Japan’s benchmark Nikkei 225 crashed after its 1989 peak, helping begin the country’s asset-price collapse.
The Nikkei 225 reached an intraday record of 38,957.44 on December 29, 1989. The peak followed years of rapid increases in Japanese share and land prices, supported by abundant credit and optimistic expectations. After the bubble ended, equity and property values fell for years.
The resulting period is often called Japan’s Lost Decade, although the economic stagnation and financial problems extended beyond a single ten-year period. Banks were left with bad loans, businesses reduced investment, and weak demand made recovery difficult. The stock-market decline was therefore part of a broader asset-price and banking crisis.
The Nikkei 225 is a price-weighted index of 225 leading companies listed on the Tokyo Stock Exchange. A common mix-up is treating the 1989 peak as the start of the crash itself; it was the high point from which the prolonged decline followed. Japan’s experience also differs from the 1987 global crash, which was much sharper over a short period.