The Nikkei 225 lost nearly 80% after Japan’s 1989 asset-price bubble burst.
The index reached its all-time closing high of 38,915.87 on December 29, 1989. Japan’s equity and property prices then entered a prolonged decline. The Nikkei fell to 7,054.98 on March 10, 2009, a drop of more than 80% from the 1989 closing peak.
The boom had been supported by easy credit, optimistic expectations, and rapidly rising land and share prices. When monetary policy tightened and the bubble deflated, banks were left with large amounts of bad debt. Weak lending and sluggish demand helped produce Japan’s long period of economic stagnation, often called the Lost Decades.
The Nikkei 225 is a price-weighted index of 225 major companies listed on the Tokyo Stock Exchange’s Prime Market. It is distinct from TOPIX, which uses a broader market-capitalization-based approach. The exact percentage depends on whether analysts use closing or intraday figures and which trough they select.