Nikkei 225 Index (N225)

QUOTE AND NEWS
MarketWatch  2 hrs ago  Comment 
Japanese stocks on Friday barreled toward their best week in six-and-a-half years, leading gains across Asia amid relief over a weakening yen and signs of economic firming in China.
The Economic Times  3 hrs ago  Comment 
At midday, the Nikkei was up 1.2 percent at 16,575.63 after touching 16,581.62, its highest since June 10.
The Economic Times  Jul 14  Comment 
The broader Topix climbed 0.8 percent to 1,311.16 and the JPX-Nikkei Index 400 advanced 0.7 per cent to 11,785.75.
The Economic Times  Jul 14  Comment 
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.1 percent, hovering near the highest level since November it reached on Wednesday. Japan's Nikkei added 0.8 percent.
Mondo Visione  Jul 13  Comment 
Osaka Exchange, Inc. (hereinafter “OSE”) is celebrating 10th anniversary of Nikkei 225 mini which arrives on July 18th, 2016. After its launch in 2006, Nikkei 225 mini grew up to one of the leading derivative products worldwide*, with...
The Hindu Business Line  Jul 13  Comment 
Japan's Nikkei hit one-month intra-day high before ending up 0.8 per cent at 16,231.43, bringing its gains since Prime Minister Shinzo Abe's election victory on Sunday to 7.4 per cent. Banks were t...
The Economic Times  Jul 12  Comment 
The broader Topix added 2.4 percent to 1,285.73 with 32 of its 33 subsectors in the black. A total of 2.357 billion shares changed hands, the highest in a week.
Reuters  Jul 11  Comment 
* Johnson & Johnson to buy 20 pct of Japanese cosmetics maker - Nikkei
MarketWatch  Jul 11  Comment 
Japanese stocks lead a rally across Asia, propped up by restored confidence in the health of the U.S. job market and hopes for expanded fiscal stimulus in Japan.




 
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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