Merrill has been badly hit by the downturn in the U.S. housing market, getting stuck with billions of dollars in asset-backed securities that are now worth a fraction of their value a few months ago. Merrill's stock has been hammered, falling 41% this year, and its market capitalization now stands at roughly $47 billion, so a $5 billion investment would represent a significant stake in the company. China's $5 billion investment in Morgan Stanley Wednesday helped bolster that firm's shares. A further $8 billion write-down at Merrill could take its total mortgage hits to $15.9 billion for the second half of 2007. Merrill Chief Executive Stan O'Neal was ousted in October after disclosing the third-quarter losses. One of the analysts projecting the new write-down, Susan Katzke of Credit Suisse Group, predicted that it could prompt Merrill to seek a capital infusion or sell assets to shore up its balance sheet.