Japan’s Nikkei 225 symbolized the bursting of its late-1980s asset bubble.
The Japanese asset-price bubble reached its stock-market peak when the Nikkei 225 closed at 38,915.87 on December 29, 1989. The index then entered a long decline as inflated stock and property prices collapsed. Japan’s experience became known as the “Lost Decades” because weak growth, financial problems, and deflation persisted for many years.
Easy credit, speculative investment, and rising land and share prices had fueled the bubble. Banks were heavily exposed to property and corporate borrowers, so falling collateral values weakened the financial system. The consequences were more prolonged than a single dramatic trading day.
The Nikkei’s 1989 record was not surpassed until 2024. That long interval is one reason the Japanese crash is frequently cited as an example of how asset bubbles can damage an economy long after prices stop falling. The episode is separate from the 1997 Asian financial crisis, although both affected Asian markets.