The Nikkei 225 reached its historic peak on December 29, 1989, before Japan’s long market decline.
The index closed at 38,915.87 at the end of a spectacular asset-price boom. Japanese property and equity prices had surged during the 1980s, supported by easy credit, strong optimism, and expectations of continuing economic growth. The boom produced valuations that later proved unsustainable.
After the peak, Japanese shares fell for years as the bubble burst, banks accumulated bad loans, and economic growth weakened. The Nikkei’s decline became a central feature of Japan’s “lost decades,” although the country’s economic challenges had several causes beyond the stock market.
The Nikkei 225 tracks 225 companies listed on the Tokyo Stock Exchange. It is a price-weighted index, meaning high-priced constituent shares have a greater direct influence than they would in a market-capitalization-weighted index.