Updated 3:15 p.m. ET

(Bloomberg) -- Hong Kong was preparing to shutterbusinesses as Typhoon Hato drew closer to the city, with CathayPacific Airways Ltd. canceling flights and officials warning theymay raise the third-highest storm signal.

Continues to intensify

The tropical cyclone has continued to intensify in the past fewhours and may pass within 100 kilometers (62 miles) south of theglobal financial center, posing a threat to the city, the Hong KongObservatory said. A Strong Wind Signal No. 3 could be upgraded tothe No. 8 Gale or Storm Signal at 6 a.m. local time. Hato, namedafter the Japanese word for pigeon, was estimated to be about 366kilometers east-southeast of the city and forecast to move towardthe coast of Guangdong, according to the U.S. Navy and Air Force’sJoint Typhoon Warning Center in Hawaii.

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Cathay Pacific said a majority of flights to and from Hong Kongbetween 6 a.m. and 5 p.m. on Wednesday are cancelled. Mostbusinesses are closed and much of the city’s public transport willstart to shut down after the No. 8 signal is hoisted.

Major business interruption

The storm may also stop trading in the world’s fourth-largestequity market. Hong Kong Exchanges & Clearing Ltd. will cancelpre-market trading if the No. 8 signal is in force between 7 a.m.and 9 a.m., according to its trading rules. The morning sessionwill be scrapped if the warning is still in effect at 9 a.m. andtrading will be closed for the day if not lifted by noon. The lasttime the city had to scrap full-day trading was in October 2016,when Typhoon Haima prompted schools to close and airlines tosuspend flights.

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On its current track, Hato’s strongest side would strike theHong Kong area as the storm comes ashore just south of the city,said Bob Henson, a meteorologist with Weather Underground inBoulder, Colorado. In the northern hemisphere, the most powerfulpart of a westward moving storm is its north side.

Because Hato is moving about 24 kph, damage from heavy rainswill probably be kept to a minimum, Henson said.

“The chance for bad weather is high; the chance for catastrophicweather isn’t very high,” Henson said.

The observatory warned that weather in Hong Kong isdeteriorating gradually and there will be heavy squally showers.There may be serious flooding in some low-lying areas as thestorm coincides with a high tide on Wednesday morning. Astorm surge is forecast to be about 1 meter.

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