Japan’s Nikkei 225 reached its record high before the Japanese asset-price bubble burst on December 29, 1989.
The index closed at 38,915.87 at the end of 1989, after a spectacular rise in Japanese share and land prices. Easy credit, strong optimism, financial deregulation, and expectations of continuing economic growth helped inflate asset values. Real-estate prices in major cities also reached extraordinary levels.
The Bank of Japan tightened monetary policy, and the boom began to unwind. Japanese shares fell sharply during the early 1990s, while property values also declined. The resulting period of weak growth and financial stress is often called Japan’s Lost Decades.
The 1989 date identifies the Nikkei’s peak, not the single worst trading day of the collapse. The decline unfolded over years. The index remained far below its 1989 record for decades, which is why the Japanese bubble is a key example of how a stock-market crash can combine with a prolonged banking and property crisis.