New Zealand's S&P/NZX 50 gross index has been running hot for more than seven years, gaining around 200 per cent since March 2009.

With that in mind, just how stretched is the local sharemarket getting?

Quite, according to new research by First NZ Capital analysts Chris Green and Paul Turnbull.

In fact, their analysis of market upturns and downturns going back to 1970 shows the current 89-month bull run in New Zealand equities could become the longest over the period examined in three months' time.


In November - barring a major market upset - it will surpass the 104-month upturn that ran between September 1998 and May 2007, according to the research.

However, while the current bull market in NZ equities has been long in duration, it hasn't achieved the magnitude of much shorter, sharper upturns in the 1980s that led up to the 1987 crash.

In the report, Green and Turnbull noted that the S&P/NZX 50 had notched up an average annual gain of 15.4 per cent over the past five years, well above its more modest 10-year average of 8 per cent.

This raised concerns around the "durability" of recent gains.

The report also noted that the market's 12-month forward price-to-earnings ratio - a measure of how cheap or expensive stocks are - of 21.6 times was roughly 35 per cent above its 10-year average of 16.1 times.

Risks facing the market included earnings or dividend disappointments and a sharp rise in domestic bond yields from their historic lows, according to First NZ.

But the report added that while the market was trading at stretched valuations, short and long-term interest rate settings remained supportive and there was an absence of a clear "sell signal".