HSBC’s Sharia‑compliant fund poured over $130 million into firms tied to Israel’s military
The United Kingdom’s largest fund that claims to follow Islamic law invested more than $130 million in shares of several companies connected to the Israeli defence sector while the conflict in Gaza, ongoing violence in the West Bank and tensions in southern Lebanon continue. HSBC, the continent’s second‑largest bank, made the purchases through its Islamic Global Equity Index Fund, targeting firms ranging from the U.S. data‑analytics giant Palantir to defence contractor RTX, the world’s second‑largest arms maker.
Since the war in Gaza began in October 2023, about 74,500 Palestinians have been killed, including more than 1,500 since a cease‑fire was declared a year ago, according to United Nations figures. The fund’s investments raise questions about whether money marketed as Sharia‑compliant can be placed in companies that supply weapons and related technology.
HSBC’s Islamic Global Equity Index Fund holds over $8 billion in assets and is intended to channel the savings of predominantly Muslim investors into global equities that pass an Islamic‑law screening. The bank’s website says the fund aims to deliver “both investment returns and better outcomes for society as a whole,” describing its approach as “ethical investments that enhance society.” An independent Islamic committee, composed of two internationally recognised Muslim scholars, is said to oversee compliance with the fund’s principles, ensuring that companies do not have “significant exposure to non‑permissible revenue sources such as selling goods or services related to … weapons.”
Wahyu Jatmiko, a lecturer in Islamic finance at the University of Southampton Business School, told Al Jazeera that there are “strong grounds to criticise HSBC’s governance, transparency, and handling of investors’ ethical expectations.” He added, “The strongest concern is the apparent tension between its stated restrictions and the reported investments. This should also be a lesson for the whole Islamic finance industry. The ‘Sharia’ label should mean something; it carries expectations about investing differently and realising the higher ethical objectives of Islamic law.”
An HSBC spokesperson said, “We understand how important it is that funds like this reflect the values of those who invest in them. We take any concerns from our clients seriously and will review this matter carefully, in partnership with independent expert advisors, to assess whether the approach still meets investors’ expectations. We commit to conducting this review swiftly and communicating any necessary actions to our customers.”
The fund’s holdings in the first half of 2026 included at least five companies linked to Israel’s military operations, as first reported by Middle East Eye and Hyphen. Among them, HSBC bought $38.3 million of Palantir Technologies stock. Palantir, a U.S. data‑analytics and artificial‑intelligence firm, signed a strategic partnership with Israel’s Ministry of Defence in January 2024 to support “war‑related missions” and held a board meeting in Tel Aviv in solidarity with the country. A United Nations report from June 2025 said there were “reasonable grounds” to believe Palantir supplied predictive‑policing technology and AI tools such as “Lavender,” “Gospel” and “Where’s Daddy?” that process battlefield data and generate target lists. The report also linked Palantir’s systems to a mistaken strike on a school in Minab, Iran, on 28 February, which killed more than 150 people, mostly children, during the first day of the U.S.–Israel conflict with Iran.
HSBC also purchased $35.7 million of shares in RTX, a major U.S. defence contractor that includes Raytheon, a leading maker of missiles, air‑defence systems and other military technology. Through Raytheon, RTX supplies a wide range of weapons and equipment used by the Israeli armed forces.
The revelations have sparked protests in London, where demonstrators joined a Palestine Coalition march on 10 October 2026, and have drawn criticism of former UK Prime Minister Keir Starmer for awarding a contract to Palantir. The controversy highlights the tension between investors’ ethical expectations and the realities of global finance.