Japan’s Nikkei 225 lost about 63% from its 1989 peak during the crash of the country’s asset bubble.
Japan experienced a major boom during the second half of the 1980s. Stock and land prices rose rapidly, helped by abundant credit, financial liberalization, and expectations that asset values would continue climbing. The Nikkei reached its record closing level of 38,915.87 on December 29, 1989.
The bubble then burst. The Nikkei fell for years, while property prices also declined and banks struggled with nonperforming loans. By August 1992, the index had lost roughly half its value from the peak; its decline continued into the following decade. Japan’s long period of weak growth and deflation became known as the Lost Decades.
The crash was not a single trading-day event like Black Tuesday. It was a prolonged unwinding of inflated asset prices, with banking and real-estate problems reinforcing one another.