Global Financial Markets Show Resilience at Mid-Year Amid M&A Boom and Lending Surge
Key finance developments highlight strong investor confidence and regulatory shifts around the world.
Published: August 7, 2025
By Rebecca Geldard, Senior Writer, Forum Stories
As we reach the midpoint of 2025, the global financial landscape reveals a remarkable capacity for resilience despite ongoing economic and geopolitical uncertainties. Recent data underscores a robust rebound in mergers and acquisitions (M&A) activity alongside a significant increase in securities lending revenues. Meanwhile, regulatory dynamics in the United States and shifts in market sentiment across major economies continue to shape the financial world.
1. M&A Activity and Securities Lending Reflect Market Strength
Global M&A activity has surged dramatically in 2025, reaching a year-to-date total valuation of approximately $2.6 trillion—the highest since the 2021 peak, according to Reuters data. This increase represents a 28% rise in deal value compared to the previous year, despite a 16% decrease in the total number of transactions. The growth is largely attributed to significant US megadeals and a sharp uptick in AI sector mergers.
The United States remains the dominant market, accounting for more than half of worldwide deal-making, while Asia Pacific has shown remarkable momentum, with deal-making volumes doubling and outpacing activity in Europe, the Middle East, and Africa (EMEA).
This M&A boom signals sustained corporate appetite for growth and elevated company valuations, reflecting investor confidence in navigating a complex environment marked by inflation concerns, trade tensions, and shifting regulatory frameworks.
In tandem, global securities lending revenues experienced a substantial 53% year-on-year increase in July, reaching $1.57 billion. According to reports in Securities Finance Times, this growth is driven by increased activity in US and Asian equity markets. The surge in securities lending suggests a strong risk appetite among investors and highlights ample market liquidity, despite prevailing volatility.
These trends resonate with recent assessments from major financial institutions such as the International Monetary Fund (IMF) and the European Central Bank (ECB), both of which recognize persistent risks from geopolitical tensions and financial market fluctuations, while acknowledging the solid performance of credit markets and non-bank financial intermediaries.
2. US Banks Brace for Crackdown Amid Allegations of ‘Debanking’
In regulatory news, the White House is preparing a significant executive order aimed at curbing what it identifies as political discrimination by banks against certain clients, a practice popularly known as "debanking." According to Reuters, this order would empower federal regulators to investigate and penalize financial institutions accused of closing accounts or denying services based on political affiliations.
This move responds to repeated claims from former President Donald Trump and supporters alleging unfair treatment by major banks. The proposed directive would require agencies to deploy existing consumer protection, fair lending, and antitrust laws to address such concerns.
The US banking sector, however, firmly denies these allegations, emphasizing that account closures are executed under legal risk management frameworks, such as anti-money laundering protocols, rather than political bias. Industry voices caution that politicizing banking supervision could undermine regulatory integrity.
Interestingly, this stricter stance on account access contrasts with broader deregulatory efforts in the digital assets arena. The Biden administration has positioned the US as a leader in cryptocurrency innovation, highlighted by the recent passage of the GENIUS Act—the first comprehensive US crypto legislation focused on stablecoins. Federal regulators have also eased supervisory requirements, allowing banks to engage in selected crypto activities without prior formal approvals.
3. Additional Market and Policy Developments
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Challenges for Big Accounting Firms: Former EY UK head Hywel Ball has highlighted difficulties the "Big Four" firms face in adopting artificial intelligence, noting that their large scale slows cultural adaptation, giving smaller firms agility advantages.
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Pharmaceutical Stocks Drop in Europe: European pharma shares declined to a three-month low after Trump reiterated intentions to impose tariffs on imported drugs. The STOXX Healthcare index fell by 2% on August 6, as investors responded to calls for reshoring production to the US.
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South Korea Market Volatility: New tax reform proposals precipitated a 3.9% drop in Korea’s KOSPI index, dampening the momentum of Asia’s top-performing market amidst concerns over the pace of reform and ongoing valuation discounts.
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UK Director Exodus: An analysis by the Financial Times found that 3,790 company directors left the UK following the removal of favorable tax treatment for non-domiciled residents—a sharp increase over the previous year’s 2,712. The United Arab Emirates emerges as the leading destination.
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UK Construction Slowdown: July saw the sharpest contraction in UK construction activity since 2020. The S&P Global Purchasing Managers’ Index (PMI) fell to 44.3, well below the 50 threshold indicating growth, primarily due to a slowdown in housebuilding.
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Rising Natural Disaster Insured Losses: Swiss Re estimates insured losses from natural disasters in H1 2025 reached $80 billion, nearly doubling the ten-year average. Wildfires in California and multiple US storms were primary contributors, with projected full-year losses potentially exceeding $150 billion as hurricane season unfolds.
4. Explore More Insights from the World Economic Forum
The World Economic Forum continues to shed light on how financial systems intersect with broader social and environmental challenges:
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Experts Aurora Matteini and Derek Baraldi discuss how finance can play a crucial role in transforming food systems to boost resilience, lower emissions, and protect livelihoods amid climate shocks.
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Forum analysts Sandra Waliczek and Harry Yeung provide in-depth coverage of the GENIUS Act’s implications for the cryptocurrency industry.
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A focused podcast episode with Yie-Hsin Hung, CEO of State Street Investment Management, dives into the looming global retirement savings gap, projected to reach $400 trillion by 2050, and elaborates on strategies to address this unprecedented longevity economy challenge.
For continuous updates and detailed analysis of these and other financial topics, visit the World Economic Forum’s Centre for Financial and Monetary Systems.
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