Sept. 6 (Bloomberg) -- BNP Paribas upgraded Hong Kong's stock market amid expectations the city's shares will benefit from a possible U.S. interest-rate cut.

Hong Kong was raised to ``overweight'' from ``neutral,'' a report sent to clients today said. South Korea and India were cut to ``underweight'' from ``neutral,'' while the Philippines was reduced to ``underweight'' from ``overweight.''

Futures trading shows investors are betting the U.S. Federal Reserve will cut its benchmark rate by at least a quarter percentage point at its Sept. 18 policy meeting to help prop up the world's largest economy.

Fed Chairman Ben S. Bernanke on Aug. 17 said that ``downside risks'' to U.S. economic growth have ``increased appreciably.''

Movements in Hong Kong's interest rates typically track U.S. credit policy because the local currency has been fixed to the U.S. dollar since 1983. Hong Kong allows it to trade in a band between HK$7.75 and HK$7.85.

BNP Paribas, France's biggest bank, expects the Fed to cut its key rate by 75 basis points in the next six months, Clive McDonnell and Winnie Ma, Hong Kong-based analysts at the lender, wrote in the report.

To contact the reporter on this story: Darren Boey in Hong Kong at dboey@bloomberg.net

Last Updated: September 6, 2007 00:16 EDT