Dan previously reported that the European Union decided not to impose economic sanctions on Russia — at least for now. However, The New York Times had an interesting story on September 3 noting that the market was imposing its own penalty on Russia for its war versus Georgia.

…[I}nvestors are also unnerved by the aftermath of the five-day war in early August.

Russian shares have lost about a third of their value since hitting record highs in May. Russian and Western bank analysts polled by Reuters have cut forecasts for Russia’s gold and foreign exchange reserves.

As much as $25 billion in foreign capital may have left Russia since the Georgia conflict started, they said: while their growth forecasts were little changed at 7.5 percent, the crisis sharply cut the liquidity of the banking system.

Apparently, the Russian “stock exchange’s benchmark RTS index…suffered its biggest decline since the financial crisis in 1998.”

A major investor from Hong Kong is quite pessimistic:

“I have assets in both Georgia and Russia and I’m going to get out. What seemed a great idea at that time has become a sort of disaster,” said a 31-year-old banker at one of the world’s top 10 investment banks, who — like most here — spoke on condition of anonymity.

A British investor who lost money in 1998 is anonymously quoted saying “we’ll soon see a downward spiral that will result in another crash — give it a few months.”

On the other hand, at least one investment advisor was willing to be quoted by name in the article. “Armine Guledjian, vice-president of Halcyon Power Investment Company and a native Californian” admittedly has a strong self interest at stake. Still, she says simply:

“This is a great time to invest, as markets are so low.”

Don’t view that as an official Duck of Minerva recommendation.