A 500 billion fund ignites the merger and acquisition boom! Goldman Sachs and JPMorgan expect Germany to lead the European mergers and acquisitions recovery.

Wall Street financial giants Goldman Sachs and J.P. Morgan both stated that, thanks to the German government's establishment of a new large fund of up to 500 billion euros (approximately 576 billion US dollars) for infrastructure and climate construction projects, the large-scale M&A activity in the German market is expected to become the strongest highlight of the European M&A market recovery. According to compiled statistics, M&A transaction volume involving German companies has reached approximately 79 billion US dollars so far, a significant increase of about 50% compared to the same period in 2024. Among them, German large enterprises are leading in outbound investments, including Siemens AG planning to acquire research software manufacturer Dotmatics for 5.1 billion US dollars, and Merck KGaA's blockbuster deal in the United States to acquire Springworks Therapeutics Inc. In addition, many European large enterprise executives, including those from German companies, are more optimistic about large M&A transactions, and the German market is becoming a hotspot for initial public offerings (IPOs), despite investors remaining cautious about the prospects. "In general, we are seeing fairly healthy transaction activity," said Christopher Droege, Head of M&A for Germany and Austria at Goldman Sachs. He added that German companies in the domestic large infrastructure or construction sector are less affected by US tariff policies, leading to higher optimism, and the defense industry is clearly benefiting from Germany's billion-euro long-term special fund. Another major Wall Street firm, J.P. Morgan, also observed that European market executives are more optimistic about the prospects of M&A transactions. "For the first time in nearly twenty years, European corporate board members are more positive about M&A activity than their American counterparts," said Alex Voigt, Head of Investment Grade Financing in the German-speaking region at J.P. Morgan. Germany has become the hottest spot for IPOs in Europe before the summer window, with two substantial IPO deals announced this month. However, despite the German benchmark index hovering near historic highs, J.P. Morgan remains cautious about the prospects of the German stock market and IPO market. "It is too early to claim that Europe is winning and the era of American exceptionalism is coming to an end," said Thorsten Zahn, Head of Equity Capital Markets in the German-speaking region at J.P. Morgan. He pointed out that the Europe-wide rebound in stock markets is mainly driven by highly leveraged hedge funds, technically bullish investors, and continually improving macroeconomic data, together with the European Central Bank's eight interest rate cuts in a year. Amundi SA, Europe's largest asset management giant, recently released a mid-year outlook report titled "Adapting to Policy Noise and Changes." The report shows that the sustained uncertainty in US government policy-making and the increasingly large budget deficits will create an extremely unfavorable backdrop for the economy and markets. As a result, the institution is shifting its focus from long-term "US asset allocation" to betting on value trends in Europe and emerging markets, and preparing for a new round of intense market volatility in US stocks, bonds, and currency markets that may be triggered by White House tax policies and global trade policies. MEGA (Make Europe Great Again) - This acronym first appeared last year in response to European competitiveness issues, and this spring it resurfaced with the surge of investor interest in European financial markets and inflows of funds into European stocks. Hats resembling the MAGA with MEGA acronym can be easily purchased online. Following the release of the tariff-heavy news on Trump's "Liberation Day," European stock markets outperformed the US stock market to a degree even surpassing the past 20 years, bringing up this acronym once again among investors and traders. Compared to the high valuations of US stocks, with the unveiling of billion-dollar defense and infrastructure spending plans led by Germany and other European countries, Europe now offers a better setting for boosting profits from historical lows and achieving significant valuation expansions. The significant surge in the stock prices of some large-cap defense stocks in the European stock market this year has made defense giants the most obvious winners in the European and even global stock markets. From market pricing trends, not only have stocks of major defense companies in Germany like Rheinmetall skyrocketed, but any European stocks connected to defense and military industries, ranging from drone manufacturers to battlefield goggles, night vision equipment manufacturers, and even some printing companies, have been snapped up this year, leading to soaring stock prices.