Nikkei 225 Index (N225)

QUOTE AND NEWS
MarketWatch  Feb 6  Comment 
The Nikkei claws back some ground, but Chinese stocks retreat after easing comments from the PBOC, as investors look ahead to the nonfarm-payrolls report due later Friday.
The Economic Times  Feb 6  Comment 
Nikkei gained 0.8 per cent to 17,643.19 points, after falling 1 per cent the previous day. For the week, the Nikkei has fallen 0.2 per cent.
The Hindu Business Line  Feb 6  Comment 
The Hindu Business Line  Feb 5  Comment 
Japan’s Nikkei share average fell on Thursday on news of the European Central Bank’s hardline stance on Greek debt and fresh falls in oil prices, but Sony Corp soared after raising its outlook.
The Economic Times  Feb 4  Comment 
Japanese shares posted their biggest gains in more than two weeks on Wednesday after Mitsubishi UFJ Financial Group's strong results lifted financial shares.
The Economic Times  Feb 4  Comment 
Financial shares led the gains after Mitsubishi UFJ Financial Group posted better than expected profits in the three months to December.
The Economic Times  Feb 2  Comment 
The Nikkei share average dropped 0.7 per cent to 17,558.04. The broader Topix fell 0.5 per cent while the JPX-Nikkei Index 400 lost 0.3 per cent.
The Economic Times  Feb 2  Comment 
The Nikkei 225 index at the Tokyo Stock Exchange fell 120.10 points to 17,554.29 at the start. Q4 GDP for US came in at 2.6 per cent.
Japan Today  Jan 30  Comment 
Japan's Nikkei share average rose on Friday as strong company earnings led by Nomura Holdings and Advantest Corp buoyed sentiment, but a sell-off in index-heavyweight SoftBank Corp limited the gains. The Nikkei ended 0.4% higher at 17,674.39....
The Hindu Business Line  Jan 30  Comment 
BBC News  Jan 30  Comment 
Japanese shares traded higher on Friday as investors shrugged off a series of government data showing a slowing Japanese economy.
The Economic Times  Jan 29  Comment 
The Nikkei fell 1.1 per cent to 17,606.22, the biggest one-day percentage drop since Jan. 16.




 
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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