en Nikkei 225

Nikkei 225
Foundation	7 September 1950; 74 years ago
Operator	Nihon Keizai Shimbun; (The Nikkei); (Nikkei, Inc.)
Exchanges	Tokyo Stock Exchange (TSE)
Constituents	225
Weighting method	Price-weighted index
Related indices	Tokyo Stock Price Index (TOPIX)
Website	indexes.Nikkei.co.jp

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^[1]^[2] (/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.^[3] 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.^[4]

History

The Nikkei 225 began to be calculated on 7 September 1950, retroactively calculated back to 16 May 1949, when the average price of its component stocks was 176.21 yen.^[5]^[6] Since July 2017, the index is updated every 5 seconds during trading sessions.^[5]

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.^[7]

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 29 December 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 28 October 2008 — 82% below its peak nearly 19 years earlier.^[8] The 1989 record high held for 34 years, until it was surpassed in 2024 (see below).

On 15 March 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 25 November, putting it at its lowest close since 31 March 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.^[9]

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").^[10]^[11] From a start in 2013, by end 2017, the BOJ owned circa 75%^[12] of all Japanese Exchange Traded Funds ("ETFs"), and were a top 10 shareholder of 90% of the Nikkei 225 constituents.^[13]^[14]

On 15 February 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.^[15]

On 22 February 2024, the Nikkei reached an intraday high of 39,156.97 and closed at 39,098.68, finally surpassing its 1989 record high, an important milestone since the Japanese asset price bubble.^[16] On 4 March 2024, the index surpassed 40,000 (intraday and closing) for the first time in history.^[17]

On 5 August 2024, amid a global stock market decline, the Nikkei dropped by more than 4,200 points, surpassing 1987's Black Monday as its biggest single-day drop in history.^[18] The following day, it bounced back by more than 3,200 points, the largest single-day gain in history.^[19]

Weighting

The index is a price-weighted index. The index is calculated as follows:

$AdjPrice=Price\times AdjFactor$ , then ${\frac {\sum AdjPrice}{Divisor}}$

Price is the stock price of a component.
AdjFactor is the price adjustment factor.
AdjPrice is the adjusted price of the stock after multiplying by the adjustment factor.
Divisor is the index divisor.

As of July 2024^[update], the company with the largest influence on the index is Fast Retailing (TYO: 9983), at about 10% weight.

Contract Specifications

The Nikkei 225 is traded as a future on the Osaka exchange (OSE). The contract specifications for the Nikkei 225 (OSE ticker symbol JNK) are listed below:

Contract Specifications^[20]
Nikkei 225 (JNK)
Contract Size:	Nikkei 225 Index X Y1,000
Exchange:	OSE
Sector:	Index
Tick Size:	10
Tick Value:	10000 JPY
Big Point Value (BPV):	1000
Denomination:	JPY
Decimal Place:	0

Annual returns

The following table shows the annual development of the Nikkei 225, which was calculated back to 1914.^[21]^[22]^[23]

Year	Closing level	Change in Index in Points	Change in Index in %
1914	21.12
1915	32.10	10.98	51.99
1916	41.61	9.51	29.63
1917	41.40	−0.21	−0.50
1918	42.21	0.81	1.96
1919	53.63	11.42	27.06
1920	27.44	−26.19	−48.83
1921	28.88	1.44	5.25
1922	23.97	−4.91	−17.00
1923	22.83	−1.14	−4.76
1924	24.45	1.62	7.10
1925	27.96	3.51	14.36
1926	27.25	−0.71	−2.54
1927	25.82	−1.43	−5.25
1928	25.65	−0.17	−0.66
1929	21.32	−4.33	−16.88
1930	16.82	−4.50	−21.11
1931	16.28	−0.54	−3.21
1932	30.33	14.05	86.30
1933	34.12	3.79	12.50
1934	32.30	−1.82	−5.33
1935	33.76	1.46	4.52
1936	35.94	2.18	6.46
1937	37.33	1.39	3.87
1938	33.66	−3.67	−9.83
1939	44.96	11.30	33.57
1940	37.42	−7.54	−16.77
1941	42.44	5.02	13.42
1942	42.71	0.27	0.64
1943	42.11	−0.60	−1.40
1944	41.82	−0.29	−0.69
1945	40.53	−1.29	−3.08
1946	28.72	−11.81	−29.14
1947	39.31	10.59	36.87
1948	72.84	33.53	85.30
1949	109.91	37.07	50.89
1950	101.91	−8.00	−7.28
1951	166.06	64.15	62.95
1952	362.64	196.58	118.38
1953	377.95	15.31	4.22
1954	356.09	−21.86	−5.78
1955	425.69	69.60	19.55
1956	549.14	123.45	29.00
1957	474.55	−74.59	−13.58
1958	666.54	191.99	40.46
1959	874.88	208.34	31.26
1960	1,356.71	481.83	55.07
1961	1,432.60	75.89	5.59
1962	1,420.43	−12.17	−0.85
1963	1,225.10	−195.33	−13.75
1964	1,216.55	−8.55	−0.70
1965	1,417.83	201.28	16.55
1966	1,452.10	34.27	2.42
1967	1,283.47	−168.63	−11.61
1968	1,714.89	431.42	33.61
1969	2,358.96	644.07	37.56
1970	1,987.14	−371.82	−15.76
1971	2,713.74	726.60	36.57
1972	5,207.94	2,494.20	91.91
1973	4,306.80	−901.14	−17.30
1974	3,817.22	−489.58	−11.37
1975	4,358.60	541.38	14.18
1976	4,990.85	632.25	14.51
1977	4,865.60	−125.25	−2.51
1978	6,001.85	1,136.25	23.35
1979	6,569.47	567.62	9.46
1980	7,116.38	546.91	8.33
1981	7,681.84	565.46	7.95
1982	8,016.67	334.83	4.36
1983	9,893.82	1,877.15	23.42
1984	11,542.60	1,648.78	16.66
1985	13,113.32	1,570.72	13.61
1986	18,701.30	5,587.98	42.61
1987	21,564.00	2,862.70	15.31
1988	30,159.00	8,595.00	39.86
1989	38,915.87	8,756.87	29.04
1990	23,848.71	−15,067.16	−38.72
1991	22,983.77	−864.94	−3.63
1992	16,924.95	−6,058.82	−26.36
1993	17,417.24	492.29	2.91
1994	19,723.06	2,305.82	13.24
1995	19,868.15	145.09	0.74
1996	19,361.35	−506.80	−2.55
1997	15,258.74	−4,102.61	−21.19
1998	13,842.17	−1.416,57	−9.28
1999	18,934.34	5,092.17	36.79
2000	13,785.69	−5,148.65	−27.19
2001	10,542.62	−3,243.07	−23.52
2002	8,578.95	−1,963.67	−18.63
2003	10,676.64	2,097.69	24.45
2004	11,488.76	812.12	7.61
2005	16,111.43	4,622.67	40.24
2006	17,225.83	1,114.40	6.92
2007	15,307.78	−1,918.05	−11.13
2008	8,859.56	−6,448.22	−42.12
2009	10,546.44	1,686.88	19.04
2010	10,228.92	−317.52	−3.01
2011	8,455.35	−1,773.57	−17.24
2012	10,395.18	1,939.83	22.94
2013	16,291.31	5,896.13	56.72
2014	17,450.77	1,159.46	7.12
2015	19,033.71	1,582.94	9.07
2016	19,114.40	80.69	0.42
2017	22,764.94	3,650.54	19.10
2018	20,014.77	−2,750.17	−12.08
2019	23,656.62	3,641.85	18.20
2020	27,444.17	3,787.55	16.01
2021	28,791.71	1,347.54	4.68
2022	26,094.50	−2,697.21	−9.37
2023	33,464.17	7,369.67	28.24
2024	39,894.54	6,430.37	19.21

Components

Energy (0.3%)

Materials (7%)

Industrials (18%)

Consumer discretionary (21%)

Consumer staples (5%)

Healthcare (10%)

Financials (3%)

Information technology (24%)

Communication services (9.5%)

Utilities (0.2%)

Real estate (2%)

The GICS breakdown is shown here.

As of October 2023, the Nikkei 225 consists of the following companies (Japanese securities identification code in parentheses):^[24] Bold indicates the top ten by market capitalisation.