For evidence of shareholder short-termism, look no further than luxury goods retailer and brand Burberry.

For evidence of shareholder short-termism, look no further than luxury goods retailer and brand Burberry.

In the past week alone Burberry’s share price has plunged by almost 20%.

Has there been a profit warning? No, the problem is that investors have taken fright at prospects in China, which proved immune to most of the problems that afflicted mature markets during the credit crunch, recession and global economic volatility.

It’s true that questions are increasingly being asked about the growth outlook in China, and there are some signs of the pace slowing, but the markdown of Burberry looks like an over-reaction.

The facts as they relate to Burberry should be made clear next Wednesday when the retailer issues its first-half trading update. But on the most recent evidence available, Burberry remains in fashion with the Chinese jet set.

When Burberry last updated in July it reported continued sales growth of 30% in stores acquired in China. That followed “good progress on integration of Chinese operations” noted at May’s prelims.

Just a fortnight ago, as the glitterati gathered at London Fashion Week, Burberry was trading at about 1,500p a share. Few seemed worried about prospects as the champagne flowed and the paparazzi snapped.

National economies seem to rise and fall overnight at the moment, but have prospects in China really changed so much in the last few weeks that such a dramatic share price fall is merited? Or is it simply panicked herd instinct that is chasing the shares down?

Burberry has not put a foot wrong in recent years. Ironically, that is one of its problems from a share price perspective. It brought a bubble element to the stock that made it vulnerable to pricking on the slightest bad news – or hint of bad news.

But Burberry has proved its doubters wrong in the past and can probably do so again.