Japan’s stock bubble burst in 1989, beginning a prolonged market decline.
The Nikkei 225 reached an all-time closing high of 38,915.87 on December 29, 1989. The peak followed years of soaring land and share prices, easy credit, financial speculation, and strong economic optimism. When monetary policy tightened and asset valuations became unsustainable, prices turned downward.
The Nikkei’s fall was followed by a long period of weak growth, banking problems, deflation, and corporate deleveraging. Japan’s experience became associated with the phrase “lost decades,” although the timing and meaning of that term are debated by economists. The market did not simply return quickly to its previous high.
This episode is often called the bursting of Japan’s asset-price bubble rather than a single one-day crash. It differed from the 1987 global Black Monday because Japan’s adjustment was closely tied to domestic real-estate and credit excesses and continued over many years.