Chinese shares tumbled on Monday from a two-week high over fears the market's liquidity will be drained if the securities regulator resumes approval of a massive initial public offering (IPO) later this month.[Hong Kong Company Formation, Incorporation, Business Registration]

The benchmark Shanghai Composite Index lost 2.44 percent, or 48.93 points, to end at 1,958.27, while the Shenzhen Component Index was down 2.79 percent, or 218.96 points, to 7,637.63.

Total turnover on the two bourses shrank to 149.96 billion yuan (24.27 billion U.S. dollars) from 169.4 billion yuan in the previous trading day.

Reports circulating around the market speculate that China is likely to restart approving IPO application at the end of July after a nine-month break, with 30 firms expected to be listed on China's A-share as the first batch.

The ceramics sector declined following the news, with its sub-index tumbling 6.61 percent. Zhejiang Kaier New Materials Co., Ltd. dropped 7.58 percent to 17.55 yuan, marking the worst performance of any company in the sector.

Ship builders also lost ground, with the sub-index [Hong Kong Company Registration Guide]losing 5.54 percent. Sainty Marine Corp., Ltd. tumbled 7.17 percent to 18.65 yuan. Guangzhou Shipyard International Co., Ltd. shed 6.52 percent to end at 9.17 yuan.

The ChiNext Index, tracking China's Nasdaq-style board of growth enterprises, dropped 2.52 percent, or 26.67 points, to close at 1,030.60 points.