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Tel Aviv Stock Exchange denies short-selling spike before Hamas attack

Published 05/12/2023, 14:27
Updated 05/12/2023, 14:40
© REUTERS/Amir Cohen/File Photo Tel Aviv Stock Exchange denies short-selling spike before Hamas attack

Proactive Investors - The Tel Aviv Stock Exchange (TASE:TASE) has dismissed a report from two US professors that traders were shorting Israeli stocks ahead of the terror attacks by Hamas on 7 October.

Calling the report inaccurate and its publication irresponsible, the exchange told Reuters there was nothing unusual in short trading positions in the two months before the attack.

A ‘short’ is where an investor sells shares in anticipation of them going down either or news or poor trading and makes a profit on the ‘turn’ by closing out or buying at the lower price.

Robert Jackson Jr from New York University and Joshua Mitts of Columbia University said there was a spike in shorting activity in Tel Aviv ahead of the Hamas attacks.

According to their report, shorting before 7 October "exceeded the short-selling that occurred during numerous other periods of crisis".

.Highlighting Leumi, Israel's largest bank, they say it saw 4.43 million shares sold short yielding gains of 3.2bn shekels (£680m) when the price fell after the attack.

In response, the Tel Aviv Stock Exchange said the authors had "miscalculated", since share prices are listed in agorot, which are similar to cents and pence, rather than the Israeli currency of shekels and that as a result, any profit was a fraction of that stated.

"I don't see in the data something even close to what they wrote in the paper," Yaniv Pagot, head of trading at the exchange told Reuters.

"There was nothing unusual in short positions in the stock exchange in the two months before the attack," he added.

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One short position of 4.5m shares in Leumi, Pagot said, was taken by an unidentified Israeli bank in the week ending 21 September though he played down reports ti was Hamas that was behind the short selling.

Israel authorities are said to be investigating the claims.

Read more on Proactive Investors UK

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