How much longer can the sharemarket push higher?

Stuart Williams. Photo / Dean Purcell

NZ sharemarket not yet ready to run out of steam after powerful run over last six years, say experts.

It's the question asked by every stock watcher - how much longer can the sharemarket keep pushing higher?

The United States' bull market, which celebrated its sixth birthday on March 9, is about eight weeks away from overtaking the 1974-1980 bull run as the third-longest since 1929.

New Zealand's bull market started five days earlier, on March 4, 2009.

Since then the NZX 50, which reached a record close of 5908.6 on Friday, has gained a whopping 144 per cent.

Stuart Williams, head of equities at Nikko Asset Management NZ, reckons the local sharemarket will post another solid gain this year, although matching or exceeding the 18 per cent rise the NZX 50 notched up in 2014 might be challenging.

At roughly 19 times forward earnings, the NZX 50 is looking expensive, he said.

The market's average price-to-earnings multiple since 2001 is closer to 15 times.

"But I don't think it's surprising that our valuations, compared with historic measures, seem a bit stretched."

Williams said the local sharemarket's gains were being driven by unprecedented factors, not least investors' "hunt for yield" in a low interest rate environment.

The Reserve Bank signalled last week that the official cash rate was likely to be kept at 3.5 per cent for at least two years, which is great for mortgage holders but not such good news for people with savings in the bank.

Investors are finding the yield in dividend paying companies, which New Zealand has a global reputation for.

Williams said another factor buoying the market was the kiwi dollar's recent weakness versus the greenback, combined with a resurgent US economy, which was benefiting listed exporters.

See video: US share bull market enters sixth year:

Laszlo Birinyi, the 71-year-old US investor who has predicted gains at every turn in the S&P 500 index since early 2009, said the thing that really kills bull markets - euphoria - is yet to surface.

"We still see continuous negativity," Birinyi said. "Ultimately, the market continues to surprise on the upside."

He predicted the S&P 500 to climb to 2240 over the next three to six months, which would be a more than 8 per cent gain on its Thursday close.

In New Zealand, the NZX 50 has risen more than 6 per cent this year.

Its upward momentum continued despite the recent earnings season.

Mark Lister, of Craigs Investment Partners, said that of the 31 New Zealand companies the brokerage followed through the reporting season, only nine increased their earnings-per-share estimates for the 2015 financial year.

"In our view, this was a relatively lacklustre reporting season, especially given the strength of the market over this period," he said.

additional reporting Bloomberg