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

Pepperstone
Market Analyst
Apr 11, 2024
Unlike many other global indexes, the Nikkei is price-weighted, meaning that companies with higher stock prices have a greater influence on the index value. Let’s explore the JPN 225, including its history, composition, and unique characteristics.

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.

Preview

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

StockWeighting as of 27/02/2024
TOKYO ELECTRON LTD. Stock Tokyo Electron Ltd.7.50%
ADVANTEST CORPORATION Stock Advantest Corporation3.81%
SOFTBANK GROUP CORP. Stock SoftBank Group Corp.3.75%
SHIN-ETSU CHEMICAL CO., LTD. Stock Shin-Etsu Chemical Co., Ltd.2.94%
DAIKIN INDUSTRIES, LTD. Stock Daikin Industries, Ltd.2.29%
FANUC CORPORATION Stock Fanuc Corporation2.06%
TDK CORPORATION Stock TDK Corporation2.00%
RECRUIT HOLDINGS CO., LTD Stock Recruit Holdings Co., Ltd1.77%
KYOCERA CORPORATION Stock Kyocera Corporation1.63%
CHUGAI PHARMACEUTICAL CO., LTD Stock Chugai Pharmaceutical Co., Ltd1.59%
LASERTEC CORPORATION Stock Lasertec Corporation1.47%
SONY GROUP CORPORATION Stock Sony Group Corporation1.34%
TOYOTA MOTOR CORPORATION Stock Toyota Motor Corporation1.29%
DAIICHI SANKYO CO., LTD. Stock Daiichi Sankyo Co., Ltd.1.15%
NITTO DENKO CORPORATION Stock Nitto Denko Corporation1.05%
SECOM CO., LTD. Stock Secom Co., Ltd.1.00%
NTT DATA CORPORATION Stock NTT Data Corporation0.99%
HOYA CORPORATION Stock Hoya Corporation0.88%
HONDA MOTOR CO., LTD. Stock Honda Motor Co., Ltd.0.87%
KIKKOMAN CORPORATION Stock Kikkoman Corporation0.86%
DENSO CORPORATION Stock Denso Corporation0.84%
BANDAI NAMCO HOLDINGS INC. Stock BANDAI NAMCO Holdings Inc.0.84%
ASTELLAS PHARMA INC. Stock Astellas Pharma Inc.0.84%
FUJIFILM HOLDINGS CORPORATION Stock Fujifilm Holdings Corporation0.84%
TOYOTA TSUSHO CORPORATION Stock Toyota Tsusho Corporation0.83%
OLYMPUS CORPORATION Stock Olympus Corporation0.81%
TREND MICRO INC. Stock Trend Micro Inc.0.75%
NINTENDO CO., LTD. Stock Nintendo Co., Ltd.0.73%
SMC CORPORATION Stock SMC Corporation0.72%
MURATA MANUFACTURING CO., LTD Stock Murata Manufacturing Co., Ltd0.71%

The material provided here has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Whilst it is not subject to any prohibition on dealing ahead of the dissemination of investment research we will not seek to take any advantage before providing it to our clients.

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