The Nikkei 225 reached its pre-crash peak in 1989, before Japan’s asset-price bubble burst.
Japan’s asset-price bubble developed during the late 1980s as land and stock prices surged. Easy credit, optimistic expectations, and financial deregulation helped push valuations to extraordinary levels. On December 29, 1989, the Nikkei 225 closed at 38,915.87, its historical peak at that time.
The market then entered a prolonged decline as the Bank of Japan tightened policy and the bubble deflated. Falling asset values weakened banks and borrowers, while the broader economy experienced years of slow growth and deflation. The period is often called Japan’s “Lost Decades.”
The 1989 peak is not the same as the market’s eventual low. The Nikkei fell for years and reached a major low in 2009. The episode also involved property prices, so describing it only as a stock crash leaves out a central part of the financial bubble.