Melvin Escudero Director, Master in Finance and Portfolio Management at Universidad del Pacifico CEO El Dorado Investm

1. Melvin Escudero Director, Master in Finance and Portfolio Management at Universidad del PacificoCEO El Dorado Investments South America Capital Markets and the new MILA integrated Stock Exchange

2. WHY LATAM: STRONG LONG TERM FUNDAMENTALS • Economic growth potential and favorable macro policies. Country focus: Brazil, Mexico, Colombia, Peru and Chile. • Good Population base for income growth and future consumption. • Upgrades to investment grade ratings and new free trades agreements. • Large natural resources related to commodities, energy and infrastructure. • Growth of income, consumption and savings will boost pro cyclical sectors: Construction, real estate, consumer discretionary, consumer staples, financial and debt products (ABS, MBS, private debt), health care, education etc. • Strong growth of local institutional investors driven by emerging private pension funds still in the growing stage (expected rate of growth between 15% - 25% annually). They show high levels of concentration in local markets, requiring greater international diversification and more local new type of investments (infrastructure, private debt, private equity, real estate and others). • Global interest towards Latam assets. But there are few vehicles to get exposure in the region.

3. WHY LATAM: STRONG LOCAL CAPITAL MARKETS GROWTH • Long term strong GDP growth outlook, higher than the developed world • Increase of corporate cash flows and profits • Higher demand for financing and credit (debt and equity) • Growth prospects for banking and related financial institutions lending to corporate sector (large, medium and small firms) and retail (consumption, mortgages and others) • Increase in the issues of new debt instruments like commercial papers, corporate bonds and mezzanine financing • Increase in equity requirement by new IPOs and Private Equity • Consolidation and M&A opportunities • More integration and globalization of local currency, debt and equity markets through ETFs, Mutual funds and direct investments. • The regulators will respond proactively with gradual steps to this new environment, like in the recent years • New LATAM stocks and ETFs listed in international and local stocks exchanges 3

4. WHY LATAM: NEW LOCAL PENSION FUNDS ARE THE NEW KINGS IN THE MARKETS

5. WHY LATAM: FUTURE IMPACT OF LOCAL PENSION FUNDS • Pension funds are highly concentrated in domestic markets and traditional assets. This will push managers and regulators to seek out for additional diversification and liquidity in other asset classes, regions, countries, sectors etc. • The increasing gap between pension funds demand (growing at a fast pace) and the limited supply of investment products will (excess demand): • Increase the international investment exposure in traditional and alternative assets. They are increasing the active and passive international exposure using all types of vehicles. • Expand the allocation in new local investments and products like New IPOs and ETFs with domestic exposure listed in local and international stock exchanges. • Open the alternative local asset classes (PE, Real Estate, Hedge Funds) and the private placement market for debt instruments like assets backed (factoring, leasing, receivables, credit cards, auto loans), mortgages backed, structured etc. • The related foreign and local market participant will benefit, like new fund managers, investment banks, trustees, market makers, brokers dealers, custodian, legal advisers, depositaries, intermediaries etc.

6. THE LATAM STOCK EXCHANGES: MAIN DRIVERS • Increasing global appetite for gaining exposure in LATAM (from retail and institutional investor: looking for value and liquidity) • Growing local retail investors: saving is growing fast and they are demanding active and passive exposure • Importance of local institutional investors, lead by pension funds, are looking for new stocks (IPOs) and ETFs for diversification and liquidity • Enhance of local capital market development , the local capital markets are introducingBenchmarks, Sec Lending, Short Selling, and derivatives new markets

7. THE NEW MILA MARKET (Latin America Integrated Market) • MILA – Integrated stock exchange platform for Colombia, Peru and Chile. www.mercadointegrado.com • Stock market capitalization of MILA markets was US$ $705.9 billions. The share in the value of companies listed by market is distributed as follows: Chile 44.88%, Colombia 36.09% and Peru 19.03%. • As a common trading platform for the three Andean exchanges, MILA represents Latam’s second largest trading venue by market capitalization (US$ 706 bn) after Brazil’s BM&F Bovespa (US$ 1.5 Tn) and ahead of Mexico’s Bolsa Mexicana de Valores (US$ 454 bn). • By number of listings, MILA (544) is the largest trading venue in Latin America, ahead of BM&F Bovespa (381) and Bolsa Mexicana de Valores (427). • If Mexico joint in the next future, the MILA market cap could be similar to Brazil (US$ 1.2 tn).

8. THE NEW MILA MARKET OUTLOOK • The integration is planed by phases. The 1st one is done: integate the trading platforms. The 2nd one is on progress, coordinating the regulation and possible single ownership. The 3rd one will be the full integration. Expected time: 2-5 years. • The Bogota Stock Exchange planned to buy the Lima Stock Exchange. In the future probably will be one owner of the three stock exchanges. • The common or similar regulation for the stock exchanges is needed. The governments have shown interest, but the convergence will take time. • Taxes need to be similar in the three markets. Today Peru has taxes over capital gains (5%). Chile and Colombia are tax exempt. • The integration of Mexico could bring more dynamic, especially if pension funds in the three countries have similar rules for investing in the integrated market. • The governments, backed by stock exchanges and market intermediaries, are planning to continue ahead with the project. • The private sector (banks, intermediaries, legal firms, energy companies, retail businesses, asset managers have begun the consolidation of their businesses (there is a boost in M&A activity). • The private sector expectations are high. The feeling is this is going slow, but will be a real thing for sure!