Taiwan's parliament approved a big new defense and drone spending law, but military stocks sold off instead of rallying — bad news for traders who bought the hype, though the longer-term story stays intact.

• The new law sets aside a large defense budget over the next six years to build up homegrown weapons and drones.
• Military-linked shares opened higher then closed lower across the board, including Aerospace Industrial Development, Thunder Tiger, EVA Air Technic and CSBC.
• The drop is a classic "buy the rumor, sell the news" move — the drone bill had been talked up over and over before the vote.
• The money is not flowing yet: the cabinet still has to countersign, and nobody knows when the actual contracts get put out to bid.
• An earlier, smaller economics-ministry drone program is likely to hand out contracts sooner.

Outlook: Analysts still like the sector over the medium term on government backing and demand for non-Chinese supply chains, but shares may drift until real orders appear.