Forex Trading


todaySeptember 7, 2023 2

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The reason for this is that the market value of the Nikkei 225 ETF will rise and fall throughout the day. Moreover, you can then sell your ETF on the open marketplace, just like you would with a company stock. In other words, those involved in the Nikkei 225 investment space back in the mid-to-late 1980s would have no doubt been hit hard by the crash. On the other hand, the index has been performing reasonably well since late 2012, where it was priced in the region of 8,00 points. However, this doesn’t necessarily make the Nikkei 225 index an unworthy investment.

More than 70 years have passed since the commencement of its calculation, which represents the history of Japanese economy after the World War II. The Nikkei 225 is a price-weighted equity index, which consists of 225 stocks in the Prime Market of the Tokyo Stock Exchange. Unlike mutual funds, which are priced at the end of the day, ETFs trade throughout the day. Like mutual funds, ETFs offer diversification through a single investment. Buying and managing each individual stock in the Nikkei 225 is costly and impractical, with substantial tax implications.

  1. Partnerships are not a recommendation for you to invest with any one company.
  2. As such, you would instead by best utilizing either an index fund or exchange traded fund (ETF).
  3. China, long an impossible-to-ignore market, has been spiraling downward.
  4. This includes some of Japan’s biggest brands, notably Honda, Mitsubishi and Toyota.

If the index drops, so will your investments.The Nikkei is one of Japan’s oldest and best-established indices but isn’t immune to volatility. For example, the Nikkei fell more than 10% after a record-breaking 9.1 magnitude earthquake shook the country in March 2011. The index has since recovered but the event demonstrates that even well-established indices can be impacted by political and environmental factors.

The United Kingdom, France, Germany, Switzerland, Italy, and Singapore also offer ETFs that track the Nikkei 225, some of which are cross-listed on the Tokyo Stock Exchange. Several ETFs that track the Nikkei 225 trade on the Tokyo Stock Exchange. They include Blackrock Japan’s iShares Nikkei 225 ETF, Nomura Asset Management’s Nikkei 225 Exchange Traded Fund (NTETF), and Daiwa Asset Management’s Daiwa ETF Nikkei 225.

However, and perhaps more importantly, the vast majority of the Japanese stock marketplace is dominate by the companies sat at the very top of the market capitalization rankings. Launched back in 1950, the Tokyo Stock Exchange is the largest stock exchange in Japan, and the fourth largest in the world by market capitalization. Located in the capital city of Tokyo, the stock exchange lists more than 3,500 companies across multiple industries.

Plan your trading

This is because the index itself is there for tracking purposes only, rather than acting as a direct financial instrument. So now that you know how the Nikkei 225 has performed over the past 30 years, in the next section of our guide we are going to show you how you can make an investment. This will include an overview of the Tokyo Stock Exchange itself, as well as a discussion on how an index works.

CFDs are way to invest in the securities market in either direction. Depending on what behaviour you expect from the market, you’ll be able to adjust your strategy accordingly. The Nikkei is a price-weighted index, meaning it’s calculated based on the stock prices of its component companies.


Ask a question about your financial situation providing as much detail as possible. Our team of reviewers are established professionals with decades of experience in areas of personal finance and hold many advanced degrees and certifications. It comprises 225 of the largest, most liquid companies listed on the Tokyo Stock Exchange across a diverse range of sectors.

Broaden your global exposure by investing in the Nikkei index with an international brokerage account.

Our analyst articles offer in-depth insights on the Nikkei 225 and its constituent stocks to inform your trading. Like the Dow Jones Industrial Average, the Nikkei 225 Stock Average is a price-weighted equity index. Ranking of companies is determined by stock price, which differs from other umarkets review major indexes where market capitalization is used in calculations. You would essentially need to purchase 225 individual stocks, which would not only be expensive, but highly complicated. As such, you would instead by best utilizing either an index fund or exchange traded fund (ETF).

As such, you will need to use a third party institution that tracks the Nikkei 225 index themselves. Each institution will have their own underlying mechanisms in their attempt to track the official index. Furthermore, some index funds or ETFs will even attempt to beat the official index, by making some weighting adjustments.

Understanding the Nikkei 225

This unique calculation makes it more sensitive to stock price fluctuations. The broader Nikkei 500 includes 500 companies, providing a more comprehensive picture of the Japanese economy. The Nikkei, like all major indices, is also influenced by global economic events.

JOLTs Job Openings unexpectedly rose from 8.925 million to 9.026 million in December. China, long an impossible-to-ignore market, has been spiraling downward. Stocks in China recently touched lows not seen since a rout in 2015, and Hong Kong’s Hang Seng Index was the worst-performing major market in the world last year. Stocks stemmed their slide only when Beijing recently signaled its intention to intervene but remain far below previous highs. TOPIX or the Tokyo Price Index is another index on the Tokyo Stock Exchange, apart from the Nikkei 225. While Nikkei is a short selection of 225 stocks from the Tokyo Stock Exchange, TOPIX includes all the stocks that are present on the TSE.

These companies play an essential role in the domestic and international consumer markets. The index includes both large-cap and mid-cap stocks to capture a comprehensive picture of the Japanese economy. The number 225 refers to the number of large, publicly-owned companies selected from a broad spectrum of industries included in the index. The origin of the Nikkei dates back to September 1950, making it the oldest stock index in Japan. If a brand is a referral partner, we’re paid when you click or tap through to, open an account with or provide your contact information to the provider. Partnerships are not a recommendation for you to invest with any one company.

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