China stock rally fizzles as stimulus update disappoints investors

A stock market rally in China has fizzled out as a highly-anticipated announcement on plans to boost the country’s ailing economy disappointed investors.

Shares had jumped by more than 10% as trading restarted after the Golden Week holiday but fell back after a closely-watched news conference by the country’s economic planners.

In a volatile session, the Shanghai Composite Index in mainland China was up by around 5% in late morning trade, while the Hang Seng in Hong Kong was 5% lower.

Investors had been hoping for more information about how the government plans to support economic growth but the announcement gave little in the way of details.

The chairman of China’s National Development and Reform Commission Zheng Shanjie said he is “fully confident” the country will achieve its full-year economic and social goals.

But added: “The downward pressures on China’s economy is also increasing with some industries seeing rat-race competition.”

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

“The market really expected more. The correction will be even stronger if the data on the Golden week in terms of consumption is weak,” said Alicia Garcia-Herrero, chief economist for the Asia Pacific region at investment bank Natixis.

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

The Chinese government has been trying to boost confidence in the world’s second largest economy as concerns increase that it may miss its own 5% annual growth target.