Nikkei 225

The Nikkei 225, or the Nikkei Stock Average (Japanese: 日経平均株価, Hepburn: Nikkei heikin kabuka), more commonly called the Nikkei or the Nikkei index (/ˈnɪkeɪ, ˈniː-, nɪˈkeɪ/), is a stock market index for the Tokyo Stock Exchange (TSE). It is a price-weighted index, operating in the Japanese Yen (JP¥), and its components are reviewed twice a year. The Nikkei 225 measures the performance of 225 highly capitalised and liquid publicly owned companies in Japan from a wide array of industry sectors. Since 2017, the index is calculated every five seconds. It was originally launched by the Tokyo Stock Exchange in 1950, and was taken over by the Nihon Keizai Shimbun (The Nikkei) newspaper in 1970, when the Tokyo Exchange switched to the Tokyo Stock Price Index (TOPIX), which is weighed by market capitalisation rather than stock prices.

The Nikkei 225 began to be calculated on September 7, 1950, retroactively calculated back to May 16, 1949 when the average price of its component stocks was ¥176.21 (equivalent to ¥1,427 in 2019) using a divisor of 225. Since July 2017, the index is updated every 5 seconds during trading sessions.

The Nikkei 225 Futures, introduced at Singapore Exchange (SGX) in 1986, the Osaka Securities Exchange (OSE) in 1988, Chicago Mercantile Exchange (CME) in 1990, is now an internationally recognized futures index.

The Nikkei average has deviated sharply from the textbook model of stock averages, which grow at a steady exponential rate. During the Japanese asset price bubble, the average hit its bubble-era record high on December 29th, 1989, when it reached an intraday high of 38,957.44, before closing at 38,915.87, having grown sixfold during the decade. Subsequently, it lost nearly all these gains, reaching a post-bubble intraday low of 6,994.90 on October 28th, 2008 — 82% below its peak nearly 19 years earlier. The 1989 record high held for 34 years, until it was surpassed in 2024 (see below).

On March 15th, 2011, the second working day after the massive earthquake in the northeast part of Japan, the index dropped over 10% to finish at 8,605.15, a loss of 1,015 points. The index continued to drop throughout 2011, bottoming out at 8,160.01 on November 25th, putting it at its lowest close since March 31st, 2009. The Nikkei fell over 17% in 2011, finishing the year at 8,455.35, its lowest year-end closing value in nearly thirty years, when the index finished at 8,016.70 in 1982.

The Nikkei started 2013 near 10,600, hitting a peak of 15,942 in May. However, shortly afterward, it plunged by almost 10% before rebounding, making it the most volatile stock market index among the developed markets. By 2015, it had reached over 20,000 mark, marking a gain of over 10,000 in two years, making it one of the fastest growing stock market indices in the world. However, by 2018, the index growth was more moderate at around the 22,000 mark.^{[citation needed]}

There was concern that the rise since 2013 was artificial and due to purchases by the Bank of Japan ("BOJ"). From a start in 2013, by end 2017, the BOJ owned circa 75% of all Japanese Exchange Traded Funds ("ETFs"), and were a top 10 shareholder of 90% of the Nikkei 225 constituents.

On February 15th, 2021, the Nikkei average breached the 30,000 benchmark, its highest level in 30 years, due to the levels of monetary stimulus and asset purchase programs executed by the Bank of Japan to mitigate the financial effects of the COVID-19 pandemic.