Japan’s stock-market bubble burst after the Nikkei 225 reached its record closing level in 1989. The index closed at 38,915.87 on December 29, 1989.
The rise was part of a broader Japanese asset-price bubble involving stocks, land, and commercial property. Easy credit, optimistic expectations, and rapidly increasing asset values encouraged speculation. When monetary policy tightened and prices began falling, the financial system faced mounting pressure.
The Nikkei’s decline continued for years rather than ending in a single trading session. Japan entered a prolonged period of weak growth, banking problems, falling asset prices, and deflationary pressure often called the “lost decades.” The index did not immediately return to its 1989 peak.
The 1989 peak is sometimes described as a crash date, but the more precise description is the bursting of Japan’s asset bubble and the long bear market that followed. This differs from a one-day collapse such as Black Monday in 1987.