A report saying some investors may have known in advance about Hamas’s plan to attack Israel on 7 October and used that knowledge to make hundreds of millions of pounds is inaccurate and its publication was irresponsible, the Tel Aviv Stock Exchange has said.
Research by US law professors Robert Jackson Jr from New York University and Joshua Mitts from Columbia University had found significant short-selling of shares leading up to the attack, which sparked a war that has lasted for nearly two months.
“Days before the attack, traders appeared to anticipate the events to come,” the authors wrote, citing short interest in the MSCI Israel Exchange Traded Fund (ETF) they say “suddenly, and significantly, spiked” on 2 October.
“And just before the attack, short selling of Israeli securities on the Tel Aviv Stock Exchange (TASE) increased dramatically,” they added.
Israel-Gaza latest: Israel responds to US warning about war
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The researchers said short-selling prior to 7 October “exceeded the short-selling that occurred during numerous other periods of crisis”, including the recession following the financial crisis of 2008, the 2014 Israel-Gaza war and the COVID pandemic.
They gave the example of Leumi, Israel’s largest bank, which saw 4.43 million new shares sold short over the 14 September to 5 October period, yielding profits of 3.2bn shekels (£680m) on that additional short-selling.
However, TASE said the authors had made a miscalculation, as share prices are listed in agorot, which are similar to pennies, rather than shekels – putting the potential short sale profit at just 32m shekels (£6.8m).
Yaniv Pagot, head of trading at the exchange, said in looking at short interest in Leumi, there was an increase of
some 4.5 million shares in the week ending 21 September and it then remained stable.
“I don’t see in the data something even close to what they wrote in the paper,” Mr Pagot told Reuters, adding the researchers did not speak to the TASE or members.
“There was nothing unusual in short positions in the stock exchange in the two months before the attack.”
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