What Is the Nikkei 225 Index and How Can You Trade It? IG International

The Nikkei 225 is the top stock market index for the Tokyo Stock Exchange. Often referred to as the ‘Nikkei Stock Average’ or just the ‘Nikkei’, it consists of the top 225 blue chip companies in Japan listed on the Tokyo Stock Exchange. Diversification can come in the form of Nikkei-linked ETFs or individual Nikkei shares, which you can also trade on. You’ll also trade the Nikkei 225 directly with us via our Japan 225 offering. Our offering tracks the Nikkei index, enabling you to make a prediction on the direction of the market price.

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CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. You should consider whether you understand how this product works, and whether you can afford to take the high risk of losing your money. We want to clarify that IG International does not have an official Line account at this time. Therefore, any accounts claiming to represent IG International on Line are unauthorized and should be considered as fake. Please ensure you understand how this product works and whether you can afford to take review superforecasting: the art and science of prediction the high risk of losing money.

The construction sector also plays a significant role in the index, with prominent companies like Kajima Corporation and Obayashi Corporation contributing to the sector’s performance in the index. The technology sector is well-represented in the Nikkei index, with global giants like Sony and Panasonic Buy google stock as well as other innovative tech companies making up a significant portion of the index. The Tokyo Price Index—frequently referred to as TOPIX—is another widely followed index on the Tokyo Stock Exchange. While the Nikkei is an index of 225 selected stocks from the TSE, the TOPIX is an index that includes all the stocks in the TSE. When saving for retirement, you’ll typically have two choices for how you’ll fund your IRA. With a traditional IRA, you’ll contribute pre-tax dollars that will grow inside the account tax-free and be taxed when the money is withdrawn.

What that means, of course, is that you want to have some solid, reliable dividend stocks in your portfolio. This information has been prepared by IG, forex broker a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it.

• Moreover, the highest record the Nikkei 225 index has been able to set since its 1989 heights was the 24,270 points it hit in December 2018.
• MoneyCheck launched in 2018 with the goal of covering personal finance and investment news in in a clear and concise way.
• You can invest in the Nikkei by purchasing shares of individual companies in the index, buying a Nikkei index fund or exchange-traded fund (ETF), or trading futures and options contracts based on the Nikkei.
• It involves a dynamic process of selection, reinterpretation, and synthesis of cultural elements set within the shifting and fluid contexts of contemporary realities and relationships.

Trading companies

Launched back in 1950, the Tokyo Stock Exchange is the largest stock exchange in Japan, and the fourth largest in the world by market capitalization. Located in the capital city of Tokyo, the stock exchange lists more than 3,500 companies across multiple industries. This includes some of Japan’s biggest brands, notably Honda, Mitsubishi and Toyota. The Nikkei is a price-weighted index, meaning it’s calculated based on the stock prices of its component companies. The total value of the index is the sum of the stock prices of all 225 companies, adjusted by a divisor for stock splits and other corporate actions.

On the reward side, the Nikkei offers exposure to some of the world’s largest and most innovative companies and has shown strong growth potential in recent years. Other notable crashes include the dot-com bust in 2000 and the global financial crisis in 2008, both of which were followed by robust recoveries. However, the bubble’s burst led to a prolonged period of stagnation and decline known as the “Lost Decades”. Since the 2008 global financial crisis, the Nikkei has been on a generally upward trajectory, albeit with periods of volatility. The index includes both large-cap and mid-cap stocks to capture a comprehensive picture of the Japanese economy. The number 225 refers to the number of large, publicly-owned companies selected from a broad spectrum of industries included in the index.

The Tokyo Stock Exchange

Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth. The Nikkei consists of 225 top companies that trade on the Tokyo Stock Exchange, many of which are global brands. With us, you will use CFDs to buy or sell contracts to exchange the price difference of the Japan 225 between the opening and closing position. Most European traders seek to diversify their portfolio, and the Nikkei 225 tends to be the preferred outlet because the Japanese economy is one of the biggest across the globe. In other words, those involved in the Nikkei 225 investment space back in the mid-to-late 1980s would have no doubt been hit hard by the crash. On the other hand, the index has been performing reasonably well since late 2012, where it was priced in the region of 8,00 points.

Before the economic downturn came to fruition,  in 1989 the Nikkei peaked at 38,916 points. The scary thing is that almost 30 years later, the Nikkei 225 has still not got anywhere close to the all-time highs it experienced in 1989. If you thought the bubbles of the Dot.com boom of the late 1990s or the housing market crash of 2008 were bad, nothing gets close to what Japan experienced.

It gauges the behavior of top Japanese companies, covering a broad swath of industries. Broadly considered Japan’s equivalent to the Dow Jones Industrial Average, it includes the top 225 blue-chip companies listed on the Tokyo Stock Exchange. An alternative avenue that you can take to invest in the performance of the Nikkei 225 is to purchase an ETF. ETFs are financial instruments that have the capacity to track virtually any asset class.

The global financial crisis of 2008 caused a sharp fall in the Nikkei, reflecting the severe economic downturn that followed. The performance of the Nikkei has often diverged from other major global indices. For example, during the 1980s, while other major indices saw moderate growth, the Nikkei surged due to the asset price bubble. Nikkei 500 consists of 500 companies from various sectors, making it a more diverse and broader representation of the Japanese stock market. The Nikkei index comprises 225 blue-chip companies listed on the Tokyo Stock Exchange.

The Tokyo Stock Exchange, the main stock market of Japan, is based in Tokyo and is often abbreviated as TOSHO. Some of the top companies on the Nikkei include the likes of Sony, Canon, Nissan and Toyota. IG International Limited is licensed to conduct investment business and digital asset business by the Bermuda Monetary Authority. One of the most prominent Nikkei ETFs is that of the Nikkei 225 Exchange Traded Fund offered by Nomura Asset Management. Although the expense ratio is slightly higher at 0.22%, this still provides good value if you prefer the ETF route.

What is the Nikkei 225 and how can you trade in it?

In addition to monitoring the performance of the Nikkei 225, you must consider exchange rate fluctuations between the yen and the dollar. One of the leading index funds in this respect is the Daiwa Japan Nikkei 225 Index Fund. With an expense ratio of just 0.16%, this particular fund is one of the most competitively priced in the space.

To ensure that the companies included in the index are easily traded, they must demonstrate a certain level of liquidity. This means that there is enough trading volume in the market, allowing investors to buy or sell shares without significantly impacting the share price. At the height of the bubble, the TSE accounted for 60% of global stock market capitalization. The Nikkei average has deviated sharply from the textbook model of stock averages, which grow at a steady exponential rate.