Nikkei index is most widely quoted price-weighted average of 225 largest Japanese companies traded on the Tokyo Stock Exchange.

Nikkei Index or Nikkei 225 Index is a stock market index for the Tokyo Stock Exchange (TSE). It has been calculated daily by the Nihon Keizai Shimbun (Nikkei) newspaper since 1950. It is a price-weighted average (the unit is yen), and the components are reviewed once a year. Currently, the Nikkei is the most widely quoted average of Japanese equities.

Nikkei index is beside Dow Jones Index one of the rare price-weighted stock market indices; majority of indices is weighted by free-float market capitalization. The characteristic of price weighted indices is that they are affected by high-priced stock.

Nikkei Index is calculated from a selection of 225 domestic common stocks listed on the First Section of TSE. Stocks are weighted on the Nikkei 225 by giving an equal weighting based on a par value of 50 yen per share. Events such as stock splits, removals and additions of constituents impact upon the effective weighting of individual stocks and the divisor. The unit in which Nikkei index value is expressed is Yen.

The Nikkei 225 is designed to reflect the overall market, so there is no specific weighting of industries. In order to provide accurate market movements and sector balance, constituent review of indices for the Nikkei225 is conducted annually.

Nikkei index began to be calculated on September 7, 1950, retroactively calculated back to May 16, 1949. The Nikkei index hit its all-time high on December 29, 1989, during the peak of the Japanese asset price bubble, when it reached an intra-day high of 38,957.44 before closing at 38,915.87. The latest minimal value of the index was reached in October 2008, when index reached the 6,994.90 level.

The Nikkei index has the following sector allocation (as of 6/22/2010):

• Industrial Goods & Services: 25.67%
• Retail: 10.94%
• Technology: 10.93%
• Personal & Household Goods: 10.08%
• Health Care: 8.74%
• Automobiles & Parts: 7.46%
• Chemicals: 4.46%
• Food & Beverage: 3.93%
• Financial Services: 3.69%
• Basic Resources: 3.35%
• Construction & Materials: 2.01%
• Telecommunications: 1.95%
• Media: 1.76%
• Travel & Leisure: 1.69%
• Banks: 1.48%
• Insurance: 0.84%
• Utilities: 0.57%
• Oil & Gas: 0.45%

The Nikkei index components shown in table below are sorted by weightings and valid as of 6/22/2010.

Tokyo Stock Exchange (TSE) calculates and publishes TOPIX (Tokyo Stock Price Index) and its sub-indices including TOPIX New index Series.

TOPIX is a free-float adjusted market capitalization-weighted index that is calculated based on all the domestic common stocks listed on the TSE First Section. TOPIX shows the measure of current market capitalization assuming that market capitalization as of the base date (January 4 ,1968) is 100 point.

TOPIX New Index Series (TOPIX Core30, TOPIX Large70, TOPIX 100, TOPIX Mid400, TOPIX 500, TOPIX 1000, TOPIX Small) are selected based on free-float adjusted market capitalization and liquidity from the companies completed its listed as of the base date for selection.

Written by: Goran Dolenc

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