The country’s net foreign direct investments (FDI) inflows in June dropped by 29 percent to $394 million from $555 million recorded in the same period last year as subscriptions for both debt papers and equities declined.

Data from the Bangko Sentral ng Pilipinas on Tuesday showed investments in debt instruments shrank by 30 percent to $213 million from $304 million.

Similarly, investments in equities excluding reinvestment of earnings dropped by 33.2 percent to $74 million from $111 million.

Earnings reinvestment decline

Meanwhile, reinvestment of earnings declined by 23.4 percent to $107 million from $140 million.

From January to June, however, FDI net inflows increased by 7.9 percent to $4.4 billion compared to the same period a year ago.

Source of the bulk of FDIs was the United Kingdom with 52 percent share, followed by Japan with 30 percent, and the United States with seven percent on a year-to-date basis.

In June alone, FDI inflows came mostly from Japan with 47 percent share, followed by the United States with 15 percent, and Sweden and Singapore with the same share of 14 percent.

Inflation and interest rates concerns

Rizal Commercial Banking Corporation chief economist Michael Ricafort said June’s lower FDI net inflows reflected investors’ concerns with inflation and interest rates.

“The results came amid still relatively higher prices and interest rates globally and locally that still weighed on investments worldwide due to higher financing costs,” he said.

The US Federal Reserve maintained its policy rate in June from 5.25 to 5.5 percent as strong private consumption continued to keep US inflation high, following the country’s unexpected job growth by 272,000 in May.