The echoes of a call from China’s top brass to redistribute wealth in the country and regulate high incomes reverberated in London on Thursday.
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 that 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 Asia-Pacific 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 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.
“The prospect of an ugly tussle with shareholders over its dual-listing has put severe pressure on BHP today, dragging down the rest of the heavyweight London mining contingent which has, in turn, put an end to the early hopes of a new 18-month high for the FTSE 100,” said IG analyst Chris Beauchamp.
“BHP’s move will go down badly with many UK investors, who will have grown accustomed to the solid dividends on offer at the miner.”
Several other miners joined BHP in the red as the price of copper headed down.
In Europe, the German Dax index closed up 0.2% while the Cac 40 in Paris dropped 0.8%.
The S&P 500 in New York and the Dow Jones were both trading down 0.1% shortly after European markets closed.
One pound could buy 1.1745 euros by the end of the day in London, unchanged on the day before. A pound could also buy 1.3746 dollars, a drop of 0.1%.
Despite a strong showing in its first-half results, housebuilder Persimmon was well shy of the FTSE 100’s top performers with a 1.5% rise.
“It suggests that investors are still concerned that the recent increase in activity is not likely to last,” Mr Beauchamp said.
Pre-tax profit rose by nearly two thirds at the business in the first six months of the year, and it expects sales completions will rise by about 10% during the full year.
Balfour Beatty’s shareholders watched their investment lose more than 7% of its value as the business reported a £23 million loss in the first six months.
Balfour said that supply chain delays had increased costs and caused problems at residential projects in central London.
The biggest risers on the FTSE 100 were Just Eat Takeaway.com, up 330p to 6,640p; IAG, up 3.78p to 163p; Barratt Developments, up 16.4p to 722p; Taylor Wimpey, up 3.75p to 176.6p; and Informa, up 10.8p to 553p.
The biggest fallers on the FTSE 100 were BHP, down 140p to 2,218p; United Utilities, down 99p to 1,941p; Antofagasta, down 42.5p to 1,470.5p; Rio Tinto, down 141p to 5,338p; and Anglo American, down 73p to 3,235.5p.