Nikkei 225
Tue, Apr 15The Nikkei 225, commonly known as the Nikkei, is a stock market index that reflects the performance of the 225 largest companies listed on the Tokyo Stock Exchange (TSE). As one of the most closely monitored equity indices globally, the Nikkei 225 acts as a gauge for the health of the Japanese economy and the performance of the country's stock market.
The Nikkei 225 is a stock market index for the Tokyo Stock Exchange (TSE). It tracks the performance of 225 large, publicly traded companies in Japan across various industry sectors. Established on September 7, 1950, the Nikkei 225 is managed and published by the Nihon Keizai Shimbun, a prominent Japanese financial newspaper. It is a price-weighted index, meaning that the weight of each stock in the index is based on its share price rather than its market capitalization.
This price-weighted index operates in Japanese Yen (JP¥), and its components are reviewed annually. The calculation of the Nikkei 225 involves summing the share prices of all 225 component companies and dividing that total by a divisor. The divisor is periodically adjusted to account for events such as stock splits, share issuances, and changes in the index's components. This method differs from market capitalization-weighted indices, where each stock's weight is determined by its market value relative to the total market value of all components.
The Nikkei 225 serves as a crucial benchmark for investors and financial professionals monitoring the Japanese equity market. Comprising some of Japan's largest and most influential companies, the index provides a comprehensive overview of the country's economic health and stock market performance. Additionally, the Nikkei 225 is used as the foundation for various investment products, including index funds, exchange-traded funds (ETFs), and derivatives, enabling investors to gain exposure to the Japanese market through a single investment.
The Nikkei 225 encompasses a diverse range of sectors and industries, offering a broad representation of the Japanese equity market. The companies included in the index are typically leaders in their respective fields, such as automotive, technology, consumer goods, and financial services. Notable names in the Nikkei 225 include Toyota Motor Corporation, Sony Group Corporation, and SoftBank Group Corp. The index is reviewed annually in October, and its components can be updated to ensure it remains a relevant reflection of Japan's largest and most influential companies.
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