Nikkei 225 Index (N225)

QUOTE AND NEWS
The Economic Times  Feb 23  Comment 
The Nikkei ended down 0.04 per cent to 19,371.46, while the broader Topix dropped 0.1 per cent to 1,556.25.
The Economic Times  Feb 22  Comment 
The broader Topix rose 0.1 per cent to 1,557.09 and the JPX-Nikkei Index 400 inched up 0.02 per cent to 13,962.42.
The Hindu Business Line  Feb 22  Comment 
Japanese stocks edged down on Wednesday morning in choppy trade as a pause in the dollar's rise against the yen kept investors on the sidelines as they awaited the minutes of the US Federal Reserve's...
The Economic Times  Feb 21  Comment 
Trading volumes were low, however, as a holiday in the United States on Monday left investors short of the usual leads.
The Hindu Business Line  Feb 21  Comment 
Japanese stocks rose on Tuesday as the weaker yen helped overall sentiment, while the paper sector outperformed on a report that a major producer intends to raise printing paper prices. Trading vol...
The Economic Times  Feb 20  Comment 
The broader Topix rose 0.2 per cent at 1,547.01, with only 1.497 billion shares changing hands, the lowest since Jan. 16. Turnover was 1.7 trillion yen, the lowest level since Dec. 20.
The Economic Times  Feb 20  Comment 
Japan's Nikkei went flat after domestic data showed exports disappointed in January even as imports outpaced forecasts.
The Economic Times  Feb 17  Comment 
The Nikkei ended down 0.6 per cent at 19,234.62 points. For the week, the benchmark index fell 0.7 per cent.
newratings.com  Feb 17  Comment 
TOKYO (dpa-AFX) - The Japanese stock market is extending losses on Friday from the previous session following the flat cues overnight from Wall Street, while a stronger yen weighed on exporters' shares. In late-morning trades, the benchmark...
The Economic Times  Feb 16  Comment 
The broader Topix dropped 0.2 per cent to 1,551.07 and the JPX-Nikkei Index 400 shed 0.2 per cent to 13,917.90.




 
TOP CONTRIBUTORS

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.

References

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