A strong financial performance from the country's listed firms has left them poised for strong growth when economic activity eventually picks up pace.
Research house Forsyth Barr says the latest earnings season shows firms gross earnings rose nearly 8% in the first half of the year, with reasonable revenue growth and tight controls on costs.
Research manager Rob Mercer says the results indicate firms are in good heart and most corporates have got their house in order by cutting costs and redefining their businesses to focus on the future.
He says the real leverage will come when revenue growth starts to lift towards 10%.
Mr Mercer says by 2013 revenue growth may lift towards 10% and profit growing towards 20% and those are the parameters that will drive New Zealand's equity market over the next couple of years.
Despite concern about slowing global growth and unsustainable government debt, particularly in Europe, Mr Mercer says earnings upgrades outnumbered falls by two to one.
He says firms are better placed to take advantage of a wider pick-up, although the timing of any recovery is uncertain.
Mr Mercer says firms that are focused on the domestic economy, such as Sky City Entertainment and Sky Network Television, expect incremental growth, while exporters and those with foreign operations, generally face tougher conditions.