The Nikkei 225 reached its peak in December 1989 before Japan’s early-1990s asset-price crash.
The index closed at 38,915.87 on December 29, 1989, after a spectacular rise in Japanese share and land prices. The boom was supported by abundant credit, optimistic expectations, and rapidly increasing asset valuations. Prices had become detached from many underlying economic measures.
The Bank of Japan tightened monetary policy, and the bubble began to deflate. Japanese stocks fell sharply in 1990, while property values also declined over subsequent years. The resulting period of weak growth and financial stress became associated with Japan’s “Lost Decades.”
The Nikkei 225 is a price-weighted index of 225 major companies listed on the Tokyo Stock Exchange. It is often confused with the broader TOPIX index, which uses a different construction and covers a wider range of Tokyo-listed shares.