The Nikkei 225 reached its peak before Japan’s asset-price bubble collapsed at the start of the 1990s.
The index closed at 38,915.87 on December 29, 1989, its record closing level for decades. Japanese share and land prices had risen dramatically during the 1980s, supported by easy credit, optimism and expectations that asset values would continue climbing.
The Bank of Japan tightened monetary policy, and the bubble began to deflate. Falling share prices were followed by a prolonged decline in land values and serious problems for banks and companies that had lent against inflated collateral. Japan then experienced years of weak growth and financial restructuring, often called the “lost decades.”
The Nikkei 225 is a stock index of 225 prominent companies listed on the Tokyo Stock Exchange. It should not be confused with TOPIX, another major Japanese benchmark that covers a broader set of companies.