Dubai yesterday joined the chorus of regulatory voices condemning the short-selling of shares as concern mounted that hedge funds shorting key Gulf companies are contributing to a dramatic drop in regional bourses.

Short selling, through which investors benefit from share price falls, is not allowed in the Gulf, but hedge funds have been shorting heavyweight regional stocks with the help of international brokerages and offshore accounts, according to local money managers. In the past three months, the MSCI Gulf index has dropped more than a fifth, which would equate to a loss of nearly $300bn (€208bn, £164bn) in total market capitalisation.