Australian shares are expected to climb higher when market trading gets under way this week, confounding many traders who think that stocks are expensive and the market is on borrowed time.
''We haven't had a correction in almost two years now,'' said Watermark Funds Management chief investment officer Justin Braitling. ''It is unheard of to have a market advance without some sort of a correction for such a long period.''
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Floats in focus
The flurry of activity in share trading after companies float is under scrutiny, with questions being raised as to the reasons for the high volumes and who might be behind it.
The local market is tipped to gain 13 points, or 0.2 per cent, on Monday, according to the SPI Futures. The benchmark S&P/ASX 200 rose 1.47 per cent last week to 5525 points, after managing close to a 13 per cent return over the course of the financial year to June 30, 2014.
''Corporate profits remain key to driving equity markets onward and upwards from what are in most places all-time highs,'' said Threadneedle chief investment officer Mark Burgess.
But a 10 per cent pull-back is not being ruled out. ''Low interest rates are forcing investors to take more risk,'' said Mr Braitling. ''For instance, CBA shares, at about $82, while there is little risk in the business, are overvalued by about three times book value.''
The last time the Australian sharemarket had a big pull-back was in the third quarter of 2012.