The New Zealand sharemarket continued to slide this afternoon after entering correction territory this week as investors became increasingly nervous ahead of next week's US election and growing concerns about the "Trump" factor.

By 3pm, the NZX-50 index had fallen to 6731 points - down 0.7 per cent from Thursday's close and down 11 per cent from its all time record high of 7571 reached on September 7.

READ MORE:NZX in correction territory - down 10pc from September high

A decline of 10 per cent or more is regarded as a correction, while a move down of 20 per cent or more is seen as a bear market.

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Analysts viewed the fall as natural consequence of a very strong bull run and of rising interest rates, which make New Zealand - with its high proportion of yield stocks - look less attractive to investors.

But Mark Lister, head of private wealth research at Craigs Investment Partners, said that unlike previous sell-offs, the decline was not in response to economic weakness.

New Zealand economic growth came to 3.6 per cent in the June year and data this week showed employment grew by 1.4 per cent in the quarter, well ahead of a 0.5 per cent gain expected by the market.

In addition, prices for New Zealand's biggest merchandise export - dairy - have been rallying sharply.

Lister said the market had, over the last week or so, been driven by worries about the possibility of anti-free trade Donald Trump becoming the next president of the United States.

"Over the last week or so it has absolutely been the Trump factor and uncertainty surrounding the US election," Lister said.

Lister said more falls looked likely. "I think the market will be on edge right up to election day," he said. "If Trump gets in, I think that there will be another leg down," he said.

"If (Democrat candidate) Hillary Clinton wins, then I think you will see a relief rally and we could see a really strong rebound," he said.

The local market has enjoyed a very strong run - in the 12 months to September, the index has gained 36 per cent - so analysts have long regarded the market as being over-priced.

If (Democrat candidate) Hillary Clinton wins, then I think you will see a relief rally and we could see a really strong rebound.

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"Equity markets have had a stonking great run and they have got a bit ahead of themselves," Harbour Asset Management portfolio manager Shane Solly said.

"We would say that our market has become over-valued but we still think New Zealand stocks and the economy stack up pretty well," he said. "It's just that the market has been paying too much for them," he said.

The New Zealand share market has fallen further than others. The US share market is 4.7 per cent down from its peak, and the Australian market is down by 6.5 per cent.