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(Bloomberg) -- German stocks will likely keep rallying after the election as earnings remain strong and valuations are still cheap, said Marcus Poppe, co-head of European equities at DWS Group, the asset management arm of Deutsche Bank AG.

Germany has more room for fiscal spending, and the likely coalition between the conservative CDU/CSU bloc and Social Democrats will find common ground, he said. DWS’s German equity funds turned overweight on industrial, technology and financial stocks prior to the election.

“I don’t see that earnings growth is going to slow down,” in Europe, Poppe said at a press briefing on Tuesday.

Germany has been at the forefront of a rally in European stocks this year, with the DAX index surging 14% to an all-time high, as investors bet on government spending to reinvigorate a moribund economy and rotate away from pricey US tech shares. By comparison, the S&P 500 is up only 1.5% in 2025.

“Some reduction in bureaucracy might be even more helpful then short-term tax incentives,” Poppe said. He helps manage five funds with assets under management of $11.4 billion, according to data compiled by Bloomberg.

The rally in Germany has seen early signs of broadening out in 2025 after only a handful of names led gains last year. The benchmark was flat in 2024 once the performance of the top five stocks is excluded. But this year, 35 out of 40 stocks on the gauge are in the green. Meanwhile, the country’s small- and mid-cap benchmarks are both up more than 10% since the start of January.

But sentiment isn’t fully positive yet given how much the smaller parts of the market have lagged in recent years, according to Poppe. “I am not yet there to say there will be a rally in small- and mid-caps” over the medium term, he said.