Defining the Nikkei 225 Stock Index, its Weighting, Modifications and Changes of Components

In the TSE (Tokyo Stock Exchange), the “Nikkei 225” is a market index which is the most important in the Asian stocks. Since 1971, this stock index has been calculated every day by the “Nihon Keizai Shimbun (Nikkei)” newspaper. Moreover, and besides being reviewed once every year, the Nikkei’s unit is the Yen.

After its introduction to the OSE (Osaka Securities Exchange), CME (Chicago Mercantile Exchange, and the SGX (Singapore Exchange, the Nikkei 225 has become an international ingredient in the stock exchange. One of its other major indexes is the “Topix”.

The highest average ever recorded of the Nikkei 225 in the 20th century was in 1989 (reaching 38,957.44 before closing at 38,915.87). In the 21st century, it reached right above 18.300 points.

To weight stock by the Nikkei 225, they are given equal weighting based on 50 yen per share. Such weighting is also influenced by removals, splits and addition of constituents. Since it reflects the overall market, there is no final weighting for the Nikkei 225.Review results of the Nikkei 225 are published every September with changes applied early October. Such changes are usually announced in the Japanese Nikkei newspaper plus appearing on the NNI. Whenever a stock is being replaced, the divisor is, afterwards, changed to make sure that there is a smooth transition of the stock index.

[youtube]http://www.youtube.com/watch?v=D7nyUmK6zMc[/youtube]

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