Russian assets, in recovery mode following a deep recession after the global oil price collapse in 2015, have been ravaged since Friday over fears of U.S. sanctions.
Popular among many emerging market investors for the past year, this progress now appears on the brink of becoming undone as market analysts call for a re-evaluation of Russia's risk pricing.
The turmoil was triggered by the U.S. Treasury's announcement last Friday of targeted penalties on Russian entities and individuals, stemming from Congressional legislation — passed last August — known as CAASTA (the Countering American Adversaries Through Sanctions Act).
Until recently considered a safe bet, with many investors "overweight" on Russian assets, the country's markets now appear at the mercy of the U.S. Treasury, whose deployment of punitive economic measures Friday was its most severe yet.
Monday saw Russian stocks suffer their worst day since 2014, with the country's main share index crashing 11.4 percent and the ruble falling 4.5 percent against the dollar. The same day witnessed Russia's 50 richest businessmen lose close to a combined $12 billion, according to Forbes.
Russian assets will likely now be plagued by higher risk premiums after a period of long positioning on Russian risk, according to Tim Ash, senior portfolio strategist at Bluebay Asset Management. This is thanks to the market being "long overly sanguine on Russia geopolitical risk and sanctions." Indeed, for the past several years, analysts recall geopolitics having little to no lasting effect on global stocks.
Russia was an attractive proposition as it embarked on its economic recovery, said Valentijn Van Nieuwenhuijzen, chief investment officer at NN Investment Partners. "Over the last six to nine months, there have been times we actually liked Russian markets on the back of recovering commodities and oil prices," he told CNBC's Squawk Box on Tuesday.
But the danger posed to assets in the face of an unpredictably aggressive sanctions agenda changes things. "I think this type of news makes it at this point not a very attractive value opportunity," Van Nieuwenhuijzen said.