Morgan Stanley took Japan equities to overweight from underweight, making it the top regional pick globally, replacing the U.S.
"Global reflation and U.S. dollar strength favors Japan equities," it said in a note dated Sunday.
The bank raised its target for the Topix index to 1800 for December 2017, from its previous forecast of 1190. On Monday, the Topix index closed at 1469.58.
The move by Morgan Stanley followed raising its 2017 earnings per share (EPS) forecast for the index to 108 yen from 83 yen.
That was in part because of expectations for the dollar/yen to trade at 125 by December 2017, compared with 107 previously, and 130 by mid-2018. Early Tuesday, the dollar was fetching 111.84 yen.
"Topix earnings are positively geared to a weakening of the yen," it said, noting that around 40 percent of Topix-company revenues come from non-domestic sources.
While strength in the dollar, which has surged since the U.S. presidential election's surprise outcome, was a negative for emerging markets, it would tend to help bolster Japan, the bank noted.