* CSI300 -1.7 pct; SSEC -1.5 pct; HSI -1.4 pct
* This week's IPOs expected to lock up 5.7 trln yuan of capital
* Market hit by fresh moves to tighten margin financing
By Samuel Shen and Pete Sweeney
SHANGHAI, June 15 (Reuters) - China stocks sank nearly 2 percent on Monday morning, saddled by a slew of bad news over the weekend, including fresh tightening of margin financing and signs of stepped up IPO issuance.
By midday, the CSI300 index fell 1.7 percent while the Shanghai Composite Index lost 1.5 percent, with banking, IT and energy stocks leading the decline. Hong Kong stocks tracked losses.
China's securities regulator published draft rules late on Friday that would for the first time limit the size of the country's rapidly-expanding margin trading and short selling by law, capping the businesses at four times a brokerage's net capital.
In addition, the China Securities Regulatory Commission (CSRC) demanded that brokerages conduct self-inspection to make sure they do not facilitate lending to clients through illicit channels.
Elsewhere, the risk of highly-leveraged stock purchases was highlighted by reports in local media of a 32-old investor who ended his life last week by jumping off a building after losing 1.7 million yuan betting on a single stock with borrowed money.
The suicide by the failed investor cast a shadow in a stock market already facing a tidal wave of IPOs.
This week, 25 companies will launch initial public offerings, which is expected to lock up 5.7 trillion yuan of subscription capital from investors, the biggest amount since 2014, the official Xinhua news agency estimates.
Adding to investor concerns, another mega IPO is due soon.
Bank of Jiangsu said over the weekend it plans to launch an IPO in Shanghai, which analysts expect could raise more than 40 billion yuan - even bigger than this week's 30-billion-yuan mega IPO by Guotai Junan Securities Co.
Chinese companies have almost doubled their proceeds from share issues in IPOs and secondary markets, rising on the recent bull run in mainland and Hong Kong markets.
In addition, senior executives of listed firms in China have stepped up the pace at which they are selling shares in their own companies, suggesting they may have doubts about whether their stock prices can go much higher.
At the end of the morning session, CSI300 stood at 5,245.58 points while the SSEC ended the morning at 5,086.80 points.
The Hang Seng index dropped 1.4 percent, to 26,909.20 points. The Hong Kong China Enterprises Index lost 2.2 percent, to 13,674.39.
Most sectors fell in Hong Kong.
Prada SpA shares fell 6 pct, reaching the lowest level in three years, after posting a 44 percent slump in quarterly earnings on weak China consumption. (Editing by Jacqueline Wong)