Japan's Nikkei 225 began its historic collapse after reaching a record closing high on December 29, 1989. The fall marked the bursting of Japan's asset-price bubble.
During the late 1980s, Japanese property and share prices rose to extraordinary levels. Easy credit, financial optimism and expectations of continued growth encouraged speculation. The Nikkei reached 38,915.87 at the end of 1989.
The index then lost much of its value as monetary policy tightened and asset prices reversed. Japan entered a long period of weak growth, falling prices and financial stress commonly called the Lost Decades. Banks were left with large volumes of bad loans backed by declining real estate.
The Nikkei eventually fell below 8,000 in 2003. The 1989 peak is often compared with later bubbles, but Japan's experience was especially prolonged because banking problems and deflation persisted for years.