On Tuesday HSBC (NYSE: HBC) released its monthly China Flash Purchasing Manager Index (PMI), fueling concerns that China’s economy may continue slowing into the first quarter.

The PMI is designed as a diffusion index; any reading about 50 indicates growth while a reading below that red line number signals contraction. Consequently, while April’s reading of 50.5 is positive, it shows such tepid growth that there’s a real risk that China’s manufacturing sector could slip into a contraction.

Particularly troubling is the fact that new export orders contracted sharply this month. China is working to retool its economy to be more focused on domestic demand, but exports still play a critical role in growth. If external demand for China’s exports remains weak, and it likely will as Europe’s PMI readings point to a deepening recession, China’s weak gross domestic product (GDP) showing in the first quarter could actually get worse.

Considering China’s usually insatiable appetite for raw materials, a slowdown there will ripple throughout the global economy, an effect we’re already seeing play out as equity indexes in resource countries around the world drift lower in recent days.

That said, I wouldn’t say that China is down for the count. The political legitimacy of the Chinese Communist Party (CCP) is largely predicated on its ability to generate economic growth and increase the material wealth of the average Chinese citizen. The government’s most recent five-year plan—the CCP’s roadmap of political, economic and development goals—is a tacit acknowledgement of that fact.

In March, the Chinese government pledged that it would increase fiscal spending by 10 percent, partially offset by an 8 percent revenue increase this year, to help stimulate the economy. That’s a fluid target, though, and likely to increase, particularly if employment in the manufacturing sector appears to be under threat. A rising unemployment rate would pose a serious challenge to the government and the manufacturing sector is one of the largest employers in China.

Given China’s propensity for stimulus in recent years, many investors are understandably hesitant to totally extricate the country from their portfolio allocation. If you primarily invest in either mutual funds or exchange-traded funds (ETFs), it might even been impossible.

Nonetheless, it’s probably prudent to focus on countries less exposed to China for the time being, until the Chinese government gives us a better idea of its game plan.

In terms of Asian nations, Japan is still extremely attractive, thanks to the aggressive stimulus measures taken by Prime Minister Shinzo Abe and his accommodative central bankers. While the Nikkei is already up by more than 55 percent since November, there’s no indication that its huge run will end any time soon, barring a regional conflagration involving North Korea.

Not only is the country benefitting from the government’s massive fiscal stimulus, the yen’s nosedive over the past several months is giving Japanese manufacturers and exporters a boost, as their output becomes more attractive in the global market.

South Korea also looks attractive despite its tensions with the North.

The country’s GDP grew by a better than expected 0.9 percent in the first quarter. Increased public spending played a role in that growth, but a 3.2 percent boost in exports also was a major contributor.

There were serious concerns that the weakened yen would ding Korean exports. The yen is down more than 20 percent against the Korean won over the past six months or so. However, strength in the country’s petrochemical and telecommunication equipment sectors has overcome that. While it will be tough to sustain that growth if the economies of the US, Europe and China remain weak, Korea looks like it might overcome those challenges.

Smaller Pacific Rim countries such as Indonesia, Malaysia, Thailand and Cambodia also remain attractive.

Despite weakened export markets, Indonesia and Malaysia are continuing to perform well, largely thanks to low debt loads and extremely attractive demographics. As a result, domestic consumption and development are picking up much of the economic slack created by tepid resource demand.

Thailand is benefiting from the growing exodus of manufacturers out of China. Despite China’s sluggish economy, labor costs remain elevated thanks to its rapid growth over the past decade, pricing many lower-end manufacturers out of the country. Thailand has stepped into that breach, in large part by developing an attractive corporate taxation scheme and offering an extremely cheap but well-educated workforce.

Cambodia, meanwhile, has become a hugely popular intra-Asian tourist destination.

Cambodia has long been a popular tourist destination among Europeans, but its relatively weak riel has made it an affordable hot spot for other Asians as well. It’s particularly attractive to Vietnamese tourists because of its visa-free entry agreement with Vietnam and its geographic proximity. It’s also become a Mecca for mid-tier gamblers who might not be able to afford higher-end casinos in Macau.

While weakness in China will be a serious headwind for the global economy, it’s not the end-all-be-all for growth investors. As with most other global governments, the CCP is ready and willing to take aggressive measures if China’s economy starts to slow at a worrisome pace.

Portfolio Updates

Anhui Conch Cement (Hong Kong: 914, OTC: AHCHY) reported that its first quarter net profit fell by 22 percent year-over-year, down to CNY972 million.

Despite a nearly 57 percent increase in net cash flow from operating activities and a high volume of debt repayment, lower selling prices and higher operating expenses ultimately proved a drag on the bottom line. Anhui also received a lower subsidy payment from the government and its investment income was more than halved due to lower profits at its joint ventures and subsidiaries.

Despite Anhui’s weak first quarter performance, China Vanke (OTC: CVKEF), the country’s largest property developer, reported that its first quarter profit rose by nearly 16 percent thanks to strong home buying demand. While China Vanke benefited from fairly easy comparables as well, its performance is a good sign that home demand in China remains strong, a bullish indicator for cement demand.

Anhui Conch Cement remains a buy under 40.

Banco Bradesco (NYSE: BBD) reported net income of BRL2.9 billion, up 5 percent from the same period last year and virtually unchanged from the fourth quarter of 2012. Total loan growth came in at a lower than expected 11.6 percent in the quarter, well below the average 17 percent, as the Brazilian economy continues striving to return to its strong historic growth.

While the macroeconomic environment is still a bit weak, Banco Bradesco cut its loan-loss provisions by 3.1 percent from the fourth quarter, although they are still up 0.5 percent compared to the same period last year. Return on equity came in 17 percent.

The bank expects its loan growth to improve as the year progresses, for a total gain of between 13 percent and 17 percent for the full year. That should be an achievable target as the broad economy improves.

Continue buying Banco Bradesco under 20.

China Minsheng Banking Corp (Hong Kong: 1988) reported that its first quarter net profits were up 20 percent to CNY11 billion and earnings per share rose to CNY0.39.

While net interest income rose by 6 percent in the quarter to CNY20.1 billion, the bank’s biggest win was a 44.8 percent surge in non-interest income, which hit CNY8.8 billion. The bank’s nonperforming loan ratio remained flat at a total 0.76 percent in the first quarter.

China Minsheng Banking Corp remains a buy under HKD15.

Despite slow growth in India, HDFC Bank’s (NYSE: HDB) net earnings grew by 30 percent compared to a year ago, hitting INR18.9 billion in its fiscal fourth quarter. For its full fiscal 2013, net profit stood at INR67.3 billion, a 30.2 percent gain versus fiscal 2012. Strong improvements in both net interest income and fee revenue were the biggest contributors to that growth.

Net revenue grew by 17.5 percent to INR61 billion in the fourth quarter, with full-year fiscal 2013 revenues at INR226.6 billion, a 21.4 percent gain.

The bank’s asset quality remained strong with a total nonperforming loan ratio of 0.97 percent, down 0.05 percent versus last year, while total provisions declined 27.9 percent to INR18.4 billion.

With strong capital adequacy ratios and its rapid growth, HDFC Bank is a buy up to 46.

Teck Resources’ (NYSE: TCK) cash costs fell from CAD59 per ton to CAD47 per ton in the first quarter, but continuing declines in coal prices weighed on first quarter results.

Sales volume spiked by 24 percent in the quarter, although revenue declined to CAD1.1 billion from CAD1.2 billion a year ago, as the average price of coal fell from USD223 in last year’s first quarter to USD161 this year.

Revenue from Copper and Zinc also continued to fall, down to CAD684 million and CAD585 million respectively.

Adjusted profit came in at CAD328 million or CAD0.56 per share, compared to CAD544 million or CAD0.93 per share a year ago.

Shares of Teck Resources will continue to produce wild swings largely based on the news out of China, a situation that isn’t likely to improve any time soon. That said, Teck remains one of the best plays on metallurgical coal, a key resource for growth around the world.

Continue buying Teck Resources.