Baring Asset Management (Asia) Limited
19th Floor, Edinburgh Tower
15 Queen’s Road Central, Hong Kong
Tel: (852) 2841 1411
Fax: (852) 2868 4110
www.barings.com
THE ASIA PACIFIC FUND, INC.
www.asiapacificfund.com
September 2007
Baring Asset Management

Principal business lines:
Institutions, Mutual Funds, Private Clients & Alternative Investments





Current assets under management US$46.3 bn (Global), US$9.3 bn (Asia)
4 main investment offices covering each major
financial time-zone.
Long history of investing from a local presence:
London
1955
Hong Kong
1976
Boston
1978
Tokyo
1982
San Francisco
London
Toronto
Boston
109 investment professionals:
proven, experienced team
Owned by Massachusetts Mutual Life
Insurance Company (MassMutual)
Tokyo
Guernsey
Assets as at 30th June 2007
Investment Professionals as at 1st June 2007
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Paris
Frankfurt
Taipei
Hong Kong
The Asia Pacific Fund, Inc.
Long-Term Performance (Cumulative NAV Returns over
1, 3, 5 and 10 year periods to July 31, 2007)
(%)
231.6
240
Fund
220
MSCI AC F/E (Free) x Jap Gross
209.0
200
167.0
180
160
161.1
147.7
140
120
100
80
71.6
64.2
54.6
60
40
20
0
Morningstar Ranking
1 Yr to
7/31/2007
3 Yrs to
7/31/2007
18/202
28/175
5 Yrs to
7/31/2007
33/149
10 Yrs to
7/31/2007
8/85
Fund performance are bid to bid, net of fees, gross income, US$. For risks associated with investment securities in emerging and less developed markets, please refer to
the Offering Document for details. Transactions in derivatives, warrants and forward contracts and other fund derivatives instruments may be used for the purpose of
meeting the investment objective of the Fund. The Net Asset Value of the Fund may have a high volatility due to these instruments and techniques being included in its
scheme property and may involve a greater degree of risk. Past performance is not an indication of future performance.
Data source - © 2007 Morningstar, Inc. All Rights Reserved; data as at 31/07/2007. 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. Past performance is no guarantee of future results.
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Our Team and Process
Executive Summary

Performance driven team - clear accountability and quick
decision making

Experienced investment professionals - deep market and stock
knowledge

High conviction portfolios – no unintended positions

Research focuses on what matters

Tight risk management – including proprietary risk measures

GARP style accommodates market leadership changes
Our competitive advantage is our people
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The Asian Team
Henry Chan
Greater China
Agnes
Deng
Franki
Chung
Edward
Wang
William
Fong
Adrian
Au
Henry
Chan
Global Sector
Team
5
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Australia /
New Zealand
Soo-Hai
Lim
ASEAN
(incl. Singapore)
Korea
India
Kai Yang
Lee
Hyung Jin
Lee
Manoj
Shroff
Eunice
Hong
Global Emerging
Market Team
Strategic Policy
Group
Khiem
Do
GARP – Growth at a Reasonable Price
CHEAP
Valuation
EXPENSIVE
Growth
HIGH
Growth at a
Reasonable Price
Value Traps
Torpedoes
LOW
Combined discipline of growth and valuation
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How we structure our research
Common language structures our judgemental decisions
Applied to both countries and companies
Research
Potential for growth surprise
Growth
Ability to finance growth
Liquidity
Sensitivity to currency, currency outlook
Currency
Strategy and execution
Management
Is the outlook reflected in the price?
Valuation
Research key to good idea generation
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Setting Research Priorities
Reducing a large universe to focused Buy/Sell candidates
Stock Universe
Positive & Negative
Quantitative Screens
Company
Meetings
BAM Top Down
and Sector Views
Overseas
Trips
Local Contacts
& Newsflow
Analyst
Discussions
Stock ideas
Client Portfolio
Source: Baring Asset Management
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Buy Disciplines
We buy when we identify



Under-appreciated earnings growth prospects
Undervaluation, based on comprehensive understanding of
corporate strategy, fundamentals and peer comparables
Catalysts that will lead to the stock being re-rated within a
defined time frame
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Sell Disciplines
Triggers for Stock Review

Stock reaches our target price

We detect deterioration in fundamental outlook
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Baring Asia High Alpha
Investment Approach

Best bottom-up opportunities as the key building block –
benchmark helps risk management and sizing of positions

Positive bets against the comparative index – either overweight or
no exposure, eliminate underweight & neutral bets

Mixed market cap – do not focus on large cap only

Higher stock concentration for large cap stocks – no need to own
two stocks for same trade.

More diversified on small to mid-cap stocks to avoid “accidents”
as a result of under-coverage by analysts, lower management
quality, illiquidity, etc.

More flexible use of cash expected

More flexible use of non-index bets
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Themes and Outlook
Asia Pacific – Major Investment Themes






China consumption and the rise of the middle class
Regional asset reflation – Singapore, Indonesia, Taiwan,
Malaysia and the Philippines
M&A theme driven by overseas expansion of PRC companies
Petro-dollar recycling “Middle East construction boom” –
shipbuilding, oil services and engineering
Reconstruction of Asia – engineering, construction, building
materials, capital goods
Improved supply side discipline of “cyclical” sectors – energy,
materials, technology
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Consumption, Asset Reflation
and Re-construction
China: Rising Income
GDP/Capita
USD
2200
2000
Per Capita GDP
1800
1600
1400
1200
1000
800
600
400
200
2006
2005
2004
2003
2002
2001
2000
1999
1998
1997
1996
1995
1994
1993
1992
1991
1990
1989
1988
1987
1986
1985
1984
1983
1982
1981
0
Source: UBS (06/2007)


GDP per capita surpassed the magical US$1,000 threshold
since 2003
Emerging middle income class!!
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Chinese equities’ rally:
Heading towards a ‘bubble’ ?
% change since Jan 02 for China; Jan 82 for elsewhere
2,500
2,000
China
Korea
Taiwan
Japan
1,500
1,000
500
0
-500
Month 1 M13
M25
M37
M49
M61
M73
M85
M97 M109 M121
Source: Macquarie Bank (6/2007)
As with Japan, Korea and Taiwan in the 80s ….
will a Chinese market ‘bubble’ materialise?
15
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Overseas Expansion of PRC Companies
Drives M&A Theme
China’s Net FDI overseas
Source: CSFB (7/2007)
16
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Singapore: Office rental to rise
Demand to outstrip supply
Rental costs as percentage of GDP
Rental costs/GDP
14%
Rental
8
7
12%
6
(m sf)
(%)
4.0
96
94
3.0
92
10%
90
2.0
5
88
8%
4
6%
86
1.0
84
3
4%
0.0
1
2%
-1.0
-
0%
2
82
80
78
76
1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007
Rental Rates
Rental costs/GDP
-2.0
74
1995
1997
1999
Net supply (LHS)
2001
2003
2005
2007F
Take-up (LHS)
2009F
Occupancy (RHS)
Source: Deutsche Bank (6/2007)
Positive for office landlords
17
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Taiwan Domestic
The Most Undiscounted Reflation Story
Property price recovery an early indicator
of asset reflation
Rise in residential construction
licence issuance
000 Units
Index
140
Taipei City
Taichung
Taiwan
130
Taipei County
Kaoshiung
40000
35000
120
30000
110
25000
100
20000
90
15000
80
70
10000
60
5000
50
3Q91
3Q93
3Q95
3Q97
3Q99
3Q01
3Q03
3Q05
0
Oct-90 Oct-92 Oct-94 Oct-96 Oct-98 Oct-00 Oct-02 Oct-04 Oct-06
Source: JP Morgan (6/2007)
Domestic sector re-rating to continue
18
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Middle East Construction Boom Benefits Korea
Engineering Companies
New overseas construction orders by region
2005
(US$m)
No. of
projects
73
158
15
35
281
Middle East
Asia
Africa
Other
Total
2006
Value
No. of
projects
Value
y-y chg
(%)
6,445
2,611
1,275
528
10,859
59
187
27
53
326
9,530
4,046
1,557
1,335
16,468
47.9
55.0
22.1
152.8
51.7
Source: Nomura (5/2007)
Regional construction boom is coming!
19
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Taiwan: Bad Market but Good Stocks
350
300
250
200
150
100
50
01/06
03/06
05/06
07/06
09/06
11/06
Hon Hai Precision
Foxconn
MSCI AC Far East
MSCI Taiwan
01/07
03/07
05/07
07/07
Taiwan Fertiliser
Source: Factset (8/2007)
We invest in stocks, not markets
20
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Tech Consolidation : Hon Hai/Foxconn Empire
Hon Hai Precision
Consecutive EPS growth for more than 10 years
Price Return
100
5000
12/06
12/05
12/04
12/03
12/02
12/01
12/00
12/99
12/94
12/98
0
12/97
0
2007E
500
2006
1000
10
2005
1500
20
2004
30
2003
2000
2002
40
2001
2500
2000
3000
50
1999
3500
60
1998
70
1997
4000
1996
80
12/96
4500
EPS Growth
12/95
90
Source: Factset (6/2007)
Phenomenal Growth of Subsidiaries
EPS Growth
2007E
2006
2005
2004
Foxconn International (2038 HK)
+36%
+83%
+66%
+100%
Foxconn Tech (2354 TT)
+58%
+76%
+71%
+14%
+243%
+523%
-
Innolux Display (2481 TT()
21
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-
Source: Bloomberg (6/2007)
A true growth stock!
Resources Upcycle to Continue on Chinese Demand
The Ebb and flow of Resource performance
All Mining Index 1936 to Current
Index on log scale
10000
The rise of China?
87
1000
Industrialisation
of Japan
OPEC 2
100
OPEC 1
10
1
36
41
46
51
56
61
66
71
76
81
86
91
96
01
06
Source: Macquarie Research & IRESS (8/2007)
22
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Asia : Investment Strategy and Outlook

Expect another year of positive return and relative outperformance

China growth will drive reflation of the region

Earnings inflection point of export cyclicals such as technology


High alpha approach captures the best stock opportunities in
the region and expresses conviction in portfolios
Bottom-up opportunities point to overweighting in China/HK,
Singapore, Malaysia, Indonesia and the Philippines. Early
signs of earnings inflection warrants gradual rebuilding of
positions in Korea and Taiwan
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Secular Growth in Asia
Drives Out-performance
Appendix
The Asia Pacific Fund, Inc.
Asset and Sector Allocations as at 31st July 2007
Asset Allocation
Sector Allocation
Fund
(%)
Index *
(%)
Financials
25.9
30.5
26.8
Info. Technology
18.1
18.9
8.3
13.7
Industries
18.8
14.4
Taiwan
16.2
19.7
Materials
11.1
7.9
Singapore
13.1
8.1
Con. Discretionary
8.6
7.0
Thailand
0.0
2.5
Energy
5.5
6.6
Indonesia
2.2
2.6
Consumer Staples
3.7
3.4
Malaysia
3.9
4.3
Telecom. Services
3.8
7.5
Philippines
0.7
0.9
Health Care
0.0
0.3
Cash & others
0.3
0.0
Cash & Others
3.2
0.0
India
1.2
0.0
Utilities
1.3
3.5
Fund
(%)
Index *
(%)
China
31.5
21.5
Korea
22.5
Hong Kong
* MSCI AC Far East ex Japan (free)
Source: Baring Asset Management
25
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The Asia Pacific Fund, Inc.
Top Ten Active Positions as at 31st July 2007
Overweight Positions
Underweight Positions
Active Weight
(%)
Active Weight
(%)
Guangzhou R&F Properties
3.5
China Petroleum & Chemical
-0.9
Yangzijiang Shipbuilding Holdings
3.3
Industrial & Comm. Bank of China
-1.0
Xinhua A50 China Tracker
2.9
United Overseas Bank
-1.0
Zijin Mining Group
2.2
CNOOC
-1.0
Innolux Display
1.9
Singapore Telecommunications
-1.0
Firich Enterprises
1.8
Cheung Kong (Holdings)
-1.1
China Merchants Bank
1.8
Hutchison Whampoa
-1.2
Hengan International Group
1.8
China Life Insurance
-1.6
Taiwan Fertilizer
1.7
POSCO
-1.7
GS Engineering & Construction Corp
1.7
Taiwan Semiconductor Manufacturing
-2.2
Source: Baring Asset Management
26
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The Asia Pacific Fund, Inc.
Portfolio Characteristics as at 31st July 2007
Portfolio Characteristics
Market Capitalization Comparison
Fund
Index*
Forward P/E
23.9
19.4
Price/Book
12.2
4.1
23.3%
18.8%
ROE
Over US$10bn
Fund
(%)
47.4
Index *
(%)
59.4
US$1-10bn
50.2
39.2
2.1
1.4
27.8
36.1
Below US$1bn
Weighted Avg (US$bn)
Portfolio Turnover
Risk Summary
The rolling 12 month portfolio turnover
as at 31st July 2007 = 87.4%
Tracking Error vs. Index
5.0%
Beta vs. Index
1.15
*
Index : MSCI AC Far East ex Japan (free)
27
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Portfolio Risk
19.34%
Index Risk
16.39%
Source: Baring Asset Management
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.
Complied (Boston): 5 September 2007
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