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Capital Market Structuring Department September, 2021

Market Note

ANALYST CERTIFICATIONS AND REQUIRED DISCLOSURES BEGIN ON PAGE 8 Pension funds: the only net buyers for August

August showed a different dynamic in the market. Flows were mostly on the buying side and from pension funds. The net amount reached COP392.8 bn. Flows from pension funds represented 24% of total flows for the month. Capital Market Structuring Department During August, the most purchased shares were Grupo Aval pref. (COP180.7 bn), Ecopetrol (COP170.06 bn), and the iColcap ETF (COP85.4 bn). In Investment Solutions Management contrast, the best sellers were Bancolombia pref. (COP72.55 bn), the iColcap [email protected] ETF (COP57.88 bn), and Corficolombiana (COP34.62 bn). Foreigners were once again net sellers. Their net amount reached COP306.6 bn. Their total flows represented 30% of total flows for the month, 7% below July’s. Amongst the most sold shares were Ecopetrol (COP234.83 bn), Grupo Aval pref. (COP225.08 bn), and Bancolombia pref. (COP105.49 bn). On the COLCAP Evolution Last 12 Months other hand, regarding buying flows, Bancolombia pref. (COP178.39 bn), volumen USD Colcap Ecopetrol (COP99.98 bn), and ISA (COP47.8 bn) top the list. It should be 200 1600 noted that the selling amount was largely due to the cross in Grupo Aval 1500 pref. on August 13 (COP142.7 bn). 150 1400 Individuals were net sellers in the month with a net amount of COP29.33 bn. 1300 Bancolombia pref., Ecopetrol, and Bancolombia ord. posted the most 100 1200

representative sales, with flows of COP73.09 bn, COP72.22 bn, and Points US$mn 1100 COP23.74 bn, respectively. Finally, regarding the stake in the trading rounds, the most relevant shares were reached by foreigners (30%), pension 50 1000 funds (24%), and broker-dealer companies (21%). 900 0 800 In August, the Colcap Gained 6.7% Aug-20 Oct-20 Dec-20 Feb-21 Apr-21 Jun-21 Aug-21

During August, the Colcap gained 6.7%. The shares that presented the Source: Bancolombia, BVC, Bloomberg. highest valuations were Bancolombia ord. (14.6%), followed by Davivienda (13.6%), and Bancolombia pref. (12.9%). In contrast, Exito (-3.3%), Corficolombiana (-2.5%), and CLH (-1.1%) posted the largest losses. During the month, the completion of the transaction between Ecopetrol and ISA Most Traded Shares On May (USD mn) was the most relevant news in the market.

Markets in the region showed mixed performances. The Brazilian market Ecopetrol 131 posted losses, falling 2.5%, along with the Peruvian market, down 0.1%. In contrast, the Chilean and Mexican markets rose 5.6% and 4.8%, respectively. PF Bancolombia 98 During August, the daily trading of the local market averaged COP102 bn (- PF Aval 75 4.4% YoY and 24.4% MoM). ICOLCAP 42 In the ranking of the most traded stocks, Ecopetrol remains first, with a ISA 40 volume of COP501.68 bn, followed by Bancolombia pref., with COP374.48 Grupo Sura 25 bn. Finally, reviewing the investment limits of pension funds, the portfolio Bancolombia 24 with the highest risk has a gap of 6.4%, the moderate one 0.2%, and the Corficol conservative one 0.0%. 23 PF Davivienda 17 Cementos Argos 15

Source: Bancolombia, BVC, Bloomberg. Table 1. Transactions (USD mn) Market Participants Evolution Brokerage Firms Foreigners Individuals Pension Funds Real Sector Others Buyers Sellers Total Participation 100% 6% Real Sector 30 34 (3) 5.7% 6% 80% Foreigners 127 207 (80) 29.8% 24% Pension Funds 186 83 103 23.9% Brokerage Firms 111 122 (11) 20.8% 60% 14% Individuals 75 83 (8) 14.1% 40% Others 13 14 (1) 2.4% 30% Collective Portfolio 16 10 6 2.3% ADRs - - - 0.0% 20% Funds 3 8 (6) 1.0% 21%

Total 561 561 100.0% 0%

Aug

Aug Aug

Source: BVC, Bloomberg. Fuente: BVC, Bancolombia

Market Winners and Losers – Mar. Table 2. Accumulative Net Flows (USDmn)

Bancolombia 14.6% USD mn 1M 3M YTD 12M Pension Funds 102.5 197.0 320.4 513.0 Davivienda PF 13.6% Foreigners (80.0) (193.4) (539.3) (747.1) Brokerage Firms (11.0) (28.9) (17.6) (61.2) Bancolombia PF 12.9% Individuals (7.7) (6.7) 96.2 102.3 Real Sector (3.5) 8.2 71.8 71.1 COLCAP 6.7% USD mn 2 years 3 years 5 years 10 years CLH -1.1% Pension Funds 1,603.7 2,400.8 3,888.2 4,391.3 Foreigners (1,837.6) (2,424.5) (2,167.1) 788.0 Corficol -2.5% Brokerage Firms (451.0) (443.4) (435.0) 61.6 Individuals 183.3 (7.1) (824.1) (3,523.5) Éxito -3.3% Real Sector 84.9 (19.4) (1,101.6) (2,583.8)

-5% 0% 5% 10% 15% 20%

Source: Bancolombia, BVC Source: Bancolombia, BVC

Table 3. Most Bought and Sold Names by PF (USDmn) Table 4. Most Bought and Sold Names by Foreigners (USDmn)

Top Bought Top Bought 3M 6M 12M 3M 6M 12M Grupo Aval PF 90.4 Grupo Aval PF 104.4 Ecopetrol 170.4 Cementos Argos 11.4 Grupo Bolívar 17.5 Grupo Bolívar 16.9 Ecopetrol 75.9 Ecopetrol 98.1 Grupo Aval PF 133.8 Bancolombia PF 5.4 Canacol Energy 9.1 Cementos Argos 11.3 ISA 13.8 GEB 35.3 Davivienda PF 45.6 Bancolombia 2.9 Cementos Argos 7.9 Canacol Energy 6.5 Corficolombiana 13.4 Corficolombiana 25.1 GEB 39.9 Avianca Holdings 1.3 Avianca Holdings 1.5 Hcolsel 4.8 Top Sold Top Sold 3M 6M 12M 3M 6M 12M Cementos Argos (8.6) Hcolsel (10.2) Grupo Sura (21.5) Grupo Aval PF (103.2) Ecopetrol (110.9) Ecopetrol (210.1) Hcolsel (4.1) Grupo Sura (6.4) Cementos Argos (9.1) Ecopetrol (68.4) Grupo Aval PF (107.2) Grupo Aval PF (140.5) Icolcap (3.2) Celsia (4.2) Hcolsel (7.5) Corficolombiana (14.2) GEB (67.4) GEB (75.7) Grupo Sura (2.3) Grupo Bolívar (3.6) Promigas (6.5) Davivienda PF (5.6) ISA (31.9) Davivienda PF (49.6)

Source: Bancolombia, BVC Source: Bancolombia, BVC Foreigners’ Evolution (USDmn) Pension Funds’ Evolution (USDmn) 100 250

50 200 0 150 (50) 103 100 (100) (80)

50 USD mn

(150) USD mn 0 (200)

(250) (50)

(300) (100)

Feb

Aug

Aug Aug

Source: Bancolombia, BVC Source: Bancolombia, BVC

Real Sector’s Evolution (USDmn) Individuals’ Evolution (USDmn)

100 80

50 60

0 40 (3) (50) 20

(100) 0 USD mn USD mn (150) (20) (8)

(200) (40)

(250) (60)

(300) (80)

Feb

Aug

Aug Aug

Source: Bancolombia, BVC Source: Bancolombia, BVC

Average Monthly Volume (USDmn) Pension Funds’ Investment Portfolio Evolution Domestic Fixed Income Foreing Fixed Income Domestic Equities Foreing Equities Others 90 2019 2020 2021 100% 75 19% 80% 60 32% 60% 45 41

US$mn 13% 28 40% 30 27 5% 20% 15 32% 0%

13 14 16 17 18 19 20 21 15

------

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec -

Jul Jul Jul Jul Jul Jul Jul Jul Jul

Source: Bancolombia, BVC Source: Bancolombia, Superintendence of Finance *Data as of march, 2021 Foreigners’ Movements (USDmn)* Pension Funds’ Movements (USDmn)*

PFBCOLOM 19.0 PFAVAL 43.6 CEMARGOS 4.7 ECOPETROL 39.5 ICOLCAP 1.0 ICOLCAP 7.2 CORFICOLCF (5.6) GRUPOSURA (0.7) ECOPETROL (35.2) CEMARGOS (4.7) PFAVAL (49.6) PFBCOLOM (6.0)

(60) (40) (20) 0 20 40 (10) 0 10 20 30 40 50 Millions Millions

Source: Bancolombia, BVC Source: Bancolombia, BVC

Real Sector Movements (USDmn)* Individuals’ Movements (USDmn)*

HCOLSEL 2.1 PFAVAL 6.2 PFDAVVNDA 1.4 CORFICOLCF 1.8 NUTRESA 1.2 ECOPETROL 1.4 GEB (1.3) PFDAVVNDA (1.9) ISA (2.6) BCOLOMBIA (3.8) PFBCOLOM (3.9) PFBCOLOM (11.0)

(5) (4) (3) (2) (1) 0 1 2 3 (15) (10) (5) 0 5 10 Millions Millions

Source: Bancolombia, BVC Source: Bancolombia, BVC

Table 5. AFP’s Equity Investment Limits per Fund

Investments in equity securities National Maximun AFP Fund Type Total Local Gap Total Gap From national issuers From foreign issuers Limit Limit Low Risk 6.2% 13.7% 19.8% 15.0% 20.0% 8.8% 0.2% Protección Moderate 12.7% 32.2% 44.9% 35.0% 45.0% 22.3% 0.1% High Risk 18.1% 44.8% 62.9% 45.0% 70.0% 26.9% 7.1% Low Risk 6.3% 13.5% 19.7% 15.0% 20.0% 8.7% 0.3% Porvenir Moderate 12.1% 32.1% 44.3% 35.0% 45.0% 22.9% 0.7% High Risk 19.1% 45.1% 64.2% 45.0% 70.0% 25.9% 5.8% Low Risk 6.1% 16.8% 23.0% 15.0% 20.0% 8.9% -3.0% Skandia Moderate 13.5% 32.9% 46.4% 35.0% 45.0% 21.5% -1.4% High Risk 17.8% 47.7% 65.5% 45.0% 70.0% 27.2% 4.5% Low Risk 6.2% 13.7% 19.9% 15.0% 20.0% 8.8% 0.1% Colfondos Moderate 13.4% 32.0% 45.4% 35.0% 45.0% 21.6% -0.4% High Risk 18.1% 44.2% 62.3% 45.0% 70.0% 26.9% 7.7% Low Risk 6.2% 13.8% 20.0% 15.0% 20.0% 8.8% 0.0% Sistema Moderate 12.6% 32.2% 44.8% 35.0% 45.0% 22.4% 0.2% High Risk 18.5% 45.0% 63.6% 45.0% 70.0% 26.5% 6.4%

Source: Bancolombia, Superintendence of Finance *Data as of march, 2021.

Tabla 4. Límites de Inversión e Inversiones en Acciones de AFP Table 6. Main Agents Bancolombia Table 7. Main Agents Nutresa

3M 6M 12M 3M 6M 12M Real Sector (1.02) Real Sector 0.21 Real Sector 1.45 Real Sector 7.12 Real Sector 9.34 Real Sector 6.79 Individuals (4.20) Individuals (1.25) Individuals 7.68 Individuals (1.24) Individuals (1.14) Individuals (2.67) Foreigners 2.85 Foreigners (7.49) Foreigners (32.99) Foreigners (5.08) Foreigners (31.21) Foreigners (45.58) Pension Funds 0.95 Pension Funds (3.12) Pension Funds (3.18) Pension Funds 3.96 Pension Funds 18.76 Pension Funds 27.30

Table 8. Main Agents Ecopetrol Table 9. Main Agents ICOLCAP

3M 6M 12M 3M 6M 12M Real Sector 0.36 Real Sector 0.85 Real Sector 9.36 Real Sector 0.19 Real Sector - 1.69 Real Sector 7.88 Individuals (2.57) Individuals (8.63) Individuals 1.94 Individuals - 0.70 Individuals - 1.27 Individuals - 1.20 Foreigners (68.42) Foreigners (110.89) Foreigners (210.12) Foreigners 0.85 Foreigners - 1.93 Foreigners - 6.00 Pension Funds 75.94 Pension Funds 98.08 Pension Funds 170.40 Pension Funds - 3.16 Pension Funds 14.01 Pension Funds 25.48

Table 10. Main Agents ISA Table 11. Main Agents Cemargos

3M 6M 12M 3M 6M 12M Real Sector (7.66) Real Sector 1.29 Real Sector 3.66 Real Sector (0.56) Real Sector 0.03 Real Sector 2.64 Individuals (1.06) Individuals 5.52 Individuals 4.10 Individuals (2.16) Individuals (2.47) Individuals 0.96 Foreigners (2.21) Foreigners (31.91) Foreigners (44.73) Foreigners 11.39 Foreigners 7.88 Foreigners 11.29 Pension Funds 13.81 Pension Funds 23.39 Pension Funds 33.72 Pension Funds (8.57) Pension Funds (0.95) Pension Funds (9.09)

Table 12. Main Agents Grupo Argos Table 13. Main Agents PF Bancolombia

3M 6M 12M 3M 6M 12M Real Sector (0.14) Real Sector 1.42 Real Sector 0.99 Real Sector (0.49) Real Sector 7.09 Real Sector 3.94 Individuals 0.20 Individuals 4.09 Individuals 4.20 Individuals (4.07) Individuals 10.41 Individuals 25.60 Foreigners (0.33) Foreigners (3.76) Foreigners (8.09) Foreigners 5.40 Foreigners (15.36) Foreigners (30.67) Pension Funds (1.01) Pension Funds 2.14 Pension Funds 7.75 Pension Funds 1.90 Pension Funds 22.88 Pension Funds 20.15

Table 14. Main Agents Grupo Sura Table 15. Main Agents PF Aval

3M 6M 12M 3M 6M 12M Real Sector (0.95) Real Sector 1.09 Real Sector 3.88 Real Sector 5.45 Real Sector 1.92 Real Sector 6.26 Individuals 3.89 Individuals 6.24 Individuals 22.66 Individuals 8.79 Individuals 7.63 Individuals 1.65 Foreigners (5.37) Foreigners (10.26) Foreigners (25.40) Foreigners (103.17) Foreigners (107.21) Foreigners (140.49) Pension Funds (2.27) Pension Funds (6.44) Pension Funds (21.54) Pension Funds 90.35 Pension Funds 104.42 Pension Funds 133.82

Source: Bancolombia, BVC Juan Pablo Espinosa Arango Chief Economist and Head of Economic, Industry and Market Research [email protected]

EconomicResearch Industry Research Equity Research Arturo Yesid González Peña Jhon Fredy Escobar Posada Jairo Julián Agudelo Restrepo Quantitative Specialist Head of Agroindustry Research Head of Equity Research [email protected] [email protected] [email protected]

Juan Camilo Meneses Cortes Nicolás Pineda Bernal Diego Alexander Buitrago Aguilar Macroeconomic Specialist Head of Commerce Research Utilities Analyst [email protected] [email protected] [email protected] +571 7463984 Juan Manuel Pacheco Perez Mateo Andrés Rivera Arbeláez Markets and Central Banking Analyst Commerce Industry Analyst Andrea Atuesta Meza [email protected] [email protected] Financial Sector Analyst [email protected] Santiago Espitia Pinzón Paolo Betancur Montoya Macroeconomic Analyst Agroindustry Analyst Juliana Aguilar Vargas, CFA [email protected] [email protected] Cement & Infrastructure Analyst [email protected] Bryan Hurtado Campuzano Javier David Villegas International and Regional Analyst Real Estate and Hotels Analyst Ricardo Andrés Sandoval Carrera [email protected] [email protected] Oil & Gas and Airlines Analyst [email protected] Deiby Alejandro Rojas Cano Valentina Gómez Garzón Macroindustry Analyst Commerce Sector Analyst Valentina Martínez Jaramillo [email protected] [email protected] Consumer & Industry Analyst [email protected] Julian Andrés Gómez Quintero Juan Esteban Echeverri Agudelo Intern Administrative Assistant Andrés Camilo Chacón Briceño [email protected] [email protected] Intern [email protected] Luisa Daniela Espejo Rodríguez Simón Londoño Duque Intern Intern [email protected] [email protected] Research Assistant

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Rating System: The investment recommendation on the issuers under coverage by Analysis Bancolombia is governed by the rating system presented below, subject to the following criteria: The upside potential is the percentage difference between the target price of securities issued by a particular issuer and their market price. The target price is not a forecast of the price of a stock, but a fundamental independent valuation made by Analysis Bancolombia, which seeks to reflect the fair price the market should pay for the shares on a given date. Based on an analysis of the relative upside potential amongst the securities of companies under coverage and the COLCAP index, the ratings of the assets are determined as follows: •Overweight: when the upside potential of a stock exceeds by 5% or more the return potential of the COLCAP index. •Market Weight: when the upside potential of a stock does not differ by more than 5% from the return potential of the COLCAP index. •Underweight: when the upside potential of a stock is 5% or more below the return potential of the COLCAP index. •Under Review: the company’s coverage is under review and therefore there’s no rating or target price. Additionally, at the discretion of the analyst, the speculative qualification that complements the recommendation will continue to be used, taking into account the risks seen in the performance of the asset, its future development and the volatility the movement of the stock may show. The fundamental potential of the index is determined based on the methodology established by the BVC for the calculation of the COLCAP index, considering the target prices published by Analysis Bancolombia. This will be made with the Colcap basket on the dates of calculation May and November of every year. For the companies part of the index but not covered, the consensus of market analysts will be used. Currently, Analysis Bancolombia has 18 companies under coverage, distributed as follows:

Overweight Market Weight Underweight Under Review

Number of issuers with ratings of: 10 2 5 1

Percentage of issuers with ratings of: 55.5% 11% 28% 5.5%