Japan’s stock exchange suffered the 1989 crash associated with the country’s “lost decades.”
Japan’s Nikkei 225 reached an intraday record of 38,957.44 on December 29, 1989. The market then fell sharply as an enormous property and equity bubble deflated. Japanese banks had lent heavily against rising land values, and companies’ market valuations became exceptionally high compared with earnings.
The Nikkei’s decline was not a brief one-day event. It became a prolonged bear market accompanied by falling land prices, banking-sector distress, weak growth, and persistent deflationary pressure. The period after the bubble is commonly called Japan’s lost decade, although economic stagnation extended well beyond the 1990s.
The crash is sometimes confused with Japan’s 1987 Black Monday decline, but the 1989 peak marked the end of the larger asset bubble. The Nikkei did not return to its 1989 closing high until 2024, making the episode one of the longest recoveries in modern market history.