Japan’s stock-market bubble burst after the Nikkei 225 reached its historic peak at the end of 1989.
The Japanese asset-price bubble developed during the second half of the 1980s. Easy credit, optimistic expectations, and rapidly rising land and share prices encouraged investors to believe that asset values would continue climbing. Japanese companies and financial institutions became deeply exposed to inflated property and equity prices.
The Nikkei 225 reached an intraday high of 38,957.44 on 29 December 1989. Prices then reversed. The decline continued through the early 1990s as banks faced bad loans, property values fell, and companies reduced investment. Japan entered a prolonged period often called the Lost Decades.
The crash was not simply a one-day event. It was a long unwinding of excessive valuations across stocks and real estate. The Nikkei’s 1989 peak remained far above later market levels for many years, making the episode a major case study in asset bubbles and financial-sector weakness.