The 19 year old’s agent Rolando Zarate has confirmed in recent weeks that Arsenal have “asked for reports on Lautaro” while Real Madrid have also held informal meetings with Zarate over the Argentina Under 20 international.
Martinez reportedly has a buyout clause of $11million (£9m) and Valencia are believed to have an agreement in place with Argentinian Primera Division side Racing Club after signing winger Rodrigo De Paul from their academy back in 2014.
Martinez has yet to score for Racing in ten league appearances for his club this season, but he has been starring for Argentina at the South American Under 20 Championships over the past two months. In nine appearances, the 19 year old scored five goals and provided one assist.
In the final group stage they finished fourth, beating Brazil for the final spot to qualify for the 2017 FIFA Under 20 World Cup.