Nikkei 225 Index (N225)

QUOTE AND NEWS
The Economic Times  2 hrs ago  Comment 
The broader Topix climbed 1.88 percent to 1,247.69 and the JPX-Nikkei Index 400 rose 1.87 percent to 11,263.70.
Reuters  6 hrs ago  Comment 
Japanese stocks rose on Wednesday morning thanks to a modest recovery in global equities following the Brexit rout, while a pause in yen buying also soothed market sentiment.
newratings.com  6 hrs ago  Comment 
TOKYO (dpa-AFX) - The Japanese stock market rose on Wednesday, following the positive cues overnight from Wall Street and on optimism that Japanese policy makers will implement new stimulus measures. In late-morning trades, the benchmark Nikkei...
Clusterstock  Jun 28  Comment 
(Reuters) - Taiwanese chip firm Advanced Semiconductor Engineering Inc said on Tuesday that its biggest customer, Apple Inc, was being more conservative in placing orders compared with last year, according to the Nikkei. The business daily...
The Economic Times  Jun 28  Comment 
Investors remained cautious on growing worries about the global economic fallout from Britain's vote to leave the European Union.
MarketWatch  Jun 27  Comment 
Japanese shares rebound after getting slammed, recovering alongside most of Asia, though markets are likely to remain volatile on Brexit fallout fears.
The Hindu Business Line  Jun 27  Comment 
Japan’s Nikkei share average recouped some of last week’s steep declines on Monday, as government officials stepped up warnings that they may intervene in currency markets to stabilise the yen after ...
The Economic Times  Jun 24  Comment 
A stampede started with an 8 per cent slump in Japanese Nikkei and went on to knock millions of dollar of investor wealth from Asia to Europe to the Americas.
BBC News  Jun 24  Comment 
Asian shares fall sharply as investors react to the UK voting to leave the European Union, with Japan's Nikkei slumping 7.9%.
MarketWatch  Jun 24  Comment 
Britain’s vote to leave the European Union sent reverberations through Asian markets on Friday, where investors were the first to react as it became clear a shock result was in the offing.




 
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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