Nikkei 225 Index (N225)

The Hindu Business Line  Jan 6  Comment 
Japan’s Nikkei share average dropped on Friday as automakers dragged after incoming US President Donald Trump threatened to slap punitive taxes on Toyota cars imported into the United States from Mex...
Reuters  Jan 5  Comment 
* Mitsui & Co is purchasing agrichemical business assets from monsanto in a deal apparently worth around 10 billion yen ($86.5 million) - Nikkei
The Economic Times  Jan 5  Comment 
The broader Topix gained 0.1 per cent to 1,555.68 and the JPX-Nikkei Index 400 advanced 0.1 per cent to 13,950.40.  Jan 5  Comment 
TOKYO (dpa-AFX) - The services sector in Japan continued to expand in December, and at a faster rate, the latest survey from Nikkei showed on Thursday with a PMI score of 52.3. That's up from 51.8 in November, and it moves further above the...  Jan 4  Comment 
CANBERA (dpa-AFX) - China will on Thursday see December figures for the services and composite indexes from Caixin, highlighting a modest day for Asia-Pacific economic activity. In November, the services index had a score of 53.1 and the composite...
Japan Today  Jan 4  Comment 
Japan's Nikkei share average started 2017 trading on a strong note on Wednesday as investors cheered upbeat global economic data released during Japan's holidays, and a weaker yen boosted exporters. The Nikkei rose 2.5 percent to 19.594.16,...
The Hindu Business Line  Jan 4  Comment 
The country’s services sector contracted in December for the second consecutive month, pointing to the continued impact of demonetisation. The Nikkei India Services Business Activity Index contract...
MarketWatch  Jan 4  Comment 
Japanese equities kicked off the new year sharply higher on Wednesday, leading the region’s gains amid a robust outlook for the U.S. economy, coupled with expectations of continued yen weakness.  Jan 4  Comment 
TOKYO (dpa-AFX) - The manufacturing sector in Japan continued to expand in December and at a faster rate, the latest survey from Nikkei revealed on Wednesday with a manufacturing PMI score of 52.4. That's up from 51.3 in November, and it...


The Nikkei 225 Stock Index maps companies on the Tokyo Stock Exchange (TSE). It is the oldest and the most well known Asian index in the world. The Nihon Keizai Shimbun (Nikkei) newspaper has been commisioned to officially calculate this index since 1971. The Nikkei 225 began to be calculated on September 7, 1950, retroactively calculated back to May 16, 1949. Currently. the Nikkei is used as the major indicator for the Japanese economy, similar to the Dow Jones Industrial Average (.DJIA). In fact, it was known as the "Nikkei Dow Jones Stock Average" from 1975 to 1985.[1]. However, unlike the Dow Jones, as the Nikkei 225 is designed to reflect the overall market, there is no specific weighting of industries. Stock splits, removals and additions of constituents impact upon the effective weighting of individual stocks and the divisor.[2]

Weighting and Components

The Nikkei is a price weighted average index (the unit is Yen), similar to the Dow Jones Index, based on a par value of ¥50 per share. That means, a ¥50 price change in any stock affects the average the same way, regardless of whether the stock is priced at ¥5 or ¥500 per share. The Nikkei 225 index's components are reviewed every year in September. Any changes, if required, are published in October and the index is adapted accordingly.

To calculate an equal weighted index, the market capitalization for each stock used in the calculation of the index is redefined so that each index constituent has an equal weight in the index at each re-balancing date. In addition to being the product of the stock price, the stock’s shares outstanding, and the stock’s float factor – and the exchange rate when applicable; a new adjustment factor is also introduced in the market capitalization calculation to establish equal weighting.

  • Stock Market Value= Price of shares * Number of shares outstanding * Free float factor * Exchange Rate(if applicable) * Adjustment Factor[3]

The Adjustment factor of a stock is assigned to the stock at each re-balancing date, which makes the stock value for each stock equal. For index component, the value would be:

  • Adjustment Factor= Index specific constant "Z"/(Number of shares of the stock*Adjusted stock market value before re-balancing)

The main criticism with this index is that a $5 priced share would have the same weight as the $200 priced share, which gives the smaller shares more weight than their due. Moreover, the stocks keep changing and so does the equality, so the stock has to be rebalanced from time to time[4] as compared to a cap weighted index.


  2. Wikipedia
  3. Calculating Equal weighted index
  4. Definition of a Equal Weighted Index
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