BEIJING — Yang Lihua was one of millions of small investors Beijing encouraged to join a stock-buying frenzy last year. But the Shanghai newspaper editor sold after prices collapsed in June and she vowed never to return.

In November, Yang was coaxed back in after a multibillion-dollar government intervention stabilized prices. Then on Monday, the benchmark Shanghai Composite Index began the new year by plunging nearly 7 percent.

“I do not want to invest anymore,” said Yang, who has lost 350,000 yuan ($55,000) in total. “This is just too miserable. It hurts, emotionally, a lot.”

Battered by market gyrations, Chinese small investors are swearing off stocks. That is setting back the ruling Communist Party’s hopes of encouraging widespread stock ownership to help transform its financial markets into tools to propel economic reform.

Despite a rebound in prices from their August lows, no significant new money from small investors has flowed into stocks, according to Guo Yanhong, a market strategist for Founder Securities.