The storm is currently situated to the south-east of Hainan Island and is forecast to edge towards the coast of Guangdong and strengthen during the day.
Kindergarten classes, and classes at schools for children with physical or intellectual disability, are suspended.
The Marine Department has warned boat owners to take precautionary measures.
The Observatory issued the No 3 signal at 4.40am. In a statement, it said it was expecting winds with mean speeds of 41 to 62 kilometres per hour.
Just before 5am, the maximum sustained winds recorded at Ngong Ping, Waglan Island and Tate’s Cairn were 78, 69 and 56 kilometres per hour with maximum gusts 105, 75 and 75 kilometres per hour respectively.