Newsletter tip blamed for strong share price swings

A monthly stock market analysis newsletter may be behind big price swings in two publicly listed stocks.

The NZX launched share price inquiries on Monday into retailer Smiths City Group and investment company Richina Pacific.

Both stocks were included in this month's "tip sheet" in the subscriber-only Market Analysis report by North Shore researcher James Cornell.

The NZX said higher-than-usual volumes of shares were traded in both Smiths City and Richina Pacific.

Smith's City shares were trading at 75c on Monday afternoon, up 11c - or 17 per cent - on Thursday's close. Richina Pacific's shares were trading at 38c on Monday afternoon, down 11c - or 22 per cent - on Friday's close.

Richina Pacific - which owns construction company Mainzeal - yesterday told the market that it did not know the reason for the fall but noted comments in the newsletter.

"A market analysis, in its subscription-based monthly newsletter issued today [Monday], has indicated that the Richina Pacific shares are, in their opinion, a sell proposition," wrote chief executive Richard Yan. "That analyst is selling its modest holdings in Richina Pacific shares."

Cornell could not be contacted for comment.

David McEwen, author of McEwen's Investment Report, said it was unusual to have such a strong reaction to a newsletter.

Yan told the NZX that Richina Pacific complied with the stock market's continuous disclosure rules and there was no change to its outlook or operations since it distributed its half-year report late last month.

Smiths City also told the NZX the company complied with stock market's continuous disclosure rules.

Managing director Rick Hellings noted it was tipped as a "buy" in the Market Analysis report.

Richina Pacific shares yesterday closed unchanged at 42c. Smiths City Group shares closed up 2c at 74c.