Japan experienced the Nikkei’s historic collapse after its late-1980s asset bubble burst.
Japan’s asset-price bubble involved rapidly rising stock and land prices, easy credit, and optimistic expectations. The Nikkei 225 reached an all-time intraday high of 38,957.44 on December 29, 1989. It then entered a prolonged decline as monetary conditions tightened and the bubble deflated.
The collapse was followed by years of weak growth, falling prices, bank problems, and corporate deleveraging. Japan’s long stagnation is often called the “Lost Decades,” although the exact period covered by that phrase varies among commentators.
The episode was not a single one-day crash like Black Monday. It was a long unwinding of an enormous asset boom. A frequent mistake is to say the Nikkei immediately returned to its 1989 peak; it remained below that level for decades and only exceeded it in 2024.