Japan’s stock-market crash began the long collapse of the country’s asset-price bubble in the early 1990s.
Japan’s Nikkei 225 reached an intraday high of 38,957.44 on December 29, 1989. It then fell sharply as property and share valuations unwound. By October 1990, the index had lost roughly half its value from the peak, and the broader downturn continued for years.
The bubble had been fueled by rapid credit growth, rising land prices, and high valuations in Japanese equities. Monetary tightening and efforts to restrain speculation contributed to the reversal. Falling asset prices weakened banks and companies, producing a prolonged period of slow growth and financial repair often called Japan’s “Lost Decade,” although stagnation extended beyond the 1990s.
This episode is sometimes confused with the Asian financial crisis of 1997, which began later and affected economies across the region. Japan’s crash preceded that crisis and was rooted primarily in the bursting of its domestic stock and property bubble.