FTSE falls after Xi’s threat to China’s wealthy

The echoes of a call from China’s top brass to redistribute wealth in the country and regulate high incomes reverberated in London yesterday.

Shares in luxury clothes maker Burberry, which relies heavily on sales in China, were among the heaviest losers on the day, helping drag the FTSE 100 lower.

China’s president, Xi Jinping, said the country needs to “regulate excessively high incomes”, and ensure businesses and the wealthy return more to society.

It is the latest sign of Beijing’s interest in cracking down on the business elite which has made its fortune since the country’s economy started opening up decades ago.

More than half of Burberry’s revenue comes from the AsiaPacific region, largely China, while the area has 97 of the company’s 214 shops.

Earlier this week, weaker than hoped for retail data out of China also put a dent in the FTSE company’s shares.

“Burberry shares are lower as concerns about the recovery in Asia weigh further on the share price.

“Comments from Chinese state media that suggested that China was looking at forms of wealth distribution also weighed on sentiment,” said Michael Hewson, CMC Markets analyst.

It contributed to a poor day for the FTSE, which closed down 11.79 points, or 0.2%, at 7169.32.

Bottom of the pack was Anglo-Australian mining company BHP, one of the index’s biggest constituents.

Just a day earlier, BHP had been riding high after it announced plans to favour Sydney above London as it restructures its listing.