Japan’s stock market reached the Nikkei 225’s historic peak before the 1990s crash.
The Nikkei 225 reached 38,915.87 on December 29, 1989, after a long period of rising Japanese share and land prices. Easy credit, optimistic expectations, and rapid asset-price inflation had created what is known as Japan’s asset price bubble.
The bubble burst around the start of the 1990s. Equity and property prices fell sharply, damaging banks and corporate balance sheets. Japan then experienced prolonged economic stagnation, which led to the period’s nickname, the “Lost Decades.”
The 1989 peak has not been surpassed by the index in the decades immediately following it. The episode is a classic example of how a stock-market crash can be tied to a wider property and banking crisis.