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I don't think a country's size correlates to its stock market size.

http://www.internetworldstats.com/stats8.htm

So, I don't see why you would think that's inevitable.

How does it not? I guess companies can trade their stocks at foreign exchanges, but over time that should cease. Assuming that productivity per person becomes more than half what it is in the US and that Chinese companies will trade their stocks in a domestic exchange it does indeed seem inevitable. Those aren't very wild assumptions.

"over time that should cease" why? companies are globally owned, listing is largely about which accounting rules and disclosure and ownership rules you follow, no need for a home bias in the long run.

Look at London for an example of a stock exchange largely full of international companies.

Given countries or reasonably similar per capita wealth it stands to reason that they stand reasonably close together.

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