1. Baring Asset Management (Asia) Limited 19/F, Edinburgh Tower, 15 Queen’s Road Central, Hong Kong Tel+852 2841 1411 www.barings.com Authorised and regulated by the Financial Services Authority Khiem Do December 9, 2008 The Asia Pacific Fund, Inc. Virtual Forum Asian Equities: The “Absolute” Case www.asiapacificfund.com

2. 1 Asian Equities The “Absolute” Case Cyclical, not secular, growth downturn Healthy balance sheet, plus room to manoeuvre Almost ‘bargain’ valuations A ‘victim’ of forced liquidation

3. 2 The Last Olympic Gold Medal goes to … Synchronised Diving StockmarketsSynchronised Diving … or … Returns YTD to 31/10/08, in USD terms US-33.00% Europe-45.00% Japan-33.60% Far East ex Japan-52.40% GEM-53.00% China A Shares-64.90% Source: Stock market returns-Factset (11/2008) MSCI USA, Europe, Japan, AC Far East ex Japan, EM and Shanghai SE A Share Index Photo—The Official Website of the Beijing 2008 Olympic Games August 8-24, 2008

4. 3 From Crisis to Crisis Asia Financial Crisis 1997-98Global Financial Tsunami 2007- Malaysia introduced capital controlsShort selling ban Hong Kong Government market interventionStock lending withdrawal Re-capitalisation – IMF, foreign investors Government rescue plans – our life savings ! China started to “test pilot” margin lending and short selling !

5. 4 Driver of global growth How Asia Has Transformed Itself Pre- and post-financial crisis Pre- 1997Post- 1998 Current accountDeficitSurplus CurrencyOvervaluedUndervalued Foreign borrowingHighWorld’s major lender LeverageExcessiveDeleveraging Capacity expansionExcessiveDisciplined Corporate RoEFallingRising Relative valuationPremiumDiscount Growth driverExportsConsumption Derivative of global growth Healthier balance sheet and stronger profitability

6. 5 Chinese Economy More sustainable GDP growth Real GDP Growth (year-on-year change, %) Source:BCA Research, JP Morgan as at 20 October 2008, Bloomberg 2008-2010 Forecast, Baring Asset Management (5 November 2008) Pro-active management of the economy to ensure sustainability CREDIT TIGHENING 9% swing 10% swing 3% swing CREDIT EASING

7. 6 China vs US Decision-Making Process Debating vs doing it US PresidentTreasuryFed CongressSenateStates VotersCNNCNBC China The Party Lots of debates JUST DO IT!

8. 7 China Fiscal policy has a lot of room to expand Source: CEIC, Credit Suisse estimates (September 2008) -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 199019911992199319941995199619971998199920002001200220032004200520062007E 0 2 4 6 8 10 12 14 16 18 Chinese Government Deficit (Surplus) Chinese Government debt (RHS) % of GDP

9. 8 Asia vs US Savings and Banks’ Loan/Deposit Ratio Source: CEIC, JP Morgan as at August 2008 – Gross savings include pension contributions are corporates. Healthier Asian banking system Gross savingsBanking loan/deposit ratio

10. 9 Rise of “Chindia” An emerging economic force Source: CLSA (11/2008)

11. 10 China vs World Share of world GDP in 2007 GDP growth contribution projection for 2009 Share of World GDP (in %, based on 2007 dollars) 2009 GDP Growth Contribution Projection: Indicative Direction Only Japan 8% US 26% Other developed 4% Europe 31% Other emerging 19% Brazil 2% China 6% India 2% Russia 2% China: 6%, EM: 25%, Developed World: 69% China/India: 50%, EM: 50%, Developed World: 0% Emerging Markets 50% China/India 50% Source:World & Emerging (2007) - UBS (8/2008) 2009 Projection – Baring Asset Management forecast (11/2008)

12. 11 Asian vs US Financials ‘Chalk and cheese’ Source: Bloomberg (9/2008), earnings per share average for Asia ex Japan financials & S&P 500 financials 31/12/99 – 01/10/08. Share price performance Asia ex Japan financials & S&P 500 financials, 31/12/99 – 01/10/08. Do Asian banks deserve the same share price treatment as their US counterparts ?

13. 12 Asian Market Valuations Cheap MSCI AC Asia ex Japan Trailing P/Book Valuation band MSCI AC Asia ex Japan 12-month forward P/E band Source: MSCI, Citi Investment Research as at November 2008 100 200 300 400 500 600 700 800 9092949698000204060810 IndexP/E = 8 P/E = 10P/E = 12 P/E = 14P/E = 16 P/E = 18P/E = 20 100 200 300 400 500 600 700 800 90929496980002040608 IndexP/B = 1.0 P/B = 1.3P/B = 1.6 P/B = 1.9P/B = 2.2 P/B = 2.5P/B = 2.8

14. 13 Asian Equity Markets Valuation Lowest for 18 years! Credit Suisse’s Asian Markets - 6 Factor Valuation IndicatorAsia ex-Japan Historic P/E Source: 6 Factor Valuation Indicator – Credit Suisse (11/2008) Asia ex-Japan Historic P/E - Credit Suisse (11/2008) Fundamental ‘Buy’ signal hoisted, based on very cheap valuation 5 10 15 20 25 30 Jan-90Jan-93Jan-96Jan-99Jan-02Jan-05Jan-08 Asia ex-Japan - PE 200 600 1000 1400 1800 2200 Jan-90Jan-93Jan-96Jan-99Jan-02Jan-05 Price Index -60 -40 -20 0 20 40 60 6 factor Asian valuation indicator "Buy" signal 30% overvalued Jan-08 Fairly Valued Price Index (LHS)6 factor Asian valuation indicator (RHS)

15. 14 Global Risk Appetite Still in ‘panic’ mode Global Risk Appetite Since 1981 Source: Credit Suisse (12/2008). Risk Index measures risk appetite of global investors Result of de-leveraging and de-risking -5 0 5 10 Jan-81Jan-85Jan-89Jan-93Jan-97Jan-01Jan-05 Euphoria Panic Risk Index Latest = -4.95 (26 Nov 08)

16. 15 Money Flows: EM Asia De-risking, De-leveraging, and Capitulation Net Foreign Flows in EM Asia (ex-China & Malaysia) Net Foreign Buying in EM Asia (ex-China and Malaysia) Note: EM Asia here includes India, Indonesia, Korea, Taiwan, Thailand and the Philippines. Net Foreign Buying in EM Asia – Source: Morgan Stanley (11/2008) Net Foreign Buying in EM Asia ex-China & Malaysia – Source: Credit Suisse estimates (11/2008) Asia was one of the working ATMs! -6% -4% -2% 0% 2% 4% 6% 979899000102030405060708 EM Asia ex-China & Malaysia

17. 16 End of redemptions in Asian Equities ? Perhaps … Total Foreigners’ net purchases Source: Credit Suisse (11/2008)

18. 17 Asian Stock Markets To the precipice and back! Gross returns in USD, year-to-date to 28 November, 2008 Source: Factset, Bloomberg Country - Index Bear period YTD to 27 Oct 2008 (%) Recovery 28 Oct to 28 Nov 2008 (%) North Asia MSCI Taiwan Free-49.41.8 MSCI Hong Kong Free-60.920.1 MSCI China Free-67.336.1 MSCI Korea Free-65.69.1 ASEAN MSCI Malaysia Free-45.30.9 MSCI Thailand Free-57.15.8 MSCI Philippines Free-58.216.7 MSCI Singapore Free-55.310.3 MSCI Indonesia Free-63.4-3.8 MSCI AC Far East Free Ex Japan Gross-60.815.0 MSCI India Free -69.14.2 Vietnam (HCM Local price index)-64.5-4.4

19. 18 The “Absolute” Case for Asian Equities We believe the case for Asia looks compelling unless …. You happen to believe the global economy will be in recession for the next 3 years!

20. 19 Important Information This document is provided as a service to professional investors/advisers. It is issued in the United Kingdom by Baring Asset Management Limited and/or by its investment adviser affiliates in other jurisdictions. The affiliate serving as the Asia Pacific Fund’s investment adviser is Baring Asset Management (Asia) Limited. In the United Kingdom this document is issued only to persons falling within a permitted category under (i) the FSA’s rules made under section 238(5) of the Financial Services and Markets Act 2000 and (ii) the Financial Services and Markets Act 2000 (Promotion of Collective Investment Schemes) (Exemptions) Order 2001. This is not an offer nor a solicitation to buy or sell any investment referred to in this document. Baring Asset Management group companies, their affiliates and/or their directors, officers and employees may own or have positions in any investment mentioned herein or any investment related thereto and from time to time add to or dispose of any such investment. The contents of this document are based upon sources of information believed to be reliable but no guarantee, warranty or representation, express or implied, is given as to their accuracy or completeness. This document may include forward-looking statements, which are based upon our current opinions, expectations and projections as of the date on the cover hereof. We undertake no obligation to update or revise any forward-looking statements. Actual results could differ materially from those anticipated in the forward-looking statements. The value of any investments and any income generated may go down as well as up and is not guaranteed. Past performance will not necessarily be repeated. Changes in rates of exchange may have an adverse effect on the value, price or income of an investment. There are additional risks associated with investments (made directly or through investment vehicles which invest) in emerging or developing markets. Compensation arrangements under the Financial Services and Markets Act 2000 of the United Kingdom will not be available. Private investors in the Company referred to herein should obtain their own independent financial advise before making investments. This document must not be relied on for purposes of any investment decisions. Before investing in the Company, we recommend that all relevant documents, such as reports and accounts and prospectus should be read, which specify the particular risks associated with investment in the Company, together with any specific restrictions applying and the basis of dealing. The Company may not be available for investment in all jurisdictions. There may also be prohibitions or restrictions on distribution of this document and other material relating to the Company and accordingly recipients of any such documents are advised to inform themselves about and to observe any such restrictions. Research Material Baring Asset Management only produces research for its own internal use. Where details of research are provided in this document it is provided as an example of research undertaken by Baring Asset Management and must not be used, or relied upon, for the purposes of any investment decisions. The information and opinions expressed herein may change at anytime. For data sourced from Morningstar: © 2008 Morningstar, Inc. all rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Ensure Complied Date is added at foot of Disclosure Complied (Boston): December 2, 2008 Disclosure for presentations to PUBLIC