Japan’s Nikkei 225 began a prolonged collapse after reaching its record closing high on December 29, 1989.
The Nikkei 225 closed at 38,915.87 on December 29, 1989, after a spectacular rise in Japanese share and land prices. The bubble had been supported by credit expansion, optimistic expectations, and asset valuations that became detached from underlying earnings and rents.
Prices then fell sharply during the 1990s. Japan’s banking system accumulated bad loans, businesses reduced investment, and weak demand helped produce years of low growth and deflation. The phrase “Lost Decade” is often used for the 1990s, although economic weakness and financial repair extended beyond that decade. The 1989 peak was not the final low: the Nikkei later fell below 8,000 in 2003.