Macquarie has downgraded its recommendation on Southeast Asian plantation sector to "underweight" from "neutral".
Malaysia’s IOI, Sime Darby and Genting Plantations were cut to "underperform". Kuala Lumpur Kepong was reduced to "neutral".
"Stocks tend to outperform the underlying commodity for six to nine months on average, but the two subsequently converge. Given the likelihood of high soybean inventories, we are unable to build a case for CPO prices to rise in 2010 to match stock price performance," said Macquarie.
"Our top Underperforms are IOI Corp and Sime Darby, as they trade at 1-2 standard deviations above their historical averages and have the lowest earnings growth over the next three years," Macquarie added.