The Nikkei 225 reached its record closing high on December 29, 1989, before Japan’s prolonged stock-market crash.
The index closed at 38,915.87 at the end of 1989, after years of rapidly rising Japanese property and share prices. The boom was associated with easy credit, strong corporate optimism, and speculation. When monetary policy tightened and asset prices turned downward, the market entered a long decline.
The bursting of Japan’s asset bubble affected banks, companies, households, and government finances. Japan then experienced a period often called the Lost Decades, marked by weak growth, falling prices or inflation below target, and persistent banking problems. The Nikkei did not return to its 1989 closing high for many years.
The Nikkei 225 is a price-weighted index of 225 major companies listed on the Tokyo Stock Exchange. It is not the same as TOPIX, which uses a different construction and covers a broader section of the market.