LONDON, Jan 8 (Reuters) - U.S. stocks look set to extend

their outperformance this year driven by the financial firepower

of big tech firms and investor friendly policies under a second

Donald Trump presidency, the CEO of State Street's asset

management arm said on Wednesday.

Some investors believe Trump's agenda of tax cuts and

deregulation can further fuel so-called U.S. exceptionalism -

which saw U.S. stocks widen their valuation gap

over rivals last year - despite potential disruption from

policies such as higher tariffs and concerns that the market is

in bubble territory.

Big technology firms that have driven up U.S. stock indexes

can continue to do so due to their large investment budgets,

Yie-Hsin Hung, CEO of State Street Global Advisors (SSGA), one

of the world's biggest asset managers with $4.7 trillion under

management, told a media event in London.

"You have the advent of all these new technologies whether

it is AI, quantum computing... The earnings adjustments they've

made as a result of it suggest that that level of exceptionalism

has a good chance of continuing," Hung said.

SSGA, known for its passive, index-tracking funds, believes

Trump's policies will be "generally constructive" for investors

but it is preparing for a "fair amount of volatility", she

added.

Hung was speaking at an event to launch a SSGA

exchange-traded fund (ETF) that offers European investors access

to Saudi government bonds and will be partly listed on the

London Stock Exchange ( LDNXF ).

State Street said that Saudi Arabia's sovereign wealth

Public Investment Fund would invest $200 million in the ETF.

Saudi Arabia has drawn considerable interest from overseas

investors seeking to tap into the kingdom's drive to diversify

its economy away from oil but the country's human rights record

has long been the subject of criticism.

Hung said SSGA engaged with clients on environmental, social

and governance issues, but that it was ultimately up to them

what they invested in. "We subscribe to the notion of providing

choice to our clients," she said.

Saudi Arabia denies accusations of human rights abuses and

says it protects its national security through its laws.

($1 = 0.8051 pounds)