Islamic Funds Monthly Market Overview - May
Monthly Market Overview - Equities
- Global equities rebounded strongly in April, posting their best monthly return since late 2020. Sentiment improved after news of a US–Iran ceasefire early in the month, despite the Strait of Hormuz remaining closed and oil prices staying elevated. A strong start to the US earnings season—supported by the ongoing AI boom—added further momentum.
- Markets rotated sharply back into technology and AI-linked names, which drove the rally. Tech-heavy markets such as the US, as well as South Korea and Taiwan within Emerging Markets, therefore delivered outsized gains. The UK lagged other developed markets due to its lower exposure to technology, while its larger sectors, such as energy and healthcare, underperformed. Emerging markets outperformed developed markets led by the tech-heavy Asian markets.
- Within Islamic global equities Technology was the largest contributor followed by Consumer Discretionary. Region wise, North America drove performance during the month, while EMEA and Asia also contributed to performance. Within specific stock names, Alphabet, and Amazon.com drove returns, while Exxon Mobil weighed on performance.
- Within Islamic EM equities, South Korea and Taiwan, contributed the most to performance. IT drove performance from a sector perspective, while Consumer Staples were a drag on returns. Within specific securities, Samsung Electronics and SK Hynix drove returns, while Xiaomi Corporation and Reliance Industries weighed on performance.
Chart 1: 1 Year Fund performance (Gross of fees)
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Fixed Income / Sukuk
- Across global fixed income markets, geopolitical stresses and uncertainty remained in focus with the blockade of the Strait of Hormuz pushing oil back above USD 100/barrel. Government bonds yields rose, on growing inflation concerns driven by the increase in energy prices, leading to markets repricing the path of central banks monetary policy. Credit markets were stronger given the broad risk-on sentiment, as credit spreads tightened.
- The US 10-year Treasury rose over the month by 5bps at 4.37 per cent in may, the German Bund rose by 4bps to 3.04 per cent and the UK 10-year Gilt rose by 9bps to 5.01 per cent. Investment grade global corporate spreads tightened by 12bps at 0.81 per cent, global high yield corporate spreads tightened by 54bps to 2.89 per cent.
- The FTSE IdealRatings Sukuk Index holds investment grade Sukuks, with an average coupon of 4.67 per cent and average maturity of 5.72 years. Top exposures are to Saudi Arabia, UAE and Indonesia.
- Sukuk issuance continues to be strong in 2026.
- Sukuk issuance continues to grow steadily, signalling growing interest in the asset class. Issuance growth rates are expected to moderate this year as investors keep a close eye on developments on the Middle East war.
Chart 2: Country exposure (Top 5)
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Chart 3: Market Value continues to grow
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Commodities
- In commodity markets, oil prices were driven by Middle East headlines. Prices fell after the ceasefire announcement, then surged as US–Iran talks stalled.
Currencies
- The US dollar weakened against all other G10 currencies in April as safe-haven demand eased with lower geopolitical risks, and as expectations for global central bank policies shifted.
Multi Asset Investment Team Views and Portfolio Positioning
- Outlook:Geopolitical uncertainty in the Middle East remains in focus, with the blockade of the Strait of Hormuz keeping oil prices elevated. This raises concerns about ongoing supply disruption, which could keep inflation higher for longer and increase the risk of a negative growth shock. However, the situation remains fluid with potential for wide ranging outcomes.
- Portfolio Positioning: With the Middle East conflict ongoing, the potential for market volatility remains high. While the near-term backdrop is challenging, but mediation efforts continue, and any ceasefire or de-escalation could support further market rebound. Given the geopolitical risk and more mixed data signals, we remain neutral equities.
- We prefer higher gold exposure, as we view the recent headwind in gold price as temporary and used the weakness to add exposure at more attractive levels. We remain overweight emerging markets equities, due to positive momentum, more attractive valuations and improved financial conditions which could support consumption and growth. We also prefer Japan, where we remain focused on its resilient economic growth and the potential for fiscal stimulus to boost growth. We remain tilted away from US equities on less supportive momentum and valuations, and prefer to hold higher exposure in other areas of the global markets.
HSBC Islamic Product Suite - Returns (Gross of Fees per cent)
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HSBC Islamic Product Suite - Rolling 1 Year Returns (Gross of fees per cent)
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Key Information
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* For more information including all available share classes, please contact your relationship manager.
Fund Registrations:
| HSBC MSCI World Islamic Screened UCITS ETF | FR, UK, NL, LU, CH, IE |
| HSBC MSCI Emerging Markets Islamic Screened Capped UCITS ETF | FR, UK, NL, LU, CH, IE |
| HSBC MSCI Europe Islamic Screened UCITS ETF | FR, UK, NL, LU, CH, IE |
| HSBC MSCI USA Islamic Screened UCITS ETF | FR, UK, NL, LU, CH, IE |
| HSBC FTSE EPRA Nareit Developed Islamic UCITS ETF | FR, IE, LU, NL, UK |
| HSBC MSCI Japan Islamic Screened UCITS ETF | FR, IE, LU, NL, UK/td> |
| HSBC Global Funds ICAV - Global Sukuk UCITS ETF | BM, FR, IE, NL, AE, UK, SG |
| HSBC Islamic Global Equity Index Fund | BH, QA, AE, UK, JE, LU, FR, CH, SE |
| HSBC UCITS CCF - Islamic Global Equity Index Fund | IE, UK |
| HSBC Global Funds ICAV - Shariah Multi Asset Fund | BM, IE, CH, UK |
Past performance does not predict future returns. Past performance is shown gross of fees, meaning any potential returns will be reduced by the deduction of investment management fees and any other expenses incurred. Returns not denominated in GBP may vary with fluctuations in the exchange rate. Shariah investment restrictions may result in the funds performing less well than funds with similar objectives which are not subject to these restrictions.
Source: HSBC Asset Management as of 30 April 2026.
Key Risks
The value of an investment in the portfolios and any income from them can go down as well as up and as with any investment you may not receive back the amount originally invested.
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- Index Tracking Risk: To the extent that the Fund seeks to replicate guarantee that its composition or performance will exactly match that of the target index at any given time (“tracking error”).
- Investment Leverage Risk: Investment Leverage occurs when the economic exposure is greater than the amount invested, such as when derivatives are used. A Fund that employs leverage may experience greater gains and/or losses due to the amplification effect from a movement in the price of the reference source.
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The value of investments and any income from them can go down as well as up and investors may not get back the amount originally invested. Where overseas investments are held the rate of currency exchange may also cause the value of such investments to fluctuate. Investments in emerging markets are by their nature higher risk and potentially more volatile than those inherent in some established markets. Stock market investments should be viewed as a medium to long term investment and should be held for at least five years. Any performance information shown refers to the past and should not be seen as an indication of future returns.
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Content ID: D071846_v1.0; Expiry Date: 30.11.2026