Japan’s Nikkei 225 reached its pre-crash record high on December 29, 1989. The index closed at 38,915.87, near the end of Japan’s enormous asset-price bubble in stocks and real estate.
During the late 1980s, easy credit and optimistic expectations drove Japanese land and share prices to extraordinary levels. The Bank of Japan then tightened monetary policy, and asset prices began falling. The Nikkei lost much of its value during the 1990s, while banks struggled with bad loans secured against declining property.
The collapse is often called the bursting of Japan’s asset-price bubble. It is also associated with Japan’s “Lost Decades,” although economic stagnation had several causes and did not follow from the stock-market fall alone. The Nikkei later recovered substantially but remained below its 1989 peak for decades.