China plans to raise the limits on inbound portfolio investments to bolster market sentiment and the renminbi's internationalization.

The upward limit for individual institutions' quotas under the qualified foreign institutional investor (QFII) program will be raised to $1 billion from $800 million under the draft rules and the lockup period for some investors will be cut to three months from one year, the State Administration of Foreign Exchange (SAFE) said on Friday.

Hong Kong's Hang Seng Index soared closed 3 percent higher on Friday. The Shanghai stock exchange also closed higher by 0.6 percent.