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Nikkei 225

From Wikipedia - Reading time: 15 min

Nikkei 225
Foundation7 September 1950; 74 years ago (1950-09-07)
OperatorNihon Keizai Shimbun
(The Nikkei)
(Nikkei, Inc.)
ExchangesTokyo Stock Exchange (TSE)
Constituents225
Weighting methodPrice-weighted index
Related indicesTokyo Stock Price Index (TOPIX)
Websiteindexes.Nikkei.co.jp
Nikkei 225 Index

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

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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

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

, then

  • 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, the company with the largest influence on the index is Fast Retailing (TYO: 9983), at about 10% weight.

Contract Specifications

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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

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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

Components

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  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]

Air transport

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Automotive

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Banking

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Chemicals

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Communications

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Construction

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Electric machinery

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Electric power

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Fishery

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Foods

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Gas

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Glass & ceramics

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Insurance

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Land transport

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Machinery

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Marine transport

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Mining

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Nonferrous metals

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Other financial services

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Other manufacturing

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Petroleum

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Pharmaceuticals

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Precision instruments

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Pulp & paper

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Railway/bus

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Real estate

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Retail

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Rubber

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Securities

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Services

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Shipbuilding

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Steel

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Textiles & apparel

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Trading companies

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Warehousing

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See also

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References

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  1. ^ "the Nikkei (index) definition, meaning – what is the Nikkei (index) in the British English Dictionary & Thesaurus". cambridge.org. Cambridge Dictionaries Online.
  2. ^ "Nikkei 225". Yahoo.com. Yahoo. Archived from the original on 12 December 2011.
  3. ^ "指数情報 － 日経平均プロフィル". indexes.nikkei.co.jp. Retrieved 23 April 2024.
  4. ^ "TOPIX". Japan Exchange Group. Retrieved 23 April 2024.
  5. ^ a b "FAQ (Nikkei Stock Average)" (PDF). Nikkei Inc. 4 April 2022. Retrieved 24 February 2024.
  6. ^ "The World's Wildest Market and 2 Television Milestones". The Motley Fool. 7 September 2013. Retrieved 24 February 2024.
  7. ^ Nikkei Net interactive Archived 22 December 2008 at the Wayback Machine
  8. ^ "Nikkei Futures | About". 7 January 2014.
  9. ^ "Finfacts: Irish business, finance news on economics". FinFacts.com. Archived from the original on 28 October 2019.[failed verification][unreliable source?]
  10. ^ "Japan Central Bank's ETF Shopping Spree Is Becoming a Worry". Bloomberg. 18 July 2017.
  11. ^ "Japan's Central Bank Is Distorting the Market, Bourse Chief Says". Bloomberg. 19 July 2017.
  12. ^ "Bank of Japan's $150 Billion ETF Binge Looks Likely to Slow Next Year". Bloomberg. 10 December 2017.
  13. ^ "BoJ Now A Top 10 Shareholder In 90% Of Nikkei 225". Barrons. 24 April 2017.
  14. ^ "What Happens When The Bank Of Japan Owns Everything?". Forbes. 27 April 2016.
  15. ^ "Nikkei index hits 30,000 for first time in three decades". The Nikkei. 15 February 2021. Archived from the original on 15 February 2021.
  16. ^ Hasegawa, Kyoko (22 February 2024). "Japan's Nikkei breaks bubble-era record". Yahoo News. AFP. Retrieved 24 February 2024.
  17. ^ "Japan's Nikkei Stock Average tops 40,000 for first time". Nikkei Asia. Retrieved 4 March 2024.
  18. ^ 日本放送協会 (5 August 2024). "【速報中】株価 下落幅過去最大 1987年ブラックマンデー翌日超 | NHK". NHKニュース. Retrieved 5 August 2024.
  19. ^ 日本放送協会 (6 August 2024). "日経平均株価 終値3217円04銭値上がり 過去最大の上昇幅 | NHK". NHKニュース. Retrieved 6 August 2024.
  20. ^ "Historical Nikkei 225 Intraday Futures Data (JNK)". PortaraCQG. Retrieved 28 October 2022.
  21. ^ "Finfacts: Irish business, finance news on economics". www.finfacts.com. Archived from the original on 28 October 2019. Retrieved 19 January 2020.
  22. ^ "Historical Data (Nikkei 225) - Nikkei Indexes". indexes.nikkei.co.jp. Retrieved 19 January 2020.
  23. ^ "NIKKEI 225 Index (Japan) Yearly Stock Returns". www.1stock1.com. Archived from the original on 17 July 2019. Retrieved 19 January 2020.
  24. ^ "Components:Nikkei Stock Average (Nikkei 225)". Nikkei Indexes. 13 October 2023.
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