Japan’s Nikkei 225 crash marked the bursting of the country’s late-1980s asset-price bubble.
Japanese share and property prices rose dramatically during the second half of the 1980s. The Nikkei 225 reached an intraday peak of 38,957.44 on 29 December 1989. It then fell sharply as the Bank of Japan tightened monetary policy and credit conditions changed. Land prices also declined, damaging banks, companies, and households that had borrowed against inflated asset values.
The bubble’s collapse led to a prolonged period of weak growth, falling prices, banking problems, and corporate restructuring. Japan’s economy did not simply experience a brief stock-market correction; the financial shock contributed to what became known as the Lost Decades. The Nikkei eventually fell far below its 1989 peak.
A common mix-up is to call the episode only a stock-market crash. The crash was part of a wider asset-price collapse involving both equities and real estate, and its effects extended well beyond the exchange in Tokyo.