Japan experienced the Nikkei 225’s record peak before its asset-price bubble burst.
The Nikkei 225 reached an all-time closing high of 38,915.87 on December 29, 1989. The peak came after years of soaring Japanese share and land prices, easy credit, strong optimism, and extensive speculation. When the bubble began to deflate, Japanese equities entered a prolonged decline, helping produce what became known as Japan’s Lost Decades.
The Nikkei’s fall was not an isolated stock-market episode. Japanese banks had large exposures to property and corporate borrowers, while falling collateral values weakened the financial system. Economic growth slowed, nonperforming loans accumulated, and policy responses struggled to restore sustained momentum.
Japan is the country in the question because the Nikkei 225 is Japan’s benchmark share index. A common error is to identify the United States, whose 1987 crash occurred earlier, or China, whose major stock-market episodes happened much later. The Nikkei eventually exceeded its 1989 record decades afterward.