Baring AssetManagement (Asia) Limited19/F, Edinburgh Tower, 15 Queen’s Road Central, Hong Kong

Tel +852 2841 1411

www.barings.com

Authorised and regulated by theFinancial Services Authority

Khiem Do

May 15, 2009

The Asia Pacific Fund, Inc.

Global and Asian Investment Outlook

www.asiapacificfund.com

2

China To Lead The World In 2009 ?Equity markets’ performance since 27/10/08

Source: Bloomberg (04/2009)

China up 63%, Asia up 39% and US down 1%

3

US Economy:Where are we now ?

‘Green shoots’ are appearing

Source: Citi (4/2009)

ISM Mfg: PMI Composite Index

30

35

40

45

50

55

60

65

70

75

Jan-

81

Jan-

83

Jan-

85

Jan-

87

Jan-

89

Jan-

91

Jan-

93

Jan-

95

Jan-

97

Jan-

99

Jan-

01

Jan-

03

Jan-

05

Jan-

07

Jan-

09

-40

-20

0

20

40

60

80

100

Tig

hten

ing

- In

vert

ed

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

40%

50%

S&

P 500 (Y

/Y)

Q1-

91

Q1-

92Q

1-93

Q1-

94

Q1-

95Q

1-96

Q1-

97Q

1-98

Q1-

99

Q1-

00Q

1-01

Q1-

02

Q1-

03Q

1-04

Q1-

05

Q1-

06

Q1-

07Q

1-08

Q1-

09

RecessionBanks Tightening C&I Loans to Large Firms (%) (Left) S&P 500 Composite (EOP 1941-43=10)

Banks Tightening C&I Loans to Large Firms (%) vs. S&P 500 (Y/Y)

Index

4

Global Economy:Where are we now ?

‘Green shoots’ are appearing

Source: Credit Suisse (4/2009)

G4 Economies - PMI New Orders Emerging Economies - PMI New Orders

16202428323640444852566064

Jan-

04

Jul-0

4

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09USEuro AreaUKJapan

28

32

36

40

44

48

52

56

60

64

68

72

Jan-

04

Jul-0

4

Jan-

05

Jul-0

5

Jan-

06

Jul-0

6

Jan-

07

Jul-0

7

Jan-

08

Jul-0

8

Jan-

09

India

China (sa)

Russia

Brazil

Index Index

5

Quantitative Easing:Every OECD central bank is doing it …..

Positive for the trend of ‘risk’ assets …..

Source: Credit Suisse (4/2009)

G3+ Central Bank Balance Sheet Size

50

100

150

200

250

300

350

Jan 07 Apr 07 Jul 07 Oct 07 Jan 08 Apr 08 Jul 08 Oct 08 Jan 09 Apr 09

Euro Area Japan UK US

Size index (100 at Jan ’07)

6

US Property Price Trend:We seem to get closer to the bottom …..

Last two months’ prices showed a slight rise: encouraging sign …..

Source: Credit Suisse (4/2009)

US Real Average Existing House Price (log scale)

6.20

6.40

6.60

6.80

7.00

7.20

7.40

Jan 68 Jan 73 Jan 78 Jan 83 Jan 88 Jan 93 Jan 98 Jan 03 Jan 08

Real Average Existing House Price (log)

Trend = 1.5% per annum1 annualised SD = 6.9%

Aug 73Okt 742.79 %14 months

Jun 79Sep 828.46 %39 months

Jan 88Dez 9011.35 %35 months

Jul 91Apr 956.1 %45 months

Nov 05Feb 0926.33 %39 months

Real house price

7

Asia’s Balance Sheet Revisited:Healthy

Asian banks have capacity to lendAsian corporate debt levels are close to 25 year lows

... as well as external debt levelsThe external position of Asia is healthier today than 20 years ago in terms of current account balance...

10%

20%

30%

40%

50%

60%

70%

80%

90%

1981 1984 1987 1990 1993 1996 1999 2002 2005 2008E

Asia ex-Japan Net Debt-to-Equity Ratio

70%

75%

80%

85%

90%

95%

100%

92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09

GDP-wgt Loan-to-Deposit Ratio (major financial institutions)

-4

-2

0

2

4

6

8

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

Asia ex HK/Sing Current Account Balance as % of GDP

16

21

26

31

84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

Asia ex HK/Sing Total External Debt as % of GDP

Source: Citi (4/2009)

Data prior to 1995 excludes Taiwan Data prior to 1995 excludes Taiwan

It is most likely that Asia can weather this storm well

% of GDP % of GDP

8

Corporate Earnings Growth:Downgrades bottoming out

50

60

70

80

90

100

110

120

Feb-08 May-08 Aug-08 Nov-08 Feb-09

2009 2010

40

50

60

70

80

90

100

110

120

Feb-08 May-08 Aug-08 Nov-08 Feb-09

2009 2010

Source: JP Morgan (4/2009)

US Asia Pacific ex-Japan

Room for upward surprise in 2009 ?

Earnings Revisions Index Earnings Revisions Index

9

Asian Equities’ Valuations:Challenging growth in 2008/09, recovery in 2010 ?

Source: JP Morgan (4/2009)

P/E (x)Div. Yield

(X)P/BV (x) Earning growth (%) ROE (%)

CountryCurrent Trailing

12m fwdCurrent Trailing

Current Trailing

2008E 2009E 2010E 2009E

Global * 9.2 10.0 4.3 1.2 -10.3 -15.1 17.3 11.5

USA * 15.5 12.8 3.0 1.8 -22.1 -9.8 22.5 10.7

EMF Asia 10.5 10.9 3.7 1.3 -15.4 -10.7 23.0 11.2

China 12.9 12.3 3.2 1.8 -9.7 -0.8 20.4 13.3

Korea 14.5 14.0 1.7 1.2 -32.6 -9.5 44.4 7.6

* Market forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using I/B/E/S estimates. US trailing PE is calculated as per reported earnings. For all other markets and sectors, forecast numbers are derived from bottom-up calculations of each individual MSCI constituents using JPM estimates for covered stocks and I/B/E/S estimates for the rest. Companies with different yearends are calendarised to December yearends and are free float adjusted for aggregation. Historical numbers are from MSCI.

10

Asian Equities’ Valuation:P/B close to historical bottom

Source: Citi (4/2009)

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Jan75 Jan79 Jan83 Jan87 Jan91 Jan95 Jan99 Jan03 Jan07

MSCI AC Asia ex Jp PBV

0.92x, MXASJ at 195

1.8x, both10- and 30-yr avg

Cheap

0%

10%

20%

30%

40%

50%

60%

70%

Dec-93 Dec-96 Dec-99 Dec-02 Dec-05 Dec-08

% Stock trading below book

Asia Ex-Japan

P/B

11

US Money Market vs Equities:Where’s the money ?

Mountain of cash in money markets !

Source: Citi (4/2009)

Note: 1Q09 reading for deposits and cash held steady from 4Q08

S&P 500 Market Cap vs. Household Deposits & Currency + S&P 500 Non-Financial Corporate Cash

Equity Mutual Fund Assets as a % of Total Assets (ex Institutional Money Market Assets)

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

Q1-

1988

Q1-

1990

Q1-

1992

Q1-

1994

Q1-

1996

Q1-

1998

Q1-

2000

Q1-

2002

Q1-

2004

Q1-

2006

Q1-

2008

$Millions

Deposits + Corporate Cash S&P 500: Market Capitalization (Bil.$)

45%

48%

51%

54%

57%

60%

63%

66%

69%

72%

Jan-

96

Jan-

97

Jan-

98

Jan-

99

Jan-

00

Jan-

01

Jan-

02

Jan-

03

Jan-

04

Jan-

05

Jan-

06

Jan-

07

Jan-

08

Jan-

09

12

Asian Excess Liquidity:Accelerating

Source: Citi (4/2009)

Bullish for share prices

-15

-10

-5

0

5

10

15

20

84 86 88 90 92 94 96 98 00 02 04 06 08-80

-60

-40

-20

0

20

40

60

80

100

Asian Domestic Excess Liquidity (%YoY, LHS) MSCI AC Asia ex-Jp US$ Index 12-m % Chg (RHS)

%YoY % Chg

13

Risk Appetite for Asian Equities:Aversion or appetite ?

Source: Citi (4/2009)

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

92 93 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08

120

220

320

420

520

620

720

Asia ex Japan Risk-love Indictor (S.D.,LHS) MSCI AC Asia ex Japan (RHS)

Euphoria

Distress

Risk aversion has abated, but risk appetite remains low

Risk deviation in SDs from mean MSCI Asia index

14

Let’s Assume That US Equities Have Troughed:What is the upside potential ?

S&P 500 at 966 in March 2010 ?

Source: Citi (4/2009)

S&P 500 Bear Markets and Subsequent PerformancePeak Trough

Date Level Date Level

09/07/1929 31.92 06/01/1932 4.41 -86.18% 120.85%09/07/1932 9.31 02/27/1933 5.53 -40.60% 95.44%07/18/1933 12.20 10/21/1933 8.56 -29.82% 5.29%02/05/1934 11.81 03/14/1935 8.06 -31.77% 81.41%03/06/1937 18.68 03/31/1938 8.50 -54.48% 29.18%11/09/1938 13.79 04/08/1939 10.19 -26.12% 23.61%10/25/1939 13.21 06/10/1940 8.99 -31.94% 9.24%11/09/1940 11.40 04/28/1942 7.47 -34.46% 53.68%05/29/1946 19.25 05/17/1947 13.72 -28.75% 21.12%06/15/1948 17.07 06/13/1949 13.55 -20.59% 42.05%08/02/1956 49.75 10/22/1957 38.98 -21.65% 31.02%12/12/1961 72.64 06/26/1962 52.32 -27.97% 32.66%02/09/1966 94.06 10/07/1966 73.20 -22.18% 33.21%11/29/1968 108.37 05/26/1970 69.29 -36.06% 43.73%01/11/1973 120.24 10/03/1974 62.28 -48.20% 38.01%11/28/1980 140.52 08/12/1982 102.42 -27.11% 58.33%08/25/1987 336.77 12/04/1987 223.92 -33.51% 22.78%03/24/2000 1527.46 10/09/2002 776.76 -49.15% 33.73%10/09/2007 1565.15 03/09/2009 676.53 -56.78%

Average -37.23% 43.08%

Peak to Trough % Change

1 Year Performance from Trough

15

The Asian 8-year Market Cycle:Will 2009 be the trough for coming 8-year cycle ?

Last trough 2001 >>> next trough 2009?

Source: Citi (4/2009)

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Dec74 Dec78 Dec82 Dec86 Dec90 Dec94 Dec98 Dec02 Dec06 Dec10

MSCI AC Asia ex Jp PBV

From trough-to-trough: 8yrs 7yrs 11mths Trough in 2009?

From trough-to-peak: 6yrs 2mths

4yrs 11mths

3yrs 4mths

6yrs 2mths

8yrs

Good prospects for Asia’s re-rating

P/B (X)

16

Foreign Investors’ Flow Analysis for Asia:Back as buyer ?

-20,000

-15,000

-10,000

-5,000

0

5,000

10,000

Apr-06 Aug-06 Dec-06 Apr-07 Aug-07 Dec-07 Apr-08 Aug-08 Dec-08 Apr-09

(US$m)

USD 4.4 bn inflow in April month-to-date !

Source: Credit Suisse (4/2009)

Total Net Flows for Asia (ex Mal/HK-China)

17

Fund StrategyLooking to add growth with focus on earnings delivery

We expect to see a continuation of relaxed macro policies globally, as short-term economic data is expected to remain weak

Asian economies, led by China, are expected to slow down cyclically, but remain solid structurally

With Asian equity valuations looking fair value, we continue to selectively add to growth/cyclicals on weakness

Stock selection focuses on earnings delivery following the strong share price rebound from distressed valuations

Change

18

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. 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.

Complied (Boston): May 13, 2009