LONDON (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.

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