Understanding the JPN 225: A Guide to the Nikkei Stock Average

JPN 225

The JPN 225 – also known as the Nikkei Stock Average, N225, JP225, Nikkei 225, or even simply the Nikkei – is a key benchmark equity index for the Japanese stock market. It tracks the performance of 225 of the largest listed companies on the Tokyo Stock Exchange.

In contrast to many other global equity benchmarks, but in keeping with the US 30, the JPN 225 is a price-weighted index, meaning that an individual constituent’s weighting in the index is directly proportional to its price; the higher a stock’s price, the greater its weight, and thus the more significant an impact it will have on the index as a whole. The JPN 225 is denominated in Japanese Yen (JPY) and serves as the underlying asset for various financial instruments, including futures contracts, CFDs (Contracts for Difference), and spread bets.

The index comprises 225 of the largest Japanese listed companies, having initially been calculated in September 1950, albeit with the index being retrospectively calculated back to 18 months prior to its launch. The JPN 225 is updated every five seconds during regular trading hours on the Tokyo Stock Exchange. Investors can monitor the index's performance and market conditions in real-time, making informed decisions based on their risk tolerance and investment goals.

The JPN 225 famously underwent a significant bubble in the late-1980s, with the index rallying more than fivefold over the course of the ‘80s, before losing over 80% of its value when measured to the intraday low printed during the GFC in 2008.

More recent performance for the index, on a total return basis, is shown below. Remember, past performance shouldn't be the sole factor in making investment decisions. It's crucial to conduct thorough research and consider your risk tolerance before investing in any financial market.

Furthermore, index weightings for the largest individual JPN 225 are as follows.