MANILA (BLOOMBERG) - Super Typhoon Mangkhut is expected to threaten China's Guangdong coastline, and Hong Kong, with a possible direct strike that may cause as much as US$120 billion (S$165 billion) in damage and economic losses.

The world's most powerful storm of the year ripped into the northern Philippines early on Saturday (Sept 15) with winds of up to 269kmh.

Measured by US standards, it was a Category 5 storm on the five-step Saffir-Simpson scale, according to the US Navy and Air Force's Joint Typhoon Warning Centre in Hawaii.

It's forecast to cross the South China Sea and strike Guangdong by Sunday.

On that track, it could cause US$120 billion in damage, with China absorbing US$100 billion - about US$26 billion of that in Hong Kong alone, said Chuck Watson, a disaster modeller with Enki Research in Savannah, Georgia.

The economic losses could reach 6.6 per cent of the Philippines' GDP, or more than US$20 billion, he said.

"That is an ugly situation," Watson said. "Any big storm going into the Hong Kong area, talk about a target-rich environment. That is just ugly."

In a worst-case scenario, if the eye wall of the typhoon hits Hong Kong head on, about 48km north of official forecasts, the economic impact could rise to US$135 billion for the territory alone, and US$230 billion for China overall, according to Watson.

In the Philippines, the authorities have evacuated some 56,000 people, disaster management agency head Ricardo Jalad told CNN on Saturday morning.

Almost one million people are living in coastal areas, or have homes made of light materials, along the storm's path, Edgar Posadas, spokesman of the disaster-monitoring agency, earlier said.

Communication lines were cut in the northern province of Cagayan, causing the local government to lose contact with far-flung areas where the typhoon made landfall, Governor Manuel Mamba told CNN.

Fierce winds have toppled and destroyed structures in the province, where roofs have also been torn away, he said.

Power has been shut in some areas including in the Philippine capital region, 275km from Cagayan, according to Manila Electric Co.

Some roads in Metro Manila are already flooded and impassable to vehicles, the Metropolitan Manila Development Authority said on Twitter.

The weather bureau warned residents in coastal areas of possible storm surges that may be as high as 6m in Cagayan and Ilocos Norte provinces. The trip across the northern tip of the Philippines has weakened the storm, it said.

WIND SIGNAL

A Strong Wind Signal No. 3 was set to be issued later on Saturday, according to the Hong Kong Observatory. That advises people to secure property and ships ahead of a storm with high winds.

There's a chance Mangkhut won't be that strong as it approaches China, said Jeff Masters, a meteorologist with Weather Underground, an IBM company in Ann Arbor, Michigan. Storms lose strength when they cross land and it's possible Mangkhut, after hitting the Philippines, won't be able to recover.

Mangkhut, named after a Thai fruit, went ashore at about 1.40am in Cagayan province, the Philippine weather bureau, Pagasa, said on its Twitter account.

The entire main Luzon island where the capital region is has been placed under storm alert, with provinces in the northernmost part of the country bearing the brunt of the typhoon.

The storm could affect as many as 48.6 million people in the region, according to the United Nation's Global Disaster Alert and Coordination System.

About 20 cyclones pass through disaster-prone Philippines each year. Super Typhoon Haiyan, which packed winds of as high as 315kmh, killed more than 6,300 people there in 2013.

"As far as damage goes, the biggest concern is Hong Kong," Masters said.