The Nikkei 225 reached its pre-crash peak of nearly 39,000 on December 29, 1989. Japan’s benchmark share index then entered a prolonged decline after the country’s late-1980s asset-price bubble burst.
The Nikkei’s record closing level was 38,915.87. During the 1980s, Japanese share and land prices rose dramatically amid easy credit, strong optimism, and speculative investment. The Bank of Japan tightened monetary policy, and asset prices began falling around the start of the 1990s.
The downturn damaged banks and companies because many loans had been secured by inflated land and share values. Japan experienced weak growth, falling prices, and financial-sector problems for years. The period is often called Japan’s “lost decade,” although the economic weakness and banking difficulties extended beyond a single ten-year span.
The Nikkei 225 is a price-weighted index of 225 leading companies listed on the Tokyo Stock Exchange’s Prime Market. It is not the same as TOPIX, which uses a broader capitalization-weighted approach, so the two Japanese benchmarks can produce different results.