Hong Kong: Hong Kong upgraded the storm warning to the highest for the first time in five years and cancelled its stock exchange morning trading session as Severe Typhoon Hato drew closer to the financial centre.

Hundreds of flights have been cancelled and schools and most businesses in the Asian financial hub closed.

Streets were largely deserted on Wednesday as winds intensified and rain lashed down, with many skyscrapers in the heart of the financial centre in darkness as the city battened down for one of the worst storms in years.

Hato churned up water in the iconic Victoria Harbour and triggered large swells and massive waves on some of the city's most popular beaches, with the weather observatory warning of serious flooding in low-lying areas.

Maximum winds near Hato's centre were recorded at a destructive 155km/h.

Gusts in some residential areas were already causing damage, sending tarpaulins, roof screens and tree branches flying through the air. Social media users posted video footage of building cranes swinging in the strong winds, with one dropping to the ground.

The Hong Kong Observatory issued No 10 Hurricane Signal at 9:10am local time. It's the first time since Typhoon Vicente in July 2012 that the city has issued the highest storm warning. Should the signal remain in effect by noon, trading on the world's fourth-largest equity market will be scrapped for the day, according to exchange rules.

At 9am, Severe Typhoon Hato was centered about 80 kilometres south of Hong Kong, the Observatory said. It is forecast to move west-northwest at about 25 kilometres per hour toward the vicinity of the Pearl River Estuary. Hato, named after the Japanese word for pigeon, was expected to skirt about 50 kilometres to the south of Hong Kong in the afternoon.

About 420 flights have been cancelled at Hong Kong International Airport, according to the Airport Authority.

Most businesses close and much of the city's public transport shuts down with the hoisting of the No. 8 signal. All schools were closed for the day and the government opened temporary shelters. Several trees fell onto a highway in the Wan Chai business district, while traffic remained light as most people weren't going to work.

The last time the city had to scrap full-day trading was in October 2016, when Typhoon Haima forced schools to close and airlines to suspend flights.

Local media on the Chinese mainland said thousands of people had been evacuated from southern provinces, including more than 4000 fisherman and fish farm workers, while high-speed trains linking Shenzhen with the eastern provinces of Fujian and Jiangxi were cancelled.

Bloomberg