The Nikkei 225 reached its record closing high on December 29, 1989, just before Japan’s asset-price bubble burst.
The index closed at 38,915.87 that day. During the late 1980s, Japanese share and land prices rose dramatically, supported by easy credit, strong optimism, and speculative investment. The Bank of Japan then tightened monetary policy, and asset prices began to fall. The decline became part of Japan’s “Lost Decades,” a long period marked by weak growth, deflationary pressure, and banking problems.
The Nikkei 225 is a price-weighted index of 225 major companies listed on the Tokyo Stock Exchange’s Prime Market. Because it is price-weighted, a high-priced share has more influence than a lower-priced share, regardless of each company’s total market value. The TOPIX is a different Japanese benchmark and is capitalization-weighted. The Nikkei’s 1989 peak was not surpassed until 2024, making the episode one of the longest recoveries associated with a major stock-market bubble.