The most powerful typhoon to hit Hong Kong in five years has forced schools and businesses to close, and hundreds of flights to be cancelled, leaving battered homes and flooded streets in its wake.

Authorities raised the signal for Typhoon Hato to 10 - the highest level in the territory's storm warning system - amid fierce gusts of up to 207km/h.

Footage on social media showed people being blown away on the streets, multi-storey car parks engulfed by floodwaters and monster waves battering oceanfront tower blocks.

The Asian financial centre's normally bustling streets were eerily quiet after the stock market was forced to suspend trading.

Hato brought down trees and swamped vehicles, while shattered glass from blown out windows in skyscrapers rained on the streets below and construction cranes swayed precariously on top of unfinished high rises.

"I've never seen one like this... it's crazy," said Garrett Quigley, a longtime resident of Lantau Island - the largest of Hong Kong's islands.

Flights were grounded by Cathay Pacific and Hong Kong Airlines, and rail services cancelled.

Hato went on to make landfall in mainland China, forcing the evacuation of thousands of people along the coastline and ferry services to be halted, Xinhua News Agency reported.

Waves up to 10m were expected in the South China Sea, the agency said.

At least three people were killed in Macau in typhoon-related falls and accidents, authorities said.

The storm caused a power cut across most of the gambling hub for several hours.

The last time the typhoon warning was raised to its maximum level in Hong Kong was for Typhoon Vicente in 2012.

The worst storm to hit the former British colony was Typhoon Wanda in 1962, which killed 130 people and left 72,000 homeless, with gusts of up to 284km/h recorded.