Twelve beaches on Hong Kong Island and Lamma Island were closed after a shark was spotted near Shum Wan on Sunday afternoon.
The giant fish might be a whale shark. After receiving a report from a civilian, the police asked for an aerial search of the area.
The Leisure and Cultural Services Department confirmed that the Government Flying Service spotted what looked like a giant fish from the air in waters near Sham Wan. Officials then decided to close 12 beaches, including Repulse Bay.
Anne-Sophie Girard and her family were among the first people to spot the shark.
Girard was on a catamaran yacht, moored off Sham Wan, and enjoying a party with her husband Martin, their four children, aged five to 12, and friends on Sunday afternoon.
But summer fun turned to horror when the boat's captain spotted a fin. He ordered the 15 swimmers, including Girard and her two youngest children, back onboard.
'At that moment, we were just really scared. It was quite a big shark. It was a close call,' she said.
The couple believes the beast they saw was a whale shark, the world's largest shark species, due to distinctive markings on its back.
'It was very big, grey with white dots on it, and its fin was black,' Girard's husband said.
The couple said the creature did not appear aggressive, even as it swam under the yacht. Whale sharks feed mostly on plankton and are not considered a threat to humans.
Last month, shark sightings were reported near Stanley, but police did not find any trace of sharks after a search of the area.