates on financial and monetary systems shaping the global economy, visit the World Economic Forum’s Centre for Financial and Monetary Systems.
This article is republished under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License. Views expressed are those of the author and do not necessarily reflect those of the World Economic Forum.