Category: 3. Business

Prepared by Paolo Alberto Baudino, Oscar Schwartz Blicke and Maurizio Michael Habib

Published as part of the Financial Stability Review, November 2025.

Hedge funds represent a relatively small segment of the euro area investment fund sector and comprise both AIF and UCITS hedge funds. The total assets of euro area hedge funds stood at around €660 billion in the third quarter of 2025, equivalent to roughly 3% of the investment fund sector’s total assets. In the EU, hedge funds may fall either under the Alternative Investment Fund Managers Directive (AIFMD)^[1] or the Undertakings for Collective Investment in Transferable Securities (UCITS) Directive.^[2] AIF hedge funds are usually marketed to wealthy investors and are predominantly held by euro area investment funds. They offer limited liquidity, by allowing redemptions only quarterly or even annually (often with advance notice), for example, and by imposing lock-up periods on initial investments. By contrast, UCITS hedge funds are more accessible to retail investors and other non-bank sectors – with euro area households and insurance corporations each holding around 15% of the shares in such funds. As these funds often allow investors to redeem shares on a high-frequency basis, the sector is more exposed to fund share redemptions during market turmoil. UCITS hedge funds account for about 30% of the overall hedge fund sector in terms of shares issued (Chart A, panel a) as well as total assets.

Chart A

UCITS hedge funds exhibit higher retail participation and use derivatives more intensively than do AIF hedge funds

a) Investor base and shares issued by euro area hedge funds, by fund type	b) Euro area hedge funds’ financial leverage and gross derivatives exposure, by fund type	c) Gross derivatives exposures of euro area UCITS hedge funds and derivative type distribution
(Q3 2025; percentages, € billions)	(Q3 2025; total assets divided by shares issued, derivative gross notional divided by shares issued)	(Q3 2025, derivative gross notional divided by shares issued)

As UCITS hedge funds have relatively high derivatives exposure and leverage, they warrant attention from a financial stability perspective. Both UCITS and AIF hedge funds employ a wide range of investment strategies, including leveraged trades, to achieve positive absolute returns. Because of regulatory constraints on borrowings,^[4] UCITS hedge funds make less use of financial leverage than AIF hedge funds do, with a total assets/equity ratio of 1.3 for UCITS hedge funds versus 1.7 for AIF hedge funds. However, synthetic leverage through derivatives is more pronounced in UCITS hedge funds, with gross notional derivatives exposure reaching up to 12 times equity for fund categories such as global macro strategies (Chart A, panels b and c).^[5] In addition, UCITS hedge funds hold a lower proportion of highly liquid assets (e.g. cash and sovereign bonds) than AIF hedge funds do.^[6] This leaves them more vulnerable to liquidity risk from redemption shocks or margin calls. Although some research has been carried out on the performance of UCITS hedge funds, this box sheds light on their liquidity and leverage-related risks, given their importance for financial stability.^[7]

Procyclical flows and larger redemptions from leveraged funds in times of stress can lead to asset sales and mounting liquidity pressures during periods of high market volatility. Evidence from a panel of 457 UCITS hedge funds shows that their flows are procyclical, positively correlated with past returns (Chart B, panel a) and in line with the findings for other fund categories.^[8] Although the analysis does not indicate that leverage generally amplifies the flow procyclicality of UCITS hedge funds, it does show larger outflows from leveraged UCITS hedge funds in periods of market stress (Chart B, panel b). Since fund share redemptions may force funds to sell assets when markets are under pressure, leveraged funds could be required to close larger positions, thereby amplifying stress.

The use of derivatives by UCITS hedge funds can intensify liquidity pressures via margin calls. Derivatives positions, which can be used for hedging or for leverage, are subject to margin requirements. During periods of elevated price volatility and significantly negative returns, margin calls on these derivatives positions tend to increase (Chart B, panel c), further straining a fund’s liquidity.^[9] This exacerbates the challenges faced by leveraged UCITS hedge funds, as they have to manage liquidity to meet both margin calls and redemption requests simultaneously. Interaction between these factors can heighten liquidity strains and contribute to broader market stress under adverse market conditions.^[10]

Chart B

Flows into UCITS hedge funds tend to be procyclical, while margin calls may intensify liquidity risk

a) Average fund-level flows into euro area UCITS hedge funds, by lagged return level	b) Average fund-level flows into euro area UCITS hedge funds, by synthetic gross leverage level	c) Average fund-level daily posted variation margin of euro area UCITS hedge funds, by negative return level
(Jan. 2019-Oct. 2025; standardised values, percentages)	(Jan. 2019-Oct. 2025; standardised values, log of derivative gross notional as a percentage of TNA)	(Jan. 2020-Oct. 2025; percentages of TNA, percentages)

A robust stress-testing framework for leveraged UCITS hedge funds is essential to ensure their resilience and limit the risks to financial stability in turbulent market conditions. The combination of outflows and margin calls on derivatives positions can intensify liquidity pressures for UCITS hedge funds during periods of stress. This raises concerns about the ability of such funds to manage the challenges and contributes to broader financial instability. These dynamics highlight the need for strengthened risk management and comprehensive stress-testing practices to safeguard financial stability during episodes of market turmoil.

Finally, authorities should be equipped with suitable tools to limit excessive leverage in UCITS hedge funds and mitigate the build-up of risks during periods of market stress. While authorities have tools that enable them to contain excessive leverage in AIFMD-compliant funds, they do not have such tools for UCITS hedge funds. The Eurosystem suggests introducing discretionary powers that would allow authorities to impose stricter leverage limits on these funds when they pose risks to financial stability.^[12] It also recommends that all UCITS hedge funds should be required to report their leverage using the commitment approach.

Young professionals under 35 years are invited to submit essays on innovations in the nuclear fuel supply chain, with winners presenting at an IAEA conference in Vienna in October 2026.

The IAEA is inviting young professionals to submit innovative essays on nuclear fuel supply issues and prospects covering topics from uranium exploration to recycling of spent fuel. Winners will be invited to present their essays at the IAEA International Conference on Fuel Supply Chain for Sustainable Nuclear Power Development in Vienna on 13 to 15 October 2026.

Professionals can submit an essay on one of the following themes: 

• Meeting growing global demand for uranium resources.
• Advancing fuel engineering and production for innovative reactor technologies.
• Expanding spent fuel recycling to support a circular economy in the nuclear sector.

The deadline for submission is 10 January 2025. Shortlisted authors must submit a three-minute recorded presentation or video by 1 March 2026.

“We wish to encourage creative thinking about the fuel supply in the context of expanding nuclear power generation, including with advanced and innovative reactor concepts,” said Olena Mykolaichuk, Director of the IAEA Nuclear Fuel Cycle and Waste Technology Division. We are eager to see participation from women and professionals from developing countries, as well as experts in disciplines such as engineering, law, natural or social sciences who have a focus on the nuclear sector.”

The prospect of significantly increasing nuclear power generation by mid-century poses challenges across the nuclear fuel supply chain. This competition aims to highlight the career  opportunities for young professionals in these fields.

Winners will have the opportunity to present their essays and participate in the conference which provides a global forum for fuel supply professionals to explore current topics and innovations. All essay applicants will also be considered for roles in other segments of the Conference programme.

For more details about the competition please click here.

Well-functioning electricity markets can be an efficient tool for balancing supply and demand, coordinating operational decisions and signalling investment needs. As electricity systems transform to accommodate a broader range of technologies and growing power demand, effective market designs for secure operations and timely investment are essential, according to a new IEA report released today.

The report – Electricity Market Design: Building on strengths, addressing gaps – looks at how wholesale market designs and the policies that complement them are performing across Europe, the United States, Japan and Australia, and provides insights on how they can adapt to changing system needs. It finds that while short-term markets have performed well in supporting efficient and secure electricity dispatch, long-term markets have been less effective in meeting investment and risk-management needs.

Complementary mechanisms, such as capacity remuneration schemes and renewable support programmes, have played a significant role in advancing investment and policy objectives, but in some cases their design has contributed to system inefficiencies and higher costs, the report says.

Across the markets analysed, electricity has been securely supplied more than 99.9% of the time over the past five years. Short-term markets have been broadly effective in maintaining reliable and efficient operations even as systems become more complex. They have enabled efficient scheduling, transparent price formation and broad participation across a diverse set of resources and actors. In Europe, for instance, the day-ahead market processes more than 400 000 bids every hour across thousands of registered actors.

Long-term markets, however, suffer from low liquidity across most of the regions analysed. This limits how easily market participants can find opportunities to protect themselves against short-term price risks. In forward and futures markets, most trading happens no more than 2 years ahead of electricity delivery, far short of the horizons of 10 to 30 years typically required to finance new capital-intensive projects. Overall, long-term market gaps make it harder for market participants to manage price risks over the time frames needed for investing in new generation, storage and electrification projects.  

For needs that markets alone cannot meet, complementary mechanisms provide targeted support to bring forward new investment and maintain essential existing capacity. Across many regions, they have helped advance policy objectives such as resource adequacy and emissions reductions targets. These mechanisms have become a structural feature of electricity markets, helping to deliver large-scale, low-emissions generation and retain dispatchable and flexible resources which may operate less frequently with rising shares of variable renewables, while remaining essential for system security. 

Overall, the report finds that short-term markets have managed to remain effective, and their strengths should be preserved while refining their designs to reflect the needs of more dynamic and distributed systems. Long-term markets have shown several gaps, undermining investment conditions and risk management. Many market participants would benefit from reforms that increase the liquidity, duration and accessibility of long-term markets.

The report underscores the importance of taking a holistic view of wholesale electricity market design. The analysis highlights the benefits of evolving market designs and emphasises the need for transparent and predictable reform processes to maintain stakeholder confidence and support effective implementation.

[Bangkok, Thailand, November 26, 2025] At the 10th 5G Core Network Summit hosted by Informa Tech, George Gao, President of Huawei Cloud Core Network Product Line, delivered a keynote address calling on telco operators to capitalize on AI opportunities. Mr. Gao advocated for building an agent communication network featuring terminal service collaboration through network agentization. Huawei also released the Striding Towards the Intelligent World White Paper 2025 on cloud core networks at the summit, which illustrates seven core network development trends around intelligent terminals, service scenarios, and AI core networks, facilitating industry collaboration and innovation.

Mr. Gao emphasized that as terminals and service applications increasingly incorporate intelligent agent capabilities, networks must evolve to bridge ecosystem gaps.

First, we can use intent entry, network service agents, network capability agents, and network O&M agents to make the network agent-based. The agentized network supports the agent-to-agent (A2A) protocol and the model context protocol (MCP), allowing agents to communicate with each other. This brings more efficient and intelligent terminal and service collaboration. The intent entry interacts with the terminal-side agents, letting them invoke network agents exactly when needed.

Second, we can build an agent communication network across ecosystems. We can introduce A2A session management capabilities based on IP sessions, and expand the authentication mode from SIM card-based authentication to digital identity authentication and authorization.

Mr. Gao also proposed four strategic actions to speed the evolution of operator networks into AI core networks:

Intelligent Network Services

Leveraging AI agents, we can roll out various intelligent services on the core network. AI Calling is a prime example. By introducing AI capabilities to calling services, we can build an AI call assistant that can understand user intent, emotions, and contextual information, creating more intelligent and efficient call experiences. Based on the data channel (DC), we can support interactive calling, which facilitates closed-loop service handling during calls. In this new model, the familiar dial pad serves as an entry point for AI services.

Network Capability Productization

By productizing network capabilities, we can help operators shift from just selling traffic to selling premium service experiences. Huawei has defined five essential elements for effective experience monetization: definable experiences, guaranteed quality, marketable products, perceptible exclusive identity, and reliable service provisioning. With technologies such as media relay, we can greatly improve HD video penetration rates and third-party service experiences, and reshape operator’s business model.

Network O&M Autonomy

We can also introduce digital employees to advance network O&M autonomy, achieving high O&M efficiency and secure, high-stability networks. The AI core network uses key technologies such as agents, digital twins, and the industry’s first mixture-of-models (MoM) architecture facilitating intelligent scheduling and collaborative inference between fast inference models and deep reasoning models. With the fusion of these technologies, we can enable the AI core network to achieve single-domain autonomy and accelerate the evolution to level-4 autonomous networks.

Diversified Telco Cloud Computing Power

We can integrate AI computing resources into the telecom infrastructure. Through resource pooling and unified orchestration and scheduling, we can build one cloud for general computing and intelligent computing, accommodating hundreds of billions of agents and vast service traffic in the mobile AI era.

Mr. Gao concluded by stating that the introduction of AI Core is not only a technological advancement, but also a reconstruction of the entire industry ecosystem. Huawei is committed to continuous innovation, to help operators unlock new revenue opportunities and secure a stronger position in the market.

Prior to today’s global debut, Tencent’s open-sourced Hunyuan 3D Models have earned worldwide acclaim and popularity among developers and creators

Tencent’s Hunyuan 3D capabilities launches globally, enabling creators to generate commercial-grade 3D assets with multimodal inputs.

Tencent today announced the official global launch of its Hunyuan 3D creation engine, bringing next-generation AI-powered 3D modeling tools to worldwide creators. With this release, users can instantly generate high-quality 3D assets from multimodal inputs such as text descriptions, images, or sketches (Refer to Appendix). This cuts production time from days or weeks to just minutes, eliminating the complexity of traditional workflows.

In addition, Tencent Cloud, the cloud business of global technology company Tencent, has made the Hunyuan 3D Model API available to global enterprises. This enables enterprises to seamlessly integrate advanced 3D generation capabilities into their workflows – for use cases such as game development, e-commerce promotion, special effects for filming, advertising, social media content creation, 3D printing, and more.

Users of Tencent Hunyuan 3D Global will receive 20 free generations daily, while enterprise users plugged into the Hunyuan 3D Model API via Tencent Cloud are set to receive 200 free credits which can be used for generating 3D assets.

Hunyuan 3D Large Model leads global industry for text-to-image, video, and 3D generation

Tencent’s Hunyuan 3D, an in-house developed generative AI large model, has become one of the most advanced in the Hunyuan series. Since the release of several open-sourced 3D models in November 2024, it has surpassed 3 million community downloads on Hugging Face, earning recognition as one of the world’s most popular 3D open-source models among developers, creators and the open-sourced community globally.

The Hunyuan 3D series has since evolved through multiple iterations, each improving generation quality and modeling accuracy. Today, models such as Hunyuan 3D 3.0 focuses on high-quality asset production for objects, while specialized Hunyuan3D World models are designed to help construct large scale interactive environments that users can roam in, opening new creative possibilities in in gaming, virtual reality and digital content creation.

More than 150 enterprises in Mainland China have integrated Tencent Hunyuan 3D Model through Tencent Cloud, including globally renowned real-time 3D engine company Unity China, leading consumer-grade 3D printing company Bambu Lab, and China’s largest AI content creation platform Liblib, among others.

The Hunyuan 3D international platform offers professional-grade model editing and adjustment capabilities, supports output in mainstream 3D formats such as OBJ and GLB, and can be seamlessly integrated into professional software like Unity, Unreal Engine, and Blender. It adapts to various workflows, enabling generated 3D assets to be immediately used in real projects.

Multi-modal inputs supported by Hunyuan 3D:

A) Text-to-3D: Instantly generate 3D models from natural language descriptions with precise fidelity to style, shape, and material details.

B) Image-to-3D: Upload up to four multi-view images to create accurate 3D models that capture geometry and texture with high precision.

C) Sketch-to-3D: Transform simple sketches into fully detailed 3D models by adding text-based attributes such as color, category, and material.

D) Smart Topology: Automatically optimize mesh topology for efficient rendering and compliance with professional standards, supporting both triangular and quadrilateral faces.

BANGKOK — Asian shares and U.S. futures advanced on Wednesday after benchmarks on Wall Street surged on hopes the Federal Reserve will soon opt to cut interest rates.

Tokyo’s Nikkei 225 rose 1.7% to 49,502.38 in a broad rally that encompassed major exporters and technology shares. However, shares in Kioxia dropped 15% on reports that Bain Capital plans to sell $2.3 billion of the computer memory maker’s shares.

In South Korea, the Kospi gained 2.5%, to 3,960.84, helped by a 3.5% gain for Samsung Electronics, the market’s biggest heavyweight. Computer chip maker SK Hynix climbed 1%.

Taiwan’s Taiex surged 1.9%.

Chinese markets were mixed.

Hong Kong’s Hang Seng rose 0.4% to 25,992.25 and the Shanghai Composite index edged 0.1% lower, to 3,866.59.

Chinese e-commerce and technology giant Alibaba fell 1.3%. Its U.S.-traded shares fell 2.3% on Tuesday after its profit fell short of forecasts, though it reported stronger revenue than analysts had expected for the latest quarter.

Australia’s S&P/ASX 200 climbed 0.8% to 8,606.50. In New Zealand, the S&P/NZX 50 added 0.6% after the central bank cut its official cash rate to 2.25% from $2.5%.

U.S. markets will have a shortened trading week due to the Thanksgiving holiday, closing on Thursday and opening for shorter hours on Friday.

On Tuesday, the S&P 500 rose 0.9% and the Dow Jones Industrial Average rallied 1.4%. The Nasdaq composite gained 0.7%.

Easier interest rates can give particularly big boosts to smaller companies, because many of them need to borrow to grow. The Russell 2000 index of the smallest U.S. stocks jumped 2.1% to lead the market.

Mixed economic data left traders betting on a nearly 83% probability that the Fed will cut in December, according to data from CME Group.

Shoppers bought less at U.S. retailers in September than economists expected, while confidence among U.S. consumers worsened by more in November than expected, signals the economy could use help from lower interest rates.

Easier rates can boost the economy by encouraging households and companies to borrow more and investors to pay higher prices for investments than they would otherwise.

Another report said U.S. inflation at the wholesale level was a touch worse in September than expected, but a closely tracked underlying trend was slightly better. Lower interest rates can worsen inflation, and higher prices are the main reason the Fed has been holding back on rate cuts.

Later Wednesday, the U.S. was due to release more data that had been delayed by the six-week long government shutdown.

The Fed has already cut rates twice this year in hopes of shoring up the slowing job market.

Several retailers leaped after delivering stronger profits for the summer than analysts expected.

Abercrombie & Fitch soared 37.5% after the apparel seller reported a better profit than expected, while Kohl’s surged 42.5% after reporting a profit for the latest quarter, when analysts were expecting a loss. Best Buy rose 5.3% after boosting its profit forecast for the full year following a better-than-expected third quarter, citing strength across computing, gaming and mobile phones.

In other dealings early Wednesday, U.S. benchmark crude oil gained 24 cents to $58.19 per barrel. Brent crude, the international standard, picked up 26 cents to $62.06 per barrel.

The U.S. dollar rose to 156.13 Japanese yen from 156.06 yen. The euro rose to $1.1594 from $1.1569.

Geneva, 26 November 2025 – Today the World Business Council for Sustainable Development (WBCSD) releases the Nature Action Portal, a new digital resource to help companies turn ambition into measurable action and direct investment toward solutions that credibly contribute to halting and reversing nature loss by 2030.

As nature degradation and pressure to act accelerates, businesses face a complex landscape of frameworks, metrics, and disclosure requirements. The Nature Action Portal offers a practical, user-friendly resource to help sustainability practitioners navigate the landscape in which they operate. In a few clicks, users can identify the metrics that matter to drive action across their operations and supply chains.

Co-created with more than 100 leading companies, 6 service providers, and dozens of external partners, the Portal is a resource supporting sustainability practitioners to:

• Explore actions across operations and supply chains to halt and reverse nature loss
• Identify relevant metrics and targets linked to actions
• Align with key nature-related frameworks to measure and disclose progress transparently and consistently

The first version of the Portal features actionable insights for five sectors (agri-food, forest products, energy, built environment, and pharmaceuticals); along with two supply chains (bio-based materials flowing from the agri-food and forest sectors); and one cross-cutting topic (water), all rigorously tested with members and stakeholders throughout 2024–2025.

The initiative seeks to support the harmonization of existing nature-related corporate action and disclosure frameworks, and to enhance their practical application through a user-friendly portal that helps sustainability practitioners to navigate through extensive guidance.

Meaningful and comparable data is vital for companies to signal risks to financial markets and stakeholders, and to justify the investments needed to address them. Yet with an overwhelming number of metrics, consistency remains out of reach. The Nature Action Portal seeks to simplify and harmonize the use of nature-related metrics by providing companies with a practical pathway to identify, measure and disclose the actions to address their most material dependencies and impacts.

– Peter Bakker, President & CEO, WBCSD

To address the need for a globally accepted approach to measuring and disclosing nature-related impacts and dependencies, WBCSD and the Nature Positive Initiative have recently announced their intention to convene the development of a Nature Measurement Protocol, in collaboration with leading organizations at the forefront of sustainable development. As this work progresses in the coming years, the Nature Action Portal will provide a valuable transitional solution, enabling corporate action to continue without delay.

In recent years, WBCSD and the Nature Positive Initiative have worked to simplify and harmonize nature-related metrics so businesses can accelerate meaningful action for nature. As we now move toward developing a Nature Measurement Protocol – aimed at delivering decision-ready data and robust measurement methodologies – the Nature Action Portal provides an essential bridge. It gives companies a practical way to act now, driving momentum for nature-positive transformation while the Protocol is being developed.

– Marco Lambertini, Convener, Nature Positive Initiative

I am pleased to see WBCSD and the Nature Positive Initiative carrying forward the Nature Measurement Protocol initiative recommended by the TNFD in its recent nature data recommendations. We look forward to supporting their shared leadership on this effort which will be critical to provide market participants with specific guidance on measurement methodologies for key nature-related metrics already recommended by the TNFD, SBTN and others. While that work progresses, the Nature Action Portal offers a practical tool to help sustainability practitioners navigate and implement regulatory and voluntary frameworks such as the TNFD.

– Tony Goldner, CEO, Taskforce on Nature-related Financial Disclosures

The Nature Action Portal was developed with support from Arcadis, The Biodiversity Consultancy, Environmental Resource Management (ERM), EY, PwC and Quantis, a BCG company.

For any requests related to the Nature Action Portal, please contact nature@wbcsd.org.

WBCSD partners and members across sectors who supported this work highlight:

Business leaders are asking for clear, actionable guidance. They need priority actions, aligned metrics, and simple disclosures. This will help them move faster, show credible progress and halt and reverse nature loss. The Nature Action Portal delivers targeted sectoral actions identified by Business for Nature, WBCSD and World Economic Forum. Businesses can explore their impacts, plan priority actions, and choose the most sector-relevant metrics to measure progress, helping us demonstrate credible business contributions towards the Global Biodiversity Framework.

– Eva Zabey, CEO, Business for Nature

Science-based action is essential for companies to make credible contributions to a nature-positive future. We welcome WBCSD’s efforts to help companies turn ambition into impact through science-based targets for nature.

– Erin Billman, Executive Director of the Science Based Targets Network (SBTN)

As a financial service provider in the food and agri sector, we aim to understand the key dependencies, risks, impacts, and opportunities related to nature in the sectors where we operate. Our objective is to help customers transition to more sustainable practices and strengthen their resilience. By linking sector initiatives to practical metrics and disclosures, the Portal lays the foundation for a system where nature-related data is applied consistently by all actors, supporting purposes from prioritization to performance monitoring.

– Aafke Keizer, Chief Sustainability Officer, Rabobank

To achieve the needed transformation, every business must recognize the complex interdependence between its activities and nature. Holcim is proud to have contributed to the collaborative process behind the Nature Action Portal which has delivered clarity and consistency across the built environment system – building alignment on priority actions, metrics and accelerating the shift to a more resilient, nature-positive future.

– Antonio Carrillo, Vice President Sustainability, Holcim

The resilience of our agri-food system is highly dependent on nature and the services it provides. A unified approach to measuring the benefits of these services across farmers, suppliers, consumers, and financial partners is essential to measure and track progress of landscape-based actions and initiatives. The Portal and the underlying work to align metrics is an important first step in harmonizing corporate impact monitoring and reporting. It builds trust and a common language, which can unlock finance and de-risk investments – accelerating credible nature-positive action and accountability.

– Natasha Santos, VP Sustainability, Bayer

The Portal creates a well thought-through overview of nature related indicators and metrics across supply chains. Aligned metrics and definitions will help harmonize reporting and enable efficient monitoring – all the way to the forests and agricultural landscapes helping companies understand dependencies, impacts, risks, and opportunities – both for their business and for nature.

– Sofia Gape, Head of Biodiversity and Land use, Inter IKEA Group

Sustainably managed forests are core business assets, securing raw-material supply, storing carbon, and providing biodiversity habitat and water. The Nature Action Portal helps the forest sector to further implement sustainable forest management and align on relevant metrics across operations and value chain.  It also assists us to make better investment decisions and report consistently to customers and financiers.

– Yuuko Iizuka, Executive Officer, Sustainability Department, Sumitomo Forestry