The Gulf stock market crashes of 2005 and 2006 tore the shirts off many investors who had come to believe that the great bull-run could not end. But it did: most markets, including the largest in Saudi Arabia, lost 50 per cent.

The correction tempered local investors’ expectations and also triggered a desire for hedging facilities to provide consistent returns and smooth out volatility. Now, some regional funds are touting their credentials as hedge funds, saying they can mitigate market risks through innovative tools that sidestep a Gulf-wide ban on shorting stocks.