Nikkei << nee kay, >> Index, is a number that measures overall gains and losses on the Japanese stock market. The Nikkei tracks the average price of 225 of the most frequently traded stocks on the Tokyo Stock Exchange (TSE). The total of the stock prices of these companies is divided by a special number called a divisor. This divisor adjusts the average to allow for stock splits. A stock split occurs when a company issues two or more shares of stock for each existing share and the price of the stock then decreases in proportion.
The Nikkei Index, officially known as the Nikkei 225 Stock Average, is one of several indexes reported by a Japanese financial newspaper called Nihon Keizai Shimbun (published in English under the title The Nikkei Weekly). This newspaper has been calculating and reporting the Nikkei 225 since 1950. The Nikkei 500 Stock Average measures average value of 500 TSE stocks using the same method as the Nikkei 225. The Nikkei 300 is a market value-weighted index, an index that weighs the stock prices of large companies more heavily than those of small companies. Other Nikkei indexes measure stock values in other areas of the Tokyo Stock Exchange.
The Tokyo Stock Exchange adopted its first stock index, the TSE Adjusted Stock Price Average, in 1950. The exchange stopped using this average in 1971, after the introduction of another index, the Tokyo Stock Price Index.
