In a testament to the resilience of the emerging market rally and also to investors’ (possibly blind) faith in Beijing’s ability to successfully deleverage the financial system without undercutting growth, Chinese stocks had their best day in a year on Friday as the SHCOMP rose 1.8%:

You’ll note from the chart that’s the highest close since January of 2016 when the bottom fell out amid worries about the pace of the yuan deval and a burgeoning global deflationary impulse. The CSI 300 Index rose 1.6% to highest close since December 2015.

Recall from last night that the offshore yuan is riding an 8-day winning streak amid tightening liquidity. As Bloomberg was keen on mentioning in the overnight, the PBoC this week drained the most funds from the financial system in almost two months, as this week’s net withdrawal totaled $50 billion.

As far as the equity picture is concerned, you can spin it any number of ways depending on how you want to break things down, but do note that on some measures, valuations are approaching levels last seen before the rather harrowing collapse that occurred in the summer of 2015:

(Goldman)