Live investing in the Japanese stock market (Nikkei 225)

The Japanese stock market, following the example of the European stock market and the American stock market, is attracting increasing numbers of traders who wish to speculate on the combined share prices of the best of the Japanese stock market, or even the major international indices. This is because most Forex brokers offer you the opportunity nowadays to invest directly in the rate of the Nikkei 225 index. We will therefore present the Nikkei stock exchange index here in detail with information and a historical analysis of the rates of this Tokyo stock market index.  

Live investing in the Japanese stock market (Nikkei 225)
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The Tokyo stock exchange in detail:

The Tokyo stock exchange, actually called the JEG, Japan Exchange Group, could be described as the official Japanese stock market. The shares of over 2,400 companies are quoted there which means it holds second place worldwide after the NYSE (New York Stock Exchange).

It was created in 1978 and has progressively grown, incorporating the TSE (Tokyo Stock Exchange) and the Osaka stock exchange before becoming, in 2006, the Tokyo stock exchange that we know today.


The Tokyo stock exchange index:

To follow the Tokyo stock exchange in real time you need to know the major index of this financial establishment which is the Nikkei.

The rate of this index actually reflects the quotes of the major companies of the Tokyo stock exchange.


Presentation of the Nikkei 225 index:

The Nikkei 225 is actually the major stock exchange index of the Tokyo stock market in Japan. It takes its name from an abbreviation of ‘Nihon Keizai Shinbun’, the name of the daily newspaper that publishes the rate of this index.  

As indicated by its name, the Nikkei 225 is of course composed of the top 225 companies quoted on the Japanese stock market in terms of the highest liquidity. Therefore, by observing the movements in the rate of the Nikkei 225 we can perceive the overall general economic health of the country. There are a large number of sectors represented in this index including technological businesses as well as automobile companies and even the pharmaceutical and engineering sectors.


The companies quoted by the NIKKEI 225:

As is already the case with the other international indices such as the CAC40 or the FTSE 100, the figure 225 following the NIKKEI corresponds to the number of companies included in the quote for this index. The NIKKEI 225 therefore takes into account the top 225 Japanese companies in terms of capital which are quoted on the TSE.

However, the NIKKEI 225 is calculated without taking into account the stock market capitalisations, only taking into account the share price of companies concerned and quoted continuously. This type of index is therefore unusual and is called an ‘equally weighted’ stock index.


Historical analysis of the Nikkei index rate:

The Nikkei 225 index was created on the basis of 100 points in May 1949. To complete the quotation of the Nikkei we find the average of the assets from which it is composed through a process of arithmetic, without weighing in the stock market capitalisation as is the case for certain other major stock market indices.

Historically, the Nikkei 225 index experienced a strong rising period through world savings. It attained its highest point of 40 000 points in 1989 but fell to 15 000 points in 1992 due to the bursting of the financial bubble. The fall strengthened between 2000 and 2003 when it was at its lowest point in 20 years.

But due to the Japanese market appeal, and after a nearly 10 year stagnation period, the Nikkei225 finally rebounded by several points, attaining 16 000 points at the end of 2005.

During 2013, the Nikkei 225 managed to gain 57%, its best performance since 1972, this was following a new presidential election and the implementation of reforms aimed at re-energising the Japanese economy. The Nikkei 225 thereby continued its rise towards 20 000 points in April 2015.

Nowadays, the Nikkei 225 represents profitable opportunities for trading due to its strong volatility and the many micro-movements that occur. It is therefore fairly easy to make profits over the short, medium or long term.


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How to invest in the Nikkei 225:

To trade on the Japanese stock market and invest in the Nikkei 225, you simply need to choose a Forex broker through which you can use CFDs to trade on the major worldwide stock market indices. Then you can speculate on the rise or fall of this asset rate to make profits.

Trade on the Nikkei 225!
75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.