The Great Secret of the Japanese

One of the most closely followed and respected indexes in Japan, the Nikkei 225 is very important to those investors who follow the Japanese financial market as a whole. To give you an idea, the Nikkei 225 index (or only Nikkei, as it is usually abbreviated) is the Japanese equivalent of the Dow Jones Industrial Average index of the United States. Therefore, we can say that the Nikkei is a weighted price index composed of the 225 largest Japanese companies listed on the Tokyo stock exchange. It is important to point out that it is not possible to directly buy an index because there are several ETFs whose components are correlated with the Nikkei. How the Nikkei 225 is formed How the Nikkei 225 is formed The index is currently calculated by the Nihon Keizai Shimbun or Japan's Economic Journal. The calculation of this index began in September 1950. Among some of the most famous companies that are included in this index we have: Canon Incorporated; Sony Corporation; Toyota Motor Corporation; Honda Motors; Mitsubishi. In this way, the Nikkei was created as part of Japan's post-World War II reconstruction and industrialization program. In addition, the shares that make up this index are classified by price and not by market capitalization. Well that's the way it works on most indexes around the world. Thus, the composition of the Nikkei undergoes a review every September. However, it is only in October that all necessary changes are made. Obviously, like all indexes, the Nikkei 225 is designed to be a kind of "thermometer" of Japanese economic activity, given that several large companies from different sectors form this market index.