Nikkei 225

Financial Dictionary -> Investing -> Nikkei 225

The Nikkei 225 (or commonly the Nikkei Heikin kabuki 225) is the leading index for the Tokyo Stock exchange, ranking the top 225 large cap companies listed on the exchange. Like the Dow Jones in the United States (it was actually called the Nikkei Dow Jones in the 70s and 80s), following the Nikkei 225 is a strong indication of how the stock market as whole is performing, and it is used as a benchmark for other funds, as well as figure used by analysts to predict future economic trends etc. Unlike other indexes that have developed a real time system, the Nikkei 225 is calculated by the traditional method and displayed on a daily basis by the Nihon Keizai Shimbun business newspaper. It has done so since its inception in 1950, where it began with one year of past data.

The stock listed on the Nikkei 225 is weighted equally by its yen per share. Although the index is reevaluated on an annual basis, should a company listed fall below the requirements it can be delisted midyear. Results after the annual meeting are made available in September and changes to the index are made in October.

Because the Nikkei 225 is representative of the market as a whole, the index is not just ranked, but also divided in to industries to give a fair and accurante overview. These include Automotive, Foods, Textiles, Precision Instruments, Pulp and Paper, Other Manufacturing, Fishery, Chemicals, Mining, Construction, Pharmaceuticals, Trading Companies, Oil and Gas, Retail, Rubber Products, Banking, Glass and Ceramics, Steel Products, Securities, Insurance, Metals, Financial Services, Real Estate, Transport, Machinery, and other services.
Some of the well known companies currently listed on the Nikkei 225 index as of 2009 include Japan Tobacco Inc, Mitsubishi, Fuji Film Holdings, and Sony Entertainment.