Global Financial Markets Show Resilience at Mid-Year With M&A Boom and Lending Surge
Published: August 7, 2025 | Updated: August 7, 2025
By Rebecca Geldard, Senior Writer, Forum Stories
As we reach the midpoint of 2025, the global financial landscape is marked by an unexpected show of resilience. Despite ongoing economic uncertainties and geopolitical tensions, key indicators such as mergers and acquisitions (M&A) activity and securities lending revenues point to robust investor confidence worldwide.
M&A Activity Hits $2.6 Trillion, Led by US Megadeals and AI Sector Growth
Global mergers and acquisitions have surged to a record $2.6 trillion year-to-date—the busiest stretch since 2021—with deal value rising 28% compared to the same period last year, even though the total number of deals declined by 16%. This increase is largely propelled by sizeable US transactions and a wave of AI-related deals that are energizing boardroom ambitions.
The United States remains the dominant market, accounting for over 50% of global M&A activity. Notably, the Asia Pacific region doubled its deal-making volume, outpacing Europe, the Middle East, and Africa (EMEA). Despite fewer deals overall, elevated company valuations and a robust appetite for growth underscore sustained investor optimism in navigating a landscape challenged by economic volatility and political uncertainties.
Surge in Securities Lending Reflects Strong Risk Appetite
Parallel to the M&A boom, securities lending revenues have soared by 53% year-over-year in July, reaching $1.57 billion. This growth stems predominantly from increased market activity in US and Asian equities, signaling robust trading volumes and strong liquidity. The rise in securities lending also reveals a heightened risk tolerance among investors, notwithstanding persistent inflation pressures, trade tensions, and shifting regulatory environments.
These positive trends align with analyses from international financial authorities such as the International Monetary Fund and the European Central Bank. Both institutions recognize continuing risks but emphasize the solid performance of credit markets and the role of non-bank financial intermediaries in sustaining market resilience.
US Government Targets Alleged Political ‘Debanking’ in Banks
In a significant regulatory development, the White House is preparing an executive order aimed at empowering federal agencies to investigate and penalize banks accused of discriminating against clients based on political affiliation. This move responds to claims voiced by former President Donald Trump and his supporters, who assert that major US banks have unfairly closed the accounts of conservative clients—a practice they refer to as "debanking."
The anticipated order would instruct regulatory bodies to utilize their existing authority under consumer protection, fair lending, and antitrust laws to address these concerns. However, banking industry representatives argue that account closures result from risk management protocols designed to prevent money laundering and other illegal activities—not political bias.
Critics caution that the crackdown could politicize banking supervision inappropriately. It’s noteworthy that this enforcement approach contrasts with the current deregulatory momentum in digital assets, where the US administration aims to foster innovation and establish the country as the "crypto capital of the world." The recent passage of the GENIUS Act, marking Congress’s first major crypto legislation, exemplifies efforts to provide legal clarity, especially for stablecoins. Additionally, banking regulators have eased restrictions, eliminating prior requirements for formal pre-approval of certain crypto-related banking activities.
Additional Financial News Highlights
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Accounting Firms Confront AI Adoption Challenges: Hywel Ball, former UK head of Ernst & Young, highlighted the struggles facing the "Big Four" accounting firms in integrating AI technologies. Their large scale and entrenched cultures may hinder swift adaptation, providing smaller, agile firms with a competitive advantage.
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European Pharma Shares Decline: Shares in European pharmaceutical companies fell to a three-month low as President Trump renewed plans to impose tariffs on imported drugs. The STOXX Healthcare index dropped 2% on August 6 amid investor concerns about potential production shifts to the US.
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South Korean Market Impacted by Tax Proposals: South Korea’s KOSPI index declined 3.9%, dampening its recent rally despite substantial inflows. Investor confidence is shaken by uncertainties around tax reforms and the ongoing "Korea discount" affecting valuations.
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UK Tax Changes Spur Director Exodus: Analysis from the Financial Times reveals that 3,790 company directors have left the UK since the abolition of favorable tax treatment for non-domiciled residents, up from 2,712 in the previous year. The United Arab Emirates remains the most popular destination for departing directors.
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UK Construction Contracts Drop Sharply: July saw the steepest decline in UK construction activity since 2020, with S&P Global’s purchasing managers’ index plummeting to 44.3, signaling contraction largely driven by a slowdown in housebuilding.
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Natural Disasters Cause Record Insured Losses: Insured losses from natural disasters in the first half of 2025 reached $80 billion—nearly twice the decade average. Wildfires in California and US storms were primary contributors, with total annual losses potentially surpassing $150 billion as hurricane season advances.
Further Insights and Analysis from the World Economic Forum
The Forum continues to highlight critical intersections between finance and broader global challenges:
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Experts Aurora Matteini and Derek Baraldi examine how climate-induced agricultural volatility is impacting inflation and financial markets, advocating for sustainable finance solutions to enhance food system resilience.
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The GENIUS Act’s comprehensive regulatory framework for stablecoins is unpacked by Forum contributors Sandra Waliczek and Harry Yeung, outlining implications for the rapidly evolving crypto industry.
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The looming global retirement savings shortfall—which could reach an extraordinary $400 trillion by 2050—is explored in depth by State Street Investment Management CEO Yie-Hsin Hung in a recent Forum podcast, emphasizing the urgent need for multifaceted strategies to address longevity and financial security.
For ongoing updates and to explore these topics in detail, visit the World Economic Forum’s Centre for Financial and Monetary Systems and subscribe to the Forum Stories newsletter.
This article is published under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License. The views expressed are those of the author and do not necessarily reflect the positions of the World Economic Forum.