Nikkei 225 Index (N225)

QUOTE AND NEWS
TheStreet.com  11 hrs ago  Comment 
NEW YORK (TheStreet) -- The Nikkei 225 Index (NSA 225), Japan's premier stock index, has largely ignored the bearish gravitational pull impacting many of the world's equity markets. But while we were asleep last night, the NSA 225 dropped 724.79...
The Hindu Business Line  Sep 1  Comment 
Japan’s Nikkei share average fell on Tuesday as weak corporate activity soured sentiment, while data from China suggested its economy was losing further momentum. The Nikkei dropped 2.3 p...
newratings.com  Sep 1  Comment 
TOKYO (dpa-AFX) - The Japanese stock market lost ground on Tuesday following the negative cues from Wall Street, while a slightly stronger yen weighed on export-oriented stocks. In late-morning trades, the benchmark Nikkei 225 index is losing...
The Economic Times  Aug 31  Comment 
For the week, analysts said that the Nikkei may hover around the 19,000-mark depending on how global data, and financial markets performance, play out.
The Economic Times  Aug 28  Comment 
Japan's Nikkei share average surged more than 2 per cent on Friday, helped by further gains on Wall Street after strong US economic data.
The Hindu Business Line  Aug 27  Comment 
Japan's Nikkei share average extended the previous day's gains on Thursday after a strong rebound on Wall Street and continued calm in Chinese markets eased investors' fears of a prolonged global...
The Hindu Business Line  Aug 26  Comment 
Japanese stocks bounced slightly in another volatile session on Wednesday morning, but the sentiment remained fragile despite
The Hindu Business Line  Aug 25  Comment 
Japan's Nikkei share average changed course in extremely volatile trading and rose on Tuesday morning after solid US stock futures eased concerns a global stock rout rooted in China worries would...
newratings.com  Aug 25  Comment 
TOKYO (dpa-AFX) - The Japanese stock market has rebounded on Tuesday, after tumbling in early trades with the benchmark Nikkei 225 Index falling below the 18,000 mark for the first time in more than six months. In late-morning trades, the...
The Times of India  Aug 25  Comment 
Tokyo's benchmark index rebounded sharply Tuesday, casting off heavy losses to sit 1.5 percent higher in the last few minutes of morning trade.




 
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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