Unknown investors made millions from the attack on Israel. A study suggests that they must have known about the impending massacre.
The terrorist organization Hamas may have made millions of dollars from its attack on Israel through stock trades. This is what US researchers suggest in a study that looks at investments around the time of the massacre. The Hamas attack not only affected Israel’s sense of security, but also caused economic damage. For example, the Tel-Aviv 35 stock index, the Israeli counterpart to the German Dax, fell to its lowest level in two years, writes the investment site “investing.com”.
Someone seems to have known about this collapse in advance and deliberately bet against the Israeli market with short sales on the stock exchanges in New York and Tel Aviv – in order to make millions in profits. The researchers do not write down exactly how high the profits of the unknown investors were.
According to the study, it is unclear who exactly the investors are. However, in view of the investigation, it is likely that they are connected to Hamas: “Our results suggest that the investors were informed about the attack and benefited from the tragic events,” writes the research team led by law professors Robert J. Jackson Junior and Joshua Mitts.
Not a coincidence
Mitts is an expert in short selling. In these fundamentally legal transactions, an investor borrows shares, sells them, then later buys them back and returns them to the lender. If the selling price was higher than the purchase price, the investor makes a profit. Under this mechanism, unknown buyers would have invested in equity funds such as the EIS on the New York Stock Exchange. The EIS tracks the most important Israeli stock indices. So anyone who bets against EIS is betting against the Israeli economy.
On October 2nd, a volume of 227,000 units was traded, compared to normally a few thousand per day. This suggests that it was neither a coincidence nor a normal risk investment, but that investors had great confidence that prices would fall and they would make profits.
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And that’s how it happened: The value of the EIS fell by 17.5 percent in the first 20 days after the massacre. So if an investor borrowed EIS shares, sold them for $54 each before the attack, and bought them again after the attack for $44.50 and returned them to the lender, he made a profit of $9.50 -Dollars per unit.
Similar investment patterns in the spring
To test whether the short selling might have been a fluke, the researchers compared investments in the EIS to transactions during other economic crises in their 67-page report. The number of short sales with EIS shares this time is significantly higher than during the 2008 financial crisis, the 2014 Israel-Gaza war or during the corona pandemic. Prime Minister Benjamin Netanyahu’s planned judicial reform, which sparked major protests in Israel, did not generate comparable investments.
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Quite the opposite: At the time of the investments on October 2nd, there were no notable economic developments in Israel, because that was the Jewish holiday of the Feast of Tabernacles. On top of that, short selling is a risky affair: Investors usually take such risks especially when they have indications of a negative market development. However, the Israeli stock market developed positively before the attack.
