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Foreigners Showed Net Selling Position

Market Note

Local Market Flows January 2021 ANALYST CERTIFICATIONS AND REQUIRED DISCLOSURES BEGIN ON PAGE 8 Foreigners Showed Net Selling Capital Market Structuring Department

Position Investment Solutions Management Gerenciasolucionesdeninversion@bancolombia.c om.co In January, foreigners recorded high outflows for a net amount of COP102.4 bn. Their total flows represented 39% of total flows for the month, increasing their participation 9% compared to December. Amongst the most bought and sold shares, the same three names stand out, with net sales flows: Ecopetrol, with a COLCAP Evolution Last 12 Months net outflow of COP45.9 bn, Bancolombia pref., with a net outflow of COP16.5 bn, and ISA, with a net outflow that reached COP7.3 bn. volumen USD Colcap Pension funds maintained their net buying position, represented by an adjusted 200 1800 amount of COP1.5 bn. In this month, the most purchased share by pension 1700 1600 funds was Ecopetrol, with a flow of COP89.7 bn, followed by the ETF Icolcap, 150 with COP83.7 bn, while the best-selling asset was Bancolombia pref., with a 1500 flow of COP110.3 bn. 1400

100 1300 Points On the other hand, individuals recorded the highest purchase flow with a net US$ mn 1200 amount of COP76.8 bn. The most representative purchases were seen in 1100 50 Ecopetrol (COP96.3 bn) and Bancolombia pref. (COP90.4 bn). Finally, 1000 foreigners had the highest participation in the trading rounds, with 39% of total 900 market flows, followed by pension funds and individuals, with 16% and 15%, 0 800 respectively. Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20 Jan-21

In January, the Colcap Lost 6.2% Source: Bancolombia, BVC, Bloomberg.

In January, the Colcap posted a performance of -6.2%. The shares that posted the main gains were Banco de Bogota (+10.3%), followed by Conconcreto (+9.3%) and Nutresa (+1.7%). It is important to note that the performance in the Colombian market was marked by the uncertainty of new lockdowns globally and by a second wave of the pandemic, as well as the announcement by Most Traded Shares (USD mn) Ecopetrol stating the non-binding purchase intention on ISA subject to an issuance of shares. Ecopetrol 165 This month, the Colombian stock market showed a worse performance than that PF Bancolombia 140 recorded by the Brazilian market, which fell 3.3%, as well as the Mexican one, ISA 62 which lost 3.8%. On the other hand, the Chilean market gained 2.7%. Over the Bancolombia 55 course of January, the average daily trading of the local market was COP128 bn ICOLCAP 42 (-1.4% YoY and -8.8% MoM), decreasing compared to recent months. Grupo Sura 40 PF Aval 32 In the ranking of the most traded names, Ecopetrol ranked first, with a volume of PF Davivienda 27 COP576 bn, followed by Bancolombia pref., with COP491 bn, and ISA, with GEB 21 COP217.7 bn. Finally, reviewing the investment limits of pension funds, the HCOLSEL 13 high-risk portfolio has a gap of 11.25%, while the conservative and moderate ones have gaps of -0.08% and 1.94%, respectively. Source: Bancolombia, BVC, Bloomberg. Transactions (USD mn) Market Participants Evolution

Brokerage Firms Foreigners Indiv iduals Pension Funds Real Sector Others Buyers Sellers Total Participation 100% 6% Real Sector 57,179,322 59,083,155 (1,903,833) 8.3% 90% 8% 80% Foreigners 262,674,458 291,990,082 (29,315,623) 39.5% 16% 70% Pension Funds 114,491,189 114,066,192 424,997 16.3% 60% 15% Brokerage Firms 104,083,634 101,056,423 3,027,211 14.6% 50% Individuals 118,660,328 96,716,130 21,944,198 15.3% 40% 39% Others 26,839,655 24,089,423 2,750,233 3.6% 30% 20% Collective Portfolio 10,775,198 11,223,702 (448,505) 1.6% 10% ADRs - - - 0.0% 15% 0%

Funds 7,844,575 4,321,699 3,522,876 0.9%

- -

Total 702,548,359 702,546,805 100.0%

Jan

Jan Jan

Source: BVC, Bloomberg. Fuente: BVC, Bancolombia

Market Winners and Losers. Accumulative Net Flows (USDmn)

Banco de Bogotá 10.3% USD mn 1M 3M YTD 12M Pension Funds 0.13 35.94 0.13 1,008.82 Conconcreto 9.3% Foreigners (29.07) 38.70 (29.07) (1,067.41) Brokerage Firms 3.06 13.26 3.06 (343.84) Nutresa 1.7% Individuals 21.98 (47.95) 21.98 126.37 Real Sector (1.98) (39.47) (1.98) 41.51 COLCAP -6.2%

Grupo Sura -10.2% USD mn 2 years 3 years 5 years 10 years Pension Funds 1,807.24 2,600.98 4,460.12 4,444.12 Isa -10.3% Foreigners (1,611.08) (2,311.89) (1,524.46) 1,442.97 Brokerage Firms (446.45) (435.80) (399.93) (484.42) Bancolombia - 12.5% Individuals 20.37 (321.50) (1,195.93) (3,902.26) -15% -10% -5% 0% 5% 10% 15% Real Sector (154.16) (182.66) (1,725.30) (2,831.76)

Source: Bancolombia, BVC Source: Bancolombia, BVC

Most Bought and Sold Names by Pension Funds (USDmn) Most Bought and Sold Names by Foreigners (USDmn)

Top Bought Top Bought 3M 6M 12M 3M 6M 12M Ecopetrol 27.64 Ecopetrol 94.29 Bancolombia PF 262.71 Bancolombia PF 64.63 Cementos Argos 8.90 GEB 32.10 Davivienda PF 19.25 Icolcap 69.80 Grupo Aval PF 188.52 ISA 6.50 Terpel 4.54 Corficolombiana PF 5.31 Icolcap 16.33 Davivienda PF 37.47 Icolcap 162.47 Hcolsel 2.65 GEB 2.37 Cartón de Colombia 3.04 Nutresa 9.06 Grupo Aval PF 36.42 Ecopetrol 150.57 GEB 2.44 Mineros 1.60 Terpel 2.27 Top Sold Top Sold 3M 6M 12M 3M 6M 12M Bancolombia PF (27.43) Bancolombia (12.25) Bancolombia (25.27) Davivienda PF (16.46) Ecopetrol (115.52) Bancolombia PF (287.63) Grupo Sura (11.58) Grupo Sura (9.49) Cementos Argos (12.35) Nutresa (7.18) Grupo Aval PF (45.73) Grupo Aval PF (219.08) Bancolombia (8.21) Cementos Argos (8.32) Promigas (10.52) Grupo Sura (6.55) Bancolombia PF (41.90) Ecopetrol (158.72) ISA (4.73) Promigas (5.51) Grupo Sura (9.00) Ecopetrol (5.83) Davivienda PF (39.47) Grupo Argos (82.72)

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

150 250 100 200 50 150 0 100 (50) (29) (100) 50

(150) USD mn USD USD mn 0 (200) (50) (250)

(300) (100)

17 17 18 19 19 20 20 21 18

------

Jul

Jan

Jul Jul Jul Jul

Jan Jan Jan Jan Jan

Source: Bancolombia, BVC Source: Bancolombia, BVC

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

100 80 60 50 40 22 0 20 0 (50) (20) (100) (40)

(150) (60) USD USD mn

USD USD mn (80) (200) (100) (250) (120) (140)

(300)

Jul

Jan

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 90 2019 2020 2021 100% 75 13% 80% 60 27% 39 60% 45 14% 37 6% US$ US$ mn 40% 30 20% 40% 15 0% 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: Bancolombia, BVC Source: Bancolombia, Superintendence of Finance *Data as of October 2020 Foreigners’ Movements (USDmn)* Pension Funds’ Movements (USDmn)*

HCOLSEL 4.6 PFDAVVNDA 10.6

PFAVAL 4.0 ECOPETROL 8.6

CEMARGOS 2.1 PFAVAL 4.5

PFDAVVNDA (12.2) CEMARGOS (1.7)

ECOPETROL(13.1 ) GRUPOSURA (10.1) PFBCOLOM( 17.4) BCOLOMBIA( 13.4) (20) (15) (10) (5) 0 5 10 15 (15) (10) (5) 0 5 10 Miles de Millones Miles de Millones

Source: Bancolombia, BVC Source: Bancolombia, BVC

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

PFBCOLOM 14.0 BCOLOMBIA 3.5 BCOLOMBIA 7.5 ICOLCAP 1.7 GRUPOSURA 4.1 ECOPETROL 0.8 MINEROS (1.0) ISA (2.3) CORFICOLCF (1.4) PFBCOLOM (2.6) PFAVAL (2.3) PFAVAL (2.6) (5) 0 5 10 15 (4) (2) 0 2 4 Miles de Millones Miles de Millones

Source: Bancolombia, BVC Source: Bancolombia, BVC

AFP’s Equity Investment Limits per Fund

Investments in equity securities AFP Fund Type Total National Limit Maximun Limit Local Gap Total Gap From national issuers From foreign issuers Low Risk 7.23% 13.27% 20.50% 15.00% 20.00% 7.77% -0.50% Protección Moderate 15.97% 27.08% 43.05% 35.00% 45.00% 19.03% 1.95% High Risk 22.34% 36.92% 59.26% 45.00% 70.00% 22.66% 10.74% Low Risk 7.15% 12.71% 19.86% 15.00% 20.00% 7.85% 0.14% Porvenir Moderate 14.82% 28.19% 43.01% 35.00% 45.00% 20.18% 1.99% High Risk 20.63% 37.96% 58.59% 45.00% 70.00% 24.37% 11.41% Low Risk 7.60% 12.15% 19.75% 15.00% 20.00% 7.40% 0.25%

Skandia Moderate 17.13% 25.47% 42.60% 35.00% 45.00% 17.87% 2.40% High Risk 22.96% 34.96% 57.92% 45.00% 70.00% 22.04% 12.08% Low Risk 7.63% 12.46% 20.09% 15.00% 20.00% 7.37% -0.09% Colfondos Moderate 16.64% 26.83% 43.47% 35.00% 45.00% 18.36% 1.53% High Risk 23.53% 34.79% 58.32% 45.00% 70.00% 21.47% 11.68% Low Risk 7.28% 12.81% 20.08% 15.00% 20.00% 7.72% -0.08% Sistema Moderate 15.60% 27.46% 43.06% 35.00% 45.00% 19.40% 1.94% High Risk 21.78% 36.97% 58.75% 45.00% 70.00% 23.22% 11.25%

Source: Bancolombia, Superintendence of Finance *Data as of October, 2020. Main Agents Bancolombia Main Agents Nutresa

3M 6M 12M 3M 6M 12M Real Sector 2.60 Real Sector (3.25) Real Sector (8.99) Real Sector 0.34 Real Sector (5.03) Real Sector (16.14) Individuals 2.58 Individuals 4.50 Individuals 14.75 Individuals (1.85) Individuals (2.83) Individuals 1.63 Foreigners (0.99) Foreigners (7.99) Foreigners (1.57) Foreigners (7.18) Foreigners (11.21) Foreigners (38.97) Pension Funds (8.21) Pension Funds (12.25) Pension Funds (25.27) Pension Funds 9.06 Pension Funds 11.88 Pension Funds 28.33

Main Agents Ecopetrol Main Agents ICOLCAP

3M 6M 12M 3M 6M 12M Real Sector (4.41) Real Sector 6.70 Real Sector 13.39 Real Sector 1.24 Real Sector 3.46 Real Sector 12.04 Individuals (21.73) Individuals 11.07 Individuals 26.08 Individuals - 1.34 Individuals - 0.10 Individuals 1.49 Foreigners 0.26 Foreigners - 8.62 Foreigners - 26.99 Foreigners (5.83) Foreigners ##### Foreigners (158.72) Pension Funds 16.33 Pension Funds 69.80 Pension Funds 162.47 Pension Funds 27.64 Pension Funds 94.29 Pension Funds 150.57

Main Agents ISA Main Agents Cemargos

3M 6M 12M 3M 6M 12M Real Sector (4.73) Real Sector 0.05 Real Sector 2.48 Real Sector 0.16 Real Sector 1.58 Real Sector 7.06 Individuals (1.70) Individuals (5.75) Individuals (33.03) Individuals (0.93) Individuals 1.84 Individuals 8.63 Foreigners 6.50 Foreigners 1.31 Foreigners (57.80) Foreigners 1.96 Foreigners 8.90 Foreigners (10.67) Pension Funds (4.73) Pension Funds 1.63 Pension Funds 58.98 Pension Funds (2.33) Pension Funds (8.32) Pension Funds (12.35)

Main Agents Grupo Argos Main Agents PF Bancolombia

3M 6M 12M 3M 6M 12M Real Sector (0.94) Real Sector (0.98) Real Sector 2.87 Real Sector (25.55) Real Sector (1.20) Real Sector 48.45 Individuals (3.42) Individuals (2.20) Individuals 19.40 Individuals (27.19) Individuals 1.95 Individuals 65.23 Foreigners 0.61 Foreigners (6.17) Foreigners (82.72) Foreigners 64.63 Foreigners (41.90) Foreigners (287.63) Pension Funds (1.38) Pension Funds 9.21 Pension Funds 25.75 Pension Funds (27.43) Pension Funds 32.45 Pension Funds 262.71

Main Agents Grupo Sura Main Agents PF Aval

3M 6M 12M 3M 6M 12M Real Sector (0.37) Real Sector (0.35) Real Sector 3.92 Real Sector (0.19) Real Sector 1.20 Real Sector 22.12 Individuals 11.28 Individuals 11.01 Individuals 18.92 Individuals (8.06) Individuals 2.76 Individuals 3.61 Foreigners (6.55) Foreigners (15.21) Foreigners (44.79) Foreigners 1.87 Foreigners (45.73) Foreigners (219.08) Pension Funds (11.58) Pension Funds (9.49) Pension Funds (9.00) Pension Funds 6.84 Pension Funds 36.42 Pension Funds 188.52

Source: Bancolombia, BVC Equity Sales Economic Research Equity Research

José Andrés Morales Izquierdo. Juan Pablo Espinosa Arango Jairo Agudelo Restrepo Regional Manager – Institutional and Government Head of Economic Research Head of Equity Research [email protected] [email protected] [email protected] +571 3535226 / 7464077 +571 7463991 ext. 37313 +574 6047048

Juan Guillermo Hernandez Hoyos Arturo González Peña Diego Buitrago Aguilar Commercial manager Quantitative Analyst Energy Analyst [email protected] [email protected] [email protected] +574 6049811 +571 7463980 ext 37385 +571 7463984

Juan Camilo Dauder Sanchez Santiago Espitia Pinzón Andrea Atuesta Meza International sales Macroeconomic Analyst Financial Sector Analyst [email protected] [email protected] [email protected] +574 6045178 ext 39457 + 571 7463988 ext. 37315 +571 7464329

Bryan Hurtado Campuzano Juliana Aguilar Vargas, CFA International and Regional Analyst Cement & Infrastructure Analyst Fixed Income [email protected] [email protected] +571 7463980 ext. 37303 +574 6047045 Manuel Rey Ayala Juan Manuel Pacheco Perez MD - International Institutional Investors Ricardo Andrés Sandoval Carrera International and Markets Analyst [email protected] Oil & Gas Analyst [email protected] +571 353 5205 [email protected] +571 7464322 ext. 37380 +574 7464596

Juan Camilo Meneses Cortes Valentina Martinez Jaramillo Central Banking and Financial System Junior Analyst Industry Research Analyst [email protected] [email protected] +574 6048906 Jhon Fredy Escobar Posada +571 7463994 ext. 37316 Industry Research Manager [email protected] +574 4044649 ext 44649 Research Assistant

Nicolás Pineda Bernal Alejandro Quiceno Rendón Industry Research Manager Research Editor [email protected] [email protected] +574 4040000 +574 6048904

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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 20 companies under coverage, distributed as follows:

Overweight Market Weight Underweight Under Review Number of issuers with ratings of: 10 5 3 2 Percentage of issuers with ratings of: 50% 25% 15% 10%