The Nikkei 225 reached its record high just before Japan’s 1989–1990 market crash.
The Nikkei 225 closed at 38,915.87 on December 29, 1989, its historical closing peak at the height of Japan’s asset-price bubble. The index then fell dramatically as inflated land and share valuations unraveled. Japan’s market weakness became a defining feature of the country’s long economic stagnation in the 1990s.
The bubble had been supported by easy credit, rising property prices, strong optimism, and expectations that Japanese companies and land would continue gaining value. When the Bank of Japan tightened monetary policy and credit conditions changed, asset prices began to reverse. Falling collateral values weakened banks and borrowers alike.
The Nikkei 225 is a price-weighted index of 225 major companies listed on the Tokyo Stock Exchange’s Prime Market. It is often confused with TOPIX, which is a broader capitalization-weighted index. The Nikkei’s 1989 peak remains a landmark date in the history of modern stock-market bubbles.