Ahead of the Bell: Dollar to lure global capital

Jefferies & Co. analyst Daniel T. Fannon said Thursday that he believes a strengthening dollar will lead to an influx of global capital into U.S. equities _ a boon for domestic asset managers with significant foreign operations.

"We believe the impacts of a rising dollar could provide a tail wind for asset managers with an established presence among non-U.S. investors," wrote Fannon in a note to clients. "Dollar-denominated assets are becoming increasingly attractive to foreign domiciled investors as the outlook for other global economies becomes uncertain."

The companies within Fannon's coverage area that stand to benefit include Invesco Ltd., Affiliated Managers Group Inc. and Legg Mason Inc. Fannon has a "Buy" rating on both Invesco and Affiliated Managers, and a "Hold" rating on Legg Mason.

Exchange operators, on the other hand, may see a drag on their earnings as the dollar continues to gain ground, Fannon said.

He expects a stronger dollar to have a greater negative impact on NYSE Euronext Inc., the operator of the New York Stock Exchange, than on Nasdaq OMX Group Inc., given that about 70 percent of NYSE's operating profit comes from European operations, compared with about 30 to 40 percent of European exposure at Nasdaq.