Nikkei 225 Index (N225)

QUOTE AND NEWS
The Economic Times  Jul 18  Comment 
The Nikkei ended 1.0 per cent lower to 15,215.71, the lowest closing level since July 11. At one point, the index was down as much as 1.7 per cent.
Japan Today  Jul 18  Comment 
Tokyo stocks closed 1.01% lower on Friday as the crash of a Malaysia Airlines plane in rebel-held eastern Ukraine sent jitters through the market, with shares of major Japanese carriers falling. The Nikkei 225 index slipped 154.55 points to...
The Economic Times  Jul 18  Comment 
MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.4 per cent. Japan's Nikkei stock average dropped 1.3 per cent.
The Economic Times  Jul 18  Comment 
The Nikkei 225 index slipped 167.71 points to 15,202.55 by the break while the Topix index of all first-section issues was down 0.85 percent, or 10.82 points, at 1,262.56.
MarketWatch  Jul 18  Comment 
Japan stocks open sharply lower amid global sell-off; Nikkei Average down 1.3%
USAToday.com  Jul 17  Comment 
Japan's Nikkei 225 index is following the Dow's cue, plunging amid international declarations that a passenger jet over Ukraine was shot dow...
The Economic Times  Jul 17  Comment 
The Nikkei ended 0.1 per cent lower at 15,370.26 in choppy trade, after hitting as high as 15,465.74, the highest level since July 7.
MarketWatch  Jul 17  Comment 
Here are the latest trading levels for Asia's major stock markets: Tokyo (Nikkei Average) down 0.1% (closed) ; Hong Kong (Hang Seng Index) down 0.2% ; Shanghai (Shanghai Composite Index) down 0.6% ; Sydney (S&P/ASX 200) up 0.1% (closed) ; Seoul...
The Economic Times  Jul 16  Comment 
The broader Topix was flat at 1,273.59, and the JPX-Nikkei Index 400 was also flat at 11,588.37.
Japan Today  Jul 16  Comment 
Tokyo stocks ended slightly lower Wednesday after a weak session on Wall Street where investors reacted to the Fed's warning over "stretched" valuations in some equity sectors. The Nikkei 225 index slipped 0.10%, or 15.86 points, to finish at...




 
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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