Key Benchmarks Performance
Global equity markets staged a strong recovery in May 2026, led overwhelmingly by technology and semiconductor-related sectors. North Asia emerged as the clear outperforming region, with South Korea’s KOSPI surging 28.4% during the month, followed by the Philadelphia Semiconductor Index (+22.1%), Taiwan’s TAIEX (+14.9%) and Japan’s Nikkei 225 (+11.9%). The rally reflected renewed investor confidence in the artificial intelligence investment cycle, accelerating semiconductor demand and improving earnings prospects across the technology supply chain. US equities also participated in the risk-on environment, with the NASDAQ gaining 8.4%, outperforming the broader S&P 500 (+5.1%) and Dow Jones Industrial Average (+2.8%), highlighting the continued preference for growth and technology exposure.
In contrast, performance across emerging markets remained mixed. Indonesia’s Jakarta Composite Index was the weakest performer, declining 11.9% in May amid concerns over domestic growth and capital outflows. Brazil’s IBX fell 7.3%, while India’s Sensex retreated 2.8%. Hong Kong’s Hang Seng Index also declined 2.3%, reflecting ongoing uncertainty surrounding China’s economic recovery. Within ASEAN, Thailand stood out positively with a 5.0% monthly gain, while Singapore advanced 2.5%, demonstrating relatively resilient investor sentiment compared with regional peers.
Year-to-date performance further underscores the dominance of technology and semiconductor-related markets. South Korea’s KOSPI has more than doubled, delivering a remarkable 101.1% gain, making it the best-performing major market globally. The Philadelphia Semiconductor Index follows closely with an 81.1% return, reflecting investors’ conviction that semiconductor companies remain the primary beneficiaries of the AI-driven capital expenditure cycle. Taiwan’s TAIEX has gained 54.4% year-to-date, while Japan’s Nikkei 225 has advanced 31.8%, reinforcing North Asia’s leadership in global equity markets.
US markets have generated solid but more measured gains, with the NASDAQ rising 16.1%, the S&P 500 up 10.7%, and the Dow Jones Industrial Average gaining 6.2%. The performance gap between the NASDAQ and broader indices illustrates the continued concentration of market leadership within technology-oriented sectors. Meanwhile, defensive segments such as healthcare have lagged, with the S&P 500 Healthcare Index declining 3.0% year-to-date as investors rotated toward higher-growth opportunities.
European markets have delivered modest returns, with Spain’s IBEX 35 gaining 6.1%, the FTSE 100 advancing 4.8%, while France’s CAC 40 and Germany’s DAX remained largely flat. The region has been constrained by slower economic momentum and relatively limited exposure to the technology themes driving global equity performance.
Within emerging markets, dispersion remains pronounced. Thailand has posted a strong 24.5% gain year-to-date, while Singapore, Brazil and Vietnam have also generated positive returns. Conversely, Indonesia has declined 29.1%, making it the weakest major market globally, while India’s Sensex has fallen 12.3% and the Philippines’ PSEi has lost 4.7%. These divergent outcomes highlight the increasing importance of country-specific fundamentals and policy dynamics rather than broad emerging market exposure.
Table 1: Global Key Benchmarks Performance
Source：LSEG Lipper, as of 26/05/31
Hong Kong MPF Performance by LGC Analysis
The May performance across Lipper Global Classifications was led decisively by Equity Korea, which surged by 29.8%, extending its strong momentum to a remarkable 116.8% gain year-to-date, making it the standout performer over both horizons. Equity Asia Pacific ex Japan also delivered robust returns of 11.5% in May and 31.5% YTD, while broader regional exposure through Equity Asia Pacific posted an even stronger cumulative gain of 52.2% YTD despite not being among the very top monthly movers. Developed market exposures were comparatively moderate, with Equity Japan up 6.9% in May and 16.3% YTD, Equity Global rising 5.3% and 12.8%, and Equity US increasing 5.1% and 10.9%, reflecting steady but less pronounced upside relative to Asia.
Greater China equities showed a mixed pattern, advancing 3.4% in May and 12.8% YTD, whereas standalone Equity China declined by 1.2% in May and remained slightly negative at -2.2% YTD, highlighting continued dispersion within the region. Equity Hong Kong also lagged, falling 1.3% in May, reinforcing the relative weakness in that segment. Mixed-asset categories recorded stable gains, with Mixed Asset HKD Aggressive and Balanced rising 3.8% and 3.4% in May, respectively, and delivering 9.7% YTD for the aggressive strategy, indicating resilience in diversified allocations.
Fixed income and money market categories were broadly subdued. Bond Asia Pacific LC and Bond Global LC both recorded modest gains of 0.4% in May and 1.8% and 0.7% YTD, respectively, while Bond HKD declined 0.5% in May and remains nearly flat at 0.1% YTD. High yield exposure within Bond Asia Pacific HC edged up 0.3% in May and 0.7% YTD. Money market funds posted marginal returns, with CNY and Other both up 0.7% in May and 2.7% YTD for the latter, while HKD money market delivered 0.1% in May and 0.6% YTD. Overall, the data underscores a clear dominance of equity markets—particularly Korea and broader Asia Pacific—over defensive asset classes, with performance dispersion evident across regional equity segments.
Figure1：Top/Bottom 10 Hong Kong MPF Performance by Lipper Global Classifications, May 2026
Source：LSEG Lipper, as of 26/05/31, in Hong Kong Dollar
Figure2：Top/Bottom 10 Hong Kong MPF Performance by Lipper Global Classifications, Year-to-Date (as of 26/05/31)
Source：LSEG Lipper, as of 26/05/31, in Hong Kong Dollar
Outlook
Hong Kong’s economy recorded a strong rebound in the first quarter of 2026, expanding by 5.9% year-on-year, marking its fastest growth pace in nearly five years and a notable acceleration from the 4.0% growth seen in the previous quarter. The expansion exceeded market expectations and was supported by a synchronized recovery across external trade, tourism, and domestic consumption, with GDP also rising 2.9% on a seasonally adjusted quarterly basis.
The recovery was primarily driven by a resurgence in external trade, as both exports and imports strengthened amid improved regional supply chains and demand from key trading partners such as mainland China and ASEAN economies. At the same time, tourism rebounded significantly, with visitor arrivals surging 17% year-on-year to 14.3 million in the quarter, supported by government initiatives and promotional spending aimed at revitalizing the sector.
Domestic demand also showed robust momentum, with retail sales growing 12.1% year-on-year in value terms, reflecting stronger consumer confidence among both residents and visitors. The recovery was broad-based, with particularly strong performance in discretionary and luxury segments, where jewelry and watches sales jumped 27.8%, alongside gains in dining, entertainment, and general retail categories.
Despite the strong start to the year, authorities maintained a full-year growth forecast of 2.5% to 3.5%, citing the potential influence of base effects and ongoing external uncertainties, including global trade tensions, geopolitical risks, and fluctuations in external demand. Inflation remained moderate at around 1.6%, providing policymakers with flexibility should economic conditions weaken.
Overall, the first-quarter performance highlights a transition from post-pandemic recovery toward a more balanced growth model supported by trade diversification, tourism normalization, and resilient domestic consumption, although the sustainability of this momentum will depend on external conditions and the durability of demand in the coming quarters.
