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Capital Market Structuring Department August, 2021

Market Note Foreigners Are Net Sellers Once Again

Sales flows were led by foreign agents in July, with the net amount reaching COP316,381 mn. Their total flows represented 37% of the total flows for the month, a 5%-higher share than in June. The most sold shares included were Capital Market Structuring Department Grupo Aval pref. (COP267,674 mn), Ecopetrol (COP170,687 mn), and Bancolombia pref. (COP110,137 mn). On the other hand, regarding Investment Solutions Management purchase flows, Bancolombia pref. (COP105,700 mn), Bancolombia ord. [email protected] (COP94,108 mn), and Grupo Aval pref. (COP92,642 mn) top the list. Pension funds maintained a net buying position, with the net amount reaching COP268,391 mn. In July, the share most bought by pension funds was Grupo Aval pref., with COP155,920 mn; followed by Ecopetrol, with a flow of COP114,362 mn, and Bancolombia pref., with COP33,188 mn; the COLCAP Evolution Last 12 Months list of best-selling assets is again headed by the iColcap ETF, with a flow of volumen USD Colcap COP31,914 mn; followed by Bancolombia ord., with COP28,560 mn, and 200 1600 Cementos Argos, with a flow of COP23,905 mn. 1500 Similarly, individuals were net buyers, with an amount of COP33,562 mn. 150 1400 Ecopetrol, Bancolombia pref., and Grupo Sura were the most representative 1300 purchases, with flows of COP72,392mn, COP26,664mn and COP21,597mn, 100 1200

respectively. Finally, regarding the share in the trading sessions, 37% of Points US$mn 1100 foreigners were followed by stock brokerage firms, with 20%, and pension funds, with 19%. 50 1000 900 Colcap fell 1% in July 0 800 In July, the Colcap posted a 1% drop. The shares that presented the highest Jul-20 Sep-20 Nov-20 Jan-21 Mar-21 May-21 Jul-21 valuations were Cementos Argos (4.6%), followed by Conconcreto (4.3%), Source: Bancolombia, BVC, Bloomberg. and Davivienda (4.2%). In contrast, both Grupo Aval shares fell 10.4%, the most devalued names. During the month, the presentation of the new tax reform proposal by the Government, the behavior of oil, and foreign sales were the main factors influencing the performance of the index. Most Traded Shares On May (USD mn) Markets in the region showed mixed behaviors in July. The Mexican market was the only one posting valuations during the month, rising 1.2%. In Ecopetrol 97 contrast, the Peruvian, Brazilian, and Chilean markets showed losses, falling 6.3%, 3.9%, and 1.8%, respectively. In July, the daily traded volume in the PF Aval 76 local market averaged COP81,999 mn (-25.3%YoY and 6.5%MoM). PF Bancolombia 61 Bancolombia In the ranking of the most traded shares, Ecopetrol remains first, with a 38 volume of COP370,397 mn, followed by Grupo Aval pref., with COP289,787 ISA 24 mn. Finally, reviewing the investment limits of pension funds, the high-risk ICOLCAP 23 portfolio has a 6.7% gap, while the conservative and moderate porfolios Grupo Sura 20 have a -0.2% gap. Cementos Argos 17 PF Davivienda 16 Corficol 10

Source: Bancolombia, BVC, Bloomberg. Table 1. Transactions (USD mn) Market Participants Evolution Brokerage Firms Foreigners Individuals Pension Funds Real Sector Others 100% Buyers Sellers Total Participation 7% Real Sector 24 20 4 5.0% 5% Foreigners 119 202 (83) 37.2% 80% 19% Pension Funds 118 48 70 19.3% 11% Brokerage Firms 83 91 (8) 20.1% 60% Individuals 54 45 9 11.4% Others 19 9 10 3.2% 40% 37% Collective Portfolio 8 14 (6) 2.6% ADRs - - - 0.0% 20% Funds 6 3 3 1.1% 20%

Total 432 432 100.0% 0%

Jul

Jul Jul

Source: BVC, Bloomberg. Fuente: BVC, Bancolombia

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

Cementos Argos 4.6% USD mn 1M 3M YTD 12M Pension Funds 70.0 171.6 217.9 520.5 Conconcreto 4.3% Foreigners (82.6) (188.2) (459.3) (742.3) Brokerage Firms (7.8) (23.5) (6.6) (85.1) Davivienda PF 4.2% Individuals 8.8 3.8 103.9 106.2 Real Sector 4.1 14.1 75.3 69.1 COLCAP -1.0% USD mn 2 years 3 years 5 years 10 years ETB -7.1% Pension Funds 1,582.3 2,524.8 3,845.0 4,435.0 Foreigners (1,821.0) (2,427.3) (1,974.4) 860.7 Grupo Aval -10.4% Brokerage Firms (444.2) (449.1) (434.5) (21.0) Individuals 177.8 (50.0) (892.3) (3,557.7) Grupo Aval -10.4% Real Sector 86.3 (30.1) (1,200.2) (2,595.2)

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

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 50.7 Grupo Aval PF 63.5 Ecopetrol 142.9 Grupo Bolívar 17.3 Grupo Bolívar 17.7 Grupo Bolívar 17.2 Ecopetrol 47.4 Ecopetrol 57.0 Grupo Aval PF 96.7 Cementos Argos 8.1 Canacol Energy 10.0 Cementos Argos 11.7 Bancolombia PF 17.1 GEB 40.2 Icolcap 54.9 Canacol Energy 4.8 Hcolsel 5.6 Canacol Energy 9.2 Banco de Bogotá 15.3 ISA 22.9 Davivienda PF 50.2 Avianca Holdings 1.3 Cementos Argos 3.6 Terpel 3.2 Top Sold Top Sold 3M 6M 12M 3M 6M 12M Hcolsel (7.3) Hcolsel (30.2) Grupo Sura (19.3) Grupo Aval PF (53.5) Ecopetrol (81.8) Ecopetrol (187.2) Icolcap (3.9) Grupo Sura (10.6) Bancolombia (9.1) Ecopetrol (44.6) GEB (77.7) Grupo Aval PF (98.4) Grupo Bolívar (3.7) Icolcap (8.7) Promigas (6.7) Banco de Bogotá (25.8) Grupo Aval PF (56.7) Bancolombia PF (84.7) Cementos Argos (3.0) Celsia (6.4) Cementos Argos (5.6) ISA (16.0) Bancolombia PF (46.5) GEB (75.6)

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

50 200 0 150

(50) (31) 100 70 (100) (83)

50 USD mn

(150) USD mn 0 (200)

(250) (50)

(300) (100)

Jul

Jan

Jan Jan

Source: Bancolombia, BVC Source: Bancolombia, BVC

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

100 80

50 60 84 0 40

(50) 20 9

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

(200) (40)

(250) (60)

(300) (80)

Jul

Jan

Jan Jan

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 18% 80% 60 32% 60% 45 40 34 US$mn 33 40% 13% 30 5% 21 21 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 -

Jun Jun Jun Jun Jun Jun Jun Jun Jun

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

BCOLOMBIA 6.5 PFAVAL 39.3 CEMARGOS 5.7 ECOPETROL 26.7 CNEC 0.5 CORFICOLCF 7.2 CORFICOLCF (6.1) ICOLCAP (4.1) ECOPETROL (29.5) CEMARGOS (4.6) PFAVAL (45.7) BCOLOMBIA (5.4)

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

Source: Bancolombia, BVC Source: Bancolombia, BVC

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

PFAVAL 3.9 ECOPETROL 6.2 ECOPETROL 3.0 GRUPOSURA 3.1 NUTRESA 1.6 PFAVAL 2.5 GRUPOSURA (0.4) PFBCOLOM (1.0) PFBCOLOM (0.9) CEMARGOS (1.1) ISA (3.8) GRUPOAVAL (1.3)

(6) (4) (2) 0 2 4 6 (2) 0 2 4 6 8 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 6.3% 13.9% 20.2% 15.0% 20.0% 8.7% -0.2% Protección Moderate 12.9% 32.4% 45.3% 35.0% 45.0% 22.1% -0.3% High Risk 18.7% 45.0% 63.7% 45.0% 70.0% 26.4% 6.3% Low Risk 6.4% 13.5% 19.8% 15.0% 20.0% 8.6% 0.2% Porvenir Moderate 12.4% 32.4% 44.8% 35.0% 45.0% 22.6% 0.3% High Risk 18.4% 44.3% 62.7% 45.0% 70.0% 26.6% 7.3% Low Risk 6.1% 17.1% 23.1% 15.0% 20.0% 8.9% -3.1% Skandia Moderate 13.5% 33.1% 46.6% 35.0% 45.0% 21.5% -1.6% High Risk 18.1% 48.3% 66.4% 45.0% 70.0% 27.0% 3.6% Low Risk 6.3% 13.7% 20.1% 15.0% 20.0% 8.7% -0.1% Colfondos Moderate 13.7% 32.3% 46.0% 35.0% 45.0% 21.3% -1.0% High Risk 18.2% 44.8% 63.0% 45.0% 70.0% 26.8% 7.0% Low Risk 6.3% 13.9% 20.2% 15.0% 20.0% 8.7% -0.2% Sistema Moderate 12.8% 32.4% 45.2% 35.0% 45.0% 22.2% -0.2% High Risk 18.5% 44.9% 63.3% 45.0% 70.0% 26.5% 6.7%

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 0.73 Real Sector 2.10 Real Sector (0.87) Real Sector 8.12 Real Sector 8.55 Real Sector 3.97 Individuals 1.90 Individuals 5.72 Individuals 9.82 Individuals (0.58) Individuals (0.14) Individuals (2.73) Foreigners (13.28) Foreigners (21.01) Foreigners (28.29) Foreigners (14.53) Foreigners (34.77) Foreigners (45.00) Pension Funds 8.18 Pension Funds 2.12 Pension Funds (9.05) Pension Funds 10.99 Pension Funds 18.10 Pension Funds 28.93

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

3M 6M 12M 3M 6M 12M Real Sector 2.63 Real Sector 2.86 Real Sector 8.96 Real Sector - 1.51 Real Sector 5.68 Real Sector 8.84 Individuals (9.02) Individuals (6.92) Individuals 3.18 Individuals - 0.57 Individuals - 0.18 Individuals - 0.27 Foreigners (44.62) Foreigners (81.82) Foreigners (187.17) Foreigners - 0.61 Foreigners - 1.09 Foreigners - 8.96 Pension Funds 47.43 Pension Funds 56.96 Pension Funds 142.94 Pension Funds - 3.92 Pension Funds - 8.73 Pension Funds 54.92

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

3M 6M 12M 3M 6M 12M Real Sector (0.23) Real Sector 5.59 Real Sector 5.63 Real Sector (1.60) Real Sector (0.61) Real Sector 0.83 Individuals 3.62 Individuals 7.15 Individuals 1.91 Individuals (4.02) Individuals (2.28) Individuals (0.61) Foreigners (16.00) Foreigners (41.64) Foreigners (40.45) Foreigners 8.10 Foreigners 3.57 Foreigners 11.69 Pension Funds 13.08 Pension Funds 22.89 Pension Funds 24.38 Pension Funds (2.96) Pension Funds 1.98 Pension Funds (5.60)

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

3M 6M 12M 3M 6M 12M Real Sector 1.18 Real Sector 2.50 Real Sector 1.61 Real Sector 0.61 Real Sector 16.37 Real Sector 15.27 Individuals 1.59 Individuals 4.98 Individuals 2.97 Individuals 8.94 Individuals 41.89 Individuals 43.66 Foreigners (1.89) Foreigners (2.73) Foreigners (8.36) Foreigners (11.29) Foreigners (46.46) Foreigners (84.67) Pension Funds (1.13) Pension Funds (1.03) Pension Funds 7.37 Pension Funds 17.09 Pension Funds 19.90 Pension Funds 49.49

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

3M 6M 12M 3M 6M 12M Real Sector (1.55) Real Sector 1.58 Real Sector 1.26 Real Sector 2.23 Real Sector 3.36 Real Sector 4.45 Individuals 1.79 Individuals 9.65 Individuals 19.69 Individuals 1.71 Individuals (7.89) Individuals (5.38) Foreigners (4.16) Foreigners (9.18) Foreigners (23.06) Foreigners (53.52) Foreigners (56.68) Foreigners (98.38) Pension Funds 0.26 Pension Funds (10.62) Pension Funds (19.27) Pension Funds 50.67 Pension Funds 63.48 Pension Funds 96.69

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 Restricted

Number of issuers with ratings of: 9 2 5 1 1

Percentage of issuers with ratings of: 50% 11% 28% 5.5% 5.5%