Nikkei 225

Linear graph of the Nikkei 225

Linear graph of the Nikkei 225 (USD)

Logarithmic graph of the Nikkei 225 from 1914 to 2012

Trading volume of TSE 1st section from January 1972 (monthly average, end of month)

The Nikkei 225 (日経平均株価, Nikkei heikin kabuka^?, 日経225), more commonly called the Nikkei, the Nikkei index, or the Nikkei Stock Average^[1]^[2] (/ˈnɪkeɪ/, /ˈniːkeɪ/, or /nɪˈkeɪ/), is a stock market index for the Tokyo Stock Exchange (TSE). It has been calculated daily by the Nihon Keizai Shimbun (Nikkei) newspaper since 1950. It is a price-weighted index (the unit is yen), and the components are reviewed once a year. Currently, the Nikkei is the most widely quoted average of Japanese equities, similar to the Dow Jones Industrial Average. In fact, it was known as the "Nikkei Dow Jones Stock Average" from 1975 to 1985.^[3]

The Nikkei 225 began to be calculated on September 7, 1950, retroactively calculated back to May 16, 1949. Since January 2010 the index is updated every 15 seconds during trading sessions.

The Nikkei 225 Futures, introduced at Singapore Exchange (SGX) in 1986, the Osaka Securities Exchange (OSE) in 1988, Chicago Mercantile Exchange (CME) in 1990, is now an internationally recognized futures index.^[4]

The Nikkei average has deviated sharply from the textbook model of stock averages which grow at a steady exponential rate. The average hit its all-time high on December 29, 1989, during the peak of the Japanese asset price bubble, when it reached an intra-day high of 38,957.44 before closing at 38,915.87, having grown sixfold during the decade. Subsequently, it lost nearly all these gains, closing at 7,054.98 on March 10, 2009—81.9% below its peak twenty years earlier.

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

On March 15, 2011, the second working day after the massive earthquake in the northeast part of Japan, the index dropped over 10% to finish at 8605.15, a loss of 1,015 points. This put it at its lowest close since March 10, 2009.

[edit] 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.

[edit] 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 (e.g., delisting). All proposed changes will be announced in Nikkei's Japanese newspapers and will appear on Nikkei.com.

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

[edit] Recent changes

Date	Addition	Deletion
2011 September 28	Amada Co	CSK Holdings Corporation
2011 August 29	Aozora Bank	Mizuho Trust & Banking
2011 August 29	Sony Financial	Mizuho Securities
2011 March 29	Yaskawa Electric Corporation	Sanyo Electric
	Dainippon Screen	Panasonic Electric Works
	Dai-ichi Life	Sumitomo Trust and Banking
2010 October 1	Tokyo Tatemono	Clarion Co., Ltd.
2010 September 28	Nippon Electric Glass	Mitsubishi Rayon
2010 April 2	JX Holdings
2010 April 2	NKSJ
2010 March 29	Nisshin Steel	Nippon Oil
		Nippon Mining
		Sompo Japan
2010 January 22	Central Japan Railway Company
2010 January 20		Japan Airlines