Nikkei 225 Index (N225)

QUOTE AND NEWS
Market Intelligence Center  45 min ago  Comment 
U.S. stocks are mixed this morning after a day of gains on Tuesday. The S&P 500 is down 0.14% and the Dow is up 0.04%. Asian markets had a  mixed Wednesday as Japanese stocks jumped higher. The Nikkei was up 2.64% while the Shanghai Composite...
The Economic Times  6 hrs ago  Comment 
Shares in Japanese suppliers to Apple Inc soared, with Foster Electric Co rising 5.4 percent and Japan Aviation Electronics Industry Ltd jumping 5.8%.
MarketWatch  6 hrs ago  Comment 
The dollar was slightly lower against the yen in otherwise directionless Asia trade Wednesday, with the Nikkei Stock Average losing some of its earlier gains.
Japan Today  7 hrs ago  Comment 
Stocks jumped 2.64% on Wednesday, reversing a sharp drop the previous day, as investors took their lead from another Wall Street rally. The Nikkei 225 index at the Tokyo Stock Exchange, which fell 2.03% on Tuesday, added 391.49 points to finish...
The Economic Times  8 hrs ago  Comment 
The Nikkei 225 index at the Tokyo Stock Exchange, which fell 2.03 percent on Tuesday, added 253.19 points to 15,057.47 by the break.
The Economic Times  9 hrs ago  Comment 
The Nikkei share average added 299.27 points to 15,104.31 in mid-morning trade after sliding 2.0 per cent on the previous day.
Financial Times  10 hrs ago  Comment 
Solid Japan export data buoy Nikkei and Hang Seng strengthens
MarketWatch  11 hrs ago  Comment 
Here are the latest trading levels for Asia's major stock markets: Tokyo (Nikkei Average) up 1.7% ; Hong Kong (Hang Seng Index) up 1.2% ; Shanghai (Shanghai Composite Index) up 0.4% (at break) ; Sydney (S&P/ASX 200) up 0.9% ; Seoul (Kospi) up...
Market Intelligence Center  Oct 21  Comment 
U.S. stocks are rising Tuesday morning after starting the week on a positive note. The S&P 500 is up 0.61% and the Dow is up 0.45%. Asian were mixed Tuesday as data showed the slow third quarter economic growth in China. The Nikkei was down 2.03%...
MarketWatch  Oct 21  Comment 
The yen rose against rivals on Friday as the Nikkei pulled back, and strategists advised not buying the dollar right now.




 
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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