Nikkei 225 Index (N225)

The Economic Times  Oct 2  Comment 
The Nikkei share average edged up 0.02 per cent to 17,725.13. For the week, it dropped 0.9 per cent, falling for the third straight week.
The Economic Times  Oct 1  Comment 
Automakers outperformed as China's tax cut on small cars took effect, halving the tax burden on cars with less than 1.6 liter engines from Oct 1 through the end of 2016.
The Economic Times  Oct 1  Comment 
The Nikkei added 1.4 percent to 17,623.96 in mid-morning trade after ending the quarter down 14.1 percent.  Oct 1  Comment 
TOKYO (dpa-AFX) - The manufacturing sector in Japan remained in expansion territory, the latest survey from Nikkei revealed on Thursday with a final manufacturing PMI score of 51.0. That was up from last month's preliminary score of 50.9,...
Forbes  Oct 1  Comment 
After consolidating for the past month, Japan's stock market and currency may be on the verge of another important move.
The Economic Times  Sep 30  Comment 
Nikkei share average gained 2.7% to 17,388.15, but ended the quarter down 14.1%, making it one of the worst performers among developed markets.
The Economic Times  Sep 30  Comment 
Nikkei share average rebounded after tumbling in the previous day, with strength in exporters and financials offsetting weak industrial production.
Market Intelligence Center  Sep 29  Comment 
Stocks are pointed toward a modestly higher open in the U.S., although that bounce will serve as small consolation after yesterday’s losses. Asian stocks followed the U.S. lower. The Nikkei lost 4.05% on the day while the Shanghai Composite...
The Economic Times  Sep 29  Comment 
Tokyo's benchmark Nikkei index dived 4.05% Tuesday, extending a global equities rout on fears over China's economy and a drop in commodity prices.
BBC News  Sep 29  Comment 
Asian shares fall sharply, with Japan's Nikkei dropping 4%, as continued fears over growth prospects and commodity prices drive a global sell-off.


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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