Local Market Flows

LOCAL MARKET FLOWS

BANCOLOMBIA ANALYSIS: COLOMBIAN EQUITY RESEARCH – Market Report Flows I March 3, 2017

Brokerage Firms, liquidity drivers in the market COLCAP Evolution Last 12 Months In February, brokerage firms were the most influential agent in the stock market, holding the Volume COLCAP 200 1500 largest share with 27.4%. Although their share as both buyers (27.2%) and sellers (27.6%) was 1450 significant, their net movement was sales, amounting to COP10,468mn. However, among the 1400 largest sellers of the month, brokerage firms ranked 5th. 150 1350 The selling force was mainly marked by ADR programs, which contributed COP85,625mn. Sales 1300

totaled COP131,690mn and Ecopetrol’s share was the most sold, likely influenced by the 100 1250 Points company's decline in proven crude reserves in 2016 (-13.5%). On the buyer side, the distrust for mn US$ 1200 ADRs in the domestic market is clear posting only COP46,060mn, 82% less than in January. 1150 50 1100 Pension funds keep ranking third in total market share, with 16.7% and net purchases for 1050 COP155,291mn, consolidating as the main net buyer on the market. The main purchases were 0 1000 made in the ICOLCAP index, Ecopetrol and Davivienda Preference. On the selling side, pension Feb-16 Apr-16 Jun-16 Aug-16 Oct-16 Dec-16 Feb-17 funds offered mostly shares of Cementos Argos, Grupo Argos and ISA. It's important to note that Source: Bancolombia, BVC, Bloomberg pension funds have been net buyers for sixteen consecutive months, proving their interest in continuing to participate in the local market.

Most Traded Shares (USDmn) COLCAP falls back retreats after three months

In January the COLCAP devalued 2.29% closing at 1,326 points; average trading volume stood at Ecopetrol 112 COP124,892mn, higher than January’s (COP113,603mn), but still below the level it closed at last ICOLCAP 79 year. Exito 79

In addition, it should be noted that Ecopetrol (COP322,585mn) has adjusted six consecutive PF Bancolombia 77 months as part of the most traded shares, as has Bancolombia (COP159,772.mn), which despite Corficol 63 having reduced trading volume vs. January (COP348,488mn), has adjusted four consecutive months in this list. On the other hand, 33% of the average trading volume was transactions over Bancolombia 55 COP1,000mn, 12% were MOC and ETF creations rose significantly from 4.6% in January to 12.7%. PF Aval 48

Cementos Argos 41 Investors worldwide were more concentrated in the US, resulting in lower trading volume at the ISA 37 local level. In addition, the market was affected by short-term issues such as the Odebrecht bribe Grupo Argos 36 case, Avianca’s announcement of a strategic alliance with United Airlines, among others. This Analysts month high volatility is expected, since most companies are reporting Q4 results. Name: Jairo Julián Agudelo Restrepo SourcePhone: Bancolombia,: (574) B6047048VC E-mail: [email protected]

Name: Daniel Esteban Meneses Piedrahita Phone: (574) 6046496 Ext. 39602 E-mail: [email protected]

Name: Erika Ivanna Baquero Jiménez November Transactions Phone: (571) 7463988 Ext. 37376 Buyers Sellers Net Participation (USDmn) E-mail: [email protected]

Real Sector 72,4 95,1 (22,7) 9,6% Foreigners 212,7 177,2 35,5 22,4% Pension Funds 171,9 118,0 53,9 16,7% Brokerage Firms 236,2 239,8 (3,6) 27,4% Individuals 127,5 152,9 (25,4) 16,1% Others 11,9 19,5 (7,6) 1,8% Collective Portfolio 15,7 16,5 (0,9) 1,9% ADRs 16,0 45,7 (29,7) 3,5% Funds 4,9 4,4 0,5 0,5% Total 869,2 869,2

Local Market Flows March 3, 2017

Figure 1 – Market Participants Evolution

Foreigners Brokerage firms Pension Funds Individuals Real Sector Others

100% 7,7%

90% 9,6%

80% 16,1%

70%

60% 16,7%

50%

40% 27,4%

30%

20% 22,4

10% %

Source: BVC, Bancolombia

Figure 2 – Market Winners and Losers – February Table 1 – Accumulative Net Flows (USDmn)

BVC, 7,7% USD mn 1M 3M YTD 12M Isa, 6,1% Pension Funds 54 167 96 935 Foreigners 36 153 71 474 Celsia, 4,2% Brokerage Firms (4) (14) (4) 38 Individuals (25) (47) (69) (344) Avianca, -9,1% Real Sector (23) (314) (124) (920)

Conconcreto, -11,4% USD mn 2 years 3 years 5 years 10 years Pension Funds 1.023 429 675 3.663 Corficol, -14,9% Foreigners 950 1.371 2.819 3.889 Brokerage Firms 73 230 613 (674) Individuals (523) (833) (2.113) (4.511) COLCAP , -2,3% Real Sector (1.352) (1.472) (1.770) (3.869) -20,0% -15,0% -10,0% -5,0% 0,0% 5,0% 10,0% Source: BVC, Bancolombia Source: BVC, Bancolombia

Table 2 – Most Bought and Sold Names by Pension Funds Table 3 - Most Bought and Sold Names by Foreginers (USDmn) (USDmn)

Top Bought Top Bought 3M 6M 12M 3M 6M 12M Bancolombia 110.70 Bancolombia 169.50 Bancolombia 310.09 Bancolombia PF 38,39 Grupo Argos PF 85,68 Grupo Argos PF 88,25 Grupo Odinsa 34.26 Icolcap 73.66 Icolcap 192.19 Grupo Argos 25,03 Davivienda PF 66,88 Davivienda PF 86,37 Ecopetrol 32.71 Ecopetrol 43.11 Ecopetrol 114.41 Grupo Argos PF 21,28 Éxito 58,14 Éxito 72,10 Grupo Argos PF 14.82 Cementos Argos PF 37.85 Cementos Argos PF 93.58 Éxito 21,11 ISA 33,11 ISA 63,87

Top Sold Top Sold 3M 6M 12M 3M 6M 12M Bancolombia PF -91.21 Bancolombia PF -114.55 Bancolombia PF -86.53 Nutresa -8,45 Corficolombiana -55,84 Corficolombiana -32,43 Davivienda PF -30.00 Davivienda PF -55.74 Davivienda PF -84.15 Cémex -6,60 Nutresa -13,74 Nutresa -30,57 Éxito -7.72 Éxito -21.25 Éxito -59.70 Conconncreto -6,43 Grupo Sura PF -12,47 Grupo Sura PF -25,00 Grupo Sura -4.79 Grupo Sura -16.97 Grupo Sura -30.06 Canacol Energy -3,76 Avianca Holdings -8,34 Avianca Holdings -21,17

Fuente: BVC, Bancolombia Fuente: BVC, Bancolombia

. 2 2 Local Market Flows March 3, 2017

Figure 3 – Foreigners’ Evolution (USDmn) Figure 4 – Pension Funds’ Evolution (USDmn) 200 200

150 150

100 100 54 50 50 36 0

USD mn USD 0 mn USD (50)

(50) (100)

(100) (150)

(150) (200) Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17

Source: BVC, Bancolombia Source: BVC, Bancolombia

Figure 5 – Real Sector’s Evolution (USDmn) Figure 6 – Individuals’ Evolution (USDmn)

100 150

50 100

0 50 (50) (23) 0

USD mn USD (100) mn USD (50) (25) (150)

(200) (100)

(250) (150) Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Feb-13 Aug-13 Feb-14 Aug-14 Feb-15 Aug-15 Feb-16 Aug-16 Feb-17 Source: BVC, Bancolombia Source: BVC, Bancolombia

Figure 7 – Average Monthly Volume (USDmn) Figure 8 – Pension Funds’ Investment Portfolio Evolution - Dec 120%

2015 2016 2017 75 100% 4%

80% 28% 60 52 43.4 60% 21% 42 45 4% 40%

US$ mn US$ 30 20% 43%

0% 15 dic.-10 dic.-11 dic.-12 dic.-13 dic.-14 dic.-15 dic.-16

Domestic Fixed Income Foreing Fixed Income Domestic Equities 0 Foreing Equities Others Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Source: Bloomberg, Bancolombia Source: Superfinanciera, Bancolombia

3 Local Market Flows March 3, 2017

Figure 9 – Foreigners’ Movements (USDmn)* Figure 10 – Pension Funds’ Movements (USDmn)*

ICOLCAP 28,2 ECOPETROL 16,5 CEMARGOS 16,0 ECOPETROL 15,6 EXITO 13,4 PFDAVVNDA 11,8 GRUPOARGOS 11,8 BCOLOMBIA 9,9 NUTRESA (3,5) HCOLSEL (1,6)

GRUPOSURA (3,8) ISA (4,5) CLH (6,8) GRUPOARGOS (12,0) PFDAVVNDA (14,5) CEMARGOS (13,7)

(27) (12) 3 18 33 (55) (35) (15) 5 25 45 65 Million Million

Source: BVC, Bancolombia Source: BVC, Bancolombia

Figure 11 – Real Sector Movements(USDmn)* Figure 12 – Individuals’ Movements (USDmn)*

ICOLCAP 10,6 BCOLOMBIA 6,5 PFDAVVNDA 1,0 CORFICOLCF 5,4 HCOLSEL 0,9 CLH 3,7 CLH 0,8 CNEC 1,3 CORFICOLCF (2,9) PFCEMARGOS (2,9)

PFAVAL (4,1) ECOPETROL (4,2) EXITO (5,2) ISA (6,1) BCOLOMBIA (16,3) EXITO (14,0)

(30) (15) 0 15 (25) (20) (15) (10) (5) 0 5 10 Million Million

Source: BVC, Bancolombia Source: BVC, Bancolombia

Table 4 – AFP’s Equity Investment Limits per Fund (December. 16)**

Investments in equity securities National Maximum AFP Fund type Total Local Gap Total Gap From national issuers From foreign issuers Limit Limit Low Risk 7.6% 11.1% 18.7% 15% 20% 7.4% 1.3% Protección Moderate 19.5% 23.3% 42.9% 35% 45% 15.5% 2.1% High Risk 28.3% 43.1% 71.4% 45% 70% 16.7% -1.4% Low Risk 5.3% 12.8% 18.1% 15% 20% 9.7% 1.9% Porvenir Moderate 17.7% 23.6% 41.3% 35% 45% 17.3% 3.7%

High Risk 23.5% 47.7% 71.2% 45% 70% 21.5% -1.2% Low Risk 6.9% 10.2% 17.1% 15% 20% 8.1% 2.9% Old Mutual Moderate 20.5% 20.9% 41.4% 35% 45% 14.5% 3.6%

High Risk 30.3% 37.5% 67.7% 45% 70% 14.7% 2.3% Low Risk 7.6% 11.5% 19.1% 15% 20% 7.4% 0.9% Colfondos Moderate 21.0% 24.7% 45.7% 35% 45% 14.0% -0.7%

High Risk 30.0% 40.3% 70.3% 45% 70% 15.0% -0.3% Low Risk 6.8% 11.4% 18.3% 15% 20% 8.2% 1.7% System Moderate 19.7% 23.1% 42.8% 35% 45% 15.3% 2.2%

High Risk 28.0% 42.1% 70.2% 45% 70% 17.0% -0.2% Source: Superfinanciera, Bancolombia *Values were calculated with the actual number of traded shares and the average trading price for the month ** December 2016, last period of public information released by Superfinanciera

4 Local Market Flows March 3, 2017

Main buyers and sellers by stock

Table 5 - Main Agents Bancolombia Table 10 - Main Agents Nutresa

3M 6M 12M 3M 6M 12M AFP 62,16 AFP 122,32 AFP 150,68 AFP 13,90 AFP 37,72 AFP 64,93 Foreigners 11,68 Foreigners 16,64 Foreigners 23,44 Real Sector -1,78 Individuals 0,86 Foreigners -2,44 Individuals 8,92 Individuals 10,17 Individuals 6,23 Individuals -2,36 Foreigners -13,74 Individuals -16,63 Real Sector -100,25 Real Sector -191,12 Real Sector -260,55 Foreigners -8,45 Real Sector -32,04 Real Sector -54,96

Table 6 - Main Agents Ecopetrol Table 11 - Main Agents Icolcap 3M 6M 12M 3M 6M 12M Foreigners 20,77 Foreigners 26,57 Foreigners 32,35 Real Sector 22,78 AFP 71,47 AFP 311,95 AFP 13,30 AFP 23,37 Real Sector -4,72 Foreigners -0,07 Real Sector 22,97 Real Sector 29,68 Real Sector -3,42 Real Sector -11,48 AFP -27,18 Individuals -0,15 Foreigners -0,09 Individuals 0,55 Individuals -12,56 Individuals -46,61 Individuals -64,79 AFP -3,56 Individuals -0,19 Foreigners -0,13

Table 7 - Main Agents Éxito Table 12 - Main Agents Cemargos 3M 6M 12M 3M 6M 12M Foreigners 21,11 Foreigners 58,14 Individuals 81,68 Foreigners 17,67 AFP 9,83 AFP 63,87 AFP -3,96 Real Sector -6,67 Foreigners 14,41 AFP 2,75 Foreigners 2,67 Foreigners 42,78 Real Sector -14,04 Individuals -9,90 Real Sector -9,59 Real Sector -2,16 Real Sector -2,71 Real Sector -8,51 Individuals -27,37 AFP -22,96 AFP -89,96 Individuals -4,18 Individuals -7,84 Individuals -19,85

Table 8 - Main Agents Grupo Argos Table 13 - Main Agents Bancolombia PF 3M 6M 12M 3M 6M 12M Foreigners 25,03 Foreigners 30,72 Foreigners 63,87 Foreigners 38,39 Foreigners 22,49 Foreigners 88,25 Real Sector 1,36 Individuals -5,33 AFP 3,44 Real Sector -11,44 Individuals -21,41 AFP 14,01 AFP -0,46 AFP -10,69 Individuals -13,06 Individuals -11,83 Real Sector -34,01 Real Sector -55,54 Individuals -6,06 Real Sector -14,89 Real Sector -27,48 AFP -28,54 AFP -52,77 Individuals -64,68

Table 9 - Main Agents Grupo Sura Table 14 - Main Agents Aval PF

3M 6M 12M 3M 6M 12M Foreigners 6,76 Foreigners 13,06 Foreigners 53,09 Foreigners 3,94 Foreigners 6,70 Foreigners 49,15 AFP -4,45 Individuals -3,67 Real Sector 12,18 AFP -1,22 AFP -2,48 AFP 16,77 Individuals -5,77 Real Sector -14,82 Individuals -16,91 Individuals -9,27 Real Sector -11,05 Real Sector -17,96 Real Sector -6,47 AFP -22,66 AFP -79,82 Real Sector -9,59 Individuals -12,44 Individuals -59,60

5 Local Market Flows March 3, 2017

Equity Sales Equity Research

Rupert Stebbings Jairo Agudelo Restrepo Equity Markets Vice President Head of equity research [email protected] [email protected] +574 6045138 +574 6047048

Diego Buitrago Aguilar Fixed Income Energy Analyst

Pablo Caicedo [email protected] VP International Business +571 7463984 ext 37307 [email protected] German Zúñiga Saavedra +571 488 6000 Cement, Infrastructure and Industry Analyst

[email protected] Economic Research +574 6047045

Juan Pablo Espinosa Federico Perez Garcia Head of Economic Research Oil & Gas Analyst [email protected] [email protected] +571 7463991 ext. 37313 +574 6048172 Arturo González Peña Andrea Atuesta Meza Central Bank and Financial System Analyst Financial Sector Analyst [email protected] [email protected] +571 7463980 ext 37385 +571 4886000 ext 37387 Henry Alexander Otero Giraldo International and Markets Analyst Daniel Esteban Meneses Piedrahita [email protected] Intern +571 7463980 ext 37310 +574 6046496

[email protected] Julián Felipe Huertas Espitia

Analyst Erika Ivanna Baquero Jimenez [email protected] Intern +571 7463988 ext. 37303 +571 7463980 ext 37376 Juan Camilo Hernández Orjuela [email protected] Intern [email protected] Research Assistant +571 7463988 ext. 37310

Sergio Daniel Pedraza Quiñones Claudia Restrepo Intern Research Editor [email protected] [email protected] +571 7463988 Ext. 37316 +574 404 3809

6 Local Market Flows March 3, 2017

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