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
As we reach the midpoint of 2025, global financial markets continue to demonstrate remarkable resilience despite persistent economic uncertainties and geopolitical tensions. Key indicators such as mergers and acquisitions (M&A) activity and securities lending revenues reveal sustained investor confidence, driven largely by significant dealmaking in the US and Asia-Pacific regions and an appetite for risk even amid ongoing volatility.
1. M&A Boom and Lending Surge Signal Strong Market Confidence
According to recent data compiled by Dealogic and Reuters, the global M&A market has reached a robust $2.6 trillion in deal value so far this year, marking the busiest period since 2021. Interestingly, this surge has been achieved despite a 16% decline in the total number of deals, pointing to higher individual deal valuations and renewed corporate ambition.
Key highlights include:
- A 28% increase in deal value compared to the same period last year.
- The United States emerges as the dominant market, accounting for over half of global M&A activity and propelled by several large-scale megadeals.
- The Asia-Pacific region has experienced a doubling in deal volume, significantly outpacing Europe, the Middle East, and Africa (EMEA).
The rise in M&A activity is partly attributed to the growing influence of AI-related transactions and a rebound in dealmaking following pandemic-related slowdowns. This uptick suggests that boards and corporate leaders remain committed to growth strategies despite ongoing challenges such as inflation, trade tensions, and regulatory changes.
Complementing this trend, global securities lending revenues experienced a sharp 53% year-over-year increase in July, reaching $1.57 billion. The Securities Finance Times reports that increased activity in US and Asian equity markets has been a major driver, reflecting healthy trading volumes and abundant liquidity. This surge also indicates a notable investor willingness to assume risk, despite the backdrop of financial volatility.
These findings align with recent assessments from the International Monetary Fund (IMF) and the European Central Bank (ECB), which acknowledge ongoing risks while highlighting strong credit market performance and the vital role of non-bank financial intermediaries in market stability.
2. US Banks to Face Potential Crackdown Over Political ‘Debanking’ Claims
In the United States, the White House is preparing an executive order aimed at addressing accusations of banks discriminating against customers based on political beliefs—an issue widely referred to as "debanking." The draft order, reported by Reuters, would empower federal regulators to investigate and potentially penalize financial institutions deemed to be engaging in discriminatory account closures or service refusals linked to clients’ political affiliations.
This development follows persistent claims from former President Donald Trump and his supporters, who allege that major US banks have unfairly restricted their access to banking services. The order would direct federal agencies to leverage existing consumer protection, fair lending, and antitrust laws to enforce compliance.
However, banking industry representatives have pushed back against these allegations, emphasizing that account closures are generally driven by legal compliance protocols, such as anti-money laundering measures, rather than political bias.
Critics warn that the proposed crackdown risks politicizing banking supervision, a contrast to the broader deregulatory stance observed in certain financial sectors. Notably, the administration continues to promote the US as a global leader in cryptocurrency innovation, recently signing the GENIUS Act—the first major legislation governing stablecoins—and easing supervisory requirements for crypto activities by banks.
3. Additional Finance Developments to Watch
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Big Four Accounting Firms and AI Adoption: Hywel Ball, former UK head of EY, highlighted challenges faced by major accounting firms in AI integration due to their large organizational scale, suggesting smaller firms may have an edge in agility and cultural adaptation.
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European Pharma Shares Decline: Following renewed tariff threats from former President Trump targeting imported pharmaceuticals, the STOXX Healthcare index dropped 2% on August 6, reflecting investor concern over manufacturing relocations.
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South Korea Market Impacted by Tax Proposals: The KOSPI index retreated by 3.9%, dampening its status as Asia’s top-performing market in 2025. Despite significant capital inflows, worries about tax reform and the so-called “Korea discount” tempered investor enthusiasm.
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Director Exodus From the UK: Analysis by the Financial Times found that nearly 3,800 company directors have left the UK following the abolition of favorable tax regimes for non-domiciled residents, with the United Arab Emirates emerging as a preferred destination.
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UK Construction Sector Contracts: July saw the steepest decline in construction activity since 2020, with S&P Global’s Purchasing Managers’ Index (PMI) falling to 44.3, signaling notable downturns especially in housebuilding.
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Natural Disasters Cause $80 Billion in Insured Losses: Swiss Re reports that losses attributed to wildfires, storms, and other disasters nearly doubled the 10-year average during the first half of 2025, with total losses projected to surpass $150 billion amid the ongoing hurricane season.
4. Further Reading and Insights from the World Economic Forum
The Forum continues to provide in-depth analysis on emerging financial trends and challenges:
- Experts Aurora Matteini and Derek Baraldi discuss how climate-induced agricultural volatility is driving inflation and require innovative financial solutions to support resilient food systems.
- Coverage of the GENIUS Act outlines the evolving regulatory landscape for stablecoins and the US government’s ambitions to foster crypto industry growth.
- A recent podcast episode featuring Yie-Hsin Hung, CEO of State Street Investment Management, delves into the looming global retirement savings gap, estimated to reach $400 trillion by 2050, underscoring urgent need for multifaceted policy responses.
For more expert insights and developments shaping the financial and monetary systems, visit the World Economic Forum’s Centre for Financial and Monetary Systems.
About the Author:
Rebecca Geldard is a Senior Writer specializing in finance and economic developments for the World Economic Forum.
Note: This article is published under the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, with rights for non-commercial republishing subject to terms.
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