Key takeaways:

• The value of bank holdings grew, even as Selfwealth members looked to take profits

• Coal and lithium stocks continue where they finished 2022, drawing major interest from traders

After a torrid time for investors in 2022, the Australian share market shrugged off a number of concerns to deliver the second best start to any year in more than 30 years.

While investors are taking some comfort from suggestions that we could be nearing a peak in interest rates, the other major catalyst for local shares was China reopening. Since the world second largest economy abruptly abandoned its COVID-zero policy, mining stocks have surged, lifting the ASX within sight of its all-time high.

Elsewhere, consumer discretionary, real estate stocks, and tech stocks enjoyed strong gains in January, while energy and utilities delivered negative returns after a bumper 12 months.

What did last month events mean for the Selfwealth community? Here is everything worth knowing.

What are the most popular ASX shares and ETFs?

At the top of the charts, Commonwealth Bank (ASX: CBA) and BHP (ASX: BHP) both extended their lead as the most popular shares on the Selfwealth platform. The value of holdings in both these stocks swelled by mid single-digit percentages, with each stock achieving a record high throughout the month.

In many respects, it is the performance of these two giants that has underpinned the resilience of the ASX, which is just a fraction away from setting a new record after wiping out all of last year losses. Commonwealth Bank is likely viewed as a favourite in these times due to the net benefit of rising interest rates, while BHP is leveraged to higher iron ore prices, with the commodity trading at a multi-month high following strong demand out of China.

It was also a good month for fellow bank stocks National Australia Bank (ASX: NAB), ANZ (ASX: ANZ), and Macquarie Group (ASX: MQG), where underlying share price gains helped boost the value of community holdings in these names. However, it wasn't all one-way sailing for bank stocks, with Westpac (ASX: WBC) lowly return of 1.6% for the month offset by a decline in overall holdings amid selling activity. That saw the Sydney-based bank stock drop one spot down to 4th position in terms of the most held ASX stocks.Lithium shares Pilbara Minerals (ASX: PLS) and Core Lithium (ASX: CXO) both crept up the list in January, with each name up two spots into 13th and 17th positions respectively. They were joined by industry peer Liontown Resources (ASX: LTR), which rejoins the top 20 after a brief absence in December. 

Lithium stocks were on a tear last month as demand expectations for electric vehicles continue to increase. One of the key catalysts for massive share price gains across a number of battery metals stocks in January was UBS' decision to lift its lithium price forecasts by as much as 50%, while also upgrading several stocks.

Consumer duo Wesfarmers (ASX: WES) and Woolworths (ASX: WOW) also retain their positions in the top 20. That comes at a time where retail sales data paints two very different pictures. 

On the one hand, several ASX-listed retailers have reported bumper sales results, while official ABS data suggested a significant slowdown in consumer spending in December. Both of these stocks, however, offer more defensive exposure to the retail sector, which may explain their popularity in an uncertain economic environment.

ASX StockCompany1CBACommonwealth Bank2BHPBHP3CSLCSL4WBCWestpac5NABNational Australia Bank6ANZANZ7MQGMacquarie Group8NEUNeuren Pharmaceuticals9AFIAustralian Foundation Inv10FMGFortescue Metals Group11PLSPilbara Minerals12WDSWoodside Energy13TLSTelstra14WESWesfarmers15RIORio Tinto16ARGArgo Investments17CXOCore Lithium18SOLWashington H. Soul Pattinson and Co19WOWWoolworths20LTRLiontown Resources

After a disappointing result in December, where all the leading ETFs in the community recorded a net outflow in monetary value, that trend flipped on its head in January. 

Furthermore, growth in holdings was relatively broad-based, with US-oriented ETFs like the Betashares Nasdaq 100 ETF (ASX: NDQ) and the Vanguard Australian Shares Index ETF (ASX: VAS) both recording a 6.2% increase in value across the community.ASX ETFsCompany1VASVanguard Australian Shares Index ETF2VDHGVanguard Diversified High Growth Index ETF3VGSVanguard MSCI Index International Shares ETF4IVVIshares S&P 500 ETF5A200BetaShares Australia 200 ETF6VTSVanguard U.S. Total Market Shares Index ETF7NDQBetashares Nasdaq 100 ETF8VEUVanguard All-World ex-U.S. Shares Index ETF9VHYVanguard Australian Shares High Yield ETF10DHHFBetaShares Diversified All Growth ETF

ASX share trading activity

Battery metals remain one of the key themes not just for long-term investors, but traders as well. Pilbara Minerals and Core Lithium both ranked prominently within the top 20 for trades by value, while Lake Resources (ASX: LKE) and Liontown Resources also made the cut when looking at trade volumes last month. 

Another theme occupying the limelight at this time is coal. Following news that China would end its unofficial import ban on Australian coal, trade interest in this sector jumped significantly across the course of January. 

Both trade numbers and trade values for the likes of Whitehaven Coal (ASX: WHC) and New Hope Corporation (ASX: NHC) were sharply higher versus corresponding figures for last year. The buy-to-sell ratio for each metric was above 60% for both stocks, which suggests investors see further upside for last year best performing market segment.For the second month in a row, South32 (ASX: S32) makes the cut in terms of being one of the most actively traded stocks in the community. It is hard to attribute anything other than broader macroeconomic factors contributing towards this, with China reopening sparking significant interest in copper stocks of late.One interesting sight among the most traded names was the Betashares Australian High Interest Cash ETF (ASX: AAA). Making a rare appearance in the top 20, the ETF, which provides investors with exposure to Australian cash, appears to be a high conviction investment by a small number of investors.

It is likely investors in AAA are looking for a source of reliable income in the current rate hike cycle. This also suggests that at least some members within the Selfwealth community view cash as an attractive option at this time, particularly with economists anticipating another rate hike next week.

Although the major banks remain a core holding in the portfolios of a significant portion of the Selfwealth community, trading in these names is still largely skewed towards selling activity. This may be a reflection of profit taking ahead of the upcoming earnings season, or it could be investors rotating into other stocks given the local share market strong start to the year.By trade volume, other stocks that were actively traded include the Vanguard Diversified High Growth Index ETF (ASX: VDHG), which ranked third by overall trades for the month, Fortescue Metals Group (ASX: FMG), sixth, and Woodside Energy (ASX: WDS), with the 13th highest number of trades in January.Top 20 stocks traded by valueCode Security

Buy-Sell Ratio

1BHPBHP

49.1%

2FMGFortescue Metals Group

45.2%

3PLSPilbara Minerals

49.2%

4BBOZBetashares Australian Equities Strong Bear Hedge Fund

52.9%

5WBCWestpac

42.6%

6MQGMacquarie Group

43.5%

7WHCWhitehaven Coal

61.6%

8VASVanguard Australian Shares Index ETF

57.1%

9CSLCSL

49.6%

10ANZANZ

41.8%

11LNASETFS Ultra Long Nasdaq 100 Hedge Fund

47.3%

12VGSVanguard MSCI Index International Shares ETF

87.7%

13RIORio Tinto

41.4%

14CBACommonwealth Bank

35.4%

15CXOCore Lithium

52.9%

16S32South32

49.4%

17NHCNew Hope

62.5%

18AAABetashares Australian High Interest Cash ETF

59.0%

19SNASETFS Ultra Short Nasdaq 100 Hedge Fund

55.6%

20GEARBetashares Geared Australian Equity Fund

49.5%

That all for this Trade Trends report, stay tuned for the next edition this time next month!