Stock Exchange

Nikkei is the abbreviated form for the Nikkei 225 Stock Average, which is one of the most respected and leading indices of stocks in Japan. It is an index that is “price-weighted in nature and comprises the top 225 stocks of blue-chip companies in Japan that are traded on the Stock Exchange located in Tokyo. You can, in simple words, state that the Nikkei is like the Dow Jones Industrial Average Index of the USA. 

Kavan Choksi provides an overview of the Nikkei

Leading business and finance expert in Japan, Kavan Choksistates that the Nikkei was in the past called the Nikkei Dow Jones Stock Average. It derives its current name from the “Nihon Keizai Shimbun” that sponsors the index circulation. 

The Index has been calculated from 1950 in September and has been retroactive to 1949 in May. The best-known organizations that are present in the Nikkei Index are Toyota Motor Corporation, Sony Corporation, and Canon Incorporated. In Asia, it is the oldest stock index for traders in the financial markets. 

How was the Nikkei established?

The Nikkei was created as a component of the industrialization and rebuilding of Japan after World War II destroyed it completed. The stocks that are present in the Index are ranked by the prices of their share over market capitalization generally found in other popular indexes. The dominations of these stocks are in the Japanese Yen or JPY. The composition of the Index is evaluated every September, and in case any change has to be made, it is generally made in October. 

The Tokyo Stock Exchange and an insight into its history

The Tokyo Stock Exchange, also known as the TSE short, was created in 1878. In its early days, it was made as a marketplace for exchanging bonds that the Government issued to samurai; besides the exchange of these bonds, the Tokyo Stock Exchange also served as an exchange for silver and gold currencies. By 1920, it went on to include trading in stocks. 

The impact of World War II on the Stock Exchange in Japan

During the Second World War, in 1973, the Government of Japan combined the Tokyo Stock Exchange with five others to create the Japanese Stock Exchange. In April 1945, the Japanese Stock Exchange had to be closed down towards the end of the war. On the 16th of May 1949, the Tokyo Stock Exchange opened again under the purview of the Securities Exchange Act in Japan. 

Business and finance expert Kavan Choksi adds that in the later phase of the 1980s, Japan witnessed a critical asset bubble when its Government deployed monetary and fiscal stimuli to combat a recession due to the 50% appreciation of the Yen during the first years of the decade. The value of land and the prices of stocks tripled from 1985 to 1989, and at the height of this asset bubble, the Tokyo Stock Exchange accounted for 60% of market capitalization in the stock market

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