Traders could have made huge amounts of money by using inside information of a Hamas attack on Israel to short stocks in the days leading up to the strike.
A study published Sunday in the journal SSRN by Robert J. Jackson, Jr. of New York University School of Law and Joshua Mitts of Columbia Law School showed that stock traders may have known that Hamas was planning an attack on Israeli territory.
Is this how Hamas made money?
Researchers noted a “significant” increase in short selling of shares of Israeli companies in the run-up to the attack, including “exceptional” activity on October 2.
“We documented a significant increase in short selling in the main ETF fund (one of the investment vehicles – ed.) of an Israeli company, a few days before the Hamas attack on October 7,” said an article published on their websites was quoted. by “The Times of Israel” and “Haaretz”.
This observation was based on the analysis of short-term sales data. “Short selling that day was far greater than short selling that occurred during many other crisis periods, including the post-financial crisis recession, the 2014 Israel-Gaza war and the COVID-19 pandemic. Similarly, we observed an increase in short selling prior to the crisis. the attack on the dozens of Israeli companies listed in Tel Aviv,” we read.
Summit conference on October 2
Short selling, or trading, occurs, among other things, when an investor borrows shares of a specific company and then sells them, hoping that the price will fall so that he can buy them back at a lower price.
The companies targeted included major banks Hapoalim, Leumi, Discount and Mizrahi-Tefahot, pharmaceutical company Teva and software giant NICE.
‘Only in the case of one Israeli company [Bank Leumi]“The 4.43 million new shares sold short between September 14 and October 5 generated profits (or avoided losses) of NIS 3.2 billion ($740 million) from this additional short selling,” the analysts wrote.
“While we do not see an overall increase in shorting of Israeli companies on US exchanges, we do note a sharp and unusual increase in trading of risky short-dated options on these companies that expire just before the attacks,” it added.
The paper’s authors found that trading peaked on October 2, accounting for more than 99 percent of the 3,570 trading days analyzed in the study, going back 15 years. They also noted that short selling “increased dramatically” on the eve of the Tel Aviv Stock Exchange attacks.
As a result of the war in the Gaza Strip, the Israeli stock market fell and the country’s economic growth forecasts were lowered.
Source: Do Rzeczy
Roy Brown is a renowned economist and author at The Nation View. He has a deep understanding of the global economy and its intricacies. He writes about a wide range of economic topics, including monetary policy, fiscal policy, international trade, and labor markets.