With oil prices falling, sanctions starting to work their way deeper into the heart of the Russian economy and the government’s warning last week that a recession is imminent, there’s good reason to believe that Russian stocks could become even cheaper than they are and have been for quite a while.

And yet most investors are not likely to be taking advantage of those sharp discounts. Since the onset of the Ukraine crisis, many investors have been leery of Russia and here are some reasons why, in the broader scheme of things, they find the Russian market unattractive.

Russia lacks proper policy and internal momentum at a time of economic troubles

For Stuart Quint, senior investment manager and international strategist at Brinker Capital, there’s a fine line between the point at which cheap stocks offer value and their prices indicate a complete meltdown. And in the case of Russia, he said, “the discount rate could actually be pushed higher in the near term, because of what’s happening both internally in Russia and what’s going on globally.”

At the macro level, the sanctions are likely to further impact the Russian economy unless its political stance changes, but for Quint, the greater concern is the fact that “there’s a lack of internal momentum in Russia.”

Institutions and policies remain extremely weak, he said, and look like they will be eroded further. The inner circle of President Vladimir Putin is tightening and that has repercussions for the rule of law and corporate governance, both of which are already questionable.

“It’s really hard to think about valuations being attractive when you know that discounts are due to issues like these and because of the political and economic situations,” Quint said.

The Russian economy is also tipping into recession, not just because of the decline in energy prices (Russia is heavily reliant on revenues from energy exports) but also because “a lot of major investment projects by both Russian and other oil companies that were about to ramp have been delayed or canceled, so the business climate is clearly deteriorating,” Quint said. With the ruble also sinking to new lows, things are getting increasingly tough for Russian corporates, he said.

Russia is moving farther away from the West

For Ben Rozin, senior analyst and portfolio manager at Manning & Napier, politics is one of the most important issues when it comes to Russia.

Manning & Napier has been hesitant about Russia since Putin came to power, Manning said, and through the years has eschewed those companies where state control has translated to “shareholders playing second fiddle.” When the Ukraine crisis began, the firm exited all its Russian holdings, including some names in the Internet and natural resources space that had good potential, Rozin said.

Now, going back into the Russian market would mean that “we have to see government policy going in the right direction, the Russian government becoming more democratic and transparent and an effort to join international peace talks,” he said. “Unfortunately, though, it seems more that Putin is moving away from the Western development model by trying to redefine Russia’s position in the world and getting closer ties with China and other emerging powers in the world, so in light of that, as U.S.-based investors, we think the risks in Russia are high, and today’s cheap valuations are not attractive to us.”

Russia isn’t likely to default on its debt, but…

Could the pressures its currently facing result in another default similar to the one Russia went through in 1998?

That possibility is now a growing concern to some, but despite the plunging ruble, it’s important to note that Russian government debt outstanding is only around 10.5% of GDP, Rozin said, and the country has foreign currency reserves to the tune of $450 billion.

Foreign currency corporate debt, on the other hand, stands at around $475 billion, “which isn’t really a big number in the grand scheme of things,” Rozin said, “so we shouldn’t be too worried about either a sovereign or a corporate debt default, even though it is going to be hard for some companies to pay back their debt.”

The pressure on companies may even force them to become more competitive, and that would normally be the kind of scenario that would encourage Manning & Napier to consider buying. However, “investors have been burned by Russia in the past and there are trust issues that have not been bridged.”

Some opportunities?

Quint said that for those investors willing to take on the risk of investing in Russia today, there are a couple of potential opportunities. There are a few energy companies, for instance, that have been cutting down on capex and that have projects outside of Russia “that in ruble terms are a bit more profitable and are a bit more shareholder friendly,” he said. “So I wouldn’t say all Russian companies are bad, some are producing cash but then again, they’re facing a very volatile macro situation and it’s hard to say, given the current regime, that there’ll be structural reform.”