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Investing.com -- The surging run higher in US stocks has some concerned about stretched valuations, but with a soft landing still likely on the horizon, ongoing strength in the corporate sector, and no sight of market exuberance just yet, Societe Generale (OTC:SCGLY) has modestly increased its exposure to U.S. equities.

"Corporate profits should remain solid and margins high, particularly in the US where corporate taxes could stay low (or even lower) helped by likely deregulation," Societe Generale said in a recent note.

The bank raised its allocation to US equities by 3% to 30% of its overall portfolio, citing a robust growth outlook and falling oil prices as supportive factors for growth-driven assets.

This increase comes despite acknowledging that US equity valuations are already stretched, with the equity risk premium at 3.2%.

The recent "red sweep" outcome from the recent US election, which is likely to reinforce an "America first" policy, is part of trio of factors that is likely to benefit U.S. equities. 

For risk assets including stocks, three factors continue to be supportive, the bank said, pointing to ongoing expectations for a soft landing, corporate margins that remain near record highs, and a lack of market exuberance. 

Economists at Societe Generale forecast GDP growth to be in line with trend: softening to 2.3% and 1.9% in the next two years, after 2.8% this year. 

The potential for another trade war under a second Trump administration is likely to dent European stocks. 

To protect its equity allocation from the looming trade war, the bank said it reallocated its equity exposure  "from continental Europe to the UK and from China to Japan."

This content was originally published on http://Investing.com