Merrill Lynch, facing the likelihood of billions of dollars in additional Q4 mortgage-related write-downs, is expected to become the latest financial firm to get a capital infusion from an Asian government investment fund, reports the Wall Street Journal. Temasek, a Singapore state-owned investment company, is in advanced talks to inject as much as $5bn into Merrill, a person familiar with the situation said. The news comes amid analyst predictions that mortgage write-downs at Merrill may double with another $8bn or more in the fourth quarter - the latest sign that Wall Street isn’t out of the subprime woods yet. Temasek’s board has given preliminary approval to the investment in Merrill, although pricing, timing and regulatory issues remain to be negotiated. As such, a deal may still not materialise. It is possible that Merrill may be in discussions with other government investment funds in addition to Temasek, said the Journal. The deal follows Morgan Stanley’s agreement this week to sell a stake of up to 9.9% for $5bn to state-run China Investment Corp.
