The Nikkei 225 reached its historic peak on 29 December 1989 before Japan’s asset bubble burst.
The index closed at 38,915.87 on that date, after a spectacular rise in Japanese share and property prices during the 1980s. The boom was supported by easy credit, financial speculation, and high confidence in Japan’s economic prospects. The Bank of Japan then tightened monetary policy, helping bring the boom to an end.
Japanese equities fell dramatically during the following years, while property prices also declined. This prolonged collapse is closely associated with Japan’s “Lost Decades,” a period of weak growth, deflationary pressure, and financial-sector problems.
The Nikkei 225 is a price-weighted index of 225 prominent companies listed on the Tokyo Stock Exchange. It is often confused with TOPIX, which uses a different construction and covers a broader group of Tokyo-listed shares.