Global Financial Markets Show Resilience at Mid-Year Mark Amid M&A Boom and Lending Surge
Published August 7, 2025 – Updated August 7, 2025
By Rebecca Geldard, Senior Writer, Forum Stories, World Economic Forum
As the world reaches the midpoint of 2025, global financial markets have demonstrated notable resilience despite ongoing economic and geopolitical uncertainties. A surge in mergers and acquisitions (M&A) coupled with a sharp rise in securities lending revenues signals strong investor confidence, defying several persistent headwinds.
M&A Activity Soars to $2.6 Trillion, Led by US Megadeals and AI-Related Transactions
According to Reuters data highlighted by the World Economic Forum’s Centre for Financial and Monetary Systems, global M&A activity has 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 last year, despite a 16% decline in the total number of transactions.
The US remains the dominant market for dealmaking, accounting for over half of all global M&A activity. Meanwhile, the Asia Pacific region has seen its deal volume double, outpacing Europe, the Middle East, and Africa (EMEA). Key drivers include corporate boardroom ambitions, a rise in artificial intelligence-related deals, and a rebound in large-scale transactions within the US market.
Market analysts note that although the volume of deals has decreased, elevated valuations and sustained corporate appetite for growth continue to fuel robust M&A activity. The resilience is underscored by investor willingness to navigate complex economic and geopolitical challenges.
Securities Lending Revenues Climb by 53% Amid Robust Equity Market Activity
In tandem with dealmaking, global securities lending revenues climbed to $1.57 billion in July—a 53% increase compared to the previous year—according to reports from Securities Finance Times. This surge is largely driven by heightened activity in both US and Asian equity markets, reflecting strong trading volumes and abundant liquidity.
This uptick in securities lending points to a growing risk appetite among investors despite ongoing market volatility, which is influenced by factors such as international trade tensions, inflationary pressures, and evolving regulatory environments.
International institutions, including the International Monetary Fund (IMF) and the European Central Bank (ECB), echo the assessment of resilience in credit markets and non-bank financial intermediaries, while acknowledging the ongoing presence of financial and geopolitical risks.
US Banking Sector Faces Potential "Debanking" Crackdown Amid Political Controversy
The White House is reportedly preparing an executive order that would authorize federal regulators to investigate and penalize banks accused of discriminating against clients based on their political beliefs. The move addresses recurrent claims—primarily from former President Donald Trump and his supporters—that major US banks have engaged in "debanking," the practice of closing accounts and refusing services on political grounds.
According to draft proposals covered by Reuters, the order would instruct regulatory bodies to use existing consumer protection, fair lending, and antitrust laws to examine these allegations. However, the banking industry strongly rejects these claims, pointing to compliance-based risk management protocols—such as those targeting money laundering—as the basis for account closures, not political biases.
Critics of the potential crackdown warn that injecting political considerations into banking regulation could have unintended consequences. This proposal stands in contrast to the administration’s broader deregulatory stance, especially regarding digital assets, where efforts focus on fostering innovation and clarifying legal frameworks, exemplified by the recent signing of the GENIUS Act, landmark legislation regulating stablecoins and the crypto market.
Additional Finance Developments to Watch
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Accounting Sector Faces AI Integration Challenges: Hywel Ball, former UK head of EY, highlighted to the Financial Times that the "Big Four" accounting firms encounter significant hurdles in adopting AI at scale due to their size and cultural inertia, potentially giving smaller firms a competitive edge in agility.
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European Pharmaceutical Shares Dip: The STOXX Healthcare index fell by 2% on August 6 following President Trump’s renewed threats to impose tariffs on imported drugs, disturbing investor sentiment amid efforts to encourage reshoring of pharmaceutical manufacturing to the US.
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South Korea’s Market Pressured by Tax Proposals: The KOSPI index dropped 3.9% amid concerns over tax reforms and diminishing reform momentum, despite strong capital inflows earlier in the month. This volatility highlights investor wariness in Asia’s top-performing market.
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UK Director Exodus Linked to Tax Changes: Analysis by the Financial Times reveals that 3,790 company directors have left the UK since the abolition of favorable tax treatment for non-domiciled residents—a 40% increase year-over-year. The United Arab Emirates has emerged as the preferred relocation destination.
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Construction Activity Contracts Sharply in UK: July saw the steepest decline in UK construction activity since 2020, with the S&P Global Purchasing Managers’ Index (PMI) falling to 44.3, indicating significant contraction largely driven by a slowdown in housebuilding.
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Rising Natural Disaster Losses: Swiss Re estimates insured losses from natural disasters hit $80 billion in the first half of 2025, nearly double the 10-year average. Wildfires in California and US storms contributed heavily to these losses, which may surpass $150 billion with hurricane season underway.
Further Reading and Resources
The World Economic Forum continues to provide in-depth analysis and updates on key financial challenges and opportunities:
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Experts Aurora Matteini and Derek Baraldi discuss the role of sustainable finance in transforming global food systems to address climate-driven agricultural volatility.
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Coverage of the GENIUS Act’s impact on stablecoin regulation and the broader crypto industry is provided by Forum contributors Sandra Waliczek and Harry Yeung.
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A recent Meet the Leader podcast episode features Yie-Hsin Hung, CEO of State Street Investment Management, exploring the looming global retirement savings gap, projected to reach $400 trillion by 2050, and solutions on the horizon.
For more insights, visit the World Economic Forum’s Centre for Financial and Monetary Systems.
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