The Nikkei 225 reached its historic peak on December 29, 1989, before Japan’s stock-market crash.
The index closed at 38,915.87 as Japan’s asset-price bubble neared its end. Extremely high land and share prices, easy credit, optimistic expectations, and financial speculation had produced valuations that could not be sustained indefinitely.
After the peak, Japanese equities entered a long decline. The Nikkei fell below 15,000 by 1992 and remained far below its 1989 high for decades. The bursting of the stock and property bubbles contributed to stagnation, banking problems, and what became known as Japan’s “lost decades.”
The Nikkei 225 and TOPIX are both important Japanese indexes, but they are not interchangeable. The Nikkei is a price-weighted index of 225 companies, while TOPIX is capitalization-weighted and covers companies listed on the Tokyo Stock Exchange’s main market.