LVMH Group, an arm of the world's largest luxury products group, Moet Hennessy Louis Vuitton, has increased its stake in luxury watch distributor Xinyu Hengdeli Holdings to 5.12 per cent, according to a filing with the Hong Kong stock exchange. The French company, which owns brand names such as Louis Vuitton and Fendi, paid HK$8.49 million last week to buy 1.54 million Xinyu Hengdeli shares in the secondary market, boosting its stake from 4.99 per cent. It is the fourth-largest shareholder in the firm. Xinyu Hengdeli shares rose 1.72 per cent to a record high of HK$5.93 yesterday on the back of the news. The stock has gained more than fourfold from its HK$1.32 offer price in September last year. James Cheng, general manager of LVMH's watch and jewellery division in China, said in August the company aimed to buy 7 per cent of Xinyu Hengdeli to gain a position on the board, strengthen co-operation and help LVMH raise its share in China's luxury watch market. LVMH started buying into Xinyu Hengdeli in May, paying HK$20 million for six million shares. It now owns 63.56 million shares, worth HK$376.9 million based on yesterday's closing price. LVMH entered China's watch and jewellery market in 2001. In 2004, it appointed Xinyu Hengdeli as its sole mainland agent for some of its luxury brands, including Tag Heuer, Zenith and Fendi watches.