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Nikkei 225 

Nikkei 225
Nikkei 225

Nikkei225 (日経平均株価 Nikkei heikin kabuka?, 日経225) is a stock market index for the Tokyo Stock Exchange (TSE). The Nikkei average is the most watched index of Asian stocks. It has been calculated daily by the Nihon Keizai Shimbun (Nikkei) newspaper since 1971. It is a price-weighted average (the unit is Yen), and the components are reviewed once a year.

The Nikkei 225 began to be calculated on September 7, 1950, retroactively calculated back to May 16, 1949.

The Nikkei 225 Futures, introduced at the Osaka Securities Exchange (OSE), Chicago Mercantile Exchange (CME), Singapore Exchange (SGX) , is now an internationally recognized futures index.

The Nikkei average hit its all-time high on December 29, 1989 when it reached an intra-day high of 38,957.44 before closing at 38,915.87. Its high for the 21st century stands just above 18,300 points.

Another major index for the Tokyo Stock Exchange is the Topix.

Contents

Weighting and modifications

Stocks are weighted on the Nikkei 225 by giving an equal weighting based on a par value of 50 yen per share. Events such as stock splits, removals and additions of constituents impact upon the effective weighting of individual stocks and the divisor. The Nikkei 225 is designed to reflect the overall market, so there is no specific weighting of industries.

Statistics

The Nikkei 225 stock average fell 3.3 percent to close at 12,433.4, its lowest close in 2-1/2 years on March 13, 2008, in the wake of Wall Street's retreat from its biggest rally since 2003, with regional investors worried by the continued slide in the United States dollar and ongoing troubles in the Economy of the United States. [1] The Nikkei 225 index sank 4.5 percent in early afternoon trading to 11,691.00 points, its lowest since July 2005, on March 17, 2008, after JPMorgan Chase told it would acquire troubled U.S. investment bank Bear Stearns, signaling to investors the depths of the Subprime mortgage crisis. [2] The Nikkei 225 closed up 176.65 points, or 1.5 percent, at 11,964.16 on March 18, 2008 as concerns persisted among investors about the health of the Economy of the United States. [3]

Changes to the components

Stocks are reviewed annually and announcements of review results are made in September. Changes, if required, are made at the beginning of October. Changes may also take place at any time if a stock is found to be ineligible for the Stock Average (e.g. delistings, etc.). All proposed changes will be announced in Nikkei's Japanese newspapers and will appear on NNI.

After a stock has been replaced, the divisor is reviewed and modified to ensure a smooth transition of the stock index.

Components

As of October 2006, the Nikkei 225 consists of the following companies: (Japanese securities identification code in parentheses)

Foods

Textiles & Apparel

Pulp & Paper

Chemicals

Pharmaceuticals

Oil & Coal Products

Rubber Products

Glass & Ceramics

Steel Products

Nonferrous Metals

Machinery

Electric Machinery

Shipbuilding

Automotive

Other Transport Equipment

Precision Instruments

Other Manufacturing

Fishery

Mining

Construction

Trading Companies

Retail

Banking

Securities

Insurance

Other Financial Services

Real Estate

Railway/Bus

Other Land Transport

Marine Transport

Air Transport

Warehousing

Communications

Electric Power

Gas

Services