Japanese Stock Market Nikkei & Topix

There are a number of stock market indices which are used as statistical measures of performance of national or regional stock markets. In this article our focus is on Japan. Lets take a look at Japanese Stock Market Nikkei and the Topix.

A word about Stock Market Indices. An index is a measure of performance. A stock market index measures the performance of a stock market. Stock market indices may be classified into two categories Â- Broad Based Indices and Specialized Indices. A specialized Index is an index of companies which are similar in nature. This similarity may be in terms of size, industry type or market capitalization.

Coming back to the topic at hand. The Japanese Stock Market uses the Nikkei as one of the indices to determine the performance of top notch companies in Japan.

Nikkei Â- History & Origin The term stands for of 'Japanese' origin. The Nikkei index is being used as an index since Sept 1950. Nikkei was at that time the name of a newspaper also known as the Japan Economic Daily. The newspaper began calculating this index on a price-weighted basis. Until May 1985 it was called as the Nikkei Dow Jones Stock Average. After that it was simply called as the 'Nikke' or 'Nikke 225'.

Composition & Type the Nikkei is a price-weighted index which is based on 225 of the leading stocks listed on the Tokyo Stock Exchange. The 225 companies are the blue chip companies in Japan. These companies may belong to diverse industries such as foods, automotive, textiles, mining, construction and such. They are similar in size and market capitalization.

The Nikkei is one of the most respected of stock exchange indices in the world. It had hit an all time high of 38,915 points on December 29, 1989.

The stocks which are listed on Nikkei are given a weight of a par value of 50 Yen per share. The Nikke is an overall market index and does not give weight to any particular type of industry.

Topix Another very popular index also used as a measure of performance on the Tokyo Stock Exchange is the Tokyo Stock Price Index or the Topix. It represents 1700 domestic companies in Japan. In the opinion of some analysts it is more representative of the Japanese Stock Market than the Nikkei. This is on account of the fact that Topix considers a larger number of companies, and the companies are domestic.

Whether you are an investor or broker interested in dealing with the Japanese Stock Market, it is a good idea to know which are the major indices to watch and monitor. I hope that you benefit fom this article on Japanese Stock Market Nikkei & Topix.