Nikkei 225 Index (N225)

QUOTE AND NEWS
The Economic Times  4 hrs ago  Comment 
Nikkei dropped 0.1% to 20,032.35, moving away from an intraday high of 20,197.16.
The Economic Times  Jul 3  Comment 
The Nikkei share average tacked on 0.1 per cent to 20,055.80.
The Economic Times  Jul 3  Comment 
Nikkei India Manufacturing Purchasing Manager’s Index slowed to 50.9 in June from 51.6 in May as a softer rise in factory new orders resulted in weaker growth in production.
The Economic Times  Jul 3  Comment 
Japan's Nikkei ticked up 0.2 per cent while US stock futures gained 0.2 per cent.
Reuters  Jul 2  Comment 
Japanese office equipment maker Konica Minolta Inc plans to acquire U.S. healthcare firm Ambry Genetics Corp to diversify its business, the Nikkei daily reported on Sunday.
The Economic Times  Jun 30  Comment 
In Friday's trading recent gainers bore the brunt of selling, with Nintendo slipping 2.8 per cent and Sony 1.8 per cent.
The Hindu Business Line  Jun 30  Comment 
MarketWatch  Jun 30  Comment 
The wild ride for global stock markets continued Friday, with Asian equities declining following selling in the U.S. and Europe.
The Economic Times  Jun 30  Comment 
Japan's Nikkei tumbled 1.1 per cent, shrinking its monthly gain to 1.8 per cent and its quarterly increase to 5.8 per cent.
The Economic Times  Jun 29  Comment 
The Asia300 is Nikkei's exclusive list of the biggest and fastest-growing companies from eleven economies across Asia.
The Economic Times  Jun 29  Comment 
The Nikkei gained 0.45 per cent to 20,220.30, moving closer to 20,318.11 hit last week.




 
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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