Activity on the Zimbabwe Stock Exchange (ZSE) is projected to be depressed in the coming weeks as investors, mainly institutional, reconfigure their system in line with the new monetary policy measures, research firms have said.

The Reserve Bank of Zimbabwe recently introduced a new policy framework anchored on five policy measures, including adoption of a market-determined exchange rate system; efficient and optimal money supply management; introduction of a new structured currency; and anchoring local currency on reserves backed by gold and foreign currency balance.

“The new governor reiterated that he would maintain a tight monetary policy stance and we expect that this will keep prices on ZSE at current levels in US$, at least in the immediate term,” research firms Morgan & Co said in its latest report.

“However, we remain bullish on the ZSE compared to VFEX [Victoria Falls Stock Exchange] because of the governor’s goal to improve ZiG’s [Zimbabwe Gold] portion of transactions in the economy to 30% by year end amid constrained US dollar supply.

“An increase in transactions denominated in ZiG holds positive implications for liquidity on the ZSE and this could see an improvement in price support at higher levels come year end.”

The research firm named Delta Corporation Limited and Nampak Zimbabwe as its top picks for the year.

It noted that the ZSE recorded its lowest weekly turnover to date, while trades in Simbisa, Innscor, and Padenga sustained the VFEX with weekly turnover of almost US$800 000.

The latest addition to VFEX, Edgars, started on a bullish note after gaining 36% in its first week.

“We maintain that the VFEX will remain stable at current levels throughout the week,” Morgan & Co said.

Inter Horizon Securities noted that the ZSE will need to rebase to the new currency, which may result in initial distortions in valuations.

“The uncertainty around performance of ZiG compels us to lean more towards defensive stocks with strong dividend policies in case valuations remain distorted, impacting capital gains,” it said.