Nikkei 225 Index (N225)

QUOTE AND NEWS
The Economic Times  7 hrs ago  Comment 
The broader Topix shed 0.1 per cent at 1,468.57, with only 1.956 billion shares changing hands, the lowest level in two weeks.
MarketWatch  8 hrs ago  Comment 
Caution over Italy’s impending referendum and uncertainty over oil weighed on stocks in Asia on Tuesday, with investors booking modest profits to hold cash.
Wall Street Journal  10 hrs ago  Comment 
Caution over Italy’s impending referendum and uncertainty over oil weighed on stocks in Asia, with investors booking modest profits to hold cash.
The Economic Times  Nov 28  Comment 
The Opec will meet in Vienna on Wednesday, with hopes it will codify a broad agreement struck in Algeria in September to cut production and protect prices.
newratings.com  Nov 28  Comment 
TOKYO (dpa-AFX) - The Japanese stock market ended a seven-session winning streak and is notably lower on Monday, with a stronger yen weighing on exporters' shares. In late-morning trades, the benchmark Nikkei 225 Index is losing 149.30...
The Economic Times  Nov 25  Comment 
The broader Topix ended 0.3 per cent higher to 1,464.53, rising for an 11th day to post the longest winning streak since May 2015.
Wall Street Journal  Nov 25  Comment 
Asian share markets were broadly higher, with Japan’s Nikkei leading as the yen continued weakening against the dollar.
newratings.com  Nov 24  Comment 
CANBERA (dpa-AFX) - Asian stocks ended mixed on Thursday, with Japanese shares riding higher on a weaker yen and Chinese shares closing flat amid further yuan weakness, while markets elsewhere across the region closed mostly lower on worries about...
The Economic Times  Nov 24  Comment 
The Nikkei ended 0.9 per cent higher at 18,333.41, extending its gains into a sixth day to post its longest winning streak since mid-July.
Benzinga  Nov 24  Comment 
Japanese stocks were trading higher on Thursday. The Nikkei 225 climbed 1.08 percent, or 196.56 points to 18,359.50, and the TOPIX rose 0.90 percent, or 13 points to 1,460.47. iShares MSCI Japan ETF (NYSEARCA: EWJ) closed at $49.91, while...




 
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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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