A Slowdown in Investment Banking Expected in the First Half of 2025

According to a note published by Morgan Stanley Research on Thursday, investment banking is expected to slow down in the first half of 2025 due to increasing market volatility and economic uncertainty. This volatility is causing concern among CEOs, boards, and sponsors planning to negotiate and initiate deals.

The note also indicates that capital market activity will remain low in the first half of the year, with a more noticeable increase anticipated in the third quarter of 2025. Strong market conditions at the beginning of the year have been affected by recent market pullbacks and rising volatility. In recent months, investment banking activities had gained momentum due to President Donald Trump's business-friendly approach. However, Dealogic data shows that merger and acquisition activities in the U.S. slowed in the first two months of 2025, marking the slowest pace in volume since 2009.