Is a share bubble developing in Australia?

The Australian sharemarket is so strong (it's up again today) some are wondering whether a bubble is developing? Not yet, says AMP Capital's chief economist Shane Oliver, but the risk of it happening is now high.

The strength in the Australian share market is naturally raising questions about its sustainability. Are shares overvalued? Is it a bubble? How far could it go?
The last time we looked at these issues in detail was in February and our conclusion was that the Australian share market was not then in a bubble, but that there was certainly a risk that a bubble may form. Now eight months later the sharemarket is nearly 10% higher and so it is reasonable to review the issue again.

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