New York and Tel Aviv traders were found to be betting on a collapse in the Israeli stock market before a terrorist attack by Hamas, according to a recent investigation conducted by US researchers Robert J. Jackson Jr. and Joshua Mitts from New York University and Columbia University. It is unclear whether Hamas was directly involved in these transactions.
The researchers discovered that certain traders appeared to have inside information about the impending attacks and profited from them. The Israeli security authorities are taking these reports seriously and are investigating the events. Short sellers, who speculate on falling prices, were particularly active in trading the ETF MSCI Israel, which tracks Israeli stocks listed on the Tel Aviv Stock Exchange (TASE).
Activity in short selling on the ETF significantly increased five days before the attack, leading the researchers to suspect that some traders were aware of the impending events. The volume of short sales on October 2nd exceeded that seen during other times of crisis, such as the financial crisis in 2008 or the Covid pandemic in 2020. Israeli companies such as Checkpoint, Nice, Teva, and Bank Leumi were among those listed on the TASE.
Although the researchers did not directly link the inside information used by speculators to Hamas, Israeli media suggests that terrorist organization may have been involved. If Hamas did use such financial techniques for funding, this could have serious implications for criminal authorities and regulators worldwide. Suspicious trading activity had also been detected prior to a previous incident in April, indicating a pattern of behavior among certain market participants.
Short sellers take advantage of non-public information to profit from falling prices by borrowing shares, selling them, and buying them back at a lower price later on. The events surrounding the attack on Israel led to significant price movements on the Israeli stock exchange