Japan’s 1989 speculative bubble burst after the Nikkei 225 reached its historic peak.
The Japanese asset price bubble developed during the second half of the 1980s. Rapid credit growth, rising land values and strong share prices created expectations that Japanese assets would continue appreciating. The Nikkei 225 reached an intraday record of 38,957.44 on December 29, 1989.
The bubble then deflated. Japanese stock prices fell sharply, while commercial land prices also declined over a much longer period. The resulting economic stagnation is associated with Japan’s “Lost Decades,” although the exact causes and duration of that period are discussed by economists.
The crash is often described as a Nikkei collapse, but it was not only a stock-market event. Real estate, banks and corporate balance sheets were also deeply affected. Japan is the country involved; the Nikkei 225 is the stock index that recorded the famous peak.