One of the country's largest fund managers is predicting another surge in shares but says the New Zealand dollar has plateaued and should start falling next year.
In its quarterly briefing, Tower Investments says the global economic situation has changed little in the last six months, with many governments printing money and keeping interest rates artificially low, creating a false sense of optimism.
Chief executive Sam Stubbs says Tower remains bullish about New Zealand, but says the dollar may have reached its peak.
He says the dollar has remained high because the Government is not printing money, the country is exporting what people want to buy and New Zealand has had very high real interest rates for a long period of time.
That's meant investors have found New Zealand 's interest rates attractive relative to other countries, and they've been constant buyers of New Zealand dollars.
But he says there is now the risk interest rates will go down and in that environment investors will deem the New Zealand dollar less attractive than it is now.
"We think the New Zealand dollar has probably plateaued at this level, most of the speculative money is already in here, people have had 18 months to form a view about our interest rates".
Tower Investments has again started buying Australian stocks after a period when it pulled a lot of money out of Australia and invested in New Zealand.
Mr Stubbs says banking and mining stocks are too risky, but other companies are good buys.
Tower's New Zealand investments include Tourism Holdings, Scott Technology, Freightways and Port of Tauranga.