China's stock rally falters as stimulus update frustrates investors

A stock market rally in China stalled as a highly-anticipated announcement of plans to boost the country's ailing economy disappointed investors.

Shares rose more than 10% as trading resumed after the Golden Week holiday but retreated after a news conference by the country's economic planners.

After a volatile day of trading, mainland China's Shanghai Composite Index closed 4.6% higher, while Hong Kong's Hang Seng fell 9.4%.

Investors were hoping for more information on how the government plans to support economic growth but the announcement offered little in the way of details.

Zheng Shanji, chairman of China's National Development and Reform Commission, said he was “absolutely confident” the country would achieve its full-year economic and social goals.

But he added: “Downward pressures on China's economy are also increasing”.

Mr Zheng's comments came as he announced that China would issue 200 billion yuan ($28 billion; £21.5 billion) for spending and investment projects by the end of this year.

“The market really expected more. If the Golden Week data is weak on the consumption side, the correction will be stronger,” said Alicia Garcia-Herrero, Asia Pacific chief economist at investment bank Natixis.

“The market is reacting to the lack of real fiscal stimulus. I wouldn't hold a press conference not to announce something new.”

The Chinese government is trying to boost confidence in the world's second-largest economy as concerns grow that it could miss its own 5% annual growth target.

Investors have poured into Chinese stocks Officials started taking various measures aimed at boosting the economy.

The plans include support for the country's crisis-hit property industry, support for the stock market, cash handouts for the poor and more government spending.

But some economists question whether the policies will be enough to solve China's economic woes.

Deeper reforms may be needed to put the country on a more sustainable growth path, they say.

Growth has slowed in the world's second-largest economy as it faces a property market slump, falling prices and other challenges.