Investment bank Troika Dialog has released a study this week that says the conflict in South Osettia could force foreign investors to abandon Russia altogether.

Having lost over 5 percent on Tuesday, the Russian stock markets may have further to fall. The latest research by Troika Dialog suggests foreign investors no longer see Russia as a safe haven.  Andrey Podoynitsyn Director of UFG Asset Management, agrees. From now on the Russian markets will have to rely on local investors.

 “It's unlikely that we should expect a rally within the next month…or even a year. We don't seem to have a bright catalyst that would shift investor sentiment. Especially considering that the bulk of investors look at global rather than Russia-specific trends”

But Roland Nash of Renaissance Capital says while foreigners may be pulling money out of Russia in the short term, the country’s fundamentals remain strong.

“We’ve had these bad headlines.  The market’s sold off by 30% from top to bottom now. I think a lot of bad news is in the price and investors will start looking at fundamental value and when they start looking at fundamental value they will see there’s a lot in Russia, and I think you will see foreign investors come back into the market, and domestic investors come back into the market.”

Both the RTS and the MICEX have lost roughly a quarter of their value this year, amid higher political risks and falling commodity prices