(Bloomberg) -- Zimbabwe’s new currency has wiped out a gain of more than 330% on the stock market this year, leaving investors dealing with the fallout.

The ZiG, short for Zimbabwe Gold, was launched on April 5 and succeeded the Zimbabwean dollar, which had lost 80% of its value this year. The new currency has so far gained more than 2% against the US dollar since its debut. 

The volume of trades in stocks and the value of transactions have plunged as the exchange converted share prices to the new unit.

Prior to the conversion, investors piled into stocks as they sought refuge from the local dollar’s collapse and surging inflation that in March stood at a seven-month high of 55.3%.

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The bourse offers one of the few investment options in the southern African nation for investors to hedge against exchange-rate volatility and inflation. However, a surge in stocks usually is a cause for concern and not jubilation, as it signals that the next currency crisis is around the corner.

Justin Bgoni, the chief executive officer of the bourse, said a combination of factors including the length of time it took for the nation’s lenders to make the switch — roughly a week — and tight liquidity conditions led to the drop in trade. 

“Generally, people are also hesitant and don’t understand what the value is in ZiG terms,” he said Monday by phone. The bourse had also rebased the Zimbabwe Stock Exchange All Share Index to 100 on the introduction of the new ZiG currency, Bgoni said Tuesday in a post on X. 

The bourse converted share prices at a swap rate of 1 ZiG to 2,498 Zimbabwean dollars after the central  bank on April 5 ordered that the ZiG will be used for everything from bank-account balances to prices displayed in supermarkets.

Most players in the capital markets successfully converted to ZiG using the central bank’s prescribed exchange rate, according to the Securities and Exchange Commission of Zimbabwe, the industry regulator. 

“In the case of equity investments on the ZSE, the value of shareholdings was simply converted to ZiG without any alteration to the number of shares held,” said Anymore Taruvinga, the chief executive officer at the commission in an emailed statement on Tuesday.

The decline in trading volumes has triggered a drop of at least 50% in some brokerages’ revenue, with most experiencing a “big hit to earnings,” said Lloyd Mlotshwa, the head of research at Harare-based brokerage firm IH Securities. For stockbrokers, the new currency has had a domino effect resulting in low “average daily turnover, which speaks to liquidity and then a knock-on effect to the stockbroking industry,” he said.

With 80% of the economy using dollars for transactions, it is also a “major downside” for stockbrokers that the exchange moved to ZiG, according to Enock Rukarwa, a research and investment consultant at FBC Securities. 

“In the face of such headwinds, stockbroking boutiques need to recalibrate their business models, derisking commission income,” he said.

Imara Asset Management, which is the nation’s largest independent brokerage and oversees $100 million in assets, also expects “some upheaval” over the next month, with share prices converted to ZiG yet to find new levels. 

“It would have been much more sensible for the Zimbabwe Stock Exchange to convert to US dollars in line with the Victoria Falls Stock Exchange, especially now that many of the underlying listed businesses are reporting in US dollars and paying US dollar dividends,” Imara Chief Executive Office John Legat and Chief Investment Officer Shelton Sibanda wrote in a client note.

(Updates with securities and exchange commission statement from ninth paragraph.)

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