The Nikkei 225 plunged nearly 80% during Japan’s asset-price bubble collapse in the early 1990s.
The index reached an all-time closing high of 38,915.87 on December 29, 1989. Japanese share and land prices had surged during the second half of the 1980s, supported by easy credit, optimistic expectations, and extensive bank lending. The Bank of Japan then tightened policy, and asset prices began to reverse.
The Nikkei fell steeply through the early 1990s. It eventually reached a low near 7,054 in March 2009, representing a decline of roughly 82% from its 1989 peak. Japan’s prolonged economic stagnation became associated with the phrase “lost decades,” although the period included changing conditions rather than one uninterrupted collapse.
The Nikkei 225 is a price-weighted index of 225 major companies listed on the Tokyo Stock Exchange’s Prime Market. It is not the same as TOPIX, which uses a broader, capitalization-weighted approach and is another important Japanese benchmark.