Chinese stocks rally fades as stimulus update disappoints investors

China's stock market rally faded after an anticipated announcement of plans to boost the country's faltering economy disappointed investors.

Shares jumped more than 10% as trading resumed after the Golden Week holiday, but fell after a press conference by the country's economic planners.

After a volatile day of trading, the Shanghai Composite Index in mainland China closed up 4.6%, while the Hang Seng Index in Hong Kong fell 9.4%.

Investors had hoped for more information about how the government plans to support economic growth, but the announcement provided few details.

Chairman of China's National Development and Reform Commission, Cheng Shanjie, said he was “quite confident” that the country would achieve its economic and social goals for the full year.

But he added: “Downward pressures on the Chinese economy are also increasing.”

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

“The market was already expecting more. The correction will be stronger if the Golden Week data in terms of consumption is weak,” said Alicia Garcia Herrero, chief economist for Asia-Pacific at investment bank Natixis.

“The market is reacting to the lack of real fiscal stimulus. I would not organize a press conference to not announce anything new.”

The Chinese government is trying to boost confidence in the world's second-largest economy, with growing fears that it may not achieve its 5% annual growth target.

Investors have been flocking to Chinese stocks ever since Officials have begun rolling out a range of measures aimed at boosting the economy.

The plans included helping the country's crisis-hit real estate industry, supporting the stock market, cash grants to the poor and increasing government spending.

But some economists have questioned whether these policies are enough to fix China's economic problems.

They say deep reforms may be needed in order to put the country on a more sustainable growth path.

Growth is slowing in the world's second-largest economy as it continues to face a declining real estate market, falling prices and other challenges.