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Jack Ma's empire in turmoil. U.S. markets rally as America votes. And Xi says China's economy can double by 2035. 

Jack Ma's Nightmare

Chinese authorities have abruptly thrown into doubt the future of Ant Group and its billionaire founder, Jack Ma. Only days before the financial-technology juggernaut was to go public in Shanghai and Hong Kong, the $35 billion IPO was halted on Tuesday after Chinese authorities announced that they had belatedly discovered an array of shortcomings that, by some accounts, might require the sprawling Ant to be overhauled. Meanwhile, the net worth of Ma — poised to become Asia's richest person with Ant's public offering — has tumbled and investors who were betting on a big first-day pop are in limbo. Ma's holding in Alibaba Group's U.S.-traded shares fell about $3 billion and the stock slumped 8.1%.

Down to the Wire

Polls are open throughout the U.S. for voters who didn't cast their ballots early or by mail. In addition to choosing between President Donald Trumpand Democratic nominee Joe Biden, Americans are casting votes in U.S. House and Senate races and state and local elections. Trump and Biden both projected confidence on Tuesday, touting long lines at some polling stations as signs they were poised for victory. While there were reports of high voter turnout in states including Texas, Florida and Arizona, there were no signs of disturbances many had feared. Meanwhile Trump is pledging a legal fight over vote counting that drags on after polls close. For election alerts, sign up here and for state-by-state statistics, click here

Markets Open

U.S. stocks capped their biggest two-day rally since September and Treasury yields rose on speculation that Congress will deliver a spending bill once the election is decided. The dollar weakened. The S&P 500 climbed nearly 2%, led by a surge in bank shares. Asian futures pointed to a mixed start to trading Wednesday. Treasuries fell and a gauge of the dollar dropped the most in more than three weeks. Oil extended Monday's gains.

Xi's Vision

Chinese President Xi Jinping said the economy can double in size by 2035 and the country can reach high-income status in the next five years as the Communist Party outlined ambitious plans for the nation's future. Based on a rough estimate, doubling economic output by 2035 would mean an annual growth rate of nearly 4.7%, said Hong Hao, chief strategist for Bocom International in Hong Kong. Economists surveyed by Bloomberg see the economy expanding by a mere 2.1% this year as a result of the coronavirus pandemic, accelerating to 8.0% in 2021.

Lobster, Wine Targeted

What started as a political spat between Beijing and Canberra has become a one-sided trade war that threatens serious disruption for an expanding number of Australian exporters. China won't allow imports of a swathe of Australian commodities and foodstuffs from as early as this week, according to people familiar with the matter. The curbs are a major escalation in Beijing's pressure campaign following a two-year stand-off over issues from technology to the origins of coronavirus. China's blacklist includes coal, barley, copper, sugar, timber, wine and lobster. It doesn't cover materials, like iron ore or natural gas, where import curbs could unduly damage China's own economy.

What We've Been Reading

This is what's caught our eye over the past 24 hours:

And finally, here's what Tracy's interested in today

The U.S. elections seemed all but certain to dominate today's Asia market agenda. Then came the news that Ant Group is pulling its much-anticipated public debut. Ant announced late Tuesday evening that it would be halting the giant IPO, which had been set to go ahead on Thursday and be the biggest of all time. Chinese financial regulators said the listing couldn't go ahead because there had been "significant change" in the regulatory environment.

It's a big turn of events for many reasons. For a start, it's now unclear what happens to investors who had already been allocated shares (which were reported by Bloomberg to have been trading at as much as 50% premium in the grey market ahead of the listing). Meanwhile, the IPO is so huge for Hong Kong's market that it's arguably grown systemic, by increasing demand for the Hong Kong dollar and forcing the central bank to inject liquidity to accommodate rampant demand for Ant shares. And then of course there's the fact that the IPO itself was pitched as a giant win for China's capital markets, demonstrating the power of mainland investors and their ability to bypass U.S. capital markets.

Market participants are now left to ponder what happens to the wealth creation set in motion by the IPO. The Hong Kong dollar has weakened sharply overnight, as has Alibaba's stock in the U.S. And there's now a giant Ant-sized question mark over just what went down between regulators and Ma to derail the listing so close to the finish line. On a day when everyone is focusing on U.S. democracy, this serves as an important reminder of the market power wielded by China's command-style economic and political system.

You can follow Tracy Alloway on Twitter at @tracyalloway.

 

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