• Japanese stocks have lagged peers so far this year, but Credit Suisse's Suresh Tantia sees that trend reversing soon.
• Tantia told CNBC that Japan is the bank's favorite developed market at the moment.
• The "building blocks" are in place for Japanese stocks to do well and the market is set to outperform the rest of the world in the coming quarters, Tantia predicted.

Japanese stocks have lagged peers so far this year, but Credit Suisse's Suresh Tantia sees that trend reversing soon.

"In the developed market space, our favorite market is Japan," Tantia, senior investment strategist at Credit Suisse's Asia-Pacific CIO office, told CNBC's "Street Signs Asia" on Thursday.

"Japan has massively underperformed the U.S. equity market this year despite a very strong earnings momentum," he said.

As of its Friday close, Japan's Nikkei 225 has risen 7.89% for 2021. In comparison, the S&P 500 stateside has soared more than 24% in the same time period.

'Building blocks' in place

The strategist said a series of "building blocks" are now in place for Japan to outperform globally in the coming quarters.

Firstly, Tantia pointed to Japanese Prime Minister Fumio Kishida's resounding victory in the recent parliamentary election, describing the win as "very positive for the market" due to expectations that the country's leader will introduce more stimulus.

The second factor, according to the strategist, is valuations.

"If you look at the valuation for the Japanese equity market, it's trading at a very attractive price compared to any other developed markets," he said

Lastly, he pointed to the outlook for the Japanese yen, which has weakened more than 10% against the dollar so far this year.

"Weaker Japanese yen tends to be positive for the equity market and we do expect JPY to weaken against U.S. dollar," Tantia said.