Japan’s stock-market crash began after its property and asset bubble burst in 1989.
Japan’s Nikkei 225 reached an all-time intraday high of 38,957.44 on December 29, 1989. The bubble had been fueled by abundant credit, rising land prices, and spectacular valuations for shares and real estate. After monetary policy tightened and the speculative boom ended, both stock and property prices fell.
The Nikkei’s decline became part of Japan’s prolonged economic stagnation, often called the Lost Decades. Banks carried large amounts of troubled loans, businesses reduced investment, and deflationary pressure persisted. The stock market did not return to its 1989 peak for decades.
This crash is sometimes described as a single event, but it was actually a long unwinding of financial and property excesses. Japan’s experience also differs from the 1997 Asian crisis, which began with pressure on Thailand’s baht.