The Nikkei 225 is undoubtedly one of the most important stock indices in the Japanese market. Let’s learn everything about him, his origins, history and integration, and current development.
This stock index traced its origins to the 1940s when Nikkei 225 started an index covering 255 companies and companies. The best time for the Nikkei 225 came in 1949 when in the 1950s, it became the Japanese giant with its 225 well-established companies.
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Today that number is maintained, and their companies are listed on the Tokyo stock exchanges. This index is so important in the current Japanese market that it attracts 80% of the domestic market.
Its indices and its components are determined by the 450 most liquid securities of the First Market.
Some specialists from the Asian stock market have expressed that the transparency and effectiveness of the Nikkei 225 indicators are such that the Japanese market reflects it.
In other words, the Japanese economy and market trend will be determined by the behavior of the Nikkei 225.
To be part of this important stock index, companies must go through a meticulous selection. This selection is made by a qualified committee, as do other indices such as the Ibex 35 or the FTSE 100, both European.
Unlike others that impose rigid rules, the Nikkei 225 establishes 5 criteria to evaluate, they are:
- Floating capital
- Time of listing on the stock market
- Trading on the stock market
- Price Weighting
- Financial viability
One of the aspects that must be highlighted when talking about the election by said committee is that the evaluation is comprehensive. It weighs heavily on me if the operation of the evaluated company is a possible representation of the operation of the Japanese economy.
Regarding liquidity and the company’s size, it must meet 1 outstanding point, the first being its price weighting; at this point, it differs from most stock indices.
The performance of this index is the target to be beaten by Japanese managers and investors focused on the Japanese stock market.
The Nikkei also serves as a point of reference for European investors since at the closing time of the Japanese market, it’s 7 a.m. in Europe (CET).
Before the opening of the European stock exchanges, this allows them to know how the Japanese markets have reacted to the latest financial news.