NIKKEI

The Nikkei 225 is a stock market index that tracks the 225 most frequently traded equities on the Tokyo Stock Exchange (TSE). It is extensively used as a measure of the Japanese stock market and is frequently seen as a reflection of the country's economic health.

The index is computed using a price-weighted technique, in which each stock's price is multiplied by the number of outstanding shares. As a result, higher-priced stocks have a greater influence on the total index value.

The Nikkei 225 is also a capitalization-weighted index, which implies that each stock's weight is proportional to its market capitalisation. This indicates that larger firms have a greater impact on the total index value than smaller companies.

The Nikkei Dow Jones Stock Average, originally known as the Nihon Keizai Shimbun, is the oldest stock index in Asia, established in 1950 as part of Japan's industrialization after World War II. It ranks constituent stocks by share price, not market capitalization, and is denominated in Japanese yen. The index includes notable corporations such as Canon Incorporated, Sony Corporation, and Toyota Motor Corporation. The composition of the Nikkei is reviewed every September, with any necessary changes occurring in October.

Tokyo Stock Exchange TSE and the Nikkei Index 

The Tokyo Stock Exchange (TSE) was established in 1878 as a marketplace for exchanging government bonds, gold and silver currencies, and stock trading. It was combined with five other exchanges during World War II and reopened in 1949 under the Securities Exchange Act.

Japan experienced a major asset bubble in the late 1980s, with the TSE accounting for 60% of global stock market capitalization. The bubble burst in 1990, and the Nikkei Index fell by one-third that year. The index fell more than 80% from its 1989 high. Despite rebounding between 2012 and 2015, the index remains nearly 50% below its 1989 high.