LatAm Equity Strategy Reference Presentation

Research evidence excerpt

LatAm Equity Strategy Reference Presentation

Colombia: Policy Regime Shift Meets Stretched Valuations and Fiscal Slippage

Our Investment Thesis

Colombia´s June election and the energy upside

• Election result confirmed Abelardo de la Espriella as the winner with 49.66% vs Iván

Cepeda’s 48.70%, reinforcing that Colombia is entering a new policy regime.

• The result remains pivotal for fiscal discipline and external relations.

• Energy offers the clearest opportunity and the most visible structural upside with the

policy shift. Ecopetrol stands out as the most direct way to gain exposure to the theme.

YTD performance has stretched valuations:

• Despite the worsening fiscal accounts, market has outperformed this year driving

valuations up.

• Best P/E Ratio has moved from 6.4x in 2025 to 9.1x currently, limiting further upside, as

it has already surpassed the 8.3x 10-year average. We don’t see much potential for

further multiple expansion.

The fiscal situation in Colombia has weakened significantly:

• In the absence of the fiscal rule, fiscal deficit is expected to surpass 6% this year.

• This situation led Colombia to lose investment grade status of the local debt.

• The future administration would likely have the cut spending and/or approve a tax reform

to deal with the current fiscal imbalance.

• 2026 Minimum wage could play a role for inflation and rates in the future as it separates

from the past trend.