Trading Nikkei 225 on Capital.com

The Nikkei 225 is Japan’s leading stock index (also known as JP225 or N225) that measures the performance of the most liquid 225 stocks listed on the Tokyo Stock Exchange (TSE ). It is a price-weighted index composed of major Japanese excellent companies. This index is considered to be the Japanese index equivalent to the Dow Jones Industrial Average on the US stock market. In fact, from 1975 to 1985 “Nikkei Dautaira was known as the average stock price”.

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What is the Nikkei 225?

The Nikkei 225 is the oldest stock index in Asia and is named after the economic newspaper “Nikkei”, which has been in charge of calculating the index since 1950.

N225 is a price-weighted index whose value represents the average stock price of the constituent companies.

Also, the selection requirements and rankings for this index are based on stock prices, not market capitalization.

Therefore, only companies with high stock prices are included in the Nikkei 225, and the Nikkei 225 tends to be most affected by the top stocks.

The main criteria for becoming a constituent of the Nikkei 225 are stock prices, the balance of the sectors to which they belong, and the liquidity of companies. It is also a condition that it is listed on the first section of the Tokyo Stock Exchange. The Nikkei 225 is reviewed every September for its constituent stocks, and the changes will be applied in October.

The Nikkei 225 is made up of companies from 33 different sectors, including technology, finance, consumer goods and services. As of August 2021, well-known multinational companies such as Sony, Toyota, and Canon stand out among the companies that make up the index. In addition, there are variations of the Nikkei 225 such as Nikkei 225, Nikkei 500, and Nikkei Stock Average 300. However, the most widely used indicator is still the Nikkei 225.

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History of Nikkei 225

In 1943, the Government of Japan merged the Tokyo Stock Exchange with five other exchanges to form a single Japan Securities Exchange.

However, in August 1945, the exchange was closed due to the effects of World War II.

The Tokyo Stock Exchange was reopened on May 16, 1949, and on September 7, 1950, the Nikkei Stock Average was first published by the Nikkei Stock Average, one of the world’s largest financial newspapers, as part of postwar reconstruction and industrialization. Was introduced.

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Nikkei 225 Performance

Unlike other exponentially growing indices, the Nikkei average hit a record high of 38,957.44 on December 29, 1989. The Nikkei average grew six-fold in the 1980s and peaked during Japan’s large-scale asset bubble. During this bubble period, the Japanese yen rose 50% in the first half of 2010, and stock prices and land prices tripled between 1985 and 1989.

The bubble burst in the 1990s, and the Nikkei Stock Average lost most of its rise. On March 10, 2009, the Nikkei Stock Average fell 81.9% from its all-time high and closed at 7,054.98. Two days after the catastrophic earthquake that struck Japan on March 15, 2011, the Nikkei average fell by more than 10% to 8,605.15, a record drop of 1,015 points. After that, the Nikkei Stock Average continued to decline, dropping to 8,160.01 on November 25, and finally reaching 8,455.35, the lowest price at the end of the year for the first time in more than 30 years.

From 2012 to 2015, the index rebounded. With a rise of about 20%, surpassing the 20,000 mark, it has become one of the fastest growing stock market indices in the world. On February 15, 2021, boosted by financial stimulus and asset purchase programs to combat the financial impact of the coronavirus, the Nikkei 225 surpassed the 30,000 standard and reached its highest level in 30 years.

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